From: cmgermer@UFPR.BR
Date: Mon Jun 14 2004 - 09:18:16 EDT
Jerry wrote: > Hi Claus. For personal reasons, this will have to be a short reply. > >> However, >> what seems to me that you want to say in your conclusion and in the >> shopping story is that the thing that is money must circulate as means >> of circulation, otherwise it cannot be money. Thus, gold would have to >> perform this function today in order to be considered money. > > The point of "Shopping With Claus" was not only to suggest that gold > no longer serves as a practical means of payment, but that it indeed has > significantly less *liquidity* than currency in circulation, credit > cards, > travelers checks, and even personal checks. It's one thing to suggest > that in a money commodity system, the money commodity gradually is > withdrawn from circulation. It's quite another when those who are > engaged in an exchange will accept just about any other symbol that > passes as money as a means of payment _rather than_ the 'money > commodity'. Hi, Jerry, I think the point you make does not add to your argument. With ‘withdrawn from circulation’ I mean that gold does not circulate in its functions as money. It obviously goes on circulating as industrial raw material and final product in jewelry and so on. However, they are two different commodities made of the same material but having two different use values, which is not unusual at all. This means that one cannot compare the behavior of industrial gold in the market with the behavior of the monetary instruments of circulation like the ones you mentioned, which are all derivations from credit money. Thus, the poorer performance of industrial gold as a monetary instrument of circulation does not serve as an argument against its possible monetary character in our days. If we want to reach consistent conclusions about the role gold still plays as money we have to look at what is going on with the presently existing monetary gold, i.e., the gold that is stored by Central Banks and international monetary institutions and privately by capitalists. We have to examine the movement of all those stores, what functions they perform, the evolution of the production of gold and the destination of the output. The final retreat of gold from monetary circulation has been – as it must be – an official decision: monetary gold has been declared a monopoly of the State and gold coins have stopped to be minted. Thus, if there is no gold in the form suited to circulate as money, there cannot be gold money in circulation. Therefore, I think the problem with your argument is still the one I pointed out in my previous post: in your view the performance of the function of means of circulation by gold itself is a necessary and sufficient condition for gold to be considered money. In this case anything that circulates in the function of means of circulation would be money, and anything that doesn’t would not be money. Is gold a store of value? Yes, it is, hence it is money. Does gold function as a means of circulation? No, it doesn’t, hence it is not money. Is this a sound theory of money? My argument is that, if one wants to put Marx's theory of money to test, it is firstly necessary to see IF his theory requires the money commodity to circulate in person (in monetary functions), and the conclusion is that it doesn't (with which you seem not to agree). If this is so, then the mere withdrawal of the money commodity from circulation doesn't allow the conclusion that money is no more a commodity. The next question is: why doesn't the money commodity have to circulate? The first part of the answer is that in Marx's theory money has other functions besides the ones that have to be performed in the circulation. One fundamental function is of measure of value. Marx's explanation of that function requires, in my opinion, that money be a commodity. Another part of the answer is that money is spontaneously replaced by instruments of circulation that represent money in the performance of its two fundamenal circulation functions - of means of circulation and of means of payment. Thus, the state *can* suppress gold totally from its circulation functions without damaging the system, because the latter spontaneously does it. Now, the development of the banking system lead by a Central Bank creates a working mechanism that combines the hoarding function of the money commodity and the production of the instruments of circulation that perform the circulation functions representing money. This is logically possible and has occurred historically. Thus, also on this account it is not necessary to drop the theory of money as a commodity. Finally, the course of development of the monetary functions of gold during the 20th century is very important and has to be taken into account in order to identify the role played by gold today. One of the very important characteristics of the period is that when gold circulates and private capitalists hold it as a hoard, their hoarding competes with the hoards the banking system has to keep in order not to collapse. But in times of crises private individuals go to the banks to withdraw gold, which puts banks and the whole banking system at risk. This is one reason why convertibility is suspended in those times. Now, the monopolization of monetary gold by the State and the suspension of convertibility turns gold, paradoxically, unable to function as means fo circulation and of payment. But this is precisely what the Central Bank attempts to reach through the inconvertibility of gold, and it does not damage the system because it is the system itself which gradually withdraws gold from its circulation functions. comradely, Claus. > > In solidarity, Jerry >
This archive was generated by hypermail 2.1.5 : Tue Jun 15 2004 - 00:00:02 EDT