Theories of credit money in Japanese Marxian economics: 1 introduction

     Even inconvertible money is credit money

Theories of credit money in Japanese Marxian economics

Introduction

Why can money buy commodities? What is the ground of value of the money?

Marx has clarified that money is the specific commodity by which all commodities express their value. In the 19th century, people thought that money is gold, which has value in itself, and that credit money is a promise to pay the gold money. However, after the suspension of the gold standard, the inconvertible money does not seem to have any value in itself. However, here I show theories of credit money in Japanese Marxian economics that maintain the even inconvertible money is credit money and has commodity value.

Currently, people think the inconvertible money is fiat money thrown from outside the private economy. Although theories of endogenous money supply, such as Post Keynesian, assert that commercial banks’ lending supplies credit money, they assume that the credit money is a promise to pay the fiat money issued by central banks or states. However, some Japanese Marxian economists have advocated that inconvertible money, including central bank money, is credit money, not fiat money. By creating credit money by lending, the banks have financial assets that are rights to receive a part of the proceeds from the commodities in the debtors. As long as the debtors smoothly gain the proceeds, the money issued by the banks has value based on the commodities. Thus, credit money belongs to commodity money.

Considering this way, we can understand the universal reason enabling money to circulate, whether convertible or inconvertible.

The paper is structured as follows: Section A takes up Tamotsu Okahashi’s theory of credit money in the Japanese banknote controversy in the 1950s. Section B discusses Uno Kozo’s criticism of Marx and the development of credit money theory in Uno school. Section C explains the commodity theory of money in modern Uno theory.