Correspondence: Mr. Cook replies to “A.E.J.”

(To the editor )

Sir,—I trust you will allow me a little space to reply to “A.E.J.’s” criticism of my articles on “Money.” I have been prevented from replying earlier by a little illness, but I hope I am not too late for publication in your March issue.
In the first place I may say that I can agree with a good deal of “A.E.J.’s” statements, and that I welcome his criticism. I am sorry, however, that he has marred it by uncharitable attacks on the S.L.P.
Now at the outset let me say that I am not entering this discussion for any other reasons than those for which I wrote my articles in the “Socialist,” namely, in order that light may be ventilated on a difficult subject, one which many Marxian Socialists seem absolutely afraid to tackle.
Karl Kautsky, in his admirable little work, “The High Cost of Living,” laments that even Marx himself, when dealing with the question of Money, has in places only indicated the nature of certain problems arising out of the subject but has not given us the answer.
The point which I wished to make in my articles was this : —that gold as a commodity must be subject to the same economic laws that all other commodities were subject to.
If that be so then it must have a price, even as other commodities have. There is a gold market even as there is a silver market, and an iron market, etc., and gold before it takes on itself the role of money must have a price per ounce which is expressed in £ s. d.
“A.E.J.” says no to this. Well, all I wish to ask him is this : —How would ” A.E.J.” explain the fact that according to the financial papers for Jan. 11th, 1918 the average price of gold put on the market by the Rand goldfield companies was in December 1917 £4 4s. 11½d. per ounce ? In 1916 it was £4 9 6¼d. per ounce.
How would “A.E.J.” explain the fact that after the Napoleonic wars £1,000 in sovereigns purchased £1,000 worth of commodities but the same 1,000 sovereigns melted down into bullion would purchase £1,050 worth of commodities ? The market price of gold was higher than the Mint price. As a result the Bank of England suspended gold payments for 25 years.
When gold assumes the function of money—of being the universal equivalent of all other commodities—then all rises and falls of the value of gold are expressed, in the movements up and down of all prices.
I realise that the measure of gold cannot be gold but value or abstract average socially-necessary labour, but it is an absurdity for one to say, as did Mr. Walter, that gold may not be the means of measuring gold. Because, for instance, the lb weight on one pan of the scale is made of iron it would be absurd to say that I could not weigh one lb of iron with it. Apparently that is what I am doing, but anyone who has reflected a moment will know that it is not the iron that is measuring the iron but that mental standard of weight termed one lb.
So with money. Directly gold or any other stuff steps forth and functions as money the terms of measurement £ s. d. become mental terms. Prices are fixed in imagination, money of account appears. We know that always behind the mental there lurks the reality, but does not prevent us from realising that money may become purely formal or mental. On the one hand we have the people who make on mistake, they argue like the metaphysicians who claim that mathematics is purely a priori ; absolutely mental without contact with the material : they are carried away with the formalism of money and go about asserting that money need not have a gold and silver basis, but can exist independent and absolutely formal.
On the other hand we have people like “A.E.J.” who would deny that money is capable of serving as a mental standard, a thing of form capable at times of becoming so detached from its gold basis as to stand at variance with it, as it does when an ounce of gold may be bought for less or more than an ounce of gold, as has been done in numerous instances I could quote.
Poor “A.E.J.” says that the formula must always be 1 oz. of gold = 80s. The FACTS, however, hit him in the eye.
And in conclusion, if I desired to throw Marx at the head of “A.E.J.,” as many of my critics seem to do with me, I might ask him when did Marx ever make the mistake of assuming that Value and Price were identical. A strict acceptance of all “A.E.J.” writes about would land one there. Yours, etc.,



I regret to hear that Mr. Cook has been ill, and trust that he does not ascribe it to my criticism. My correspondent’s expression of grief because I have “marred” my criticism by “uncharitable attacks on the S.L.P.” is duly noted, True, in the political fight I am not much given to charity, and the same may be said, I fear, of almost, if not quite all, members of the S.P.G.B. For which reason it is as well for any political organisation which runs up against us if it does mot need that prop of the decrepit.

Mr. Cook enters the discussion in order that “light may be ventilated on a difficult subject.” I certainly agree that so dark a mystery as Mr. Cook makes of “Money” can do with the illumination of a breath of fresh air. But as for “Marxian Socialists” being “absolutely afraid to tackle” the matter, the truth is that there is nothing to tackle—Kautsky notwithstanding.

“Gold as a commodity must be subject to the same economic laws that all other commodities are subjest to,” says Mr. Cook, concluding : “If that be so, then it must have a price even as other commodities have.”

Cannot Mr. Cook understand that gold differs from all other commodities in this—it is taken from them all to be the universal equivalent ? As gold differs in this respect from all other commodities, so it differs from them in that the only possible way in which it can find a “price” is by declaring itself as itself in terms which in its case can only symbolise itself. So one ounce of gold is always equal to an ounce of gold, and always equal to £3 17s. 10½d.

If Mr. Cook wished to make the point he says he went a funny way about it, and it seems he imagines commodities are equated to money terms, whereas they are equated to gold expressed in money terms.

If money becomes a mental standard, that is to say if the prices of commodities can be fixed in terms of money without money being used, that does not mean that money is capable of being “so detached from its gold basis as to stand at variance with it” so that “an ounce of gold will exchange for more or less than an ounce of gold.” Prices may be fixed in imagination ; money of account may appear ; money may become purely formal or mental ; but if this “money of account,” this formal or mental money, can become detached from its gold basis what foundation has it ? Prices may be fixed in imagination and in terms of imaginary money, but goods are not sold for formal or mental or imaginary money. What, therefore, is the use of equating them to anything else than that for which thev are to be exchanged—gold ?

Money can never become so “purely formal” that commodities can be equated to its terms instead of to its substance, and the attempt to equate gold to the substance of money—which is gold—is pure farce.

Mr. Cook says “I realise that the measure of gold cannot be gold, but value or abstract average socially-necessary labour.” This is rubbish. In the first place he himself proceeds to show that gold can be the measure of gold, as iron can of iron ; in the second place it is absurd to say that value can be the measure of gold, for it can not. The boot is on the other trotter ; it is gold that is the measure of value.

Mr. Cook is all at sea again when he says that “it is not the iron that is measuring the iron, but that mental standard of weight termed one lb.” Nothing of the sort. It is the iron which measures the iron, and not by any mental or imaginary process, but really and actually, by means of a quality they possess in common—weight.

But the original point of discussion was Mr. Cook’s statement that in certain circumstances the price of an ounce of gold would fall from 80s. to 40s. In this letter he proves the case against himself when he says: “When gold assumes the function of money—of being the universal equivalent of all other commodities—then all rises and falls in the value of gold are expressed in the movements up and down of all prices.” Let us take it at that, then.

Taking the figures Mr. Cook used for the purpose of his argument, gold is worth 80s. an ounce. Owing to the time taken to produce it being lessened by half, however, the “price” of gold, Mr. Cook claims, falls to 40s. per ounce, the reason being that its value has fallen. Now let’s see how this fall in the value of gold is “expressed in the movements up and down of all prices.”

A. 1 oz. gold = 80s. =X Y Z of all other commodities.
B. 2 ozs. gold = 80s. = X Y Z of all other commodities.

The lowering of the value of gold, proclaiming itself in the way Mr. Cook claims, leaves the prices of other commodities untouched. His own words dismiss him from the discussion.

Now to answer my correspondent’s questions. The Bank of England suspended specie payments from 1797 to 1819. The reason was not that implied by Mr. Cook. It was the simple reason which is compelling our rulers along a similar path to-day. At that time England was not only furnishing an army and a navy against France, but was subsidising her various and voracious allies. While this was partly done with products, it had largely to be done with gold. We do not produce gold here, so it had to be obtained. Pitt practically stole the gold reserve of the Bank of England, but he gave them legal authority to suspend cash payments.

This demand for gold enhanced its purchasing power and meets Mr. Cook’s point re bullion. Gold was at a premium. But whether it wore the impress of the State or not made no difference in this respect. It is rubbish to say that gold in the form of bullion could buy more than gold in the form of sovereigns, weight for weight. Mr. Cook, peering down into the depths to find “a mental standard capable of becoming so detached from its gold basis as to stand at variance with it,” finds the wrong thing because the right one is floating on the surface. He says it is money. But it is not—it is the symbol £. This, of course, may be made to represent money so ideal that it does not exist at all—not even in imagination. And the more ideal is the money it pretends to stand for, the more divorced its celestial soul is from the “damned yellow earth” which is its carnal substance and which men do so “‘anker arter,” the more acutely will it “stand at variance” with its “gold basis.” It will buy less than bullion not because it is sovereigns but because it is not. And that’s that.

As for the other instance the same preliminary conditions may be instanced. Then exigencies of the war have placed gold at a premium because all belligerent countries’ imports far exceed their exports and they need gold to settle the balances. Gold being at a premium, the country (or company) exporting gold demands a higher ratio of exchange in whatever they exchange their gold for. They certainly do not exchange their gold for gold, therefore Mr. Cook’s in­stance would not, anyway, support his theory that “an ounce of gold may be bought for more or less than an ounce of gold (receivers of stolen plate barred). They exchange it for bills of exchange, which play so large a part in international trade. These bills are of money or price term denominations, hence it looks as though the ratio of bullion and money does change. And that’s that.
A. E. J.



We have received the following letter from, Mr. Walker upon the subject of this discussion. It looks as though our “A.E.J ” has interfered in a sort of family row with the usual result—he “cops it” from both sides.

To The Editors
Sirs,—Your contributor “A.E.J.” has also made a glaring error. It occurs where he says “This value is, in the case of all commodities, measured by quantity ; for instance, double the amount of the same commodity contains double the value.”
“A.E.J.” is correct when he says “double the amount of the same commodity contains double the value,” he is certainly in error when he says-it is measured by quantity.
An illustration will make this clear :
20 Pins = 20 Ships quantitatively.
But are they equal in Value ?
Value is the name we give to abstract labour and is Determined (measured) by the Socially Necessary Labour Time embodied in the commodities (the phenomenal form of value).
This quantitative relation is continually varying, whereas value never varies ; 10 hours are always 10 hours, whether embodied in 1 pair or 20 pairs of boots : a very different thing.
A. E. Cook erred when he equated gold to itself instead ol a commodity of a different kind but of like value ; the result was disastrous—for Cook.
Yours Faithfully
P.S. I am sending a copy of this letter to the Editor of the “Socialist.”



A happy thought, that, to finish up with. Possibly it will be disastrous—for Walker.

In replying to my critic the first point to be noted is that Mr. Walker himself admits the correctness of my illustration that double the amount of the same commodity contains double the value. It is as well that Mr. Walker admits this, for I should not have the heart to attempt to reveal so subtle a truth. But this illustration was given to prevent misunderstanding as to my meaning. What does Mr. Walker do in order to prove me wrong? He deliberately ignores my illustration, which, dealing with, quantities of the same commodities, limited my meaning.

What I intended to convey was that in a given sort of commodity the value would correspond to the quantity. I should be the last to claim that I expressed myself well, but at all events Mr. Walker’s admission shows that he was not misled. We cannot all write as clearly as my critic does when he says “Value is the name we give to abstract labour.” (Had I tried to explain this I might have left the impression that the labour was not so abstract but that it retained one quality—it had to be socially necessary labour.) And again, had I tried to explain that value is “determined by the socially necessary labour time embodied in the commodities,” I should assuredly have gone astray after my clumsy fashion, and written that it was the labour and not the labour time which is embodied.

But really when I said value is measured by quantity I certainly did not mean “determined.” To my mind the verb to measure is to ascertain the quantity or dimensions of a thing. Though the socially necessary labour embodied in a commodity determines its value it does not disclose it, for the simple reason that one does not know how much such labour is embodied. This amount has to be ascertained by measurement. And how is it measured ? Quantitatively, in spite of what Mr. Walker says. One named Marx wrote (“Capital,” Chap. III) : “The first chief function of money is to supply commodities with the material for the expression of their values, or to represent their values as Magnitudes of the same denomination, qualitatively equal and quantitatively comparable. It thus serves as a universal measure of value.”

Values, therefore, are quantitatively comparable, i.e., may be compared or measured by quantity—as I said. And money measures alt values—not embodied labour, as Mr. Walker says. And that’s that.

A. E. J.

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