Moseley’s MELT

by Jehu

I have been reading Moseley’s 2011 paper, “The Determination of the “Monetary Expression of Labor Time” (“MELT”) in the Case of Non-Commodity Money”.

Don’t bother looking for the paper.

You probably won’t find it.

Since, above all, the subject of the paper is all about issues that determine your miserable life as a wage slave, naturally academics, as a public service to your venal slave masters, prefer to keep it well-hidden from you behind their intellectual property firewalls.

I only mention the source because I am working on an exhaustive examination of Kliman’s 2011 book and, while reading it, I felt had to address this very interesting bit of typical post-war Marxist revisionism by Fred Moseley in 2011. Kliman uses MELT in his book, so I will have to address it as some point. The comments here apply directly to Moseley’s variant of the MELT, but, as you will see, are probably appropriate to the entire class.

MELT sucks.


Moseley’s MELT begins, quite naturally, as all such revisionism does, with a quote from Marx:

“If the paper money exceeds its proper limit, i.e. the amount of gold coins of the same denomination that could have been in circulation, then … it will still represent within the world of commodities only that quantity of gold which is fixed by its immanent laws.”

Our post-war Marxist revisionist then goes on to paraphrase (i.e., revise) Marx this way:

“Therefore, in the case of inconvertible fiat money, Marx’s theory is similar to the quantity theory of money in the sense that the quantity of money is independent of prices and determines prices (in part). However, Marx’s theory is also different from the quantity theory in the sense that the quantity of money does not determine prices directly, but rather indirectly through the MELT.”

Did you see that?

Hilarious, right?

In Marx’s original quote, paper money can only represent the value contained in a quantity of a commodity money. Moseley, however, revises Marx to assert paper money can represent some imaginary mathematical function.

He then attributes this new revised formulation of Marx to Marx.

Moseley performs this act of revisionism by reducing commodity money to an absolute theoretical abstraction: it is no longer the highest form of exchange value, i.e., the expression of the socially necessary labor time required for the production of a commodity expressed in the body of another commodity, but the mere paper cash equivalent of aggregate labor time in general.

The category, exchange value, has disappeared from Moseley’s new construct altogether — along with the distinction between useful labor and value-producing labor and the distinction between socially necessary and superfluous labor.

Moseley writes:

“In this case of inconvertible credit money, in any given period in the economy there exists a certain quantity of L, the total quantity of SNLT that must be represented in some way, and there is no other way to represent it except by credit money.”

In this statement — and despite much discussion to the contrary in the literature over the years — Moseley just expects us to accept as given that the “L” in his equations, or, more importantly, in government employment data, is equal to SNLT as defined by Marx.

If, however, “L” as presented in government stats is not the same as SNLT in Capital v1, chp1, Moseley has a huge problem. It is a huge problem because in Capital v1, chp1, SNLT can only be manifested as exchange value — i.e., in the body of another commodity, a money commodity.

Yet our revisionist, Moseley, has removed exchange value from his MELT equation.

Or, more accurately, society has removed exchange value from circulation and Moseley is trying to replace this necessary category of commodity production and exchange with his MELT.

Moseley continues,

“At the same time, there also exists M p V, the total quantity of paper money adjusted for velocity that is available to represent SNLT.”

Yes. Available to represent SNLT. But, in point of fact, this mass of M p V (i.e., value-less paper money) cannot differentiate between unnecessary labor time and socially necessary labor time; or between value-producing labor time and merely useful labor time.

Moreover, in his 2011 paper, Moseley offered nothing in his MELT that would allow us to make such a distinction.

Of course, Marx addressed this issue, but for some reason Moseley ignores Marx’s solution, although he actually quotes it:

“If the paper money exceeds its proper limit, i.e. the amount of gold coins of the same denomination that could have been in circulation, then . . . it will still represent within the world of commodities only that quantity of gold which is fixed by its immanent laws. No greater quantity is capable of being represented. If the quantity of paper money represents twice the amount of gold available, then in practice £1 will be the money-name not of 1/4 of an ounce of gold, but of 1/8 of an ounce. The effect is the same as if an alternation had taken place in the function of gold as the standard of prices. The values previously expressed by the price of £1 would now be expressed by the price of £2. (Marx 1867: 225)”

Marx appears to be saying that although gold no longer plays any direct role in the circulation of commodities, it still plays an indirect role in determining the value represented by prices of those commodities.

If the quantity of currency in circulation exceeds the amount of coin that would have been required for circulation, the paper currency would still only represent this amount of gold and no more.

To put this another way, if the United States were to withdraw all of its coin from circulation on April 5, 1933 and replace it with inconvertible currency, and at the same time devalue the currency by 70% — from 20.67 dollars a troy ounce to 35 dollars a troy ounce — the new currency would still represent no more gold (value) on April 5, 1933 than it did on April 4, 1933.

The effect of this currency devaluation would simply be to inflate paper money prices by 40%.

Subsequently, even a floating regime could be calculated as a simple relation between the old price standard and the inverse of so-called floating price of gold.

Which is to say, for all of its nice maths, Moseley’s MELT is entirely superfluous.

We can calculate the value of any commodity by applying the inverse of the price of gold to its nominal currency price denominated in dollars. We can even do this with the value of the output of the entire US GDP.


One other thing remains to be noted about this 2011 paper by Moseley:

Unlike Marx, as part of his MELT theory, Moseley offers no reason for the sudden and complete disappearance of commodity money from the entire world market in every country more or less simultaneously. Nor does he offer any explanation why nation-states stepped in after this sudden disappearance to replace commodity money with their own fiat currencies.

Is it just a case, as certain bourgeois writers have proposed, that commodity money was an aberration in world history or have we witnessed a world historical movement in our time?

If it is the latter, what is the nature of this world historical movement of society?