chapter  7
The theory of labour money: Implications of Marx’s critique for the Local Exchange Trading System (LETS)
ByMAKOTO NISHIBE
Pages 18

In this chapter I will examine Marx’s critique of the theory of labour money, and present his own vision of communism. Based on the results thus obtained, I will then evaluate the significance of the Local Exchange Trading System (LETS). Proudhon, Owen and Ricardian socialists, in common, claim that labour money should be introduced in order to correct the unfairness of capitalism and to establish their ideal societies. They argue that labour is the true measure of value, which they define as the labour necessary to produce products. This presumes that the labour theory of value holds valid constantly over time, not only in the long run but also in the short run. All of them view the market as static in stationary equilibrium, and regard money merely as the medium of exchange. Marx criticises the theory of labour money because it ignores disequilibrating or dynamic factors intrinsic to the market economy where anarchical commodity production prevails, and where value is only revealed a posteriori as a social average of oscillating market prices determined by the relation between demand and supply.