The Dollar as World Money

Abstract

Marx's theory of money can provide insights into the entrenchment of the U. S. dollar as a modern-day equivalent of world money. The domestic underpinnings of global monetary standards determined the inflationary bias of the Bretton Woods system and the systemic deflationary tendencies of the subsequent non-system. There is a strong connection between the tendency toward systemic illiquidity, characteristic of financialized capitalism, which has to be periodically cured by an expansion of government debt, and the institutionalization of the international dollar standard, under which the monetary liabilities of the U. S. state serve as the preeminent form of “world money.” The remarkable resilience of the international dollar standard is rooted in its ability to support the present system of globalized production, characterized by a specific division of labor between the financialized U. S.–centered core and an export-oriented periphery.