Marx says that fiat money will drive out gold.
We say, don't you believe it. It will do no such thing. This is what is called Gresham's law, and as commonly applied is false. Bad money, that is, fiat money, will no more drive out good money than good money will. As between several countries on a gold basis fiat money will drive gold from one country to another, provided it is issued in one country alone and not in all. But it will drive no gold out of circulation; if the gold does not circulate in one country it will in others. So will good money drive out good money if it is issued in one country alone. It will drive out just as much as fiat money would, no more and no less. But it will not drive it out of circulation. It will reappear in the circulation of other countries. But if additional money whether good or bad be issued in these different countries simultaneously, each receiving its proportionate quota, they would preserve a par of exchange, no gold would be driven out of circulation and none would be exported from one country to another.
Marx says that under fiat money there is no standard. (Capital, p. 65.)
We say that the total quantity of money of all kinds, even including counterfeit money, forms the standard of value.
Marx says that fiat money represents gold.
We say that so far as a standard of value is concerned fiat money no more represents gold than it represents hay or potatoes. With reference to a scale or standard of price it may be admitted that among modern nations fiat money has been developed historically out of commodity money and its representatives; and that it retains the old names for the units even after it has become entirely separated from and independent of commodity money.
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"This Odilon Barrot was appointed president of the inquiry commission and drew up a complete indictment against the February revolution, which ran as follows: March 17, Manifestation; April 16, Conspiracy; May 15, Attack; June 23, Civil War. Why didn't he extend his learned criminal researches back to February 24th? The Journal des Debats gave the true answer: the 24th of February is the date of the founding of Rome. The origin of states is lost in a myth which we must accept by faith, but may not discuss." (Marx. Class Struggles in France, p. 44.)
Well said, comrade Marx, excellently well said! As with states so with price level. You extend your learned researches as to price level back to some point subsequent to the introduction of money or the fixing of the unit of valuation. But why not go back to the origin of money when the quantity of money or the weight of the unit was fixed? Because the origin of money you assume to be lost in a myth which we must accept by faith, but may not dis-
