quantity of money will cause no change in its value, if its value remains the same; that is, if the value of money does not change, its value will remain the same.
Mark Admits the Quantity Theory of Money to be True in Case of a Change in the Value of Gold.
This is all that has ever been claimed for the theory under free coinage. It is admitted that under free coinage the value of gold metal and gold coin is the same; but it is claimed that an increase in the quantity of money by making money out of some other material than gold lessens the value of gold as long as any gold money remains in circulation. This Marx denies.
To decide whether a rise in the price level is due to a fall in the value of gold, as Marx claims, or to an increase in the quantity of money, as we claim, it is only necessary to observe that, if under free coinage the coins be dimished in weight by one-half and the same names retained, there would be a rise of the price level, as Marx admits. If on the other hand, the coins be diminished in weight by one-half, but the coinage limited in quantity to the same number of coins as previously existed, the price level will remain the same, though the value of the gold metal contained in the coins will be one-half the same as formerly. This proves that the quantity of money, and not the value of the metal in the coins determines the price level. This is to Marx a stumbling block. He cannot understand limited coinage, especially when concurrent with full weight coins. It did not exist on a large scale in his time, and it appeared to him abnormal and unnatural. He could not see that money is not a natural product, but a societary creation. That it has exchange value, but no utility. He says that money is by nature gold and silver. He denies that anything can have exchange value without utility. (Capital, p. 5.) This is the source of all his errors on the money question. He appears to have thought this claim necessary to sustain his labor theory of value. He would not make an exception of money.
He afterwards admits that there are two kinds of utility. "The use value of the money commodity becomes twofold. In addition to its special use value as a commodity, (gold for instance serving to stop teeth, to form the raw material of articles of luxury, etc.) it acquires a formal use value originating in its specific social function." (Capital, p. 39.)
That is, money may have a value and yet have no utility other than its social utility as a perpetual medium of exchange.
If Marx were living to-day, he might go to any large bank in London and buy a £'s worth of Indian rupees; he would get a certain weight of silver coins. He might then buy a £'s worth of Mexican dollars; he would get a very much greater weight of silver coins. He could then sit down and do some hard thinking,
