I have been following the hare I started by claiming that modern capitalist
money needs no necessary commodity backing with interest.
But I feel that the bourgeois state is beginning to be let off too lightly:
EG Paul writes:
Formally, the finance of state expenditure by the issue of currency may be
borrowing, but in practice, given the non redeemable nature of the currency, it
is a tax on holdersof existing money balances.
But does the state not have obligations vis-a-vis money which substitute for the
fact of its irredeemablity, which manifest themselves in the imperative for it
to (at least to seem to be acting to) defend the internal and external value of
the currency?
And Chaion writes:
The state money is no debt slip, ...
But British Bank notes have written on them 'I promise to pay the bearer on
demand x pounds'. My surmise is that the imperative that debt places upon the
state is to take steps to defend the purchasing power of the bank note; the
obligation of the state/central Bank to control inflation and maintain the
exchange rate is systemic, not just some gleam in the eye of 'monetarist'
economists.Defending the 'value' of the currency at the costs of massive
unemployment, and dismemberment of the welfare state may be the economics of the
mad-house - but who said the bourgeois epoch was not a mad-house?
My initial intuition that models in which money is necessarily commodity based
are missing out a key feature of capitalist money has been re-inforced by the
key role which most discussants assign to the state in managing money. Like
labour-power, money is at best a very peculiar commodity, whose peculiarities
mean that its reproduction cannot be left to the market.
Michael