The Future of Physical Gold (Part III)

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The Future of Physical Gold (Part III)

Part III of a series on gold, focusing on Marx's "realization problem" and its implications for the global financial system in general, and the theory of Freegold specifically.

The Future of Physical Gold, Part III - The Final Realization


In Part I and Part II of this series, Dialectic Foundations and The Evolution of Value, we discussed how the material conditions of human existence drove the evolution of the capitalist political economy, and how wealth came to be created through the production of "surplus value" from commodity inputs (= its objective "use-value" minus its "exchange-value"). The fruits of surplus value were increasingly concentrated among those who controlled productive assets and managed cash flows (finance) in the "wealth accumulation" circuit (M-C-M+).

However, this value cannot be realized without monetizing the exchange-values of finished products or services in a market. The realization of surplus value becomes a significant barrier to capitalist growth when workers cannot keep up pace through proportionally increasing wages in an unfriendly, time-constrained environment (only 24 hours in a day), while thousands are also displaced by technological gains and added to the "reserve labor army" of the unemployed. The latter process was heavily influenced by the discovery of fossil fuels, which allowed machinery capital to generate a higher ratio of surplus value than labor.

As the dialectic struggle between workers and capitalists progressed, certain political concessions had to be made by the latter so they could continue recycling surplus value in consumer and investment markets. For example, a minimum wage had to be set, basic working conditions had to be improved and monopolies had to be prevented or disbanded so companies within an industry could theoretically offer competitive prices and wages. The "Socialist" revolutions of Russia, Eastern Europe, Latin America and China provide extreme examples of political concessions that did little to alter the fundamental reality of workers living in a world marked by capitalist relations of production.

Many "progressive" labor policies became more prominent in the West after World War II, when aggressive "safety nets" were created and labor was allowed to organize at larger scales. This trend was largely aided by the natural dialectic pullback from the perceived failures of capitalism during the Great Depression, which ultimately only ended for the the world through a global war effort. The monetary circuit (M-C-M+) of surplus value, however, cannot function well when labor's share of power is growing, which caused the "neo-liberal revolution" of the 1970s to reverse the trend and give an unprecedented wealth advantage to the purveyors of speculative financial capital.


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