Redefining the Commodity Theory of Money: From the Viewpoint of the Recent Unoist Approach and Japanese Debates on Credit Money
1. Introduction
Marx introduced money as the form through
which commodities express their own value.
Traditional Marxist economics assumes that money was gold, and after the
suspension of convertibility, money became state
fiat money.
In contrast, unlike
traditional Marxism, Unoists in Japan
reconstruct Marx’s Capital logically in many
respects, beyond textual interpretation. Regarding credit
theory, Unoists emphasize the uncertainty of circulation, which leads to specialized capitals engaged in
circulation, such as commercial capital and banking capital.
They argue that even inconvertible credit money still has a basis in commodity value.
This means that the salability of commodities gives rise to the value of money.
Banks link commodity value with value of money. Thus, money gains access to
commodity value, either directly or indirectly. In this sense, money remains commodity
money, and is different from state
fiat money.
This
paper will give an overview of this Unoist perspective.
More detailed arguments can be found in my drafts and published papers.
2. Outline
This
presentation consists of three main points:
1-2. There are two routes in the logical emergence of banking capital.
3. Anticipation of future reflux of money
The Banknote Controversy in Japan in the
1950s-1960s was the starting point.
Unfortunately, however, I have no time to elaborate on it. Please see Iwata 2021.
Building on this debate, Shigekatsu. Yamaguchi,
a leading Unoist Scholar, argued that credit creation is not the issuing of
credit money beyond reserves, but the anticipation of the future reflux of
money. (Yamaguchi 1984: 45, Iwata 2021b: 108-109).
In other words, the conventional idea views
credit creation as the difference between credit money and cash reserve,
that is, money is created from nothing.
In contrast, Yamaguchi argued that all
credit money is backed by claim that will bring
money in the future.
However, Yamaguchi still assumed “cash money”
such as gold, as the ultimate basis
of credit money. Because of this assumption, he could not fully explain
inconvertible credit money without gold money.
Modern Unoists attempt to overcome this limitation. This attempt can be seen in
both value-form theory (Iwata 2024) and credit theory. This paper focus on
credit theory.
4.
From industrial capital to
banking capital: Perspective
In Capital,
Marx’s credit theory consists of two developments:
(1) the evolution from commercial credit to bank credit (Marx 1981: 525), and
(2) the integration of money-dealing and interest-bearing capital (ibid: 528).
The relationship between these two is not clearly explained in Capital.
Originally, Unoists emphasized only the first
route —through commercial credit— and downplayed the second—
through what Marx called ‘money-dealing capital. Recently, however, some Unoists have emphasized money-dealing operations, but not as an independent form of capital
(Yoshimura 2005).
Therefore, we can regard these two routes as two factors of banking capital rather than a
dichotomy.
The first line above shows the
development from commercial credit to banking credit. The second line below
shows the development from commercial capital, via money dealing, to banking
capital.
We will explain the first route in section 6, and the second in sections 7 and
8.
Before explaining each route, I will mention a methodological characteristic of the Unoist approach. It focuses on the profit-seeking behavior of individual capitals under uncertain circulation.
5. Contradiction between certain production and uncertain
circulation
Industrial capital has two processes:
production, which is certain, and circulation, which is uncertain and
unpredictable. The two processes are connected as the following figures.
Modified Obata
2009: 185. (See
also Bryer 2017: 47)
Unoists highlight this problem of
realization in their theories of credit and commercial capital.
6. From commercial credit to credit intermediation
When sales temporarily decline because of uncertain circulation, an industrial capital may buy materials on credit from another capital to continue production. This is the most primitive and embryonic form of credit creation. This process can be shown as follows.
The premise of commercial credit is that
the creditor has enough information about the salability of the debtor’s
commodities. If the seller’s commodity is sold out, the
seller can mediate between the debtor and another seller
who lacks such information, in order to gain more profit
(Iwata 2025b).
In that case, the first creditor becomes a credit intermediary.
7. Commercial Capital
An industrial capital with strong sales can
purchase commodities from other industrial capitals and
resell them (Iwata 2020, 2025b),
which leads to greater sales and profits.
If it invests the value of its fixed capital
into commodity capital at the time of replacement, it becomes commercial
capital.
8. From commercial capital to money dealing operation
Commercial capital can buy and resell many commodities, not constrained by fixed capital. Therefore,
it can buy from and sell to the same industrial capital. If such transactions
are made on credit, the commercial capital holds both liabilities and claims with
the same industrial capital (Shibasaki 2016). The relationship can be shown as follows.
On the asset side
of the industrial capital, we can see a metamorphosis: commodity 1 – claim –
commodity 2. Since
commercial capital holds many commodities (commodity i, i = 2,3…),
the claim against the
commercial capital can function as money, and its
liabilities perform as money-dealing. By
holding numerous liabilities, commercial capital can mediate monetary
transactions among different capitals through the transfer of these liabilities.
9. From credit intermediation and money-dealing operation
to Banking capital
As endogenous money supply theories emphasize, banking capital creates its own liabilities as money, rather than merely taking deposits.
Credit intermediation creates a relationship
between creditor and debtor, while money-dealing operations create liabilities that play the role of money.
If these two functions are integrated into
one capital, it becomes banking capital. Both functions are backed by commodity
value.
10. Classification of commodity money
Thus, a developed
system of commodity trade and banking can give rise to inconvertible credit
money. Without such a system, precious
metal such as gold can circulate as
money. Both types of money have a commodity basis. If
we call the latter material money, commodity money can be classified as
follows.
This constitutes a new commodity theory
of money.
Fiat money lacks a commodity basis
and can circulate only under limited conditions, such as for
small-denominated auxiliary coins.
11. Conclusion
Modern Unoists emphasize that inconvertible credit money still
has a basis in commodity value. This is the new commodity
theory of money. From the viewpoint of credit theory,
banks transform commodity value constrained by use-value into money through credit
intermediation. In this case, banks must ensure the soundness of claims against
the borrowers.
Modern
Unoists argue that the use of commercial credit by commercial capital causes a concentration
of claims and liabilities, which leads to money-dealing
operations and the concentration of monetary transactions
in the liabilities of certain capitals.
Thus, we can summarize the two factors behind the circulation of
banks’ liabilities:
(1)
the soundness of claims backing credit money, and
(2)
the burden of monetary transactions.
These are useful standards for analyzing real banking systems.
Traditional banks perform both roles. However, under neoliberal
deregulation, these bank functions have sometimes
been unbundled. For example, payment
service companies have taken over
money-dealing operations, but they still depend on traditional banks for the claims that
back the
value of credit money.
Bitcoin performs only the
money-dealing, without any claim backing it. In
contrast, stablecoins use blockchain technology for money-dealing but secure their
value by holding sound financial securities.
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