Money and value

[deke t lefel]

wonderful, although not too sure about this bit

The locus of "value" is in the matter/energy system. This is a physical system.

The locus of "money" is in the financial system. This is an abstract system.

money relies on the energy supply to the printing presses and computers and is still part of the physical system

if E=Mc^2 it may be of interest to note that money seems to become more detached from the physical system as the vast majority of it moves around at a velocity (literally) very close to the speed of light

 

[Backatcha Bandit]

Rats, moths and rust, Deke.

 

[love detective]

the quote that is attributed to Marx in that (pretty woeful) article is not something that Marx said (at least not to my knowledge)

when I first read it, I thought maybe it was just some odd translation, but re-reading it it became pretty clear that this doesn't sounds like the kind of language Marx would use, nor the type of thing that Marx would say (in terms of substance). I can't even work out what it's meant to be saying. weird.

 

[Backatcha Bandit]

The translation (Pye, 1929) is certainly not perfect.

In Gesell's original, the bit at the end where he has Crusoe saying "Then the cause of interest is to be sought in money? And Marx was mistaken?", it's Crusoe that then continues:

Even where he says: "The circuit M-C-M, buying in order to sell dearer, is seen most clearly in genuine merchants’ capital. But the movement takes place entirely within the sphere of circulation. Since, however, it is impossible, by circulation alone, to account for the conversion of money into capital, for the formation of surplus-value, it would appear, that merchants’ capital is an impossibility, so long as equivalents are exchanged; that, therefore, it can only have its origin in the two-fold advantage gained, over both the selling and the buying producers, by the merchant who parasitically shoves himself in between them. ** If the transformation of merchants’ money into capital is to be explained otherwise than by the producers being simply cheated, a long series of intermediate steps would be necessary (Marx, Capital, 6th Edition, Volume I, p. 127)"???

Friday/The Stranger then replies:

Of course Marx was mistaken, and as he was mistaken about money, the nervous system of economic life, he was mistaken about everything. He and his disciples excluded money from the scope of their enquiry

The 'shining metal disks' jibe and the 'Gold and Silver' quote (probably from 'A Contribution to the Critique of Political Economy') Pye tacked on instead of the above quote from Marx.

It's a shame, really, as the piece loses a touch of it's original humour - the joke being that it's Crusoe who keeps quoting Marx; e.g. the pause between the previous long-winded (Capital I.VI) quote and Friday's dead-pan question: "How long have you been on this island?"

**Gesell himself snips Marx's Benjamin Franklin quote: “war is robbery, commerce is generally cheating.” - (which is itself a misquote).

I trust that clears up any niggling questions you had regarding the Marx quotes, leaving you clear to consider the actual idea that Gesell is trying to get across.

As Falcon put it so well:

The locus of "value" is in the matter/energy system. This is a physical system.

The locus of "money" is in the financial system. This is an abstract system.

The 'value' is real, tangible and subject to rats, moths and rust.

The 'Money' is ethereal, abstract, a sign that exists within the realm of ideas, of information, therefore beyond the temporal and spacial.

Hence; 'Money' today representing multiple claims to a single 'asset' in the form of future industrial production that will never take place. No bacon? DAMN YOU, FALCON!

 

[love detective]

poor translations aside - the assertion that:-

He [Marx] and his disciples excluded money from the scope of their enquiry

is absurd

the fact that Marx largely incorporated & embedded his analysis of money into his wider framework of value (which by the way may be 'real' and objective, but it's not tangible - you can't blow up a social relation) and didn't treat it as a separate detached topic, seems to make people who have not read him able to come out with absurdities like this. Anyone who has struggled through the three volumes of capital will be very much aware as to the embedded & natural incorporation of money (and credit, interest, banking system, etc.) into the scope of Marx's enquiry

It's a shame, really, as the piece loses a touch of it's original humour

it was quite funny to be fair, even reading it from the original article you linked to (even if it's wrong, it can still be funny)

leaving you clear to consider the actual idea that Gesell is trying to get across

even taking the other (real) marx quote that you mentioned above, his analysis (and therefore his criticism of marx) is all over the place - mixing up theories of money, labour power, interest, use-values, exchange values, merchants capital and surplus value and using them all interchangeably without really getting the grasp of any of them.For example, he introduces a topic and then uses a quote from Marx about a completely different topic to then say Marx was wrong about another completely different thing, it's absurd and lazy hackery.

I believe i criticised Gessel earlier for thinking that a little bit of tinkering with something (money) which is a manifestation of the deeper issue (capitalist social relations) would solve all the worlds problems, and he's doing it again in the article that you linked to, tinkering with (interest) as though that would solve the contradictions of the deeper issue (value production & related social relations)

I can see the appeal of Gessel to those who think they can just wrench money apart from the system that it is a manifestation of - and then base all analysis & 'solutions' at that surface level layer - this thread is pretty much full of that kind of thing happening ('quick wins' in terms of analysis and solutions), and i've argued until i'm blue in the face as to the short sightedness of that approach, so not really much more to add on that

 

[Backatcha Bandit]

..a little bit of tinkering...

..tinkering with (interest)...

..surface level layer...

What could be more fundamental that examining the fundamental nature of 'money'?

It's his perceived absence (in Marx) of consideration of that 'fundamental' level which forms the basis of Gesell's criticism.

I think the problem here is that this sits outside of the 'framework' within which you're working.

 

[love detective]

do you agree with gesell that marx excluded money from the scope of his enquiry?

anyone who is familiar with marx's analysis/work in this area couldn't possibly entertain the charges that gessel lays out here - marx derives money (both logically and historically) from the most fundamental of bases

this conversation is absurd

 

[Blagsta]

What could be more fundamental that examining the fundamental nature of 'money'?

It's his perceived absence (in Marx) of consideration of that 'fundamental' level which forms the basis of Gesell's criticism.

I think the problem here is that this sits outside of the 'framework' within which you're working.

Yes, this is what Marx does.

 

[frogwoman]

Apparently the only real money is gold and the rest is fraudulent.

 

[Backatcha Bandit]

@ LD: I'm wondering if it's possible to get you to utilise a different framework from which to view the question (I'm assuming, of course, that you can accept the possibility that there even is an alternative framework to the one you are currently working with - we can argue later about which might be more more relevant / appropriate).

Perhaps somebody else can suggest a better one, but in the interests of keeping it accessible, I invite you to take a look at Donella Meadows work on 'leverage points' - points of intervention within a complex system.

Whereabouts on that scale would you place Gesell's idea regarding bringing 'money' back within the temporal realm?

 

[love detective]

if you'd read my last few posts you would see my particular criticism here is Gessel's fundamental misunderstanding of Marx's framework/project - so you're asking me to use a different framework to the one he was trying to critique/understand and then to base my evaulation as to whether he has any kind of handle on that framework on a completely different framework - yeah that might work

the point here is not even saying that Marx is correct (or the only framework to use), but pointing out that the criticisms made by Gessel about Marx portray a complete and utter confusion of Marx's work in the first place

 

[Backatcha Bandit]

Apparently the only real money is gold and the rest is fraudulent.

'Money' differs from 'Gold' in that 'Gold' is obviously in the physical - and as such is subject to physical effects, such as being heavy, getting stolen, requiring energy and effort to store, etc.

The 'money', extratemporal, information, idea, suffers none of this.

 

[frogwoman]

yeah, I don't actually believe that, lol.

 

[TruXta]

Calling money, or capital for that matter, extra-temporal, a mere abstraction, well, that's me disagreeing already there. Just like value, money is material. Even if it's "just" information it is instantiated, stored, manipulated and perceived in terms of concrete social behaviours that are reproduced daily by billions of people all over the globe.

 

[Backatcha Bandit]

you're asking me to use a different framework to the one he was trying to critique/understand and then to base my evaulation as to whether he has any kind of handle on that framework on a completely different framework

Yes, it was a daft assumption to make on my part.

If you can't face the fact that an alternative framework exists, you're not going to have much fun trying to examine things using a different one.

I'm not particularly interested in your opinion of Gesell's opinion of Marx's opinion. I was hoping for your opinion on Gesell's idea regarding what he saw as a fundamental flaw in 'money'.

 

[Backatcha Bandit]

yeah, I don't actually believe that, lol.

I know, jus' sayin'.

Are you channelling Max Keiser?

 

[Backatcha Bandit]

Calling money, or capital for that matter, extra-temporal, a mere abstraction, well, that's me disagreeing already there. Just like value, money is material. Even if it's "just" information it is instantiated, stored, manipulated and perceived in terms of concrete social behaviours that are reproduced daily by billions of people all over the globe.

No one's suggesting that the magic doesn't work, TruXta.

 

[love detective]

Yes, it was a daft assumption to make on my part.

If you can't face the fact that an alternative framework exists, you're not going to have much fun trying to examine things using a different one.

I'm not particularly interested in your opinion of Gesell's opinion of Marx's opinion. I was hoping for your opinion on Gesell's idea regarding what he saw as a fundamental flaw in 'money'.

Re your first two sentences - do you ever read anyone else's posts here other than your own?

Re the third & fourth - the former sentence is part & parcel of making any kind of assessment on the question posed in the later. Approaching the question from the point of view of a 'flaw in money' is the kind of surface level, superficial, non foundational/fundamental, vulgar analysis I was referring to earlier

The 'flaw' is not with money in and off itself, the 'flaw' is with the underlying social relations that give rise to the crystalisation of our current monetary system. Money is a manifestation of a particular essence, so any analysis which concentrates on 'flaws' at the level of that manifestation (at the expense of analysis of the essence) only will never get anywhere useful in telling us how our society works

 

[Falcon]

Apparently the only real money is gold and the rest is fraudulent.

You'd think so. But you end up constraining your economy on the basis of how much gold there is, rather than how much economy there is. And you end up with the value of your economy going up and down depending on how much people fancy gold, rather than the other way round.

Renewable energy generating capacity - now that's a tasty physical asset for backing currency ...

 

[Backatcha Bandit]

The 'flaw' is not with money in and off itself, the 'flaw' is with the underlying social relations that give rise to the crystalisation of our current monetary system. Money is a manifestation of a particular essence...

Nope.

It's the qualitative, metaphysical difference between the 'money' and the 'stuff' that enables such social relations to exist. Makes them inevitable.

Regardless of politics or intent, extratemporal 'money' provides a powerful systemic driver towards unequal distribution.

Gesell says that 'The cause of interest lies in money' because even with 0% interest (NO interest), the extratemporal nature of it has the same effect as having interest: That is, you can hoard (or artificially withhold from circulation) 'money' and benefit from the act of doing so.

As soon as you have 'interest', whether explicit or invisibly contained within the fundamental nature of the medium of exchange, the system can do nothing other than concentrate wealth.

Failure to recognise this key point is what leads to 'surface level, superficial, non foundational/fundamental, vulgar analysis', in my opinion.

Keynes puts it like this:

[Gesell] points out that the rate of interest is a purely monetary phenomenon and that the peculiarity of money, from which flows the significance of the money rate of interest, lies in the fact that its ownership as a means of storing wealth involves the holder in negligible carrying charges, and that forms of wealth, such as stocks of commodities which do involve carrying charges, in fact yield a return because of the standard set by money.

I'm sure there's no need to remind you of his opinions regarding Gesell and Marx.

 

[love detective]

As soon as you have 'interest', whether explicit or invisibly contained within the fundamental nature of the medium of exchange, the system can do nothing other than concentrate wealth.

concentration of wealth (or more correctly value) is not fundamentally due to the existence of 'interest' or some flaw in the monetary system alone, which if fixed (as gessell seems to think) would herald a different and more progressive mode of organising society.

Interest is but one of the forms that surplus value takes when it comes to its distribution after production & appropriation of that surplus value - the existence or otherwise of interest says nothing about the fundamental ability of capital to extract value from labour in the first place - and the existence of this, not interest, means that the system can do nothing other than concentrate wealth (more correctly value)

and you harp on at me for being wedded to a one framework approach

 

[Backatcha Bandit]

Interest is but one of the forms that surplus value takes when it comes to its distribution after production & appropriation of that surplus value - the existence or otherwise of interest says nothing about the fundamental ability of capital to extract value from labour in the first place - and the existence of this, not interest, means that the system can do nothing other than concentrate wealth (more correctly value)

It says something about the fundamental ability of capital to exist.

Absent the extratemporal nature of the medium of exchange, accumulation to the point where it can exploit is simply not possible.

At the moment value is abstracted into 'money', it is removed from the temporal plane. Gesell suggests a method for 'tying it down' to reality.

I'm not convinced that you even understand the problem with extratemporal currency, or that you even recognise it as such.

You appear to be as aware of the metaphysical nature of 'money' as a fish might be of the nature of the water in which is swims.

 

[love detective]

It says something about the fundamental ability of capital to exist.

It does no such thing actually

The fundamental ability of capital to exist is its ability to extract surplus value from labour. Without this there would be no capital as we know it, regardless as to whether money is lent at interest or not. You'll note that although capitalism has only existed for a few hundred years, lending at interest has been around for thousands of years prior to capital & capitalism's existence. So to say the existence of interest says something about the fundamental ability of capital to exist, not only portrays a logical confusion of the matter you're trying to understand but also a historical & empirical confusion as to the way its actually developed

The surface level forms that surplus value takes (i.e. profit, interest or rent) when it comes to its actual distribution amongst different types of capital is important but it's not the fundamental basis of surplus value's (and hence capital's) existence in the first place. In fact this distinction is something that Marx considered one of the most important things in Capital (the book):-

The best points in my book are: 1) the two-fold character of labor, according to whether it is expressed in use-value or exchange value. (All understanding of the facts depend upon this.) It is emphasized immediately in the first chapter; 2) the treatment of surplus value independently of its particular forms as profit, interest, ground rent, etc

The rest of your post doesn't warrant a response

 

[Random]

Absent the extratemporal nature of the medium of exchange, accumulation to the point where it can exploit is simply not possible.

Are you saying that capitalism using barter would not be exploitative?

 

[love detective]

these 'money first' people don't seem to grasp that our current monetary system is largely an effect, not the cause, of the underlying exploitative social relations of capitalism

you could have all the money in the world, but if you can't go out and buy labour with that money, it's not going to make you a capitalist, no matter how much you have of it. In other words, capital as we know it would not exist. If wage-labour doesn't exist, surplus value doesn't exist, if surplus value doesn't exist, capital doesn't exist. this is the fundamental ability of capital to exist, to grow, to valorise itself.

this 'money first' approach is similar to the idea that you could negate/abolish the catholic church by formally getting rid of the pope but changing nothing else - it mixes up essence & appearance, substance & form

Marx (sorry BB) actually makes the point somewhere in Volume 2, that although money is an obvious requirement for value to circulate and pass its way through the circuits of capital, that the most ideal situation from a point of view of the production of value (i.e. exploitation of labour) is the case where a capitalists's commodity product is sold not for money, but for the productive capital inputs that are required to re-start the production process. As this minimises the amount of time value spends in the sphere circulation (i.e. the money capital and commodity capital forms) and maximises the amount of time value spends in the productive sphere (i.e. in the production of value, through exploitation of labour)

fairly straightforward logic really in that although capital clearly needs to fully traverse the circuit from money to productive capital to commodity capital and then back to money again, value itself is only produced within the production stage, so the ideal situation is for the time that value is spent in the money and commodity form's should be minimised, hence efficiencies in transport/communication/circulation etc.. are key to an efficient traverse of the circuit and to allow value to 'work harder' and spend less time in the forms that does not allow it to directly valorise itself

So taken to logical conclusion an ideal type capitalism (from a maximisation of exploitation perspective) would skip the stages of commodity capital being turned into money and that money then being turned back into productive capital and instead the commodities coming out of the production phase would be converted immediately back into the productive capital inputs of means of production and labour - he wasn't suggesting that this would ever be possible practically but from an ideal perspective this would be the most efficient (if an efficient way of doing it could ever be found).

 

[deke t lefel]

'Money' differs from 'Gold' in that 'Gold' is obviously in the physical - and as such is subject to physical effects, such as being heavy, getting stolen, requiring energy and effort to store, etc.

The 'money', extratemporal, information, idea, suffers none of this.

however, money is not just a pure idea, most money is stored on computers which are in the physical and require energy to run

it could be argued that all tools are just ideas, as without the knowledge of how to use them, they have no use

 

[deke t lefel]

You'd think so. But you end up constraining your economy on the basis of how much gold there is, rather than how much economy there is. And you end up with the value of your economy going up and down depending on how much people fancy gold, rather than the other way round.

Renewable energy generating capacity - now that's a tasty physical asset for backing currency ...

or constraining the amount of war that can be waged.... Nixon Shock and all that

 

[deke t lefel]

these 'money first' people don't seem to grasp that our current monetary system is largely an effect, not the cause, of the underlying exploitative social relations of capitalism

you could have all the money in the world, but if you can't go out and buy labour with that money, it's not going to make you a capitalist, no matter how much you have of it. In other words, capital as we know it would not exist. If wage-labour doesn't exist, surplus value doesn't exist, if surplus value doesn't exist, capital doesn't exist. this is the fundamental ability of capital to exist, to grow, to valorise itself.

this 'money first' approach is similar to the idea that you could negate/abolish the catholic church by formally getting rid of the pope but changing nothing else - it mixes up essence & appearance, substance & form

Marx (sorry BB) actually makes the point somewhere in Volume 2, that although money is an obvious requirement for value to circulate and pass its way through the circuits of capital, that the most ideal situation from a point of view of the production of value (i.e. exploitation of labour) is the case where a capitalists's commodity product is sold not for money, but for the productive capital inputs that are required to re-start the production process. As this minimises the amount of time value spends in the sphere circulation (i.e. the money capital and commodity capital forms) and maximises the amount of time value spends in the productive sphere (i.e. in the production of value, through exploitation of labour)

fairly straightforward logic really in that although capital clearly needs to fully traverse the circuit from money to productive capital to commodity capital and then back to money again, value itself is only produced within the production stage, so the ideal situation is for the time that value is spent in the money and commodity form's should be minimised, hence efficiencies in transport/communication/circulation etc.. are key to an efficient traverse of the circuit and to allow value to 'work harder' and spend less time in the forms that does not allow it to directly valorise itself

So taken to logical conclusion an ideal type capitalism (from a maximisation of exploitation perspective) would skip the stages of commodity capital being turned into money and that money then being turned back into productive capital and instead the commodities coming out of the production phase would be converted immediately back into the productive capital inputs of means of production and labour - he wasn't suggesting that this would ever be possible practically but from an ideal perspective this would be the most efficient (if an efficient way of doing it could ever be found).

very well explained, thanks

 

[littlebabyjesus]

however, money is not just a pure idea, most money is stored on computers which are in the physical and require energy to run

it could be argued that all tools are just ideas, as without the knowledge of how to use them, they have no use

Are you really convinced by your own argument there?

 

[TruXta]

Are you really convinced by your own argument there?

Total self-contradiction going on there.