TH: Money, money, money, must be funny... Hugh Rodwell m-14970 at mailbox.swipnet.se Tue Sep 22 03:08:35 MDT 1998
http://lists.econ.utah.edu/pipermail/marxism-thaxis/1998-September/011456.html Previous message: M-TH: Re: Swedish Elections -- postscript Next message: M-TH: LBJ tapes released Messages sorted by: [ date ] [ thread ] [ subject ] [ author ] -------------------------------------------------------------------------------- This discussion on whether we have real money or just credit money is going on on the Capital Reading Group list. It might interest subscribers here. Cheers, Hugh ___________________________________ Joaquin writes: >Credit-money, or contemporary money, can be called "symbolic money". When >Marx says (DK I ch 2 ph 14) "the fact that money can, in certain functions, >be replaced by mere symbols of itself, gave rise to that other mistaken >notion, that it is itself a mere symbol", that is correct for his time, but >not for ours. For example, when he speaks of world money, Marx mentions >approvingly James Steuart assert that world money is only gold and silver >(DK I ch 3). > >The credit system as analyzed by Marx has the metal money at his base. For >Marx "money, the common form in which all the commodities as values are >transformed, the universal commodity, must be itself a particular commodity >between the others, for they must be measured with it not only ideally, but >must be exchanged and barterd for money in the real exchange" (Grundrisse p >82-83 Dietz Verlag edition), that is "(Money) value is determined by the >labour-time required for its production, and is expressed by the quantity of >any other commodity that costs the same amount of labour-time" (DK ch2 >ph15). All this is coherent with metal-money, but today -- contrary to >Marx time, >money is created by convention, but is still a real thing -- >it is real symbolic money >- If the gold in Ford Knox is not at the base of the international dolars >(reserve dolars): Why the rest of the world still makes up their reserves in >dolars and not in gold? This and parallel questions deserve a good, long and >hard theoretical work by marxists, just only initiated (Suzanne de Brunhoff, >Werner Bonefeld and others) This is conceptually impossible. "Real symbolic" money is meaningless. There is no way capitalism today has evaded the contradictions of commodity exchange and circulation including money as a commodity. If it had, our problems would be solved, we wouldn't need socialism, and all we would need would be the sensible and enlightened management of a thoroughly socialized world economic system. The current calls by Soros, Blair and others for transnational regulatory authorities would be the ultimate in economic wisdom, and -- the crisis would never have arisen in the first place! But the crisis is there, always was and always will be until capitalism is replaced by socialism. What credit-money represents is just an ever-more mediated and indirect pointer to the real universal commodity. The insanity of capitalist relations in a society where the forces of production are as socialized as they are today is revealed by the acute embarrassment of bourgeois economics in relation to money and gold. They are still desperately trying to pretend that the value of money is the result of political decree (this is the basis of Joaquin's position and Chris Burford's view of the 30-year US long bond) and not tied to any real commodity such as gold. But the noose is tightening as the crisis develops. The way credit-money operates during periods of relative capitalist expansion (bull markets in the metropolises) gives us an idea of how prices and labour-equivalents could work in a socialist economy that's got beyond the Law of Value (ie achieved world hegemony and surpassed capitalist productivity), but it is completely deceptive when it comes to understanding the nature of money in capitalist society. As we shall see as the crisis develops and deepens. Cheers, Hugh We're still arguing about money. Cheers, Hugh ____________________________________ John Ky writes: >Whatever the case, the government plays by certain rules to >ensure stability. You don't see a government in a stable >country making wild decrees about money all the time do you? Sweden is relatively stable. The government put short term interest rates up to 500 per cent a few years ago. How wild do you want?? Some countries fluctuate wildly between stable and unstable. The stability is not in the hands of their governments to decree. Governments make decrees about money all the time, from interest rates to printing orders. The wildness or not can only be gauged after the event by the behaviour of the economic system. John assumes that money is a matter of government control, mainly imperialist US control. He's in for just as big a shock as other believers in this fairy tale. >Joaquin: >>Credit-money, or contemporary money, can be called "symbolic >>money". Money is created by convention, but is still a real >>thing -- it is real symbolic money. > >Hugh: >>This is conceptually impossible. "Real symbolic" money is >meaningless. > >Only by virtue of definition. It depends heavily on the >definition of money, and the type of symbolism you refer >to. For example you be may arguing that these aren't >real money but symbols of money; or that these are money >by being symbolic of some measure such as exchange value. >You might also have limited your definition of money to >metal money or alternatively you may classify any commodity >that is universally exchanged as money. What Joaquin means >by "symbolic money" ultimately determines whether "real >symbolic money" is meaningless. My definition is Marx's. What Joaquin's is, he'd better make a lot clearer. Until he convinces me the way Marx did, I'll stick with Marx. Particularly Joaquin will have to convince me that the economy today is qualitatively different in terms of departing from the fundamentals of commodity production and circulation from what it was in Marx's day. >I think gold and silver managed to acquire money status >because it is: > >+ comparitively easier to authenticate than other commodities. >+ non-perishable >+ divisible >+ portable >+ limited in abundance >+ convenient >+ easy to secure >+ measureable > >When other commodities become more superior than gold and >silver with respect to these (and possibly other) properties >then it is reasonable to adopt them as money in favour to >gold. In the past gold has acquired money status only >because it has these properties. So?? And what replacements have we seen? >There is no reason to believe that precious metals are the >only "real money" - In principle, they aren't. But what else can ultimately do the job? >or that they can continue to exist as >"real money" infinitely. Commodity production is not an 'infinite' mode of production. It arose historically from other modes of production and will disappear when superseded by socialism (or barbarism). As long as commodity production rules, however, find a better commodity to serve as the universal means of exchange. I wrote: >>There is no way capitalism today has evaded the contradictions >>of commodity exchange and circulation including money as a >>commodity. If it had, our problems would be solved, we wouldn't >>need socialism, and all we would need would be the sensible and >>enlightened management of a thoroughly socialized world economic >>system. The current calls by Soros, Blair and others for >>transnational regulatory authorities would be the ultimate in >>economic wisdom, and -- the crisis would never have arisen in >>the first place! John froths: >That's just plain stupid. You are claiming that if this so called >"pointer money" was abolished and replaced by metal-money that all >capitalist contradictions would be solved. Where do I claim this?? I say that capitalism hasn't evaded the contradictions of commodity production and circulation. I also claim that it never will. As for pointer-money, I'm not saying that if it was abolished and replaced by metal money everything would be dandy. And if John had been following Marx's arguments and my references to them he would grasp this. In the first place it is absolutely impossible to abolish credit and pointer-money under capitalism, however dependent they are on real money underlying the system. It was impossible in Marx's day and it's a million times less feasible today. In the second place, a change of money systems from credit to real could in no way resolve any of the contradictions of capitalism, let alone all of them. The money system is directly derivative from the system of commodity production and exchange, it is secondary. All schemes to reform capitalism by reforming money or currency alone are utopian. "Successful" currency reforms have always involved much more than just the currency, and they've usually been pretty short-lived as well. >If that isn't what you mean then this paragraph is irrelevant to >the argument. Nonsense. What I say is that as long as capitalism survives it will be subject to the contradictions involved in the commodity nature of money, and the impossibility of planning and coordinating production and exchange that this involves, in other words, capitalism will always be subject to crises of overproduction of capital, glut, general insolvency etc by its very nature. >Joaquin: >>- If the gold in Ford Knox is not at the base of the international >>dollars (reserve dollars): Why the rest of the world still makes up >>their reserves in dolars and not in gold? This and parallel questions >>deserve a good, long and hard theoretical work by marxists, just only >>initiated (Suzanne de Brunhoff, Werner Bonefeld and others) > >I agree. Contrarywise, why bother with the gold at all if dollars are so much better? Why make yourself vulnerable to what might happen if South Africa or Russia unleash a tidal wave of gold on the world market? And if the dollar is so damn reliable, why all the nervous dancing about and headtossing in world markets? Why all the fuss about national reserves? What needs study is the mediation between real money (gold or whatever commodity serves as the real universal equivalent) and state money/credit money, not the utopian nonsense of an autonomous and non-existent political money by decree. The principles relating to this are so clear that Marx was able to demolish the whole mare's nest in his criticism of Proudhon and his labour voucher scheme in 1847, even before the Communist Manifesto was written. >Hugh: >>But the crisis is there, always was and always will be until >>capitalism is replaced by socialism. > > >Rubbish. If humanity ceased to exist, then the crisis would >also cease to exist. That would be the simplistic refutal of >your argument. Extremely simplistic. Here John of course is arguing that capitalism itself will be able to overcome its crises. And this not in the middle of a bull run, which would at least be understandable, but in the midst of the greatest crisis since Bretton Woods (take Blair's and Soros's word for it). To claim capitalism will be crisis free if only it finds the right nostrum is lunacy. If they could've done it, they would've. And to use "Marxist" methods, as the regulationists and apparently Joaquin would like, to solve capitalism's crises for it is perverse at best and anti-working-class madness at worst -- madness because it just won't work. It's as chimerical as a perpetuum mobile. >In addition, socialism may not guarantee a >solution to the crisis. I suspect that some implementations >of socialism may numb it down or mutate the crisis into an >unrecogniseable form - you can't ignore the existance of a >black economy; you can't ignore that society is extremely >dynamic and somewhat independent of the rules it is suppose >to live by. Whatever the implementation, if it fails to be >more natural than capitalism. (eg. If you forbid exchange, >you may still see people exchange things such as information >and good will) John just sees "socialism" as some kind of kinder gentler icing on the capitalist cake. I hope our continued reading of Capital convinces him otherwise. >>They are still desperately trying to pretend that the value >>of money is the result of political decree (this is the basis >>of Joaquin's position and Chris Burford's view of the 30-year >>US long bond) and not tied to any real commodity such as gold. >>But the noose is tightening as the crisis develops. > > >You can't get something out of nothing. When the government >decrees money and puts it into circulation, it doesn't mean >there is suddenly more value floating around. It means >that someone has suffered liability for it. It is the same >as making a loan. You can request money from the bank which >isn't yours, but you incur a liability. When you deposit >money, the bank incurr a liability to you. When the government >starts printing money, the people incur a liability proportional >to the amount of money they possess multiplied by other factors. >The government may responsibly introduce money into circulation >responsibly by lending. It may responsibly remove money from >circulation by borrowing. I suppose this is how long bond works. This makes some sense. Nothing comes of nothing. But the problem is basically the one we're studying in Capital. Where does value come from and how does it behave? A secondary question in this is how does money mediate commodity circulation? However, the government is not the people. And the kind of responsibility John is talking about here is very bourgeois -- paying your debts and the like. As we've seen in recurrent scandals, the government usually tries to force others to pay for its debts, and if it can't do this it tries to abolish them (wild decrees about money??!). >The government is always able to print some money because the >nation's population is increasing. By printing money, the >government can maintain an average cash per capita and preserve >the value of money. If they want to print more money, they >could try increasing immigration. What on earth has population got to do with the value of money? By this Malthusian reckoning India and China would be the richest countries on earth, and Russia wouldn't be sitting in the hole it is at present. Cheers, Hugh boddhisatva kbevans at panix.com Tue Sep 22 16:57:12 MDT 1998 Previous message: M-TH: Debate question Next message: M-TH: Money, money, money, must be funny... Messages sorted by: [ date ] [ thread ] [ subject ] [ author ] -------------------------------------------------------------------------------- C. Hugh, I don't think you have carefully considered what credit money is. First, let me say that credit money clearly exists as such and it has for quite a while. Abandoning the gold standard did not suddenly moot money, instead it made money something different. That form of money has served extremely well for some decades so you are really arguing against empirical reality in a sense. The question is what the new money represents. The answer is clearly not commodities. Money has no definite commodity value. A piece of tin has usefulness bestowed on it by nature. It is not formless, but definite. It's natural characteristics make it useful for some things and not for others. As such it has a definite, even static, relationship to any particular technological state of art. Floating money is not created by nature but is created by banks. Loans create money. What is a loan? It is an agreement among parties based on an assessment of how a technological state of art will pay off and, very importantly, how well all the participants can be trusted to make that state of art pay off. Rather than valuing commodities at hand, money is actually created valuing future commodity production and relations of production. The relative value of today's money to today's commodities is actually a function of the anticipated value of tomorrow's commodity production versus today's stock of goods and assets. Credit money, in a very real way, values a society's capacity to produce against the commodities it has on hand. While it may have been true in Marx's day that money was a numerical substitute for commodities, that is no longer true. peace Hugh, Money represents the value of contracts, not commodities. peace BodyS writes: > Money represents the value of contracts, not commodities. and this is his general argument for the difference between money in Marx's time and money today. This fetishizes the thought as prior to the being. A contract or a promise or whatever is about something material, a commodity or commodity-like service. Since it points to the material thing that is the focus of the agreement, it is natural to treat it as if it was the thing -- as long as no glitches occur that screw up the pointing function. If glitches occur, as they do in crises, anyone insisting on the real value content of credit notes, contracts or paper will just get laughed at. What we are seeing today is the reality of this circumstance closing in around the biggest fetish of them all, the Almighty Dollar. Most of the surrounding fetishes are falling by the wayside, most spectacularly the peripheral ones, and most impressively the imperialist ones like the yen. However, capitalism being the lying system that it is, completely dependent on false understanding of all its categories, the myth that credit is real value and paper is real money will be perpetuated until the dollar itself is reduced to palpable ashes. If the socialization of society had affected the relations of production as fundamentally as BodyS and others (lke Joaquin on CRG) are arguing, so that commodity production and circulation had become transformed into the coordinated production and circulation of products of labour by consciously and freely associated producers (the only basis on which money could function in the way they claim), then we'd already have socialism, and there would be no explanation at all for the crises periodically convulsing capitalism. But this is not the case, we still have capitalist relations of production, and it is their constrictive stranglehold on the forces of production that cause the horrors of everyday life in the imperialist world at best and the explosive nightmare of fullscale crisis at worst. And among the central features of these capitalist relations of production you will find the nature of money, rooted willy-nilly in its commodity form and absolutely impervious to all the rhetoric trying to paint it up as mere words -- the promises or decrees of politicians or central bankers. There is no qualitative difference between the way money works today and the way it worked in Marx's time. It's just that certain of the mechanisms Marx analysed have become more prevalent and that the role of precious metals (ie the universal commodity equivalent) has become even more tenuous and hard to grasp than it was then. If BodyS, Joaquin or anyone else can point to a decisive moment when the whole system of money suddenly became Proudhonian, I'd be fascinated. Cheers, Hugh Bhoddi misunderstand Marx's theory of value. As Marx argues, commodities are already symbols of value, there use-value standing in as expression of their value. Symbolic money is not a departure but a development of commodity fetishism. What is not acceptable is the idea that money is just a subjective fiction, which would render the social domination of capital useless. In such a case, the CIS could simply print more money and spend its way out fo the crisis. The debt-ridden countries in the world would become the most powerful, simply by printing more money. Even individual debtors could simply print their own currencies. Exchange rates between currencies are not subject to *arbitrary* fluctuations, not when averaged over time. Rather those exchange rates reflect the real weight of the economies and central banks that stand behind those currencies. The deviation of currency values from gold reserves suggests that money is no longer solidified value, but as many a government has discovered, money is no fiction, but rests on the ability of the government concerned to raise the revenue to back its currency. That is an objective and not a subjective reality. -- Jim heartfield -------------------------------------------------------------------------------- Jim H writes: >The deviation of currency values from gold >reserves suggests that money is no longer solidified value, but as many >a government has discovered, money is no fiction, but rests on the >ability of the government concerned to raise the revenue to back its >currency. That is an objective and not a subjective reality. And just what might this revenue be if it's not solidified value?? All the rest about the non-fictitious nature of money and its objective, non-subjective reality is fine. Cheers, Hugh wrote: >>Real commodity money is still at >>the base of the unbalanced inverted pyramid, and the bigger the pyramid >>grows, the harder it will fall. >> >>That's why I refer to the money we use in everyday circulation as >>pointer-money. It points, however indirectly to the real commodity (gold or >>whatever) at the base of it all. and Joaquin asked: >If so, what is the real particular commodity, product of labour-time, at the >base of actually existing money? This is really the central question that professional Marxist economists should have answered for us long ago, instead of just capitulating to vulgar economics and pretending that capitalism had resolved one of its most fundamental contradictions by getting out of the money bind. Instead of calling themselves Marxists they should call themselves Proudhonians, as they accept in principle that a non-commodity-based voucher (paper of assigned value -- assignats!) system can replace money in a capitalist mode of production. This is logically and scientifically absurd if we accept Marx's general theory of value. So instead of avoiding the issue, by assuming a non-commodity-based money system, let's get down to first principles. Using first principles we can see that gold, which was the most practical base for the money system for centuries, was really showing its limitations by Marx's time, but none of the panaceas proposed to take its place (see the chapters on the financial crises of the mid-19th century in Capital III) proved any good. What was revealed, but never admitted was that the limitations of gold were the limitations of capitalism, with relations of production based on individual ownership of the means of production and appropriation of the products while the forces of production were becoming socialized through and through and coming into ever greater contradiction with the relations of production. So what happened? During periods of expansion, capitalism developed and "perfected" credit mechanisms and methods of circulation that avoided actual brute metal exchange as far as possible. But all the representatives of value (whatever the medium -- paper, telegraphic signals, bonds, contracts) still acted as pointers to real value, and there at the bottom of it all was gold. After the complete collapse of imperialism (with the possible exception of the US and Sweden) in the second world war and its resuscitation thanks to Stalinism (the crushing of the revolutions in France, Italy and Greece, and the lack of revolutionary policies in Britain, Germany, the States etc), there was a will among the capitalists to pay a price for survival -- Keynesianism and the welfare state. There was also a large-scale non-capitalist economic system affecting the world market -- the Soviet Union, Eastern Europe and later China. These factors introduced a relative political and even economic stability into the world market, but it should be noted that they were *political* in the first instance and to a lesser extent economic factors -- economic hegemony was still firmly in the hands of the imperialists. But what they generated was a buffer for the lunges and crises of capitalism, at the same time as the political stability allowed the great boom to take place with little challenge to the system as such. This combination of circumstances created the illusion that conscious manipulation of things such as supply, demand, money etc was possible under capitalism. This was probably the period of world history when the labour theory of value had the greatest problems in getting accepted or even understood -- the blind operation of economic laws seemed to be a thing of the past. But it wasn't of course, as the end of the boom (coinciding with the defeat of imperialism in Vietnam) demonstrated. So getting away from gold as the universal commodity equivalent was relatively easy in such circumstances -- all sorts of promises and tokens of good faith were exchanged, and such things as Special Drawing Rights were dreamed up. What they all boiled down to was an agreement that a certain quantity of money was the equivalent of a certain quantity of commodities, and a guarantee by states to enforce this equivalence. Given this setup, the actual commodities involved in base of the system can be empirically examined (hopefully by professional or at least fulltime Marxist economists) and analysed as an amalgam of this or that that is agreed at any given time. As we can see, this is completely dependent on the commensurability of the commodity amalgam throughout the world market and on the ability of the states involved to maintain parity and equivalence. During periods of expansion this is fine and dandy, but in periods of crisis like the present, with governments and regimes falling to pieces, it's not. As long as sufficiently big imperialist states (the US, say, and Germany) can keep up the juggling with their commodity amalgam and their political guarantees are accepted at face value, things will sail on despite the rough weather. But as soon as the political stability at the heart of the imperialist system is threatened (it doesn't have to go, just be sufficiently threatened), the owners of assets and more importantly creditors will dump the amalgam and the political guarantees and go for real value equivalence. This will mean realizing potential value in exchange for stores of real value -- ie any commodities sufficiently well-suited to be a universal equivalent of exchange, ie in the first place precious metals. Real, substantial productive assets will prove their worth only *after* the crisis is resolved, if it is resolved (as we saw in the Great Depression -- pure finance capital (Morgan) was vaporized, productive capital (Rockefeller, Ford etc) was laughing -- once it survived the cataclysm). The assigning of an amalgam of commodities as the base of a money system might easily be misconstrued as conventional money. This could be said of gold as money, too -- after all, general agreement about its exchangeability is what underlies its function as money -- but its the value of gold as a commodity which guarantees its function and which makes it possible to reach a general agreement in the first place. First the function, then the acceptance of it. Same goes for the present system. There must be real commodity value at bottom, or it's dead. The agreement is an agreement that the amalgam actually has real commodity value, not that it is arbitrarily assigned such value. Now I've answered Joaquin's question, perhaps he would answer mine. When did a real universal value equivalent (ie a commodity serving as a store of universally exchangeable value) cease to be the foundation of the money system under capitalism? If such a change has taken place, what real value does credit money and convention money relate to, and in what way? Cheers, Hugh Hugh exclaims: >"Real symbolic" money is meaningless. And later explains: >A contract or a promise >or whatever is about something material, a commodity or commodity-like >service. Since it points to the material thing that is the focus of the >agreement, it is natural to treat it as if it was the thing -- as long as >no glitches occur that screw up the pointing function. Poppycock. Money is both real and symbolic, material and ideal. Treat it too much one way and you end up trying to bring value into the laboratory, too much the other and it becomes nowt but convention. Russ -------------------------------------------------------------------------------- Russ at his public bar best: >Poppycock. Money is both real and symbolic, material and ideal. Treat it >too much one way and you end up trying to bring value into the >laboratory, too much the other and it becomes nowt but convention. Now all we need to know is what bit is real/material, what bit is symbolic/ideal, and how the two aspects are linked, with examples and reflections on how this affects the current world crisis and the labour theory of value in general. Also, how can I treat money as *too* material or *too* symbolic? Is gold too material? Is a blip on a screen too symbolic? Do they have a Department of Alchemy in Derby -- I'd love to see that lab Russ is talking about?! (They had an Alchemy Department at Aberystwyth, run by Druids...) Iechyd da! Hugh In article <l03130301b22e773b7...@[130.244.236.94]>, Hugh Rodwell <m- 14970 at mailbox.swipnet.se> writes >When did a real universal value equivalent (ie a commodity serving as a >store of universally exchangeable value) cease to be the foundation of the >money system under capitalism? In Britain it ceased in 1914. Between 1820 and 1914 Britain was on the gold standard, where the currency in circulation had by law to be backed by an equal value of gold in its reserves. Because of this convertibility, the British pound was "as good as gold". Britain came off the gold standard so that the government could pay for fighting the First World War. Marx explained money on the basis of his theory of value (see Capital, Vol. 1, Ch 3, Sec 2c). With convertibility (into gold) the price level is determined by the total amount of gold in circulation. Although prices vary according to market conditions, there is no inflation (a sustained increase in the general price level). The price level in 1914 was lower than that of 1820. But with inconvertibility the required level of currency is determined by the total amount of commodities in circulation. If there is an issue of currency in excess of this amount, prices rise. This is precisely what happened after the Second World War, under the influence of Keynesiansim, as governments attempted to spend their way out of recessions. -- Lew -------------------------------------------------------------------------------- What is the value theory of contracts ? How do we determine the value of a contract ? Charles This message has been scanned for malware by SurfControl plc. www.surfcontrol.com _______________________________________________ Marxism-Thaxis mailing list Marxism-Thaxis@lists.econ.utah.edu To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
