Steuart failed to understand the evolution of money, arising from the exchange of commodities, and so the development of exchange-value, as the indirect measure of value, and consequently, the development of a money commodity, as the universal equivalent form of value, so that the exchange-values of commodities, expressed in it, become prices. The development of coins, as a standard of price, is only possible on the basis of this evolution, but Steuart only sees money in this final result, as standard of price, and unit of account. He is unable to understand its objective basis, and sees only its phenomenal form.
Money, then, becomes ideal money, and this gives rise to all kinds of errors, in relation to fiat currencies, as well as in relation to the concepts of labour-money tokens, as presented by Bray, Gray and later Proudhon, not to mention the schemes and swindles of John Law, and the Pereire Brothers, and many more that came after them.
The idea that there was something special about the standard of prices, such as the £, that it represented some intrinsic quantum of value, was seen in relation to the debate between Lowndes and Locke, but it was replicated a century later. Indeed, the idea that the $ represented some intrinsic quantum of value, so that the price of gold was fixed at $35 an ounce, was again behind the crisis in the global currency system in 1971. In The Revolution Betrayed, Chapter 4, Trotsky also describes the same phenomenon in the USSR, in the 1920's, as the Stalinists printed money tokens to finance their super-industrialisation programme, leading to rampant inflation.
“During the first period of the five-year plan, on the contrary, all the sluices of inflation were opened. From 0.7 billion roubles at the beginning of 1925, the total issue of currency had risen by the beginning of 1928 to the comparatively modest sum of 1.7 billions, which is approximately comparable to the paper money circulation of tsarist Russia on the eve of the war – but this, of course, without its former metallic basis. The subsequent curve of inflation from year to year is depicted in the following feverish series: 2.0 – 2.8 – 4.3 – 5.5 – 8.4! The final figure 8.4 billion roubles was reached at the beginning of 1933. After that came the years of reconsideration and retreat: 6.9 – 7.7 – 7.9 billion (1935). The rouble of 1924, equal in the official exchange to 13 francs, had been reduced in November 1935 to 3 francs – that is, to less than a fourth of its value, or almost as much as the French franc was reduced as a result of the war. Both parties, the old and the new, are very conditional in character; the purchasing power of the rouble in world prices now hardly equal 1.5 francs. Nevertheless the scale of devaluation shows with what dizzy speed the Soviet valuta was sliding downhill until 1934.”
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