This conference will address issues around the role
of money in contemporary capitalism, in both national
and international contexts. Its starting point is
a new book by Prabhat Patnaik ("The value of
money", Tulika Books and Columbia University
Press 2008) which will also be released at the conference.
The first part of the conference will focus on a consideration
and assessment of the arguments made in the book,
at both theoretical and empirical levels. The second
part of the conference will be devoted to analyses
of recent tendencies in money, finance and real economies
in particular countries and in the world economy.
About the book
This book provides a logical critique of monetarism,
which has become the dominant stream of contemporary
macroeconomics. However, it is a critique along lines
very different from what is generally advanced. As
against the monetarist view that the value of money
vis-à-vis commodities is determined by demand
and supply of money, it argues that the value of money
is given from outside the realm of demand and supply.
This latter position (described as "propertyism"
by Patnaik) is one that also characterised the work
of both Marx and Keynes. In Keynes the value of money
vis-à-vis commodities in any period was given
from outside the realm of demand and supply, by the
fact that the exchange ratio between money and the
commodity labour power, i.e. the money wages, were
given. In Marx the value of money vis-à-vis
commodities was given by the Labour Theory of Value.
Therefore Patnaik posits a different division of economics:
not in terms of the usual distinction made between
the "classical" (i.e. Ricardo-Marx) and
the "marginalist" (i.e. Menger-Jevons-Walras)
traditions, but one between "monetarists"
(including Ricardo) on the one hand and Marx and Keynes
on the other.
Patnaik argues that the recognition that the value
of money is fixed from outside the realm of demand
and supply is a logical pre-requisite for recognizing
that there may be a deficiency of aggregate demand
in a capitalist economy, since this fixing of the
value of money independent of demand and supply is
what underlies the holding of money as a form of wealth.
This is why both Marx and Keynes had talked of "involuntary
unemployment" caused by insufficient demand while
neither Ricardo nor contemporary monetarists recognize
this possibility.
However, even while Patnaik argues for the logical
superiority of the Marx-Keynes tradition over the
monetarist one, and hence by implication over the
Walrasian tradition in a money-using world, he also
critiques both Marx and Keynes for the incompleteness
of the break they made with orthodoxy. This incompleteness
is based on their perception of capitalism as a self-contained
system. Patnaik shows that the break from monetarism
can become logically complete only if we recognize
that capitalism is not a self-contained system, but
one that is ensconced within a pre-capitalist setting
and interacts with it incessantly.
This theory of the value of money in capitalism therefore
logically leads to a theory of imperialism. This leads
Patnaik to a discussion of the international monetary
system. He argues that even while the world economy
may appear to have done away with commodity money
by de-linking the US dollar from gold, in fact it
can never actually do so. The value of money, even
paper/credit money, arises because of its link to
commodities. Stability in the international monetary
system requires the persistence of the confidence
of the capitalist world’s wealth-holders in the leading
economy’s currency as a stable medium for holding
wealth, and this depends on the continued perception
of global hegemony of the leading economy. Patnaik
refers to the current international monetary regime
as the oil-dollar standard, and provides an explanation
for the Iraq war in terms of the need to stabilise
the oil-dollar standard.
Recent developments in money, finance and the world
economy
The rest of the conference will be devoted to recent
developments in money, finance and the world economy.
Some of the topics likely to be taken up are:
- The global implications of the current financial
crisis in the US.
- The role of the Euro, and the possibility and
implications of growing inter-imperialist rivalry.
- Control over natural resources in the world economy
– emerging trends and issues of distribution.
- The nature and sustainability of recent rapid
growth in the developing world.
June 19, 2008.
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