Re: on money substance and abstract labor

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Sun Jun 06 2004 - 18:13:48 EDT

 > 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?
The pound was a standard of price, yes, but I view the question of
whether the state attempts to regulate the price of gold as an
entirely subsidiary factor.
> >
> >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

What I am questioning is the priority assigned to gold coin. To my mind the
use of gold in coinage is an anti-forgery expedient.

A key concern of all monetary technologies is their integrity of record.
They must provide
some protection against falsification. It is in this light that the use of
precious metal
for coins should be seen. States have always enacted severe penalties for
fraudulent issue of coin. But penalties would be ineffective if the
issue of fraudulent coin is made too easy. Beyond legal prohibitions on
state coin had two distinct protection mechanisms.

The coin is made by stamping from a master, one of the basic copying
 Unless one has access to the master it is difficult
to make accurate copies of the coin. Reasonably good  copies may however
pass without
notice. To do this one has to replicate the master, which can in principle
be done
by taking an impression of the coin, using this to make a mould and from
that cast
a new die. Until the invention of iron casting, this process was technically
infeasible, since dies made from softer castable metals like bronze would
not have
the toughness required to stamp out coin. Note that there are 3 copying
between the coin used as a model and the new forged coins. Errors in copying
accululate exponentially
so it is very difficult to get forgeries of acceptable quality.

The remaining forgery techniques were to hand carve a new die, or to use an
existing coin to make negative moulds from which coin could be cast rather
than stamped. These are relatively expensive processes and would not be
while for the production of low denomination coinage. For high denomination
coinage they would be feasible.

Whilst low denomination coins were made from copper or copper alloys, and
protected against forgery by the method above, high denomination coins
required additional protection. This could be done by forging them from
expensive materials like gold and silver. Provided that the nominal value
of the coins was not hugely in excessive of the value of the metal
they contained, this, in conjunction with the inherent difficulties
of accurate copying, reduced the profits to be made from forgery.

The use of gold or silver is not essential to money tokens, as is
shown by their abandonment in favour of the use of paper money
printed using sophisticated   techniques that make it difficult
to copy. The use of bullion was a low-tech anti-forgery expedient.

The use of gold was not at all essential to the pound functioning as money
so long as some other technology made forgery hard. The development of
high quality intaglio printing provided that, allowing hard to copy
to be produced. If we consider all the forms of money existing in
early 19th century Britain - why conceptually privilige gold coin. We know
that gold convertiblity could be suspended without interrupting the
of the capitalist economy. If however one removed all forms of  bank money,
then the economy would have collapsed. Which then was key ?
Gold, or paper money?

Foley, quoting Marx, quoting Ricardo, is essentially defending the quantity
theory of money. This is based on the notion of a constant velocity of
which is highly dubious. It distracts attention from what is the key issue -
the ability of the state to impose a tax in its determined state money.
So long as this is present, the money will retain its validity. This is the
key to understanding the validity of money.
> >
> >4. Even if one accepts the theoretical premise that money is a commodity,
> >     there were actually  two commodities that could plausibly be taken
> >     be the substance of money - gold and silver, since coins in both
> >     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.

All this shows is that the state can not simultaneously regulate the
price of several commodities unless those commodities are domestically

> >>
> >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.

Since the US no longer attempts to regulate the price of gold, you
have to ask what might cause the value of the dollar to fluctuate?
 > >  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
> >later.
> 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.
The alternative explanation of the evolution of money attributes
it to the process of surplus extraction by the state.
To simplify a great deal, Coinage was
introduced as a mechanism to simplify the raising of taxes and
for the paying of troops. It is thus always the creation of the
state, marked by the insignia of the state. The issue of money
is a primary sovereign function of the state, as it is the key
to the state's ability to appropriate part of the social product.

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