Re: SV: M-TH: Marx on GOLD
In article v0401172bb384a50f8cfa@[166.84.250.86], Doug Henwood [EMAIL PROTECTED] writes As above, they think governments (even a "workers'" government) have the ability to spend their way out of recessions to the land of peace and plenty (or to counter the cyclical trade slump). Generally, they think employment can be optimised by the correct usage of interest and money (interest rates or the value of money being too high). So governments have no influence over the growth rate or the distribution of income? Fiscal and monetary policy is powerless? That the machinery of capitalist government can be used to worsen or improve the lot of the working class? That is not what I said. I argued above that such a set of assumptions represented a Keynesian outlook, and these assumptions are all wrong and Marx showed why. A Marxist has a different set of assumptions and asks different questions. What are you talking about? The technical issues have been debated furiously by Keynesians monetarists for decades. Most Keynesians are bourgeois, and all monetarists are, but they're not the same. I know that, I was trying to point out how difficult it is to get Marxists to explain what their monetary theory is. Perhaps you can oblige and explain the claim, in your earlier post, why Marxists should take seriously Keynes' writings on finance? -- Lew --- from list [EMAIL PROTECTED] ---
Re: SV: M-TH: Marx on GOLD
Bob Malecki wrote: Doug writes: For goldbugs, the beauty of the metal is that it's a nonstate form of money and its supply rises about 2% a year (and not even Hans Tietmeyer could run a monetary policy that tight). For Marxist goldbugs, the beauty of the metal is pretty similar - they just can't believe that an entirely state-regulated monetary system can survive. But it has. Doug Has it Doug? Are'nt we being a little hasty here? I mean even you say that this stuff is only 25 years old and if we look at the last 25 years it was based only on post WW2 development of the long boom after the war. Actually the floating system came with the end of the Golden Age; it was the gold-dollar standard of Bretton Woods that governed the boom period. The recent revamping of the Swedish, and now the Japanese, Indo-chinese economies shows that a mercedes and a nice house ain't woth the pot to piss in these days. What ever are you talking about? The weakening of the Swedish welfare state (and the Japanese private corporate welfare state, such as it was) looks to me like symptoms of bourgeois political strength, not the imminence of revolution. Seems to mean that our "Marxists" are getting lost in all kinds of confusion over the old "gold" standard and the new credit standard based on the strength of a given piece of paper without understanding that the system is on a self destruct mode which leads to wars and the possibilities of revolution to get rid of it. Optimist. What difference does it make between "gold and credit" if the system itself no longer can turn a buck. So we are back to the old question of war being the for longed arm of economic policy. What do you mean it can't turn a buck? U.S. profit rates made a strong recovery starting in the early 1980s. They peaked in 1996 and have since fallen off a bit, but they're well above the crisis levels of the 1970s. European profit rates, while not as high as the U.S., are still quite high - in fact a recent paper from the Bank for International Settlements wondered why they're as high as they are. Japan is in the tank, yes, but I suspect they're bottoming out just as the U.S. is topping out. That's because Doug and others would like to be at those future Keynesian conferences to reform this society and attempt to turn the clock back to a period in history which is excepptional and hardly the rule! You're truly extraordinary, Bob. You must have missed this passage from Wall Street that I quoted in my response to you and WV: quote But the real problems with Keynes lie ultimately in the naivete and conservatism lurking behind his sophisticated and iconoclastic style. Having (re)discovered that 'entrepreneurs' (a word he and post-Keynesians like Davidson prefer to the more loaded 'capitalists') are in business to make money, and nothing else, he somehow concluded that rentiers will consent to their euthanasia. Compare this vain wish to a 150-year-old observation: 'In England there takes place a steady accumulation of additional wealth, which has a tendency ultimately to assume the form of money' (quoted in Marx 1981, p. 543). A tendency indeed: money, whatever its economic role, is most definitely not neutral in its social role; the accumulation of money is the fondest desire of every good capitalist citizen. Keynes realized this with one half of his mind, and then with the other half thought you could tweak this fundamental tendency out of existence almost unnoticed. Having laid bare some real contradictions, he spuriously proposed to resolve them. And further, having discovered in two ways, those of the Treatise and the General Theory, that capitalism does not tend of its own accord to full employment and stability, Keynes (1936, p. 379) then declared at the end of the General Theory that his goal was not to overturn the 'Manchester system,' but merely to liberate its full potential: blockquote The complaint against the present system is not that these 9,000,000 men ought to be employed on different tasks, but that tasks should be available for the remaining 1,000,000 men. It is in determining the volume, not the direction, of actual investment that the existing system has broken down. Thus I agree with Gesell that the result of filling the gaps in the classical theory is not to dispose of the "Manchester System," but to indicate the nature of the environment which the free play of economic forces requires if it is to realize the full potentialities of production. /blockquote The problem of capitalism lies not in the exploitation of labor, the creation of poverty amidst plenty, the abuse of nature, the atomization of society, nor the trivialization of culture, but simply in its incompleteness - that one in ten are denied its full delights. But given full license, Keynes and his epigones could solve that problem. Too bad the capitalists haven't let them do it yet. But they did, in a sense - not the sense in which Keynes meant it, and
Re: SV: M-TH: Marx on GOLD
In article v04011706b3843afe9945@[166.84.250.86], Doug Henwood [EMAIL PROTECTED] writes This part of Marx has been submerged by Keyenesianism: basically, the idea that governments can spend their way to peace and prosperity. If you think that's all that Keynes is about, you're badly wrong. Either you have never read him or didn't understand what you've read. It's what *Keynesianism* broadly represents. Keynes' own writing is more obscure, but he often stated his aim as saving capitalism from itself. His analysis of finance and credit should be taken seriously by anyone calling himself a Marxist. By "seriously" do you mean take a thorough look, or do you think there is something worthwhile taking on board? But many others who would regard themselves as Marxist have unwittingly adopted Keynesianism by default. They too may spurn the Baron's politics but they cling to the unspoken assumptions of his economics. Which are...? As above, they think governments (even a "workers'" government) have the ability to spend their way out of recessions to the land of peace and plenty (or to counter the cyclical trade slump). Generally, they think employment can be optimised by the correct usage of interest and money (interest rates or the value of money being too high). Of course, getting them to admit to any this is the devils' own job. But what else can they do - own up to being some kind of broadly defined monetarist? Of course not, they ignore it as some kind of technical issue they don't need to bother with. -- Lew --- from list [EMAIL PROTECTED] ---
Re: SV: M-TH: Marx on GOLD
Lew wrote: As above, they think governments (even a "workers'" government) have the ability to spend their way out of recessions to the land of peace and plenty (or to counter the cyclical trade slump). Generally, they think employment can be optimised by the correct usage of interest and money (interest rates or the value of money being too high). So governments have no influence over the growth rate or the distribution of income? Fiscal and monetary policy is powerless? That the machinery of capitalist government can be used to worsen or improve the lot of the working class? I have no idea what "the value of money being to high" means. Of course, getting them to admit to any this is the devils' own job. But what else can they do - own up to being some kind of broadly defined monetarist? Of course not, they ignore it as some kind of technical issue they don't need to bother with. What are you talking about? The technical issues have been debated furiously by Keynesians monetarists for decades. Most Keynesians are bourgeois, and all monetarists are, but they're not the same. Doug --- from list [EMAIL PROTECTED] ---
Re: M-TH: Marx on GOLD
Thanks Hugh. This was clarifying for me. Charles Brown Hugh Rodwell [EMAIL PROTECTED] 06/07/99 05:31PM John W writes: Thanks for all your replies but now I am completely confused. How can money - as the universal measure of value - function if it does not itself have any value? If value is determined by the labour time necessary for its production. Money does have value the same as any other commodity -- the universal equivalent is a commodity and needs to be. The confusion comes from all the socially authorized proxies for the universal equivalent which are in themselves lacking in value, merely being tokens for the actual equivalent. Marx in Capital and elsewhere gives plenty of examples of what happens when valueless tokens fail in their function. He also gives examples of money which is actually made from the universal equivalent commodity causing problems precisely because it *does* have a value of its own -- when this value strays too far from the state decreed value, the state loses and the money takes on a life of its own until the state eats humble pie and adjusts its dictated evaluation of the currency. This also happens beneath the surface of presentday capitalist society, too, of course, showing that the hybrid universal equivalent commodity is still concrete enough to take on a life of its own and screw up the state's desire to proclaim the value of its own currency without consideration for the realities of capitalist production and distribution. Obviously gold need not be used money of account or the circulating medium but surely in the exchange C-M-C the three items must be commensurable. If 2 coats = hundredweight of corn then M must embody the same amount of socially necessarry labour time as is contained in the coats and the corn. Is this wrong? It's right, of course. An equivalent is only an equivalent if it in fact is equivalent. And the thing being equivalated so to say is the socially necessary labour time. The last problem I have with the replies is that why does the Bank of England still hold gold reserves for all the UK banks and moves them from one to another at the end of the days trading? This is also done at Fort Knox for balancing the accounts between countries. Is this just because they misunderstand that it is only paper money enforced by military power that gives value. Oh no. It's cos they're forced to observe the realities, however little they might believe in them. Paper money enforced by military power does not give value. This is a key misunderstanding. What it does is represent a credible token for value, which is an utterly different kettle of fish. Still mystified by gold, Gold is no mystery, it's the shenanigans it gets up to when it gets cast as money in the capitalist process of reproduction and distribution. Understand this process and the role of value in it, and you'll understand both money and gold. Basically, nothing comes of nothing. E nihil nihilo. Cheers, Hugh == "Changes dictated by social necessity are sure to work their way sooner or later, because the imperative wants of society must be satisfied, and legislation will always be forced to adapt itself to them." Karl Marx, "The abolition of landed property -- Memorandum for Robert Applegarth, December 3 1869" http://csf.Colorado.EDU/psn/marx/Archive/1869-Land/ This is published in the Collected Works of Marx and Engels, Vol 23 1871-74, p. 131, under the title of "The Nationalisation of the Land". It was written in 1872 as notes for Eugene Dupont, the organizer of the Manchester section of the Working Men's International Association. Dupont's report at the May 8 meeting of the section was published in the International Herald on June 15, 1872. This report, which differs slightly from the notes published in the M-E Archives, is the text published in the Collected Works. * * * "Though not in substance, yet in form, the struggle of the proletariat with the bourgeoisie is at first a national struggle. The proletariat of each country must, of course, first of all settle matters with its own bourgeoisie." Communist Manifesto, 1848, end of first section "Bourgeois and Proletarians" * * * "The world political situation as a whole is chiefly characterized by a historical crisis of the leadership of the proletariat." Transitional Programme -- The Death Agony of Capitalism and the Tasks of the Fourth International, 1938, perhaps the most important programmatic document for which Trotsky bore major responsibility. Introduction. * * * And on a lighter note: His lockid, lettered, braw brass collar, Shew'd him the gentleman and scholar. [Rabbie Burruns, The Twa Dogs, 1.13] --- from list [EMAIL PROTECTED] --- --- from list [EMAIL PROTECTED] ---
[lew@lewhiggins.freeserve.co.uk: Re: M-TH: Marx on GOLD]
I had written: Had the Bank of England, under the gold standard, used the convertibility of its bank notes as the sole criterion for how many bank notes to issue, it would have issued too many bank notes. Lew responded: Too many bank notes for what? All banks were required by law to only issue enough currency which could be freely convertible into gold on demand. Of course, some banks did over-issue their currency and if a financial crisis occurred there would be a run on gold, the bank would go bust and that particular currency would become worthless. My response to this now: The solvency of the banks is a surface phenomenon which does not tell the whole story. The Bank of England was several times on the brink of going bust, and all they had to do is suspend convertibility of bank notes into gold for a few weeks or so, and the panic subsided and the system itself survived without harm. These busts were not a sign that the Bank had previously issued too many banknotes; they were an expression of much more basic contradictions of capitalism. If the Bank of England would have issued too many banknotes, then it would have allowed to economy to overheat and prices to rise so much that eventually bank notes would have been traded at a discount with gold coins and would no longer have been considered real money. The Bank was very careful not to let this happen, because they knew that bank notes, even from the Bank of England, first had to earn their status as money. Only the experience of many years of prudent B of E policy (and of learning on part of the central bankers) would solidify the status of the bank notes as money. This process continued, and over time more and more risky things became to be accepted as money, because the institutions behind them had proved that they can make it work. John asked: Was there (at that time) enough gold he;d to honour all the transactions? And if there was not (and I believe there wasn't) what was the cause of the short-fall? There were periodic panics during which there was not enough gold. But this does not mean that there were imprudent policies involved. Had the Central Bank pursued a policy in which such bank runs would not be able to happen they would have stifled capitalist development in other ways. They had to regulate the institution of money to fit the capitalist realities, not the other way around. During that time they did it with the Bank Act of 1844, which made it fairly difficult to issue many bank notes even in good times, and which nevertheless had to be suspended occasionally in crisis moments, making bank notes temporarily inconvertible. There was also international cooperation: if one of the European central banks got into trouble, the others helped it out. Nowadays they do it with lender of last resort functions (the Central Bank occasionally bailing out certain debtors in order to prevent a collapse of the credit system), and again international cooperation. They are probably too good at preventing an increasingly fragile credit system from collapsing. Sometimes such collapses are necessary to eliminate the overhang of debt stifling real production, just as sometimes forest fires are necessary). And they are probably not doing enough in terms of international cooperation. BTW I am less certain of what I am saying here than it may sound. These are my attempts to make sense of it, sent out in the hope that those aspects which are wrong will be ironed out in the discussion. Hans. --- from list [EMAIL PROTECTED] ---
Re: M-TH: Marx on GOLD
J.WALKER, ILL wrote: How can money - as the universal measure of value - function if it does not itself have any value? If value is determined by the labour time necessary for its production. It's valorized by the goods and services it can buy, including labor power. The last problem I have with the replies is that why does the Bank of England still hold gold reserves for all the UK banks and moves them from one to another at the end of the days trading? This is also done at Fort Knox More at the Federal Reserve Bank of New York, actually. for balancing the accounts between countries. Is this just because they misunderstand that it is only paper money enforced by military power that gives value. Many of the world's central banks are selling their gold stocks, and there's substantial pressure on the IMF to do the same. In other words, the central banks don't pay that much attention to gold anymore. Doug --- from list [EMAIL PROTECTED] ---
Re: M-TH: Marx on GOLD
In article [EMAIL PROTECTED], J.WALKER, ILL [EMAIL PROTECTED] writes Thanks for all your replies but now I am completely confused. How can money - as the universal measure of value - function if it does not itself have any value? If value is determined by the labour time necessary for its production. Obviously gold need not be used money of account or the circulating medium but surely in the exchange C-M-C the three items must be commensurable. If 2 coats = hundredweight of corn then M must embody the same amount of socially necessarry labour time as is contained in the coats and the corn. Is this wrong? It's not wrong. As Hans explained, the crucial factor was the currency being freely convertible into gold on demand and so therefore the currency was "as good as gold". The last problem I have with the replies is that why does the Bank of England still hold gold reserves for all the UK banks and moves them from one to another at the end of the days trading? This is also done at Fort Knox for balancing the accounts between countries. Is this just because they misunderstand that it is only paper money enforced by military power that gives value. The main purpose for gold these days is settling international exchange rates between currencies. Basically, with convertibility (into gold) the price level is determined by the total amount of gold in circulation (the situation in the UK up till 1914). But with inconvertibility the required level of currency is determined by the total amount of commodities in circulation. Gold no longer has a role in fixing the value of a currency within a country. In article [EMAIL PROTECTED], Hans Ehrbar [EMAIL PROTECTED] writes 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 is true. 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. This is not true: there is nothing in Marx or a Marx inspired reading of the evidence to suggest such a conclusion. 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). I think you might find a more plausible explanation in the rising profit rates and expanding markets in the post-war period rather than political fixes concerning the form of money. In article l03130300b37e6fa986b0@[137.92.41.119], Rob Schaap [EMAIL PROTECTED] writes G'day John, Haven't got my *C* with me ... My understanding of the way things are today is that banks create over 90% of the money in circulation through the provision of credit. If you take a look at your currency you will see that it is produced by your equivalent of a government central bank. Private banks lost the right to issue their own currency some time ago. Contrary to what the voodoo economists will tell you, private banks cannot create something out of nothing. The idea that banks can create credit "at the stroke of a pen" is a piece of bullshit instigated by Keynes. Treat it with the contempt it deserves. -- Lew --- from list [EMAIL PROTECTED] ---
Re: M-TH: Marx on GOLD
Lew wrote: The main purpose for gold these days is settling international exchange rates between currencies. Gold has minimal international functions. I have no idea what you're talkinga bout when you say its main purpose is settling international exchange rates. Those are set on foreign exchange markets. There's an implicit gold price involved, but it's just a reflection of what the FX markets decide. With fixed-rate currencies - there are a few left, though their number is dwindling - their value is tied to another currency, like the US dollar or French franc. 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. This is not true: there is nothing in Marx or a Marx inspired reading of the evidence to suggest such a conclusion. Capital vol. 3, pp. 648-649 of the Vintage/Penguin edition: Marx said that in crises, commodities cannot be transformed "into money, i.e. into their own purely fantastic form." To reverse a drain of gold, for example, interest rates are driven up "to guarantee the conditions of this convertibility But the basis for it is provided by the basis of the mode of production itself. A devaluation of credit money (not to speak of a complete loss of its monetary character, which is in any case purely imaginary) would destroy all existing relationships. The value of commodities is thus sacrificed in order to ensure the fantastic and autonomous existence of this value in money. In any even, a money value is only guaranteed as long as money itself is guaranteed. That is why many millions' worth of commodities have to be sacrificed for a few millions in money. This is unavoidable in capitalist production, and forms one of its particular charms" If you take a look at your currency you will see that it is produced by your equivalent of a government central bank. Private banks lost the right to issue their own currency some time ago. Contrary to what the voodoo economists will tell you, private banks cannot create something out of nothing. The idea that banks can create credit "at the stroke of a pen" is a piece of bullshit instigated by Keynes. Treat it with the contempt it deserves. Keynes never deserves contempt, but I'll forget about that for the moment. In actual practice, banks extend credit and seek to fund their loans later. This happens at the level of an individual bank and also at the systemic level. Under modern systems, credit growth is driven by private demand and the central bank is called upon to provide the reserves to validate the credits. Marx is usually considered an endogenist theorist of money, meaning that the supply of money follows the needs of circulation rather than vice versa, the exogenous approach of Friedman and the monetarists. Doug --- from list [EMAIL PROTECTED] ---
Re: M-TH: Marx on GOLD
John W writes: Thanks for all your replies but now I am completely confused. How can money - as the universal measure of value - function if it does not itself have any value? If value is determined by the labour time necessary for its production. Money does have value the same as any other commodity -- the universal equivalent is a commodity and needs to be. The confusion comes from all the socially authorized proxies for the universal equivalent which are in themselves lacking in value, merely being tokens for the actual equivalent. Marx in Capital and elsewhere gives plenty of examples of what happens when valueless tokens fail in their function. He also gives examples of money which is actually made from the universal equivalent commodity causing problems precisely because it *does* have a value of its own -- when this value strays too far from the state decreed value, the state loses and the money takes on a life of its own until the state eats humble pie and adjusts its dictated evaluation of the currency. This also happens beneath the surface of presentday capitalist society, too, of course, showing that the hybrid universal equivalent commodity is still concrete enough to take on a life of its own and screw up the state's desire to proclaim the value of its own currency without consideration for the realities of capitalist production and distribution. Obviously gold need not be used money of account or the circulating medium but surely in the exchange C-M-C the three items must be commensurable. If 2 coats = hundredweight of corn then M must embody the same amount of socially necessarry labour time as is contained in the coats and the corn. Is this wrong? It's right, of course. An equivalent is only an equivalent if it in fact is equivalent. And the thing being equivalated so to say is the socially necessary labour time. The last problem I have with the replies is that why does the Bank of England still hold gold reserves for all the UK banks and moves them from one to another at the end of the days trading? This is also done at Fort Knox for balancing the accounts between countries. Is this just because they misunderstand that it is only paper money enforced by military power that gives value. Oh no. It's cos they're forced to observe the realities, however little they might believe in them. Paper money enforced by military power does not give value. This is a key misunderstanding. What it does is represent a credible token for value, which is an utterly different kettle of fish. Still mystified by gold, Gold is no mystery, it's the shenanigans it gets up to when it gets cast as money in the capitalist process of reproduction and distribution. Understand this process and the role of value in it, and you'll understand both money and gold. Basically, nothing comes of nothing. E nihil nihilo. Cheers, Hugh == "Changes dictated by social necessity are sure to work their way sooner or later, because the imperative wants of society must be satisfied, and legislation will always be forced to adapt itself to them." Karl Marx, "The abolition of landed property -- Memorandum for Robert Applegarth, December 3 1869" http://csf.Colorado.EDU/psn/marx/Archive/1869-Land/ This is published in the Collected Works of Marx and Engels, Vol 23 1871-74, p. 131, under the title of "The Nationalisation of the Land". It was written in 1872 as notes for Eugene Dupont, the organizer of the Manchester section of the Working Men's International Association. Dupont's report at the May 8 meeting of the section was published in the International Herald on June 15, 1872. This report, which differs slightly from the notes published in the M-E Archives, is the text published in the Collected Works. * * * "Though not in substance, yet in form, the struggle of the proletariat with the bourgeoisie is at first a national struggle. The proletariat of each country must, of course, first of all settle matters with its own bourgeoisie." Communist Manifesto, 1848, end of first section "Bourgeois and Proletarians" * * * "The world political situation as a whole is chiefly characterized by a historical crisis of the leadership of the proletariat." Transitional Programme -- The Death Agony of Capitalism and the Tasks of the Fourth International, 1938, perhaps the most important programmatic document for which Trotsky bore major responsibility. Introduction. * * * And on a lighter note: His lockid, lettered, braw brass collar, Shew'd him the gentleman and scholar. [Rabbie Burruns, The Twa Dogs, 1.13] --- from list [EMAIL PROTECTED] ---
Re: M-TH: Marx on GOLD
G'day John, Haven't got my *C* with me ... My understanding of the way things are today is that banks create over 90% of the money in circulation through the provision of credit. It exists only as digits, and represents a faith in the near-to-mid term old crisis theorists like me don't think is justified. In other words, the huge majority of monies represents value not yet extracted, and not particularly likely to be within the period it'll be needed to square the accounts. In that event, we either reallocate social wealth to bail out the banks or generate new loan contracts to keep the finance system afloat (we've done that before, but it obviously ain't a structural fix as much as a short-term 'socialism-for-the-rich' band-aid that effectively exacerbates the credit-dependence of the system), or we let the financiers hit the wall and find ourselves with a depression of (by my simple arithmetic) absolutely unprecedented intensity. We depend upon our yoke most profoundly ... Anyway, no relationship pertains in 1999 between minted money and the amount in circulation (capitalism survives each day on an ever deeper-mined future - the only bolt-hole it has), and none with gold - which enjoys only a discursive status - as Australia's and Britain's decisions to sell while the going's good suggests. Controlling credit is not only a self-professed socialist's aim, it really should be any capitalist's aim, too. Everyone's so urgently talking up productivity projections not so much because of the improved living standards they should promise, but because it's desperately needed to square today's accounts. It might be said that the tendency of the rate of profit to fall encourages ameliorating bites into the future, which ultimately promises only systemic fragility, as the pressure to service that debt is increased by more of said tendency. The 'information economy' seemed to offer those who don't believe in systemic crisis a way out (an index to this optimism is to be seen in stock values among info-monopolists). But those numbers are already softening, it seems. After that, only massive capital destruction is left as a way back to profitability - and that would have the effects we've been watching in SE Asia. Regional devastation and the laying waste of 200 million lives in sudden intense depressions that go all but ignored in the core economies. Too much of that, and you've solved an excess capacity problem only to introduce an underconsumption crisis. Then the depression nails us ... If that's hilariously untenable, Doug'll be quick enough to chime in. Won't you, Doug? Cheers, Rob. To readers of Das Kapital, Here is a theoretical question on Marx's most important work which I hope someone can help me with. There is a group of us here in Manchester slowly going through Das Kapital and although we can get to grips with most of the first few chapters, one problenm we cannot resolve is the relationship between the amount of gold and the amount of paper money, coins, credit, etc. Is the value of the coin money equal the amount of gold, is it proportional or is there any direct relation? o they just have to have some Gold? In the exchange C-M-C does M = the amount of concretised labour in an amount of gold equal to that required to make C ? This question is rather confused, but if anyone has any idea what it is I am still struggling to understand could youn please help. Many thanks, John Walker Manchester, UK. --- from list [EMAIL PROTECTED] --- --- from list [EMAIL PROTECTED] ---
M-TH: Marx on GOLD
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 CityUT 84112-9300 (801) 585 5649 (FAX) --- from list [EMAIL PROTECTED] ---
