Re: Re: The exchange value of currencies
> > The exchange value of currencies is the measure of the relative organic > composition of capital. > > Chris Burford > I suppose that everybody had understood the sentence this way. There is something true in this sentence, but it does not make a Marxian theorem. In B.3, Ch.35, II, Marx defines the rate of change of currencies as the measure of the moves on the international market of metals. Additionally, from a Marxian point of view, the association of rate of change with relative org. comp. would lead to the conclusion that the higher rate of org. comp. goes hand in hand with the lower currency value, as the relative org. comp. reflects the relative productivity, and as productivity, according to Marx, tends to depreciate goods (and metals). Now, it is more accurately the contrary, as a higher productivity means a faster capital turnover, tending to imbalance the flows of capital coming in and going out, what is daily determining the rates of change in a system of flexible changes. The economic territory whose turnover is the fastest gets a higher flow of imports that the one of its exports, what tends to estimate its exports with repect to its imports, that is its currency with respect to the currencies of its suppliers. Gold standard was made to restore the balance. But when a country gets the opportunity to pay in its own currency, that is to say to pay its debt with its debt, as today's USA with the dollar, and formely Great Britain with the "balances-sterling", the balance cannot be restored and the territories which get a positive trade balance are impoverishing. Now, although this reality does not correspond to a Marxist analysis, the notion of relative org. comp., that is of relative productivity, was discovered by Marx first (B.3, 45th ch.). Thanks to that, I have got the idea of an economic chain structured by an unequal distribution of productivity, and it runs. Have a good day, Chris RK
Re: Re: The exchange value of currencies
On 2002.04.18 08:58 AM, "Chris Burford" <[EMAIL PROTECTED]> wrote: > At 16/04/02 23:50 +0100, you wrote: >> The organic composition of capital is the measure of the exchange value of >> currencies. >> >> Is this a correct application of marxism? >> >> Chris Burford > > I appreciate the discussion. But I am wondering if my gentle, wise old > communist friend, got it the wrong way round. > > Perhaps it should be > > The exchange value of currencies is the measure of the relative organic > composition of capital. > > Chris Burford > Comrade Chris Burford > What is " exchange value of currency"? If currency has exchange value,many currencies must exchange in capital market. So do you mean currency as bill .bond, stock? After this mail I will explain concept of currency.
RE: Re: RE: Re: RE: Re: The exchange value of currencies
I wrote:> > Obviously, most of Marx's ideas come from previous political economists and not just from Hume (who developed quantity theory of money, not Locke).<< Romain writes: > This is of Locke: "So far as the Change of Interest conduces in Trade to the bringing in or carrying out Money or commodities, and so in time to the varying their Proportions here in England from what it was before, so far the change of Interest as all other things that promote or hinder Trade may alter the Value of Money in reference to Commodities." (Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money, London, 1691)< you're right: Locke was the first to provide a coherent quantity theory of money, at least according to Walter Eltis (in The Quantity Theory of Money: >From Locke to Keynes and Friedman. By Mark Blaug, Walter Eltis, Denis O'Brien, Don Patinkin, Robert Skidelsky, Geoffrey E. Wood. Brookfield, Vermont: Edward Elgar, 1995. Pp. ix, 139.) I haven't read the article, but the book review on line says so. History of economic thought is not my forte, except for a small number of dead economists. >> ... it [the quantity theory] applies in very specific situations but fails in other situations. The quantity theory applies best with countries with very poorly developed financial systems if they are at full employment of resources.<< > I have been believing that for years. I do not anymore. There are indeed two specific and different situations, but I now think that the diffrence is between the character of money issuing. There is a true inflation by money, when money issuing is pathogen. That is, if some power (official or criminal, or both) issues a money that can never been destroyed because it does not exist in any liability column of any account. On the contrary, the keynesian "budget deficit" mobilzes the saving it allows, so that accounts are balanced. As for the poorest countries, when they are not subverted by an irresponsible or criminal power, their inflation is the result of both the price of imports and the price of the currency they have to pay import with (at random, the dollar). , I don't want to repeat what I've said elsewhere, but in line with the Chartalist theory, I think that the focus on money is a mistake. I see serious inflation as always and everywhere a political phenomenon. If the state is falling apart (due to civil war, etc.) it can't collect taxes or cut spending (because public support for the state would disappear) -- and no-one will buy its bonds. So the budget deficit leads to the printing of fiat money and inflation. Import prices are crucial to the story, since hyperinflation causes the exchange rate to plummet, raising import prices in domestic terms, encouraging the hyperinflation to continue. Of course, import prices could also rise for exogenous reasons, as you suggest. JD
Re: RE: Re: RE: Re: The exchange value of currencies
James Devine wrote: > Obviously, most of Marx's ideas come from previous political economists and > not just from Hume (who developed quantity theory of money, not Locke). This is of Locke: "So far as the Change of Interest conduces in Trade to the bringing in or carrying out Money or commodities, and so in time to the varying their Proportions here in England from what it was before, so far the change of Interest as all other things that promote or hinder Trade may alter the Value of Money in reference to Commodities." (Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money, London, 1691) > By the way, the quantity theory of money is a bit like Newtonian physics I agree with that, as the quantity theory absolutely needs an instantaneous and global confrontation between money and goods. Hume had jeopardized his theory in the same time he wrote it, as he saw the prices rising "by degree" (Of money in Essays Moral, Political and Literary, Indianapolis, Liberty Classics, 1985). But what is the adjustment variable, as long as prices, rising 'by degree", have not yet adjusted demand with supply? Of course, it is the variation of stocks. Now, when stocks stop declining, that means that supply matches demand, and there is then no reason left for prices to rise. It would be hard to admit that stocks were declining during inflation (and growth) periods of 16th and 20th centuries, for example. This is the reason why neoclassicists, in order to save their inflation theory, have invented the "rational expectations", thanks to which the instantaneous confrontation may do not exist on the real markets, as it is present into the minds. > it applies in very specific situations but fails in other situations. The > quantity theory applies best with countries with very poorly developed > financial systems if they are at full employment of resources. I have been believing that for years. I do not anymore. There are indeed two specific and different situations, but I now think that the diffrence is between the character of money issuing. There is a true inflation by money, when money issuing is pathogen. That is, if some power (official or criminal, or both) issues a money that can never been destroyed because it does not exist in any liability column of any account. On the contrary, the keynesian "budget deficit" mobilzes the saving it allows, so that accounts are balanced. As for the poorest countries, when they are not subverted by an irresponsible or criminal power, their inflation is the result of both the price of imports and the price of the currency they have to pay import with (at random, the dollar). Best wishes to you, James RK
RE: Re: The exchange value of currencies
Romain writes:>... Exchange value of currencies does not belong to any Marxist theory, as Marx believed in a gold currency for ever.< It's more accurate to say that Marx _assumed_ that gold was the international currency, since he hadn't thought of a world dominated by a single hegemon that could impose its fiat money on the world the way the US did. (Contrary to myth, Marx was no seer.) Some later Marxists made the gold standard a dogma, though. Given the gold standard, Marx's theory did have a role for exchange rates. Somewhere in volume III of CAPITAL, he wrote that if too much fiat money was produced, the exchange rate between it and gold would fall (so that it would lose value relative to gold). (This is hardly controversial, by the way.) >Actually, exchange value of currencies depends on the sign of the balances of trade, with a reversion of the law when the currency of world system's metropolis has been imposed as the common currency, like today's dollar. And this is completely out of Marxist theories.< to say that the dollar standard is "completely out of the Marxist theories" is to assume that there's nothing to Marxist theory but quotes from old books and dogma. I believe that this assumption is wrong, that the basic concepts from Marx (which do NOT include the gold standard) can be applied to new situations and new theories. -- Jim Devine
