[OPE-L:1847] [MIKE WILLIAMS] electronic money

glevy@acnet.pratt.edu (glevy@acnet.pratt.edu)
Sun, 21 Apr 1996 15:10:52 -0700

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---------- Forwarded message ----------
Date: 21 Apr 96 16:45:44 EDT
From: Michael Williams <100417.2625@CompuServe.COM>
To: OPE-l List <OPE-L@anthrax.ecst.csuchico.edu>
Subject: [OPE-L:1842] electronic money

Jerry asks (questions 1-6):

1.* Why is electronic money "necessary" for the reproduction of highly
developed capitalism?

My syntax is at fault: My argument is: money is necessary for the
reproductionof capitalism. But (for developed capitalism, characterised
inter alia by money having (alomost - see below) sloughed off any
necessary connection to the commodity form. The first reason for
entertaining this possibility is that thereexist developed forms of
money - arguably the most refined being electronicmoney (but we won't
know 'till that has eother become generalised, or been educed to a
curiosity.) Thus, COMMODITY money is nor systemically necessary to

2. * Why haven't nations sold off their gold reserves? Are the reserves
entirely redundant or are they still required (and, if so, for what

That money be reproduced for in all its standard funtionality requires
that it be more or less universally socially and individually recognised
as such. Thisis always a tenuous and unstable business, resting on
parameters like'confidence'. Thus there are many (each contingent, but
being the more concreteconditions of the more abstract functionality of
money per se) modes by which the legitimacy of money (more concretely of
the different national currenciesand the various potential intetnational
monies - SDRs, EMU, etc) is reproduced. The proximate agents for this are
the Central Banks and the various quasi world-bank like institutions.
Maintaining bullion reserves may be just one instrument for this. The
lack of world money may be another reason for the persistence of bullion
reserves. Historical inertia may be another (combined with the fact that
change breeds uncertainty, and therefore potential loss of confidence.

The merely 'stand-by' role of bullion is indicated by two well known
facts: that almost no currencies are still convertible; and the even in
principle only fractionally-backed nature of all banking systems.

Fianlly, I would speculate that if this standby were ever called on -
globallyor locally - such a crisis may well involve the flight to
bullion (amongs othepotential stores of value), but that would also
involve a flight FROM capitalist money in all its functionality.
Capitalism would be, tendentially, failing to reproduce itself.

Thomas Mayer said of New Classical treatment of money (using developments of
Samuelsons over-lapping generations models), something to the effect: If
Samuelson had used the term 'heirlooms' instead of 'money' where would that
leave the New Classical theory of money. As Marxists we should perhaps
hopre to have a more adequate grasp of this central category ...?

3.* Are there limitations and problems with the process of making
electronic money universal?

Very likely - but I don't have any special technical knowledge in this field.

For instance:

4 * If traditional forms of currency in circulation (coins and paper
currency) were eliminated, this would change the relationship between
the citizen and the state since it would mean that the state would
(rather easily) have records of all earned income. Effectively, this
would eliminate "unreported income" and the "underground economy."
While this might be seen as a worthwhile objective from the
standpoint of the state, one would imagine that there would be
rather strong (in some cases, quite literally) social forces opposed
to this process.

Interesting - but I am not sure of its relevance to the reproduction of
capitalism. Is there an implicit assumption here that (advanced)
capitalism is incomapatible with an authroitarian state?

5 * Wouldn't it - ironically - lead to a partial return to the barter
system? For instance, if currency in circulation was eliminated, if
you wanted to "sell" a chair to me, how would that exchange be effected?
Wouldn't we either have to go to a bank to have the transaction recorded
(an unlikely occurrence) or wouldn't I have to exchange some object or
service for the chair? Or, relating to the above, suppose a capitalist
employs undocumented laborers. Wouldn't it mean, in practice, that the
workers would have to be paid directly with consumption goods?

Maybe - but that would involve tendential withdrawal from the behaviour
tendentially required to reproduce capitalism

6 * What would happen in a crisis or hyperinflation if capitalists and/or
workers demanded payment in some more tangible material object like gold
or silver or some other state token of account, e.g. the dollar?

Ditto, I guess.

I have gotten an awful lot of flack since I started suggesting that
commoditymoney was an albeit high profile, historicaly important,
contingency (the latestsalvo is by Dixon & Kay in a recent CJE). But I
remain convinced. I would dearly like more discussion of the matter.