| This question <94|502> overall <94|96> Gilmour: <703|139>. content B form 95% |
| Question 228: Compare Marx's derivation of money with the derivations of money in modern Economics |
| [95] Gilmour: Marx's derivation of money is stemmed from the use value of differing commodities. These commodities are compared to gold. For example, 20 yards of linen is equal to 2 oz of gold. Also he denotes that these commodities can be compared to one another. 20 yards of linen is equal to 1 coat, 1 coat is equal to 10 lbs of tea. In this way, Marx implies that any commodity with value can be exchanged for another commodity. The two parties must agree on the value of each commodity in trading however. This makes money almost limitless in form. It can be a precious metal, or a bushel of wheat. |
| In the modern economy, gold has much value, but it is not traded directly for other commodities. Rather it is used as more of a store of value, however it does not regulate how much money is in the market. Today's money is classified as currency, travelers checks, demand deposits, and other checkable deposits as denoted by the Federal Reserve. This first set denotes M1 money. M2 is equal to M1 plus small denomination time deposits, savings deposits and money market deposit accounts, and money market mutual fund shares. We see that money today is based upon faith that it will be accepted by the general public. There is more money in the world than is actually backed by gold. This money is created by banks and businesses in the forms of loans, stocks, bonds, etc. Commodities can still be traded but not on a large scale as was the case in past centuries. If I wanted to go to the store to buy shoes, I couldn't expect the vendor to accept payment in wheat. They would expect currency, or more conveniently a debit card. Money has changed greatly in the way it is classified and used. |
| Hans: Most of your answer describes how the modern monetary system differs from the gold standard prevalent at Marx's time. This is correct, but this is not the topic of question 228. Question 228 wants you to explain in what way modern theories of money are different from Marx's theory of money. |
| You say a few things about Marx's theory of money, but they are wrong. Marx does not derive money from the use-values of differing commodities. Marx sharply distinguishes barter without money from a monetized exchange, while your answer sounds as if he identified them. |
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