[OPE-L:2350] RE: commodity money

Chai-on Lee (conlee@chonnam.chonnam.ac.kr)
Fri, 24 May 1996 03:08:44 -0700

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Dear Duncan,

Thank you for your intervention.

Duncan (1):
>On Wed, 22 May 1996, Chai-on Lee wrote:
(among other things)

>> Firstly, in regard to the LTV,:
>> The main message Marx delivered in his discussion on the FORM
>> of VALUE in Chapter 1, Section 3 of Capital, vol 1 was this: money
> >is also a commodity. The appearance that money is something
> >other than a commodity is a fetishism.

>I would read this in somewhat weaker terms, as showing how the >money form of value arises from and simultaneously with the
>commodity form (through the development of the equivalent form of

Chai-on (1):
Yes, the money form arised from the commodity form. Its origin
was in the commodity form not anywhere-else. So, the money
must be a commodity form, too.

Duncan (2):

>> Secondly, in regard to the holistic logical orderings.
>> The value of money needs to be explained prior to the commodity
>> values. Duncan's explanation is still not successful. Riccardo's
>> and Michael's are circular. As for Marx, the commodity itself is
> >differentiated into two categories, money and ordinary commodity.
>> The differentiation is activated by the development of exchange as
>> discussed in marx's Chapter 2 of Capital vol 1.

>At least my explanation is separate from the determination of
>commodity values, since the speculative valuation of the
>government debt is not directly contingent on conditions in other
>commodity markets.

Chai-on (2):
Yes, your explanation was exceptionally saved from the circular.
But I doubt it would be successful to analyze the speculation prior to, and independently of labor values.

Duncan (3):
>> Thirdly, in regard to the crisis theory:
>> To see the money as a mere value symbol cannot but lead to
> >the dichotomy of the classical macro economics. Of course,
>> Duncan's conception of credit money is different from the value
>> symbol. So, I think his conception would eventually arrive at the
>> commodity money conception if the debate should continue
>> further. This is very important to me because different money
>> conception would provide us quite different visions of the future of
> >world capitalism.

>How do you fit the current institutional situation (floating exchange
>rates, no guaranteed convertibility of national currencies into gold) >into your interpretation?

Chai-on (3)

IMO, foreign exchange rate needs somewhat longer discussion.

Even in the gold standard system, the market price (or market value of
gold is deviating from the offical convertion rate of gold into bank notes.
The two were mutually influencing. The most determinant was the
current production condition of gold and/or the import price of gold.

By analogy, the fixed rate of echange in the foreign exchange
corresponds to the offical conversion rate while the floating rate of
exchange does to the market price of gold. And "the current production
condition of gold and/or the import price of gold" corresponds to the
import and export prices of goods.

In theory, the central banks can issue paper money with no limit
as far as it is backed by foreign currencies. They can intervene
in the foreign exchange markets with unlimited freedom. Its feasibility
zone is limited by the import and export balances.
Yet, if the central banks collaborate (among the G7 countries) to
increase the issue of money in the same proportion, the exchange
rate does not change with no interest rate being influenced.
In this situation, the credit money turns into the pure state paper
money. (the difference between the state paper money and the
credit money consists in if the issue of money is backed by bonds
or not). The collaborated G7 countries can enjoy the primitive
accumulation from the rest of the world, which must be the privilege
of the advanced economies with high technologies as the capitalist
power. More discussion should follow, however, about the
international labour theory of value.