The Function Of Money

11 Pages 2638 Words

Discuss the functions of money in the Marx’s political economy. Could the function of means of payment explain the emergence and proliferation of the credit money in contemporary capitalism?


Of these three approaches to money: The German Historical School, Neoclassical and the Marxist approach; Marxist economics could be seen to have the closest theoretical content to that of the classical political economy. This similarity is especially seen in the theory of value. Where as other economic models, such as the German historical school and neoclassicism did not agree, Marxism developed the labour theory of value in which basis Marx founded a sound theory of money and credit but criticised how these issues were treated in the classical theory.
Marx identified problems of the use of value which is particular to commodities so they are quantitatively different, imperfectly divisible and heterogeneous; and value which is general and commodities are qualitatively the same, perfectly divisible and homogeneous (Political Economy of Money and Finance, p34). As commodities try to have both use value and exchange between them becomes damaged. This could be avoided if there is one commodity witch has both use value and value for the exchange of all commodities. Hence Marx said money is the solution to direct exchange problems as it has these qualities.
This essay looks at the functions of money in Marx political economy and credit money in contemporary capitalism.


In Marxist economics the functions of money follows from what money is and also show reasonable grounds to how the forms of money has evolved from commodity money e.g. gold, to fiat money, and then to credit money e.g. pounds. Its therefore important to see the connection between the forms if money and functions of money in capitalist exchange.

First of all money, as a function to Marx, shows the value of commodities thereby representing it in a measurement, thus acting a...