On 19/08/2013 6:54 PM, Julio Huato wrote:
John, In the back-and-forth, the original issue (merits of the CCC, or
lack thereof) is now buried under a host of other points. Since these
points are of intrinsic interest, let me follow up on them. Readers
beware. I said that, in regards to its connection to society's
material reproduction, money should be viewed as a layered social
structure. You seem okay with my assertion so far, but question what
follows -- which is that the measure-of-value function is the one
closest to its material content. Then I alluded to the Grundrisse's
intro, but failed to give more specific information of what I had in mind.
Given that there is a significance in identifying the layer of money
with the closest connection to society's reproduction of material
content, I identified an incipient layer that's closer yet than money as
a measure-of-value; to wit, the social claim to final output by
carried-out work before associated remuneration even gets into the
picture. I should also have pointed out that the determination of the
value of that claim isn't the claim itself; because no worker will set
out to claim the underlying use-value of his or her own output. This
reality by itself belies the Marxian assertion that value is created at
the point of production. Instead, the determination of this value will
be accomplished in the future, by tiny fractions of countless other
workers holding a similar social claim, acquired through their own labor
accomplishments. And by the same reasoning, the original claim in
question will through the holder's motivation, soon to be expressed in
demand, determine the value of tiny fractions of the labor
accomplishments made by others in the past. This depicts the underlying
dynamic equilibrium of use-value (i.e. material content) creation, as
already said, in effect even before a measure-of-value/unit-of-account
layer enters the picture.
And that's also why matrices, shadow pricing of supply coefficients, or
whatever other mathematical tricks you may have up your sleeve, do _not_
apply in a dynamic process valued in terms of _reproduction_. If you do
not believe this is true, examine the structure and composition of
demand coefficients in a determinant matrix. Where and in what form are
the countless fractions of supply coefficients, each accomplished at
different points earlier in time, represented? Is my depiction above
wrong? It's either/or, isn't it? And a shadow-price theoretical
procedure suffers from exactly the same inherent shortcoming. How does
one shadow-price something in determinate terms, when whatever is priced
isn't determinate yet? Isn't this delusion masked as analysis? We are in
the domain of accountancy and not that of mathematical principles, when
subsequently we implement a measure-of-value/unit-of-account to inputs
and outputs because the field is way too vast to keep track of
otherwise; with those prices being set in terms of a unit of account, in
the hope and expectation that an eventual demand will justify the
original setting and determine it. And then, from a determinate point of
departure, the process will justifiably set out to reproduce. No
demand, no value of production, and the process will come to a dead
end. Marx was wrong at least when reproduction instead of production is
the criterion and goal; and production for the sake of production
instead of the well-being of humanity is silly.
No, I wasn't talking about the first few sentences, but to a
subsequent passage where Marx notes that the high abstraction of
"labor in general" becomes possible only under the conditions of
advanced capitalist production, when in front of us the productive
force of labor switches from one application to another. The
abstraction of value and its monetary form become clearer to us under
these conditions.
You may not have been talking about the first few sentences, but you
still took it for granted they'd hold as a valid point of departure,
didn't you? Doesn't that "subsequent passage" follow from Marx's stated
point of departure? The high abstraction of labor has been identified
above to concern the fractiousness of supply with respect to demand.
This situation, in terms of extractable use-value, is exactly the same
for a pure communist as it is for an advanced capitalist mode of
production. It isn't a matter of the productive force of labor switching
from one application to another, insignificant in the real world in any
case, it is a fractionate adding of that force over time to culminate in
final output, thanks to freely given natural resources. Why in heaven's
name would a pure communist society supplant the auto-magically produced
effect of a price system, with a bunch of central planners given
god-like power over the aspirations and preferences of laborers, when
it's ultimately concerned only with labor getting its fair share of the
pie? There are far more economical ways than central planning to
accomplish that objective.
Let me take a step back now. As it often happens, when people think
they have identified a primitive notion, e.g. the atom, upon closer
examination it turns out that the damn thing is actually a complex
structure formed by the interaction of even more basic components.
That happened with money. In answer to the question of what exactly
determines the "moneyness" (the specific essence or quality) of money,
the economists wound up decomposing money into its so-called
"functions." This goes back to classical political economy.
The answers to that particular question would only be valid if money
were to be a determinate physical _thing_. Even the question itself
assumes that such a determination is possible. Why do you think that,
just as is the case with capital, no coherent theory of what money _is_
has been written yet. In light of the latter, given the huge effort
expended by top in their field economist, isn't it highly likely that
it's the wrong question to ask when a true understanding of money is the
objective? Shouldn't we first of all have a clear understanding of what
money is, before we can talk about its functions? 'Money is what money
does' abdicates from the possibility of getting to the bottom of it all;
and, if not quite ignominious, is at least a delusionary position to
take in any inquiry seeking a truth.
Today's economists seem to believe that the essence of money hinges on
its function as a means of purchase, exchange, circulation, or
immediate payment (payment upon purchase).
Being a measure-of-value/unit-of-account and reflecting a claim upon
society are layers that can be substantiated from underlying premises.
Any other such "functions" may be no more than empirical observations
leading to paradoxes when analyzed further; meaning that within the
construct of a coherent whole, those functions cannot hold true.
Marx was first to claim that measure of value is an even more basic
function. This is, IMO, absolutely correct. Why? On the surface, this
is about the comparability of commodities as a requisite to their
exchange. At a deeper level, this comparability evinces that seemingly
diverse human activities are in fact all applications of *society*'s
productive power of labor. Concretely, we are a bunch of individuals
producing. But we produce in association. This association renders our
individual labor powers into a social productive force. This is indeed
the crux of the matter in the process of reproduction
No problems with the gist of this so far. Aside from the argument
already stated in my opening paragraph, my only serious objection here
is with the last word. What you are describing is a production process.
In the real world, products aren't going to be reproduced if there isn't
a demand for them. And that real world could apply to a communist world
just as well as to a capitalist one. Your measure-of-value function
totally abstracts from demand, just as Marx's point of departure does.
Already having identified the crux of the matter, how do you get to
reproduction? I don't want to put words in your mouth, but if you'd hold
production and reproduction to be more or less synonymous you cannot
care about waste, and your economy would become non-economic.
-- the social formation of money, the formation of the social
structure of money. (Cf. my pdf document where I frame the
proportional allocation of the productive forces of labor among its
alternative uses at each point in time -- or its dual, the value
vector -- as a fixed point.)
Only true if your Marxian point of departure, in the above coupled with
the NC one of GE, is indeed a realistic one to take in describing an
economy. In an economy where demand determines the value of supply,
meaning one wherein reproduction is the objective goal, there are no
fixed determinate points in time as I've indicated above. Instead, in
such an economy, "the social formation of money, the formation of the
social structure of money" is constantly changing right along with the
economy's size. Every time an investment is made for the purpose to
effect future final output, both on the supply side and on the demand
side, the currently disbursed personal income associated with that
investment for the greater part will end up as an increased demand for
existing final output to which it isn't related at all. This situation
not only requires a far more encompassing understanding of inflation,
but your value vector mirror image of productive forces in monetary
terms cannot exist as a fixed point in time.
Credit money issued by the state, particularly fiat money (money
without official convertibility), mystifies the link to the material
basis, the connection with the process of material reproduction. But
in another sense, it makes it more transparent, as the state acts as
the official representative of capitalist *society*. So, in a sense,
it's a step away from the fetishism of gold or stuff, although towards
the fetishism of extra-economic or political power. IMO, there's a
link that Marx did not examine properly in Capital, perhaps because
credit money was still underdeveloped. The missing link, IMO, is that
of the *bond* in the most general sense -- the generic term today's
theoretical economists use to refer to financial securities inclusive
of money.
Fiat money, as understood to be the numerical representation of socially
accumulated claims, demystifies; not by exposing the connivance between
capitalists and the state, but by clearing up what used to be the
mythical property of money - as both a recognized claim and mirror image
of all economically existing final output and, independently, being a
form of economic wealth itself. Regardless of being impossible
analytically, for all intents and purposes the latter is always taken
for granted as a matter of course. Marx too was fooled by this
conundrum. In Capital II, Ch. 17, he poses the very pertinent question:
"[h]ow can the entire capitalist class manage to draw continually £600
out of circulation, when it continually throws only £500 into it?" and
later he adds: "Nothing comes from nothing. The capitalist class as a
whole cannot draw out of circulation what was not previously thrown into
it." Then, after having stated that "[i]t will not do to obviate this
difficulty by plausible subterfuges" as well as concluding (paraphrased)
that the extra £100 either has to come from additional gold production
or are _already existing_ idle balances, he decides that: "*The problem
itself therefore doesn't exist* (emphasis in the original) ... So far as
any problem exists here, it coincides with the general problem: Where
does the money required for the circulation of the commodities of a
country come from?" So, according to Marx, there is no problem; when
M?C?M' rules, M'-M= existing idle balances + additional gold production.
Not only does this mean that Marx just blew his entire exploitation
theme to smithereens, but idle balances in his scheme constitute a
wealth in addition to available worker-produced living-standard
enhancement. Apparently for Marx, money wasn't just a measure of value,
its was a value all by itself and thus contradicts the ltv and/or snalt
measure of value. Consulting Marx on what is money, is obviously
hopeless. Although he asks the right question, he doesn't have the
wherewithal to come up with a meaningful answer and so he obviates
through subterfuge... There has to be a better approach than to try to
salvage some reason from this jumbled mess by holding on to Marx's point
of departure come what may.
Marx in Grundrisse and Capital promised he'd get to examine credit
money at some point, but other than fragments, such analysis is
missing in Capital and the other economic manuscripts I've read.
See above.
One can think of a bond, simply, as a legal contract (prima facie
between private parties, but ultimately between the holder of the bond
and society as a whole) whereby specific rights are conferred on the
holder by society's legal and political representative (the state)
with society's implicit or explicit commitment to devote resources
(taxed or extra-economically appropriated productive force of labor)
if necessary to enforce those rights. And clearly, the rights of the
holder ("assets" in financial-accounting jargon) are necessarily the
obligations (i.e. the "liabilities") of the rest of society. (By the
way, the concept of a bond is very general and it includes any and all
government policies or laws, as churned out by the legislative
process, adjudicated by the courts, and administered by the executive
branch. All legal contracts, explicit or not, can and should be viewed
as part of this legal/financial superstructure, insofar as all legal
contracts -- e.g. a purchase, a marriage, a federal budget, a monetary
policy decision, etc. -- entail a certain extra-economic reallocation
of the productive forces of labor in society
I'm with you all the way, but I think you're missing something vital
here that cannot be deduced from what you're saying. When the judiciary
adjudicates, it does so from the micro perspective where the merits of
each case usually seem fairly cut-and-dry. But it's beyond argument that
when defendants in the aggregate and even with the best will in the
world cannot possibly abide by the "rights" of the plaintiffs, it
clearly has become the plaintiffs' fault for having set the conditions
of the "bonds" impossible to make good on, a ruling in favor of _any_
individual defendant will thus be in order. I realize of course that
judgements based on humanitarian grounds at times tend to produce the
same result, but that's the luck of drawing a sympathetic judge.
Instead, in cases following economic rationales, the judiciary should be
informed to recognize , what is and what is not abidable by in the
aggregate, rather than limiting themselves to individual circumstances
that may or may not produce justice. This is another aspect of the whole
not being the sum of the parts; a fact that's easily analyzable in
economic terms from my point of departure, but that Marxians can do no
better than pay lip-service to. Although in the above described case,
applied Marxist humanitarian principles would lead to a similar outcome,
humanitarian principles in general just aren't good enough to convince a
judiciary concerned with logical economic issues; especially not a
judiciary that more often than not needs to show an anti-humanitarian
bias in order to get elected.
and, hence, the quantitative correspondence between the discounted
face value of the bonds and the stock of productive and consumptive
wealth of society.)
Another potentially serious disagreement here; first off, in order to
make this stick, you're going to need a theory of capital that shows you
know what you're talking about. From the perspective of a reproductive
process according to accountancy principles, there are no determinately
valued stocks at any particular time. All an accounting of this process
will be able to show is that the endogenously existing flow of
discretionally weighted attributable inputs with respect to output, are
coming off stocks having _had_ a value to the extent that returns have
been coming in. No returns = no value; and this goes for the economy's
bonds as much as for its production capacity. An important corollary of
this is that the total value of its bonds is limited to the extent that
living-standard enhancement can be extracted from the process, the rest
being fictitious wealth.
The general connection between the monetary denomination of the
totality of the bonds outstanding at any point in time (the so-called
"present value" of the entire financial superstructure) and the size
of society's wealth, which is to say its productive forces, is
analogous to Marx's quantitative formula re. coins and symbols of
money in Capital. (By the way, Fred Moseley has a paper where he
distilled this passage of Capital in a neat mathematical formula. You
can look it up if you're interested in it.) And I should leave it there.
Thanks but no thanks, neat mathematical formulas don't fit within an
accountancy perspective of how the economy works. So, by association,
your assertion is nonsensical within that paradigm as well. So it all
boils down to, which paradigm is both the most explanatory and relevant
in the quest to end capitalism. BTW, isn't Fred Moseley the fellow who
holds that Marx's Ch. 17 of Cap. II is (paraphrased) an aberration that
ought to be dismissed altogether?
John V
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