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On Marx's Analysis of Money Hoarding in the Turnover of Capital

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  • Costas Lapavitsas

Abstract

The formation of money hoards, which underpins the demand for money, is typically treated by mainstream monetary theory as originating in the motives of the rational individual. In contrast, Marx's discussion of money hoarding treats hoard formation as a necessary tendency of capitalist production and circulation rather than as a result of the individual's predilections. Based on Marx's analysis, this article identifies several structural reasons for money hoard formation in the circuit of capital. It is also shown that Marx's discussion, despite its insight, suffers from a technical error in analysing the overlapping of production and circulation time in the circuit, and in drawing the implications for hoarding. Finally, it is argued that the broader significance of capitalist money hoarding lies in the foundations it provides for the emergence of the credit system.

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  • Costas Lapavitsas, 2000. "On Marx's Analysis of Money Hoarding in the Turnover of Capital," Review of Political Economy, Taylor & Francis Journals, vol. 12(2), pages 219-235.
    • Handle: RePEc:taf:revpoe:v:12:y:2000:i:2:p:219-235
    DOI: 10.1080/095382500406521
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    1. Foley, Duncan K., 1982. "Realization and accumulation in a Marxian model of the circuit of capital," Journal of Economic Theory, Elsevier, vol. 28(2), pages 300-319, December.
    2. Makoto Itoh & Costas Lapavitsas, 1999. "Political Economy of Money and Finance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37578-9, March.
    3. William J. Baumol, 1952. "The Transactions Demand for Cash: An Inventory Theoretic Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 66(4), pages 545-556.
    4. Lapavitsas, Costas, 1994. "The Banking School and the Monetary Thought of Karl Marx," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 18(5), pages 447-461, October.
    5. Costas Lapavitsas, 1997. "Two Approaches to the Concept of Interest-Bearing Capital," International Journal of Political Economy, Taylor & Francis Journals, vol. 27(1), pages 85-106, March.
    6. Arie Arnon, 1984. "Marx's Theory of Money: the Formative Years," History of Political Economy, Duke University Press, vol. 16(4), pages 555-575, Winter.
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    Cited by:

    1. Howard Petith, 2002. "An Analytic and Descriptive Look at Marx's Own Explanations of the Falling Rate of Profit (second version)," UFAE and IAE Working Papers 549.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. Passarella, Marco & Baron, Hervé, 2013. "Capital's Pons Asinorum: the Rate of Turnover in Karl Marx's Analysis of Capitalist Valorisation," MPRA Paper 48306, University Library of Munich, Germany, revised 14 Jul 2013.
    3. Lambert, Thomas, 2019. "Bankers as Immoral? The Parallels between Aquinas’s Views on Usury and Marxian Views of Banking and Credit," MPRA Paper 97741, University Library of Munich, Germany.
    4. Labrinidis, George, 2014. "International reserves in the era of quasi-world money," MPRA Paper 59963, University Library of Munich, Germany.
    5. Labrinidis, George, 2018. "The roots of the Euro," MPRA Paper 86560, University Library of Munich, Germany.

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