THE ECONOMIC (OBJECTIVE) EXCHANGE THE VALUE OF MONEY
Theory is not likely to unravel the problem of the value of money in a satisfactory manner until it has grasped the concept of the money form and of the expanded form of money. The older theory was bound to fail when approaching this problem, if for no other reason than that it never succeeded in defining these concepts and hence could never determine the "quantity'' of money which determines its value. In the older theory this quantity was the material stock of money. Actually it should be represented by the entire sum of the income of the economy which is available under the expanded form of money. A wealthy man who disburses his large income by checks drawn on his bank is unlikely to appraise the value of money by the standard which would be set merely by the sum of cash which he happens to carry at any particular time. As regards the personal exchange value of money, this is so apparent that any further discussion may scarcely be expected. But the conditions governing the value of money in the national economy are different and a more careful analysis is required in order to shed light upon the concept of this value and the
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law which governs it under the amplified form of money. In practical life it is the social economic exchange value of money which men have in mind when they say that money is worth more in one place than another or that it is worth more now than it formerly was. In this connection also, the prevailing scientific interpretation follows the procedure of daily experience. I t accepts the value of money as it is objectively determined and refers to it as the objective exchange value. The same statements which we have ascertained to be true in connection with the objective determination of natural values hold good also in respect to money. The value of money is not an objective value; it is the general cross-section of the subjective or personal valuations of money; it is the value as to which all persons are agreed. We define this value as the significance which all parties concerned attach to money in the economic process under the general price level.