Some comments on Duncan (26.11) and Alfredo (27.11):
(Obs: I still owe an answer to Mike's post of 30.10. The reason will become
clear below, and is that I have not read all of his and Geert's book).
Duncan wrote:
> Claus gives a number of Marxological arguments tending to prove that Marx
> believed that money had to be a commodity in the role of socially
accepted
> general equivalent. I think this is a very defendable reading of Marx.
Claus: what I think is that in Marx's theory money *has to be a commodity*.
I never said that Marx is right, and I don't have elements, so far, to say
he is wrong, even in view of contemporary *empirical evidence*. I have also
sustained that, in order to replace Marx's theory of money, it is not
enough to confront it with contemporary appearances, it would rather be
necessary to elaborate another theory of money consistent with Marx's
labour theory of value, where a non-commodity form of money is
theoretically grounded. I have also sustained that so far no such theory
had been presented, which means that the marxists would not have a theory
of money at present. Mike Williams replied to me that he and Geert hat done
it, in their book, which I have so far not been able to read carefully
enough, but I am very anxious to do it and to learn how they propose to
solve this so relevant problem.
Duncan:
> The problem is that it leads to a dead-end for the contemporary
application
> of Marx's theory of money. (The Economist this week, for example, has a
> piece on the demonetization of gold and the plans to sell off national
gold
> reserves.)
Claus: These plans are not new. What is curious, however, is that gold is
still locked in the vaults of central banks, and have dropped very little,
if the data are precise. For example, from 1971 to 1993 the monetary gold
reserves of the world, according to IMF, have dropped from 1.175,9 to
1.143,7 million ounces; the gold reserves at the international monetary
institutions (IMF, EMCE, BIS) have *increased* from 145,6 to 204,8 m.o.
through the same period (I don't have data more recent than 1993); it is
also to be noted that the gold reserves (at SDR market prices) as a
proportion of total world reserves have also dropped very little (if at
all), from 32,2% to 28,4% along the same period. It doesn't seem that these
figures convincingly prove that the monetary functions of gold are in the
way of being extinguished.
Duncan:
> As a result many writers who adhere extremely strictly to
> Marx's literal words ...
Claus: to assert that Marx's theory requires money to be a commodity does
not express - in my opinion - an irreflected adherence to literal words,
but to the logic of his theory, which is what requires us not only to drop
literal quotations, but to replace his theory of money.
Duncan:
> ... in most of their discussion seem to feel free to add
> on any old theory of money that comes into their heads, or that they
> perhaps remember dimly from a class on money, usually some version of the
> quantity of money theory of prices.
Claus: I'm sorry, but I have not understood the meaning of this.
Duncan:
> This is doubly damaging, since some of
> Marx's points are explicit critiques of the quantity of money theory of
> prices, and the theory itself is badly flawed and increasingly
discredited
> by modern econometric investigation.
Claus: I'm also not sure about the meaning, but if it means that Marx's
theory of money as a commodity compromises it with the quantity theorem, I
would not agree.
Duncan:
> But, look, a huge section of contemporary political economy debate
revolves
> around money, finance, and monetary policy. The argument for reining in
the
> growth in the U.S. is to prevent inflation, which has to do with the
value
> of money in terms of real goods and services. The crisis brewing up in
> Southeast Asia which is prompting dark hints of crisis for the system is
in
> the first instance a financial crisis. If we can't organize a coherent
> analysis of these issues, how far are we going to get in formulating
> credible alternatives and critiques?
Claus: As long as we don't have a theory of money alternative to Marx's but
consistent with his value theory, it doesn't seem to be possible to do this
in marxist terms. However, if Marx's theory of money is still sustainable,
there would be no theoretical reason for not being able to do it.
Alfredo wrote
>I agree with Duncan's recent post about commodity money. We ought to be
able
> to produce a convincing explanation of money that illuminates the *fact*
that
> money is no longer based on gold, and is unlikely ever again to be based
on
> any commodity, at least as far into the future as we can see.
Claus: as I said above, I'm not convinced of the *fact*, although there are
strong *empirical evidences* in support of it, but there are also another
*empirical evidences* against it.
Alfredo:
> To put it bluntly: if Marxism cannot explain reality, then perhaps it's
> irrelevant after all, and we should be doing something else.
Claus: I agree with that. However, in terms of the theory of money, it has
so far not been theoretically proved that Marx's theory is irrelevant to
the understanding of contemporary capitalism and should be replaced (I add
again that Mike's and Geert's attempt to do this I still have to read).
Alfredo:
> I shouldn't be so dramatic. It's fairly easy to account for the existence
of
> inconvertible money based on Marx's reasoning. Oversimplifying things a
bit,
> I'd do it this as follows:
>
> 1- In chapter 1 of Capital 1, Marx derives the function of measure of
value.
> His argument implies that the one-to-one relationship between the value
of
> *each* commodity and the value of the unit of gold determines *each*
price.
>
> 2- In chapter 9 of Capital 3, we learn that prices do not correspond to
> values; there is no one-to-one correspondence between the SNLT to produce
any
> commodity and its price.
>
> 3- This *implies* that - even in Marx's own time - gold *never* actually
> functioned as the measure of value along the lines of Capital 1 chapter
1.
> For under capitalism, because of the uniformisation of profit rates,
there is
> *never* a one-to-one relationship between price and value. To suppose
> differently is to remain in a world of simple commodity production, or at
> least with a very abstract understanding of capitalism (before profits
enter
> the scene explicitly).
>
> 4- Conclusion: under capitalism, gold is *never* the measure of value,
and it
> need *not* be money. The measure of value under capitalism is not any
> commodity; it is *the rate of valorization of capital*. It's on the basis
of
> this rate that the transformation gives us (however we may imagine that
it
> actually happens) a vector of prices of production.
>
> This simple reasoning allows us to bypass gold entirely. The
transformation
> implies a change in the function of measure of value; this is the key to
the
> abolition of the fetishism of gold. Why doesn't Marx do it? For two
reasons.
> First, because he never returned to the analysis of the functions of
money
> after the transformation. Second, because in his time it made perfect
sense
> to refer to gold as money.
Claus: I think what Alfredo argues is very relevant. It is significant that
Marx never mentioned the problem of transformation in relation to the
function of measure of value of money, as far as I know. However, the
answer to the two last questions don't make much sense. First, because
after the transformation, there are several chapters in section V where he
analyses the banking and financial spheres, and repeats the necessity of a
commodity - specifically gold - to be money. (I'm not sure that these
chapters have been written after the chapters on transformation, and have
not tried to review it); second, I think in his time, contrarily to
Alfredo's statement, paper money forms were already important enough to
require consideration, and Marx did it. In short: Marx's definition of
money as a commodity is not grounded merely on historical evidence.
Regards, Claus.
Claus Germer
cmgermer@sociai.ufpr.br
Departamento de Economia
Universidade Federal do Paraná
Rua Dr. Faivre, 405 - 3º andar
80060-140 Curitiba - Paraná
Brasil
Tel: (041) 362-3038 ext. 2537
(041) 254-3415 Res.