If the value of gold itself had not fallen, as a result of new discoveries, an increase in its supply could, at most, only result in a temporary fall in its market price. That fall in its market price would reduce the profits of gold miners, or even result in losses. The least profitable would go out of business, gold production would fall, supply would contract, and its market price would rise.
What Hume saw was the effect not of a rise in the supply of gold and silver, but a fall in its value, as a result of the new discoveries. Hume writes,
“‘It is easy to trace the money in its progress through the whole commonwealth; where we shall find, that it must first quicken the diligence of every individual, before it increases the price of labour." (p 304)
Engels notes,
“In other words, Hume is here describing the effect of a revolution in the value of the precious metals, namely, a depreciation, or, which is the same thing, a revolution in the measure of value of the precious metals. He correctly ascertains that, in the gradual process of readjustment in the prices of commodities, this depreciation "increases the price of labour" — in ordinary language, wages—only in the last instance; that is to say, it increases the profit made by merchants and industrialists at the cost of the worker (which he, nevertheless, thinks is quite in order), and thus “quickens diligence”.” (p 305)
The same is true in modern economies, where central banks facilitate rising prices via increased liquidity, which ultimately, then, leads to workers demanding higher wages, which is, then, presented as the cause of the inflation. Similarly, protectionism, whether via import controls, or tariffs, results in higher domestic prices, but it is only after those prices have risen that workers are left having to respond to them in demands for higher wages.
“But he does not ask himself the real scientific question, namely, whether and in what way an increase in the supply of the precious metals, their value remaining the same, affects the prices of commodities; and he lumps together every “increase of the precious metals” with their depreciation. Hume therefore does precisely what Marx says he does (A Contribution to the Critique of Political Economy, p. 173).” (p 305)
In other words, this is Marx's criticism of The Quantity Theory of Money, as presented by Hume, and later adopted by Ricardo, Lord Overstone et al, and enshrined in the 1844 Bank Act. But, an examination of Marx's argument, here, shows precisely what is wrong with the attempt by some socialists, today, to have Marx apply this argument to the increased supply of money tokens/currency.
The whole point, here, is that Marx posits the question in terms of the value of money. If there is no change in the value of gold, there is no change in the value of money, where gold is the money commodity. An increased supply may, temporarily cause its market price to fall, just as the market prices of all commodities fluctuate as a result of short-term changes in demand and supply, but that is all. If the value of gold does not change, then, as Marx describes, in "A Contribution To The Critique Of Political Economy", the only other way a change in prices can occur is if the quantity of gold contained in the standard of prices, for example the Pound, is changed, or as described earlier, if 6d of silver is attempted to be passed off as a shilling.
But, it is precisely this latter which occurs where the currency is debased, depreciating in the case of a fiat currency, by printing it in excess. In that case, it is precisely this quantity of these money tokens thrown into circulation that causes their depreciation and leads to an inflation of prices.
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