Re: [OPE-L] Where does the money comer from : was Why aren't non-labourers sources of value?

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Apr 27 2005 - 04:49:06 EDT

On 4/22/05, Paul Cockshott <> wrote:
> A crude argument would be that as each capitalist is
> going through a circuit of the form
> m-c-m'-c'-m'' etc
> then during alternate phases of the cycle of capital
> each time round each capital has more money.
> If we assume that different capitals are randomly
> mixed in their phases - some in the money phase
> some in the commodity phase then what is true for
> individual capitals must be true for capital
> as a whole. If the commodity stock held by all
> capitals is growing at x% per year, then the
> money stock must also be. At each cycle there must
> be more money available to purchase the augmented
> mass of commodities.

Ian replies
Not if prices deflate.

p c

But that is ruled out in the original formulation.
If prices were deflating then we would have a
basic cycle m-c-m where the second m was the
same as the first, and there would be
no profit.

Now this same m could of course represent a
larger number of labour hours, but that is not
the level at which the question is posed.
The basic observation is that capitalists
purchase commodities for a sum m, and later
sell them for a sum m+delta m - how does this

Thus although one might concieve of an economy
characterised by constant deflation, it is very
hard to reconcile this with an observation of
how capitalism actually works. In practice of course
deflation can cause great problems because 
firms incur debts this year, which become
prohibitively expensive to repay in 5 years
time if there is constant deflation.

Concievably one might have a capitalist economy
with constant deflation and persistent negative
interest rates on loans, but I dont think this
has ever happened.

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