Int. Journal of Political Economy, vol. 27, no. 1, Spring 1997, pp. 7-42. © 1998 M.E. Sharpe, Inc. 0891-1916 / $9.50 + 0.00. TREVOR EVANS Marxian Theories of Credit Money and Capital Money is central to the Marxist analysis of capitalism. Marx himself introduces money at the beginning of Capital, and it is of significance at every subsequent stage of his analysis. For Marx, capitalism is nec- essarily a monetary economy, although he also stressed that monetary factors could only be understood by relating them to developments in the sphere of production. This is very different from the main body of neoclassical economics, which develops its analysis largely in terms of a real, or moneyless economy, and then adds on a monetary sector at the end, principally in order to determine the price level. Since the publication of Capital, the Marxian theory of money has received relatively little attention. One notable exception is Rudolf Hilferding’s Finance Capital, although the first half, where the theory of money is considered, has been discussed much less than the second half, which develops the famous thesis that banking capital had come to merge with and dominate over industrial capital. II. Rubin’s Essays on Marx's Theory of Value addresses some important methodological issues, although, as the title suggests, the focus of this work is on value rather than on money. By contrast, the importance of money is stressed in Roman Rosdolsky’s The Making of Marx's Capital, which provides a very clear exposition of the methodological foundations of Marx’s Trevor Evans worked for many years at the Centre for Regional Economic and Social Research (CRIES) in Managua, Nicaragua, and is currently based in Ber- lin. This paper was written in 1988 and revised in April 1994. I am grateful to Laurence Harris and Chris Edwards for their comments on the earlier version.8 INTERNATIONAL JOURNAL OF POLITICAL ECONOMY approach, although Rosdolsky does not attempt to develop Marx’s theory at all. More recently, Ernest Mandel has also emphasized the key role of money in Marxian economics in his theoretical writings, and he is one of the few Marxian writers who has addressed monetary issues in his extensive empirical analyses. Nevertheless, Mandel’s work is based essentially on applying Marx’s approach to contempo- rary conditions, rather than on developing it. In recent years, a number of writers in France have developed a more innovative approach to Marxian monetary theory. One of the most important of these is Suzanne de Brunhoff, who has extended Marx’s approach through a careful analysis of modern systems of money.! There are also a number of writers associated with the Regu- lation School who have developed a wide-ranging analysis of postwar capitalism that gives considerable attention to the role of money. They have attempted to develop the Marxist theory of money, in part by drawing on the recent work of Post Keynesian economists. The foun- dations of this approach were laid by Michel Aglietta, although he subsequently distanced himself from his earlier Marxist perspective, and the task of elaborating a regulation analysis of money along Marx- ist lines was taken up by Alan Lipietz.2 However, the position that both these writers adopt on some of the key issues, in particular the analysis of credit money, has also been developed independently by Duncan Foley in the United States.> Two main issues occur in discussions of the Marxist theory of money. One concerns the right starting point for a theory of money under capitalism: whether such a theory should be based on the fact that capitalism is a commodity-producing economy, or whether it should be based on the fact that the commodities are produced under capitalist social relations with the aim of making a profit. This question is important in its own right, but it is also important because it is closely linked to the other main issue. This concerns the relation be- tween commodity money and credit money, and how Marx’s theory, which relies heavily on a notion of commodity money, can be used to analyze money that is not convertible into gold. To consider these issues, it will help first to clarify the analytical method employed in the Marxist theory of money. Marxist economics analyzes capitalism on the basis of two types of social relation. The first is the commodity relation, which refers to the organization of production in private, independent units that relate only indirectlySPRING 1997 9 through the process of exchange. The second is the capital relation, which refers to the fact that workers are employed for a wage by capitalist enterprises that own the means of production.* These two relations provide the starting point for the Marxist theory of money, which involves four stages in all. The first stage considers money and the commodity relation; the second considers money and the capital relation; the third looks at how the analysis has to be modified when the first two stages are combined; finally, the fourth stage extends the analysis to include banks and credit and the transformation of money capital into a commodity that is borrowed and lent. Each of these stages is considered briefly in the next four sections. This then sets the scene for two sections in which each of the questions posed above is considered—namely, whether the analysis of money should start from the commodity relation or the capital relation, and how the relation between commodity money and credit money should be conceived. The last main section then outlines how recent writers have attempted to relate their approach to modern systems of money based on a hierarchy of different forms of credit money. Money and commodities The first stage of the Marxian approach is based on considering inde- pendent producers who own their means of production and who use their own labor to produce commodities for exchange. Marx referred to this as simple commodity production, although since he first em- ployed the term, there has been some disagreement about how it should be understood. Engels and, more recently, Emest Mandel, among others, have interpreted it as a historical stage of development and conceive of a simple commodity economy as the forerunner of a capitalist economy. 1.1. Rubin, by contrast, points out that it is only under capitalism that there is a widespread circulation of commodities, and he questions whether small pockets of commodity production within precapitalist societies would have been subject to the same types of economic pressure as a fully developed capitalist economy. More fundamentally, though, he argues that, irrespective of its histori- cal validity, the concept of simple commodity circulation is intended as a means of analyzing some features of a capitalist economy while temporarily abstracting from many of its other features.° Whichever of these positions is adopted, there is broad agreement