Re: [OPE-L] Where does the money comer from : was Why aren't non-labourers sources of value?

From: Ian Wright (iwright@GMAIL.COM)
Date: Tue Apr 26 2005 - 20:57:24 EDT

On 4/22/05, Paul Cockshott <> wrote:
> A crude argument would be that as each capitalist is
> going through a circuit of the form
> m-c-m'-c'-m'' etc
> then during alternate phases of the cycle of capital
> each time round each capital has more money.
> If we assume that different capitals are randomly
> mixed in their phases - some in the money phase
> some in the commodity phase then what is true for
> individual capitals must be true for capital
> as a whole. If the commodity stock held by all
> capitals is growing at x% per year, then the
> money stock must also be. At each cycle there must
> be more money available to purchase the augmented
> mass of commodities.

Not if prices deflate.

> My general point here is that one does not solve the
> problem of surplus value by recourse to exploitation
> in the labour force. This explains either
> a) how you can get a profit in a simple reproduction
>    economy
> b) how you can get an accumulation of capital value
>    through expanded reproduction
> What it does not explain is how it is possible for
> an exponentially growing capital value to continue passing
> through the monetary form during its cycle. 

> In this
> sense the published volumes of Capital do not fully
> solve the problem of surplus value. In my view the
> answer is only possible if you downgrade the theoretical
> importance of gold, and place much more importance on
> the development of characteristically capitalist forms
> of banking. This of course is the approach taken by
> list member Riccardo Bellafiore. 

This is not my area at all, but I have some naive questions.

In theory only, prices can deflate, allowing a constant money stock to
function as before, even though the commodity stock is expanding. Does
Marx consider price deflation as a theoretical option at this level of
abstraction and thereby postpone an analysis of the creation of new
money? If not why not? It would seem a simpler way to proceed.

I understand there are a host of practical reasons why price deflation
is difficult (e.g., small change will become scarce unless higher
denominations are melted down and re-issued in finer-grained
denominations), and also institutional reasons for the rise of
fractional-reserve banking. But why must an initial explanation of the
production of surplus-value necessarily include an account of
mechanisms that expand the money supply?


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