Marx’s Explanation of Money Price

Abstract

AbstractIn this chapter I present my interpretation of Marx’s explanation of the money price of a commodity. I argue Marx explains the money price of the commodity as that set by producers on the basis of unit money costs of production, taking into account the prices set by producers of the bulk of the commodities of the type they are producing. Marx sees the unit money costs of producing a commodity as fundamentally determined by the labour time that needs to be expended in the production of the bulk of commodities of its type. In a commodity money setting this causes him to explain the relative money price of a commodity by the relative productivity of labour in the production of the bulk of commodities of different types, and the aggregate money price level by the productivity of labour in the production of the bulk of the money commodity relative to the productivity of labour in the production of the bulk of all other commodities as well as raw material prices. In an inconvertible fiat currency setting it requires him to explain the relative money price of a commodity in the same way as in the case of a commodity money setting, but the aggregate money price level by the economy-wide productivity of labour, prices of raw materials and aggregate excess demand for all commodities.