Summary of My Upcoming Research Presentation

 

After the suspension of convertibility, money is often regarded as fiat money with no intrinsic value. This view tends to support the quantity theory of money or the idea that money can be injected exogenously by the government. 

In contrast, approaches like the Monetary Circuit Theory link bank-issued money to firms’ production, and other endogenous money theories argue that banks issue money in response to market demand. However, these views often overlook the value of money and its relation to commodity value. 

This paper shows Japanese Marxian theories that connect credit money with commodity value. During Japan’s 1950–60s Banknote Controversy, Tamotsu Okahashi applied Marx’s three laws of monetary circulation—bills of exchange, metallic money, and paper money—to explain different issuance channels of banknotes. 

Recent Unoist scholars further refine this view, classifying commodity money into two types: material money, which takes a material form, and inconvertible credit money, which takes a self-sustaining form as a claim to commodity value. Crucially, credit money is issued not at the beginning of production, but in anticipation of the sale of commodities. Banks take on the risk of uncertainty of circulation, reflecting what Marx called the “salto mortale”. This uncertainty is assumed away in Volumes 1 and 2 of “Capital” but must be emphasized in Volume 3.

This paper, firstly, highlights the importance of Japanese Marxian contributions. Secondly, by analyzing the balance sheets of banks, borrowers, and banknote holders, it shows that the value of credit money consists in the borrowers’ assets. Thirdly, it argues that credit money emerges from the contradiction between the uncertainty of circulation and the certainty of production in industrial capital with fixed capital.

Our paper contributes to rethinking intrinsic value in inconvertible credit money and the relation between industrial and bank capital through circulation.