From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed May 04 2005 - 05:01:51 EDT
Paulo In relation to the question of the need for more money in simple reproduction and expanded reproduction. There seems to be implicitely in Marx´s analysis (Chapter XVII Circulation of surplus value, vol. II of Capital) some sort of competition between gold production and credit system. In so far as the credit system raises "the functional capacity of the quantity of money really functioning" it diminishes the need for metallic money. The question is then not one of "downgrading the theoretical importance of money" but rather to investigate how the credit system downgraded the importance of gold within expanded reproduction. I would like to understand better the relationship between credit system and gold. For instance: if the credit system developed the way Marx suggets, would this slow down the production of gold because since demand falls prices would fall bellow prices of production? Which mechanism is there connecting gold production and credit system? Paul There was clearly a mechanism by which the credit system displaced gold. The mechanism could not have been the issue of paper money as suggested by Gerry as the 1844 bank act set a tight limit on the fiduciary issue of notes, other notes had to be backed by gold. On the other hand bills of exchange and cheques were not covered by this restriction and could act as means of payment. It is not, within Marx's analysis, possible to have the sort of feedback relationship suggested by Paulo. He is implying that a shortage of gold would cause the exchange value of gold to rise above its value. This of course is what Ricardo said, but Marx disputed this arguing that gold would continue to exchange at its value. I have never found Marx's objections to Ricardo on this point convincing. If the exchange value of gold rose, that would imply a general deflation which is also excluded in the formulation of the circuit m-c-m'-c'-m''. If we assume that cheques and bills of exchange provided the means by which the circulation was achieved in the presence of a gold shortage, then this has implications for the view we have of capital. The account book capital of a firm would comprise: stocks of commodities+ holdings of gold coin+ holdings of state paper/base coin+ holdings of private debt- liabilities as private debt. Taken across the whole capitalist class the last two entities cancel out. The sum of bank money comes to zero. Now look at the first 3 items. Only the first two actually embody labour and constitute value. Holdings of state paper money do not constitute value - instead they are proof of the unproductive consumption of value by the state in the past. Should they be ignored in computing the sum of social capital or should they be subtracted from the total? Today, is the sum of capital equal to stocks of commodities - notes and coin or is it simply stocks of commodities In either case, in the modern world, money can not constitute part of the total capital value.
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