Re: (OPE-L) recent references on 'problem' of money commodity?

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Fri Nov 19 2004 - 10:54:18 EST

At 9:51 AM -0500 11/19/04, Fred Moseley wrote:
>Hi Rakesh,
>I have come to realize that there is a more fundamental problem
>(besides the determination of the MELT) with your suggestion of a basket
>of commodities as money today, and in particular as the measure of value
>today (which I discussed in my last post in response to Paul B.)
>According to Marx's theory, a commodity can function as the measure
>of value only if it functions as the general equivalent, i.e. only if it
>is directly exchangeable with all other commodities.

But I am not saying that a commodity directly functions as the
measure of value.

>  Oil and gold and
>grain are not general equivalents, i.e. they are not directly exchangeable
>with all other commodities, not individually and certainly not as a basket
>of all three.  Therefore, this basket of commodities cannot function as
>the measure of value.

Value is measured in dollars. The question is what determines the
value of the dollar. Even in your new interpretatin we don't know
since you have given no theory for the determination of the quantity
of dollars--you have left it hanging as an exogeneous variable!  My
idea however does give us that. I provide an explanation for the
value of the dollar. Its value changes as value of the composite
commodity to which Greenspan attempts to keep it equal.

>Greenspan may be trying to conduct monetary policy in order to keep the
>price of this basket of commodities stable,

Well do you think that is what he is doing? That he has had to keep
Baker's commodity index at the center of his attention in large part
to maintain the confidence of foreign investors, in particular
central banks?


>  but that is a separate issue
>from money functioning as the measure of value and the determination of
>the MELT.

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