From: Costas Lapavitsas (Cl5@SOAS.AC.UK)
Date: Mon May 31 2004 - 14:07:36 EDT
Riccardo, I'm not so sure that the points you have underlined are those on which we disagree. To try and get some more mileage out of this debate, while avoid writing the book you mention, let me make three points. First, I think that Marx's attempt to derive money spontaneously out of exchange relations could and should be rescued by leaving value substance out of the reckoning. Second, it is incorrect that, if one starts with money, one must also assume that finance 'falls' from somewhere else and not banks. It is necessary, first, to differentiate between money for circulation and money capital for reproduction. Where each 'comes from' ought to be analysed at very different levels of abstraction. But by finance you seem to mean mostly loanable money capital, implying that it needs to 'fall' from somewhere else in analysis that starts with money. This is not so. In my view, loanable money capital is related to idle money generated in the circuits of capital and made available for lending. But you should also consider that capitalist finance is not solely the advance of loanable money capital. Trade credit is vital, and is spontaneously generated as capitalist circuits are articulated with each other. It does not originate with banks or other financial institutions. Third, in sum, credit (trade and banking) can be analysed on the basis of Marx's circuit of capital, for which only money and money capital are necessary. Loanable money capital is a derivative, not a prior, concept. Schumpeter, as is his wont, breezily rejects money-based analysis of finance as well as the 'commercial bill theory of banking'. Had he been less facile in his dismissal of Smith and more careful in his reading of Marx, he might also have been more circumspect in his judgements. Costas -----Original Message----- From: Riccardo Bellofiore <riccardo.bellofiore@UNIBG.IT> To: OPE-L@SUS.CSUCHICO.EDU Date: Mon, 31 May 2004 16:08:07 +0200 Subject: Re: (OPE-L) on money, capital, and the state Dear Costas, thanks for your long answer.. I just underlined some phrases where for sure we disagree. A detailed answer would be a book. I may just state some personal positions, on some of these points, unsure if they are of any help (I doubt): (i) I do not dismiss Menger (note: I made a very long article on Mises, and I can say I am an expert in Menger and Hayek); but I think his position is intrinsecally neoclassical, much more than Walras (who is actually partly a theorist of planning: cfr. Barone, Lange) (ii) Marx tried another way to a spontaneous emergenece of money, which is definitely non-neoclassical (money as a very special commodity), the problem is that it failed (iii) Marx move was linked to the view that the abstract labour in commodity was in some sense already social prior to final exchange with money, though at the same time he said the labour became social only in final exchange: the two things were not contradictory as long as money is seens a commodity in the sense of being produced by labour (iv) this does not work, thus, either we maintain the view that labour is dis-homogeneous before final exchange (then, abstract labour arises only in commodity exchange, you have only money as measure, no labour "content" or "substance" as immanent mesure) or we must have a way to argue that labour is tentatively social before final exchange. tried by Rubin, and failed (because he didin't had finance before production) (v) this can be done only with a monetary sanction which is before-hand (vi) this is exactly (Schumpeterian bank)-finance to (capitalist (production). My view is that only in this way Marx may be "saved" from Sraffianism (not Sraffa) and extreme value-form theory (not Rubin). I think that THIS is exactly at the heart of our discussion. From this perspective: - Schumpeter is crystal clear - the analytical confusion is on the side of those who try to go from money in general exchange without capital to capitalism as a monetary economy - this is shown without doubt from the fact that, say, you are able to say that with capital we do not need to bring in banking finance to have extra-finance. No: there is no need for "extra" finance, and we need some who produce money, i.e. banks. One may deny that because, exactly starting from money as money without having money as capital before it, he or she maintains a view of finance falling from somewhere elese than banks. Sorry for appearing rude, it is just to state the position clearly. The point is that Schumpeter is the "general" case, the others are "partial". And that of course Luxemburg was confused among saving and investment but she at least saw that if we talk of money in the circuit the money should have been injected from somewhere. The question: from where demand comes in? in her is confused with the one from where money comes in? But the intuition is right: from where money comes in into the capitalist circuit? This of course has nothing to do with denying the difference between money as capital and money as money (btw, you find it in any Keynes-Kalecki model: one thing is bank finance, another money spent by wages, another one money recovered on the ffinancial market, another money as store of value, etc.). Note: I have nothing against going from money in general exchange without immediately introducing capital and money and capital, as Marx rightly does, but only if it is admitted the Schumpeterian moment (bank as finance) to be introduced later on (with banking finance as essential to the capitalist process), and that this is the ante-validation in money terms of living labour as surplus-value producing labour. Note also that I may agree with your last point about the State from a Schumpeterian perspective. Though I would add that without the State the system may be unstable and may be without an anchor regarding its measure of value function. riccardo At 12:04 +0000 31-05-2004, Costas Lapavitsas wrote: >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 -- 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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