In reply to the question about the money markets of contemporary
capitalism raised by Foley [ope-l:372] and Shaikh [ope-l:381].
--- "How can different national money markets and money rates of
interest coexist and function effectively as a world money market
despite there being no world money?" ---
To begin with, we have to start from the distinctions between home market
and foreign market and between national market and home market. Today's
world market is cirsscrossed with this complicate combination.
The world market can be conceived as composed of two sorts of conflict.
The first conflict is the following. Britain and India are two distinct
national markets, in which two different currencies are each circulated.
Yet India is a home market for the British while Britain is still a foreign
market for the Indians. This distinction rests on the power of capital.
If A's frame of social value (this concetion shall be expounded later when
we discuss the social value) is forcefully imposed upon B's by the movement
of capital and commodities, A is said to be a foreign market for B while B
is a home market for A. In this case, a national market like B stands in
conflict with the capitalist tendencies that internalizes foreign markets
making a hierarchical world market. Capital has two aspects that are
mutually contradictory (first, it has an inherent tendency to keep intact
the demarcation between home market and foreign market for the sake of
realizing surplus profits, and, second, it has an unintended tendency to keep
on internalizing foreign markets entailed by the movements of capital and
commodities). This requires an additional explanation about the mechanism
of making surplus profits, however. We therefore shall discuss it at later
stages.
The second conflict is the one between the world market which tends to
demolish the economic borders of national markets, and the national
seigniorage which prohibits the circulation of foreign currencies within
the national market that bears a direct relation to the interest of its
ruling class (eg. the discords within the EU over the EMU). When the
collapsing tendency of economic borders which is best seen in the spirit
of Uruguay Round, TWO, etc. develops, the present system of floating
exchange rates especially in less developed countries must come into
conflict with it. Then, to maintain a stable exchane rate, the economic
seigniorage cannot but be interfered. The reason why gold money is
replaced by paper money seems to be in this tendency.
These two kinds of conflict constitute a lawful dynamics of the present
world economy. This thesis is the very starting point of my next project
on the "Uneven development". Comments?
Chai-on Lee