The Gold Standard

[HalPhilipWalker]

What are the arguments for and against returning back to the gold standard? I'd appreciate it if you can give a Marxist perspective, but I'll accept any thoughts people might have about it.

I wasn't sure which forum to put this into, but I wanted as wide a net as possible to discuss this.

[milkmiku]

One of the major tenets of Marxism is the abolishment of currency. So it is bad.

A finical system backed by a shiny metal stockpiled collectively by monolithic financial institutions. This cannot go wrong in any way.

[Brosa Luxemburg]

The gold standard will result in a fixed currency. If the federal reserve prints money it lowers the value of the dollar and results in inflation. The gold standard would make it so the fed can't just print money whenever. The problem arises when if the price of commodities change, because a fixed currency cannot adjust. If the prices change, the value of the currency could possibly change without a fixed currency.

Also, it should be kept in mind that gold, like paper money, is just a medium of circulation. They are both just the absolute and alienated value-form of all commodities. They really posses, outside this, no real use-value. It is just a social construct.

[Paul Cockshott]

the basic circuit of capital mcm' where m<m' requires growth in the money stock. Gold stocks grow <1% a year. The gold standard thus imposed constraints on capital expansion and could not be sustained.

[milkmiku]

no real use-value. It is just a social construct.


Actually gold is highly valuable for electronics, has uses in medicine, glass making, dentistry, aeronautics, astronautics, persion instruments, and many other thing in which gold is the best matriel for.

[Brosa Luxemburg]

Actually gold is highly valuable for electronics, has uses in medicine, glass making, dentistry, aeronautics, astronautics, persion instruments, and many other thing in which gold is the best matriel for.

Of course, what you just listed involves using labor power. Such input of labor power is what gives the gold it's value. Outside of that, no, besides looking nice and being rare, it has no value until labor gives it value.

[milkmiku]

Of course, what you just listed involves using labor power. Such input of labor power is what gives the gold it's value. Outside of that, no, besides looking nice and being rare, it has no value until labor gives it value.


I'm sorry, So are you saying nothing has value until it is used?

[Brosa Luxemburg]

I'm sorry, So are you saying nothing has value until it is used?

No, I was arguing the labor theory of value. (http://en.wikipedia.org/wiki/Labor_theory_of_value)

[Paul Cockshott]

the basic circuit of capital mcm' where m<m' requires growth in the money stock. Gold stocks grow <1% a year. The gold standard thus imposed constraints on capital expansion and could not be sustained.

[milkmiku]

No, I was arguing the labor theory of value. (http://en.wikipedia.org/wiki/Labor_theory_of_value)


I'm sorry I confused economic value with value of use. I though you were saying gold is useless.

[l'Enfermé]

I think the ironic thing with these American "end the fed!" right-wing libertarians(the ones who are also the ones that want to bring back the gold standard) is that they completely ignore the fact that the Fed is not some government institution, it's a collection of private banks. When they oppose it, they're not opposing "government tyranny" or "big government", they're opposing the private sector.

[ÑóẊîöʼn]

the basic circuit of capital mcm' where m<m' requires growth in the money stock. Gold stocks grow <1% a year. The gold standard thus imposed constraints on capital expansion and could not be sustained.

I don't think I'm understanding your notation. What do m and c stand for, and what is the operator between them?

[Positivist]

I think the ironic thing with these American "end the fed!" right-wing libertarians(the ones who are also the ones that want to bring back the gold standard) is that they completely ignore the fact that the Fed is not some government institution, it's a collection of private banks. When they oppose it, they're not opposing "government tyranny" or "big government", they're opposing the private sector.

Yes and there is a whole ensemble of other facts that libertarians neglect such as;

-Without government intervention in the capitalist economy, monopolization will occur (more frequently and drastically) and prices will rise immeasurably. Also this means there worshipped small businesses and competition are eliminated.

-A government is not the sole social organ which can coerce people.

-Without some minimum wage or price limit or something (which can only be enforced by a government) people will be unable to afford commodities, and consumption will stagnate.

Libertarianism isn't not only not a sound economic theory, it isn't even a sound capitalist economic theory.

[Tim Cornelis]

Y
-Without government intervention in the capitalist economy, monopolization will occur (more frequently and drastically) and prices will rise immeasurably. Also this means there worshipped small businesses and competition are eliminated.

Monopolies always arise out of government intervention. I can't think of any monopoly that was sustained without government intervention.

Moreover, big business enjoys quite some benefits from government intervention. As such, small business will benefit from a free market and not big businesses. (Of course assuming free markets are even a realistic option).

The rest of what you said is more accurate:


-A government is not the sole social organ which can coerce people.

They are right in stressing that the state is only organ that is able to monopolise physical coercion (the only kind of coercion they see due to context dropping).


-Without some minimum wage or price limit or something (which can only be enforced by a government) people will be unable to afford commodities, and consumption will stagnate.

But, but, in free markets everyone will receive according to his contribution to each factor of production, therefore minimum wages only increase consumption insofar they cause unemployment for others!

Unlike minimum wages, price ceilings are actually flawed as we can see in Venezuela.

[homegrown terror]

They are right in stressing that the state is only organ that is able to monopolise physical coercion (the only kind of coercion they see due to context dropping).
in a smaller group setting, organised crime groups (mafia, yakuza, triad etc) can very effectively monopolise physical coercion. once the state deems a neighborhood a "lost cause," such groups have free reign to enact their own version of slavish obedience, and who's to say which is worse, what with so many governments (especially at local levels) acting more and more like mob enforcers.

[Noa Rodman]

There are a lot of misconceptions of what a gold standard is. It does not mean the currency is "100% backed" by gold reserves and neither does it mean that gold coins are in circulation. Here's a short non-Marxist explanation:
http://goldnews.bullionvault.com/gold_standard_033120116
http://goldnews.bullionvault.com/gold_standard_currency_peg_supply_demand_050702008 2

Marx criticized Ricardo not for advocating a gold standard, but the way Ricardo wanted it implemented (based on the quantity theory).

Here's a passage (note 62) where Marx quotes Fullarton:
http://www.marxists.org/archive/marx/works/1867-c1/ch03.htm#a62

In fact a similar situation Germany faced after the first world war. Kautsky argued that contrary to the policy of desperately keeping Germany's gold (by someone like Hilferding, who actually in theory argued against Marx's theory of money; see the pre-war polemic with Kautsky), Germany should sell gold in order to be able to buy means of production, raw materials, etc. to kick start the economy, what purpose does having a reserve have if you don't use it in a desperate situation.

It's true that in communism money would be abolished, but in the transition period there would be still money (which e.g. even Zizek now argues using Ayn Rand's argument that otherwise you have relations based on direct violence, like in Cambodia; but no Ayn Rand is necessary to realize this).

When Kautsky argues for a gold standard, he openly says:

http://marxists.org/archive/kautsky/1924/labour/ch03_j.htm#sc

"If the institutions of price and money continue to exist under a socialist mode of production, and if socialist prices are grafted on to the historical form of price, it would also be necessary to adhere to the historical form of money, and to retain gold as the money commodity. Actual gold need not be used."

Imaginary gold, how ridiculous! Actually, he didn't lose his marbles; he just understood what a gold standard is or is not.

And Lenin argeed with this. NEP was possible because of the Chervonets.

That guy Nathan Lewis made in his book on gold a nice speculation which I want to share : "If Russia had followed Karl Marx's principles and maintened an indepently gold-linked ruble while the capitalist countries destroyed themselves with inflation, the outcome of the cold war may have been radically diffferent."

I think Preobrazhensky also pointed out that a gold standard need not entail actually gold circulation at home or 100% backing with reserves (citing from capital vol. 3).

[Dean]

I don't think I'm understanding your notation. What do m and c stand for, and what is the operator between them?

M=Money, C=Commodity, and the operation occurring is the exchange of money for a commodity, and then the exchange of that commodity for a greater amount of money.

Its the basic formulation of capitalism proposed in Marx's Capital.

[Dean]

Monopolies always arise out of government intervention. I can't think of any monopoly that was sustained without government intervention.

This is misleading. There isn't any business that isn't sustained by government intervention.

In an unfettered market, including the sale and purchase of regulatory functions previously held by the state alone, the same tools are given to the capitalist class, and the same consequences arise. What do you think cartels are? Moreover, the 1895-1910 consolidation movement by companies was not exclusively driven by state action. This was a model being followed universally, even in Europe, in the context of regions with wildly different regulatory structures. It was private enterprise that monopolized markets, the state only followed orders.

It was US big banks, for instance, that colluded to consolidate Germany's chemicals industry and create one massive conglomerate prior to WWII, IG Farben, the same conglomerate that produced German chemical weapons like Zyklon B and arguably were catalytic in Hitler's rise to power. "Farben was Hitler and Hitler was Farben." (source (http://www.revleft.com/vb/books.google.com/books?id=Q0amI9GmIe8C&printsec=frontcover&dq=Wall+Street+and+the+Rise+of+Hitler)) This is in teh context of the notoriously weak state, the so-called "Weimar Republic."

[RedMaterialist]

The "gold standard" is a "relation of production," a form of money used to circulate commodities, used as a store of value, etc. The dollar value of all the gold produced yearly in the world probably is something like $15-20 billion. The world GDP per year is about 40 trillion. The "forces of production" have long since outgrown the use of gold as money or as a standard of money. If the gold standard were brought back, the world economy would collapse in a week.

[Noa Rodman]

Except that no actual gold is required for a gold standard, redshift (see my previous post).

The disadvantage of inflation for workers, pensioners, etc. is a fact (e.g. see economist William Blake in his book on currency). But unfortunately the history of the workers' movement in the US has seen quite a lot of opponents of a gold standard (also e.g. Edward Kellogg and the Greenback party), based on mistaken beliefs.

I think that the position opposing a gold standard today because it supposedly might endanger the world economy, besides being based on crude misconceptions, fits quite well in the dominant ideology (both Friedman and Keynes) and is apologetic of US imperialism.

[Kotze]

I think that the position opposing a gold standard (...) is apologetic of US imperialism.:closedeyes: I think that your position in claiming that connection is apologetic of being full of shit.

[RedMaterialist]

Except that no actual gold is required for a gold standard, redshift (see my previous post).

and is apologetic of US imperialism.

No gold for the gold standard? Try telling that to the Rand Paul fanatics.

that's going to be my new user name: apologistforU.S.imperialism.

[Noa Rodman]

The problem is Rothbard and the Mises institute people don't understand the gold standard. Here's a link you can send to Rand Paul fanatics (even without relying on Marx): http://goldnews.bullionvault.com/gold_standard_033120116

Now as to apologist for US imperialism; the present system allows the US to export its debt and create instability of world trade, at least that's what someone like De Gaulle knew:

http://www.youtube.com/watch?v=i-g2iGskFPE

At a US congress hearing of economist Jacques Rueff ( http://archive.org/details/goldcentralbanks00unit ) he was accused that his position of a return to the gold standard would play into the hands of Soviet interests (the SU was the second exporter of gold)!

On the other hand I even heard someone say that the SU manipulated gold prices, and high gold prices are the cause of capitalist instability. (for your enjoyment, if you understand French, which you as apologist for American imperialism probably don't ;) , it's a video found here http://www.rts.ch/archives/tv/information/3465356-la-fievre-de-l-or.html ).

[#FF0000]

Except that no actual gold is required for a gold standard, redshift (see my previous post).

that is true but a fixed-rate exchange system is still an awful idea. The Euro's kind of a good example of this. the crisis in asia back in the 90s is another good example.

[Noa Rodman]

How is the Asia crisis an example of your claim? It sounds like something Bernanke said:

http://blogs.wsj.com/economics/2012/03/20/bernanke-chinas-dollar-peg-like-being-on-gold-standard/

“If the Fed lowers interest rates and stimulates the U.S. economy, that means also that essentially monetary policy becomes easier in China as well. Those low interest rates may not be appropriate for China,” Bernanke said. “China may experience inflation because it’s tied to U.S. monetary policy.”

So basically the claim here is that the present crisis and trade imbalance is caused by the Chinese "gold standard."


A nation — a young nation — so conceited about its “practice” and so frightfully dense theoretically as the Americans are, gets thoroughly rid of so deep-rooted a fixed idea only through its own sufferings. The plausible idea of imagining that there isn’t enough money in the world because one hasn’t any when one needs it — this childish idea common to the paper currency swindle à la Kellogg and to the silver swindle is most surely cured by experiment and bankruptcy, which may also take a course that is very favorable for us.

http://www.marxists.org/archive/marx/works/1893/letters/93_03_18.htm

I don't know how the Euro is related to the topic.

[#FF0000]

How is the Asia crisis an example of your claim?

I was talkin about this one, specifically.

https://en.wikipedia.org/wiki/1997_Asian_financial_crisis

[Dean]

The disadvantage of inflation for workers, pensioners, etc. is a fact (e.g. see economist William Blake in his book on currency). But unfortunately the history of the workers' movement in the US has seen quite a lot of opponents of a gold standard (also e.g. Edward Kellogg and the Greenback party), based on mistaken beliefs.

Approximating the real value of labor, and controlling the national accounting system, are only hindered by a gold standard or indeed any cross-national currency homogenization.

Moreover, inflation is not caused by an expansion of the money supply. Inflation is caused by the imbalance between employment and capital utilization and demand. When demand is high and supplies are unchanged, prices go up. Unemployment directly feeds into this by failing to expand supplies of consumer goods while demand expands.

[Noa Rodman]

If I understand it, in 1997 the Thai baht got in trouble because the dollar appreciated, so because of a floating currency system (which is not to say that anyway even if the baht could be kept fixed to the floating dollar, they would not have faced other problems eventually).

Dean, without going into the substance of your claim, do you happen to know how the economists adhering to quantity theory of money usually are called? Quantivians, quantityvists,.. it doesn't sound right.

[Dean]

If I understand it, in 1997 the Thai baht got in trouble because the dollar appreciated, so because of a floating currency system (which is not to say that anyway even if the baht could be kept fixed to the floating dollar, they would not have faced other problems eventually).

The crisis started as a consequence of overbearing foreign debt with their currency tied to the US Dollar. It's worth noting that these kind of currency failures are common; Japan enforced a similar regime in their colonies in Macau and much of the gold trade has been used in the furtherance of currency manipulation especially in the 19th century. Germany was subject to similar conditions when overbearing debt was levied after an expensive war that was entirely financed by borrowing.

One of the fundamental differences in the US current debt regime is that at least 70% of US debt is owed internally, in a capital-rich nation with plenty of room for expansion.

This is why Nixon got the US off of the gold standard, and this changed the TV's narrative to an anti-Nixon paradigm since the moneyed interests realigned against him for this.



Dean, without going into the substance of your claim, do you happen to know how the economists adhering to quantity theory of money usually are called? Quantivians, quantityvists,.. it doesn't sound right.

Monetarists. And they're wrong. Demand/Supply curves for commodities are more relevant. However notions like "The Law of demand" are not applicable as a law to economies of scarcity.

The trick, as you see, is that monetary value is tied to the value of assets. When the funds representing assets become small enough as a portion of fund, that is too much funds are represented as debts especially to other nations (a difference which devalues the equity potential on funds), the currency will lose stability. Changes in net value in society should be accounted for, so a static volume for currency like a gold standard is disingenuous, it will not be indexed at the proper value distribution throughout society.

[Rafiq]

Money commodity money doesn't make much sense to me. Or is it, with M < m, a better commodity is made each time? One that generates more cash?

[Le Socialiste]

Money commodity money doesn't make much sense to me. Or is it, with M < m, a better commodity is made each time? One that generates more cash?

Not necessarily. M-C-M', with M' representing the original investment (M) plus the extra value realized after sale, or "surplus value," is simply an expression of capital's "self-expanding value." As you're well aware, a commodity can only be produced if it contains use-value, which must correspond with its supposed profitability (value). Money-Commodity-Money simply reflects what Marx considered to be capital's "self-expanding value," with the original investment going into the commodity's production and eventual sale, producing (or yielding) extra/surplus value.

Unless you already knew this and I didn't answer your question at all, in which case - my apologies.

[RedMaterialist]

Money commodity money doesn't make much sense to me. Or is it, with M < m, a better commodity is made each time? One that generates more cash?

From Marx, Capital, Vol I, ch. 4:

M-C-M' : Money is exchanged for a commodity for more money than the original amount of money. Thus, a capitalist exchanges (buys) $100 for commodity X and then exchanges (sells) commodity X for $110. How is it possible for the extra $10 to appear in the transaction? The capitalist must find for sale on the market a commodity which creates its own value, which is worth, at the end of the transaction, more than it was going into the transaction.

The only commodity which has this particular quality is labor or labor power.

On the other hand, the process C-M-C is sort of the original form of barter. Farmer sells wheat for $ and then buys leather. There is no increase in the money in this series. The money is supplied by merchant capital or usury capital. Merchant capital is a way of making money by cheating; usury was made illegal thousands of years ago, still practiced however.

Industrial capital solves the problem of the merchant and the usurer: Money is exchanged for a commodity and more money results. However, the basic rule of commodity exchange must not be violated: all commodities, on average, must be exchanged at their true value.

The capitalist buys labor power for wages, M-C, then puts the labor power to work and then sells the result of the labor power for more money than he paid, M-C-M'. What is produced by the worker is worth moreat the time of production than what is paid to the worker as wages.

With apologies to Marx. But I think that is basically how it works.

[RedMaterialist]

Not necessarily. M-C-M', with M' representing the original investment (M) plus the extra value realized after sale, or "surplus value," is simply an expression of capital's "self-expanding value." As you're well aware, a commodity can only be produced if it contains use-value, which must correspond with its supposed profitability (value). Money-Commodity-Money simply reflects what Marx considered to be capital's "self-expanding value," with the original investment going into the commodity's production and eventual sale, producing (or yielding) extra/surplus value.

Unless you already knew this and I didn't answer your question at all, in which case - my apologies.

I would say it is labor's self creating value, for which the capitalist does not pay. In fact, I don't think Marx ever said that "capital" has a self-expanding value. At least I could not google it on the marxist.org site.

[Le Socialiste]

I would say it is labor's self creating value, for which the capitalist does not pay. In fact, I don't think Marx ever said that "capital" has a self-expanding value. At least I could not google it on the marxist.org site.

From Capital, Volume One, Ch. Four - The General Formula for Capital:


If now we take in turn each of the two different forms which self-expanding value successively assumes in the course of its life, we then arrive at these two propositions: Capital is money: Capital is commodities. [13] In truth, however, value is here the active factor in a process, in which, while constantly assuming the form in turn of money and commodities, it at the same time changes in magnitude, differentiates itself by throwing off surplus-value from itself; the original value, in other words, expands spontaneously. For the movement, in the course of which it adds surplus-value, is its own movement, its expansion, therefore, is automatic expansion.

To Rafiq, maybe this'll help as well (from the same volume and ch. of Capital as the above quote):


In simple circulation, C-M-C, the value of commodities attained at the most a form independent of their use-values, i.e., the form of money; but that same value now in the circulation M-C-M, or the circulation of capital, suddenly presents itself as an independent substance, endowed with a motion of its own, passing through a life-process of its own, in which money and commodities are mere forms which it assumes and casts off in turn. Nay, more: instead of simply representing the relations of commodities, it enters now, so to say, into private relations with itself. It differentiates itself as original value from itself as surplus-value; as the father differentiates himself from himself qua the son, yet both are one and of one age: for only by the surplus-value of £10 does the £100 originally advanced become capital, and so soon as this takes place, so soon as the son, and by the son, the father, is begotten, so soon does their difference vanish, and they again become one, £110.

Value therefore now becomes value in process, money in process, and, as such, capital. It comes out of circulation, enters into it again, preserves and multiplies itself within its circuit, comes back out of it with expanded bulk, and begins the same round ever afresh. [14] M-M', money which begets money, such is the description of Capital from the mouths of its first interpreters, the Mercantilists.

Buying in order to sell, or, more accurately, buying in order to sell dearer, M-C-M', appears certainly to be a form peculiar to one kind of capital alone, namely, merchants’ capital. But industrial capital too is money, that is changed into commodities, and by the sale of these commodities, is re-converted into more money. The events that take place outside the sphere of circulation, in the interval between the buying and selling, do not affect the form of this movement. Lastly, in the case of interest-bearing capital, the circulation M-C-M' appears abridged. We have its result without the intermediate stage, in the form M-M', “en style lapidaire” so to say, money that is worth more money, value that is greater than itself.

M-C-M' is therefore in reality the general formula of capital as it appears prima facie within the sphere of circulation.

[Paul Cockshott]

mcm' is why gold standard falters

[Hexen]

Sorry to bump this topic but I've recently left a comment (http://www.youtube.com/all_comments?v=7R2Atsh6hHA) on a youtube video on Good/Bad/Ugly explaining this will happen if we go back to the gold standard but someone responded....


Not really. Market will solve this with no problem. Gold, silver and platinum is the real deal. It's usable in many occasions. You see this at stock market as well; since 1990 the silver have risen 2000%. Is that random? not at all. Market doesn't trust people who want to dictate other. A free market would make the world a more living reality, instead of dead cold society we have to day where govt. have to "fix" everything. You, sir, have no clue.

Is there any response to this quote?

[Welshy]

Sorry to bump this topic but I've recently left a comment (http://www.youtube.com/all_comments?v=7R2Atsh6hHA) on a youtube video on Good/Bad/Ugly explaining this will happen if we go back to the gold standard but someone responded....



Is there any response to this quote?

Did they really say anything in the quote? Also isn't there the issue of hoarding a bunch of money if you expect it to just keep increasing in worth?

[Noa Rodman]

There is still no clarity on what a gold standard is (I say that from my own sense of lack of knowledge). That Nathan Lewis explains it well, e.g. in this short article Gold Standard Fallacies (http://www.newworldeconomics.com/archives/2007/081907.html)

(the whole list of articles is interesting: http://www.newworldeconomics.com/archives/ )

Also a Marxist blogger who with a correct understanding now and again writes on the gold standard is found @ http://critiqueofcrisistheory.wordpress.com/

[Dean]

There is still no clarity on what a gold standard is (I say that from my own sense of lack of knowledge). That Nathan Lewis explains it well, e.g. in this short article Gold Standard Fallacies (http://www.newworldeconomics.com/archives/2007/081907.html)

(the whole list of articles is interesting: http://www.newworldeconomics.com/archives/ )

Also a Marxist blogger who with a correct understanding now and again writes on the gold standard is found @ http://critiqueofcrisistheory.wordpress.com/

Thanks for the links, but they are lacking. Critique of Crisis seems like a narrowly orthodox Marxian blog, which means most of what he has to say, while not always disagreeable, is not new to me or many others here. But that's just my interpretation of the article you linked to; the history cited is good at least.

The other article is bad, though. Take this:
1) A gold standard does not inhibit government deficit financing. On the contrary, a gold standard makes it easier for a government to issue debt! Under an established gold standard, yields on government debt are typically in the neighborhood of 3.0% -- not just for a week, but for decades at a stretch. With such low financing costs, governments can issue lots of debt, if they want to. It is true that a gold standard prevents printing-press financing of government deficits. However, only the shoddiest government indulge in that, and if such a government was on a gold standard, it would soon leave it.

Gold expands in value for a number of reasons, but they are mostly related to the relative stability of the supply of gold in the face of an expanding global GDP, high liquidity in the gold market and its social role, namely, having a rich history of being the quintessential form of value in human society. The largest economy in the world has a massive consumer market with a lot of credit that is interested in investing in gold.

The most important reason for gold being a hindrance to currency issuance is that it ceases to become valuable compared to the dollar when it constitutes the dollar itself. Of course, the rate of currency standard diversification is inversely proportional to the effect of this last problem - but if gold must constitute only a fraction of currency value to make that currency elastic enough, it is not clear why we should advocate for a gold standard at all.

[Lynx]

A country could decide to issue a fixed amount of currency and then stop. This would be equivalent to a gold standard, and just as disastrous.

Would this work in a steady state economy?

[citizen of industry]

I would say it is labor's self creating value, for which the capitalist does not pay. In fact, I don't think Marx ever said that "capital" has a self-expanding value. At least I could not google it on the marxist.org site.

M-M' is the circuit of money capital. M-M-C(L/MP)...P...C'-M'-M'

Bank loans M(oney) to Producer. M-M. Producer exchanges money for commodities (means of production and labor power M-C(L/MP)). Surplus value is created in the production process and is congealed in the commodity (...P...C'). The commodity is exchanged for money, and the surplus value is realized (C'-M'). This surplus value is divided into "profits of enterprise" and interest. The interest goes back to the bank who loaned it out. (M'-M')

Abstract from the production and realization process and you'll see what the money capitalist sees: M-M'

M-(M-C-(L/MP)...P...C'-M'-)M', in other words, M-M'. Money is a self expanding value. Money creates money. You just loan it out and it comes back with more value, like magic. Cool beans. "We have its result without the intermediate stage, in the form M-M', “en style lapidaire” so to say, money that is worth more money, value that is greater than itself."

It's important because the producer receives "wages of supervision" and the profits go to holding companies, banks, investors, etc. Profits are "removed" from the production process and the creation of surplus value gets hidden away. Also the money capitalists can get out of any responsibility over working conditions, wages, etc., even though their capital sets it all in motion.

Links: http://www.marxists.org/archive/marx/works/1894-c3/ch21.htm (Capital Vol.III "Interest-Bearing Capital)
http://www.marxists.org/archive/marx/works/1885-c2/ch01.htm#4 (Capital Vol.II "The Circuit of Money Capital")

[Noa Rodman]

There's been some talk of including the "gold standard" in the program at the RNC. I don't actively advocate it, but do oppose those who lull workers into the belief that central bank issuance is good for them. It's not necessary to show that inflation eats away wages, but anyway here's an article in Forbes from all places:
Is Soft Money Good for the Working Class?
http://www.newworldeconomics.com/archives/2012/081612.html


The manifesto of the Petrograd soviet (1905) demanded wages be paid in gold, for the record;
http://www.marxists.org/history/ussr/government/1905/11/27.htm

[Alric]

I think the ironic thing with these American "end the fed!" right-wing libertarians(the ones who are also the ones that want to bring back the gold standard) is that they completely ignore the fact that the Fed is not some government institution, it's a collection of private banks. When they oppose it, they're not opposing "government tyranny" or "big government", they're opposing the private sector.

They're not opposing the private sector, because the Fed has a government-granted license to increase the supply of money substitutes unbacked by money in specie, which would be illegal in the absence of government monopoly interference in the supply of money and credit.


I think if communists want to argue about the virtues of government's control of the money supply, they'd be better off joining in on the actual issues.

[Paul Cockshott]

The case for the state to control the issue of money is
1. that it allows, given suitable political pressure, the rate of interest, and thus the revenue of the rentier class, to be pushed down.
2. that the use of commodity money, because it limits the circuit m-m' to the rate of expansion of the gold stock, creates more unemployment and worse conditions for the working class.

[Noa Rodman]

Paul, correct me if I'm wrong, but you seem to favor chartalism to Marx's theory of money and my question is first, do you believe Marx's theory of money is wrong, and second why?


On the "gold standard" there is a section about the 1925-31 restoration here:
http://libcom.org/library/credit-romanticism-golden-pincers-zachary-atlas

If you look at the first cartoon it depicts gold as the tower of Babel and some prophet-like figure representing world peace, raising his hands to the sky. It was clear that the abandonment of the gold standard is linked to war. In fact in 1931 when Japan invaded Manchuria it went off the "gold standard" and one can see this as the opening shot of the second world war.

@l'Enfermé, the Nazi theorist Gottfried Feder (which the link I gave also mentions), who supposedly convinced Hitler to join in, wrote a book proposing a tax-strike (or debt cancellation à la Proudhon) raving against Finance-bolshevism etc. but the notable thing is that he opposed the private sector control over central banks. As a good nationalist, and in this sense followed by Keynes, he wanted the sovereign state to control the issue of money and its "productive" investment. There was a recent article on Prisonplanet which argued on the same logic (against private control, meaning the Rothschilds).

[Paul Cockshott]

I never found Marx's critique of Ricardo,s theory of how the gold standard worked all that convincing. Also I now think Marx's view too historically tied too early modernEurope, as opposed to China or post 19th century world.