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Labor Power as the ‘Money Commodity’ — Peter Cooper

Summary:
For Marx and many Marxists, money is based in a commodity; in Modern Monetary Theory (MMT), it is not, being based instead in a social relationship that holds more generally than just to commodity production and exchange. Even so, to the extent that commodity production and exchange are given sway within ‘modern money’ economies, operation of the Marxian ‘law of value’ appears to be compatible with MMT. It is just that, from an MMT perspective, private for-profit market-based activity will be embedded within, and delimited by, a broader social and legal framework that is – or at least can be – decisively shaped by currency-issuing government. Therefore, even though in MMT money is not regarded as a commodity, it seems that a commodity theory of money can be reconciled with MMT provided,

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For Marx and many Marxists, money is based in a commodity; in Modern Monetary Theory (MMT), it is not, being based instead in a social relationship that holds more generally than just to commodity production and exchange. Even so, to the extent that commodity production and exchange are given sway within ‘modern money’ economies, operation of the Marxian ‘law of value’ appears to be compatible with MMT. It is just that, from an MMT perspective, private for-profit market-based activity will be embedded within, and delimited by, a broader social and legal framework that is – or at least can be – decisively shaped by currency-issuing government. Therefore, even though in MMT money is not regarded as a commodity, it seems that a commodity theory of money can be reconciled with MMT provided, first of all, that the connection between a money commodity and currency is understood to apply only to the sphere of commodities and, secondly, that it is legitimate to regard labor power as the ‘money commodity’. An earlier post gave some consideration to the social embeddedness of commodity production and exchange. The present focus is on the notion of labor power as money commodity. On this point, MMT can be understood as directly linking currency to labor power, which, as Marx demonstrated, is a commodity under capitalism. This raises the question of whether labor power can serve the role of money commodity in Marx’s theory.For Marx and many Marxists, money is based in a commodity; in Modern Monetary Theory (MMT), it is not, being based instead in a social relationship that holds more generally than just to commodity production and exchange. Even so, to the extent that commodity production and exchange are given sway within ‘modern money’ economies, operation of the Marxian ‘law of value’ appears to be compatible with MMT. It is just that, from an MMT perspective, private for-profit market-based activity will be embedded within, and delimited by, a broader social and legal framework that is – or at least can be – decisively shaped by currency-issuing government. Therefore, even though in MMT money is not regarded as a commodity, it seems that a commodity theory of money can be reconciled with MMT provided, first of all, that the connection between a money commodity and currency is understood to apply only to the sphere of commodities and, secondly, that it is legitimate to regard labor power as the ‘money commodity’. An earlier post gave some consideration to the social embeddedness of commodity production and exchange. The present focus is on the notion of labor power as money commodity. On this point, MMT can be understood as directly linking currency to labor power, which, as Marx demonstrated, is a commodity under capitalism. This raises the question of whether labor power can serve the role of money commodity in Marx’s theory....
Interesting post. It brings to mind the notion that if labor power is the "money commodity," then "money," which in modern time is government currency, has "commodity power." In mercantilist times, the basic "money commodity" was gold or gold and silver, or silver, depending the historical period. However, Marx's analysis of the extraction of surplus value by the ownership (rentier) class from the working class — farmers in a (feudal) agricultural society and factory workers in a (capitalist) industrial society shows that labor (time and power) are fundamental. The factory workers that dominate the "working class" in numbers are subject to expropriation of property similar to that of serfs and peasants under feudalism. Under capitalism the managerial class has greater bargaining power than the working class since their quality of labor power is scarcer, being more highly skill and specialized. So the rate of expropriation may be less and at the upper levels top management has managed to "split the profits" with the owners.

A monetary system that is based on precious metals or other objects of barter conceals that labor power is foundational. A state money system makes it clear that the "money commodity" is actually labor power. This somewhat obscured in a fixed rate convertible monetary system in which "money" is anchored to a commodity other than labor power, especially when the "money thing" is a natural commodity like stamped coins minted from precious metals. But the reality is that all monetary exchange is based on labor power as the "money commodity" since it is not "money" that creates commodities but rather labor power.

I am not sure to what degree labor power is correctly categorized as a commodity, however. At the very least, labor power is not a naturally existing commodity since labor power other than unskilled labor is a function of time and ability and specialized ability has to be acquired. Nothing similar to this pertains to commodities defined as goods produced for exchange rather than use, which equates to good produced for sale in a monetary production economy.

As a philosopher, I am skeptical about "commoditizing" humans, which, of course, is what the institution of slavery does. The deep ethical question is whether there is a progression from slavery to serfdom to work for hire in which workers are income dependent. Some serious thinker posit that there is such a connection.

This seems to me to be fundamental to the thinking of Marx. Labor is not a natural commodity for Marx, but only becomes a commodity in a monetary production economy. His analysis of capitalist production shows how work for hire is another from of expropriation of real value from workers through the equation of value with price in a market-based capitalist society whose foundation is a monetary production economy. His solution is to change that foundation for one that supports real freedom rather than the illusion of freedom characteristic of 18th century bourgeois liberalism, a foundation that persists today.

As a philosopher, it strikes me that the fundamental issue in economics is value theory. The equation of value with price is based on either assumption or handwaving. Marx got this. He realized that there is much more to economic value than can be captured by price in markets, and also that that markets are not necessarily reflective of true cost where cost includes real resources.

A good example of this is the present existential crisis presented by climate change, which can be trace in part at least to negative externality, where gain is capitalized while part of the cost is socialized through the false assumption that the "the solution to pollution is dilution." Similarly, for Marx, extraction of surplus value is also a negative externality that workers "pay for" through labor that is not justly compensated for it full contribution. This is concealed by the conventional economic theory of reward being determined on the basis of marginal product.

Forced unpaid work is a form of slavery. In a monetary production economy where income from work is a vital necessity, the extraction of surplus value from workers that have insufficient bargaining power to exact just compensation for the contribution of their labor time and power is forced unpaid work.

The MMT job guarantee (JG or ELR) is a step toward connecting "the commodity power of money" directly with labor power through a living wage. However, this just returns workers under capitalism to the position of serfs and peasants that were self-sufficient in terms of their own production and limited needs in agricultural societies. With the advent of the industrial age and the mass moving, often forced, of former agricultural workers to factories that all changed as urban workers became income-dependent, forced to "work for a living" by bidding their labor power in markets at the going offers.

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Labor Power as the ‘Money Commodity’
Peter Cooper

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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