erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

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

Costas Lapavitsas (SOAS, University of London, UK)

Abstract

Monetary theory based on commodity money possesses solid foundations for analysis of capitalist monetary phenomena. Valueless fiat and credit money 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. The paper considers especially the adequacy of commodity, fiat, and credit money as means of exchange. Adequacy is approached in terms of determination of the exchange value of these three forms of money, though the process is very different for each: spontaneous hoarding for the first, arbitrary determination of quantity for the second, credit advance and repayment for the third. In this context, it is shown how 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.

Economic Research Center
Middle East Technical University
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