Ricardo’s Explanation of Money Price

Abstract

AbstractIn this chapter I outline and critically evaluate David Ricardo’s explanation of the money price of a commodity from the perspective of Marx’s explanation. The basic argument I develop is that Ricardo’s conception of the value of the commodity causes him, like Smith, to have a logically inconsistent and counterintuitive explanation of the money price of the commodity and the aggregate money price level. It causes him to explain the relative money price of the commodity by the relative quantity of labour time actually expended in the production of the commodity, not what needs to be expended, and the aggregate money price level by the quantity of money used to facilitate the exchange of commodities for one another relative to the quantity of these commodities. This in turn causes him to illogically see changes in relative money prices taking place independently of changes in aggregate money prices, and to deny the influence of the productivity of labour on the aggregate money price level while admitting it has a bearing on the relative money prices of commodities.