NOTE 19: The monetary expression of labor time (M.E.L.T.)
If we state the total product of labor produced in a given period of time in terms of the commodity money prices of those commodities, we are, at the same time, stating the aggregate socially 
necessary labor time of society in so many units of the socially necessary labor time required to produce a unit of the commodity money. If it takes one hour to produce an ounce of the commodity money, the total socially necessary labor time of society is equal to so many units of money.
The problem with MELT theory, however, is that it uses a unit of measure, fiat money, that has no socially necessary labor time. Its employment as a tool to measure the labor time of society is at least problematic.
This is one way to interpret the validity of the MELT function: nothing about fiat currency tells us anything about the socially necessary labor times of the commodities for which it is exchanged, because it does not share the common characteristic of being a product of labor. However, another more interesting and far more fruitful way to interpret the results of the MELT function is that a fiat currency always states the duration of socially necessary labor time as zero.
Fiat currencies express the values of commodities as zero
This is Marx’s exact argument regarding value and its expression in exchange value:
“The progress of our investigation will show that exchange value is the only form in which the value of commodities can manifest itself or be expressed.”
In Marx’s labor theory of value, value must express itself as some definite quantity of exchange value. However, as can be seen, there is nothing in Marx’s theory that states this exchange value cannot be zero. Following the laws of quantum physics, anything not expressly forbidden by the law of value must be compulsory. Since nothing in Marx’s theory states the exchange value of a commodity cannot be zero, the value of the commodity exchanged for a valueless fiat currency must be zero.
Mathematically:
x hours of total socially necessary labor time equals y units of labor time in the form of the object serving as money in exchanges
Assuming the condition since 1971, when a paper currency fills the function of world money, this means if the labor time required to produce the object serving as money in transactions is zero, the exchange value of all the transactions is zero. The labor value of all commodities, which must be expressed as exchange value, is zero.
The formula introduced for the MELT function,
m = new value in dollars divided by new value in labor time
Would reduce to,
m = 0/x
Where zero is the exchange value represented by the sum currency prices of commodities and x is the total expenditure of living labor.
And this presents a problem when it comes to determining the so-called monetary expression of labor time: If this function is assumed to be an expression of the values of commodities, we would have to divide the sum of fiat currency exchange value (which is always zero, no matter how large) by total labor time of society. The problem emerges when we try to find the value of the product produced in a given day by dividing the labor time required to produce the currency prices by total labor time expended. The result would always be zero units of exchange value divided by x units of total labor time.
0/x is zero.
However, although the MELT always expresses the sum value of commodities as zero exchange value, this does not imply the MELT function is meaningless to us. The MELT function tells us that whatever the value of the total labor time of society, this labor time can no longer be expressed as exchange value. A necessary caveat: MELT does not tell us the socially necessary labor time of society is zero. It only expresses this labor time as zero. The object serving in the function of money is not the actual the value of the total labor time of society, but only its expression in some quantity of currency.
However, we already know the exchange value of a single commodity can be zero, i.e., it may find no buyers in the market; so there is nothing in Marx’s theory that states this cannot occur for all commodities at once and together.
Following quantum theory, if an exchange value of zero for the sum of commodities is not expressly forbidden by Marx’s theory, it must be compulsory.
What happens if the value of commodities can no longer be expressed as exchange values? This is the puzzle of fiat currency, which MELT is crudely trying to solve. If the currency is not tied to the value of a commodity, it cannot express the value of the commodities for which it is exchanged. Or, (perhaps more accurately), it always expresses this value as zero, no matter the quantity of currency involved.
Since in labor theory the exchange value represented by prices are not forbidden to go to zero, it is compulsory they must go to zero; which is to say money must be abolished.
The transformation problem and exchange value
Why is our money expressing the value of every commodity as zero? Several theories have been advanced to explain this. The bourgeois monetarists have sought the explanation in the malfunctioning of the gold standard (Bernanke, Eichengreen). Marxists have often pointed to the same alleged dearth of money itself, the lack of sufficient gold to serve as money.
These explanations are incorrect.
To understand why they are incorrect, you have to understand the problem was already predicted by the so-called problem of the transformation of labor values into money prices of production. In the labor theory of value, the price of any commodity is the expression of the socially necessary labor time required to produce it. However, this is not true for capitalist production, where the price of a commodity is its value PLUS an average rate of profit.
If the value of a commodity is notated by the symbol “v”, the capitalistic price of a commodity can be notated by the symbol “v+s”. Where “v” equals the socially necessary labor time required to produce the commodity and “s” equals the average rate of profit.
Mathematically, “v” can only equal “v+s” under two conditions:
v=0
or,
s=0
Why would this be true?
Simple: If “v” equals zero, in Marx’s theory, “s” will always equal zero because living labor is the only source of value and surplus value. On the other hand, if “s” equals zero, “v+s” equals “v+0” equals “v”. This means the transformation formula v=v+s cannot be true for any case where s is non-zero. And this will be true for any positive or negative value of “s”.
Marx’s discussion of this can be found in chapter 9 of volume 3, however this chapter has always been misinterpreted as an attempt by Marx to prove v=v+s. Lots of ink has been spilled to demonstrate Marx was wrong or to defend his calculation. But all of this ink has been spilled on the assumption Marx was trying to prove something he never tried to prove, namely, v=v+s.
Why wasn’t Marx trying to prove v=v+s? Because the equation v=v+s predicts the complete collapse of capitalism. At the heart of the collapse of capitalism is a single commodity whose price is always v and whose product is always v+s, labor power. Based on this analysis, Marx was able to predict with surprising accuracy that production on the basis of exchange value had to collapse.
It is really difficult to view Marx’s prediction that production on the basis of exchange value must collapse side by side with a money that expresses the values of all commodities as zero and not have a light bulb go off. But this is exactly what our MELT theory Marxists have managed to do.
The Real Movement 
An MMT way to define the value of the currency (intended as a distinct concept from the MELT) is as the reciprocal of the minimum wage. That way, the value of the currency says how much simple labor power capitalists can purchase with a unit of the currency or, equivalently, how much labor time a worker must perform to receive a unit of the currency.
One way of looking at the MELT is as the amount of socially necessary simple *labor* (as opposed to labor power) that can be commanded with a unit of the currency. Because workers’ labor is partly necessary and partly surplus labor, a dollar commands more labor power than labor. For instance, if the minimum wage is $10 and the MELT is $20/hour, then $1 can purchase 0.1 hours of simple labor power but only 0.05 hours of simple labor represented in commodities.
One effect of defining the value of the currency in this way is that its reciprocal (the minimum wage) places a floor under plausible values of the MELT. Since capitalists won’t continue to invest if surplus value is persistently negative, in the present scenario they will require more that $10 of value to be created in an hour before setting the labor process into motion. So the MELT can’t plausibly be less than $10/hour in this scenario with any persistence. The higher the rate of exploitation, the higher the MELT will be, given the wage for simple labor.
This is essentially Marx’s definition of the value of a currency applied to fiat currency. For Marx, the value of the currency, when backed by gold, was the amount of socially necessary labor required to produce the gold represented by a unit of the currency. The definition applied to fiat currency is likewise the amount of socially necessary labor required to obtain a unit of the currency. From the worker’s perspective, it is as if this amount of labor needs to be performed to “produce” a unit of the currency for him or herself.
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This might be true for MMT, but it skips several critical steps for labor theory, as I will show.
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“In Marx’s labor theory of value, value must express itself as some definite quantity of exchange value. However, as can be seen, there is nothing in Marx’s theory that states this exchange value cannot be zero. Following the laws of quantum physics, anything not expressly forbidden by the law of value must be compulsory. Since nothing in Marx’s theory states the exchange value of a commodity cannot be zero, the value of the commodity exchanged for a valueless fiat currency must be zero.”
As usual your logic is flawless, but my question is: Isn’t valueless fiat currency still a “stand in,” even if a rather shabby one, for the money commodity. Surely the State’s attempt to replace gold with valueless fiat currency is doomed to fail, but short of the replacement of capitalist relations of production with those of communist or voluntary relations of production, wouldn’t some sort of commodity money reappear?
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Not really. This is because we normally describe what happened backwards. In truth, the state did not replace commodity money with its own fiat. What actually happened is the commodity money suddenly stopped circulating as money in the economy beginning with the Great Depression. Essentially, we did not abandon commodity money, commodity money abandoned the production of commodities. The cessation of the circulation of money forced the state to step in with its currency to replace it.
Money stopped circulating as money and it is difficult for me to think of any condition in which this event might be reversed.
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