Money, the state and Jerry's name

From: Costas Lapavitsas (Cl5@SOAS.AC.UK)
Date: Sun May 30 2004 - 07:04:08 EDT

Hi Jerry,

Sorry for misspelling your name in my last message. A British spelling habit.


-----Original Message-----
From: Costas Lapavitsas <Cl5@SOAS.AC.UK>
Date: Sat, 29 May 2004 10:44:57 +0000
Subject: Re: Money and Mind

Andy wrote:

"Costas, money as form of 'purchasing power' means, quantitatively,
that money serves as an index of the size of the feasible set, i.e. as
no more than a numeraire. Money does not serve to homogenise
the diversity of goods. Thus 'purchasing power' cannot be compared
quantitatively through time due to qualitative change to the feasible
set (changed in goods, new goods, old goods). In these
circumstances a science of money must look for something other
than 'purchasing power', as which the diverse goods are equivalent,
shouldn't it?"

This argument is not entirely clear to me but I read it as saying that money 'as purchasing power' cannot be a numeraire because the set of commodities changes over time. I do not see why change in the set over time is an especial problem for money 'as purchasing power'. Nor is it clear that this particular problem becomes less difficult when, say, abstract labour is chosen as factor of equivalence. The theoretical difficulties of making dead labour (especially of many vintages) equivalent with living labour are well-known. 

In any case, in my view, money becomes the numeraire as commodities are regularly and universally offered for it in view of its unique purchasing power. In short, the unit of account function (as social process and not as abstract division by an economist) is inseparable from the means of exchange function. Both functions arise out of money's monopoly over buying ability. The coherence and consistency of the nomenclature of price is a different matter, and depends on the existence of abstract labour as social substance. In the absence of the latter, for instance, money would still operate as numeraire but prices could fail to exhibit transitivity. 

Andy also wrote

"This argument holds for money pre-capitalism and within
capitalism. And this explains Marx's commments regarding Aristotle
and money. It sugests that, from our perspective (where to use
Marx's analogy we are able to study the anatomy of 'man'), we can
see that money is the form of value (=congealed abstract socially
necessary labour) but from Aristotle's perspective (he only has the
anaotmy of an 'ape' to study), he just gets confused. Specifically,
Aristotle was part of a slave society where actual labour was not
(was not considered) a fluid activity of fully fledged humans so that
'labour' was considered an empty abstraction referring to the
diverse, fixed, unconnected activities of slaves ('talking anilmals').
For Aristotle, labour thus has the same status as use value, and
provided no means of commensuration of exchange values."

This also has a bearing on various points that Ian, Howard and others have raised. I agree with the methodological approach of 'the anatomy of man', i.e. more developed acting as template for less developed, though 'man - ape' is an unfortunate analogy. But the approach should be applied consistently. Thus, value (abstract labour) is best analysed on the assumption that the society to which we are referring is capitalist. Only then do social mechanisms and relations exist such that diverse concrete labours are rendered commensurate in practice, thus giving rise to abstract labour. These mechanisms include labour mobility, inherent to wage labour, and constant reallocation of resources through the market as capital responds to price and profit signals. Under capitalist conditions, the organising role of the 'form of value', to which both Ian and Howard have referred, has roots in production through abstract labour. But without capitalist conditions, abstract labour is merely an ideal abstraction and the organising role of the 'form of value' is strongly anarchical and subject to extra-economic influences. 

As for money's emergence, it seems to me that, once the assumption of capitalist conditions has been made, the major problem is not be drawn into the dialectic of value (abstract labour) - use value, which leads to a dead-end in this connection. A less serious but still significant problem is to derive money without relying explicitly on concepts and processes that have validity only in capitalist society. Our understanding of money must also have purchase on money in past historical periods or in non-capitalist societies. If money's analytical derivation depends on abstract labour, then either abstract labour must be given a trans-historical validity, or our analysis will not reveal very much about non-capitalist money. 'Man' in this case will not tell us much about 'ape'. I think that these problems can be avoided by deriving money as monopolist of the ability to buy out of the 'relative - equivalent' dialectic.


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