Forum Replies Created
The classic quantity of money equation is:
M = P x T, divided by V
Where M is the quantity of money, P the prices to be realised, T the number of transactions, and V the velocity of circulation of money.
Mathematically, if V increases then M should decrease. What you think would happen in practice depends on whether you think the level of prices determines the amount of money in circulation (in which case money would be withdrawn from circulation) or whether you think the amount of money determines the level of prices (in which case the price level would go up).
I would have thought that today, when money is no longer convertible into gold (and so can’t be withdrawn from circulation as bullion), the effect should be to raise the price level or, rather, that the central bank would not have to issue so much new money to fulfil its remit to keep the price level rising (and money depreciating) at 2 percent a year.
According to this headline, the US has begun to undo Quantitative Easing — Quantitative Tightening — by selling the government and other bonds the Federal Reserve bought. This should have the opposite effect of bringing down the price of financial assets. What the authorities are afraid off is doing this too quickly and provoking a financial crash. They want to deflate the bubble gradually. Whether they succeed we will see.
Yes, raising the price of financial assets does seem to have been the main result of QE.
Even the House of Lords came to the conclusion that it was a failure in terms of encouraging real economic activity:
I don’t think “the recent increase in inflation” will have anything to do with quantitative easing. In fact it isn’t necessarily an increase in inflation proper, ie overissuing money-tokens in relation to what the economy requires leading to a depreciation of the money-tokens and a rise in the general price level.
What it is, strictly speaking, is an increase in the Consumer Price Index. This measures the changes (usually increase) from month to month in the prices of a basket of consumer goods and services bought by the average consumer. The prices of the goods and services in the basket can go up for other reasons than a depreciation of the currency (inflation proper). For instance, due to paying demand exceeding available supply (which may be limited for supply chain problems caused by covid lockdowns and now sanctions on Russia).
It is government policy (remit to the Bank of England) to raise the price level by 2% a year. In other words, to depreciate money by that amount. This will be inflation proper (monkeying with the money supply).
The increase in the CPI above this 2% to 5, 6, 7 % and predicted double-digits by the end of the year can be put down supply chain problems. It is mostly due to the increase in energy prices for heating and fuel for cars and the repercussions of this on other prices.
If this is the case, the CPI should eventually fall back towards 2% but it looks as if this may take longer than the government and Bank of England originally expected. In the meantime workers will have to try to protect themselves from a fall in their standard of living by pressing for the price of what they sell — their ability to work — to go up. As they can be expected to do, with given the relative labour shortage with some chance of success.
Incidentally, there is a discussion on this on Discord tomorrow evening at 7.30 on the eve if TUC march and rally in London on Saturday.
I think you are right. This hasn’t been mentioned on this forum but it has on our other forum for Party members. There’s also the text there of the Better leaflet, 2000 copies of which we are distributing;
If you or anyone else here is interested in helping distribute them, we will be meeting at 10.30 on Portland place where the march starts and at 1 o’clock near the statue of Churchill (without the Mohican) in parliament square where there’s a rally and speeches. We will have a supply of leaflets at each place.
The return of the “war economy” which, under the term “permanent arms economy”, the old IS group (Tony Cliff, Mike Kidron, etc) and others claimed had supposedly saved capitalism from collapsing?
No, not really. You can easily check for yourself on the internet whether land that has never had any human labour mixed with it can be and has been bought and sold. You are the one who wants to demonstrate the absolute validity of your rather trite theory that everything that is bought and sold will be found to contain at least some human labour.
It is clear that your labour theory of value is not the same as Marx’s but is what in #230437 is called
“a “labor theory of things that have value,” which is very obviously true! Regardless of what value is, no commodity that has value has ever been the product of anything except some combination of (a) the nonhuman natural world and (b) human labor.”
In fact you stated that this was your labour theory of value in the opening sentence of your post starting this thread:
“It’s the fact that we know of nothing valuable that happens to have no labour embedded in it that appears an incontestable argument for the law of value discovered by Marx.”
And, later, refer to
“my thesis that we know of nothing valuable that does not contain some labour.”
By “valuable” you mean have mean “has a market price”:
“No value means no market-value, hence no market-price. Things without value are not bought or sold in a market”
So your theory is: Everything that is (or could be) bought and sold contains some labour.
The author of the article referred to in #230437 thought this is obvious. Marx didn’t as he thought that exceptions were virgin land and honour and conscience. But you say he was wrong about this in regard to the honour and conscience as in your view they will contain an element of human labour.
Also, the classical Labour Theory of Value is not simply that everything that is bought and sold contains “some” labour but that their price depends in some way on the amount of labour they contain.
That Marx didn’t agree with your theory is not a good argument against your theory. But it is a MIGHTY argument against your claim that your theory is “an incontestable argument for the law of value discovered by Marx”.
The MIGHTIEST argument against the Prakashian Labour Theory of Value that everything that is bought and sold contains some labour is virgin land (and sea), and plots on the moon and on asteroids.
If you are prepared to accept these comparatively rare exceptions your quest is over. You have found The Truth. The trouble is that it is not very profound. We already knew nearly everything that is bought and sold is the product of human labour.
I fail to understand how this view clashes with my reply #230406.
Maybe you can’t understand this, but everybody else can.
Marx’s view (or definition, if you like) is that “value” is not a material thing that can sensed by the senses. You can subject a use-value offered for sale to examination by a microscope and you won’t find an atom of “value”. Value (on Marx’s definition) only becomes observable as “exchange-value” when a commodity is exchanged for another commodity. Value, for him, is not a material thing but is a relation between things (and ultimately between those who produced them). A use-value that is not produced for sale has no value.
You have a different definition (nothing wrong with that in itself). You seem to be defining it as some sort of “stuff”, something that can be perceived by the senses that exists independently of whether the use-value is exchanged or not. As you said in #230406:
“I can’t see why the ‘value’ of a commodity should be ‘unappreciable’ by senses of the sensible.
I am not sure exactly what it is that you think can be perceived by the senses as “value” in a free-standing use-value destined to be exchanged as a commodity.
So we have two different definitions of value. To judge which is the more useful we need to see which can explain better the workings of a society where production for sale is predominant.
Dear Mr Prakash
While I appreciate your attempts to defend my theory of value, I must point out that in that translation of a passage at the beginning of section 3 of Chapter 1 of Volume 1 of my major work, Das Kapital, I was talking about value not the use-value of a commodity.
From France 24:
“He said the Azot chemical plant was being shelled, with fighting around the area. About 800 civilians have taken refuge in the plant’s bunkers, according to the tycoon whose company owns the facility.”
When is an oligarch not an oligarch? When they are a tycoon.
From the current issue of Jacobin magazine:
“But Cohen believed that rank-and-file socialists who think the LTV is obvious are moved by something other than Marx’s technical claims about value. Instead, what moves them is something like a “labor theory of things that have value,” which is very obviously true! Regardless of what value is, no commodity that has value has ever been the product of anything except some combination of (a) the nonhuman natural world and (b) human labor.”
Not an atom of matter enters into the reality of value. We may twist and turn a commodity this way and that way — as a thing of value it still remains unappreciable by our bodily senses.
He doesn’t tell us how inflation will be prevented in his workers’ co-op market economy. As a market economy there will still be money, but who will control the money supply? The workers coop running the Federal Reserve perhaps.
He blames profit-seeking private enterprises for causing inflation by raising prices, but wouldn’t his workers coops producing for the market also have an incentive to charge what the market will bear?
It appears that German intellectuals have been discussing the same subject: