Re: [OPE-L] Money in China and Europe

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Sat Apr 16 2005 - 15:01:25 EDT

Rakesh wrote:

But how does this fit with how the late Roman economy which was
revolutionized in Banaji's account by securing a stable money--a  new
gold coinage which provided a means by which financially astute
bureaucrats could accumulate fortunes that they subsequently invested
in land. Note then Banaji's attempt to rewrite the history of late
antiquity--a new currency system in fact assisted the revival and
indeed an expansion of a monetized economy.

Paul Cockshott
As far as I can determine this is the subject of lively debate
among economic historians of the roman empire. I regret to say
that having just read a collection of papers on the subject last
month I realize that I have failed to note the sources which
argue that the evidence for trends in price levels in the second
and 3rd centuries supported the chartalist theory. The argument
basically was that the debasement of the denarius should have
created a far worse inflation than it actually did.

Can you please give me a ref to the work by Banaji that you are
relying on?

>This local and temporary historical phenomena is universalised
>in metallist doctrines.

What seems to me implied here is another explanation for one thing
enjoying a monopoly over direct exchangeability. If I understand you
Paul correctly, you are saying that thing does so as the singular
medium through which the state collects taxes. Money thus represents
the power of the state and in virtue of that becomes the singular
representative of abstract social labor time. But does it matter for
Marx's argument how that one thing comes to be the sole
representative of abstract social labor time, for once it is that for
whatever reason it then has the power to interrupt circulation, to
become the object of hoarding? And it is hoarded not as the medium
through which taxes will have to be paid but as the sole
representative of abstract social labor time.


Paul Cockshott

In one way you are right. However money came to be the representation
of power over labour, the consequences for the analysis of 
the circuit of capital do not change much.

On the other hand it is important for analyzing the role
of money as a store of value and for anlaysing the revenues
of the state.
In a monetary economy the state has two was of
 gaining access to real labour resources.

1 It can levy a tax in money and spend the money buying labour
or commodities.
2 It can simply mint and spend the money. This process is termed

Taxation and seigneurage are mutually inter-dependent. Unless there
is an intial minting of money, no tax in money can be levied. On the
hand if no taxes are levied, then the money will be valueless and
the state will be unable to appropriate real resouces with its

In a natural economy the appropriation of resouces by the state
is direct and constrained by its political ability to coerce 
property owners into handing over goods, and also to coerce subjects
performing labour services. With the invention of money, the
of a surplus splits into two - a symbolic appropriation of coins as tax
goes alongside a real appropriation, by purchase, of labour time and
commodities. The
real appropriation appears as something equitable and voluntary. The
coercive aspect of the process occurs entirely in the realm of symbols -
rendering unto Ceasar that which is Ceasar's.

Coercion remains bounded by political ability. Taxation meets resistance
whether it occurs in money or kind. But because  there is a split
between the real
and  symbolic domains, seigneurage can act as a wedge to force them
A state can, within limits, appropriate more labour than it can
raise symbolically as tax. Taxation is a recurrent process. It provides
a stream of symbolic labour to be spent on real labour. Seigneurage
is a one off process needed to start the tax process going. In the year
the coins are minted, the Crown can purchase more than it taxes.
This acts as a constant temptation for states whose tax raising power
is weak, for minting  coin is politically easier than raising  taxes.

The issue of coin has to be a continuous process anyway. 

 There is always
a certain loss of coin due to accident or ware and tear. 
The subject's accidental loss 
is the Crown's gain. If a coin falls in a river, a record that services
have been performed for the Crown goes with it. If taxes are to be met,
the Crown must issue a new coin, and the subjects must perform
new services to get it. This means that a certain level of
seigneurage is built into the system. This seigneurage derives from
the {\em lost information} caused by the imperfections of coin
as a technology of record.
Some additional minting is required to keep pace with the growth in the
value of
commodity circulation. As more people are drawn into commodity
production -
because of population growth, the expansion of the state,
 or because previously natural economic processes
 become commodified - then more coin is required to sustain
this trade.

 Hoarding or saving withdraws coin from circulation. Of course
many hoards are eventually lost either for ever, or to be found
by archeologists centuries later. But leaving those aside for
the moment, the effect of hoarding is very similar to that
of loss from the standpoint of the state.
If a hoarder puts away 100 coins a year into a hoard, then,
unless these are compensated for by other hoaders dissipating their
hoards, the Crown can issue an extra 100 coins per year. Any
net hoarding by the population allows a cooresponding rise in the annual
issue of coin.

The consequence of a higher issue, is more seignurage - real
of labour and services by the Crown. But the money form hides this, both
from holders of money, and from some economists who should know better.
Open an elementary economics textbook and you read that money serves
as a store of value. Hoarders believed this, but it is fundamentally
an illusion. A miser with 1000 pennies under the floor, 
had not stored up value: he  buried the ghost of value departed.

The  King issued pennies in return for real value - work. 
Like as not, they were born as  soldier's pay. Then the work of
soldiering, like winter's snow, vanished leaving no material residue. 
 Aside  from the paltry scrap  value
of  Royal cannon, no vendible commodity survived,

What the miser  stored was information, a number that assigned to
him a tiny fraction of the power royal. Should he 
spend his hoard he would command the labour of others. But should
all hoarders try to do this at once, they found 
themselves competing with the normal purchasors of labour and
commodities. Prices would go up. The social power represented
by each coin would fall. 

In time of famine hoards were spent. They helped ensure the survival
of the hoarders, but only by grabbing them a larger share of
a diminished crop. They redistribute starvation, but on a
social scale do not represent an accumulation of value.
A social provision against famine could only occur if
there were a real accumulation of value in the form of
corn in granaries.

This obviously has contemporary relevance in the current
political debates about privatized pension provision.

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