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Note that this piece from Naked Capitalism perpetuates an error, in omitting money as a standard of deferred payment from the mainstream definition of money.

If the demand for anything in general is meant, I do not see that money as we know it is badly necessary

If what is meant is effective demand, then the discussion makes sense, but then if we ask what converts "desire" demand into effective demand, then its the willingness of the supplying party to accept the instrument in exchange, and something that people in general are willing to accept in exchange would have exchange value.

In other words, this passage is playing a semantic game:

Money is not a store of value. Can it reliably be a measure of value? Economically worthless things may be in much demand, and therefore command a price beyond their value.

(1) It is supposing "economic value" that is distinct from exchange value, (2) tacitly assuming that all discussion of value involves that "economic value" (3) following from that supposition, it clearly will be the case that there will be things with substantial exchange value and little or not "economic value", and from demonstration of a supposed example, (4) it is concluded that money does not store "economic value", which has been assumed to be the only thing that "value" can mean.

But then, all along, if money is a more or less effective store of value, it is exchange value that it is storing, so conflating all "value" with an "economic value" that is supposed to be distinct from exchange value is begging the question ... building the conclusion into the assumptions.

And the assumption in question is a purely semantic one, that "value" always and everywhere refers to "economic value", and never to exchange value.

But to the extent that a current effectively serves as a store of value, what has always been exchange value that it stores.

So this argument goes much deeper into the past than forgetting everything we learned following the 1930's work of Keynes and Kalecki ... it is forgetting the 1700's and early 1800's work of Smith, Ricardo and Mill.

At least it is forgetting the work of the classical political economists to re-invent the wheel ... to rediscover the distinctions between use value, production value and exchange value, under newly invented language ...

... rather than forgetting the work of Keynes, Kalecki and their followers in order to pretend that the previous falsified theories of the economy had not been falsified.

But money is introduced for very tangible purposes - thus the definition should not be self-referential.

Except that if it is not introduced for economic interaction with an already money using economy, money as such does not seem to have been introduced ... rather, tax accounting with portable instruments is introduced, and money evolves from the portable tax accounting instruments.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Jul 1st, 2015 at 08:59:05 PM EST
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