The Theory of Credit Money: A Structural Analysis

MAINSTREAM atically distinguish among the different forms of money. For most purposes of macroeconomic analysis, for example, it is immaterial whether the money supply comprises coins, banknotes, bank deposits or, indeed, gold. It is usually assumed that what matters most is the practical facilitation of commodity exchange, i.e., money's function as means of exchange. Any instrument which systematically plays this role can be considered as undifferentiated money (e.g., Friedman and Schwartz, 1970, ch. 3). This lack of interest in the peculiarities of various forms of money calls to mind Marx's comment on the off-hand way in which economists treat distinctions of form, since they are in actual fact interested only in the substantive side (III, 440). Yet Marxist monetary theory has fared scarcely better in this respect. Marx provided a sophisticated analysis of metallic money and of fiat paper money but Marxist theory has found it very difficult to extend his analysis to modern money such as banknotes and bank deposits. This is all the more remarkable in light of the fact that metallic money is actually inherited by capital from feudalism. Marxist theory, whose express aim is the analysis of capitalism, is