Re: on money substance and abstract labor

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Sat Jun 05 2004 - 19:43:04 EDT

At 11:15 PM +0100 6/5/04, Paul C wrote:
>Here we have a particular problematic speaking, one which allows a very
>selective appreciation of the reality at the time.
>It requires a particular theoretical perspective to see the monetary system
>as 'one commodity specialising in the function of universal equivalent'
>since empirically this is not what one perceived at the time.

Why? The movement from silver to gold complete by the end of the
Napoleonic War.

>1. Gold did not function as the universal measure of value in early
>     Britain, the Pound Sterling did.


>2.  The Pound Sterling, was a notional unit of account recognised by the
>     British state,  commercial transactions were carried out in terms of
>     this unit rather than in terms of units of  gold,  or in terms of
>     another state unit of account.

ok so the quid was not a standard of price in Marx's sense, that is a
certain quantity of the money commodity? Is that what you are saying?

>3. The Pound Sterling had multiple  representations in common use:
>     a) Bank of England Notes.
>     b) Bank of Scotland Notes.
>     c) Bank notes of other commercial banks.
>     d) Cheques drawn on these banks.
>      e) Gold sovereigns.
>      f) as 4 silver crowns
>      g) as 240 copper pennies.
>      f) Treasury tallies.

Don't understand the point here. As Foley points out, "if the state
issues than can be absrobed by circulation, agents will try to get
rid of the excess paper money by using it to buy gold. This attempt
creates a market for the exchange of paper money and gold and a price
in that market, usually called the discount of paper against gold."
Then we'll have two prices: one that reflects the discount between
the paper money and gold and a gold price. So I don't see the problem
posed by multiple representations

>4. Even if one accepts the theoretical premise that money is a commodity,
>     there were actually  two commodities that could plausibly be taken to
>     be the substance of money - gold and silver, since coins in both forms
>     were issued and circulated. Therefore the premise that the
>universal equivalent
>     was a single commodity was not met.

all but two commodities end up on the relative side of the value
form; that selection then makes possible the list of prices even if
there are two or three types. This social result still seems to
demand a logico-historical explanation. And silver was displaced by
gold in the history of the pound sterling.

>5. But to define it as a commodity one had to ignore all the
>non-metallic forms
>     assumed by the Pound.

I don't think so. As Foley notes above, this Marx did not do as he
drew from the banking school to analyze the State's printing of paper

>6. One also had to account for the contiued smooth functioning of the
>     system in periods when convertibility of  Bank of England notes
>into gold was dropped.
>     Why should the Pound still have functioned when it no longer had
>any guaranteed
>      equivalent in gold?

Well yes I agree--this is a very difficult question.

>      We are of course mnuch more familiar with this sate of affairs -
>since it is some
>       70 years since the British state attempted to define Sterling the
>price of  gold.
>      Marx might be forgiven for seeing non-convertible currencies as an
>      whose operation was to be explained by an absent cause - the gold
>that would
>      have circulated if, counter-factually, the gold standard had not
>been dropped.
>>>The problem with an ideal genesis is that it tells you more about your
>>>theory than it tells you about what happened.  One can have an arbitrary
>>>number of theories from which one can construct ideal histories that
>>>purport to explain the present - on what basis does one then choose
>>>between them?
>>I don't think it's arbitrary for Marx to analyze in logical and
>>historical terms why the generalized commodity production came to
>>depend on the selection of a universal equivalent.
>>He is interested in the relation between commodity and money.
>>It's not clear to me what Knapp or chartalist theories of money add
>>to or controvert about this, but I shall read Ingaham.
>I agree that generalised commodity production does require a universal
>scalar measure of value. This is not the same thing as saying that this
>scalar measure must be a commodity.

But it was a (or perhaps two) commodit(ies), and that Marx explained.
Once say the dollar was invented through its relation to gold, then
perhaps the signifier achieves ever more partial freedom from the
signified until it became detached (hoping for Costas' corrections
about any mis use of language analogy here).  Yet even now I don't
know whether a Greenspan can let a dollar fluctuate too wildly in
terms of not a quantity of gold per se but a basket of commodities
without endangering complete chaos in the commodity and money
markets. I have asked this before, in particular to the critics of
Claus Germer.  I think it's premature to say that the commodity basis
of money has been abolished. Or that it can be fully abolished
without wreaking havoc on capitalist commodity production.

>>In defetishizing money, Marx argues that money
>>has the power of direct exchangeability only because a system of
>>generalized commodity production and exchange demands a commodity be
>>selected in which all others express their value (we can trace this
>>process of selection from simple to general to universal value form,
>>which is both a logical and historical process; tracing the process
>>in this way Marx calls an ideal genesis of the money form).
>There seems to me to be 2 problems with this argument
>1. Generalised commodity production requires a universal scalar measure
>     of value, but this does not logically imply that that scalar must
>itself be
>     a commodity.

Yes a very difficult question to which Michael Williams, Claus Germer
and other experts could speak and have already spoken.

>     One could as well argue : value is social labour time, the Pound
>      measures value, thus the Pound Sterling is just another name for a
>     quantity of social time.
>2. The logical deductive approach suffers from the Hegelian weakness of
>     its premises in order to arrive at pre-ordained conclusions. The
>hidden premise
>     in Marx's argument is the archetypal bourgeois world view that
>commodity exchange
>     is the prior, the state superstructure is the consequence.

No the argument is that commodities are historically and logically
prior to a universal equivalent and the money price form. I follow
Pashukanis as I thought that you had: commodity exchange is through
and through a juridical phenomena, the superstructure is in the base,
the base in the superstructure. I think your formulation here is a
caricature of Marx--read the first few paragraphs on the chapter on
exchange in the first part of Capital.

>  Thus
>given that he
>     initially considers commodity exchange in the absence of the state,

generalized commodity exchange is through and through a legal phenomena.

>he is forced
>     to conceptualise how such an abstract system could give rise to
>money. But
>     this is a fetishised inversion of reality imposed by the context of
>Marx's work -
>     the critique of bourgeois political economy. From a historical
>materialist standpoint
>     we know that the state was the prior and commodity production came

Not following the actual criticism of Marx's theorizing of the
relationship of money to the commodity. What does the state have to
do with this? Sorry if I am not getting the obvious.

Yours, Rakesh

>  Thus
>     the problem that Marx is trying to solve is a problem that is only
>meaningfull within
>     the context of  bourgeois political economy, for historical
>materialism it does not
>     exist.

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