From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed May 04 2005 - 09:40:04 EDT
Gerry: I think one has to be careful not to substitute a contingent, historical explanation for a theoretical explanation. After all, eventually even in the UK under the gold standard, that "tight limit" was removed, wasn't it? The point I was suggesting was simply that there doesn't _have to be_ a "tight limit" between the quantity of gold and the accumulation of capital. _For instance_, paper currency _can_ be issued by the state which alters that relation. -------------- Paul C As I understand it, although the bank act was temporarily suspended a few times during commercial crises, it remained in effect until 1914. The gold standard did attempt to establish a tight limit between the quantity of gold and the accumulation of capital, and this tight limit eventually proved to be an insuperable obstacle to capital accumulation during the 1920s and 1930s. Gerry: The point that you make about Ricardo v. Marx is interesting but undeveloped: what specifically did you find unconvincing about Marx's critique of Ricardo re the exchange value of gold? Is there an advantage to Ricardo's conception? If so, what is it? Paul The question for me is why does Marx treat gold as something special. Other commodities are expected to have their exchange values fluctuate with respect to excess supply. For gold he assumes instead that it will always exchange at its value. Ricardo argued that an increase in the quantity of gold will lead to price inflation, Marx argued against this that any increase in gold stocks would be absorbed by hoarding without any change in prices. But why? One can see that some speculative hoarding might take place in anticipation of prices falling later, but to trigger such hoarding, there would have to be a price rise in the first place. Why should capitalists, having larger stocks of gold, not simply attempt to expand their capital stocks with this gold? If it is used to purchase new commodities, then one would expect it to have an inflationary effect. The context for all this was of course for Ricardo a trade imbalance. If exporters of say machinery lead to a trade surplus, then, unless capital exports occur, the machinery producers will try to accumulate the excess gold as capital locally. This will create excess domestic demand and push up prices as Ricardo predicted. For them to simply hoard the gold, would be to assume that they no longer acted as capitalists.
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