[OPE-L:311] Re: An odd fact brough to light by Duncan Foley's pos

Duncan K Foley (dkf2@columbia.edu)
Sat, 21 Oct 1995 18:27:16 -0700

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On Fri, 20 Oct 1995, Paul Cockshott wrote:

> Vis a vis money being a tax prepayment certificate:
> This is an important factor, and one reason why we have
> to discuss the nature of the state in an economic sense
> before it is possible to systematically deal with modern
> money. In saying that money is a tax pre-payment certificate,
> one is only half way there. Money in the sense of state
> issued notes, is the only form of tax that is allowed by
> the modern state, tax in kind has effectively vanished.
Libertarian neoclassical economists would also argue that conscription
and jury duty represent taxes in kind. But the point is basically true:
the reason is that it is so much more efficient to collect taxes in value
in a developed capitalist/market society.

> Thus rather than representing a debt owed by the state,
> it becomes the only way of discharging debts owed by the
> subjects to the crown. It thus has an enforced circulation.
> People who have to pay taxes are forced to produce commodities
> or sell their labour to obtain the means to pay taxes. In this
> form, the introduction of monetary taxes in west Africa by
> the imperial powers was an important factor in accelerating
> the penetration of commodity production and wage labour.
> Similarly, if one has a private debt and offers to settle it
> in state money, the creditor has no legal basis for refusing,
> so that where state power is well established, state money
> has an advantage in private debts also.
Though there is a tendency for business to settle debts in foreign
currencies in inflationary environments. In many countries the courts are
not much help in settling contract disputes, any more than the central
banks are a help in establishing a stable monetary environment.

> But these factors raise the question of how taxes are possible
> in the first place. How is the state able to claim part of the
> surplus product?
Well, this power developed gradually and historically step-by-step with
the establishment of capitalism. It's a main theme of English history.

> It also does not answer the question of what determines how much
> value is represented by a Dmark or Franc?
I think this is the big question at the moment. Two theories seem to
exist: 1) that the price level of historically given and changes
according to pressures on aggregate demand (which seems to be the
post-Keynesian way of thinking of it; 2) that the market values the debt
of the State speculatively as it values corporate equity and other
uncertain assets speculatively.
I'd be interested in any other ideas people have or know about.

> >