Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 10

The main reason that the liquidity injections by central banks, in the late 1980's and after, did not result in higher commodity prices, and higher nominal interest rates, is because the liquidity was directed, by central banks and financial institutions into the purchase of existing financial and property assets, causing serial asset price bubbles, which also resulted in falling yields on those assets (because this kind of speculation is not investment/capital accumulation, and so does not result in increased production of surplus value, of which interest and rent are simply components along with profit of enterprise and taxes). The other reason is that rising productivity from the microchip revolution, reduced the unit value of commodities, so that without inflation of the currency, prices would have fallen.

Engels quotes Duhring's comment,

““All that was necessary was to assign to the ‘simple pieces of paper’ the same role that the precious metals should have played, and a metamorphosis of mercantilism was thus immediately accomplished”.” (p 299)

And notes,

“The metamorphosis of my uncle into my aunt can be immediately accomplished in the same way. True Herr Dühring adds appeasingly:“Of course Boisguillebert had no such intention.”

But how, in the devil’s name, could he intend to replace his own rationalist conception of the money function of the precious metals by the superstitious conception of the mercantilists merely because, he held that the precious metals can be replaced in this role by paper money?”. (p 299)

The mercantilists believed that there was something special about the amount of precious metal hoarded in state treasuries, as a measure of the wealth of nations. As Marx described in Theories of Surplus Value, its understandable that such ideas arise in economies that dominated maritime trade such as Britain and the Netherlands, just as its natural that they should identify surplus value/profit as arising from the process of trade/exchange, rather than production. In fact, as Marx also wrote, the mercantilists were not as stupid, in that regard, as some of their later detractors suggested.

Unlike Law, or the proponents of QE/MMT, they understood that this accumulation of precious metal arose from the ability to export more than was imported. It was not possible to increase the wealth of the nation by simply replacing precious metal currency with paper notes, so as to print more of them, any more than by reducing the amount of gold contained in a gold coin, and issuing more such coins.

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