>
> Ted,
>
> You quote Marx's explanations of financial crises in terms of a flight from
> financial assets, including fiat monies, to gold. What are the
> implications of the fact that this did not occur for the relevance of Marx
> to understanding recent financial crises?
>
> Edwin (Tom) Dickens
Here, it seems to me, things get very complex.
As I said about the application of Keynes's ideas to Japan, it is a key
aspect of the approach of both Marx and Keynes that significant changes in
circumstances are assumed to change the the character of the dominant
psychology. This is an implication of assuming that social interdependence
is "dialectical", that social relations are "internal".
So even where Marx's analysis is based on realistic assumptions about the
motivation dominant in 19th century capitalism (which, like Keynes, he does
not treat as all of a piece - his analysis of the psychology of gold
hoarding in India, for instance, differing significantly, as does Keynes's,
from his analysis of it in England), it is certain that significant aspects
of these assumptions would not be relevant to, say, U.S. capitalism now.
This is implicit in the passages to which I pointed. These claim that the
motives dominant in early capitalism differ from those dominant in mature
capitalism (though Marx links them through the idea of the "inner man" of
the mature capitalist).
This applies to the role of gold in capitalist psychology. (Even now however
it remains true that there are still "gold bugs" in all cultures and that
there are significant cross-cultural differences in the role played by gold
hoarding.)
However, even though the role of gold may be different other features of the
irrational psychology Marx attributes to capitalists may remain relevant.
Keynes, for instance, though assuming (Treatise on Money, v. 2, p. 260) that
"the long age of commodity money has at last passed finally away before the
age of representative money" ("gold has ceased to be a coin, a hoard, a
tangible claim to wealth, of which the value cannot slip away so long as the
hand of the individual clutches the material stuff"), still assigns a
significant role to a regressive intensification of an irrational
"instinctive or conventional" "feeling about money" in his account of
monetary crises.
"Why should anyone outside a lunatic asylum wish to use money as a store of
wealth?
"Because, partly on reasonable and partly on instinctive grounds, our
desire to hold Money as a store of wealth is a barometer of the degree of
our distrust of our own calculations and conventions concerning the future.
Even though this feeling about money is itself conventional or instinctive,
it operates, so to speak, at a deeper level of our motivation. It takes
charge at the moments when the higher, more precarious conventions have
weakened. The possession of actual money lulls our disquietude; and the
premium which we require to make us part with money is the measure of the
degree of our disquietude." (Collected Writings, vol. XIV, p. 116)
Keynes also assumes that ideas about money and liquidity differ
significantly at the same time and place. Thus, though
"the vast majority of those who are concerned with the buying and selling of
securities know almost nothing whatever about what they are doing. They do
not possess even the rudiments of what is required for a valid judgment, and
are the prey of hopes and fears easily aroused by transient events and as
easily dispelled. This is one of the odd characteristics of the capitalist
system under which we live, which, when we are dealing with the real world,
is not to be overlooked." (Treatise on Money, v. 2, p. 323)
there are "professional investors" (the "wisest" market participants) whose
object is "to anticipate mob psychology rather than the real trend of
events, and to ape unreason proleptically." (p. 323)
This both makes their liquidity preference different psychologically from
that of the "mob" and gives it a different object.
"as soon as the price of securities has risen high enough, relatively to the
short-term rate of interest, to occasion a a difference of opinion as to the
prospects, a 'bear' position will develop, and some people will begin to
increase their savings deposits either out of their current savings or out
of their current profits or by selling securities previously held. Thus in
proportion as the prevailing opinion comes to seem unreasonable to more
cautious people, the 'other view' will tend to develop with the result of an
increase in the 'bear' position." (Treatise on Money, v. 1, p. 229)
"In modern conditions, both in Great Britain and in the United States, the
total 'bear' position can, of course, much exceed the amount of savings
deposits B, since professional investors have other, and generally more
profitable, means of lending 'bear' funds against liquid claims on cash than
through the banking system, e.g. by buying treasury bills and by direct
loans to the money market and the stock exchange; and in addition there are
those transactions of bears who have sold what they do not own, which are
directly offset against the transactions of bulls who 'carry-over' what they
have bought." (p. 225)
One of the claims Keynes makes about the variation of ideas about
"liquidity" historically and cross-culturally is that
"It may be that in certain historic environments the possession of land has
been characterised by a high liquidity-premium in the minds of owners of
wealth" (General Theory, p. 241)
I don't know if this is in any way relevant to contemporary Japan.
One of the main points of all this is to suggest reconsideration of the
widespread premises that psychological factors are "epiphenomenal" to what
is really real and that this premise characterizes Marx's "materialism",
differentiating it from "idealism".
Ted
--
Ted Winslow E-MAIL: [EMAIL PROTECTED]
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