Date: Tue Jun 15 2004 - 09:18:13 EDT
Hi, Allin, I thank you for your post and apologize for a new delay in answering to it. I've been out of town until yesterday. I will comment on your first point, leaving the other ones for the next post. > Claus wrote: > > "Now, the widespread view today is that money is no more a commodity, > because gold not only does not circulate, as is also not used > officially to define the standard of prices. In my opinion this > conclusion has two problems:" > > "1) it does not account for the role played by gold in the monetary > system of our days. This account seems to me to be necessary, since > gold is present in very expressive amount as an official international > monetary reserve and in even greater amount as private reserves;" > > Petroleum also bulks large in national reserves; so do wheat and > butter. The role of gold in present-day monetary systems seems > nugatory, a mere historical hold-over. You wrote earlier: > Claus: Petroleum, wheat, butter and the like are not monetary reserves, they are reserves of raw materials, dependent on technological and market structure characteristics of the particular sectors of production and also on national security reasons, which is a totally different thing. You are not going to find petroleum, wheat and butter in the statistics of the international reserves of the central banks published by the IMF and other monetary institutions. Your interpretation of the role of gold today seems to be the standard interpretation in textbooks and monetary common sense, but can hardly be taken as a scientific interpretation without a closer analysis. Although I don’t think we are going to get to consistent conclusions just by looking to the facts without a theory, in an inductivist way, we cannot ignore them either. And about gold my simple point is this: first, there is a consistent theory – Marx’s – which locates gold as money with great detail in a complex frameword, where it performs different functions in an integrated way; second, gold goes on clearly functionning at least as means of hoarding in the banking system and in private hoards. Thus, although it is no surprise that non-Marxist writers dismiss the monetary role of gold, I don’t think Marxists should do the same. Gold goes on being produced, year after year, with increasing output, a great proportion of which goes into hoards. It is a well known fact that the demand for gold and its price increase in the crises and decrease in normal times, which is the opposite of what happens with raw materials and other assets. Isn’t this the usual working of money in its hoarding function? I would ask: how do you explain this? Do capitalists also build reserves of wheat, butter, petroleum and so on as hoards? Do you think that the gold privately held by capitalists today is of the same kind of the other raw materials, or would you think that it is motivated by a sentimentalist historical hold-over? It may seem that the official gold reserves lay inactive in the vaults of the central banks, but this is not true. I’ll provide a very empirical example: in a speech recently at a conference a senior manager of the Bank of England explained that the gold reserves of the Bank are managed ‘on a day to day basis’, ‘aimed at achieving a return on them, by lending a portion to the market’. The Bank is also ‘a very significant custodian of physical gold’, belonging primarily to other central banks but also to commercial firms, which is in part ‘lent on to the market in our own name, at a margin to reflect the cost and credit risk incurred’. Isn’t this called banking credit? And what is the object of banking credit if not money? I don’t intend to mean that examples like this prove anything more than that gold is not an irrelevant monetary element today. But I do think that it is very relevant, although its relevance is not evident to the monetary common sense, because the operations with gold are limited to the very high spheres of economic life, between central banks and governments and big private banks and corporations. And, last but not least, Marx’s theory provides a framework for the understanding of the role of gold today, contrary to the other available theories. So, why not analyse gold within this framework? comradely, Claus.
This archive was generated by hypermail 2.1.5 : Wed Jun 16 2004 - 00:00:02 EDT