From the Gold Standard to the Floating Dollar Standard: An Appraisal in the Light of Marx’s Theory of Money

Abstract

The paper explores the insights offered by Marx’s analysis of the emergence of “world money” into the workings of the international gold standard period and the post-Bretton Woods floating dollar standard. In a curious inversion of the traditional formulations drawing on Lenin, imperial hegemony in today’s context would seem to be associated with net capital imports (rather than exports) by the dominant country. In particular, I argue that in a context where the role of “world money” rests on the monetary liabilities of a dominant state, in the form of credit money — “fictitious capital” — rather than bullion, there is an easing of the external constraint on the advanced countries in the core with the impact of the debt-deflationary spiral and financial fragility being borne disproportionately by the periphery. The theorization of world money needs to address the relation between the state and the financial system: the asymmetric manner in which countries outside the core were incorporated into the monetary system, and the role that financialization plays in preserving the hegemony of the dominant currency. JEL classification: F33, F34, F59