Re: measurement of abstract labor

From: Allin Cottrell (
Date: Sun Jul 18 2004 - 22:55:53 EDT

On Sun, 18 Jul 2004, Rakesh Bhandari wrote:

> But if in so regulating credit and the supply of paper money
> Greenspan succeeds in maintaining the "value" of the dollar as a
> determinate quantity of a composite commodity, will he not have
> succeeded in giving the dollar a value as the value of that
> composite commodity?

I'd say one cannot "give something value" other than by applying
socially necessary labour time in its production, which is clearly
nothing to do with Greenspan's action in relation to the dollar.

By (roughly) maintaining the exchange ratio of the dollar against some
basket of commodities he is doing nothing less nor more than.

But notice that maintaining _constancy_ of this sort of exchange ratio
is not in fact Greenspan's object, nor has it been the historical
result.  He, along with many other central bankers, seems to accept
the case for a small positive rate of ongoing inflation.

> To maintain the dollar as nearest substitute for world money and the
> attendant privileges to the US financial sector and the USG,
> Greenspan has to build confidence that the "value" of the dollar--or
> rather its equality in physical terms to a composite commodity--will
> not fall....

The dollar has for several decades been the "nearest substitute for
world money", and the "attendant privileges" have been evident,
despite the fact that it has depreciated more or less monotonically
against most baskets of commodities (and a fortiori against labour
time, since the labour time required to produce most commodities has
also been falling more or less monotonically).

The most relevant requirement, I believe, is that the investors
believe that the dollar will not depreciate substantially and abruptly
relative to other national (or supra-national) currencies that could
reasonably be regarded as competitors for the role of quasi-world
money.  For a long time there has been no plausible competitor.  One
might say that nowadays the Euro is a candidate, but it's early to


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