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Marx’s Theory of Money: A Reappraisal in the Light of Unconventional Monetary Policy

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  • Maria N. Ivanova

Abstract

This paper analyzes key aspects of Marx’s theory of money in order to reassert its continued relevance for understanding monetary developments in contemporary capitalism. Unlike theorists who become preoccupied with particular functions and forms of money, Marx develops a comprehensive concept of money integrating its various functions and emphasizing the socio-economic basis of its existence. Money performs different functions including a measure of value, a means of purchase/exchange, a means of payment, and a means of hoarding, which are independent of money’s concrete forms. The functions of money as a means of purchase and means of payment relate to each other as money (income) and credit (money), which are fundamentally different. The quantity and availability of credit (money) may be influenced by the activities of the central bank and the private banking system. Credit (money), however, can only become money (income) if and when it enters the domain of social production as an embodiment of the value of social labor and social purchasing power. This inextricable link between money and social production sets natural limits to the ability of monetary policy to influence both monetary and non-monetary developments in contemporary capitalism. An analysis grounded in Marx’s theory of money can provide insights into a range of contemporary monetary phenomena including hoarding, the rush to liquidity during financial crises, the scramble for government debt as a source of ultimate liquidity, and the limits to conventional and unconventional monetary policy. JEL Classification: E4, E5, B51, E6

Suggested Citation

  • Maria N. Ivanova, 2020. "Marx’s Theory of Money: A Reappraisal in the Light of Unconventional Monetary Policy," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(1), pages 137-151, March.
    • Handle: RePEc:sae:reorpe:v:52:y:2020:i:1:p:137-151
    DOI: 10.1177/0486613419856727
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    References listed on IDEAS

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    1. Maria N. Ivanova, 2018. "Quantitative Easing: A Postmortem," International Journal of Political Economy, Taylor & Francis Journals, vol. 47(3-4), pages 253-280, October.
    2. Christopher Martin & Costas Milas, 2012. "Quantitative easing: a sceptical survey," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 28(4), pages 750-764, WINTER.
    3. Maria N. Ivanova, 2017. "Profit growth in boom and bust: the Great Recession and the Great Depression in comparative perspective," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(1), pages 1-20.
    4. Robert J. Gordon, 2012. "Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds," NBER Working Papers 18315, National Bureau of Economic Research, Inc.
    5. J. M. Keynes, 1997. "The General Theory of Employment," Voprosy Ekonomiki, NP Voprosy Ekonomiki, vol. 5.
    6. Maria N Ivanova, 2019. "Inequality, financialization, and the US current account deficit," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(4), pages 707-724.
    7. Joseph E. Gagnon, 2016. "Quantitative Easing: An Underappreciated Success," Policy Briefs PB16-4, Peterson Institute for International Economics.
    8. Claudio Borio, 2000. "Market liquidity and stress: selected issues and policy implications," BIS Quarterly Review, Bank for International Settlements, November.
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    Cited by:

    1. Desogus, Marco & Casu, Elisa, 2020. "On the Monetary Causes of Inequality: A Review of the Literature and an Alternate Way Forward," MPRA Paper 114362, University Library of Munich, Germany.

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    More about this item

    Keywords

    Marxist economics; monetary theory/policy; unconventional monetary policy;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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