[OPE-L:1873] Reply to Claus on the money supply

Subject: [OPE-L:1873] Reply to Claus on the money supply
From: clyder (wpc@dcs.gla.ac.uk)
Date: Thu Dec 09 1999 - 07:07:38 EST

I am replying to your last mail from memory since
I only got a glimpse of it before I left my desk.

As I recall you make the point that it is unfair of me
to say that the marxian analysis of money pays inadequate
attention to the question of the existence of credit
accounts. You go on to say that these are dealt with
in the third volume, and that credit is logically subsequent
to money in that it arises from the function of money
as a means of payment.

I think that in saying this you are slightly misunderstanding
what I mean by a credit account. I am using the term in a
more general sense than you. In my mail I define a credit
account list as a set of ordered pairs associating subjects
with numbers. By credit accounts you, I think, understand
a particular instantiation or set of instantiations of this -
accounts kept in the ledgers of banks.

What I am trying to get accross is that we must view credit
accounts as an abstract data-type. This data-type is characterised
by a certain intrinsic information, and by the set operations
over it. The characteristic operation on a set of credit
accounts is the atomic transaction, in which account a is
credited with quantity x and account b debited by amount

This data-type can be implemented using different technolgies.
What you call money, say gold coin, is just one particular
techique for implementing such accounts. In this case, the
information structure is held in a unary coded number system
represented by the number of coins in the direct possesion
of the subjects. The atomic transaction is effected by
the physical transfer of the number tokens - the coins - between
subjects. The physical identity and durability of the tokens
then guarantees the semantics of the transactions.
This technology of record, which is vulgarly associated
with money itself, has the great advantage of being robust
and simple. It can be operated by people who are illiterate,
and who have limited arithmetical abilities. Simple mechanical
aids like abbaci and reckoning tables enable the necessary
transfers to be handled.

However this is just one possible way of implementing the
data structure represented by credit accounts. A society
that has the requisite literacy, the ability to perform
arithmetic using a place number system, and which has access
to durable writing materials - paper or clay, can perform
the same operations using written accounts. Historically
these actually precede the use of gold coin. This is brought
out by Polanyi and the general literature on the origins
of the Babylonian sexagissimal number system. The babylonians
used accounts in terms of shekles, a standard volume of
barley, and maintained records of these on clay tablets written
in base 60 numbers.

With the spread of paper and the indian base 10 number
system, it became possible once again to record credit
accounts symbolically. Symbolic credit accounts have
the advantage over token accounts that they can easily
record large quantities. Token accounts require a
number of tokens that grows proportionately with the
number being recorded. To record the fact that the
duke of Norfolk has a fortune of 100,000 guineas, he
requires a strong box large enough to hold 100,000
coins. To make a large atomic transaction a considerable
weight of coin must be moved.
The use of place number systems allows large numbers
to be recorded in a small space, allowing accounts of
almost arbitrary magnitude.

Up until the late 20th century the predominant way of
storing accounts was in ledger books. Following the
invention of the magnetic disk by IBM in the late 50s,
the predominant form of account has been the disk
file. However whether accounts are kept as magnetic
records, bearer notes, or coins the abstract information
structure is the same, they are means of associating
recorded numbers with juridical subjects.

Thus given the abstract usage of my term credit account
it does not make sense to say that the analysis of credit
should be subsequent to the analysis of money. What
you are calling money is just a particular technology for
recording credits.

My objection to the analysis of money in chapter 1 of capital
is that it is a bad abstraction. It abstracts from what
is an essential element of any system of credit recording -
the owner of the credit. All historically evolved systems
of account associate numbers of the unit of account with
juridical subjects - either people or impersonal legal
entities. By focusing on commodities and money, and
relegating the proprietors to the background, the analysis
fails to bring out the full logical structure of the
social relations involved. It focuses instead on what is
an incidental and historically contigent technical feature
- the material from which the tokens are made.

It is as if, in writing a similar analysis today I were
to say that whilst ferrite is not by nature money, money
is by nature ferrite.

The first chapters of capital are, in my opinion, the ones
most marked by the hegelian conceit that it is possible to
deduce complex relationships from simple axioms. Unlike
other chapters, which are richly documented with empirical
and historical evidence the first ones are modeled on the
self evolution of forms in Hegels Logic.

In the chapter on money, unlike for example that of primitive
accumulation, he remains at the level of an imaenant critique
of political economy, and as such remains on the theoretical
terrain of political economy - free equal voluntary exchange.
I do not believe that this is a historically adequate basis
for examining the history of money.

I have now got your original message so here are some
other points:
----- Original Message -----
From: Claus Germer <cmgermer@SOCIAIS.UFPR.BR>
To: <ope-l@galaxy.csuchico.edu>
Sent: Wednesday, December 08, 1999 4:42 PM
Subject: [OPE-L:1864] Re: Re: the money supply

> Paul wrote in [OPE-L:1851]:
> >
> > But the existence of money involves more than just a price list for
> > all commodities. It also implies, and this is not adequately emphasized
> > in the Marxian analysis of money, existence of a credit account list.
> > This is of the form {(subject1 credit1), (subject2 credit2)..}
> > associating with each juridical subject a monetary credit or debit.
> > The list may exist in the form of ledger entries in the banks,
> > database entries in Visa's computers, or more primitively,
> > coins in purses. All of these are just different historically evolved
> > technologies for recording the same sort of information.
> It is not true that credit is not adequately emphasized in the Marxian
> analysis. Credit is explained differently from yours, that's all.

My point was not that credit was not analysed, but that the
formal analysis of money excluded the fact that the relationships
involving money always entail an association of juridical
subjects with quantities of the unit of account.

> >
> > Whilst price lists and value lists may at first sight seem equally
> > useful in cost accounting, credit account lists imply something
> > quite different. Here money appears not as a neutral metric,
> > but as, what Smith called, the power to command the labour
> > of others. Credit accounts encode social hierarchy.
>Money is a phenomenon of the
> circulation and assumes the independence and equality among the agents of
> exchange. In Marx's analysis it is private property of the means of
> production that introduces social hierarchy, meaning domination by the
> owner over the non-owners of means of production.

Yes but credit account lists impose an ordering on juridical
subjects by the magnitudes of their credit balances. This
ordering is implicit in the existence of such accounts.

> > Thus the persistence of
> > such accounts in socialist societies is an index of the survival of
> > capitalist forms of domination, of lordship.
> This seems inaccurate to me. In Marx's analysis capitalism is essentially
> society based on a specific form of the private property of the means of
> production. When private property is abolished, so is capitalism (assuming
> the transition period has
> been overcome). Thus there is no place for money or for money credit,
> for money or credit accounts either.

This is all very abstract and a-historical. One has to explain the real
world. Why did money, or something that seems very like it, exist
in socialist societies. Stalin traced this to the co-existence of public
and co-operative ownership of the means of production, do you think
that this is an adequate theorisation?

> In the absence of private property, there is a communal authority. With
> existence of private property, the state expresses the domination of the
> proprietory class, which can coexist with communal systems of distribution
> of labor, like in feudalism. However, it isn't the intrinsic function of
> the state to distribute the productive functions. In the merchant society
> any communitary links are abolished. Thus, there is no conscious mechanism
> of distribution of labor. This function is taken over by the law of value,
> expressed in the money commodity. Money arises spontaneously as the
> of the anarchic confrontation of private producers of commodities. The
> necessity that it arises spontaneously derives from the fact that there is
> no conscious mechanism of distribution of labor. If the state were to do
> it, there would not be a need for money.

I think this is simply wrong historically. Money arises because of the role
of the state as the original appropriator of the surplus labour. This
is what links money to labour, it is the tokenisation of the surplus,
its commution.

Alongside the appropriation of the surplus as profit,
there exists in every capitalist country another channel
for the surplus, one both older and newer - the state and its taxes.
Before capitalism and after it, the public power endures,
 with the primordial right to surplus labour. Originally this takes
the form of a personal obligation to labour or serve
as a soldier. The latter can persist to this day, but
generally these duties were, by all states with an effective bureaucracy,
commuted. Instead of performing the labour myself I can get somebody
 else to do it, provided that I can surrender to the state a certificate
showing that they have performed it for me. These certificates
can take various forms, tally sticks, paper vouchers or
the metal disks stamped with royal insignia that we call coin.
With the formation of a standing army, the personal military
service is performed by a minority whose service is certified
by the queen's shilling. The obligation, however, remains
general and those who do not serve must render coin in lieu: tax.
The coin then circulate, as the only way others can obtain
coin is by selling goods and services. The coin are tokens of
labour performed for the state, and the payment of tax a performance
of these services by proxy.

This archive was generated by hypermail 2a24 : Sun Dec 12 1999 - 15:45:03 EST