Reply To: Cost of living crisis

Yes , I noticed too that Engels had cobbled together that chapter and added quite a bit himself. He and Marx were criticising the Quantity Theory of Money as put forward by Ricardo that says that the level of prices depends on the amount of money put into circulation. Which does seem to contradict what Marx says elsewhere.

But there is no contradiction. Ricardo was arguing that this applies when there is a currency composed of gold and paper notes convertible on demand into a fixed amount of gold. Marx (and others) challenged this theory arguing that, with a convertible paper currency circulating alongside gold, it’s the other way round — that the amount of money in circulation depends on the number of prices to be realised; if too many convertible bank notes were issued this would not cause inflation as the notes would simply return to the bank that issued them.

With an inconvertible paper currency (as now), on the other hand, the quantity theory does apply, as Marx explained in the passage quoted by Lizzie.