Re: (OPE-L) on money, capital, and the state

From: Costas Lapavitsas (Cl5@SOAS.AC.UK)
Date: Thu Jun 03 2004 - 05:51:02 EDT

I had a feeling that we would end up with Ingham's book and work on the historical aspects of money's origin. Ingham relies heavily on Keynes's 'Babylonian' musings. Mostly, however, he relies on Grierson's numismatic work and on Heihnsohn and Steiger, who were also mentioned in a message by Riccardo. These writers have influenced the post-Keynesians, especially Wray, whose work is pivotal to Ingham's own. 

What we have here is the (many times deflected) influence of the German Historical School, even down to Polanyi, whom you also mention. To post-Keynesians, including Ingham, this appears as critique of general equilibrium approaches to money. It is the Methodenstreit in Anglo-Saxon garb a century later.

Actually, the debate on the historical/logical orign of money is considerably older than the German version, but Ingham seems unaware of it. It goes back at least to Mercantilism and the notion of money arising as abstract unit of accout, rather than concrete means of exchange, as often suggested by classical political economists. It is the debate of the 'macoute', the ideal gold bar that Africans presumably used to measure value, but which was not means of exchange. Marx was perfectly aware of it, and rejected it out of hand. Incidentally, in the same context, he also rejected 'abstract' bank money, i.e. the florin banco of the Bank of Amsterdam. And he was right. The macoute was a myth and the florin banco was commodity money reserves used by the Bank. A critical reading of Ingham and related literature similarly reveals that Babylonian/Summerian abstract units of account, which were presumably thought up by clever state bureaucrats, exist more in febrile theoretical imaginations than in cuneiform tablets.

I think that a significant merit of Marx's approach to money's emergence is that it treats money as unit of account as inseparable from means of exchange, both in history and in theory. By the same token, money is seen as product of commodity exchange, not abstract measuring device invented by the state. The theoretical problem is logically to derive money out of exchange without falling into a neoclassical trap, while allowing for money to play a broad social role. 

For the record, Ben Fine and I had an exchange with Ingham on money in Economy and Society. The journal will publish a final response by me next year. In my view, Ingham's work is thoroughly anti-Marxist but also deeply flawed.


-----Original Message-----
From: clyder@GN.APC.ORG
Date: Wed, 2 Jun 2004 15:44:41 +0100
Subject: Re: (OPE-L) on money, capital, and the state

A good sourse is Bolins book on the state and currency
in the Roman empire, gives a good account of the origin
of coinage.That dates back at least to the 60s.
 Polanyi's book on Trade and Markets in Early
empires is good.

The most recent summary of the historical literature is
in Ingham's book, 'The Nature of Money'

Quoting Costas Lapavitsas <cl5@SOAS.AC.UK>:

> Can I ask on what historical sources you rely for this strong and confident
> statement?
> Costas
> At 09:20 01/06/2004 +0100, you wrote:
> >  > Money, it seems to me, arises spontaneously out of private and social
> > > relations among commodity owners. It is a social nexus that necessarily
> > takes
> > > the form of absolute ability to buy. In a capitalist economy it also
> > acts as
> > > claim on wealth, since the division of labour is very detailed and
> > producers
> > > are independent and in competition. It also becomes capital and
> > > interest-bearing capital. It further has a variety of non-economic
> > roles. But
> > > these roles depend on the essential character of money as monopolist of
> > > buying ability and do not determine it.
> > >
> > > As for the state, which Jerry and others have brought up, I think that
> we
> > > should differentiate between the state inducing the emergence of money
> and
> > > the state becoming necessarily associated with money and buttressing it
> > with
> > > its own power.  The former, I suggest, is analytically misleading (as
> > well as
> > > historically dubious) and not in line with Marx's letter and spirit. The
> > > latter I would have no quarrel with.
> > >
> > > Costas
> > >
> >
> >The problem with this account is that there is very little
> >historical evidence to support it. It is a theoretical back
> >projection of onto early society of Isaac Newtons monetary
> >policy as master of the Mint.
> >
> >----------------------------------------------------------------
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