Reading Capital with Radhika 4. Did Marx have a ‘Commodity Theory of Money’?

The fourth lecture for this group reading Capital, Volume I focusses on the first half of the critical chapter 3, the Chapter titled ‘Money or the Circulation of Commodities’. Like the previous two chapters, but possibly more than them, this is a foundational chapter of Capital I. We will look at this chapter over two lectures because, in addition to being foundational, it is controversial. There are many, including nearly all the prominent ‘Marxist economists’ (a label I have been questioning since the start, see the first lecture in this playlist), who claim that Marx had a ‘commodity theory of money’. My own view is that if they were right, we should all stop reading Marx because if Marx really believed money was a commodity, let alone a commodity like any other, he is no use for the study of an economy in which money played a critical, essential and at the same time, a dangerous role, containing the seed of crisis. This lecture covers the chapter until we get to the critique of Say’s Law that capitalism cannot suffer from gluts which appear on p. 209 of the Penguin edition. The next lecture will start with this critique. The edition being used for these lectures is Karl Marx, Capital, Volume 1, Translated by Ben Fowkes, New Left Book and Penguin, 1977 Below is the full description of the series, which can be found here:    • Reading Capital with Radhika Desai - Geopo...   In her lectures, Radhika will be presenting an interpretation of Capital that she arrived at in the course of developing Geopolitical Economy, the Marxist approach to understanding the international relations of the capitalist world which placed imperialism and anti-imperialist resistance at its centre and has required rescuing Marx’s original analysis of capitalism as contradictory value production from more than a century and a half of misinterpretation by Marxists themselves. As she was working on developing geopolitical economy, she discovered that much of the interpretation of Capital in the bulk of what passes for Marxism and Marxist economics in the west is based on a compromise, or what Bukharin called a ‘policy of theoretical reconciliation’, with the theoretically and methodologically opposed neoclassical economics whose entire raison d’etre was to contest the radical implications of Marxism, and even classical political economy with its conviction that all value originated in labour. Thanks to this unjustified compromise, rather than defending and developing Marxism’s original analysis of capitalism as contradictory value production, ‘Marxist economists’ and Western Marxists found Marx’s analysis wanting instead. Specifically they levelled three major charges against Marx as early as the late nineteenth century. First, that Marx’s analysis of capitalism suffered from a ‘transformation problem’ of being unable to ‘transform’ values into prices when the problem was Ricardo’s’ and not Marx’s. Secondly, they claimed that Marx did not think that capitalism suffered from demand deficits when he claimed this repeatedly and even stated more than once that it was the most fundamental problem with capitalism. And they claimed that Marx was wrong about the Tendency of the Rate of Profit to Fall because capitalists would not invest if they expected their profits to fall when, in fact Marx was very clear that every capitalist invested to raise profits but the collective result of their separate decisions was to reduce the rate of profit. The ‘Marxist economist’ or Western Marxist is rare who does not level at least one of these false charges against Marx. In addition to these misunderstandings there are, inevitably given neoclassical economics’ inability to deal with money’s autonomous role in capitalism, many misunderstandings around Marx’s treatment of money, including the idea that Marx had a ‘commodity theory of money’. The result has been not a Marxist understanding of capitalism but a Schumpeterian one, capable of infinite expansion, and a neoclassical one, devoid of contradictions, uncomprehending of value and its relation to price, studying something called ‘the economy’ separate from the rest of society and static, not historically dynamic, and unable to theorise the role of money in capitalism. This is the understanding of capitalism that has led so many Marxists to produce their own versions of bourgeois and imperialist understandings of capitalism’s international relations including ‘realism’, ‘globalization’ and ‘US hegemony’. Radhika’s new approach, geopolitical economy, contests this tendency by placing the dialectic of imperialism and anti-imperialism at the centre of its understanding of capitalism’s international relations or what Marx called ‘the relations of producing nations’. She could not have done this without fighting all misconceptions of Marx’s analysis of capitalism.