Paul writes
"Alan, are you free to set the monetary equivalent of
value if you at the same time accept Marx's argument
that the price level is set by the labour content of
gold?"
Whatever Marx says about the value of money, the one thing he
does not say is that *prices* are determined by the labour content
of gold. On the contrary he categorically denies it.
In OPE 1102 of 19/02 I gave a citation from Philosophy of
Poverty which, in my opinion, Marx held to from then on,
which bears this out.
Allin remarked that he believed Marx had since changed his
mind, and an interesting discussion has ensued which has
brought to light the difficulties of interpreting
the 'value of money' always and only to mean the labour
content of the commodity serving as gold.
To emphasise that the 'value of money' in Marx's theory
of price definitely did not refer to its metallic value I pointed
out that Marx distinguishes this metallic value (labour content
of gold) from the nominal value of money and frequently employs
such expressions as 'gold can rise above its value'.
What does this expression *mean* if prices are determined by the
labour content of gold?
I supplied further citations in OPE 1172 of 21/02/96, eg
Critique p182
'The most common and conspicuous phenomenon acompanying commercial crises
is a sudden fall in the general level of commodity prices occurring after
a prolonged general rise of prices. A general fall of commodity-prices may
be expressed as a rise in the value of money relative to all other commodities,
and, on the other hand, a general rise of prices may be defined as a fall in
the relative value of money'
or Grundrisse p134 which I only gave a reference to so citing it here
in full illustrates the point.
"Darimon and consorts see only the one aspect which surfaces during
crises; the appreciation of gold and silver in relation to nearly all other
commodities (labour, perhaps, not always, excluded) in periods of so-called
prosperity, periods of a temporary general rise of prices. Since this
depreciation of metallic money (and of all kinds of money which rest on it)
always precedes its appreciation, they ought to have formulated the problem
the other way round; how to prevent the periodic depreciation of money
(in their language, how to overcome the rise and fall of prices). The way
to do this? To abolish prices. And how? By doing away with exchange
value. But this problem arises: exchange corresponds to the bourgeois
organisation of society. Hence one last problem: to revolutionise
bourgeois society economically. It would then have been self-evident
from the outset that the evil of bourgeois society is not to be remedied
by 'transforming' the banks or by founding a rational 'money system'."
Or Grundrisse p200
'The general rise of prices in times of speculation cannot be ascribed to
a general rise in its exchange value or cost of production; for if the exchange
value or the cost of production of gold were to rise in step with that of all
other commodities, then their exchange values expressed in money, i.e. their
prices, would remain the same. Nor can it be ascribed to a decline in the
production price of gold...since money here is not only a general commodity
but also a particular, and since, as a particular, it comes under the laws
of supply and demand, it follows that the general demand for particular
commodities as against money must bring it down'.
So I repeat, whatever Marx does say about the value of money, the one thing
he categorically does *not* say is that *prices* are determined by the labour
content of gold!
On the contrary, he says that the only way to remove the 'evil' that prices
are *not* determined by the metallic value of money, is to abolish capitalism.
The determination of prices by factors other than the metallic value of
money is thus an inherent feature - I would argue in a certain sense the
*determining* feature - of a system in which the actual division of labour
(as opposed to the hypothetical division of labour expressed in the
wonderful equations of the academics) is regulated by private exchange
between individuals.
Alan