[OPE-L:3342] Re: TSS and Value of Money

Steve Keen (s.keen@uws.edu.au)
Thu, 10 Oct 1996 14:23:04 -0700 (PDT)

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Re Paul's comment that Marx's reasoning applies not to the price of
money but to the rate of interest:

True, that particular observation did. But the concept does carry over
to money itself as well, and also to financial assets--which are to
their capitalist purchasers no more than an uncertain stream of future
cash flows.

For money itself--and here I mean notes issues--the "price of a dollar"
is set not by its exchange-value (the cost of production of the note)
but by its use-value. This could notionally be tied to the amount of
gold the note represents, and hence to the cost of production of a real
commodity, only if the gearing between notes issues/stocks and gold
output/stocks was 1:1, and the direction of causation was gold-->notes.
That is not the case for modern capitalism--as de Gaulle proved some 25
years ago.

Paul Cockshott wrote:
> Steve:
> >The money-commodity approach did dominate Capital I, and it's quite
> >legitimate to take that as the matire Marx. However, in Capital III,
> >Marx began to apply the core of his analysis of the commodity--the
> >dialectic between use-value and exchange-value--to money, and financial
> >assets. He reasoned:
> >
> >"What, now, does the industrial capitalist pay, and what is, therefore,
> >the price of the loaned capital?... What the buyer of an ordinary
> >commodity, buys is its use-value; what he pays for is its value. What
> >the borrower of money buys is likewise its use-value as capital; but
> >what does he pay for? Surely not its price, or value, as in the case of
> >ordinary commodities." (Marx 1894, p. 352.)
> >
> >He reached the conclusion that the price of money is set, not by its
> >value, but by its use-value. This arises because, while it is a
> >commodity in one sense--that it is traded, and necessary for trade--it
> >is not a commodity in another--loaned money is not produced by other
> >commodities, but by agreement between lender and borrower.
> WPC:
> This refers to a quite different matter - the rate of interest. I have argued
> previously that it is an error to view this as the price of money, but
> Marx was certainly not talking about the exchange value of money vis a
> vis other commodities.
> Paul Cockshott
> wpc@cs.strath.ac.uk
> http://www.cs.strath.ac.uk/CS/Biog/wpc/index.html