Home > political-economy > The Trouble with Marxism (Part Four): Moseley, Marx, Money and Symbols

The Trouble with Marxism (Part Four): Moseley, Marx, Money and Symbols

This section of my critical analysis of Fred Moseley’s “THE ‘MONETARY EXPRESSION OF LABOR’ IN THE CASE OF NON-COMMODITY MONEY” is presented after the generous input of Kirsten Tynan (twitter: @KirsteninMT), who gave up her time to help me decipher the silly equations Moseley uses to illustrate his argument. I take back what I said about the relation between math, autism and mental illness. In fact, @KirsteninMT took time from pressing personal concerns to give me her valuable input — and I want to acknowledge that.

In this section of my critical analysis of Fred Moseley’s MELT theory, my objective will be to get at the argument, behind MELT, that non-commodity money alone can serve as money. Once I have done this, I will be able to show that the confusion of price with exchange value prevent Marxism from making a materialist analysis of the role of the fascist state in the economy, capitalist overaccumulation, and to underestimate the possibility for realization of communist society.

Moseley argues:

It is clear that money as means of circulation does not have to be a commodity in Marx’s theory, as Marx himself emphasized. The only question is whether money must be a commodity in Marx’s theory in its function as measure of value.

However, Marx in his 1859 work, “A Contribution to the Critique of Political Economy”, writes:

In the first place, a commodity in which the functions of standard of value and medium of circulation are united accordingly becomes money, or the unity of standard of value and medium of circulation is money. But as such a unity gold in its turn possesses an independent existence which is distinct from these two functions. As the standard of value gold is merely nominal money and nominal gold; purely as a medium of circulation it is symbolic money and symbolic gold, but in its simple metallic corporeality gold is money or money is real gold.

Let us for a moment consider the commodity gold, that is money, in a state of rest and its relations with other commodities. All prices of commodities signify definite amounts of gold; they are thus merely notional gold or notional money, i.e., symbols of gold, just as, on the other hand, money considered as a token of value appeared to be merely a symbol of the prices of commodities. Since all commodities are therefore merely notional money, money is the only real commodity. Gold is the material aspect of abstract wealth in contradistinction to commodities which only represent the independent form of exchange-value, of universal social labour and of abstract wealth. So far as use-value is concerned, each commodity represents only one element of physical wealth, only one separate facet of wealth, through its relation to a particular need. But money satisfies any need since it can be immediately turned into the object of any need. Its own use-value is realised in the endless series of use-values which constitute its equivalents. All the physical wealth evolved in the world of commodities is contained in a latent state in this solid piece of metal. Thus whereas the prices of commodities represent gold, the universal equivalent or abstract wealth, the use-value of gold represents the use-values of all commodities. Gold is, therefore, the material symbol of physical wealth. It is the “epitome of all things” (Boisguillebert), the compendium of social wealth. As regards its form, it is the direct incarnation of universal labour, and as regards its content the quintessence of all concrete labour. It is universal wealth in an individual form. Functioning as a medium of circulation, gold suffered all manner of injuries, it was clipped and even reduced to a purely symbolical scrap of paper. Its golden splendour is restored when it serves as money.

Marx clearly makes a distinction between money, the material of gold or silver, and money’s purely symbolic functions as measure of value and medium of circulation. The prices of commodities are merely notional gold or notional money. Functioning as a medium of circulation, gold is reduced to a purely symbolical scrap of paper.

Are these statements by Marx a “true” description of money? Does he offer a faithful description of the way money actually functions in a capitalist economy? This is, perhaps, the wrong way to put it. Rather than asking if it is true that in both the function of measure of value and in the function of standard of price, as well as when serving as the medium of circulation, money is a symbol of itself, it is enough to state, in Marx theory, it is true. Later, after understanding Marx’s theory, we can decide for ourselves whether this is an accurate description of these money functions.

So, in Marx’s theory, in both its function as measure of value and as standard of price, money is only ideal money, or symbolic money — a token representation of itself. Money itself, is not these things — in addition to only ideally serving as money in circulation, it is also only a symbol of itself in these functions. The question is not whether the functions of measure of value and means of circulation can be filled by symbols of money, but can money itself be only these symbols.

In Marx’s theory, the answer is, “No.”

So, on the one hand, Moseley seems to be absolutely right that as measure of value money does not to have contain value. but the implication of his statement is that money itself can be something other than a commodity — that it too can be a symbol of itself. Perhaps, this is true in neoclassical or Austrian theory, but it is decidedly not true in Marx’s. In Marx’s theory, I think, money is the opposite of the circulation of commodities. While the circulation of commodities is the circulation of wealth, money is wealth when it falls from circulation, or when circulation is interrupted.

“But”, Marx argues, “gold and silver establish themselves as money only in so far as they do not function as means of circulation.”

Marx, therefore, insists what makes money money is its opposition to circulation of commodities. Money is the only way this circulation can continue, so to speak, during its actual interruption — money itself is only a materialized symbol of commodity circulation. With money, commodities (values) can remain in circulation, without actually being in circulation. Which means, the values contained within each commodity complete the first phase of circulation — C ==> M — and halt there. In this form, these values are, in theory, always able to assume circulation, because they now appear in the form of universal exchange value — in theory, they are absolutely exchangeable, in the money form.

Why is this important?

It is important because value-at-rest (money) must take the form of the commodity in its universally exchangeable form, a money commodity, and can only take the form of a money commodity. But, for capital, value-at-rest (money) is an anathema — capital is the ceaseless movement of value, of commodities, through its own process self-valorization. Capital then, in Marx’s theory, is already from its very inception the annihilation of money in the process of realization.

Thus, Marx’s theory has no need for the Keynesian argument Moseley uses to explain the replacement of commodity money by worthless tokens. Indeed, following the neoclassical argument, Moseley states what makes money money is what it has in common with commodities in circulation:

“The measure of value does not itself have to possess value. Inconvertible paper money (not backed by gold in any way) can also function as the measure of value. In order to function as the measure of value, a particular thing must be accepted by commodity-owners as the general equivalent, i.e. as directly exchangeable with all other commodities. Until the 1930s, capitalists required that the general equivalent (and hence the measure of value) had to be a commodity, or at least convertible into a commodity at legally defined rates. However, in the Great Depression it became impossible to maintain the convertibility of paper money into commodity money. Convertibility required tight monetary policy, which was making the depression worse. In order to escape this “cross of gold”, governments ended convertibility, and made credit money, without gold backing, the general equivalent. Capitalists had no choice but to accept inconvertible paper money by itself as the general equivalent, and hence as the measure of value.”

In place of this silly neoclassical explanation for the debasement of currencies in all industrialized nations within the space of five years or so — an explanation that does not grasp the antagonism between money and the circulation of commodities — we can substitute an explanation based on Marx’s theory that presupposes this inherent antagonism between capital and money; between money as value-at-rest, or the interruption of circulation of commodities, and self-valorizing value, or the continuous circulation of commodities, which is the premise of the capitalist mode of production.

Moseley, who has already veered completely off Marx’s theory by equating symbolic functions of money with money, proposes to answer the question:

…if social labor is represented by paper money that is not convertible into gold, then what determines the quantity of money that represents an hour of social labor in the economy as a whole (since it can no longer be determined by the gold produced in an hour, as in the case of commodity money)?

As you might imagine, I have some problems with Moseley’s question.

First, social labor has always been symbolically represented, even when gold was used as currency. Second, this symbolic representation has nothing to do with whether paper money is convertible or not convertible. Third, we are not here concerned with the quantity of money in circulation, but the quantity of worthless dancing electrons or paper in circulation in the economy. Fourth, we are not concerned with “social labor” but with socially necessary labor time, i.e., value.

With regards to the last point, social labor can be carried on for decades without producing even a single second of socially necessary labor time, or value. This is clearly the case in a communist society, where all social labor is managed directly and carried on in an association of commune members. In this case, not one millisecond of value is produced in this combined productive activity. Even an associated cooperative effort of a commune embracing the whole of humanity produces no value. So, we are not the least bit concerned about “social labor”, but only socially necessary labor time. That is, we are concerned about the specific historical form social labor takes under the capitalist mode of production.

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