GOLD, CAPITAL and the MONETARY

well-stocked British or American library today contain literally scores of books on the 'monetary crisis.

Especially over the last decade there has been a veritable flood of reports, pamphlets and investigations into the nature of the illness now afflicting the capitalist monetary system.

A favourite theme of much of this work is that capitalism is now suffering from an acute 'liquidity crisis'.

The threat to world trade and the future stability of the system is, we are informed, an inadequacy in the means for settling international debt. The gold, dollar, and sterling reserves are inadequate to meet the needs of an expanding world trade.

Only if means are found to supplement these present serves can crisis and disaster be averted. This has led many eminent economists and bank. ers to demand the creation of 'new money' which would either replace or provide addition to the present sources of liquidity.

Why not allow a central bank, such as the International Monetary Fund, to print an agreed quantity such paper money which could then distributed to the capitalist states ?

Indeed such proposals, in a limited form at least, have been put into operation in the form of the creation of Special Drawing Rights (or pape gold'). And as early as 1944 Keynes had proposed the creation of a new world reserve currency Bancor which would have done away with the 'barbarous relic' In the elaboration of such schemes the capitalist class shows that the true nature of the systems remains a mystery to it.

In the space of this brief article we shall show why such "solutions' Utopian and arise from a total misconception of capitalism nature of its crisis.

Marx himself treated with great scorn many of his contemporaries who also failed to see the real role which money played in capitalist economy. They always tended to see it as a clever device which man had invented to overcome the problems and inconveniences of barter.

Instead of exchanging goats for sheep, one used money as the intermediary in the process.

In reply Marx stressed that capitalism possessed a series of unique features which meant that money played a quite different role under this mode of production than any of the bourgeois economists realized.

These features we can briefly summarize:

All production tends to be for the market and not for the producer's own use In other words, commodity production tends to be the dominAmerican monopolies move into Europe By an industrial US INDUSTRY increased its stake in Europe by over £2 millions during 1968, Commerce Department figures revealed earlier this week.

But the impact of rigid controls on overseas investment by the Nixon Administration is underlined by the fact that over £1.3 millions of this total was raised outside the United States, virtually all through the Euro-dollar market.

Take-overs

It is this severe competition for funds in • the European money markets which has forced up interest rates to ant form of production under capitalism.

• Labour power, or the ability to work, itself becomes a commodity.

• Production, the means of which are privately owned, is undertaken for profit.

He showed that each commodity had two 'aspects' or 'sides.

It was in the first place a use value-a pair of shoes was useful for walking in.

At the same time it had an exchange value.

It contained a definite proportion of the total labour time of society - the time which under average conditions had been involved in making the commodity.

The value It was this socially necessary labour time which determined the value of the commodity.

Thus a pair of shoes which, under average conditions took twice as long to make as a shirt would be twice as valuable.

Now a capitalist does not engage in production in order to create use values.

In fact he has no interest in the use to which the commodities which he produces might or might not be put.

What interests him alone is the exchange value contained in the commodities he makes. He will buy commodities (C) and through the exploitation of labour he will transform these commodities (say steel, coal, glass, rubber, etc.) into other commodities of a greater value (C) and a different use value (say motor cars).

But here the process cannot finish.

Henry Ford is not interested in a field full of cars.

In order to restart the process he must exchange his cars into another commodity which he can then use to purchase even greater quantities of steel, machinery, rubber, glass and labour power.

In capitalist economy it is money which plays this vital role.

A capitalist thus starts with money (M), buys his commodities (C), transforms them into commodities of a greater value (C) which he then must realize in the form of money This was the process of Henry Ford:

What interested him was a commodity's exchange value. correspondent record high levels and added considerably to the financial crisis facing European capitalism.

Two more US monopoly take-overs in. Europe were announced on Monday.

Westinghouse Electric plan to take over a majority stake in the equity of the French firm Jeumont-Schneider, while Borg-Warner has announced proposals to link up with Lahnradfabrik Friedrichshafen, of West Germany, to produce automatic transmissions for marketing in Europe.

The giants of the world capitalist system are preparing themselves for battle, not only against each other, but the working class. capital accumulation drove capitalism along.

Marx showed that it was a break in this process which produced the tendency towards breakdown and crisis inherent in capitalism.

Thus with the development of capitalism money separates itself out from all other commodities. Its use value lies solely in its command over the exchange value of all the other commodities.

But why should gold play such a crucial role in the world monetary system ?

It has been the basis both of the old gold standard and the gold - exchange standard which replaced it after 1934 when all currencies of the world were eventually linked to gold via the dollar.

For the bourgeoisie this question always remains a Gold, they tell us, plays this role because it is 'intrinsically valuable', , because it is 'precious' or 'rare' or even that it is "beautiful'.

Others give up even these so-called 'explanations' and inform us that gold enjoys its present status because it 'has always been the basis of the monetary system'.

In fact gold, because of the peculiar characteristics of this commodity, has been selected through the processes of history to play the role of world money. This is why it remains, ultimately, the means of international payment and debt settlement and under capitalism must do so.

What are the special material qualities of gold ?

It is extremely durable, of uniform quality, easily divisible and weighed.

Its comparative rarity in the earth's crust also means that a large magnitude of value is contained in a small quantity of the metal. The fact that the technical conditions under which it is mined have been relatively constant over a long period has also helped to stabilize its value.

In periods of expansion and prosperity, the capitalist may spurn gold as worthless form in which to store money.

It is the onset of the crisis which makes clear for all to the , role which money (gold) plays. With prices falling the capitalists rush out of commodities and into money.

'On the eve of the crisis the bourgeois, with the self-sufficiency that springs from intoxicating prosperity, declares money to be a vain imagination. Commodities alone are money. But now the everywhere: money alone is a commodity! As the hart pants after fresh water, so onts hisaltul after pioney: p. 155 Kerr ed.)

This is why the hope that capitalism can continue to resolve its crisis simply by resort to the printing press through the creation of a new international money is utterly illusionary.

Gold cannot be dispensed with under capitalism. If the capitalists have confidence alone in this form of wealth in a crisis it is because of the particular features of gold as a commodity.

To see money merely as a John Maynard Keynes in 1944 proposed the creation reserve currency-Bancor-which would have done 'barbarous relic' of gold.

the limits imposed by metallic barrier.

Especially in the present century and above all after the last war with the application of Keyensian monetary techniques, governments have expanded credit considerably beyond the value of gold in their possession. After 1945 they were largely forced to such measures by the power of the working class, demanding higher wages and living standards and determined never to return to the 1930s.

As Marx showed, even for the last century this creation of credit—in the form of paper currency and bank money-plays a vital role in extending the period of expansion in time of upswing of the type which followed the end of the last war.

Not only is considerably more capital placed at the disposal of each individual capitalist than would otherwise be the case without the credit system, but the pace of accumulation and concentration of capital is accelerated.

Complete collapse

All these were clearly consequences of the application of: Keynesianism over last 25 years.

But, Marx showed there were definite limits beyond which this process cannot go.

The more the volume of credit was expanded on a of a new world away with the narrower gold base, the greater the possibility of a collapse of the entire superstructure of credit.

A slight disturbance in one sector or country can rapidly spread in a chain reaction to the entire system once more.

For capitalism such a crisis is inevitable and necessary. Only through such a collapse will the 'correct' relationship between gold and paper money be re-established. would involve a bankruptcy But such correction for large areas of capitalism, especially in Europe, which has been rebuilt after the war largely on credit provided by the Americans.

Trade war

Above all it would unleash a trade war of unprecedented proportions and the attacks which this is now involving and will require on a much higher scale against the working class.

In other words, for the ruling class there can be no longer a solution to the currency crisis simply through a series of clever techniques or manipulations.

It is only through enormous attacks on the living standards of the working class— which means attempts to smash its organizations of struggle-that value can once more be put back into the monetary system and any 'stability', even on a temporary basis, be re-established. for run BRITISH and European shipping lines have formed a consortium for the Australian containership Its aim is to establish a monopoly on this run.

13 shipping lines from Britain, France, Germany, the Netherlands, Italy and Australia will next summer form the Australia Container Service (ACS).

ACS will operate 14 big container ships representing an investment of over £100 million.

Computer control

The movements of each ship and the allocation of cargoes will be controlled by a computer in the consortium's London headquarters.

The formation of such groups as ACS is made necessary by the huge • increase in productivity brought about by container ships.

The 14 ACS container ships will be able to carry the entire European-Australia cargo trade.

If each of the existing shipping lines introduced containerships, enormous surplus capacity would result and the trade would yield no profits at all.

But the formation of cartels cannot avoid the sharpening competition which containerships must bring.

Cartels mean the grouping of companies into powerful blocs for fighting the coming cargo rate-war.

Surplus capacity

Indeed the formation of ACS was stimulated when France ordered two big container ships.

This meant that there would be surplus containership capacity and cut-throat competition on the Australia run.

Three Scandinavian lines are expected to challenge the ACS monopoly with a new fleet of fast container/roll-on ships.

There is also a likelihood that US shipping lines may intrude into the Australia No matter what attempts the shipping companies make to group themselves into monopolies, a planned shipping industry under capitalism is impossible.

Only when capitalist private ownership and the nation state are abolished through the establishment of socialism will this be possible.

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