[OPE-L:3378] Re: TSS and Value of Money

Steve Keen (s.keen@uws.edu.au)
Sat, 12 Oct 1996 18:15:16 -0700 (PDT)

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Re Duncan's comments on the value & use-value of money, please take a
look at the 2 replies I sent to Allin on this, which cover part of the
textual basis in Marx for the approach I'm advocating to credit money
and notes.

We would have to differ on whether Marx's own analysis extends to fiat
money, as I don't think the textual evidence is clear enough to point
either way. I would argue that the concepts *do* easily extend to fiat
money, even if Marx had not specifically considered it.

I would also disagree with the statement that

> <snip> He also has a theory of credit, but in the
> context of a gold standard system where the price level of commodities is
> determined by their production costs, so that the expansion of credit can
> influence the accumulation process, but not prices.

This is in general true of Vol I analysis--for the reason I put forward
earlier, that Marx was "holding constant" some forces which would need
to be considered in later works, of which Vols II & III as published
were precursors, but certainly not what Marx would have been content
with had he lived to complete his program.

Nonetheless, in Vols II & III & TSV, you can find the beginnings of an
analysis which supports the proposition that the expansion of credit can
affect prices, as well as the accumulation process. The passage I'm
thinking of here occurs when Marx is discussing Ricardo on rent as it
applies to mineral resources in 11.2 of TSV II. He quotes Ricardo as

"'The compensation *given* for the mine or quarry, is paid for the
*value* of the coal or stone which can be removed from them, and has no
connection with the *original* and indestructible *powers* of the land.'

No! But there is a very significant connection with the "*original* and
destructible *productions* of the soil. The word '*value*' here is just
as ugly as the phrase '*repaid* himself with a profit' was above.

Ricardo never uses the word *value* for utility or usefulness or "value
in use". Does he therefore mean to say that the "compensation" is paid
to the owner of the quarries and coalmines for the '*value*' the coal
and stone have before they are removed from the quarry and the mine--in
their original state? Then he invalidates his entire doctrine of value.
Or does *value* mean here, as it must do, the *possible* use-value and
hence the *prospective exchange*-value of coal or stone?..." (p. 248 PP

Notice the final sentence (all emphases are Marx's): "does *value* mean
here, as it must do, the *possible* use-value and hence the *prospective
exchange*-value of coal or stone?" I interpret this as saying that price
of these (speculative) assets is set not by their exchange-value--since
as Marx cogently argues, they have none--but by their (uncertain)
use-value. So the price level for unproven mineral resources--and by
extension, the price level for speculative assets in general--is set not
by their exchange-value, but by their (speculative) use-value.

This is the basis for a 2 price theory of capitalism: one price level
for commodities based on objective costs of production, another for
speculative assets, based on expectations of the profit stream they will
yield. This is also part of Minsky's analysis, as you'd be aware.