This is in response to a comment on my post entitled “From Money as Universal Equivalent to Money as Currency.” Scroll to the bottom of that post to read the comment.
I want to thank ‘A’ for taking my blog seriously enough to raise these interesting and important questions.
First, I should clear up some misunderstandings. It’s not correct to say that the amount of token money that can be issued “is limited (if it is to hold its value) by the amount of gold in circulation.” Token money replaces gold in circulation and implies that gold has fallen out of circulation and accumulated in hoards both official and private.
“It seems to me,” ‘A’ writes, that “if the assumption about gold underpinning token money was accurate in the past, I am unsure about its continued accuracy.”
This gets to the heart of the matter. Marx demonstrated that when social labor is broken up into independent private labors, labor embodied in the products must take the form of value. He also showed that value must, in turn, take the form of exchange value. The exchange value of one commodity must always be measured in terms of the use value of another.
With the development of commodity production, one or a few commodities emerge as the universal equivalent that measures the exchange values of other commodities in terms of its own use value. This is the essence of Marx’s theory of value and price.
A Critique of Crisis Theory 