The Value of Money Prabhat Patnaik (Book Review by Rohit Azad)

Published by: Columbia University Press 2009

ISBN-10: 0231146760; ISBN-13: 978-0231146760

Why does an otherwise worthless bit of paper – money – have a finite and positive value? The author of The Value of Money asserts that understanding capitalism’s logic and prolonged existence lies in answering this question. While accepting the superiority of the traditional Marxist/Keynesian argument (namely, that money’s value is exogenously determined in any given period) over the mainstream framework, this argument nevertheless fails to identify what ensures money’s stability across periods. The real value of money across periods is determined by the rate of inflation, which in turn depends on the class conflict over ex ante shares in total output. Therefore, an isolated capitalist system, as visualized by both Marx and Keynes, cannot have such stability from within unless one of the claimants is a price taker. Only by introducing a semicapitalist periphery as a shock absorber to the capitalist core, both as a price taker and as a market “on tap,” can this stability be ensured.

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(This book review was originally published in Rethinking Marxism, Vol. 26, No. 1, 2014)