Money, Banks and Finance in Economic Thought

Toichi Nawa's Theory of International Values and Money: On the Relation of Senior's Cost-of-Production Theory to Ricardo and Marx

Tabuchi Taichi, Doshisha University

This paper gives a reappraisal of the theory of international values and money presented by a Japanese Marxian theorist, Toichi Nawa (1906-1978), focusing especially on his interpretation of Ricardo, Senior and Marx. Recent studies showed that, contrary to the standard interpretation since John Stuart Mill’s arguments, Ricardo’s value theory in his Principles can be understood exclusively as the cost-of-production theory of value, which integrates the domestic value theory and international value theory, requisitely taking into consideration changes in the value of money when it is applied to the analysis of international exchange. After Ricardo, Nassau Senior developed the cost-of-production theory of value explaining both domestic and international exchanges including money, against Robert Torrens’s and J. S. Mill’s supply-and-demand theory of international values. However, it is notable that, as early as in the late 1940s, Nawa appreciated Senior’s international value theory, and tried to show inheritance relationship between Senior’s cost-of-production theory of value of money and Marx’s arguments on ‘national differences of wages’ and ‘modification of the law of value.’ The structure of this paper is as follows: First, we track how Nawa developed his international value theory based on Senior and Marx. Senior discussed national differences of cost of obtaining gold and its effects on money wages, and showed that money wages are high in the countries where exporting industries have high productivity, whereas it does not mean that real wages are also high in such countries. According to Nawa, Marx inherited these points in the chapter on ‘national differences of wages’ in his Capital. Based on these consideration, Nawa explained that the differences of productivity of the ‘key industries’ among countries determine in inverse proportion the differences of value of money among countries. Nawa’s presentation provoked the ‘controversy over international values’ during the 1950s and 1960s in Japan. Then, we point out the limitation of Nawa’s theory of international values. As is often the case with Marxian theorists, Nawa almost always judged theories through the lens of Marx’s labour theory of value. It is regrettable that Nawa regarded Senior’s value theory as ‘vulgar’ cost-of-production theory and thus missed the important relationship between Ricardo and Senior. Lastly, we present an alternative view to Nawa’s theory of international values and his understanding of history of economic thought based on Marx’s Capital and Theories of Surplus Value. The paper will, thus, provide a critical review of Nawa’s approach to international values and money from today’s perspective.


Keywords: international values, the cost-of-production theory of value, value of money, Ricardo, Senior, Marx

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