Re: [Pen-l] Re: money [was: Skidelsky on Keynes

["Jim Devine" <jdevine03@xxxxxxxxx>]

John Vertegaal wrote:
> Ok, and as you said yourself to I believe Charles B, "a definition isn't
> going to convince anybody". I guess that means: unless you can point it
> out as a source of conflict, it'll stand, take it or leave it; which is
> fair enough, I won't challenge you on that. It will add another axiom to
> your theory though.

Definitions aren't _meant_ to convince anyone. Rather, the point of
definitions is to facilitate communication.

A definition is also not an axiom. If you'll allow me, here's another
definition: an axiom is a "self-evident and necessary truth; a
proposition which it is necessary to take for granted; a proposition
whose truth is so evident that no reasoning or demonstration can make
it plainer." (from the Wiktionary) Instead of "self-evident," I'd say
"true by general agreement in the context being discussed."

In geometry, one defines a "line." But an axiom might say something
like "two parallel lines never intersect." (Obviously, though this
axiom may be "self-evident," it may not be true. Non-Euclidean
geometry allows parallel lines to intersect, as on the surface of a
globe.)

me:
>> Money is the "universal equivalent." It can be used to buy absolutely
>> everything else that's for sale on markets (commodities). To be a
>> useful, "base" money (currency) it has to be more than just scarce: it
>> must be acceptable (e.g., non-toxic), durable, homogeneous, portable,
>> and divisible. Credit or bookkeeping money must be backed by such base
>> money and faith in and the good credit of the borrowers and lenders.

John:
> Nothing in the above that would indicate money to be non-axiomatic, so
> that's another one? Any idea how many of them altogether in your theory?

Since I don't have a unified deductive theory of everything, there's
no point in counting "axioms." As I've said before, I think it's silly
to rely entirely on deductive/axiomatic reasoning.
Inductive/descriptive reasoning is just as important.

In any case, the above is NOT axiomatic. The first part is an
empirical _description_ of money in commodity-producing societies. The
second part (non-toxic, etc.) is partly theoretical: I have a hard
time imagining that powdered plutonium would be a very good form for a
usable money. But economic history indicates that actually-existing
monies fit my description.

> In mine, the identity of money rolls out of a total of _three_ axioms, it
> doesn't look like your theory going to beat that. Would you agree that the
> theory requiring the least amount of axioms is the most general and
> therefore is a superior one (all else being equal and no ideologies entering
> the picture)?

This represents an utter commitment to axiomatic/deductive reasoning.
As I've said before, I think it's silly to rely entirely on this kind
of reasoning.

BTW, what are your axioms? does having fewer axioms make you a better person?

me:
>> huh? If assets cannot exceed liabilities, there's no net worth, no
>> equity, no capital!

John:
> Right, in terms of an economic flow, these "quantities" are immaterial.
> $0, $1T, $1Q, it's all the same. They could be faked to be at any level,
> it doesn't make one iota of difference. e.g. Is one's ability to draw
> returns altered by having misled creditors about the value of one's
> collateral, instead of having played the game like one is supposed to?

This does not make any sense at all. In the kind of property-rights
system we live under, equity (capital) is not the same as debt. Max
_owns_ stock in a company. He does not automatically owe any money to
anyone as a result (though he could have bought it on margin). The
company _owns_ the factories, etc. It can be ahead of the game, having
less debt than assets.

> So now the question becomes, what is the purpose of an economy? Is it to
> accumulate irrelevant quantities (stocks), or does it exist to provide
> us with a standard of living (flow)?

That's a completely different (normative) question. I don't remember
asking that kind of question in this thread.

> Do Marxians have a way of
> identifying capital value, that would prove it not to be irrelevant, or
> is that axiomatic too? Isn't adhering to the idea of capital being a
> root cause of economic activity, being unnecessarily apologetic to
> capitalist "power"?

Capital value has already been identified by accountants. Marxian
political economists don't have to add anything (though they might
measure it in labor-value units).

Seeing capitalist domination as the basis for the normal operations of
a capitalist economy isn't apologetic, since that system involves not
only social domination of the working class but also exploitation and
alienation.

me:
>> In the right-hand column of a double entry books,
>> there's an entry at the bottom, i.e., net worth = assets minus
>> liabilities.

John:
> Right, and what is this "net worth" worth in the absence a return; or,
> IOW, in terms of itself?

what does "IOW" mean? Net worth would be zero if there's no return.
Even a consumer durable such as an owner-occupied house has a return
(the ability to avoid the cost of renting an abode) to its owner. Just
because assets are associated with returns does not mean that they
have to correspond peso for peso to debt.

me:
>> Someone owning equity can use that M to hire labor-power to produce
>> new commodities C that can be sold for a larger amount M', so there's
>> a surplus-value M'-M. Some of that surplus-value can then be
>> accumulated, raising the equity. In theory at least, no new debt
>> accumulation is required for this process to occur.

John:
> ... What's the point of
> abolishing profits, if a similar objective can be achieved through
> profit sharing? There is no need for those in the non-profit sectors, to
> miss out on productivity increases in the private sector either, if
> that's a concern.

I don't understand your point here. It doesn't respond to my point,
i.e., that the amount of equity (capital) can be increased over time.

John before:
>>> Marxians may recognize this supra-economic [??] domain to consist of use
>>> values; and all of us happen to
>>> occupy it too, just supplying our vitality to the economic sphere and
>>> obtaining the bulk of our standard of living in return. I'm working on
>>> drawing a schematic representation of this. ...

me:
>> we live in a world of use-values, but we also live in a
>> commodity-producing economy where these use-values have
>> exchange-value. Further, we live under capitalism, where surplus-value
>> can be produced.

> ... Having to account for identical output in terms of two
> incompatible sets of value within the same domain, doesn't strike me as
> being particularly enlightening; to say the least.

Marx (or was it Engels?) referred to a contradiction under capitalism
between use-value and exchange-value. If such a contradiction exists,
then having two "sets of value" is required for understanding it.

> I adapted H. Daly's
> ecol_econ_feedback depiction by moving the human population into the
> ecological domain. Feedbacks in the form of pollution/destruction will
> be altering use values. Infrastructure not being charged with having to
> provide monetary returns, e.g. roads, bridges, the output of home and
> civil (armed) services, etc., exist in the eco_sphere too. There is no
> financial limit to any involvement; if it can be produced, we can pay
> for it. The vertically integrated economy only borrows a portion of our
> avails and with loans equaling deposits, it nets to zero. ...

This seems to be a use-value standard. That's fine, except that
use-values cannot be aggregated.

Your picture is nice, but hardly self-explanatory.
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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