[OPE-L:5336] Re: [CLAUS] RE: use-value of money

Duncan K. Foley (dkf2@columbia.edu)
Sun, 13 Jul 1997 22:16:00 -0700 (PDT)

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In somewhat belated reply to Allin's OPE-L:5166:

>On Mon, 2 Jun 1997, Duncan K. Foley wrote:
>> But if you believe this, why do you think hard-headed capitalists are
>> willing to accept dollars in exchange for commodities at current price
>> levels?
>The dollar is legal tender in the US -- wouldn't they be
>breaking the law if they refused to accept dollars?

I don't think this is exactly what "legal tender" means. I think what it
means is that if you make a contract to sell land, say for $10,000, and the
other signee comes up with $10,000 in US currency, you can't go to court
and insist on payment in gold, or pounds. It doesn't require you to draw up
the contract in US $.

>Besides, what is the alternative? The transactions costs of
>barter are so high that it would take a disastrous inflation
>to make it worth the capitalists' while to try to flee the

In most hyperinflations (for example, Germany in the 1920s) the relevant
alternative is not barter but payment in a stable currency. In Germany in
the 1920s the Dutch guilder and the British pound were used this way,
especially in transactions between capitalists.

>Most fundamentally, though, why should a
>capitalist, in 1997, be concerned about the rate of exchange
>of the dollar for _gold_ in future, rather than the future
>rate of exchange of dollars for labour-power and other

I think I agree with this point. But doesn't this lead back to a theory of
a speculative immediate determination of the value of the $?


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu