In response to Gerrys mail below.
The point raised here is, I think, closely related to
the arguments of Kalecki that I touched on in an earlier
post, but we must first sort out problems of whether we
are talking of stocks or flows of money.
As a flow of money, the capitalists taken as a whole can
not draw more money out from circulation than they throw in
unless some other category of agents is purchasing more than
they sell. The two categories for whom this can be true are
citizens of other countries and the state. It is possible for
capitalists to withdraw more money from circulation than they
put in if the country runs a trade surplus, or, if the government
funds purchases by the issue of currency.
If we rule these external agencies out of consideration for the
momement then m-c-m' is only possible because of the investment
and consumption expenditure of capitalists.
As a stock of money on the other hand, there is no simple
mechanism whereby the stock will adjust to changes in the level
of real wealth. The stock of money is, under a credit money system,
equivalent to some subset of the total outstanding debt in the
economy. This is driven
a) by the imbalances between sectors' cash flows, in particular
by the tendancy of the rentier sector to be in financial surplus
b) by the polarisation of the population of capitals into firms
who are forced to increase their gearing ratio and firms able
to reduce their gearing ratio
c) by the extent of the de-monetization of debt by the issue of
equities
----------
From: Gerald Levy[SMTP:glevy@acnet.pratt.edu]
Sent: 19 November 1996 15:25
To: Multiple recipients of list
Subject: [OPE-L:3686] quantity of money in circulation
Fred wrote in [OPE-L:3680]:
> ... The main question of Marx's theory
> of surplus-value is how this GIVEN sum of money capital increases it
> magnitude, or becomes more money. In other words, how do capitalists
> withdraw more money from circulation than they throw into circulation,
> with the initial money capital thrown into circulation taken as given.
> ...
Someone on the list [who, at this point, is anonymous] sent me a message
which said:
> If the money is endogenous - i.e., is injected into the
> system as the result from the fact that some agent (firms, the State)
> has gone into debt in this period or in the past - how can the
> capitalists withdraw from circulation more money than the one they throw
> into circulation [I am disregarding the possibility that in the past
> there has been an accumulation of money balances: this would only
> complicate the issue, but does not change the result]? In fact, when
> Marx has M-C-M' the positive difference M-M' is a difference in abstract
> wealth, not in money strictly speaking - e.g., as the final means of
> payment.
(1) [to Fred]: how would you answer the above?
(2) [for any and all]: what is the mechanism that causes the quantity of
money in circulation to increase alongside increases in real wealth?
Doesn't a concrete explanation of the causes of a change in the quantity
of money in circulation presuppose the analysis of bank capital and the
state-form?
In solidarity,
Jerry
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