Quantity Theory of Money

Reading Capital: Money, or the Circulation of Commodities

The fourth entry in a section-by-section reading of Marx’s Capital. Chapter Three settled what money is; here Marx shows what money does — and the answer is far more unsettling than ‘medium of exchange’ suggests. Money can make prices lie, it can break the link between selling and buying (where Marx plants the first seed of economic crisis and his quarrel with Say’s Law), and it can detach itself from goods to become an object of pursuit in its own right. The objections this time come from fiat money and the quantity theory; the replies, from endogenous money and the monetary theory of value.