On Fri, Aug 9, 2013 at 9:47 AM, John Vertegaal <[email protected]> wrote:
> What makes you assert that money, as a unit of account, has indeed a
> material content? Does a numeraire hold the physical content of what it
> numerates? How so?
The *social form* we call money has several layers. The connection
between each of them and the material process of reproduction varies,
but this connection exists. The function of money that is closest to
the material process is, of course, money as a measure of value. The
comparability of every form of wealth or power to money under
capitalism follows almost directly from (it is the inverted image of)
the fluidity of the productive forces of (social) labor, especially as
the historical development of capitalist has highlighted this fluidity
(cf. the Intro in the Grundrisse). The connection (and inversion!)
seems the closest there.
The use of specific monetary units (e.g. $) as units of account
("standard of price") is a subsidiary function to the primary function
of money as a measure of value; the former ("standard of price") is
that of counting the quantities of the piece of wealth that performs
the role of measure of value -- gold, silver, or whatever.
In the case of modern credit-money or "fiat" money (a la U.S.), the
physical wealth that performs that role is not gold (or not gold
alone) but the physical assets of the U.S. state or -- in political
terms -- its economic + extra-economic power (or, simply said, its
taxing power). Although the purchasing power of one dollar is not
arbitrary (it results largely from monetary policy decisions,
political and legal forms of our physical reproduction as a society),
the specific denominations used are historically fanciful. So if
you're asking me for the exact material content of the decision that
named these monetary units "dollars" rather "johns" or "julios," I
will have to bounce the ball right off to you and ask if you believe
that fanciful ideas appear in people's heads without any connection to
the physical world.
All that said, let me go back to the substantive issue. There are two
things going on here and we should distinguish them: (1) the actual
historical process of price determination in capitalist markets and
(2) the different theories that may rationalize such process, theories
that may be more or less logically consistent, more or less capable of
answering the specific questions they are designed to address.
The CCC beef (cf. Joan Robinson's quotation in a previous email) is
with the "neoclassical" production function as an adequate piece in
the theory that pins down output prices in a particular class of
"neoclassical" models.
What are the units of "physical capital" in that function? -- asks
Robinson. Note that this is not much to do with a numéraire.
Allegedly, it cannot be "physical" units, since the "neoclassical"
quantity of aggregate "capital," being an aggregate, must smuggle
value categories in its determination. So, it's idem per idem,
explaining prices by prices: a formal contradiction.
A corollary is that, small changes in the profitability of specific
pieces of "capital" in the face of a non-monotonic relation between K
(or K/L) and aggregate return rates may lead to discontinuities or
"re-switching" of techniques. And under these conditions, how can the
"neoclassicals" assume with a straight face that an increase in K/L
leads to a monotonically decreasing profit rate?
So, this is primarily an argument against the notion of total or
aggregate "physical capital" or, in Marxist terms, aggregate means of
production, as a premise in the determination of output prices.
Note that the general equilibrium model of price determination
completely circumvents the CCC objection, since the GE model does not
need to assume one single homogenous input called "physical capital."
You can have an arbitrarily large number of "capital" inputs. And the
logic from premises to conclusions does not require the aggregation of
inputs or outputs, other than the "aggregation" the market itself
accomplishes by adding individual demands and supplies.
I write all this so we see clearly what it is we are talking about.
It does not surprise me in the least to know that a theory of prices
based on a production function with a single input labor and a single
input "physical capital" will only yield a very rough sense of how
things operate in a complex real world. It seems to me, with due
respect, that those who believe that the CCC dealt a deadly blow to
bourgeois economics are like those people who after the first car
chase ends in Terminator I, they are convinced that Sarah Connor has
gotten rid of the killing cyborg once and for all. It's even worse
than that, because the CCC blow was mainly self inflicted.
> Where does default, or the
> possibility of a disequilibrium, enter into your f : y→y; framework?
If you want to examine the effect of default, then you have to specify
it in f.
Re. disequilibrium: If we are thinking about very small changes in
continuous time and space, then disequilibrium means the
disintegration of y. Equilibrium does not mean bliss. It can mean
(it usually means) lots of misery. Now, if we are thinking in terms
of discrete time/space, then there can be temporary mismatches between
the two sides of the function, but to ensure passage to the next
discrete piece of time/space, then either of the sides (or both) need
to adjust because the equality has to be enforced.
> Money does much more than simply "mediate".
I didn't say that mediation is "simple." Mediation can be very
complex. But it's mediation insofar as we as individuals are not
directly interacting with nature to meet our needs. We use social
structures like money (which is to say, a whole *social* division of
labor among private independent producers) to mediate our interaction
with nature. You don't go to the wilderness alone, and domesticate
animals to milk them and drink their milk. You go to a supermarket
built and maintained by others and buy the milk produced by others,
etc. The function of that thick layer of social structures between
you and nature is what I call "mediation."
> Its use as a unit of account
> alters the reality of the field of investigation. This assertion follows
> from the basic assumption that the field of investigation in question is
> always in _a state of becoming_ resolved, rather than _is_ a
> determinately valued structure at any given point in time and as such
> subject to depletion.
Yes, the mediation by money alters the process of reproduction, say,
compared to a reproduction process with no money. However, the next
sentence does not make sense to me. Money, as unit of account or
whatever, exists as a social structure at each point in time and that
social structure also changes from one point in time/space to another.
This difference is about how we conceptualize money for a given
purpose. Each approach (or their combination), if used consistently,
can give us light.
> What I'm implying is not that your over-time function f : y→y is
> invalid, but that the temporary capture of the physical y in terms of a
> unit of account forces demand and not supply (of "the productive forces
> of labor") to become the determinant of the change in y; which also is
> the underlying reason why money isn't a veil.
I guess you're referring to the Keynesian macro view that money is not
passive, a "veil." Yes, yes. I am not arguing against that. But that
does not mean that money as a social form lacks a material content.
Abstractions (and money has the look and feel of an abstraction) have
social roots.
> I fully agree with you
> that the economy is a social structure and that the flow [of
> living-standard enhancement], insofar it becomes determinate through
> exercised final demand, is one and the same flow of
> [values-in-exchange]. So of course, _if_ markets fully clear at
> cost-plus prices, reproduction is assured. But is this a useful
> depiction of the real world through time? Not!!
Markets do clear, through disruptive crises if in no other way.
Somebody takes the loss if the wrong choices are made. What depiction
is useful or not depends on context or situation. If somebody argues
that a monetary economy is completely disconnected from reproduction
in the physical or material sense, one may want to resort to that
depiction of the real world, because it does show one aspect of the
real world. If somebody argues that in a monetary economy, physical
reproduction is smooth, because money is only a veil and demand and
supply are ex ante the two sides of the same coin, then one should
protest and use a more fine grained depiction, emphasize the
mediation, etc.
> During the time that "→" operates, it's an either/or situation. One can
> choose to approach individual use-values within the economy as
> determinate, but without having a clue as to how to aggregate them in
> the changed y; or investigate how booked values come to be, and
> _understand_ why these micro-values are in effect indeterminate and
> unable to be aggregated in the changed y. Such an understanding leads to
> the conclusion that within the economy, values-in-exchange rule; while
> use-values make sense only in the world we actually live, and not in the
> world we're _making_ a living in. And thus the two worlds are best
> viewed as connected, but each having separate value notions.
If I understand you well, I don't think this is correct. I wish it
were. But I think that even in our private intimate lives, use value
is dominated by value. In fact, it is dominated by surplus value.
The only episodic cases in which this is not true is when we're
fighting the monster.
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