I wrote:
> > The whole system also required institutions of wage- and price-setting
> that allowed deflation, since the supply of gold seems to > steadily fall
> behind the demand for it as a capitalist economy grows.<
Edwin (Tom) writes:
>Jim, If I'm not mistaken, Michael's argument is that technical progress
>(increasing relative surplus value) leads to a steadily falling (labor)
>value of commodities.
right. I agree with this.
>Therefore, fiat currencies that permit the government to keep nominal
>values from also falling, by expansionary fiscal policies more than
>anything else, simply postpone an inevitable crisis of overproduction at
>the expense of compounding it when it does come with inflation (thus an
>explanation of stagflation).
right. I agree with this.
>In other words, it wasn't gold that caused deflation but gold that
>prevented stagnation caused by overproductin from being accompanied by
>inflation.
that makes sense to me. I agree. right.
I didn't know I was disagreeing with Michael. Reading the above tells me
that I wasn't. I was talking about something else, the need for a world
hegemon to allow fiat money to operate on a world scale and the way in
which the system of competing capitalist nation states that prevailed until
the US became hegemon encouraged adherence to a rough-and-ready gold
standard instead of world fiat money.
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
