Chapter 2B. - Theories of The Standard of Money - Part 9 of 10

Gray begins from the correct standpoint that value is determined by labour-time. In that case, he says, why do we need some additional extraneous measure of value, based upon precious metals. In a post-commodity producing economy, of course, that is true, as Marx sets out above, and in Capital III, Chapter 49.

“after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing all this, become more essential than ever.”

(Capital III, Chapter 49)

If commodities are no longer produced, then price and exchange-value are redundant. As Marx sets out in his Letter To Kugelmann, exchange value is simply the form that The Law of Value assumes under commodity production. Where commodity production and exchange ceases, and society reverts to the production of products/use-values, exchange value has no relevance. The Law of Value takes the form once more of the direct determination of value by labour-time.

In reality, as now, the system would operate via workers having amounts of value credited to their accounts electronically, and would make payments electronically. These amounts of value might retain historic currency names such as $,£, € and so on, but the reality would be that these were simply symbols representing given amounts of social labour-time.

What Gray failed to recognise was the difference between the concrete labour performed, and abstract labour, as well as failing to take into account what amounts to socially necessary labour. The difference between concrete labour and abstract labour has been described, and also the role of money in reducing all labour to this abstract, universal labour. But, within the context of continued commodity production and exchange, there is also the vital question of demand, i.e. of what actually constitutes use-value for consumers, and so what of the total labour expended was actually socially necessary.

If everyone is given a token equal to the amount of concrete labour they have performed, and so can take out of society's stores goods whose values have been directly determined on the same basis, then the complex labour of the computer programmer would be treated the same as the simple labour of the machine minder. The product of the former would be relatively undervalued, and that of the latter overvalued, so that demand for the former would exceed supply and vice versa. Disproportions and shortages, and overproduction would result, leading to the development of black markets and money prices.

But, even were that not the case, and all the labour was uniform, simple labour, it would not prevent commodities produced in one sphere failing to find a market in another. Just because Sinclair had his workers expend labour on production of C-5's, did not mean that there was demand for them, and so the labour expended on their production, and the production of their components, was not necessary labour, not value producing labour. Failing to recognise that, and so providing all of that labour with tokens to take commodities out of society's store, when, in fact, they had contributed no additional value, no use-values that anyone wanted to consume, would again result in disproportions and crises.

In fact, this is what happened under Stalinism, with huge amounts of nominal labour-time being expended, but which produced things that no one considered to be use-values, i.e. for which there was no demand. The same kind of thing can be seen with all such huge, bureaucratic state endeavours, as with the NHS in Britain.  MMT as a means of QE to pay for it is just another form of it.   As Trotsky described, in The Revolution Betrayed, the fact that the state simply printed more Roubles to cover these costs made any such evaluation impossible, and so prevented a quick response to them.

“Industry, to be sure, continued its rapid growth, but the economic efficiency of the grandiose construction was estimated statistically and not economically. Taking command of the rouble – giving it, that is, various arbitrary purchasing powers in different strata of the population and sectors of the economy – the bureaucracy deprived itself of the necessary instrument for objectively measuring its own successes and failures. The absence of correct accounting, disguised on paper by means of combinations with the “conventional rouble”, led in reality to a decline of personal interest, to a low productivity, and to a still lower quality of goods.”

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