Already, today, the worker is paid their wages electronically, into their bank account. No physical currency is required. It is simply a recording of the sale of a commodity, labour-power, and the payment for it, which amounts to nothing more than an equivalent claim to a given amount of social labour-time, in the form of other commodities and services (wage goods). Similarly, the worker can pay the shopkeeper for the goods and services they buy electronically, via debit card, which simply transfers a balance from their account to that of the shopkeeper. The shopkeeper buys from the manufacturer, also by electronic transfer.
So, no physical currency is required to exchange all of these commodities, removing the role of the central bank in controlling currency supply, as means of determining the value of the standard of prices. If the totality of exchanges between workers and capital is considered, workers sell a commodity – labour-power – to capital. An entry is made in their bank account, i.e. a credit, equal to its value, a quantum of social labour-time. Workers then buy back from capital, the wage goods they require, and do so, by simply transferring this value back to the bank account of capital, without requirement for money as currency at all.
Consider a situation where two parties exchange commodities of equal value, say 10 hours labour. It is this equality of value that is the basis of their exchange. What is exchanged is equal quantities of social labour/universal labour. Whether A and B put a “price” on that value, i.e. on their respective commodities, of £1, £10 or £1 million does not change the basis and nature of the exchange. Indeed, in economies that used silver rather than gold as the money commodity, these prices, would indeed, be much higher, even though the value is the same.
It simply means that 10 hours labour is given the name £1, £10, or £1 million. If a football field is 100 yards long, it doesn't change its length, if I say, instead, its length is 300 feet, or 3,600 inches. Similarly, if the workers' wages, instead of being £1 per week, are £10 per week, this does not change the basis and nature of the complex of exchanges, in which, now, the worker pays £10 to the shopkeeper, who, in turn, passes this £10 to the manufacturer. They all still exchange a given amount, say 10 hours, of social labour.
The difference is that, where the central bank controls the currency issue, they exert some control over the value of the currency/standard of prices, and so whether these nominal price are £1, £10 or £1 million.
“If you cross the Channel you will find that the money wages are much lower than in England, but that they are circulated in Germany, Italy, Switzerland, and France by a much larger amount of currency. The same Sovereign will not be so quickly intercepted by the banker or returned to the industrial capitalist; and, therefore, instead of one Sovereign circulating 52 Pounds yearly, you want, perhaps, three Sovereigns to circulate yearly wages to the amount of 25 Pounds. Thus, by comparing continental countries with England, you will see at once that low money wages may require a much larger currency for their circulation than high money wages, and that this is, in fact, a merely technical point, quite foreign to our subject.” (p 28-9)
In other words, it is impossible to draw a direct link between the level of wages, and amount of currency in circulation, because this is also a function of the velocity of circulation. In the thought experiment above, wages, and other prices, could rise to any level, without additional currency circulation, because there would no longer be physical currency, only electronic transfers. Provided the manufacturers felt that they could double their nominal prices to shopkeepers, in response to a doubling of nominal wages, they would be able to pay those higher wages, and the shopkeepers, having paid double the previous prices to the manufacturer, would, likewise, sell to the workers at double the previous nominal prices, which the worker would pay with their nominally doubled wages.
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