Date: Tue Nov 23 2004 - 08:20:03 EST
Hi Fred, Thank you for your answer. Some comments about it follow. I’ll come back about the algebra of your deduction later. I would start by disagreeing with your statement that “Marx's method of determination of the MELT with inconvertible paper money reduces to MV / L”. So far I see it as your INTERPRETATION of what you think (with which I disagree) can be deduced from Marx’s theory, since you make conclusions that are, in my opinion, incompatible with Marx’s theory of money. I referr to your statement that inconvertible paper money IS today the equivalent of value and functions as measure of value, and that the measure of value does not need to be a commodity. I’ll try to ground my disagreement with the following comments. You ask: “Claus, do you agree or disagree with this "intuitive" theoretical explanation of the determination of the MELT today? If not, then how do you think the MELT is determined today?” I think it is clear to the members of the list that in my opinion there is no possibility to compatibilize Marx’s theory of money with a valueless money, which means a *valueless* equivalent of value(!). Marx’s definition of the equivalent of value as a commodity is unequivocal and he repeats it along the whole of his works until his death, as I attempted to prove in my paper included in your book. He never gave even the least indication of the possibility that something not having value could be money. And this is not due to historical reasons (if Marx had accepted the commodity nature of money only because gold functioned as money at his time, this would mean that he wouldn’t have a theory of money). Money has to be a commodity in Marx’s theory based on consistent theoretical reasons. In my paper I also attempted to show why money as a commodity is logically needed in order to distribute social labor among the individual producers. For this reason it is my opinion that a theory of money as a *valueless* equivalent of value (!) is incompatible with Marx’s theory. It is not possible to ground it on Marx’s presentation of the form of value in chapter 1 of CI. Secondly, so far I’m not convinced that Marx’s theory of money is invalid. It has not been demonstrated either theoretically or practically. The situation of money after 1973 is similar to so many other situations before, where the convertibility of credit money (paper money has never been convertible, by definition: “inconvertible paper money issued by the State and having compulsory circulation”, CI, ch. 3) has been suspended for a time because of wars or because the state was bankrupt. I have repeated several times that the fact that gold does not circulate in person does not mean that it is no longer money. This is a historical fact and is perfectly compatible with Marx’s theory. It is not only compatible, but even necessary in Marx’s theory, and does not imply that gold is no longer money. The fact that gold still performs fundamental functions of money is clear before our eyes. Why should we deny it? What we Marxists have to do, in my opinion, is to put Marx’s theory as a whole (not just a part of the theory, and not interpreted according to post-Keynesian or other criteria, as is common) to test against the facts of the monetary sphere of our days (facts described and interpreted according to the criteria of Marx’s theory, not of post-Keynesian or other theories) In my opinion, if one looks at the facts of today with Marxian eyes, one sees one think; if one looks with other theoretical eyes, one sees different thinks. Well, this is what different theories do. Thus, if one looks at the *monetary sphere* of today with Marxian eyes, one sees gold very distinctly in fundamental monetary functions. In science, one may find something that one is not looking for, but one will frequently overlook something one is not looking for, and you would hardly find something that you don’t want to find. Thus, there are analists who don’t want to see gold performing monetary functions. That's ok, but is not 'the' truth. Finally, IF the facts clearly show the monetary relevance of gold, this means that there is no reason to abandon Marx’s theory of money before closer examination, thus I think the definition of the MELT in terms of Marx’s theory has still to be taken as valid. An interesting question arises with the recent references, on the list, to the possibility of the official return of gold as the material content of the dollar. How would you then define the MELT? Fred: > > I am glad that you think that this ratio is "intuitive". So do I. And my > algebra shows that this ratio is equal to Marx's method of determination > of the MELT with inconvertible paper money. > Claus: Marx never determined the MELT with inconvertible paper money, in the sense you did, i.e., assuming a *valueless* equivalent of value (!). When inconvertible paper money exceeds the needs of circulation and depreciates, what results, according to Marx’s theory, is that a unit of paper standard will represent a smaller amount of gold than the official standard, but it will always represent the amout of gold that would cirulate in normal conditions. At present, f.i., a dollar is officially equal to 1/42,22 ounce of gold, while at the market it is has been fluctuating aproximately around 1/300 of an ounce in the past two decades or so. Just one comment, for now, about your formula MELT=MpV/L. You wrote: “But L cannot be estimated, as I have discussed at length (because of unequal skills and unequal intensities).” Claus: Since you argue that L is an objective category, it is in principle possible to estimate it, however hard it would be, or even impossible. It is hard, in my opinion, not mainly because of the problems you raise, but because of the independence of the producers in the market economy and the consequent absence of social planning of production and distribution. The main problem of L, however, in my opinion, is that it is the total labor represented in the commodities in circulation. The problem is that, if you agree that money is the instrument of the law of value that distributes the social labor among the individual producers, what is relevant is LL, not L, because what has to be distributed is the existing living labor, not dead labor, which no longer exists. I still hope to see your reaction to the other point discussed in my previous post. comradely, Claus.
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