Distinguishing currency acceptance from currency value therefore carries a social significance. So long as a sovereign government’s currency is accepted, neither the currency nor society is ultimately beholden to the law of value.
Since a currency can be made viable irrespective of (marxist) value considerations, a currency-issuing government can override the law of value whenever this is the political will. This opens the way for an extension of not-for-profit activity and, if desired, a transcending of capitalism.
To reiterate what was stated earlier, however, this does not mean that policy is feasible “within any context whatsoever” or “under any circumstances”. For instance, it might be that certain policy options negatively affect the profitability of capitalist firms. In that case, certain policy options might not be compatible with a preservation of capitalism.
This only means that society, in such instances, will face a choice between reinforcing capitalist social relations or transitioning to socialism. Ultimately, the viability of the capitalist class is contingent on the actions of currency-issuing governments, not the other way round....heteconomist
Currency Acceptance, Currency Value, and Transcending Capitalism
Peter Cooper
MMT, money, value, and transcendental Capitalism
ReplyDeleteComment on Peter Cooper on ‘Currency Acceptance, Currency Value, and Transcending Capitalism’
Peter Cooper argues: “A currency’s role as public utility hinges on currency acceptance. A currency expresses (marxist) value in the sphere of commodity production so long as it represents an amount of socially necessary abstract labor. If so, it is relevant to distinguish two questions: (i) what drives acceptance of the currency? and (ii) what determines the value of the currency?”
Peter Cooper answers the question of acceptance: “Government has the authority to impose taxes (and other obligations) on members of the community and specify what will be accepted in payment. In principle, this authority is bestowed upon government by the community and, ideally, will be exercised in a democratically accountable way.”
This is not correct. Imagine an elementary production-consumption economy consisting of the household sector and the business sector.#1, #2, #3 The business sector pays the wage income Yw with own IOUs and the households, in turn, fully spend the IOUs for buying the consumption good output from the business sector, i.e. C=Yw. The workers will accept the business sector’s IOU’s as payment if they can be reasonably sure that the creation/destruction of IOUs is fraud-safe. This can best be achieved if the business sector’s IOUs are replaced by the central bank’s generalized IOUs, i.e. by fiat money. The acceptance of fiat money does NOT depend on the taxing power of the State but on institutional safeguards.
Peter Cooper answers the question of value: “In Marx’s theory, ‘value’ (defined as socially necessary labor time) governs commodity production and exchange.”
This is not correct because Marx’s Theory of Value is provably false. Marx got profit, exploitation and classes wrong.#4 To this day, Marx and Marxians lack the concept of cross-over exploitation.#5
From the true macrofoundations follows the macroeconomic Law of Supply and Demand as shown on Wikimedia.#6 It says:
(i) An increase of the expenditure ratio rhoE≡C/Yw leads to a higher market clearing price (the Greek letter rho stands for ratio). An expenditure ratio rhoE greater than 1 indicates deficit-spending/dissaving/credit-expansion, a ratio rhoE less than 1 indicates saving/credit-contraction.
(ii) An expenditure ratio greater 1 makes that macroeconomic profit, i.e. Q≡C−Yw or Q≡(rhoE−1)Yw, is greater zero.
(iii) Deficit spending, i.e. the move from rhoE=1 to rhoE greater than 1 causes a one-off price hike but NOT inflation.
From the macroeconomic Law of Supply and Demand follows the purchasing power of the wage a.k.a. the value of money as W/P=R in the elementary case of budget balancing, i.e. of C=Yw or rhoE=1. In other words, the Labour Theory of Value is false since the founding fathers. Value does NOT depend on socially necessary labor time.#7
When the government sector is added the macroeconomic Profit Law reads Q=(G−T)−S or Public Deficit (G−T) = Private Profit Q if S is taken out of the picture for a moment.
So, profit in transcendental Capitalism does NOT depend on the exploitation of the workers but on the deficit spending of the government sector and the household sector. Roughly speaking, transcendental Capitalism is State sponsored.#8 The accumulated sponsoring is measured by the public debt which stands currently at $22 trillion. The so-called free market economy is already for a long time on full life-support of the State.#9
Egmont Kakarot-Handtke
References
https://axecorg.blogspot.com/2019/05/mmt-money-value-and-transcendental.html