This debate between Ann Pettifor and James Rickards, author of The Road to Ruin, took place at the Royal Society of Surgeons, London, on 30th November, 2016. The future of the international financial system was at the core of the debate, with Pettifor contesting Rickards’ view that “gold is money” and that the economy can be compared to a biological system. Instead, she asserted, the economy is man-made and can be remade. The debate is about an hour long and can be viewed here.
hey boffy, get over yourself
Gold is not money. It is the money commodity, i.e. the commodity in which the value of commodities has historically been measured. In that regard it is only the latest in a number of commodities that have fulfilled that role. As Engels points out, in his Supplement to Capital Volume III, the first commodity that was used as the universal equivalent, i.e. the money commodity, was cattle.
Money is really abstract labour-time, which takes physical form in the shape of some universally accepted, equivalent commodity, be that commodity cattle, salt, copper, silver or gold. The commodity used has to fulfil a number of requirements, for example it must be movable, which is why land has never been used as money; it must itself have value, i.e. have been the product of labour, it should be homogeneous, which is why things such as cattle give way to precious metals such as silver or gold; it must be easily divisible into smaller units; it should be durable rather than perishable, which is also why precious metals increasingly take on that role; it should be easily storable, so that commodities that contain a lot of value in only a small physical mass become the most suitable for that purpose.
Money is a claim to an amount of labour-time. It is, at the most basic, the intermediate means by which the basis of barter by which one side of a trade provided an equal amount of abstract labour-time, for that provided by the other side of the trade, is extended so that it is no longer necessary for both sides of this exchange to need a priori what the other has to exchange, because both will accept, the universal equivalent commodity – the money commodity.
In that respect, as Marx sets out in Theories of Surplus Value, every commodity is money, because every commodity can be used to buy other commodities, if the other party will accept some other commodity for what they have to sell. Every commodity is able to obtain an equivalent amount of value for that which it possesses, and that value can then be used to acquire some other commodity of equal value.
In fact, money increasingly only functions as means of payment in this regard, to cover the difference between the values of commodities actually exchanged. In other words, if company A sells £100 of commodities to company B, which in turn sells only £80 of commodities to company A, the only money involved will be a money payment of £20 from B to A to cover the balance of the fact that B paid for the £100 of commodities it bought from A with its own commodities and not with money.
The more commercial credit is developed, so that companies exchange their products on this basis, and only the resultant balances of the exchanges have to be settled at some predetermined settlement dates, the more money becomes merely a means of payment rather than a means of circulation. As the above shows £200 of value of commodities was circulated, but only £20 of money was required in order to effect that circulation.
As Marx demonstrates in Theories of Surplus Value, looking at the exchanges set out by the Physiocrats in the Tableau Economique, this is also affected by the rate of circulation of commodities. The more frequently commodities are bought with other commodities via credit, the less money is required to intervene in the process.
With more and more transactions being undertaken electronically the less money even fulfills the function of means of payment rather than means of circulation, and becomes primarily a store of value, and unit of account. I do not need to hold an amount of gold in my bank account to cover the balancing settlement payments I must make, because the balancing payment can be made simply by an electronic transfer of an amount of value from my bank account to the clearing centre. All that is required is that I have sufficient value in my account to make that transfer legitimately.
In the end, this legitimate value is nothing more than a claim to, an equivalence of my claim to a portion of social labour-time.