[OPE-L:2042] Re: Re: Re: the money supply

["clyder" <wpc@xxxxxxxxxxxxx>]

> >From your statement it is not clear how you figure the process which you
> call comparison of values. The exchange between a commodity and the money
> commodity provides the exchange value.  Marx called value to what
underlies
> the exchange value
> and represents amounts of abstract labor. The exchange value is a mere
> quantitative relation between an ordinary commodity and another commodity,
> singled out of the universe of commodities as a general equivalent of
> value. Now, what we call value cannot be explained taking value as a
factor
> of the explanation. The point then is: what is it that causes each
> commodity to be exchanged against a given amount of the equivalent
> commodity? It's not value, because value is the result of the process,
> value is the name we give to the amount of the equivalent commodity given
> in exchange for an ordinary commodity.

What you have described there is not the value of a commodity but what marx
represents as its price, its exchange value in terms of the universal
equivalent
gold.



> But what makes them compare to each
> other according to equal amounts of social labor? This is the point about
> which I
> have attempted to present my understanding.

This is indeed a hard question, why are prices proportional to values.
As you say in a commodity producing society the division of social labour
is regulated through prices, which can only be done if there is a strong
correlation
between prices and values.

But this does not answer the question. Since prices are not in practice
weights of gold, but
abstract units of account created by the state, one needs some mechanism
that establishes a correlation between these abstract units of account and
social labour. The state theory of money does this by saying that the state
appropriates a share of the social labour time. It appropriates this from a
subset of the population - the state employees and suppliers of commodities
to the state. This subset is issued with credit accounts with the central
bank
for these services. When I do work for the civil service I am given a cheque
drawn not on a bank but on the state itself ( I think it says it is drawn
against
the 'lord treasurer's remebrancer'). I take this to a bank and they cash it
for
me into pound notes which, unlike the cheque are freely transferable.

Later in the year I am sent a tax demand saying that I must pay a certain
sum by Jan 31st or face immediate and automatic penalties. Along with the
tax demand comes a paying in slip stating that the payment must be
made into the inland revenue general account at the bank of England.

The payment has to be made via my bank. My bank, and the other clearing
banks clear these debits to the Bank of England, by tendering the
cheques issued against the Lord Treasurers Remembrancer, or with
notes issued by the Bank of England.

So long as the issue of cheques by the Lord Treasurers Remembrancer balances
the payments into the Inland Revenue General account, the value of money is
fixed
by the following formula

value of 1 pound = Hours labour appropriated by the state/ Number of pounds
issued in return