Subject: [OPE-L:1853] Re: the money supply
From: Claus Germer (cmgermer@SOCIAIS.UFPR.BR)
Date: Tue Dec 07 1999 - 11:47:28 EST
>RE Claus's [OPE-L:1831]:
>Of course, facts aren't "natural", but an attempt to discover facts
>*logically precedes* an attempt to develop and present a theory in which
>the meaning of these facts, and the relationship of a given set of facts
>to the whole, can be comprehended. A "crude" and "chaotic" investigation
>into the empirical concrete thus is a *pre-condition* for the development
>of a theory that attempts to grasp that subject.
>In this case, we are in the first instance discussing a *very concrete*
>question concerning *recent (post-1971) history*. The place to *begin*
>such a discussion is not with abstract theory (or what Uno called "basic
>theory"), but with a discussion of that very concrete experience.
>Is it unreasonable to ask that before we discuss how we interpret those
>developments from the perspective of Marx's *or any other* theory, we
>first attempt to see if we can agree on a common version of the
What seems to be at issue here is a question of the method of inquiry.
Although you are right about the need to start from the empirical, this is
actually not that simple,
because, in the first place, the empirical is indeed chaotic, which
requires that the relevant facts be selected according to some criteria and
be based on some assumptions. It seems to me that the way you propose to
conceive the concrete to be investigated, in the case of money, is
inadequate. I can't see why to restrict the examination of the subject to
post-1971 history. The understanding of the ongoing facts requires to
examine the previous facts as well. I don't mean to say that the sequence
of facts is the key to understand what happens today, but if we see the
concrete as a process, the historical dimension is a moment of the
understanding. Thus, starting from the concrete includes its process of
On the other hand, unless I have missed something, the present debate has
so much about what the present facts are, but about how to explain them.
we have been dealing with are basically two: the roles of both gold and the
purely abstract currencies or standards of prices in the monetary system at
present. According to one side in the debate, the relevance of gold is
negligible as a monetary category, in spite of its lasting presence as a
central banking reserve; according to the other side the abstract
currencies should be examined as instruments of circulation based on a
money commodity, in spite of the absence of an explicit link between
them.The first side sees Marx's theory of money as an inadequate tool for
the understanding of the present monetary system; the second side views
that theory as an adequate starting point.
Would this be an acceptable summary of the debate? If it is, it seems to me
that what is at stake is the validity of Marx's theory of money. The
inadequacy of Marx's theory of money has been supported by two different
arguments: one was based on the alleged superiority of another theory
(Allin's defense of Wray's post-Keynesian monetary approach), and the other
on the argument that Marx's theory has
been outdated by the evolution of the monetary system, which seems to be
your view. My feeling is that the later argument is supported mainly on two
empirical facts: the end of both the monetary role of gold and of the
official definition of the currencies in terms of their gold content.
The two critics are obviously of different kinds, and are perhaps able of
offering strong points against Marx's theory. However, what I claim is that
they should provide an explanation, alternative to Marx's, in the first
place of his theory of money and of credit money as a whole, and secondly
of the connection between prices and the labor content of the commodities.
>From a strictly Keynesian point of view this doesn't seem to be a problem,
since Keynes' theory doesn't accept the labor theory of value.
Departamento de Economia
Universidade Federal do Paraná
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