From: cmgermer@UFPR.BR
Date: Tue Nov 23 2004 - 13:42:54 EST
Fred, while I was replying to you last post, I overlooked your reply to Paul Bullock from Nov 22, and I’m really confused about what it is that you want to prove. I’ll try to explain: You wrote to Paul: I argued in my next-to-last post that, with respect to the determination of the MELT, it does not make any difference whether or not credit money still is tied to gold in some way. In both cases MELT = MV / L. (...) Or, if so, then I have shown (paper attached again) that Marx's determination of the MELT in this case is equal to MV / L, which is the ratio that I have argued determines the MELT today, without reference to gold. So, once again, with respect to the determination of the MELT, it does not make any difference whether or not one assumes that gold is still the fundamental money today. Claus: What confuses me is what you mean by saying that “it does not make any difference whether or not one assumes that gold is still the fundamental money today” or “difference whether or not credit money still is tied to gold in some way”? I thought in your posts you were talking of the general equivalent of value, not only of the means of circulation. In fact, in your post of November 19, which I first repplied, you wrote: “In this way, credit money, of necessity and by default, becomes the general equivalent, and hence the measure of value of all commodities, in a different quantitatively way than gold.”, and in your working paper the idea is the same. This is what I specifically disagree with you. If this is so, what do you mean by saying that gold could still be the “fundamental money today” or that it is irrelevant whether or not credit money is tied to gold or not? Those sentences seem to mean that in your working paper and posts you are talking just about paper money and the prices determined in terms of it, assuming gold goes on as money behind the scene, but you also say that paper money becomes the general equivalent, which is inconsistent whith the permanence of gold in monetary functions. If you are merely interested in knowing how the prices will change with a change in the quantity of paper money, this is in principle very simple in Marx’s theory: whenever there is paper money (which means inconvertible paper money issued by the state) IN EXCESS of the needs of the circulation, the paper money will depreciate and the prices expressed in terms of paper money will rise, i.e., there will be inflation, although the money prices (expressed in real money, i.e., gold) remain unchanged. In one paper of mine I called the former ‘standard prices’ and the latter ‘money prices’ in order to distinguish them clearly. However, the paper standard goes on representing a definite amount of gold, smaller than the official standard, as you mention in your working paper in the section about inconvertible fiat money. In this sense, one could say that the problem of Greenspan in order to control liquidity would be to define what he considers to be the best indicator of the level of prices and then expand or contract the liquidity according to it. In terms of Marx’s theory of the paper money prices (when it exceeds the needs of circulation, which is the case in the USA since the late 1960s), the latter will increase with the increase in the issues, and decrease in the opposite case. There is however no definite proportion in which this will hapen. The point is that this does not displace gold money from its role of general equivalent, on the contrary, the paper money prices fluctuate in a definite relation to the official standard of prices. I hope you agree with me that in Marx’s theory there is only one *money*, which is the general equivalent. Once having come to exist, money performs several functions, and in its circulation functions it is represented by particular instruments of circulation, without displacing the money commodity, the general equivalent, which is the only that can function as measure of value. Symbols of value, such as tokens and paper money, are instruments which replace money specifically in the function of means of circulation, but not in the fundamental role of general equivalent and measure of value. From what you write I don’t understand your actual position about this. Could you clarify what your opinion about this is? Comradely, Claus. > > On Sat, 20 Nov 2004, Paul Bullock wrote: > >> Fred, now you are not really answering me.. did you follow my points? > > > > Hi Paul, > > Well, I could say that you are not answering my question either. But > let's not get into a combative mode, and instead try to figure this out > together. > > I argued in my next-to-last post that, with respect to the determination > of the MELT, it does not make any difference whether or not credit money > still is tied to gold in some way. In both cases MELT = MV / L. > > So my question to you in my last post - how do you interpret the > determination of the MELT today? - was a follow-up of my previous post. I > think this is a very important question, and I would like to focus > attention on it. The MELT is an essential variable in Marx's theory, > i.e. P = (MELT) L, and we need to be able to explain how the MELT is > determined in contemporary capitalism. > > But sorry I was so cryptic. Let me elaborate: Do you think the > determination of the MELT today is the same as in Marx's case of > inconvertible paper money (with paper money representing gold, even though > not convertible into gold at legally defined rates), as Marx analyzed in > the Critique and in Capital? > > If not, then how do you think the MELT is determined? > > Or, if so, then I have shown (paper attached again) that Marx's > determination of the MELT in this case is equal to MV / L, which is the > ratio that I have argued determines the MELT today, without reference to > gold. So, once again, with respect to the determination of the MELT, it > does not make any difference whether or not one assumes that gold is still > the fundamental money today. > > Paul, I will try get to your other points, as time permits. But I would > really like to clarify the determination of the MELT. What do you think? > > Thanks very much for the good discussion. > > Comradely, > Fred > >
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