If the value of gold changes, then the quantity of paper notes representing it would change, so long as this relation to gold, and convertibility remains. In other words, if the value of gold halves, twice as much gold is required to represent the same amount of social labour-time, and so twice as many notes would be required in circulation. But, that is only because gold retains this function as money commodity, and so measure of value/proxy for social labour-time.
“Supposing gold were superseded by silver as the standard of value and the relative value of silver to gold were 1:15, then 210 million pound notes would have to circulate henceforth instead of 14 million, if from now on each piece of paper was to represent the same amount of silver as it had previously represented of gold.” (p 119)
In other words, 14 million ¼ ounce gold coins is equal to the value of commodities to be circulated, say 14 million hours of labour. Each coin has the name £1. Now, silver replaces gold, but silver's value is only a fifteenth that of gold. So, each quarter ounce £1 silver coin represents only a fifteenth of the social labour-time that a £1 gold coin represented. Consequently, fifteen times as many of these silver £1 coins, 210 million, are required for circulation. Each coin retains the name £1, and the total price of commodities, therefore, rises to £210 million, even though their values and exchange-value have not changed.
If paper £1 notes circulate as representatives of these coins, this same law applies, so that, now, 210 million £1 notes would be required.
“The number of pieces of paper is thus determined by the quantity of gold currency which they represent in circulation, and as they are tokens of value only in so far as they take the place of gold currency, their value is simply determined by their quantity. Whereas, therefore, the quantity of gold in circulation depends on the prices of commodities, the value of the paper in circulation, on the other hand, depends solely on its own quantity.” (p 119)
In other words, if 210 million £1 notes are in circulation, in place of 14 million £1 gold coins, this cannot change the underlying fundamental law by which they actually represent a given amount of social labour-time. The greater the quantity of these tokens put into circulation, the smaller the aliquot portion of that total value each token represents. So, although it seemed possible to infringe this law as had the Pereire Brothers and as MMT suggests, by simply printing more of these tokens, it is a delusion, because it cannot change the total value of commodities/social labour-time, for which they act as universal equivalent form of value. It simply reduces the value of each token proportionately, and that is manifest in higher prices.
“Once the notes are in circulation it is impossible to drive them out, for the frontiers of the country limit their movement, on the one hand, and on the other hand they lose all value, both use-value and exchange-value, outside the sphere of circulation. Apart from their function they are useless scraps of paper. But this power of the State is mere illusion. It may throw any number of paper notes of any denomination into circulation but its control ceases with this mechanical act. As soon as the token of value or paper money enters the sphere of circulation it is subject to the inherent laws of this sphere.” (p 119)
No comments:
Post a Comment