Steuart's role in the development of theory was neglected, Marx says, with his discoveries being attributed to Smith, just as those of Hume were attributed to Ricardo. Smith was careful not to attribute the sources of his own ideas, Marx notes.
“Whereas Ricardo improves upon Hume's theory, Adam Smith records the results of Steuart's research as dead facts. The Scottish proverb that if one has gained a little it is often easy to gain much, but the difficulty is to gain a little, has been applied by Adam Smith to intellectual wealth as well, and with meticulous care he accordingly keeps the sources secret to which he is indebted for the little, which he turns indeed into much. More than once he prefers to take the sharp edge off a problem when the use of precise definitions might have forced him to settle accounts with his predecessors.” (p 167-8)
Smith is inconsistent in his writings, as Marx describes in Theories of Surplus Value, modifying his views on value, surplus value and productive labour. So too with money. Marx notes that he tacitly accepts Steuart's view, in relation to money, in that he says a part of the gold in a country is used as coin, a part as reserves used by merchants for international trade, a part as bank reserves, part for settling international payments, and part used for luxury commodities. On the other hand, he
“quietly eliminates the question about the amount of coin in circulation by quite improperly regarding money as a simple commodity.”
But, in a note, Marx also says,
“This is inaccurate. On the contrary, in some passages the law is correctly expressed by Smith.” (Note *, p 168)
In this process, Smith, thereby, avoids the issue of the portion of gold that forms currency, and simply treats it as though it were any other commodity. Ricardo makes the same assumption, which is the fatal error in his own theory of money, and which formed the basis of the 1844 Bank Act.
“The tension caused by the struggle against the illusions of the Mercantile System prevented Adam Smith, moreover, from objectively considering the phenomena of metallic currency, whereas his views on paper money are original and profound. Just as the palaeontological theories of the eighteenth century inevitably contain an undercurrent which arises from a critical or an apologetic consideration of the biblical tradition of the Deluge, so behind the facade of all monetary theories of the eighteenth century a hidden struggle is waged against the Monetary System, the spectre which stood guard over the cradle of bourgeois economy and still cast its heavy shadow over legislation.” (p 168-9)
The period after 1787, when the Bank of England suspended cash payments, i.e. the conversion of notes into gold, is a parallel to the period after 1971, when the US ended Dollar convertibility.
“... the rise in price of many commodities which followed, the fall in the mint-price of gold below its market-price, and the depreciation of bank-notes especially after 1809 were the immediate practical occasion for a party contest within Parliament and a theoretical encounter outside it, both waged with equal passion.” (p 169)
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