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

From: cmgermer@UFPR.BR
Date: Tue Nov 23 2004 - 08:20:03 EST

Hi Fred,
Thank you for your answer. Some comments about it follow. I’ll come back
about the algebra of your deduction later.

I would start by disagreeing with your statement that “Marx's method of
determination of the MELT with inconvertible paper money reduces to MV /
L”. So far I see it as your INTERPRETATION of what you think (with which I
disagree) can be deduced from Marx’s theory, since you make conclusions
that are, in my opinion, incompatible with Marx’s theory of money. I
referr to your statement that inconvertible paper money IS today the
equivalent of value and functions as measure of value, and that the
measure of value does not need to be a commodity. I’ll try to ground my
disagreement with the following comments.

You ask: “Claus, do you agree or disagree with this "intuitive"
theoretical explanation of the determination of the MELT today?  If not,
then how do you think the MELT is determined today?”

I think it is clear to the members of the list that in my opinion there is
no possibility to compatibilize Marx’s theory of money with a valueless
money, which means a *valueless* equivalent of value(!). Marx’s definition
of the equivalent of value as a commodity is unequivocal and he repeats it
along the whole of his works until his death, as I attempted to prove in
my paper included in your book. He never gave even the least indication of
the possibility that something not having value could be money. And this
is not due to historical reasons (if Marx had accepted the commodity
nature of money only because gold functioned as money at his time, this
would mean that he wouldn’t have a theory of money). Money has to be a
commodity in Marx’s theory based on consistent theoretical reasons. In my
paper I also attempted to show why money as a commodity is logically
needed in order to distribute social labor among the individual producers.

For this reason it is my opinion that a theory of money as a *valueless*
equivalent of value (!) is incompatible with Marx’s theory. It is not
possible to ground it on Marx’s presentation of the form of value in
chapter 1 of CI.

Secondly, so far I’m not convinced that Marx’s theory of money is invalid.
It has not been demonstrated either theoretically or practically. The
situation of money after 1973 is similar to so many other situations
before, where the convertibility of credit money (paper money has never
been convertible, by definition: “inconvertible paper money issued by the
State and having compulsory circulation”, CI, ch. 3) has been suspended
for a time because of wars or because the state was bankrupt. I have
repeated several times that the fact that gold does not circulate in
person does not mean that it is no longer money. This is a historical fact
and is perfectly compatible with Marx’s theory. It is not only compatible,
but even necessary in Marx’s theory, and does not imply that gold is no
longer money. The fact that gold still performs fundamental functions of
money is clear before our eyes. Why should we deny it? What we Marxists
have to do, in my opinion, is to put Marx’s theory as a whole (not just a
part of the theory, and not interpreted according to post-Keynesian or
other criteria, as is common) to test against the facts of the monetary
sphere of our days (facts described and interpreted according to the
criteria of Marx’s theory, not of post-Keynesian or other theories)

In my opinion, if one looks at the facts of today with Marxian eyes, one
sees one think; if one looks with other theoretical eyes, one sees
different thinks. Well, this is what different theories do. Thus, if one
looks at the *monetary sphere* of today with Marxian eyes, one sees gold
very distinctly in fundamental monetary functions. In science, one may
find something that one is not looking for, but one will frequently
overlook something one is not looking for, and you would hardly find
something that you don’t want to find. Thus, there are analists who don’t
want to see gold performing monetary functions. That's ok, but is not
'the' truth.

Finally, IF the facts clearly show the monetary relevance of gold, this
means that there is no reason to abandon Marx’s theory of money before
closer examination, thus I think the definition of the MELT in terms of
Marx’s theory has still to be taken as valid.

An interesting question arises with the recent references, on the list, to
the possibility of the official return of gold as the material content of
the dollar. How would you then define the MELT?

> I am glad that you think that this ratio is "intuitive".  So do I.  And my
> algebra shows that this ratio is equal to Marx's method of determination
> of the MELT with inconvertible paper money.

Marx never determined the MELT with inconvertible paper money, in the
sense you did, i.e., assuming a *valueless* equivalent of value (!). When
inconvertible paper money exceeds the needs of circulation and
depreciates, what results, according to Marx’s theory, is that a unit of
paper standard will represent a smaller amount of gold than the official
standard, but it will always represent the amout of gold that would
cirulate in normal conditions. At present, f.i., a dollar is officially
equal to 1/42,22 ounce of gold, while at the market it is has been
fluctuating aproximately around 1/300 of an ounce in the past two decades
or so.

Just one comment, for now, about your formula MELT=MpV/L. You wrote:

“But L cannot be estimated, as I have discussed at length (because of
unequal skills and unequal intensities).”

Since you argue that L is an objective category, it is in principle
possible to estimate it, however hard it would be, or even impossible. It
is hard, in my opinion, not mainly because of  the problems you raise, but
because of the independence of the producers in the market economy and the
consequent absence of social planning of production and distribution. The
main problem of L, however, in my opinion, is that it is the total labor
represented in the commodities in circulation. The problem is that, if you
agree that money is the instrument of the law of value that distributes
the social labor among the individual producers, what is relevant is LL,
not L, because what has to be distributed is the existing living labor,
not dead labor, which no longer exists.

I still hope to see your reaction to the other point discussed in my
previous post.


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