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

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Thu Dec 02 2004 - 19:54:52 EST


Claus wrote:

>The US has been able
>to impose a paper dollar standard and the abandonment of gold for
>international payments. For international purposes the national standards
>of prices are not defined in terms of gold, but in terms of a basket of
>national currencies, and the dollar has been converted into the privileged
>means of international payments and of international reserves. This has
>been crucial for the US, since if gold went on being accepted as a means
>of international payments, the gold reserves of the US would run out. On
>the other hand, I think one cannot interpret this as an arbitrary
>imposition of the US without economic grounds. The economic ground is
>that, although a country cannot convert their dollars into gold, it is
>able to convert it in almost every kind of asset Ė financial or physical Ė
>in the USA and in other countries. I think if the US were unable to secure
>its economic superiority (industrial and financial and military), it would
>be unable to secure the position of the dollar as the world paper
>standard... To say that gold is still world money does not mean that the paper
>dollar has not usurped its role in important functions, for instance as
>means of circulation, means of payment and means of hoarding.

I think you prove my point here. I fail to see any monetary function
that the dollar is not vastly more important than gold in fufilling.
As an international reserve, the dollar seems clearly more important
than gold and more functional in the wake of currency attack given
its greater liquidity.


Perhaps the dollar price of gold rises and gold production is
stimulated if the Fed overissues "credit money" in relation to the
greater value that needs to be realized (and perhaps this is what
Greenspan did between 2001-4 for the base political reason of
ensuring back slapping Bush's re-election, but as I have said before,
now he is now being forced to play catch up despite no general
inflationary upsurge)?

But the function that gold is playing here is not monetary but merely
indexical.
And to be sure, with the emergence of the euro, Greenspan will have
to be more attentive to the signals of price sensitive commodities.
There is no imperial power without limits. But limits do not do away
with US plundering (nor for the way in which that plundering has--to
use Althusser's language--overdetermined and deformed the pure
dialectic of capital and labor within the US).

Analysis should focus on the conditions under which the dollar, as
inconvertible fiat money, can serve (or continue to serve) as measure
and store of value and means of international payment. Insisting that
nothing has changed, that underneath all the monetary turbulence
money is still the gold commodity militates against analysis of the
ways in which capitalism has changed under the weight of two world
wars and hegemonic displacement via catastrophic violence.

With all talk of the displacement of imperialism by Empire and the
dissolution of the nation state, it risks apologetics not to
recognize that the US state has imposed the dollar as money.

Of course you don't want to do that. But I just don't see how your
and Paul B's analysis does not have that consequence.

Yours, Rakesh




At 9:29 PM -0200 11/29/04, cmgermer@UFPR.BR wrote:
>Rakesh wrote:
>
>>  At 11:20 AM -0200 11/23/04, cmgermer@UFPR.BR wrote:
>>>The fact that gold still performs fundamental functions of
>>>money is clear before our eyes. Why should we deny it? ... (T)hus, if one
>>>looks at the *monetary sphere* of today with Marxian eyes, one sees gold
>>>very distinctly in fundamental monetary functions.
>>
>>  OK,  Claus, gold was traditionally used by central banks as a 'war
>>  chest' to provide security in the vent of a crisis.
>
>Claus:
>I would express this in a different way: in capitalism gold performs the
>function of hoarding, representing the sum of different reserves which
>each capital has to hold both as a condition as an effect of its regular
>functionning. With the development of the banking system led by a central
>bank, those reserves were converted into functionning capital through
>credit and into a small single national reserve held by the central bank.
>At this point the main functions of money (=gold) are three (since it no
>longer functions as means of circulation): means of payment for the
>payment of the balances of both domestic and international compensation;
>and an additional fraction as a war chest in your terms. Thus, the latter
>function is not an imposition of the process of reproduction of global
>capital.
>
>
>Rakesh:
>>  However, it was
>>  of little use during the collapse of the Asian Tiger economies. Being
>>  less liquid than forex reserves, it can't be readily used to defend a
>  > national currency from speculative attacks. It was growingly
>>  considered more of a "commodity" than an "asset". Of course this may
>>  or is changing with a flight out of  all  major currencies to gold,
>>  and convertibility may be forced on central banks. But this is not
>>  yet clear before our eyes.  So I don't understand what proves to you
>>  (and Paul B) that gold is still performing in Nov 2004 the
>>  fundamental functions of money.
>
>Claus:
>I think one has to examine the framework of the international monetary
>system after the monetary crisis of the 60s and 70s.
>
>What I think can be proved is that gold is still performing the functions
>of money as an international monetary reserve, as private means of
>hoarding, and also as part of the domestic monetary reserve of the central
>banks. In addition to that, it must be performing the fundamental function
>of measure of value if the theory that only a commodity is able to perform
>the function of the distribution of social labor.
>
>Rakesh:
>>
>>  Hasn't the world been on a dollar rather than gold standard? And the
>>  US the beneficiary of exorbitant privileges? If we say that gold is
>>  still world money, then we are discouraged from understanding what
>>  has allowed to dollar to usurp that role to this day. And whether
>>  that usurpation is unravelling before our eyes.
>>
>
>Claus:
>Iím not sure one can say that the world has been on a dollar RATHER THAN a
>gold standard. Itís a ďPAPER DOLLAR standardĒ. The dollar is a standard of
>prices officially defined in terms of gold (1 dollar = 1/42,2222 of an
>ounce of gold). Since the US have been able to issue paper dollar in
>excess of the needs of circulation, and force its acceptance by almost all
>the nations, gold went out of the circulation and the paper dollar
>depreciated. Of course the US is the beneficiary of exorbitant privileges
>not only domestically (in this case the US government) but in the world,
>in a way similar to what used to be true at the domestic level in older
>times. However, if
>it is true that the role of the equivalent of value as the instrument of
>the distribution of social labor can only be performed by a money
>commodity, then the interference into that function by way of the USís
>attempt to completely displace gold from those functions must be seen as
>the cause of a specific tipe of crisis in the world system. Money is for
>capital, according to Marx, a contradictory thing, because on the one hand
>capitalists donít want to immobilize their capital value into money, but
>on the other side they have to do it as an imposition of both the process
>of reproduction of capital and in part of the uncertainty about the
>future.
>
>Comradely,
>Claus.
>
>
>>  Rakesh
>>


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