[OPE-L:2123] Re: Re: Re: Re: Re: the money supply

From: Allin Cottrell (cottrell@ricardo.ecn.wfu.edu)
Date: Wed Jan 12 2000 - 19:33:29 EST

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On Mon, 10 Jan 2000, Claus Germer wrote:

> Thus, it seems to me, you were supposed to start with the
> state providing a way for measuring the values of
> commodities according to labor times.

This is to pre-judge the issue. The state issues tokens, in
payment for goods and services. People are willing to accept
those tokens because they require them to cancel their tax
liabilities -- or because they expect to be able to pass them on
to others who need them to cancel their tax liabilities. These
tokens end up circulating in general exchange for
privately-produced goods and services, and the prices of the
latter are denominated in the state-tokens, as unit of account.
Now the question of whether, and if so how, those prices come to
reflect the labour-time required to produce those various
commodities, is a distinct and separate question. But we can be
sure that the answer to this question will not be that the
state-money "measures" the labour content of commodities. That
notion is a theoretical dead-end.

> [Y]ou don't say anything about the way values can be
> measured by a money created by the state...

That is because I believe that _no_ form of money can do any
such thing. Labour values can be _measured_ by an
econometrician using input-output methods, never by money. But
certain economic mechanisms can produce the effect that
money-prices reflect, more or less accurately, labour values.

> [I]t is not clear that for Smith the labor content of
> commodities is common knowledge *in that rude state of
> society*, as he says.

If not, what possible basis does he have for asserting that
barter exchange ratios will be in line with relative required
labour times?

> Second and more important, it would be better to start from
> Marx, whose theory is the one we are discussing...

True, we are trying to assess Marx's theory of money, but (as
you know) it is my contention that his theory of money is quite
inadequate, so it is not helpful to the debate to propose that
we treat it as the starting point.

Allin Cottrell.

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