>Hi Rakesh, > >Thanks for your post on my recent paper in Science and Society, a response >to David Laibman's critique of what he calls "new orthodox Marxists", >myself included. > >However, I am afraid that I am too preoccupied right now with writing a >paper on the current recession to respond to your post. As we have >discovered in our previous OPEL discussions, these issues are complex and >require lengthly discussion, which I don't have the time for right now. I >will be happy to return to these more abstract theoretical issues once the >current recession is over, whenever that is. Dear Fred, By the way, did you see the WSJ editorial by the conscience of the American capitalist class George Gilder last week (1/11/02, p. A11)? He puts a lot of the blame on a tight fed which has restricted the supply of money (as indicated by falling gold prices, he says) and chocked the supply of credit, leading to a deflation by which the real debts of companies have become unmanageable. I was thinking of Claus Germer when I read this: "Money is a standard of value, a code for transmitting information about the supply and demand for goods and services. For a decade, Alan Greenspan seemed to adhere to a fixed standard of value, *guided by a price rule based on gold and commodities*. But since 1996, he went astray, citing as policy guides the 'irrational exuberance of the stock markets,' the productivity explosion, the Internet bubble. *Without guidance from gold*, currency markets lack any objective means to differentiate the 'news' (a change in monetary conditions) from the white noise of clamorous markets. When the standard of value itself becomes a commodity , traded like any other on the currency markets, the most vital investment information is lost amid the froth...To save his exalted reputation, he must return to a price rule." (emphasis mine) I had this monetary explanation of deflationary pressure in mind when I recently typed out this passage from Mattick Sr in a response to Paul Z: "The transformation of surplus value into additional capital can be accomplished without additional commodity money, and capital can be accumulated in commodity form. No actual commodity money corresponds to the credit money necessary for this; it is the 'symbolic form' of an additional sum of money that does not exist in reality; but it suffices to carry out the tranformation of the commodity values into additional capital: additional capital that in turn determines the future expansion of credit. Thus it is the accumulation of capital itself which solves theproblem of the addiotnal money necessary and eliminates the difficulties of realization by means of the techniques of finance... "It is of no consequence at all whether this transformation [of surplus value into money] is accomplished with commodity money or symbolic money. The latter however can be increased at will and so adapted to the needs of accumulation. Its growth accompanies that of the accumulating capital but is also limited by the latter. In this way re return to the point that which appeared to unlikely to RL, namely the production for the sake of production which she believed impossible in a closed system, having failed to find an explanation for the additional money required. "If capital can realize its surplus value through accumulation, then the enlarged cpaitals are represented as increased sums of money capital. But accumulation depends not on money or credit but on profitability. If profit falls, and with them the rate of accumulation, the the demand for credit declines along with the total demand. The insufficient demand appears as a lack of money and the crisis of production also as a financial crisis." Economic Crisis and Crisis Theory, p. 114. All the best, Rakesh
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