Interesting excerpts from Das Kapital, volume 3, on the nature of money. Marx understood the hierarchy of money, with metals as the apex of the hierarchy, toward which holders of money retreat in a credit crisis. Marx seems to have assumed that capitalism is based monetarily on commodity fetishism, therefore then
Even though the contemporary system is not a convertible system, there was a retreat into gold at the time of the recent crisis. In fact, I was recommending to friends that they sell riskier assets, especially equity in financial institutions, for gold after Bear Sterns, when it began to look like there could be a global financial crisis. It turned out to be a pretty good call.
But Marx apparently did not think that a capitalistic system could work with a monetary system without gold at the apex of the hierarchy, that is, credit ultimately exchangeable for metals as assets that are no one's liability. Of course, there would not be enough physical metal to meet demand in a real crisis, so the price of metal would be driven up.
Ironically, this view is now held by those who follow Austrian economists, and almost daily posts appear on Austrian economic blogs and at Zero Hedge with the warning that it will be anytime now.
In fact, a goldbug friend just sent me such a link this morning so that I could partake of the easy money when gold blows off at any minute. Now I see that I should let him know that Marx preceded the Austrian economists in this view and congratulate him on being a closet Marxist.
Marx on the Necessity of Money being a Commodity
Lord Keynes
4 comments:
"But Marx apparently did not think that a capitalistic system could work with a monetary system without gold at the apex of the hierarchy,"
You are implying that he understood options for monetary systems other than metals for which there is no evidence that he did...
Nobody else did either so I wouldn't be too hard on Marx....
The form of our current system of state currency re-emerged in parallel with the development of the information technology required to operate it on the contemporary scale.. Telegraph.... wireless.... SATCOM....optical fiber.....
Rsp
Marx: "But it should never be forgotten, that ..... precious metals, remains the basis from which the credit system naturally can never detach itself.”
The way it turned out he was very wrong here... The Marx sectarian people should just admit this and move on to focus on issues within the contemporary ... .. Ie we are are being ruled by unqualified, incompetent morons who do not understand the systemic context of our CURRENT monetary system...
Rsp
Matt,
The modern version of the fixation with metals is the fixation with unchanging exchange rates.
Because Keynes believed in it and he's a God.
"The modern version of the fixation with metals is the fixation with unchanging exchange rates."
Cos inflation or something.
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