[OPE-L:4057] Re: Marx's "gold"

Duncan K. Fole (dkf2@columbia.edu)
Sat, 25 Jan 1997 13:41:57 -0800 (PST)

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Alejandro writes (I've lost the OPE-L number):

..However, my hypothesis is that, in
Marx's monetary theory, "gold" is mainly a "functional
determination", that of "reserve money": to conserve and
represent labor-time externally in a stable way.

This would mean that, despite --in Marx's examples-- gold
is a commodity, we shold not consider it as any other
commodity. To put this in another terms: In a scheme of
reproduction, gold could be considered as commodity, but
NOT AS RESERVE MONEY. In its determination as money, "gold"
is, in a certain sense, "out" of the scheme of

I don't understand this. Under a gold standard gold is one of many stores
of value. It has risks, like any other store of value, and it has returns,
one of which is its high liquidity (since it can be spent immediately,
without being sold first.)


Let us suppose that the labor-time to produce gold falls.
This means that "gold money" cannot perform efficiently its
function to conserve and represent in a stable way labor-
time. What will be the reaction of capitalists, given the
cheapening of gold? To increasingly use another "asset"
able to represent and conserve better than gold labor-time,
e.g. "silver". In this case "gold" will rapidly lose its
monetary functions, i.e. it will cease to be "reserve money"
and become a simple commodity.

I think this is wrong historically, and probably theoretically. Once gold
emerges as a social general equivalent, while individuals have the choice
to hold it as an asset or not (they could hold silver, or land, or common
stocks), they don't have an individual choice as to what will function
socially as money.


I think the functional determination performed by gold in
Marx's examples, can be carried out by any socially accepted
asset, e.g. a US Treasury Bond, which is a non-commodity.
When we put the problem in these terms, it is clear that
"reserve money" is out of the scheme of reproduction. The
problem to determine what is the labor-time represented by
this "asset" (or set of "assets") is completely different
from the determination of the labor-time embodied in gold
considered as a commodity similar to "sugar" or "iron".

I've argued for separating the "function" of money as representing social
labor time from the existence of a social general equivalent commodity, and
therefore that it makes sense to talk of the "monetary expression of labor"
in a state credit monetary system, for example. In a gold standard system,
however, there is a close relation between the production price of gold as
a commodity and the monetary expression of labor, though this may be
mediated by speculation on changes in the production price of gold in the


..I would suggest two previous problems in
order to "measure the monetary expression of value":

a) Firstly, as I argued in OPE-L 3941, in Marx's text,
"money" is a complex concept, i.e. we have --in the simply
monetary system depicted by him-- "reserve money" ("gold")
and "symbol money" ("coin", "pounds"). This defines TWO
(not ONE) "monetary expressions of value". The relation
between these two ratios is very important in order to
understand the dynamic of the monetary system in any "real

I don't think it's very important. As long as convertibility is maintained,
the deviation in value of "symbol money" from "reserve money" is quite
small (on the order of 1%). I think Marx discussed this more for
completeness and because 19th century monetary theory obsessed about it
than because it has much importance for the functioning of capitalist
production. Marx is very clear about this in his discussion of the
"standard of price" in the first three chapters of Volume I of Capital,
where he explains that the "pound" is just a legislated name for a certain
quantity of gold.


b) Secondly, it is necessary to know what is actually
"reserve money", what is the "asset" able to conserve and
represent labor-time in a stable way. This "asset" can
change through time, but the analysis of this change is
completely different from that involving commodities. So,
it does not make a lot of sense to consider the
"differential rates of increase in cost reductions between
gold and other commodities."

I don't see how your last sentence follows from the first two. If one is
considering a functioning gold standard system, then speculation on the
future technological changes in gold production is going to have an
influence on the value of gold relative to commodities, that is, on the
money price level.


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