Die Neue Zeit
3rd January 2011, 01:34
Transformative Critique: Direction on Money and Revisiting Eugen Duhring
“In the first place, such a misuse of Owen's labour-notes would require their conversion into real money, while Herr Duhring presupposes real money, though attempting to prohibit it from functioning otherwise than as mere labour certificate. While in Owen's scheme there would have to be a real abuse, in Duhring's scheme the immanent nature of money, which is independent of human volition, would assert itself; the specific, correct use of money would assert itself in spite of the misuse which Herr Duhring tries to impose on it owing to his own ignorance of the nature of money.” (Frederick Engels)
In envisioning a society full of economic communes interacting with one another on a separate but labour-mobile basis, the anti-Semite Eugen Duhring provided the basis of various market-socialist models not influenced by Marx at all. They range from the self-management trusts of Oskar Lange to the industrial cooperatives and Israeli settlement cooperatives of Franz Oppenheimer to even the People’s Communes that were formed during China’s catastrophic Great Leap Forward. It is in this context that Duhring suggests a means of exchange other than modern money and the means of exchange prevailing under detailed societal management over its own collective labour-time.
When petty-commodity modes of production began, the predominant form of commodity trade was C-C’ or a barter trade, whereby a commodity trades directly for a different commodity. According to traditional economic accounts, the difficulty of having a double coincidence of wants between the buyer and seller was what led to the creation of money as a means of exchange and of specifically storing wealth in time preference for some future purchase. Thus, commodity trade expanded to include M-C and C-M, whereby commodities were bought with and sold for money, respectively. It was also expanded to include C-M-C’, whereby a commodity is sold for money, which in turn is used to buy another, different commodity with an equal or higher value. However, traditional economic accounts already fail to account the more insidious purpose of money: accumulation for its own sake. Already in petty-commodity modes of production there were instances of M-M’, or simply the lending of money at interest. Moreover, the very process that is money-capital was facilitated by the merchants: M-C-M’, or the purchase of a commodity with money for resale at a higher price. The bourgeois introduction of and power over generalized commodity production broadened the existing process of money-capital, now having at its disposal both labour markets and capital markets from which to purchase labour-power and means of production to create a new commodity for selling at a profit, thus M-C...P...-C'-M'.
The societal abolition of the commodity mode(s) of production towards a higher mode of production where there exists detailed societal management over its own collective labour-time, over all use values, and thus over the allocation of all productive and other non-possessive property necessarily involves the replacement of money-capital with a system of non-circulable (and necessarily electronic) labour credit. This dispenses with M-M’, C-M-C’, M-C-M’, and of course M-C...P...-C'-M’, while the broader and complete convergence between socially necessary labour and surplus labour eliminates exchange value (again, not to be confused with use values) and thus commodities altogether.
In the meantime, however, the lack of almost any sort of public management (that is, planning, organization, direction, and control) over M0, M1, M2, and the entire money supply generally is problematic, to say the least. While the monopolization of all central, commercial, and consumer credit in the hands of a single transnational bank under absolute public ownership or the lesser national-democratizations of finance and their extension into the general provision of credit go a long way towards establishing public management over the money supply, by themselves they do not address the problems of investment strikes (not investing as required by government plans towards maintaining or expanding production), asset stripping (the wholesale liquidation of business assets for a gain), short selling or derivatives trading, and more typical monetary capital flight.
While detailed societal management over its own collective labour-time involves the gradual institution of a societal planning apparatus that can allocate even intermediate products on an in-kind basis – something well beyond the abilities of a planning apparatus for a monetary economy, like Gosplan (All-Union State Planning Commission, later the State Planning Committee of the USSR) – more radical directional inroads can be made against money-capital. One such measure is the disabling of the circulation of money at every point where legitimate intermediate transactions (most notably those of intermediate products like raw materials and assets used in or arising from the production of the means of production) are not involved, such as the end-consumer point. This necessarily means replacing modern money with a purely electronic and personally identifiable currency. The very idea of cash is then left to criminals and black markets, and all the costs associated with counterfeiting prevention and even money laundering (circulation that conceals the identity, source, or destination of illegally obtained money, and which is related to capital flight in the common usage of tax havens and shell or dummy companies) can be diverted towards computer crime prevention and easier crackdowns on any form of black market currency. Furthermore, this measure prevents investment strikes and even monetary capital flight through short selling or derivatives trading (while asset stripping, without the ability of employees to elect the majority of at least the board of any company, could hypothetically still be done through illegal barter).
[Note: At this point, technical and financial assistance for localities seeking to establish local currency alternatives to government money would end except for those localities that would suffer from having to get rid of their currencies and adopt the new electronic currency.]
However, until there is a societal planning apparatus that can allocate even intermediate products on an in-kind basis, this currency in the sphere of legitimate intermediate transactions should be allowed to circulate by means of transfer. Consider this example, which contrasts the end consumer with transactions between public enterprises:
John Smith works at Public Enterprise A, which produces various kinds of machinery. Credits in the form of non-circulable (at least on his end), personally identifiable electronic currency are created for his work and credited to his account. According to Engels, this is where one Weitling replaces anonymous cash “by a ‘ledger’, in which the labour-hours worked are entered on one side and means of subsistence taken as compensation on the other.” After keeping the currency for a week, he then goes to Public Enterprise B to purchase consumer goods, thus redeeming his electronic currency. Whether these credits remain with Public Enterprise B or are eliminated, in the meanwhile that enterprise purchases new machinery from Public Enterprise A. While the form of purchase could be different, the substance remains the same; at a minimum, double-entry recordings and the related price calculations are made by both parties to account for this transaction. Both machinery and something else of value are exchanged between the two parties.
With this specific electronic currency, society can determine its other functions. Disabling this currency’s ability to generate interest (going beyond prohibitions on civil courts from enforcing the collection of the interest portion of debt payments, or severe criminal penalties being imposed on those who use threats of harm to extort interest, thus possibly making them redundant) would prevent any prospects of profitable gains through idle savings, and would go a long way towards turning it purely into a means of exchange. Tying this currency or an earlier, pre-transitional one like modern money to labour-hours or some other unit of labour-time, by means of a widely publicized labour-time-to-money ratio, would be an enormous step forward in exposing bourgeois and petit-bourgeois exploitation while addressing the anti-inflationary grievances against fiat currencies (under which, according to Chartalist views on money, government money is created only by persistent government deficit spending, and under which governments must spend first before collecting taxes) made by those with nevertheless bogus fetishes for gold and other physical commodities (hence the discarded gold standard). Making this currency expirable like cheques and money orders would prevent currency hoarding.
As for personal savings and credit, they will continue to exist even with less motivations, since time preferences for purchases are independent of time preferences for incomes. Paul Cockshott and Allin Cottrell suggested in Towards a New Socialism a couple of means to reconcile societal priorities with personal savings and credit within reasonable limits. Although they pertain to non-circulable labour credit, similar suggestions can be made for electronic currencies that circulate in the sphere of legitimate intermediate transactions:
1) Current labour tokens may be freely exchanged for some kind of retirement asset (e.g. one which pays out an annuity starting at a specified future date or contingency). Such transactions would be conducted through a unified state-run ‘financial system’ so that their aggregate volume can be monitored by the planning agency.
[…]
2) To permit a shorter-term flexibility, current labour tokens might also be exchangeable for consumer saving deposits, from which labour tokens may be withdrawn at a later date in order to purchase various consumer durables, vacations, etc.
[…]
3) Aside from the above recognised forms of saving, individuals are not able simply to hoard labour tokens. Hoarding, which would disrupt the labour allocation plan, is avoided by having [them] expire after a specified date, much as the banks refuse to honour personal cheques after a specified period in the current system.
[…]
Note that as the productivity of labour grows over time, and the labour content of specific goods falls, labour tokens will in effect become ‘worth more’: there is a form of implicit interest on labour-token savings. It is reasonable that people should be able to collect this ‘interest’ on their long-term savings, since their non-consumption makes possible an accelerated accumulation of means of production which in turn helps to bring about increased labour productivity, but there is no call for any additional payment.
Of course, given the problematic issues raised by geomagnetic storms and computer crime, the electronic systems associated with this directional measure should have as a backup a more manual currency system not unlike that behind the Kautsky-inspired Soviet ruble in its fourth, fifth, and sixth denominations (1924-1947, 1947-1961, and 1961-1991). Under these denominations, money was primarily a unit of accounting for the implementation of the Five-Year Plans (notwithstanding exchange values involved in the transition between one denomination and another, or cost accounting being oriented towards “socialist profit,” or lack of planned approvals for exchanges exercised between directors on behalf of their respective state enterprises). Unlike those denominations, this backup should not be able to generate interest other than the implicit “interest” associated with increased labour productivity and decreased labour content in specific products.
REFERENCES
Anti-Duhring by Frederick Engels [http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch26.htm]
Duhring's Socialitarian Model of Economic Communes by Alberto Chilosi [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=55155]
Giving up on some terms: Debating capitalism again, etc. [http://www.revleft.com/vb/giving-up-some-t129907/index.html]
How to abolish exploitation [http://www.revleft.com/vb/abolish-exploitation-t131948/index.html]
Towards a New Socialism by Paul Cockshott and Allin Cottrell [http://www.ecn.wfu.edu/~cottrell/socialism_book/new_socialism.pdf]
The Restoration of Capitalism in the Soviet Union by Bill Bland
[http://www.oneparty.co.uk/html/book/ussrchap2.html]
[http://www.oneparty.co.uk/html/book/ussrchap5.html]
[http://www.oneparty.co.uk/html/book/ussrchap6.html]
“In the first place, such a misuse of Owen's labour-notes would require their conversion into real money, while Herr Duhring presupposes real money, though attempting to prohibit it from functioning otherwise than as mere labour certificate. While in Owen's scheme there would have to be a real abuse, in Duhring's scheme the immanent nature of money, which is independent of human volition, would assert itself; the specific, correct use of money would assert itself in spite of the misuse which Herr Duhring tries to impose on it owing to his own ignorance of the nature of money.” (Frederick Engels)
In envisioning a society full of economic communes interacting with one another on a separate but labour-mobile basis, the anti-Semite Eugen Duhring provided the basis of various market-socialist models not influenced by Marx at all. They range from the self-management trusts of Oskar Lange to the industrial cooperatives and Israeli settlement cooperatives of Franz Oppenheimer to even the People’s Communes that were formed during China’s catastrophic Great Leap Forward. It is in this context that Duhring suggests a means of exchange other than modern money and the means of exchange prevailing under detailed societal management over its own collective labour-time.
When petty-commodity modes of production began, the predominant form of commodity trade was C-C’ or a barter trade, whereby a commodity trades directly for a different commodity. According to traditional economic accounts, the difficulty of having a double coincidence of wants between the buyer and seller was what led to the creation of money as a means of exchange and of specifically storing wealth in time preference for some future purchase. Thus, commodity trade expanded to include M-C and C-M, whereby commodities were bought with and sold for money, respectively. It was also expanded to include C-M-C’, whereby a commodity is sold for money, which in turn is used to buy another, different commodity with an equal or higher value. However, traditional economic accounts already fail to account the more insidious purpose of money: accumulation for its own sake. Already in petty-commodity modes of production there were instances of M-M’, or simply the lending of money at interest. Moreover, the very process that is money-capital was facilitated by the merchants: M-C-M’, or the purchase of a commodity with money for resale at a higher price. The bourgeois introduction of and power over generalized commodity production broadened the existing process of money-capital, now having at its disposal both labour markets and capital markets from which to purchase labour-power and means of production to create a new commodity for selling at a profit, thus M-C...P...-C'-M'.
The societal abolition of the commodity mode(s) of production towards a higher mode of production where there exists detailed societal management over its own collective labour-time, over all use values, and thus over the allocation of all productive and other non-possessive property necessarily involves the replacement of money-capital with a system of non-circulable (and necessarily electronic) labour credit. This dispenses with M-M’, C-M-C’, M-C-M’, and of course M-C...P...-C'-M’, while the broader and complete convergence between socially necessary labour and surplus labour eliminates exchange value (again, not to be confused with use values) and thus commodities altogether.
In the meantime, however, the lack of almost any sort of public management (that is, planning, organization, direction, and control) over M0, M1, M2, and the entire money supply generally is problematic, to say the least. While the monopolization of all central, commercial, and consumer credit in the hands of a single transnational bank under absolute public ownership or the lesser national-democratizations of finance and their extension into the general provision of credit go a long way towards establishing public management over the money supply, by themselves they do not address the problems of investment strikes (not investing as required by government plans towards maintaining or expanding production), asset stripping (the wholesale liquidation of business assets for a gain), short selling or derivatives trading, and more typical monetary capital flight.
While detailed societal management over its own collective labour-time involves the gradual institution of a societal planning apparatus that can allocate even intermediate products on an in-kind basis – something well beyond the abilities of a planning apparatus for a monetary economy, like Gosplan (All-Union State Planning Commission, later the State Planning Committee of the USSR) – more radical directional inroads can be made against money-capital. One such measure is the disabling of the circulation of money at every point where legitimate intermediate transactions (most notably those of intermediate products like raw materials and assets used in or arising from the production of the means of production) are not involved, such as the end-consumer point. This necessarily means replacing modern money with a purely electronic and personally identifiable currency. The very idea of cash is then left to criminals and black markets, and all the costs associated with counterfeiting prevention and even money laundering (circulation that conceals the identity, source, or destination of illegally obtained money, and which is related to capital flight in the common usage of tax havens and shell or dummy companies) can be diverted towards computer crime prevention and easier crackdowns on any form of black market currency. Furthermore, this measure prevents investment strikes and even monetary capital flight through short selling or derivatives trading (while asset stripping, without the ability of employees to elect the majority of at least the board of any company, could hypothetically still be done through illegal barter).
[Note: At this point, technical and financial assistance for localities seeking to establish local currency alternatives to government money would end except for those localities that would suffer from having to get rid of their currencies and adopt the new electronic currency.]
However, until there is a societal planning apparatus that can allocate even intermediate products on an in-kind basis, this currency in the sphere of legitimate intermediate transactions should be allowed to circulate by means of transfer. Consider this example, which contrasts the end consumer with transactions between public enterprises:
John Smith works at Public Enterprise A, which produces various kinds of machinery. Credits in the form of non-circulable (at least on his end), personally identifiable electronic currency are created for his work and credited to his account. According to Engels, this is where one Weitling replaces anonymous cash “by a ‘ledger’, in which the labour-hours worked are entered on one side and means of subsistence taken as compensation on the other.” After keeping the currency for a week, he then goes to Public Enterprise B to purchase consumer goods, thus redeeming his electronic currency. Whether these credits remain with Public Enterprise B or are eliminated, in the meanwhile that enterprise purchases new machinery from Public Enterprise A. While the form of purchase could be different, the substance remains the same; at a minimum, double-entry recordings and the related price calculations are made by both parties to account for this transaction. Both machinery and something else of value are exchanged between the two parties.
With this specific electronic currency, society can determine its other functions. Disabling this currency’s ability to generate interest (going beyond prohibitions on civil courts from enforcing the collection of the interest portion of debt payments, or severe criminal penalties being imposed on those who use threats of harm to extort interest, thus possibly making them redundant) would prevent any prospects of profitable gains through idle savings, and would go a long way towards turning it purely into a means of exchange. Tying this currency or an earlier, pre-transitional one like modern money to labour-hours or some other unit of labour-time, by means of a widely publicized labour-time-to-money ratio, would be an enormous step forward in exposing bourgeois and petit-bourgeois exploitation while addressing the anti-inflationary grievances against fiat currencies (under which, according to Chartalist views on money, government money is created only by persistent government deficit spending, and under which governments must spend first before collecting taxes) made by those with nevertheless bogus fetishes for gold and other physical commodities (hence the discarded gold standard). Making this currency expirable like cheques and money orders would prevent currency hoarding.
As for personal savings and credit, they will continue to exist even with less motivations, since time preferences for purchases are independent of time preferences for incomes. Paul Cockshott and Allin Cottrell suggested in Towards a New Socialism a couple of means to reconcile societal priorities with personal savings and credit within reasonable limits. Although they pertain to non-circulable labour credit, similar suggestions can be made for electronic currencies that circulate in the sphere of legitimate intermediate transactions:
1) Current labour tokens may be freely exchanged for some kind of retirement asset (e.g. one which pays out an annuity starting at a specified future date or contingency). Such transactions would be conducted through a unified state-run ‘financial system’ so that their aggregate volume can be monitored by the planning agency.
[…]
2) To permit a shorter-term flexibility, current labour tokens might also be exchangeable for consumer saving deposits, from which labour tokens may be withdrawn at a later date in order to purchase various consumer durables, vacations, etc.
[…]
3) Aside from the above recognised forms of saving, individuals are not able simply to hoard labour tokens. Hoarding, which would disrupt the labour allocation plan, is avoided by having [them] expire after a specified date, much as the banks refuse to honour personal cheques after a specified period in the current system.
[…]
Note that as the productivity of labour grows over time, and the labour content of specific goods falls, labour tokens will in effect become ‘worth more’: there is a form of implicit interest on labour-token savings. It is reasonable that people should be able to collect this ‘interest’ on their long-term savings, since their non-consumption makes possible an accelerated accumulation of means of production which in turn helps to bring about increased labour productivity, but there is no call for any additional payment.
Of course, given the problematic issues raised by geomagnetic storms and computer crime, the electronic systems associated with this directional measure should have as a backup a more manual currency system not unlike that behind the Kautsky-inspired Soviet ruble in its fourth, fifth, and sixth denominations (1924-1947, 1947-1961, and 1961-1991). Under these denominations, money was primarily a unit of accounting for the implementation of the Five-Year Plans (notwithstanding exchange values involved in the transition between one denomination and another, or cost accounting being oriented towards “socialist profit,” or lack of planned approvals for exchanges exercised between directors on behalf of their respective state enterprises). Unlike those denominations, this backup should not be able to generate interest other than the implicit “interest” associated with increased labour productivity and decreased labour content in specific products.
REFERENCES
Anti-Duhring by Frederick Engels [http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch26.htm]
Duhring's Socialitarian Model of Economic Communes by Alberto Chilosi [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=55155]
Giving up on some terms: Debating capitalism again, etc. [http://www.revleft.com/vb/giving-up-some-t129907/index.html]
How to abolish exploitation [http://www.revleft.com/vb/abolish-exploitation-t131948/index.html]
Towards a New Socialism by Paul Cockshott and Allin Cottrell [http://www.ecn.wfu.edu/~cottrell/socialism_book/new_socialism.pdf]
The Restoration of Capitalism in the Soviet Union by Bill Bland
[http://www.oneparty.co.uk/html/book/ussrchap2.html]
[http://www.oneparty.co.uk/html/book/ussrchap5.html]
[http://www.oneparty.co.uk/html/book/ussrchap6.html]