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Money and the Analysis of Capitalism: The Significance of Commodity Money

Author

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  • Costas Lapavitsas

    (Department of Economics, School of Oriental and African Studies, University of London, Thornhaugh St., Russell Sq., London WCJ OXG, U.K.cl5@soas.ac.uk)

Abstract

Monetary theory based on commodity money possesses sound foundations for analysis of capitalist monetary phenomena. "Valueless" forms of money (fiat and credit) have their roots in the nature and functions of commodity money. The evolution of the form of money is explained by the adequacy of each particular form for the functions which money is called to perform in capitalist exchange. Performing these functions encourages the development of money's form, leading to the emergence of several types of non-commodity ("valueless") money. This paper considers especially the adequacy of commodity, fiat, and credit money as means of exchange; adequacy is fully specified by examining determination of the exchange value of these forms of money. The process of determination is different for each: spontaneous hoarding for the first, arbitrary specification of quantity for the second, credit advance and repayment for the third. In this context, it is shown that the intrinsic value of commodity money can play an anchoring role for money's exchange value. The quantity theory of money has explanatory power with regard to the exchange value of fiat money and, under certain conditions, of credit money.

Suggested Citation

  • Costas Lapavitsas, 2000. "Money and the Analysis of Capitalism: The Significance of Commodity Money," Review of Radical Political Economics, Union for Radical Political Economics, vol. 32(4), pages 631-656, December.
    • Handle: RePEc:sae:reorpe:v:32:y:2000:i:4:p:631-656
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    Cited by:

    1. Bill Lucarelli, 2011. "The Economics of Financial Turbulence," Books, Edward Elgar Publishing, number 14252.
    2. Labrinidis, George, 2018. "The roots of the Euro," MPRA Paper 86560, University Library of Munich, Germany.

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