tag:blogger.com,1999:blog-6245381193993153721.post8630265114538696091..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: A Marxist agrees with me on the Labour Theory of Value and Fiat Money!Lord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-6245381193993153721.post-39569045739856500272016-04-07T22:38:01.131-07:002016-04-07T22:38:01.131-07:00Are you aware Jehu responded to this?
https://the...Are you aware Jehu responded to this?<br /><br />https://therealmovement.wordpress.com/2016/02/20/four-questions-for-lk-on-money/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-38500684373580482682016-02-13T10:47:33.650-08:002016-02-13T10:47:33.650-08:00Marx says money can never become detached from a c...<i>Marx says money can never become detached from a commodity standard<br />[...] Marx says money can't ever be severed from a gold standard.</i><br /><br />Shrug.<br /><br />Again, you have quoted from a chapter in which Marx lays out how credit money does in fact become detached from a "commodity standard" and also how, when the credit system is shaken, the importance of objective value reasserts itself. This has, in fact happened since the 30s and it continues to happen.<br /><br />Thomas Lordhttp://basiscraft.comnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-43310057784876196422016-02-13T02:26:01.077-08:002016-02-13T02:26:01.077-08:00No, this is just militant irrationality.
Marx sa...No, this is just militant irrationality. <br /><br />Marx says money can never become detached from a commodity standard and you deny basic facts about he said.<br /><br /><i>"Fiat money can and does circulate as currency but the commodity money standard can not be abolished."</i><br /><br />lol.. commodity money standard WAS abolished first in the 1930s and then in 1973 totally for international payments. Are you really so fanatically dishonest, or so ignorant you don't know this fact?<br /><br /><i>"as soon as credit is expanded beyond credibility, there is a run on real commodities in preference to credit money."</i><br /><br />No, Marx says money can't ever be severed from a gold standard. That fact that it has been and money continues to function and capitalism goes on and on proves Marx was wrong.<br />Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-79705570218810178002016-02-13T01:53:49.994-08:002016-02-13T01:53:49.994-08:00Cite me a passage by Marx where he says that money...<i>Cite me a passage by Marx where he says that money can become purely fiat money and commodity standard abolished.</i><br /><br />That's not what Marx (or I) say. <br /><br />Instead: Fiat money can and does circulate as currency <i>but the commodity money standard can <b>not</b> be abolished.</i><br /><br />Fiat money is a form of credit money. How do we know? Because:<br /><br />1. Quantities of fiat money and debt denominated by the same currency come into existence in equal measure. <br />2. Debt repayment extinguishes fiat money in equal measure.<br />3. At time of issue, fiat money nominally denotes a definite quantity of value determined by the same-instant prices of real commodities.<br /><br />Fiat is a distinct form of credit money because the central bank has repudiated having any specific exchange rate to gold. In spite of that, the central bank has an implicit, instantaneous conversion rate to gold when new debt is created -- it is only that the promise to redeem for a specific number of ounces is formally gone.<br /><br />Although a true redemption rate is formally gone, still, the convertability of credit money to real commodities is the touch stone of the reliability of the credit system. When that reliability is in doubt, there is a run on real commodities and away from credit money, including fiat currency.<br /><br />Already in Marx's time -- and in the very chapter you cite Marx is talking about this -- the gold reserves are an insigificant fraction of the nominal amount of credit money in circulation. Full redemption of credit money, the medium of exchange and the unit of account, is already, as Marx writes, impossible.<br /><br />You cited Capital v3 ch 35:<br /><br /><i><b>"and in the second place, because capitalist production forever strives to overcome this metallic barrier the material and phantastic barrier of wealth and its movements, in proportion as the credit system develops, but forever breaks its head on this same barrier."</b></i><br /><br />Yes, exactly. Capital drives commodity money from circulation in favor of credit money but as soon as credit is expanded beyond credibility, there is a run on real commodities in preference to credit money.<br /><br /><i><b>Credit, likewise a social form of wealth, crowds out money and usurps its place. It is faith in the social character of production which allows the money-form of products to assume the aspect of something that is only evanescent and ideal, something merely imaginative.</b> But as soon as credit is shaken — and this phase of necessity always appears in the modern industrial cycle — all the real wealth is to be actually and suddenly transformed into money, into gold and silver <b>[il.e., into objectively quantified value in the form of real, fixed capital -tl]</b> — a mad demand, which, however, grows necessarily out of the system itself. And all the gold and silver [i.e. real, fixed capital -tl] which is supposed to satisfy these enormous demands amounts to but a few millions in the vaults of the Bank. [i.e. available on the exchanges]</i><br /><br />Thomas Lordhttp://basiscraft.comnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-9384334030709513242016-02-12T20:07:33.034-08:002016-02-12T20:07:33.034-08:00(1) "He doesn't assert money "must b...(1) <i>"He doesn't assert money "must be" gold (or whathaveyou),"</i><br /><br />False. Marx states repeatedly that money must be attached to and convertible into a commodity like gold:<br /><br /><i> “But as soon as credit is shaken [sc. in commercial crises]—and this phase always appears of necessity in the cycles of modern industry—all the real wealth is to be actually and suddenly transformed into money, into gold and silver, a crazy demand, which, however, necessarily grows out of the system itself. And all the gold and silver, which is supposed to satisfy these enormous demands, amounts to a few millions in the cellars of the Bank.<br /><br />In the effects of the gold drains, then, the fact that production as a social process is not subject to social control is strikingly emphasized by the existence of the social form of wealth outside out of it as a separate thing. The capitalist system of production, it is true, shares this with former systems of production, so far as they rest on the trade with commodities and private exchange. But only in it does this become apparent in the most striking and grotesque form of the most absurd contradiction and nonsense, because, in the first place, production for the direct use of the producers is most completely abolished under the capitalist system, so that wealth exists only as a social process expressed by the interrelations of production and circulation; <b>and in the second place, because capitalist production forever strives to overcome this metallic barrier the material and phantastic barrier of wealth and its movements, in proportion as the credit system develops, but forever breaks its head on this same barrier.</b><br /><br />In the crisis the demand is made, that all bills of exchange, securities, and commodities shall be simultaneously convertible into bank money, and this whole bank money consists of gold.”</i> (Marx 1909: 673–674).<br /><br /><i>“But it should never be forgotten, that money, in the first place, <b>in the form of precious metals, remains the basis from which the credit system naturally can **never** detach itself.”</b></i> (Marx 1909: 712).<br /><br /><i>“The banking system shows, furthermore, by putting different forms of circulating credit in the place of money, that <b>money is in reality nothing but a special expression of the social character of labor and its products, so that this character, as distinguished from the basis of individual production, **must** present itself in the last analysis as a thing, as a peculiar commodity by the side of the other commodities.”</b> </i> (Marx 1909: 713).<br /><br />See here:<br /><br />http://socialdemocracy21stcentury.blogspot.com/2015/06/marx-on-necessity-of-money-being.html<br /><br />(2) <i>"I'm not aware that Marx argued that "fiat money is impossible". (The opposite, I think.)"</i><br /><br />Cite me a passage by Marx where he says that money can become purely fiat money and commodity standard abolished. Do you have any evidence?<br />Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-59392772625975777572016-02-12T19:26:05.086-08:002016-02-12T19:26:05.086-08:00I am pretty sure Marx's reason for saying that...I am pretty sure Marx's reason for saying that money is a produced commodity is not dogmatic, it is empirical.<br /><br />He doesn't assert money "must be" gold (or whathaveyou), but explains *why* in historic fact it is.<br /><br />Why does money naturally take the form of a produced commodity? In the example of gold: an ounce of gold directly embodies objective proof of its value, in the labor theory sense. The use of a produced commodity as money is just a special case of the general exchange of commodities of equal value.<br /><br />The proof that the objective value content of money matters can be seen in, for example, San Francisco during the Gold Rush. Gold flakes, nuggets, and refined forms instantly took on an exchange value determined by the socially recognized average effort involved in producing them.<br /><br />I think you are correct in saying that the value content of gold is why, in a money-using society, exchange prices naturally orbit around commodity values (in the sense of SNLT): It is because the unit of price is also itself an objective unit of value.<br /><br />Marx's distinction between currency and money is thus also a natural and empirical one. For a starting point, currency is simply a token for money. From there, the use of currency enables the possibility for divergence.<br /><br />OK, but so what? After all, you assert there are three essential properties for "money" that have nothing to do with its being a produced value. <br /><br />(1) a medium of exchange;<br />(2) a unit of account, and<br />(3) store of purchasing power.<br /><br />Qualities (1) and (2) are certainly true of marxian money and for marxian currency. Gold notes are a medium of exchange as is species. An ounce of gold is certainly a unit of account.<br /><br />The trouble is here:<br /><br />(3) store of purchasing power.<br /><br />What the heck is "purchasing power"?<br /><br />This matters because for Marx, money would be:<br /><br />(1) a medium of exchange<br />(2) a unit of account<br />(3) a measure of value (SNLT)<br /><br />You are saying "No, not marxian value but, instead, *purchasing power*." What is purchasing power?<br /><br />I think people say "purchasing power" to mean just "you can buy stuff with it". Isn't that circular though? <br /><br />X IS MONEY IF X:<br />(1) Is a medium of exchange,<br />(2) Is a unit of account,<br />(3) Is money.<br /><br />The question of what "purchasing power" means is vital to your argument that goes:<br /><br />"If fiat money is impossible, then our modern economies would have collapsed decades ago when money was severed from gold in the 1930s for domestic economic transactions, and certainly since the end of Bretton Woods (a system in which gold only had a role in the international payments system anyway)."<br /><br />I'm not aware that Marx argued that "fiat money is impossible". (The opposite, I think.)<br /><br />What Marx can tell us, on the basis of the law of value, is that fiat currency can temporarily disguise a fall in the price of labor below its value. Fiat money can disguise for a time the deflation associated with a fall in the rate of (real, realized) profit. <br /><br />At the same time, fiat can not magically raise the rate of (real, realized) profit and thus can not prevent the constant crises of late capitalism such as the growing impossibility of forming new, independent capitals, and the bubbles and bursts of credit.<br /><br /> Thomas Lordhttp://basiscraft.comnoreply@blogger.com