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

From: Francisco Paulo Cipolla (cipolla@UFPR.BR)
Date: Mon May 02 2005 - 20:01:15 EDT

In relation to the question of the need for more money in simple
reproduction and expanded reproduction.
There seems to be implicitely in Marx´s analysis (Chapter XVII Circulation
of surplus value, vol. II of Capital) some sort of competition between
gold production and credit system. In so far as the credit system raises
"the functional capacity of the quantity of money really functioning" it
diminishes the need for metallic money.
The question is then not one of  "downgrading the theoretical importance
of money" but rather to investigate how the credit system downgraded the
importance of gold within expanded reproduction.
I would like to understand better the relationship between credit system
and gold. For instance: if the credit system developed the way Marx
suggets, would this slow down the production of gold because since demand
falls prices would fall bellow prices of production? Which mechanism is
there connecting gold production and credit system?

Ian Wright wrote:

> 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?
> -Ian.

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