ABRIDGED PRESENTATION AS DELIVERED AT HISTORICAL MATERIALISM IN LONDON IN NOVEMBER.
November 7, 2024 3 Comments
This will be my actual delivery due to the constraints of time at this year’s Historical Materialism Conference in London.
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Brian, what’s the difference between this version of your essay and the previous one? I also find it interesting that, in a presentation on Marx’s monetary theory, you only mention the word “gold” twice—first as a metaphor and then in reference to the Bretton Woods agreement. Do you lean toward the dematerialization thesis, or do you share the view held by a minority of Marxists that gold still plays a monetary role through the market, where the price of gold acts as the inverse of the dollar’s value?
Evidence shows that roughly a quarter of all the gold ever mined is held by central banks, suggesting that its monetary role persists despite the end of official convertibility. This is because the link between commodity money and monetary symbols is established in the market. The price of gold (measured in dollars) in a way reflects the value content of the dollar itself. Of course, this relationship is not linear: the tension between commodity money and value symbols becomes apparent during economic crises and currency runs.
In normal periods, when the profit rate is high and capital accumulation accelerates, a virtuous cycle of endogenous money creation emerges, and the link between commodity money and monetary symbols may seem to disappear; the convertibility at a set rate is not questioned. But almost all crises are preceded by a rise in the price of gold and an increase in its value relative to other metals, such as copper.
I can’t go into further detail here due to space, but once I finish reading this new version, I’ll try to send you my thoughts via email. Best regards!
Even in Marx’s day he saw gold as global clearing money which rebounded on the internal money supply by its movement between countries. It was not directly currency. Because I helped build the National Union of Mineworkers in South Africa in the 1970s I have always taken a keen interest in gold. Over the years I have sought correlations between the gold price and the exchange value of the dollar but it continuously breaks down. Currently the dollar is at a new high and so is gold.
Its important to distinguish gold as the money medium from its role as a store of value. In all cases when risks increase both internally and externally the price of gold has soared. It did so after the 2008 crash, during COVID and now with the BRICS countries loading up on gold in the face of a growing geopolitical storm. It is seen as a safe haven and one wonders what its dollar price will zoom up to when the Dollar crisis breaks out.
In so far as using gold as money, something which has been discussed in BRICS circles, this would be a mistake meaning lessons coming out of the collapse of Bretton Woods have not been learnt. I think it more probable that a new global currency will be digital and based on a real time moving weight of international currencies. The more the merrier as this will be less punitive for less developed economies.
Just quickly on gold and copper. In a recession the copper price will fall in line with the fall in investment. But true recessions are also financial events when debt has to be written off creating financial uncertainty. It is a time when money is the king and gold the queen because gold is an unassailable store of value. in high demand