[OPE-L:3373] Re: TSS and Value of Money

Steve Keen (s.keen@uws.edu.au)
Sat, 12 Oct 1996 14:15:26 -0700 (PDT)

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Allin Cottrell wrote:
> The cost of production of a dollar bill is unrelated to its
> exchange value. Do you mean that its exchange value is not
> set by its value?

Yes. See further below.

> > 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.
> "The price of a dollar is set by its use-value." Isn't this
> backwards? Dollar bills have essentially zero use-value
> other than serving as means of exchange (leaving aside
> coke-snorting). Thus they have use-value only insofar as
> they have exchange-value. And they have exchange value
> insofar as they are (a) defined by the state as legal
> tender, acceptable for paying taxes and all that, and (b)
> restricted in their issue (to some degree or other) relative
> to the "demand" for means of payment associated with the
> going rate of transactions in real goods and services.
> Allin.

Marx's expression of this can be found in Vol III, Ch 21, where he says
that money has "an additional use-value, namely that of serving as
capital. Its use-value then consists precisely in the profit it produces
when converted into capital."

This is a similar comment to yours above, that "Dollar bills have
essentially zero use-value
other than serving as means of exchange". He continues

"Suppose the annual average rate of profit is 20%... A man in possession
of 100, therefore, possesses the power to make 120 out of 100.... If he
gives these 100 to another for one year, ... he gives him the power to
produce a profit of 20--a surplus-value which costs this other
nothing... If this other should pay, say, 5 at the close of the year ...
out of the profit produced, he would thereby pay the use-value of the
100--the use-value of its function as capital, the function of producing
a profit of 20. The part of the profit paid to the owner is called
interest." (Progress Press edition, pp. 338-339.)

Another intriguing statement on this issue comes in chapter 24:

"As in the case of labour-power, the use-value of money here is its
capacity of creating value--a value greater than it contains." (p. 392)