I'd like a moneyless system, but see a couple flaws that need fixing

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capricorn
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Jan 28 2012 06:55
Goti123 wrote:
For example, we could make 100,000 pencils and 1 Playstation. Or we could make 0 pencils and 5,000 Playstations. But it may be so that we cannot produce 100,000 pencils as well as 5,000 Playstations. The question then is, how much of each are we going to make?

The examples you are giving are not very good since, given today's means of production and modern know-how, society could easily produce 100,00 pencils and 5,000 Playstations.

Goti123 wrote:
This question can only be answered completely if we have the consumer preferences of all consumers who choose with their labour credits or money.

Why couldn't this information be obtained from what consumers actually chose to take under conditions of open access to goods? (So, no need for the bureaucracy and waste of resources involved in issuing everyone with "labour credits" and pricing every individual good.)

Goti123 wrote:
If make categories of priority this partially solves the problem, but not completely.

For example, pencils will be placed in category 1 and so 100% of requested pencils will be produced (100,000P). But this means that only 1 Playstation can be made, while maybe the consumer preferences would be optimally met if only 50,000 pencils were made and 2,500 Playstations.

So how do we determine where to stop producing one good and start producing another and on what scale?

As I said, in your example, society could easily produce both 100,000 pencils and 2,500 Playstations. More in fact, if needed. The amount to be produced could be calculated from what people took under conditions of open access over a comparable period in the past.

Having said this, there will be problems where if you choose to do one thing you can't do another, but these will concern land use rather than what movable goods to produce. The solution in these cases will be democratic debate and decision. It certainly wouldn't be a good idea to decide such questions by the amount of labour credits or money people are prepared to pay to favour one use as opposed to another as essentially happens today.

alb
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Jan 28 2012 11:35
Birthday Pony wrote:
I'm not sure how defining money as debt opens up the door to "debt-free money." In fact, it most likely rejects any such notion.

My point was that in defining money as debt (or, rather, in defining debt as money) Graeber gives credence to currency cranks who also argue this and want to replace money based on debt by some other form of money. I don't suppose Graeber takes up this position. Judging by that article in the Guardian, he seems to want to go back to what you describe here:

Birthday Pony wrote:
IOUs are the first paper money we see, and before currency there were informal debts between neighbors. The money that was also a commodity, like wood or copper, had the weight and value on one side and then the person who made them on the other. At plenty of times the currency would be worth more or less than the commodity it was printed on, depending on the credit of the person who made it. Such currencies generally didn't come into existence without states.

I'm not challenging Graeber's professional competence in digging up historical facts like this, but we're talking here about limited arrangements between neighbours. The wider and dominant form of currency in Ancient Greece and Rome and then again from the end of the Middle Ages in western Europe was a commodity having its own value as a product of labour (silver) not paper or wooden IOUs.

In any event, modern money is neither an IOU nor a commodity but "fiat" money (intrinsically virtually worthless bits of paper and round pieces of metal) issued by states whose circulation they enforce. A moneyless society would be one without this or without commodity money. On Graeber's definition a moneyless society would be impossible because people will always have social obligations ("debts") to each other. Surely a reason for rejecting his definition as inadequate.

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Jan 28 2012 13:41
alb wrote:
The wider and dominant form of currency in Ancient Greece and Rome and then again from the end of the Middle Ages in western Europe was a commodity having its own value as a product of labour (silver) not paper or wooden IOUs.

You may want to read Graeber's book. He quotes historical data that suggests otherwise (i.e. no real commodity money for most of the Middle Ages in most places).

alb
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Jan 28 2012 15:54
jura wrote:
alb wrote:
The wider and dominant form of currency in Ancient Greece and Rome and then again from the end of the Middle Ages in western Europe was a commodity having its own value as a product of labour (silver) not paper or wooden IOUs.

You may want to read Graeber's book. He quotes historical data that suggests otherwise (i.e. no real commodity money for most of the Middle Ages in most places).

Actually, I never said that (commodity) money was the dominant form of currency in the Middle Ages (as you can see, I carefully excluded this period). That it was hardly used for most of the Middle Ages is not a discovery of Graeber's since this has long been accepted. Here for instance is what the Belgian historian Henri Pirenne wrote in his classic Economic and Social History of Medieval Europe:

Quote:
German economists have invented the term Naturalwirtschaft, natural economy, to describe the period prior to the invention of money. (...) it is important to enquire how far it can be properly used, as it often is used, of the early Middle Ages before the renaissance of the twelth century. The writers who describe this period as one of natural economy obviously do not intend the term to be understood in any absolute sense. They are well aware that ever since its invention, money has been in continuous use among all the civilised people of the West, and that the Roman Empire handed it on without interruption to its succession states. Thus when the early Middle Ages are described as a period of natural economy, all that is meant is that the part played by money was then so small as to be almost negligible. Undoubtedly there is a good deal of truth in this contention; but at the same time we must be on our guard against exaggeration (Henri Pirenne, Economic and social history of medieval Europe. London: Routledge & Kegan Paul, 1936, p. 103-104).
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Jan 28 2012 17:50

Sorry, alb, I misread your post. Graeber basically says the same – that for various reasons, at the end of the Middle Ages (in Europe), the money commodity returned and replaced the medieval economy based on formal and informal debts, which itself had previously replaced the coinage of the Roman Empire.

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Jan 28 2012 21:29
capricorn wrote:
Goti123 wrote:
For example, we could make 100,000 pencils and 1 Playstation. Or we could make 0 pencils and 5,000 Playstations. But it may be so that we cannot produce 100,000 pencils as well as 5,000 Playstations. The question then is, how much of each are we going to make?

The examples you are giving are not very good since, given today's means of production and modern know-how, society could easily produce 100,00 pencils and 5,000 Playstations.

Goti123 wrote:
This question can only be answered completely if we have the consumer preferences of all consumers who choose with their labour credits or money.

Why couldn't this information be obtained from what consumers actually chose to take under conditions of open access to goods? (So, no need for the bureaucracy and waste of resources involved in issuing everyone with "labour credits" and pricing every individual good.)

Goti123 wrote:
If make categories of priority this partially solves the problem, but not completely.

For example, pencils will be placed in category 1 and so 100% of requested pencils will be produced (100,000P). But this means that only 1 Playstation can be made, while maybe the consumer preferences would be optimally met if only 50,000 pencils were made and 2,500 Playstations.

So how do we determine where to stop producing one good and start producing another and on what scale?

As I said, in your example, society could easily produce both 100,000 pencils and 2,500 Playstations. More in fact, if needed. The amount to be produced could be calculated from what people took under conditions of open access over a comparable period in the past.

Having said this, there will be problems where if you choose to do one thing you can't do another, but these will concern land use rather than what movable goods to produce. The solution in these cases will be democratic debate and decision. It certainly wouldn't be a good idea to decide such questions by the amount of labour credits or money people are prepared to pay to favour one use as opposed to another as essentially happens today.

...well obviously I didn't literally mean Playstations and pencils in those numbers. They were just two random goods and two random numbers to make the example more concrete than X and Y and Z and Q.

Like I said if relative scarcity persists we should adopt a system where we prioritise and categorise goods, democratically. But it's about individual preferences which cannot be ascertained democratically.

"Why couldn't this information be obtained from what consumers actually chose to take under conditions of open access to goods? "

Precisely because if relative scarcity persists there can be no free access to goods. As Michael Albert noted:

"We are churning out pencils, as another example. When do we stop churning? Pencils are useful, but the more pencils we have, the less is the value of each new one added to the pile, at least after a point. Moreover, we certainly do not want to use up so much of our labor and resources churning out pencils that we start having to forego things more desirable to us than our growing pile of pencils—say, milk."

We cannot infinitely produce both. That's a fact. Nor do we need to do this as needs, within a given period, are finite. Which is commonly accepted. But the crux of the problem is this:

what if we anticipate that we need 100,000 pencils and 100,000 milk cartons (again, random numbers, don't take it literally), while we only have enough resources to produce 50,000 of each. Do we then proceed to produce 50,000 of each? But what if consumers value the milk more than pencils so when optimising consumer preferences the outcome would be 80,000 milk cartons; 20,000 pencils.

The problem is, we do not know when to stop producing what good.

This problem is minimised by the fact we can democratically determine it; but it will persist.

Also, it would still be superior to capitalism as in capitalism consumers are financially constraint and are therefore almost always unable to meet their preferences.

But it would simply be best if we could solve the problem, but if we cannot, it's not disastrous or whatever.

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Jan 29 2012 03:03
alb wrote:
The wider and dominant form of currency in Ancient Greece and Rome and then again from the end of the Middle Ages in western Europe was a commodity having its own value as a product of labour (silver) not paper or wooden IOUs.

Probably because states print money, and then require that people pay taxes in that money rather than any other form.

alb
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Jan 29 2012 07:38

That'll be part of the story (though in those days states would have minted rather than printed money), but not the whole story. The extent to which there was trading and commerce (which retracted during the early Middle Ages) would also have been a more important factor.

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Jan 29 2012 07:43
alb wrote:
That'll be part of the story (though in those days states would have minted rather than printed money), but not the whole story. The extent to which there was trading and commerce (which retracted during the early Middle Ages) would also have been a more important factor.

This is territory that I personally don't know enough about, but the argument Graeber makes is that trade with commodity-currency and large scale, impersonal markets came about because of states and their need to build armies. They would tax the population, pay some of it back to those enlisted in their army, then have the soldiers trade with small-time merchants in their towns. Since soldiers were the ones with most of the fancy currency, they were the main factor driving use of the state currency as opposed to the shop-makers wooden tokens. Then it was easier to just tax a population to build and maintain an army rather than hoard all their goods just to feed and clothe a military force.

alb
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Jan 29 2012 08:34

Yes, I saw that he made that argument. I suppose he's trying to argue that the state is the villain of the piece (as, as an anarchist, he would) but I still say that you can't ignore the extent and relevance of non-local commerce in the use and spread of commodity-money.

Other relevant things were happening towards the end of the Middle Ages such as the conversion of what the serfs "owed" their feudal exploiters from payment in kind or work into payment in (commodity) money, so preparing the way for the later development of capitalism and the spread of commodity (buying and selling) relations throughout the economy and society which is still going on today. Which we want to put an end to and, in fact, is why we are discussing here whether a moneyless society would be a workable alternative.

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Jan 29 2012 08:42

I agree with you on that.

But, I'm still not convinced that money is always a commodity, and if it is, then whatever trade Graeber is talking about in the original quote on this thread still doesn't bother me even though he misnamed it money.

alb
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Jan 29 2012 09:08

Actually, money today is no longer a commodity, but a sort of all-purpose, re-usable voucher with hardly any intrinsic value of its own that can be used for any payment, just as the old commodity money (such as silver or gold) which it has replaced in nearly all countries used to be.

The argument is really about the origin of money. Traditionally, money has been defined as having three features: a medium of exchange, a store of value and a unit of account. Graeber's argument is that money originated as a unit of account before it became a medium of exchange. Maybe, but the evolution of one commodity as a medium exchange between all other commodities is something different that needs a separate explanation. In the end, as we have already discovered here, this comes down to a question of definition.

capricorn
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Jan 29 2012 11:22
Goti123 wrote:
Like I said if relative scarcity persists we should adopt a system where we prioritise and categorise goods, democratically. But it's about individual preferences which cannot be ascertained democratically.

"Why couldn't this information be obtained from what consumers actually chose to take under conditions of open access to goods? "

Precisely because if relative scarcity persists there can be no free access to goods. As Michael Albert noted:

"We are churning out pencils, as another example. When do we stop churning? Pencils are useful, but the more pencils we have, the less is the value of each new one added to the pile, at least after a point. Moreover, we certainly do not want to use up so much of our labor and resources churning out pencils that we start having to forego things more desirable to us than our growing pile of pencils—say, milk."

We cannot infinitely produce both. That's a fact. Nor do we need to do this as needs, within a given period, are finite. Which is commonly accepted.

Albert begs the question by assuming that relative scarcity will persist and, in fact, because he accepts the basic premise of capitalist economic thinking that "resources are finite but wants are infinite", he thinks that it always will.

But while resources are finite, wants are not (as you yourself concede here). In that case the question becomes: are there enough resources to satisfy people's finite wants? Surely the case for communism rests on answering "yes" to this question. Once the waste and artificial scarcity of capitalism has been ended, the resources at our disposal will be sufficient to provide everybody with the things they need to lead a decent and satisfying life.

In which case, in a communist society, we won't have to choose between pencils and milk (or whatever). We will be able to produce enough of both. Of course we will still not want to waste resources but this will be a different choice than under conditions of relative scarcity.

Goti123 wrote:
But the crux of the problem is this:

what if we anticipate that we need 100,000 pencils and 100,000 milk cartons (again, random numbers, don't take it literally), while we only have enough resources to produce 50,000 of each. Do we then proceed to produce 50,000 of each? But what if consumers value the milk more than pencils so when optimising consumer preferences the outcome would be 80,000 milk cartons; 20,000 pencils.

The problem is, we do not know when to stop producing what good.

I don't see this as a problem at all. In fact estimating in a communist society what to produce to satisfy people's individual needs will be the least of the questions to be resolved regarding the production and distribution of wealth. I've already suggested one way: "Why couldn't this information be obtained from what consumers actually chose to take under conditions of open access to goods? " Or they could be asked via sample surveys or non-market research.

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Jan 30 2012 00:29
capricorn wrote:
Goti123 wrote:
Like I said if relative scarcity persists we should adopt a system where we prioritise and categorise goods, democratically. But it's about individual preferences which cannot be ascertained democratically.

"Why couldn't this information be obtained from what consumers actually chose to take under conditions of open access to goods? "

Precisely because if relative scarcity persists there can be no free access to goods. As Michael Albert noted:

"We are churning out pencils, as another example. When do we stop churning? Pencils are useful, but the more pencils we have, the less is the value of each new one added to the pile, at least after a point. Moreover, we certainly do not want to use up so much of our labor and resources churning out pencils that we start having to forego things more desirable to us than our growing pile of pencils—say, milk."

We cannot infinitely produce both. That's a fact. Nor do we need to do this as needs, within a given period, are finite. Which is commonly accepted.

Albert begs the question by assuming that relative scarcity will persist and, in fact, because he accepts the basic premise of capitalist economic thinking that "resources are finite but wants are infinite", he thinks that it always will.

But while resources are finite, wants are not (as you yourself concede here). In that case the question becomes: are there enough resources to satisfy people's finite wants? Surely the case for communism rests on answering "yes" to this question. Once the waste and artificial scarcity of capitalism has been ended, the resources at our disposal will be sufficient to provide everybody with the things they need to lead a decent and satisfying life.

In which case, in a communist society, we won't have to choose between pencils and milk (or whatever). We will be able to produce enough of both. Of course we will still not want to waste resources but this will be a different choice than under conditions of relative scarcity.

Goti123 wrote:
But the crux of the problem is this:

what if we anticipate that we need 100,000 pencils and 100,000 milk cartons (again, random numbers, don't take it literally), while we only have enough resources to produce 50,000 of each. Do we then proceed to produce 50,000 of each? But what if consumers value the milk more than pencils so when optimising consumer preferences the outcome would be 80,000 milk cartons; 20,000 pencils.

The problem is, we do not know when to stop producing what good.

I don't see this as a problem at all. In fact estimating in a communist society what to produce to satisfy people's individual needs will be the least of the questions to be resolved regarding the production and distribution of wealth. I've already suggested one way: "Why couldn't this information be obtained from what consumers actually chose to take under conditions of open access to goods? " Or they could be asked via sample surveys or non-market research.

I'm in agreement with Capricorn. Wants are not infinite, people will not desire to have as much as they can, especially in a society where items are no longer a representation of wealth.

When someone offers to pay for gas, I'm likely to say yes. But if they offer to pay for dinner, TV, etc I'm definitely going to say no. Why? Because it's rude to milk someone for all the cash they have. There you are, societal expectations just had an effect on me.

As for the prioritization/production issue:

Ambrose wrote:
Let's say we only have one factory producing these chemicals so they are in short supply. There are several groups or other factories or laboratories, etc who may want or need the chemicals but there isn't enough for everybody to get what they want. There may be much bickering, especially if the county has only recently overthrown capitalism and monetarism; let's say that it has.

They may bicker and argue for a long time and either the one who's product is most valuable to the community may end up getting it or nobody will be able to agree and thus no one will get it. There will be one thing that everyone will agree on though: more chemicals are needed. So a new chemical factory would be constructed because of general consensus.

Remember, our paper currency (money) is worthless and only our minds give it value. The market system and capitalist/monetarism system are self-feeding and self-justifying. When people assume it to be anything more, they're just putting the pussy on the pedestal.

Spikymike
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Jan 30 2012 16:17

Looking back to the concerns I raised in my conversation with Joseph on the other Graeber thread about the possible use or misuse of the concept of money as a relationship of credit and debt in misunderstanding both the nature of modern capitalism and a potential modern communism, I find myself largely in agreement with the views expressed here by alb (and separately with capricorn) which compliment what I said there.

alb's concerns regarding the way in which this concept has been used in a different context by the New Economics Foundation perhaps illustrates this well - see for instance the article on this in the latest February 'Socialist Standard' when it is up on line, (as well as the useful accompanying short guide on the different interpretations of profit rates).

I was however interested to note the possible internal disagreement within the spgb on this matter expressed earlier in this thread by Dave.B. Perhaps this could be debated openly in the Standard some time?

Dave B
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Jan 30 2012 20:01

It revolves around the equation;

M(v) = P/{V x N}

I am a scientist and like equations.

Where M(v) is the “Marxist” labour time ‘ exchange’ value of a monetary unit eg a $

And ‘P’ is the sum of values required to be exchanged in circulation [using that currency]

And where V is its ‘velocity’ or average rate at which ‘it’, the money unit, changes hands.

And N is the quantity of money units.

Or lets say

$(v) = P/ {V x N}

That is actually the Nobel prize winning Friedman position, however it was in fact ‘basically’ debated by Marxists; ie Kautsky and Hilferding in 1912.

http://www.marxists.org/archive/hilferding/1910/finkap/ch02.htm

http://www.marxists.org/archive/kautsky/1912/xx/gpcc.htm

I suspect that Alb and myself (certainly) hadn’t realised that the spat we had, or have, was ‘basically’ a hundred years old

Marx really opened up the idea much earlier however; he was in fact plagiarising Adam Smith who said the same thing in Wealth of Nations re the use of Paper money ‘experiment’ in Pennsylvania.

Anyway first from Karl;

Quote:
The number of pieces of paper with a denomination of £5 which could be used in circulation would be one-fifth of the number of pieces of paper with a denomination of £1, and if all payments were to be transacted in shilling notes, then twenty times more shilling notes than pound notes would have to circulate.

If gold coin were represented by notes of different denomination, e.g., £5 notes, £1 notes and 10s. notes, the number of the different types of tokens of value needed would not just be determined by the quantity of gold required in the sphere of circulation as a whole, but by the quantity needed in the sphere of circulation of each particular type of note.

If £14 million were the level below which the circulation of a country never fell (this is the presupposition of English Banking legislation, not however with regard to coin but to credit money), then 14 million pieces of paper, each a token of value representing £1, could circulate. If the value of gold decreased or increased because the labour-time required for its production had fallen or risen then the number of pound notes in circulation would increase or decrease in inverse ratio to the change in the value of gold, provided the exchange-value of the same mass of commodities remained unchanged.

Supposing gold were superseded by silver as the standard of value and the relative value of silver to gold were 1:15, then 210 million pound notes would have to circulate henceforth instead of 14 million, if from now on each piece of paper was to represent the same amount of silver as it had previously represented of gold. The number of pieces of paper is thus determined by the quantity of gold currency which they represent in circulation, and as they are tokens of value only in so far as they take the place of gold currency, their value is simply determined by their quantity. Whereas, therefore, the quantity of gold in circulation depends on the prices of commodities, the value of the paper in circulation, on the other hand, depends solely on its own quantity.

http://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_2c.htm

And from Smith which briefly forms the substance of Karl’s musing’s;

Book V: On the Revenue of the Sovereign or Commonwealth Adam Smith

Chapter II: On the Sources of the General or Public Revenue of the Society

Quote:
…….the whole value of the paper bills of credit never exceeding that of the gold and silver money which would have been necessary for carrying on their circulation had there been no paper bills of credit. The same expedient was upon different occasions adopted by several other American colonies: but, from want of this moderation, it produced, in the greater part of them, much more disorder than conveniency……….

http://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book05/ch02.htm

The idea may have geo-political implications as has been observed or suggested by others re the importance of the $ as the international unit of currency.

And thus if ‘P’; the sum of values required to be exchanged in circulation, or are exchanged (using the $ currency unit) is reduced so is the exchange ‘value’ of the $.

And we have the stuff about oil being traded and backed by the $ etc.

Impacting on the economy of the greenback ‘goldmine’ or the US mint that provides the means of circulation that was previously performed by gold and silver, that had intrinsic value.

It all makes economic sense of course in capitalism; as Smith noted, paper money is cheaper.

And capitalism can take some credit in the fact that, if we have to have money it is so much better for ‘humanity’ that people aren’t busting a gut hacking it out of the ground to produce it.

I have sympathy with the ALB position re paper money as debt and or credit etc however I still think there is, or perhaps more accurately was, a small germ of truth in it.

You can create as much money as you want now by just printing it, but you are not creating credit or debt etc but just devaluing the real value of money in circulation.

And the excess ‘exchange value’ that rolls off the printing press come from the loss of exchange value of the currency that people have in their pockets.

But as capitalism and ‘P’ expands it needs more money to circulate those commodities.

And thus the US mint can step up to the plate and provide it without any necessary devaluation of the paper $.

Money, and paper money, though isn’t or has not been only used to circulate commodities.

It has also been used, as gold admittedly, as a store of value.

And thus there are not two departments of capital as Karl said, and not even three when we include the expansion fixed capital, but four if we include surplus value being used to accumulate [gold] money, taken out of or not for circulation in times of uncertain profitability.

When money is hoarded, or taken out of circulation, encouraged by the low rate of return and risk of investment, V drops allowing you to print more with temporary impunity.

Anyway that is my take on it.

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Jan 30 2012 20:42

I'm not a scientist and I am not a fan of equations. But it was a fascinating look into the world of economics which economists hold up to be a science.

Finance is one the of the most mathematically difficult concepts to grasp, one I have no desire to master myself; it is much simpler to declare it my enemy and destroy it.

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Jan 30 2012 21:00
Dave B wrote:
And thus there are not two departments of capital as Karl said, and not even three when we include the expansion fixed capital, but four if we include surplus value being used to accumulate [gold] money, taken out of or not for circulation in times of uncertain profitability.

With the little difference in this "fourth" department that its content is not actually capital!

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Jan 31 2012 11:35
Dave B wrote:
I suspect that Alb and myself (certainly) hadn’t realised that the spat we had, or have, was ‘basically’ a hundred years old

Perhaps you have read this translation (which is bad, but in this way you have to really think to make sense of it and not just stare at the words surprised ):

http://libcom.org/library/measure-value-under-paper-money-currency-%E2%80%93-wolf-motylev

I don't think there exist any doubt on whether Kautsky or Hilferding followed Marx's theory of money, because it's pretty clear that Hilferding did not... V. Poznjakov's article 'Hilferding or Marx?' gives a good overview of the Hilferding-Kautsky debate. I don't know if there's a point to translating it.

Poznjakov concludes with a quote from Kautsky, p. 122 out of http://www.archive.org/details/sozialdemokratis00kautuoft

Spikymike
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Feb 1 2012 15:48

Thanks to Dave.B and Noa.R for the linked texts which I have saved to peruse later.

In the meantime the Socialist Standard article reviewing the NEF pamphlet which I mentioned in my post 46 above can be found at:

http://www.worldsocialism.org/spgb/socialist-standard/2010s/2012/no-1290-february-2012/where-money-comes-reply-new-economics-foundation

alb
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Feb 2 2012 11:52
Noa Rodman wrote:
I don't think there exist any doubt on whether Kautsky or Hilferding followed Marx's theory of money, because it's pretty clear that Hilferding did not.

I think Hilferding later became German Finance Minister on two occasions in the 1920s. It would be interesting to know what monetary policy he pursued. He may, however, have had the last laugh.

Since 1971 when the US went off the gold standard (until then the value of most other currencies was linked to the dollar which is turn was linked to a fixed amount of gold) the link between paper currencies and gold has been pretty tenuous.

It would in fact seem that what Motylev said in that 1922 Russian article was an impossible utopia has been realised:

Quote:
The entry into circulation of paper tokens independent of gold with a random designation - is an explicit utopia.
Quote:
Is the introduction possible under capitalism of new, completely independent of gold paper signs with arbitrary designation? It's obvious that such a possibility at bottom rejects the mechanism of capitalist economy, missing in money – namely, commodities. But even if we ignore this, then such money signs are impossible if only because, - not one commodity-owner would know, to how many tokens his commodity corresponds, and the government would not have any criteria for clarifying the amount of tokens, to be issued.

This last is precisely the problem that governments face today: how to guess how much paper currency to issue to maintain a stable price level, ie how much currency would be brought in existence and circulate spontaneously without government intervention if gold were still the basis of the currency. Actually, these days, government aim to achieve a price level that increases at about 2-3% a year.

I should add that I don't think that this is incompatible with Marx's theory of money as Marx made a clear distinction between the circulation of a paper money that was convertible on demand into a fixed amount of gold (the situation in the leading capitalist countries up to WWI) and the circulation of an "incovertible paper money issued by the state and given forced currency" (as he put in Capital and has been the case in nearly all states since WWII),

Also, I would have thought that the fact that there is now no clearly identifiable link between paper money and gold makes it easier to envisage a society with any money. After all, if it's only paper. It is the likes of Ron Paul who want to bring back a currency directly linked to gold who appear ridiculous.

Noa Rodman
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Feb 2 2012 12:15

Hilferding strived for a gold standard as a policy. But even with a gold standard he thought the value of money is independent of gold. This difference between policy and theory gets overlooked. iirc the policy which Kautsky recommended actually had much lower expectations about a re-introduction of gold standard for the Mark.

To be precise, in 1971 the US went off a gold exchange standard. That doesn't settle anything about the theoretical question of what determines the value of money.

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soc
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Feb 2 2012 16:30

The whole debate reminds me to a sci-fi novel from Arthur C. Clarke, the Garden of Rama. As much as I enjoyed the book, there were some angering aspects of it. The story goes like this: there's a giant, cylindrical alien space ship, that enters in to mars orbit to get 2000 humans on board for observing us as a spacefaring species. The space ship provides sophisticated robots and other technical support which is ranging from collecting waste, to medical practice. And the humans settlers doing what? Markets! And of course, this crappy Hollywood-like embedded social experiment ends up with concentration of power, a coup against the original colony leadership and expansion war to get hold of the habitat of an other species that is on board of this space ship.

I couldn't really believe that with such a reality-close wonders that the authors were exploring in the "sci-fi" parts, this they had such a poor imagination in the social matters.

So you get the idea of a society which has basically served by their own controlled environment, including so advanced robots that are able to satisfy most of the needs of the residents. And I was wondering, that how the humans were able to produce a market system, let alone a monetary one. And I just wasn't able to work out any scenario where it could work. Given that the robots satisfy all the basic needs (food, water, shelter, health care, even "cultural" needs as there were models for acting in theaters!) it transforms all human activity to deal with their interest, make use of the robots for their own pleasure, or improve them. I just can't see, how one can reproduce the market based economy in these circumstances, given that there isn't really scarcity of any basic human need. What it means, that food for example would not be able to gain any exchange value, unless the control over the food production is seized some and they deliberately hold it back from the entire population. So, without superior violence (say, one person with a baseball bat would not be able to stop the entire population from taking the food production back to the commons). Superior violence however is unlikely to build up without scarcity because the population would have the access to the same weaponry as the appropriators themselves.

To connect this fairy tale to the original post, moneyless society IMO must necessarily would look something similar to the hunterer-gatherer societies but not in a primitivist sense. People will be able to satisfy their needs that is provided by their environment but that environment in turn could be improved by the effort of individuals or collectives. In other words, resource allocation becomes an engineering problem, where the availability and other individuals and collectives who share the same resource will be naturally forced to form a wider collective that is able to resolve the allocation problem.

Communism therefore definitely moneyless, but it is not because it replaced the function of money, but because it gets rid of the old notion of property and distribution.

Dave B
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Feb 2 2012 20:50

I think with the issue of the exchange value money you need to look at two different cases;

that is when it is on a (gold) standard and when it is not.

When it is on a standard or is convertible or whatever then basically money is a commodity and the exchange value of any commodity according to Marxist theory is dependent on the amount of labour time required to produce it.

But also whether or not supply and demand for that commodity (which includes the money commodity) are in equilibrium or not.

It is only when supply = demand;

That the exchange value of ANY commodity finds its ‘Adam Smith’ natural price; or when its exchange value = value= the amount of labour time required to produce it.

Thus;

Value, Price and Profit VI. Value and Labour

Quote:

On the other hand, the oscillations of market prices, rising now over, sinking now under the value or natural price, depend upon the fluctuations of supply and demand. The deviations of market prices from values are continual, but as Adam Smith says:

“The natural price is the central price to which the prices of commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this center of repose and continuance, they are constantly tending towards it.”

I cannot now sift this matter. It suffices to say the if supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, that is to say with their values, as determined by the respective quantities of labour required for their production. But supply and demand must constantly tend to equilibrate each other, although they do so only by compensating one fluctuation by another, a rise by a fall, and vice versa.

http://www.marxists.org/archive/marx/works/1865/value-price-profit/ch02.htm

Money serves or can serve two functions; one is for the circulation of commodities as values.

And thus as, or if, the total value of commodities increases so does the amount of money required to circulate it, or demand, increases, and vice versa.

Thus there is a possibility for the exchange value of the money commodity to vary in the short term according to variations in supply and demand, as with every other commodity.

(Assuming that the efficiency with which money performs that function or in other words the ‘velocity’ of money circulation remains the same.)

There is another ‘demand’ for money and that is as a store or hoard of value which can play its part.[2]

If the there is a increased demand for the money commodity, possibly due to the expansion of capitalism and the increased value of goods needing to be exchanged etc.

Then the exchange value of gold and the stuff that you can get for it goes up.

And previously redundant goldmines that couldn’t produce enough gold to cover the ‘cost of production’ start to produce again, increasing supply and satisfying and reducing demand and thus restoring the exchange value of gold to its ‘natural price’ or labour theory of value ‘price’. *

That point was even recognised by the non Marxist theoretician and Mr Supply and Demand himself;

John Stuart Mill in his ‘Principles of Political Economy’,1848,

Quote:
“But money, no more than commodities in general, has its value determined by demand and supply. The ultimate regulator of its value is Cost of Production"

http://www.gutenberg.org/ebooks/30107

The increase in demand for the money commodity to circulate commodities probably, most times, proceeds in a steady kind of way and thus the exchange value of the money commodity [gold] tends to stay in sync with its ‘natural price’.

There have been exceptions, as perhaps, with the sudden appearance and flood of gold and silver due to imperial adventures etc.

It is a bit questionable and stretching a Marxist theoretical point to say that exchange value of precious metals upon the discovery of South America in the 16th century is best analysed by the reduction of the socially necessary labour time require to produce them.

I am not saying that that argument has no merit at all by the way.

As we are no longer on the gold standard and have not been for some time it is probably all very academic in the sense that the exchange value of paper money has been de-linked and is no longer regulated by its ‘cost of production’.

It is now free from that and it ‘floats’ purely according to the only thing that regulates it supply and demand.

There is no problem as far as I see it; as it’s exchange value is still regulated by the law of value in as much as, even according to ‘Friedman’, its value is determined by the total labour time value of commodities for which it is used to exchange.

So it is just one step removed; but all roads still lead to the law of value.

All the Kafkaesque Shenanigans of the gold standards system of ‘free coinage’, ‘seigniorage’ and melting down new gold money to exchange for old shaved and clipped money etc was dealt with amusingly by Adam himself.

*; there isn’t a straightforward relationship between the exchange value of a commodity that depends heavily on a natural resource.

As according to Karl the exchange value of that kind of commodity depends or is set by the least productive ‘mine’ that can make an average rate of profit as covered in differential ground rent and surplus profit theory.

There is in fact as Karl noted a secondary ‘derivative’ measure of the value of money and that is the interest rate; that did play an important part when on the gold standard.

In times of economic plight and terror, the capitalists would pull in their horns and bunker down and switch their interests from the profitability of working capital to the safe bet of the stored value of gold money.

In such situations the interest rate and exchange value of money sky rocketed and the price of their precious commodities, denominated in gold, fell. .[2]

On the fourth department of capital.

Department one is producing constant capital or what not,

Department Two is producing stuff that humans consume.

Department three accumulating fixed capital ie robots

Department four, with the gold miners on the gold standard, are producing the means of circulation, that is supposed to come out of surplus value, to say nothing of hoards of value.

Noa Rodman
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Feb 2 2012 22:07
Quote:
It is a bit questionable and stretching a Marxist theoretical point to say that exchange value of precious metals upon the discovery of South America in the 16th century is best analysed by the reduction of the socially necessary labour time require to produce them.

I am not saying that that argument has no merit at all by the way.

Is anyone making that argument here? I guess following your 'Hilferdingian' position the exchange value of commodity-money was reduced due to an explosive increase in the total value of the mass of commodities at that time.

Quote:
As we are no longer on the gold standard and have not been for some time it is probably all very academic in the sense that the exchange value of paper money has been de-linked and is no longer regulated by its ‘cost of production’.

It is now free from that and it ‘floats’ purely according to the only thing that regulates it supply and demand.

There is no problem as far as I see it; as it’s exchange value is still regulated by the law of value in as much as, even according to ‘Friedman’, its value is determined by the total labour time value of commodities for which it is used to exchange.

So your 'explanation' is that when there is a gold standard money gets regulated by its cost of production, but when there is no gold standard it's not regulated by cost of production. Pre-1971 you're a Marxist (aka Kautskyian), post-1971 you're a Hilferdingian, is that it?

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Ambrose
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Feb 3 2012 00:00
soc wrote:
The whole debate reminds me to a sci-fi novel from Arthur C. Clarke, the Garden of Rama. As much as I enjoyed the book, there were some angering aspects of it. The story goes like this: there's a giant, cylindrical alien space ship, that enters in to mars orbit to get 2000 humans on board for observing us as a spacefaring species. The space ship provides sophisticated robots and other technical support which is ranging from collecting waste, to medical practice. And the humans settlers doing what? Markets! And of course, this crappy Hollywood-like embedded social experiment ends up with concentration of power, a coup against the original colony leadership and expansion war to get hold of the habitat of an other species that is on board of this space ship.

I couldn't really believe that with such a reality-close wonders that the authors were exploring in the "sci-fi" parts, this they had such a poor imagination in the social matters.

So you get the idea of a society which has basically served by their own controlled environment, including so advanced robots that are able to satisfy most of the needs of the residents. And I was wondering, that how the humans were able to produce a market system, let alone a monetary one. And I just wasn't able to work out any scenario where it could work. Given that the robots satisfy all the basic needs (food, water, shelter, health care, even "cultural" needs as there were models for acting in theaters!) it transforms all human activity to deal with their interest, make use of the robots for their own pleasure, or improve them. I just can't see, how one can reproduce the market based economy in these circumstances, given that there isn't really scarcity of any basic human need. What it means, that food for example would not be able to gain any exchange value, unless the control over the food production is seized some and they deliberately hold it back from the entire population. So, without superior violence (say, one person with a baseball bat would not be able to stop the entire population from taking the food production back to the commons). Superior violence however is unlikely to build up without scarcity because the population would have the access to the same weaponry as the appropriators themselves.

To connect this fairy tale to the original post, moneyless society IMO must necessarily would look something similar to the hunterer-gatherer societies but not in a primitivist sense. People will be able to satisfy their needs that is provided by their environment but that environment in turn could be improved by the effort of individuals or collectives. In other words, resource allocation becomes an engineering problem, where the availability and other individuals and collectives who share the same resource will be naturally forced to form a wider collective that is able to resolve the allocation problem.

Communism therefore definitely moneyless, but it is not because it replaced the function of money, but because it gets rid of the old notion of property and distribution.

I agree with the argument and conclusions made here.

In order for monetarism to work, scarcity is a necessity. Which means artificial scarcity becomes inevitable as society advances.

alb
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Feb 3 2012 09:43
Noa Rodman wrote:
Hilferding strived for a gold standard as a policy. But even with a gold standard he thought the value of money is independent of gold. This difference between policy and theory gets overlooked. iirc the policy which Kautsky recommended actually had much lower expectations about a re-introduction of gold standard for the Mark.

So maybe Kautsky had the last laugh (until 1971). But what this shows is how far the both of them had moved from their pre-WWI Marxist position to reconciling themselves with capitalism and proposing policies for capitalist governments to implement (and in Hilferding case actually implementing them as Finance Minister). As ministers in the government there Lenin and Trotsky were in the same position running the state capitalism in Russia. In fact even in exile Trotsky was still supporting a gold-based rouble. In the Revolution Betrayed (1936) he does pay lip-service to the eventual disappearance of money, but his theory of money seems to be the same as Stalin's theory of the state: that before it can finally wither away it will have to be expanded immensely.

But to return to the present, what is your take on the post-1971 situation? Do you still regard gold as the money-commodity?

Noa Rodman
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Feb 3 2012 10:58

There is a video of Anwar Shaikh showing the calculation of prices through gold instead of dollars and you get a picture that coincides with the economic conjuncture. He predicted the depression on the basis of it. I think it's this video:
http://www.dailymotion.com/video/x9hqta_anwar-shaikh-on-marx-and-the-global_news

I do hold that it's possible that gold still is the money-commodity, and that the value of (also paper) money can not just be calculated, but "in fact operates" by the value (/labour time for producing) of gold. I must research the issue.

Angelus Novus
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Feb 3 2012 12:52
Noa Rodman wrote:
There is a video of Anwar Shaikh showing the calculation of prices through gold instead of dollars and you get a picture that coincides with the economic conjuncture.

Huh?

Presumably you could also calculate prices through McDonalds hamburgers and "get a picture that coincides with the economic conjuncture". This is literally meaningless.

Noa Rodman
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Feb 3 2012 13:51

Well why aren't hamburgers money today?