Awhile back, John Vertegaal wrote: > ... Where does [Marx] lay out the circumstances whereby money "capital" _is_ > indeed causal to the production of surplus value, i.e. non-fictitious? And if > he ever does so, what are his assumptions? <
Up to full-capacity or potential output, the extension of money credit raises demand, which allows greater realization of surplus-value. which in turn allows more profit (property income) to be received by the capitalists. However, this thought is not developed much, especially since v3 of CAPITAL was never finished. The extension of credit also “greases the wheels of commerce,” i.e., it speeds up much of capitalism’s dynamics including the tendency toward overproduction (see chapter 27 of v3). > As far as I understand Marx, _work and work only_, produces (surplus) value… > Just above the Sismondi footnote [Marx] writes that "... money wealth in > general,.. has resolved itself into an accumulation of claims of ownership > upon labour". That may well lead to "allow[ing] payment of interest on it". > But for the division of value after it was produced to be a _cause_ (or > factor) of production, a set of assumptions is required with which I'm > unfamiliar.< Money or financial or paper wealth represents a _legal claim_ on society's total value and surplus-value, but it does not directly organize the production of surplus-value or cause surplus-value to be created. Thus, it's possible for a promise to pay interest (the flip-side of a claim such as a bond) may exceed the actual surplus-value available to pay that interest. Usually, however, if promised interest payments are “too high,” the direct effect is to hurt dividends (which are a residual income). Of course, some debtors can't make interest payments and thus are insolvent. It’s true that “work and work only” produces surplus-value, but that only refers to the _direct_ causation. Technical change and the capitalist accumulation of means of production can and usually do raise the effectiveness of labor (use-values produced per unit of labor done) and, all else constant, the productivity of labor-power hired (use-values produced per hour of labor-power hired). If the real wage (the bundle of use-values paid per hour of labor-power hired) is constant, as Marx assumes in much of v1, rising effectiveness of labor reduces the value of labor-power (the amount of labor that must be done to produce the real wage bundle). This means that there’s more value left over for surplus-value. Marx calls this “relative surplus-value” creation. This means that it’s possible for the issuance of paper wealth (bonds, stocks) to finance or facilitate real accumulation of means of production which in turn causes the flow of surplus-value to increase. If that happens, then the initially fictitious capital (paper wealth, whose market price is based on expected future income streams, not actual ones) turns out after the fact to be a realizable claim, actually paying its owners interest or dividends. On the other hand, some paper or fictitious wealth turns out after the fact to be _truly_ fictitious, which means that its issuance and sale did not facilitate the production of surplus-value. This happens if the borrowed money or money received from selling new stocks is spent on current consumption, waste, failed wagers or speculation, programs that benefit non-capitalists, and the like. Now look at the government's borrowing. The issues and sale of government bonds _may or may not_ promote labor productivity and thus raise the flow of surplus-value that could be used as a source of interest income for the bond-holders. However, even the most productive government real investment may not produce enough income _for the government_, as most or all of the benefits are captured by the “private” sector (capitalists). For example, the building of a high-speed railway may help business and the economy’s production a lot but government ends up having to pay the interest on the deal. Thus, it seems that the interest has to be paid by raising taxes or cutting outlays. But there’s an additional point: if the economy’s potential or full-capacity output rises (and tax laws, transfer programs, and government purchases do not change), that leads to what Keynesians call a “fiscal dividend”: more tax revenues will be reaped at the potential output level than than was reaped before – so that tax-hikes and outlay cuts aren’t needed to pay interest on the government debt. The fiscal dividend happens normally since potential normally increases -- except that it normally disappears as tax laws, transfer programs, and government purchases are changed. But building a high-speed railway might raise the fiscal dividend by speeding up the growth of potential output, so that the interest on the government debt issued to pay for it can be paid (at least in part). > Money is a unit of the accounting process associated with new wealth creation > by work, and disbursed as income for the distribution of that wealth. It has > no value independent from the created wealth.< Do you mean "new _real_ wealth" (i.e., means of production and the like, that promote the production of surplus-value)? I'll assume that you do. If so, your statements make more sense. When you say that “money” has no value independent from the created new (real) wealth, do you mean that financial or money claims in general (which includes bonds, stocks, etc.) have no value independent of the new real wealth that was financed by these claims’ issuance? Again, I’ll assume that you do, since it makes more sense. I still don’t understand what you’re saying here, however. Perhaps it’s a language problem. > So if this income [from ownership of financial claims] is extracted to become > "capital" for buying bonds with, it loses its value as soon as its purchasing > power is transferred and consummated by government income earners. The > purchasing of bonds doesn't turn the inherent circular nature of the economy > into a linear one, regardless of "powerful" institutional convention. < Please explain what this linear/circular stuff means. Maybe a diagram would help. BTW, I don’t think of the capitalist economy as being “linear” at all. At least I don’t think I do: it’s unclear what “linear” means in this context. I also don’t know what the > “powerful” institutional convention< that you refer to is. Are you referring to the normal practice of paying interest on debt to avoid default and/or bankruptcy? If you don't make interest payments, the courts will punish you (unless you can flee the country or fight the bankruptcy court, both of which can be expensive). Not only that, but financial markets will punish you, by raising the risk premium on future loans. That encourages most people to obey this convention. In fact, it's more than a "convention," since it's backed by the coercive power of the state and the financial market's electronic herd. >The conventional right to claim a portion of future wealth creation is based >on something that, in the reality of the economy being a circular means to an >exogenously located end, no longer exists.< I don’t understand what this means at all. What is it that “no longer exists”? > If you believe that the money from bonds [i.e., interest payments?] can > produce surplus-value [which I don’t], you believe that money has a value > independently. In that case, define (M) please.< I don’t believe that interest payments can produce surplus-value; as noted, the financial claims on capital income (surplus-value) can be out of line with the surplus-value that’s actually produced. However, if realized, real interest income can be the basis for further accumulation of means of production, etc., just as other forms of property income can. > As I see it, the difficulties arise in the main from assumptions you don't > want to let go of. [what are those??] The economic process is indivisibly > circular. [yes, but the circle grows larger every day.] By assuming that (M) > is a determinate quantity that causes _certain_ effects [which I do not], you > cut through the circularity and replace it from that point onward with a > linearity. [huh??] If you agree that the economic process is circular, which > you did a couple of times in past conversations with me already, you're > contradicting yourself; unless you can come up with a definition of (M) that > somehow proves otherwise.< Since I don’t understand the assumptions you attribute to me, it’s hard to see any contradiction. What are _your_ assumptions? It would be off-topic to define money (i.e., M). You’re not talking about money _per se_; instead, you’re talking about paper or financial or money wealth. As above, that refers to legal claims on future income. Legal claims on income aren’t always realized, but mostly they are. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
