Money and totality: A review essay

ABSTRACT

Moseley’s (2016) Money and Totality focuses on two important issues: (a) the nature and significance of Marx’s notion of the “circuit of money capital” and (b) the solution to the “transformation problem”. The former question, in particular, makes this book important not only for Marx specialists but also for other dissenting economists. Recall that in writings before the General Theory Keynes (1933a, 1933b), in particular, made allusion to the Marxian circuit via the concept of the monetary theory of production. However, these references did not survive in the published version in 1936. Nor was Keynes at all confident on this topic in debate the following year. It is therefore important to both Marx scholars and other heterodox economists to inquire exactly how the Marxian circuit was supposed to work. A starting point is to write out the scheme from Capital Vol. 2 (Marx, 1885/1976) in full, M – C … P … C’ – M’, and try to explain what the magnitudes (M’ – M) and (C’ – C), are supposed to represent. This is indeed one of Moseley’s main tasks in this thought-provoking book.

KEYWORDS:

• Marx
• monetary circuit
• profit
• surplus value
• transformation problem

JEL CLASSIFICATIONS:

• B14; B22; E31; E02; E42; E51

Notes

¹I have put the expression “money capital” in quotes (both here and later in the article) because the conflation of the two terms money and capital is ultimately one of the main issues which still needs to be debated.

²Steedman’s title was Marx after Sraffa. For this reason, Moseley (2016), p. 395) characterizes the 1970s contributions as the “Sraffrian method” (of solving the transformation problem).

³The line of text placed in square brackets here is an interpolation from a later passage on the same page of Ingham’s book. This placing seems to be the best fit for the abbreviated quotation.

⁴In fact, the title of Ingham’s (2004a) book, cited above, was simply The Nature of Money.

⁵The terms in quotes reflect Keynes’s own terminology from the Tract on Monetary Reform (Keynes, 1923, pp. 5–30).

⁶However, note that this same assumption very much reduces the significance of the transformation problem from the point of view of an empirical theory of profit or, indeed, a theory of income distribution in general. It essentially concedes that we would not expect to see commodities exchange at their “values” in any concrete state of the world.

⁷In empirical work, of course, this would indeed become a major issue.

⁸In various places (e.g., Smithin, 2009, 2013b, 2016a, 2016b) I have previously used this symbol to stand for the natural logarithm of the average productivity of labor. There is thus at least something of an analogy to the proportionality factor in Moseley’s exposition, albeit in the context of a social theory of value rather than a labor theory of value. It is obviously not a logarithm in this context.

⁹Moseley actually writes this as S = mL – V.

¹⁰Marx was a prophet of profit, so to speak. I would imagine that this pun works only in English.

¹¹It is also quite puzzling to me that the economist theorists of the 19th century could not see that the leading capitalist economy of the day, Great Britain, had operated quite successfully with a system of “paper credit” (Thornton 1802; von Hayek 1939; Hicks 1967; Smithin 1996) during the whole of the “bank restriction” period, 1797–1821. So successfully, that Britain triumphed in the Revolutionary and Napoleonic Wars and remained the hegemonic power for almost a century afterwards down to the First World War of 1914–1918. We should also note that the international gold standard, beloved of late-19th-century neoclassical economists was not in fact fully established until 1873 (the “crime of ‘73” being the demonetization of silver in the United States in that year). This was 14 years after Marx’s first discussion of the subject in A Contribution to a Critique of Political Economy (Marx, 1959) and a full 6 years after the publication of Vol. 1 of Capital (1867).

Additional information

Notes on contributors

John Smithin

John Smithin is a Professor in the Department of Economics at York University.