Well, I have little to add for an introduction, so here goes another dive into the morass of Marx. Feel free to follow along. I actually have a few nice things to say about this next section, though.
Introduction
Part 1
Part 2
Part 3
Book I, Part I, Chapter III: Money, or the Circulation of Commodities
Section 1.—The Measure of Values
Section 1 of this very lengthy chapter begins with an assumption that certainly was valid in the 19th century, but failed in the 20th, namely, that gold is the commodity-money. In his day, gold and silver were the monetary media of global trade. Marx also has the foresight to state that he makes this assumption merely for the sake of simplicity, and does not exclude other possibilities, believing the same concept will hold true regardless of the monetary system in question.
The first function of money is to supply commodities with the material for expression of their values, or to represent their values as magnitudes of the same denomination, qualitatively equal, and quantitatively comparable. It thus serves as a measure of universal value.
[...]
It is not money that renders commodities commensurable. Just the contrary. It is because all commodities, as values, are realized as human labor, and therefore commensurable, that their values can be measured by one and the same special commodity...
And just like that, we're back to square one with the labor theory of value, the concept of trade as a zero-sum game of equivalent values, and the overarching failure to realize subjective value or marginal utility. He pictures the economy as a chain of equivalent values, and even states that, "money itself has no price," not realizing that all exchanges he can imagine are, in fact, the reciprocal price of money.
He goes on to say that a price is, "...a purely ideal or mental form." He continues to insist that the real value is the labor input for a commodity, and the gold price a sort of abstraction. Marx refers to another of his own works via a footnote in a casual dismissal of unnamed "wildest theories" which cannot be assessed by reference to this work alone.
He delves into bimetallism somewhat, and recognizes that there is an inherent instability of tying both metals together in a single price system.
...[A]ll commodities have two prices—one a gold-price, the other a silver-price. These exist quietly side-by-side, so long as the ratio of the value of silver to that of gold remains unchanged, say, at 15:1. Every change in their ration disturbs the ratio which exists between the gold-prices and the silver-prices of commodities, and thus proves, by facts, that a double standard of value is inconsistent with the functions of a standard.
I have no arguments with this statement in the context of 19th century bimetallism. This price-fixing created an unnecessary tension between the ever-fluctuating market price of silver and gold and the government monetary exchange rate policy, resulting in economic problems due to constantly invoking Gresham's law first one way and then the other.
Marx continues his analysis using his value theory, which I have criticized previously to my satisfaction, but there is another passage of some interest to me where he delves into the changes of prices resulting from either an increase in the value of commodities or a decrease in the value of money. Unfortunately, he does not approach the concept of price inflation and money supply inflation to any serious degree. Still, he does mention how debasement of coins divorced many monetary names from the original weights in silver or gold that lent them their names. The British Pound today has no relation to the value of a pound of silver, and its pre-decimalization fractions as shillings and pence only made sense under that original silver-based system.
Still, even when so divorced from their origins, money is useful as a unit of account, and Marx seems to recognize this. However, he soon reverts to form, and simply says, "Price is the money-name of the labor realised in a commodity." Price is instead merely an offer to exchange. Commodity prices trend toward an equilibrium level despite an ever-shifting economy, and exchanges occur when both parties perceive a benefit according to their subjective value scales, not because some universal equivalent value of labor has been calculated.
