Currency Value, Productivity, and a Currency’s Command over Use-Values — Peter Cooper

In general terms, Modern Monetary Theory (MMT) defines the value of the currency as “what must be done to obtain it”. As MMT authors have noted, this general definition can be interpreted in terms of labor time. A Marxist interpretation, consistent with MMT’s general definition, is to define currency value in terms of socially necessary labor time. Two interpretations seem particularly suitable. A first approach is to define currency value as the reciprocal of the average money wage. This measure indicates the amount of labor-power that must be supplied in exchange for a unit of the currency and, on average, the amount of socially necessary labor that is performed in exchange for the currency unit. A second approach is to define currency value as the reciprocal of the monetary expression of labor time (MELT). This measure indicates the amount of socially necessary labor represented in a currency unit and therefore the amount of abstract labor represented in a currency-unit’s worth of any commodity, including labor-power, which under capitalism is treated as a commodity. The two definitions are closely and simply connected. They are also closely connected to other macro measures such as the price level and average productivity....

heteconomist
Currency Value, Productivity, and a Currency’s Command over Use-Values
Peter Cooper