I’ve been reading ‘Marx’s Theory of Money: Modern Appraisals’ after there was some debate on here about the role of commodity money in Marx’s value theory. 
@__gio and @StoryPegasus rightly pointed out there are many places where Marx insists on the necessity of commodity money, however I am inclined to agree with @criticofpolecon and @ygzgzot that it isn’t essential to the logic of his value theory when further developed.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Chris Arthur in his chapter of the book (as well as in The Spectre of Capital and elsewhere) argues that money acts as the measure of value not because it shares a property of value common to commodities as a product of labour
@__gio @StoryPegasus @criticofpolecon @ygzgzot but because in fulfilling the function of universal equivalent it imposes a standard by which each commodity becomes quantitatively measurable against each other and therefore creates the space in which value can exist and be measured at all.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Geert Reuten in his chapter ‘Money as a Constituent of Value’, similarly argues that abstract labour is immeasurable ex-ante since it is only money which establishes the actual homogeneity of commodities and so makes the reduction of commodities into values actual.
@__gio @StoryPegasus @criticofpolecon @ygzgzot On the other hand, in §3 of ch.1 of Capital, Marx is very clear that the reduction of private labour to abstract social labour in exchange only occurs because the labour power that produces commodities is equated to the labour power that produces the money commodity.
@__gio @StoryPegasus @criticofpolecon @ygzgzot In his chapter in the book, Claus Germer makes the same point, that money must be the product of labour in order for the private labour time expended in other commodities’ production to be equalized and reduced to a common substance of social labour.
@__gio @StoryPegasus @criticofpolecon @ygzgzot As such as if you reduce the money-form to a pure value-form and say that money doesn’t need to be a product of labour, it seemingly threatens to undermine labour as the condition of the value-relation.
@__gio @StoryPegasus @criticofpolecon @ygzgzot A second argument Chris Arthur puts forward for the redundancy of commodity money rests on his systematic dialectic method. He argues that commodity money is initially assumed because
@__gio @StoryPegasus @criticofpolecon @ygzgzot it provides the minimal sufficient conditions for developing the money-form of value from the simple category of the commodity, and does not require appeal to the more complex concrete categories of capital and credit which have yet to be developed.
@__gio @StoryPegasus @criticofpolecon @ygzgzot A similar point is also made by Graziani, that while commodity money is adequate to the circulation process of commodities, it is not to the production phase where the purchase of labour-power by capitalists depends on credit money.
@__gio @StoryPegasus @criticofpolecon @ygzgzot This argument is taken up by Bellofiore in his chapter who, while arguing that commodity-money is a necessity to Capital, also argues that it is necessary to go beyond it in order to develop a theory of the monetary circuit. And so the logic of Marx’s argument points beyond it.
@__gio @StoryPegasus @criticofpolecon @ygzgzot @__gio has pointed out that however that Marx also says repeatedly e.g. in Ch.32 and 36 of Vol.3 that credit money can only express value if it is ultimately backed by commodity-money.
@__gio @StoryPegasus @criticofpolecon @ygzgzot I think it’s true that there is an unmistakable connection between fiat and credit money and gold since as Bellofiore, Kliman and Freeman note, people turn to gold as a money of last resort in times of crises, hence why Shaikh argues for the existence of Kondratiev ‘gold waves’.
@__gio @StoryPegasus @criticofpolecon @ygzgzot However, this is not the same as saying that credit money ‘cannot break free’ of commodity money. It just entails that the development of inconvertible fiat currency systems depends on a (potentially revokable) extension of trust and confidence in the monetary system.
@__gio @StoryPegasus @criticofpolecon @ygzgzot While Marx thinks credit money depends on commodity-money then, I think Arthur and Graziani are right that credit-financed production in fact represents a kind of supersession of the necessity of commodity-money.
@__gio @StoryPegasus @criticofpolecon @ygzgzot However, I believe the supersession does not only occur with the emergence of credit and capital but earlier in the development of the money-form itself. Marx is of course correct the money-form of value can only develop out of the commodity-form.
@__gio @StoryPegasus @criticofpolecon @ygzgzot It can only evolve from initially being equated with other commodities as a product of labour and particular equivalent alongside others, to eventually becoming a universal equivalent excluded from them as the direct embodiment of social labour or value itself.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Once the money-commodity reaches this stage however, its ability to function as the representation of social labour or value is no longer necessarily dependent on it itself being a product of labour or having intrinsic value.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Similarly, while it is true that it is only through the emergence of commodity money that private labours are first equalized as social labour and transformed into values, once money becomes the embodied representation of social labour time
@__gio @StoryPegasus @criticofpolecon @ygzgzot its ability to validate commodities’ private labour as socially neccessary no longer depends on being the product of private labour itself. All that it requires is that it continues to be acknowledged in its functional role as the representation of social labour time or value.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Fred Mosely agrees on this point. He argues against Germer that commodity money is historically contingent, and that fiat money may function as the measure of value even if it contains no labour simply because it is the only means by which social labour can be represented
@__gio @StoryPegasus @criticofpolecon @ygzgzot This raises the question though if money as a universal equivalent becomes completely unmoored from labour, how can it claim to represent social labour time or value?
@__gio @StoryPegasus @criticofpolecon @ygzgzot In A Spirit of Trust Robert Brandom discusses how pre-modern theories of representation generally assumed that a representation required a resemblance or shared property between the representing and what it represents, whereas in the Early Modern Period,
@__gio @StoryPegasus @criticofpolecon @ygzgzot it came to be understood that representation only requires a global isomorphism between the system of representings and the system of representeds, and the subjunctive sensitivity of the representing system to changes in what is represented.
@__gio @StoryPegasus @criticofpolecon @ygzgzot In the same way, money does not necessarily need to have intrinsic value in order to represent value, there only needs to be some clear subjunctive sensitivity of money prices to values. The only question is how that sensitivity can be grounded in a fiat money economy.
@__gio @StoryPegasus @criticofpolecon @ygzgzot This same question can be phrased in terms of the MELT. As Moseley asks, if commodity-money is no longer essential, what determines the amount of social labour that is represented by a given unit of money?
@__gio @StoryPegasus @criticofpolecon @ygzgzot Moseley’s own approach to this question is to provide an ex-ante determination of the MELT for fiat money, which he elaborates in the introduction to the book and more fully in his paper ‘The Determination of the MELT in the Case of Non-Commodity”.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Here, Moseley criticises Foley’s New Interpretation of circular reasoning since it provides an ex-post definition of MELT while the MELT in Marx’s labour theory of value, he argues, also has to be used in an ex-ante way to determine the total money value added by living labour.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Under commodity money, Moseley argues, such an ex-ante definition is unproblematic since the MELT can be defined as equal to the inverse of the value of the gold commodity, and the price of each commodity as the product of the SNLT required to produce it and the MELT.
@__gio @StoryPegasus @criticofpolecon @ygzgzot To extend this approach to fiat economies, Moseley argues the MELT is equal to the inverse of the value of gold times the ratio of paper money in circulation to the quantity of gold money that *would* be required if commodities were to sell at gold prices.
@__gio @StoryPegasus @criticofpolecon @ygzgzot This allows him to retain an ex-ante definition of MELT for fiat currency, and so explain the determination of money value added by labour time, in a way that doesn’t depend on the value of gold (though at the expense of adopting the quantity theory of money).
@__gio @StoryPegasus @criticofpolecon @ygzgzot Bellofiore points out however that Moseley’s ex-ante determination of MELT relies on the implicit assumption that SNLT is a purely technical magnitude determined ex-ante in production:
@__gio @StoryPegasus @criticofpolecon @ygzgzot Rodriguez-Herrera also argues at length that the MELT should not be thought of as determined once and for all in production but instead as depending on total prices determined in the unity of production and circulation.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Andrew Kliman and Alan Freeman also argue that money prices do not depend on an ex-ante MELT determined solely in the production conditions of the gold commodity. Instead the MELT should be understood as the dependent variable and aggregate price as the independent variable.
@__gio @StoryPegasus @criticofpolecon @ygzgzot I think this criticism of Moseley’s approach to the MELT is on the right lines, however it also creates a problem, because if you abandon the ex-ante determination of MELT you also threaten the core of the LTV the determination of money value added by labour time.
@__gio @StoryPegasus @criticofpolecon @ygzgzot E.g. Herrera seems to see prices and values as simultaneously determined in the transformation process rather than values existing before and then determining prices, however it’s unclear how this can preserve the subjunctive sensitivity of prices to labour values.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Moseley makes the same criticism of Foley and Reuten and Williams value-form theory, namely that they abandon the ex-ante determination of social labour time, and so the determination of price by social labour time, in favour of simultaneous determination.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Bellofiore’s money circuit approach however is different. He acknowledges that without some notion of an ex-ante MELT it seems impossible to meaningfully talk about exploitation as something that occurs in production prior to the market as Marx does.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Bellofiore also criticises Reuten for abandoning abstract labour as an ex-ante magnitude in production, however unlike Moseley, he also acknowledges the value-form/Rubin point about MELT and value being determined ex-post.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Bellofiore’s solution is to argue that while in general the MELT must be understood as an ex-post magnitude, there is an ex-ante determination of the MELT in the money circuit in terms of the money wage bill advanced by firms,
@__gio @StoryPegasus @criticofpolecon @ygzgzot and the credit money or finance advanced to purchase wage-labour in expectation of realized value. Hence the money supply is endogenous and determined by firms’ expected money prices rather than the other way around as in Moseley’s quantity theory.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Bellofiore shows that capital undergoes both a monetary ante-validation of labour through the initial financing of capital and purchase of wage-labour based on expected prices, and an ex-post validation through the eventual market realization of value at the point of sale.
@__gio @StoryPegasus @criticofpolecon @ygzgzot By doing so, Bellofiore retains an ex-ante definition of MELT, but crucially with respect to initial finance rather than the value of the gold commodity. In doing so he seeks show how the LTV and exploitation can be preserved under conditions of credit money.
@__gio @StoryPegasus @criticofpolecon @ygzgzot I know @__gio has raised the concern however of whether Bellofiore’s approach can actually ground socially necessary labour time as the source of money value added if firm’s price expectations could potentially have no relation to labour whatsoever.
@__gio @StoryPegasus @criticofpolecon @ygzgzot One potential solution to this problem is to extend Bellofiore’s money circuit idea with the TSSI perspective on the circuit of industrial capital. Guglielmo Carchedi argues there is no once and for all transformation from values to prices
@__gio @StoryPegasus @criticofpolecon @ygzgzot but rather a continuous cycle of transformations of values into market prices which in turn form the basis for the new ‘individual values’ at the start of the next M-C-P-C-M’ cycle. This implies a radically different notion of what it means for money-prices to represent values.
@__gio @StoryPegasus @criticofpolecon @ygzgzot In the Phenomenology, Hegel criticises models of knowledge which treat representings and representeds, as resolutely independent of one another since it results in a dualism between objects as they are for us and as things-in-themselves.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Instead, he argues experience is a process of constant negation, a bacchanalian revel, where what we previously took to be the thing in itself is revealed to be simply how things appeared for us, which thereby results in a new understanding of the true essence of the object.
@__gio @StoryPegasus @criticofpolecon @ygzgzot As such essence and appearance, truth and error, should be grasped not as independent entities but merely different logical moments of one dialectic, the process of experience.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Similarly, in the Grundrisse, Marx says that market value equates itself with value not as if value were an independent third-party, but rather ‘by means of constant non-equation of itself’ as real value.
@__gio @StoryPegasus @criticofpolecon @ygzgzot In this way Marx invokes the same dialectic as Hegel. Competition is also a process of constant negation which reveals each market price to always be a mere appearance of value, but which in doing so reveals something new about the true value of the commodity.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Since price equates itself with value through constant negation of itself as value this means that what is represented (value) and our representing of it (money-prices) are not wholly independent but rather structural moments of one dialectic, the circuit of industrial capital.
@__gio @StoryPegasus @criticofpolecon @ygzgzot In this way, the representation of value in the money-form can be grounded without requiring an ex-ante MELT to map a set of pre-existing values onto prices as if they were resolutely independent entities.
@__gio @StoryPegasus @criticofpolecon @ygzgzot Instead, the TSSI approach suggests we should instead understand the relationship between value and its money-form on the more dialectical model of Hegel’s account of experience, in terms of the relationship between an essence and its appearance.
@__gio @StoryPegasus @criticofpolecon @ygzgzot This is exactly the conclusion that Patrick Murray reaches in his chapter in the book on ‘Money as displaced social form’.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
