Subject: [OPE-L:1890] Re: Reply to Claus on the money supply
From: Claus Germer (cmgermer@sociais.ufpr.br)
Date: Fri Dec 10 1999 - 18:13:49 EST
Answering to Paul [OPE-L:1873]:
It seems to me that we are repeating arguments, and that the basic reason
for the disagreement is a difference in the theoretical approach. In this
case, as I already mentioned, it is my understanding that making judgements
like right and wrong of one theory - as you do of Marx's method in Capital
- based on criteria of another theory - which in your case seems to be
Knapp's chartalism -, is in my opinion naive and useless. What is at issue
is the basic assumptions and the method adopted by each theory, from which
different and even opposing interpretations follow.
I attempted to provide a summary of the materialistic character of Marx's
approach to value and money, which is based on the assumptions first that
human labor is the basic condition of existence, second that in the
presence of division of labor, there must be a way of distributing labor,
and third that in a market economy this way springs out of the process of
exchange and expresses itself in money. I'm sorry to say it, but your
answer that
> I think this is simply wrong historically.
attempts to present an opposite interpretation, which is yours, based on a
different theoretical approach, not as a different interpretaiton but as
the truth.
Claus Germer
cmgermer@sociais.ufpr.br
Departamento de Economia
Universidade Federal do Paraná
Rua Dr. Faivre, 405 - 3º andar
80060-140 Curitiba - Paraná
Brasil
Tel: (041) 360-5214 - Ufpr
(041) 254-3415 Res.
----------
> De: clyder <wpc@dcs.gla.ac.uk>
> Para: ope-l@galaxy.csuchico.edu
> Assunto: [OPE-L:1873] Reply to Claus on the money supply
> Data: Quinta-feira, 9 de Dezembro de 1999 10:07
>
>
> I am replying to your last mail from memory since
> I only got a glimpse of it before I left my desk.
>
> As I recall you make the point that it is unfair of me
> to say that the marxian analysis of money pays inadequate
> attention to the question of the existence of credit
> accounts. You go on to say that these are dealt with
> in the third volume, and that credit is logically subsequent
> to money in that it arises from the function of money
> as a means of payment.
>
> I think that in saying this you are slightly misunderstanding
> what I mean by a credit account. I am using the term in a
> more general sense than you. In my mail I define a credit
> account list as a set of ordered pairs associating subjects
> with numbers. By credit accounts you, I think, understand
> a particular instantiation or set of instantiations of this -
> accounts kept in the ledgers of banks.
>
> What I am trying to get accross is that we must view credit
> accounts as an abstract data-type. This data-type is characterised
> by a certain intrinsic information, and by the set operations
> over it. The characteristic operation on a set of credit
> accounts is the atomic transaction, in which account a is
> credited with quantity x and account b debited by amount
> x.
>
> This data-type can be implemented using different technolgies.
> What you call money, say gold coin, is just one particular
> techique for implementing such accounts. In this case, the
> information structure is held in a unary coded number system
> represented by the number of coins in the direct possesion
> of the subjects. The atomic transaction is effected by
> the physical transfer of the number tokens - the coins - between
> subjects. The physical identity and durability of the tokens
> then guarantees the semantics of the transactions.
> This technology of record, which is vulgarly associated
> with money itself, has the great advantage of being robust
> and simple. It can be operated by people who are illiterate,
> and who have limited arithmetical abilities. Simple mechanical
> aids like abbaci and reckoning tables enable the necessary
> transfers to be handled.
>
> However this is just one possible way of implementing the
> data structure represented by credit accounts. A society
> that has the requisite literacy, the ability to perform
> arithmetic using a place number system, and which has access
> to durable writing materials - paper or clay, can perform
> the same operations using written accounts. Historically
> these actually precede the use of gold coin. This is brought
> out by Polanyi and the general literature on the origins
> of the Babylonian sexagissimal number system. The babylonians
> used accounts in terms of shekles, a standard volume of
> barley, and maintained records of these on clay tablets written
> in base 60 numbers.
>
> With the spread of paper and the indian base 10 number
> system, it became possible once again to record credit
> accounts symbolically. Symbolic credit accounts have
> the advantage over token accounts that they can easily
> record large quantities. Token accounts require a
> number of tokens that grows proportionately with the
> number being recorded. To record the fact that the
> duke of Norfolk has a fortune of 100,000 guineas, he
> requires a strong box large enough to hold 100,000
> coins. To make a large atomic transaction a considerable
> weight of coin must be moved.
> The use of place number systems allows large numbers
> to be recorded in a small space, allowing accounts of
> almost arbitrary magnitude.
>
> Up until the late 20th century the predominant way of
> storing accounts was in ledger books. Following the
> invention of the magnetic disk by IBM in the late 50s,
> the predominant form of account has been the disk
> file. However whether accounts are kept as magnetic
> records, bearer notes, or coins the abstract information
> structure is the same, they are means of associating
> recorded numbers with juridical subjects.
>
> Thus given the abstract usage of my term credit account
> it does not make sense to say that the analysis of credit
> should be subsequent to the analysis of money. What
> you are calling money is just a particular technology for
> recording credits.
>
> My objection to the analysis of money in chapter 1 of capital
> is that it is a bad abstraction. It abstracts from what
> is an essential element of any system of credit recording -
> the owner of the credit. All historically evolved systems
> of account associate numbers of the unit of account with
> juridical subjects - either people or impersonal legal
> entities. By focusing on commodities and money, and
> relegating the proprietors to the background, the analysis
> fails to bring out the full logical structure of the
> social relations involved. It focuses instead on what is
> an incidental and historically contigent technical feature
> - the material from which the tokens are made.
>
> It is as if, in writing a similar analysis today I were
> to say that whilst ferrite is not by nature money, money
> is by nature ferrite.
>
> The first chapters of capital are, in my opinion, the ones
> most marked by the hegelian conceit that it is possible to
> deduce complex relationships from simple axioms. Unlike
> other chapters, which are richly documented with empirical
> and historical evidence the first ones are modeled on the
> self evolution of forms in Hegels Logic.
>
> In the chapter on money, unlike for example that of primitive
> accumulation, he remains at the level of an imaenant critique
> of political economy, and as such remains on the theoretical
> terrain of political economy - free equal voluntary exchange.
> I do not believe that this is a historically adequate basis
> for examining the history of money.
>
> I have now got your original message so here are some
> other points:
> ----- Original Message -----
> From: Claus Germer <cmgermer@SOCIAIS.UFPR.BR>
> To: <ope-l@galaxy.csuchico.edu>
> Sent: Wednesday, December 08, 1999 4:42 PM
> Subject: [OPE-L:1864] Re: Re: the money supply
>
>
> > Paul wrote in [OPE-L:1851]:
> >
> > >
> > > But the existence of money involves more than just a price list for
> > > all commodities. It also implies, and this is not adequately
emphasized
> > > in the Marxian analysis of money, existence of a credit account list.
> > > This is of the form {(subject1 credit1), (subject2 credit2)..}
> > > associating with each juridical subject a monetary credit or debit.
> > > The list may exist in the form of ledger entries in the banks,
> > > database entries in Visa's computers, or more primitively,
> > > coins in purses. All of these are just different historically evolved
> > > technologies for recording the same sort of information.
> >
> > It is not true that credit is not adequately emphasized in the Marxian
> > analysis. Credit is explained differently from yours, that's all.
>
> My point was not that credit was not analysed, but that the
> formal analysis of money excluded the fact that the relationships
> involving money always entail an association of juridical
> subjects with quantities of the unit of account.
>
>
> > >
> > > Whilst price lists and value lists may at first sight seem equally
> > > useful in cost accounting, credit account lists imply something
> > > quite different. Here money appears not as a neutral metric,
> > > but as, what Smith called, the power to command the labour
> > > of others. Credit accounts encode social hierarchy.
> >Money is a phenomenon of the
> > circulation and assumes the independence and equality among the agents
of
> > exchange. In Marx's analysis it is private property of the means of
> > production that introduces social hierarchy, meaning domination by the
> > owner over the non-owners of means of production.
>
>
> Yes but credit account lists impose an ordering on juridical
> subjects by the magnitudes of their credit balances. This
> ordering is implicit in the existence of such accounts.
>
> >
> > > Thus the persistence of
> > > such accounts in socialist societies is an index of the survival of
> > > capitalist forms of domination, of lordship.
> >
> > This seems inaccurate to me. In Marx's analysis capitalism is
essentially
> a
> > society based on a specific form of the private property of the means
of
> > production. When private property is abolished, so is capitalism
(assuming
> > the transition period has
> > been overcome). Thus there is no place for money or for money credit,
> hence
> > for money or credit accounts either.
>
>
> This is all very abstract and a-historical. One has to explain the real
> world. Why did money, or something that seems very like it, exist
> in socialist societies. Stalin traced this to the co-existence of public
> and co-operative ownership of the means of production, do you think
> that this is an adequate theorisation?
>
>
>
> >
> n
> >
> > In the absence of private property, there is a communal authority. With
> the
> > existence of private property, the state expresses the domination of
the
> > proprietory class, which can coexist with communal systems of
distribution
> > of labor, like in feudalism. However, it isn't the intrinsic function
of
> > the state to distribute the productive functions. In the merchant
society
> > any communitary links are abolished. Thus, there is no conscious
mechanism
> > of distribution of labor. This function is taken over by the law of
value,
> > expressed in the money commodity. Money arises spontaneously as the
> outcome
> > of the anarchic confrontation of private producers of commodities. The
> > necessity that it arises spontaneously derives from the fact that there
is
> > no conscious mechanism of distribution of labor. If the state were to
do
> > it, there would not be a need for money.
> >
>
> I think this is simply wrong historically. Money arises because of the
role
> of the state as the original appropriator of the surplus labour. This
> is what links money to labour, it is the tokenisation of the surplus,
> its commution.
>
> Alongside the appropriation of the surplus as profit,
> there exists in every capitalist country another channel
> for the surplus, one both older and newer - the state and its taxes.
> Before capitalism and after it, the public power endures,
> with the primordial right to surplus labour. Originally this takes
> the form of a personal obligation to labour or serve
> as a soldier. The latter can persist to this day, but
> generally these duties were, by all states with an effective bureaucracy,
> commuted. Instead of performing the labour myself I can get somebody
> else to do it, provided that I can surrender to the state a certificate
> showing that they have performed it for me. These certificates
> can take various forms, tally sticks, paper vouchers or
> the metal disks stamped with royal insignia that we call coin.
> With the formation of a standing army, the personal military
> service is performed by a minority whose service is certified
> by the queen's shilling. The obligation, however, remains
> general and those who do not serve must render coin in lieu: tax.
> The coin then circulate, as the only way others can obtain
> coin is by selling goods and services. The coin are tokens of
> labour performed for the state, and the payment of tax a performance
> of these services by proxy.
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