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: Wed May 04 2005 - 15:58:53 EDT

Paul, Claus and Jerry:
Thanks for clarifying these difficult issues.
However it is not clear whether or not the development of the credit system
slows down the output of gold and what this mechanism would be. Since excess
gold money relative to the needs of circulation of commodities is hoarded
rather than spent (according to Marx) we cannot say the mechanism would be
inflation and the consequent devaluation of gold relative to other commodities
. So the question remains: how the development of the credit system regulates
the pace of gold production?

Paul Cockshott wrote:

> Paulo
> 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?
> Paul
> There was clearly a mechanism by which the credit system displaced gold.
> The mechanism could not have been the issue of paper money as suggested
> by Gerry as the 1844 bank act set a tight limit on the fiduciary issue
> of notes, other notes had to be backed by gold.
> On the other hand bills of exchange and cheques were not covered by this
> restriction and could act as means of payment.
> It is not, within Marx's analysis, possible to have the sort of feedback
> relationship suggested by Paulo. He is implying that a shortage of gold
> would cause the exchange value of gold to rise above its value. This
> of course is what Ricardo said, but Marx disputed this arguing that
> gold would continue to exchange at its value.
> I have never found Marx's objections to Ricardo on this point convincing.
> If the exchange value of gold rose, that would imply a general deflation
> which is also excluded in the formulation of the circuit m-c-m'-c'-m''.
> If we assume that cheques and bills of exchange provided the means by which
> the circulation was achieved in the presence of a gold shortage, then
> this has implications for the view we have of capital.
> The account book capital of a firm would comprise:
> stocks of commodities+
> holdings of gold coin+
> holdings of state paper/base coin+
> holdings of private debt-
> liabilities as private debt.
> Taken across the whole capitalist class the last two entities cancel
> out. The sum of bank money comes to zero.
> Now look at the first 3 items. Only the first two actually embody
> labour and constitute value. Holdings of state paper money do not
> constitute value - instead they are proof of the unproductive
> consumption of value by the state in the past. Should they
> be ignored in computing the sum of social capital or should
> they be subtracted from the total?
> Today, is the sum of capital equal to
> stocks of commodities - notes and coin
> or is it simply
> stocks of commodities
> In either case, in the modern world, money can not constitute
> part of the total capital value.

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