[OPE-L:2313] Re: Commodity Money

Chai-on Lee (conlee@chonnam.chonnam.ac.kr)
Wed, 22 May 1996 01:02:50 -0700

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Dear Michael Williams,

Thank you for your reply, I have been delayed in replying to you.
Sorry for this delay.

Among other things,

Michael (1):
The practical import of a lot of the above can be captured by
arguments couched in terms of the necessarily credit-basis for
money. In R&W 1989, we do indeed allow money to emerge as credit
money as a necessary condition of reproduction of capitalist accumulation.
Perhaps Duncan is better placed than I to elaborate
on the 'essence' of money as credit?

Chai-on (1):
The most essential function of money is not in the measure of value nor
in the means of circulation but in the means of debt-payment. See
Marx's Capital vol 1, Chap. 3.

Chapter 3: Money or the Circulation of Commodities
1. The Measure of Values
2. The Means of Circulation
3. Money
(a) Hoarding
(b) Means of Payment
(c) World Money

In the above, only (a), (b) and (c) are proper monetary functions. 1 and
2 are taken by any money substitute as its roles.

Once this can be accepted, a crucial problem is "how can the credit
money function as the means of debt-payment?" The answer is "No".

Michael (2):
c) For our approach, there is no quantitative determination of a
commodity's value prior to its entry into commodity circulation, for
which it was produced. Our argument for the necessity of labour,
traded as labour-power, to value, valorisation and capitalist
accumulation is quite independent of any postulation of some a priori
value-substance such as abstract labour. Whilst our conceptions
of money and of commodity value are, of course, inter-linked in our
systematic presentation of the capitlaist economy and bourgeois
society, it is not obvious how YOU make the link from the rejection of
commdoity money, to the rejection of any embodied labour theory of

Chai-on (2):
You are in the rejection of embodied labor theory of value not because
you rejected the commodity money conception but because of your
peculiar value form analysis. I feel no more like to argue that you are
already against Marx in every aspect. S. Bailey are the most vulgarised
economist Marx try to criticise in the first chapter of Capital vol. 1.
Your conception of value has no difference from Bailey's.

Michaels (3):
In responce to my statement as the following,
(2) [a)]Money is put on a more abstract level than commodity values
in your money conception [b)]since your conception is in the ontext
of "monetary theory of labor value". [c)] Money is something other
than the commodity. [d)] The value of money is therefore to be
explained *with no reference to commodity values*. [e)] The
exchange between money and other ordinary commodity is of
course not on an equivalent level.

a) Yes
b) Not quite sure what you mean. But probably 'yes', if you mean that
'Value theory of Labour' was influential. Under capitalism, value
considerations systemicaly determine the allocation of resources, of
which the sole primary factor of the value of a commodity is (though
this has to be argued) labour.
c) Yes indeedy!
d) No, No! The value of money is just the inverse of the general level of
commodity values
e) Oh yes it is! The value of a commodity which is systematically sold for
$1 is $1. If I sell one $1 dollar commodity, I can expect to be able to buy
one unit of any other $1 dollar commodity. The
equivalence is SYSTEMIC, and makes no use of the 'underlying'
metaphor, which refers to a substantial sub-structural value
economy of abstract labour times. There is nothing 'conserved' in exchange:
the value of the commodity (and indeed the value of the
money expression of labour) is constituted and reconsituted by
systemic ongoing market exchanges.

Chai-on (3):
Your position is confusing in the above. Value is determined in the
exchange with money, but the value of money is determined as the
inverse of the general level of commodity values. Do you think this is
logically cogent? Money's value is determined by the value of
commodities but the latter is determined by the former? Or by the play of
supply and demand?

Michael (4):
In earlier posts, Chai-on has referred to the importance of bullion in
underpinning confidence in monetary transactions across
international boundaries. It may, contingently play that role, precisely
because there is no capitalist world state adequate to the concept.
Inter-national relations are suffused with contingency at every level,
not just in terms of monetary relations. Part of the reason it is able to
do so may be a historical hangover of the mystique of gold.

Chai-on (4):
No. You misunderstood my point. I never referred to the importance
of bullion in underpinning confidence in the international
transactions. I insisted money would not be replaced with a mere value
symbol. Gold can be replaced with any product of labor. But
money cannot be disconnected entirely from the product of labor.