Re: on money substance and abstract labor

From: cmgermer@UFPR.BR
Date: Mon Jun 07 2004 - 19:54:48 EDT

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.

I have not been able to follow closely this interesting thread about
money, but I would like to make a few comments about your list of points

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

You are partly right: it was not gold, but it wasn’t the pound sterling
either, but silver that functionned as a measure of value in England at
least since the 11th century. In the practical life it wasn’t the Pound
either, but the penny that functioned as measure, because Pound coins were
not minted at all until the 19th century, I guess. I'm not sure whether
silver was a ‘universal’ measure in the beginning, because the
universality of the measure requires the unification of the market (and
the universal existence of markets in the first place). But the pound
sterling was originally both a pound weight of silver (where ‘sterling’
meand the fineness, I think) and the measure of value. The official pound
sterling – like *all* monetary units at least until 1971 (I say at least
because the Dollar is still valued ad $42,2222 an ounce of gold in the
balance sheet of the Fed) – was just a local standardization of the money
material, which in the beginnings of capitalism was silver in most of the
more important capitalist countries or regions. The transition from silver
to gold is nothing but a change in the commodity that functions as
equivalent of value (previously many other commodities – always
commodities – did the job), and 0in no way contradicts the theory that
money must be a commodity, because the theory states that it must be a
commodity, not gold, although it also states that gold is the commodity
which is best suited for the function of equivalent of value.

> 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
> Guineas
>      another state unit of account.

If by “notional unit of account” you mean that the Pound Sterling did not
have a material correspondence, I think it is a mistake, because the money
standard has allways been defined as a definite amount of the money
material (both among the metalists as among the chartalists). But if you
are saying it from a chartalist point of view, i.e. based on the
assumption that the value of the money material is not the essence of the
unit of account, then it seems to me that you are stating the basic
chartalist theoretical assumption, not a historical fact.

> 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.

This list is not of equal ‘representations’ of the Pound Sterling. It is
the Pound Sterling that was the representation or the official name of the
unit of the money material. All kinds of Bank notes and of cheques, as
well as the bills of exchange that originated them, were just certificates
of debt of amounts of money units (Pound Sterlings). They are all
technically forms of credit money, not of money. On the other hand, the
coins you mention are not credit money, they are the material form of
official units of account, and the copper pennies, if you are referring to
England, are what Marx called symbols of value.

> 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.

The fact that more than one commodity funtion simultaneously as the money
material does not contradict the theory that money must be a commodity.
Those are episodes of the historical process of formation of the general
equivalent. There has been a historical transition from one metal to the
other functioning as money, and there have been at the same time different
markets using simultaneously different commodities as equivalents of value
in their particular market spaces. Hence there did not exist a universal
equivalent, just particular ones. F.i. trade between two countries having
different money commodities required that both kept reserves of the two.
Gold is the one that finally became the universal equivalent, which only
occurred end of the 19th century. The simultaneous use of gold and silver
as money material was always a problem, and I think the dual system has
been maintained in part because of the chartalist belief that the value of
the money unit is independent of the value of the material used to
represent the unit. Thus it was thought that the State could arbitrarily
set a monetary exchange proportion between gold and silver irrespective of
their actual value relation, which however proved to be impossible.

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

As I argued above, the Pound did not assume non-metallic forms – debts
expressed in Pounds did.

> 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.
>      One could as well argue : value is social labour time, the Pound
> Sterling
>       measures value, thus the Pound Sterling is just another name for a
> certain
>      quantity of social time.

This is ok as long as you acknowledge the Pound Sterling to be the name of
a certain amount of a commodity, which then represents the amount of
social labour time that produced it. The social labour content of the
Pound is given by the social labour contained in the commodity from which
it is made. But if you define the Pound as just a name independent of a
material substance, how can you referr it to a certain amount of social
labour? There can be no social labour in something that has not been
produced by social labour. Can you? How?

> 2. The logical deductive approach suffers from the Hegelian weakness of
> hiding
>      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. Thus
> given that he
>      initially considers commodity exchange in the absence of the state,
> 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. 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.

I don’t think there are hidden premises in Marx’s theory of money. There
may be unnoticed premises. If one goes from the market to the State or the
other way round is not a matter of fact but of theoretical assumptions. It
seems to me to be true that for Marx the State has its specific origin in
the existence of private property, which came into existence a long time
before capitalism. Thus it is no surprise that the State, as a general
social fact, came prior to generalized commodity production, but this does
not mean that the latter derived from the State. The historical
materialist standpoint is that the State has one cause and the exchange of
commodities another cause. The *bourgeois* State, on the other hand, only
comes into existence after the bourgeois form of private property becomes
prevalent, and this only occurs after money has long been established as
part of the exchange of commodities, because without money there would not
be capitalism nor a bourgeois State.

Sorry for the length of may comments.

Claus Germer.


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