The printing of additional money tokens cannot increase the amount of money in the economy, because that money is simply the equivalent form of of the value of commodities (goods and services). To increase the amount of money (universal labour) in the economy, it is necessary to produce additional new value. i.e. to increase the social working-day, either by a) employing more labour, b) increasing the individual working day, or c) increasing social productivity so that the labour employed becomes, on average, more complex, increasing the quantity of abstract social labour-time.
If the total value of social production is 1 million hours of labour, then money – the equivalent form of this value – also must be 1 million hours, because this is tautologically true. It cannot be the case that 2 million hours of labour is the equivalent form of 1 million hours of labour. Consequently, if gold is the money commodity, and ¼ ounce of gold is equal to 100 hours of labour, money takes the form of 10,000 ¼ ounces of gold. If this ¼ ounce of gold is the historical basis of the standard of prices, called £1, then the total value of production takes the form of £10,000. As seen, the name given to the standard of price does not change, but the value of this standard most certainly does.
If the value of gold falls, then the value of the £ falls, and so prices measured by these £'s rise, just as if, when I measure the length of a field in feet rather than yards, it will rise three-fold. If the quantity of gold represented by the £ falls, then prices will similarly rise. But, the real basis of this rise in prices is that the £ itself is then a representative of a smaller quantity of universal labour/social labour-time, whose manifestation, in a given money commodity, such as gold or silver, is simply a consequence of historical development. The standard of prices has a continually changing relation to the money commodity, and its relation can, therefore, disappear altogether, so that it simply represents, directly, a quantity of social labour-time.
There is no reason why, if 10,000 £1 notes are in circulation, representing 1 million hours of social labour-time, this should not continue to be the case if gold falls in value by 20%. In that case, the prices of all commodities would remain unchanged, whilst the price of gold would fall by 20%. Indeed, on the basis of the use of such money tokens, central banks can determine the general level of prices by modifying the quantity of them put into circulation. That is not the case with gold or silver, because its own value is determined by its metal content, and the labour-time required for its production.
If there is a fall in social productivity, which does not affect gold, so that, instead of total output being equal to 1 million hours, it is equal to 2 million hours, the money equivalent of that is now 20,000 ¼ ounces of gold = £20,000. However, if gold is replaced by paper £1 notes, it could be the case that the same quantity is put into circulation if they no longer have any connection to gold. But, the connection to social labour-time cannot be severed. If each note, now, represents 200 hours of social labour-time, rather than 100 hours, the general price level would be unchanged. In the same way, if the total value of output is is 1 million hours of labour, but 20,000 £1 notes are put into circulation, each of these notes, now, represents 50 hours of social labour-time, rather than 100 hours, with the consequent effect that prices double.
The laws relating to value and money are not changed, as a result of the introduction of money tokens, but the effects of these laws, as manifest in prices, are changed. If an increased quantity of money tokens are printed, this cannot change the total amount of money/social labour-time they represent, and so the value of each note is proportionally reduced, and vice versa. Each note, however, proclaims itself to be £1, $1, €1 and so on, so that the result must be that the given amount of value, now, appears as a larger sum of prices. The general price level rises – inflation.
“What was originally an insignificant divergence of the nominal content from the actual metal content of metallic currency can therefore reach a stage where the two things are completely divorced. The names of coins become thus detached from the substance of money and exist apart from it in the shape of worthless scraps of paper. In the same way as the exchange-value of commodities is crystallised into gold money as a result of exchange, so gold money in circulation is sublimated into its own symbol, first in the shape of worn gold coin, then in the shape of subsidiary metal coin, and finally in the shape of worthless counters, scraps of paper, mere tokens of value.” (p 114)
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