[OPE] Problems in International Political Economy (IPE) shaikhs defence of Marx

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Fri Apr 18 2008 - 12:48:55 EDT

Good post. You raise some issues which e.g. Ernest Mandel did not solve in his essay on gold. But you say:

"If the supply of money in a country increases, according to Marx,
the result is not a rise in prices, but a withdrawal of part of the
coin into hoards or into jewelry."

Where does Marx actually claim this? I am not aware that he does claim this and it would contradict his theory of credit money as presented in Cap. Vol. 3. Hoarding and luxury spending is only one possibility. 

The issues which you raise can be solved, as I discovered in the 1980s. We should however distinguish between the "general theory of money", and the "theory of monetary regimes".

One problem with your theory of the law of value I think is that you still define the law of value as a "balancing mechanism" or "equilibrium mechanism". In my opinion, this reading of Marx is wrong - instead the law of value represents a "structural constraint" or "limit" on the trade in newly produced labour-products, and therefore it "regulates" price relativities in the last instance (according to certain "fundamentalist" Marxisms, there is no connection at all between the Marxian values and prices, but that is obviously wrong, both textually and theoretically). 

In my opinion, Marx does not argue that market activity by itself generates economic equilibrium, that is more a bourgeois ideology about trade, i.e. the idea that traders will adjust to each other until equilibrium is reached. The only empirical proof we have of an equilibrium price is that the price remains constant over time. The inference is that at this price, supply and demand are balanced, and that market activity will tend to reach this equilibrium price. But since we might equally well argue that at this price level, some potential buyers refuse to buy, and potential sellers refuse to sell, the whole argument turns in a vicious circle: the demand-supply levels determine the equilibrium price, and the equilibrium price determines the demand-supply levels.


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