In response to John Walker's inquiry regarding the link
between money and gold:
According to Marx, the first function of money is "measure
of value." Capitalism can only function if there is a
reliable and stable way to measure the values of the
commodities, so that the capitalists know whether they are
making profits or not. At Marx's time, the stability of
money as a measure of value was guaranteed by the
convertibility of money into gold.
This guaranteed the value of money alright, but it was very
harsh; a lot of output had to be sacrificed in order to
maintain the value of money.
During the Great Depression, the gold standard was replaced
by inconvertible credit money. This made things much more
elastic, and therefore provided the institutional
underpinnings for monopoly pricing, regulation of wages by
collective bargaining, deficit spending by the public
sector, and lender of last resort interventions. This
``greatly contributed to the amazing economic expansion of
the first two postwar decades.'' (Robert Guttmann, ``How
Credit Money Shapes the Economy'' M.E. Sharpe, 1994).
Since WWII, the dollar has taken the role of international
money. Although the dollar is not convertible into gold and
therefore has not intrinsic value, its value is maintained
by the monetary policy of the USA, the largest integrated
economy of the world (before the EU), and the dollar's
international acceptance is enforced by US military power.
The bombing of Yugoslavia shows what happens to a country
which does not open its economy unconditionally to
international capital.
Still, gold reserves have remained substantial parts
of the currency reserves held by the capitalist nations.
According to the 1998 Annual Report of the IMF, p.\ 109,
<http://www.imf.org/external/pubs/ft/ar/98/pdf/file08.pdf>
the share of gold holdings in total reserves was
44% in the 1980s, and has declined during the 1990s,
it is 14% at the end of 1997. But international instability
has also increased with this decline.
BTW, since you are reading Capital, you may be interested in
my Annotations to Capital, which go through the text in
great detail. I am using those for an internet class on
Capital, but I think they are gradually becoming more and
more worth while for anybody who is trying to understand
Marx. Eventually I will publish them as a book. They can
be obtained from my web site,
<http://www.econ.utah.edu/ehrbar/annota.htm>
I jsut put up a new version a few days ago. I also have
detailed notes about Guttmann's book, and other literature
pertinent for modern monetary theory (Lipietz, Block,
Eichengreen, Foley, many others), in my class notes for the
graduate money seminar,
<http://www.econ.utah.edu/ehrbar/ec7500.pdf>
--
Hans G. Ehrbar [EMAIL PROTECTED]
Economics Department, University of Utah (801) 581 7797 (my office)
1645 E. Central Campus Dr. Front (801) 581 7481 (econ office)
Salt Lake City UT 84112-9300 (801) 585 5649 (FAX)
--- from list [EMAIL PROTECTED] ---
