On the necessity of money in an exchange-constituted economy: the cases of Smith and Marx

Abstract The debate over theories of the nature of money has recently been revisited in this Journal. This paper shifts the focus from the stuff that is being positioned as money to the social totality. Credit theorists claim that commodity theories of money imply monetary neutrality and a primacy of real analysis. In contrast, this paper argues based on Marx and Smith that, independently of whether money is a commodity or credit, the necessity of money depends on the constitution of the economy in terms of the relation between production and circulation. If social production is constituted through the exchange between private specialised producers, money is not neutral but essential. For Smith, real analysis is nevertheless meaningful, in that, he treats the spheres of exchange and production separately. By contrast, Marx exposes real analysis as commodity fetishism and stresses the mutually constitutive social relations between money, commodity exchange and capitalist production.