Labour "gold standard"?

[Die Neue Zeit]

Not much discussion has arisen on tying existing currencies to labour hours as a stop-gap measure. The Austrians advocate the "gold standard" ostensibly out of anti-inflationary concerns, but what about labour hours in an economy instead of gold?

[The Idler]

Daniel DeLeon discussed it a lot but you probably already know that. There is a good comparison between De Leonism labour hours here (http://www.deleonism.org/v2.htm).

[Demogorgon]

I don't necessarily think it is a particularly good idea. People spend a lot of time thinking about how to replace the current monetary system and consider tying it to labour to be a start, but I think that is a bit old fashioned. The idea of tying currency to something is out of date. Plus tying to labour carries all sorts of problems to do with the practicality of how long you can keep your credits before spending them, can they be transferred and so on, not impassable, but a problem that it would be best to avoid. I don't intend to get into that here though.

My counter-proposal is that as capitalism comes apart all financial institutions come under public control and so forth. With that happening we eliminate all private banking and the current system of fractional reserve fiat banking based on private sector lending is as dead as the gold standard and can be replaced naturally rather than attempting to hammer the new system out to replace a new design. That is to say the issue of all credit becomes a public and democratic matter decided on the basis of how much new credit is needed at a given time. Monetary policy makers also make that decision today, but do so based on elitist interests and primarily be influencing private sector lending. With all of that gone, we can simply decide how much we need and issue it without it causing debt or empowering financial institutions.

[ZeroNowhere]

Daniel DeLeon discussed it a lot but you probably already know that. There is a good comparison between De Leonism labour hours here (http://www.deleonism.org/v2.htm).Daniel De Leon discussed labour credits in socialism, which is a completely separate issue. What DNZ seems to be discussing here is something which wasn't discussed by De Leon, but was discussed by Marx in the Grundrisse, in a discussion which generally revolved around the fact that it was a fairly silly and inconsequential idea.

[Die Neue Zeit]

^^^ I'm not talking about Proudhon's "labour money" scheme at all.


Daniel DeLeon discussed it a lot but you probably already know that. There is a good comparison between De Leonism labour hours here (http://www.deleonism.org/v2.htm).

I wasn't referring to labour vouchers or credits at all, either:

http://eprints.gla.ac.uk/25751/1/25751.pdf


Indeed, our proposals to replace money with labour vouchers are tantamount to a long term policy of declining prices.

Given an objective to establish a socialist economy based on the equivalent payment of labour, monetary reform is a step towards this goal. We suggest that the ECB be placed under a legal obligation to maintain a stable value of the currency in terms of labour.

[...]

The aim would be to fix the value of the Euro in terms of the average number of hours of embodied labour that an hour of labour will purchase. There exist well established techniques using national input output tables by which the equivalence of money to labour time can be calculated. Our colleague Stahmer explains these. If in 2009 an hour was worth roughly 30 Euros and the VPC wanted to stabilise this, they would have to adjust the issue of Euros up or down to ensure that the exchange of embodied labour against Euros remained constant.

[...]

The reasons for the goal are:
1. As labour productivity rises, a Euro fixed in terms of hours of labour will be able to buy more each year, cheapening the cost of living.
2. Once the value of the Euro has been stabilised in terms of labour value the labour value of Euro notes should be printed on them in hours and minutes. This step would be an act of revolutionary pedagogy. It would reveal clearly to employees just how the existing system cheats them. Suppose a worker puts in a working week of 45 hours and gets back Euros and sees that the hours printed on them amount to only 20 hours, then she will become aware that she is being cheated out of 25 hours each week. This will act to raise socialist consciousness, and create favourable public opinion for other socialist measures.
3. As a final stage the Euro would be renamed and redefined in terms of work time, and would cease to be a transferable physical currency. People
would have electronic credits measured in, say, European Standard Hours, which would be redeemable against goods containing the same number of hours of work, but which could not be used for private speculative transactions.

My more academic question, which hasn't been answered in previous attempts, either, is how to reconcile this with the Chartalist theory of fiat money and its relationship to the credit system.

[MarxSchmarx]

My more academic question, which hasn't been answered in previous attempts, either, is how to reconcile this with the Chartalist theory of fiat money and its relationship to the credit system.

Would you be able to flush out the supposed discrepancy? I ask because I don't know anything at all about this and am genuinely curious - also, I think if you can spell out the crux of the debate noobs like myself can at least try to offer some kind of concrete answer - for what that's worth, but sometimes it helps to have someone who is completely unfamiliar with the issue at hand.

[Die Neue Zeit]

The Chartalist theory of money says:

http://en.wikipedia.org/wiki/Chartalism


* Private household budgets and national government budgets are not analogous – households must finance their spending prior to the fact. Private individuals or associations may not spend money they do not have, and must either earn it or borrow it before spending. Governments must spend first by crediting private bank accounts before it can subsequently collect taxes through debiting private bank accounts.
* Indeed, if all government spending were collected in taxes (balanced budgets, no national debt), there would be no money for private savings. Money created by private banks nets to zero; the asset of the bank created by a loan is offset by the liability of the bank debtor.
* Therefore, Government spending is the source of funds for net private savings. If net private savings are desired, the Government sector must run a deficit.
* Government spending is not revenue-constrained.
* Governments do not "spend taxpayers' funds" – taxation lowers private spending power, but does not provide additional public spending power. Governments can spend fiat money by printing it, without needing to finance it.
* Decreases in national debt yield a decrease in private sector savings, and thus an increase in leverage of the private sector, which can yield a credit bubble.

In essence, unlike Bastard Keynesians, Chartalists say that deficit spending is necessary even in the good times.

I guess my "academic" question is, with perpetual deficit spending, won't that always depreciate the value of labour hours and minutes published on Euro notes?

[Kotze]

Suppose there is a country with its own currency system where the minimum age for hired labour is 10. One day it is lifted to 12. From one day to the other, it got illegal to employ a ten-year old. The currency wasn't removed from the pockets and the wallets and from the safes and elsewhere, it wasn't replaced with new bills and coins in a different look with text on them telling you that from now on employees have to be at least 12, no vending machines has to be retrofitted. Yet, what employers in that country can now do with that currency is more limited compared to what they were allowed to do the day before.

The system that allowed individuals to buy other people was different from the system that merely allows individuals to rent others, similarities in the look of coins from both eras notwithstanding. The next change will apparantly be a bit too subtle for those who claim that labour vouchers are just money, which probably has to do with the fact that the features that today's money has over labour vouchers are only available to the minority that has enough of it.

If laws are introduced and enforced that set limits to minimum and maximum income and inheritance, that democratize banking, that make the concentration of hiring-and-firing and other decisions regarding rewards and punishments in the hands of a certain few illegal — then based on how strict these restrictions and their enforcement are this does turn currency into labour vouchers or something in between.

One argument in favour of flipping to a payment system that also looks different and is named labour-time units or something similar is that it would heighten awareness of income inequality, which would help the radical left given that people underestimate how unequal the income distribution is and show a preference for a more egalitarian distribution (http://www.rawstory.com/rs/2010/09/poll-wealth-distribution-similar-sweden/).
I guess my "academic" question is, with perpetual deficit spending, won't that always depreciate the value of labour hours and minutes published on Euro notes?Deficit spending doesn't imply inflation, you also have to know about demographic changes, changes in available resources, changes in technology, changes in saving behaviour, changes in the trade balance. Stable value in embodied labour hours is also very different from what people normally consider stable value when they talk about a payment system. A given amount of non-expiring vouchers for the same amount of embodied labour time would have given you more/better stuff in the year 1990 than in 1980 and more/better stuff in 1980 than in 1970 and more/better stuff in 1970 than in 1960.

[sanpal]

Not much discussion has arisen on tying existing currencies to labour hours as a stop-gap measure. The Austrians advocate the "gold standard" ostensibly out of anti-inflationary concerns, but what about labour hours in an economy instead of gold?

Currency as I understand is used in market economy no matter has it the "gold standard" or not. The only tie the currency with labour hours can be through "socially necessary labour time" but it is not economically for calculation and distribution because after end of commodity circleit is too late for practical application. Socially necessary labour time can be calculated after plural selling-buying acts and after the expiration of substantial period of time. Market spontaneous fluctuations will disturb exact balance every time. The only solution is in a non-market (the communist mode of production) economy.

Your strange currency as .."stop-gap measure" isn't necessary if to apply a scheme of parallel economies I mentioned in other threads i.e. 1) sector of economy using market economy + 2) sector of communist economy where the labour time note's would be taken.



Daniel DeLeon discussed it a lot but you probably already know that. There is a good comparison between De Leonism labour hours here. (The FREE ACCESS proposal ; The LABOR TIME VOUCHERS proposal )


haha the second and the first phases of communism reject each other. Anecdote.

[Die Neue Zeit]

Comrade, this stop-gap currency is very different from the one I wrote about in the commentary titled "Transformative Critique: Direction on Money and Revisiting Eugen Duhring." Elements of the former could be incorporated into the latter, though, since the latter is a broader discussion on what money is all about.