Some important comments from Fred Moseley on my notes on his book, “Money and Totality”

by Jehu

Fred Moseley has graciously responded to many of the criticisms I have made regarding his book, “Money and Totality”. My study of his book is not yet finished, but I want to post his response. I don’;t often receive direct feedback from writers whose books I discuss here. I think his response clarifies many of the differences I have with him on the subject for me. I hope it will have the same impact on anyone who has been following my notes as well.

I am grateful to Moseley for his response. I don’t mind being shown to be wrong so long as I learn more about the highly difficult and abstract subject of the transformation of labor values into capitalistic prices of production..


Hi Jehu,

A friend of mine alerted me to your series of notes on my book Money and Totality. I appreciate your attention to my book, and I want to try to clarify some of the issues.

Below are a few comments on what I understand to be the main points of your notes.

1. One of your main criticisms of my book is that Capital begins with “the commodity”, not with money. I agree that I should have discussed Chapter 1 of Volume 1 more. But Chapter 1 is less central to the transformation problem and my book was already 400 pages long. But I wish I had added a chapter on Chapter 1. I will take this opportunity to briefly explain my interpretation of Chapter 1 and the relation between commodities and money.

It is obviously true that Marx’s theory begins in Chapter 1 with the commodity, not with money. My emphasis in the book is that Marx’s theory of surplus-value (ΔM) begins in Part 2 with a given quantity of money (M), as expressed symbolically in the Chapter 4 as “general formula for capital” M – C – M+ΔM. But money had already been derived in Chapter 1 from an analysis of the commodity as the necessary form of appearance of the abstract labor contained in commodities.

Marx’s analysis of “the commodity” in Chapter 1 is not about an actual individual commodity as distinct from other commodities, but rather is a representative of what all commodities have in common – a general relation of equivalence with all other commodities. Marx’s analysis of this general relation of equivalence of commodities leads to the following conclusions: (1) abstract labor is the substance of value, i.e. the common property of commodities that determines their equivalence with all other commodities; (2) socially necessary labor-time (SNLT) is the magnitude of value, i.e. the quantity of abstract labor contained in commodities; and (3) money is the necessary form of appearance of value; i.e. the necessary form of appearance of abstract labor and SNLT.

So the money at the beginning of the general formula for capital in Chapter 4 is not just an abstract assumption with no relation to the commodity. Money in Chapter 4 is understood to be the form of appearance of the value of commodities. And this understanding of money (and prices) is the key to Marx’s explanation in the rest of Volume 1 of how the given quantity of money M is transformed into a greater quantity of money (M+ΔM) – by the surplus labor of workers in production.

Thanks to Chris Wright for his comment on note 4. I also think that the first sentence of Chapter 1 clearly states that the subject of his theory from the very beginning is the “capitalist mode of production”. And Chris is right about both parts of his sentence: “Moseley is hugely invested in the seriousness with which Marx addresses money, while most of his progeny essentially didn’t take money seriously at all.” I think it is hugely important that the title of Marx’s book is Capital, and that Marx’s concept of capital is clearly and emphatically defined in Chapter 4 in terms of “money that makes more money (M that becomes M+ΔM”). And the main goal of Marx’s theory is to explain how this all-important monetary phenomenon happens.

2. Another criticism repeated in a number of your notes has to do with my interpretation that Marx’s theory in all three volumes of Capital is about a single system. But you hardly mention at all that this single system is analyzed in two sequential levels of abstraction: (1) first a theory of the total economy and in particular of the total surplus-value produced in the economy as a whole; (2) second a theory of how the pre-determined (and henceforth presupposed) total surplus-value is divided into individual parts – first the equalization of the profit rate across individual industries (i.e. the “transformation problem”) and then the further division of the total surplus-value into industrial profit, commercial profit, interest, and rent.

Chapter 3 of my book provides 80 pages of textual interpretation from all four drafts of Capital to support this interpretation of the two levels of abstraction in Marx’s theory and I wish you would take this extensive textual evidence into consideration and comment on some of it.

The usual interpretation of the transformation problem is from one set of micro variables to another set of micro variables – i.e. from individual labor-values to individual prices. But that is not what Marx’s transformation is about; Marx’s transformation is from macro variables to micro variables – i.e. from aggregate prices and the total surplus-value to individual prices and the individual parts of surplus-value. The “transformation problem” is really a disaggregation problem.
You seem to take for granted the usual micro-micro interpretation without really considering my macro-micro interpretation. You don’t mention the key point of the determination of the total surplus-value prior to its division into individual parts. This is why there is only one rate of profit in Marx’s theory – which is determined at the macro level of abstraction in Vol. 1 and presupposed at the micro level in Vol. 3.

3. You said in your note 5: “Moseley suggests, but never actually states, that prices and values don’t diverge in Marx’s theory.” And similar comments in other notes.

This is just plain wrong (except the “never actually states” part). Why do you think that I “suggest that prices and value don’t diverge”? My book is about the determination of prices of production that systematically diverge from individual values.

You also state your own view in note 5 that the prices of commodities “have no direct relation to their values”. It depends on what you mean by “direct relation”. Prices of production are not proportional to values, but prices of production depend on the rate of profit and the rate of profit is determined by values. And the inputs of constant capital and variable capital also depend primarily, but not solely, on values.

4. You state in note 4: “Of course Moseley doesn’t agree with Marx that money has to be a commodity.”

I argue that Marx’s theory in Capital assumes that money is a commodity, and the debate over the transformation problem has all assumed that money is a commodity, and that is what I assumed in my book except for two pages at the end of Chapter 5. In these two pages, I noted that money today is no longer a commodity (i.e. not convertible into gold at legally fixed exchange rates), and I commented that non-commodity actually eliminates one issue in the debate over the transformation problem – whether or not the composition of capital in the gold industry is equal to the average composition of capital in the economy as a whole. If money is no longer gold, then the composition of capital in the gold industry is no longer an issue. (I argue in Chapter 5 that it is not an issue even with commodity money, but that is a separate question.) Elsewhere I have argued that Marx’s theory of money can be extended to the contemporary case of non-commodity money (“The Determination of the ‘Monetary Expression of Labor-Time’ in the Case of Non-Commodity Money”, Review of Radical Political Economics, 2011, pp. 95-105).

5. You state in note 13 that inflation disproves the labor theory of value. But that would be true only if the monetary system were still based on the gold standard. Since money is no longer a commodity, inflation does not disprove the labor theory of value. You seem to argue that money has to be a commodity in Marx’s theory and therefore inflation disproves the labor theory of value. That is similar to a cop’s trick of planting evidence on an innocent person and then charging that person with a crime.

I argue that the empirical evidence that supports Marx’s labor theory of value and surplus-value is the wide range of important phenomena of capitalist economies that is explained by this theory: conflicts between capitalists and workers over wages, over the length of the working day, and over the intensity of labor, inherent technological change, trends and fluctuations of the rate of profit, inherent crises and the boom-bust cycle due to fluctuations in the rate of profit, etc. (and, yes, capitalist development undermines its own existence). All these important phenomena are explained in Marx’s theory as effects of the determination of surplus-value by surplus labor.

I think I will stop there for now and see what you have to say about the above.

You say in a comment on note 15 that “Moseley’s argument is not my chief concern.” What is your chief concern? It is not clear to me.

Also I wish you would try a little harder to understand my interpretation with a more open mind, and perhaps read a little more of my book. All but one of the quotations from my book in your 16 notes are from the first 6 pages of my book.