Neoclassical Explanations of Money Price

Abstract

AbstractIn this chapter I outline and critically evaluate the Neoclassical explanation of the money price of a commodity from the perspective of Marx’s analysis. The basic argument I develop in the chapter is that the Neoclassical conception of the value of the commodity, whether as the subjective worth attached to the commodity or the commodity income costs of producing the commodity, causes them to have a logically flawed and counterintuitive explanation of the money price of the commodity and aggregate money price level. It causes Neoclassicals to explain the relative price of the commodity by its value as either the subjective worth attached to the commodity or the commodity income costs of producing it, and, with the exception of neo-Walrasians, to explain the aggregate money price level by the quantity of money used to facilitate the exchange of a certain quantity of commodities for one another relative to the quantity of these commodities as a composite cluster. These explanations require Neoclassicals to see changes in relative money prices taking place independently of changes in the aggregate money price level and deny that changes in the productivity of labour have a bearing on either.