From: Costas Lapavitsas (Cl5@SOAS.AC.UK)
Date: Mon May 31 2004 - 08:04:59 EDT
Dear Riccardo, This is a long message. I couldn't find a way of making it shorter. I did not claim that Schumpeter was a supporter of Knapp, as you can check from my original message. I referred to your point on money as claim on wealth, typically associated with the German Historical School, and recently with post-Keynesianism. Schumpeter is a special case and, to be frank, not terribly clear on the analytical process of money's emergence. I read Marx as attempting to prove that money is a special commodity. There is nothing neoclassical nor Mengerian about that. Menger's analysis, moreover, is deep and should not be dismissed out of hand. On the substance of your argument, we seem agreed that the emergence of money has to be associated with the processes of commodity exchange. We are also agreed that, for analytical purposes, generalised commodity exchange is already capitalist. But I do not see why it is necessary to bring in production and the need to finance it. The issue of saving and investment (and Luxemburg's theoretical quest, deriving from Marx in vol. III) seems to me a red herring. At one remove, it has to do with the size of monetary flows (effective demand) required for reproduction. At another, with the quantity of money necessary to circulate a given volume of commodity output. Marx answered the reproduction problem (actually, dismissed it in relation to Thomas Tooke) by specifying processes of aggregate capitalist decision-making that brought money capital back to those who had originally put it in circulation. There is no logical need for a further element outside Departments I and II, whether a non-capitalist economy, to provide extra demand, or a banking sector, to provide extra finance. As for the quantity of money, Marx stated that shortfalls, if any, would be met out of hoards, a problem he had already resolved in vol. I in connection with commodity exchange without reference to capitalist reproduction. But this entire issue has nothing to do with the emergence of money as universal equivalent. The connection between the emergence of money and capital is certainly difficult and complex. But I think that it is a mistake to attempt to show that the analytical content of money must be established through explicit reference to capitalist production. Rather, the appropriate analytical terrain for this task is commodity exchange. If capitalist production is brought in, the result is likely to be analytical confusion. It is likely, for instance, that money as capital would be conflated with money as money, possibly leading to underestimation of the latter. There is a vast array of activities in contemporary capitalism in which money does not act as capital - from the realisation of workers revenue, to settling private obligations, to making gifts, etc. Money as money is very important in a capitalist economy. It is also by far the most original aspect of Marx's analysis of money's functions. Money, it seems to me, arises spontaneously out of private and social relations among commodity owners. It is a social nexus that necessarily takes the form of absolute ability to buy. In a capitalist economy it also acts as claim on wealth, since the division of labour is very detailed and producers are independent and in competition. It also becomes capital and interest-bearing capital. It further has a variety of non-economic roles. But these roles depend on the essential character of money as monopolist of buying ability and do not determine it. As for the state, which Jerry and others have brought up, I think that we should differentiate between the state inducing the emergence of money and the state becoming necessarily associated with money and buttressing it with its own power. The former, I suggest, is analytically misleading (as well as historically dubious) and not in line with Marx's letter and spirit. The latter I would have no quarrel with. Costas -----Original Message----- From: Riccardo Bellofiore <riccardo.bellofiore@UNIBG.IT> To: OPE-L@SUS.CSUCHICO.EDU Date: Mon, 31 May 2004 11:17:06 +0200 Subject: Re: (OPE-L) on money, capital, and the state At 20:13 -0400 29-05-2004, glevy@PRATT.EDU wrote: >Hi Costas: > > On the other hand, the approach of seeking to derive money as claim to >> wealth, which you associate with Schumpeter, is problematic. The reason >> is that it makes money's emergence essentially exogenous to the process >> of exchange. (to Costas) No: you need to distinguish two exchanges: on the labour market, on the commodity market; money's emergence is not exogenous to the first, quite the opposite (whereas in the Menger tradition the first exchange is cancelled, as is in Marxians who foirget that general exchange is of commodities which need to be produced). >The usual reference for this approach is Knapp and there >> are many other Austrians and Germans, including Weber. They typically >> rely on forces outside the market (the state, law, etc) to determine the >> claim to wealth represented by money. I prefer endogenous explanations, > > when available. (to Costas) Not Schumpeter: you may check in HEA, etc. He was never a supporter of Knapp. > >The state is " exogeneous" to what? Surely not capitalism. I agree: but I think that capitalism must be first analyzed looking at a system made only by workers and capitalist firms. riccardo -- Riccardo Bellofiore Dipartimento di Scienze Economiche "Hyman P. Minsky" Università di Bergamo Via dei Caniana 2 I-24127 Bergamo, Italy e-mail: riccardo.bellofiore@unibg.it direct +39-035-2052545 secretary +39-035 2052501 fax: +39 035 2052549 homepage: http://wwwesterni.unibg.it/dse/homepage/bellofiore.htm
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