The Banking School and the monetary thought of Karl Marx

Abstract

Extensive research has been carried out on both the Bullion and Currency Controversies since Wicksell's (1905) contribution.1 In this literature Marx's views on the Controver sies have been inadequately explored.2 This is surprising when one considers Marx's theoretical preoccupation with Ricardo, the main exponent of the Bullionists. It is also surprising in view of the fact that Marx did the bulk of his economic research in London just after the peak of the Banking Controversy. Comments on the latter can be found throughout his mature economic work.3 Arnon (1984B) has gone a long way toward filling this gap in the literature.4 His central argument is that Marx's mature understanding of money hoards (reserves) as regulators of monetary circulation was influenced by Tooke, the pillar of the Banking School. Arnon also points out that Marx was influenced by Tooke's distinction between gold, fiat money and banknotes as qualitatively different forms of money. Section 2 of this article is concerned with the latter point. There is no doubt at all that Marx's analysis of the forms and functions of money was influenced by the views of the Banking School. However, Marx also claimed that [n]one of these writers take [sic] a one-sided view of money but deal [sic] with its various aspects, though only from a mechanical angle without paying any attention to the organic relation of these aspects either with one another or with the system of economic categories as a whole. (1970, p. 186; see also Marx, 1976, n. 35, p. 225) This article argues that Marx's monetary theory attempted to establish the 'organic relation' of the various aspects of money, apparently lacking from the work of the Banking School. Put briefly, Marx started his analysis by positing money as the 'independent form of value', a commodity with its own value, and then proceeded to derive the functions of money. In deriving the latter he linked the evolving forms of