This conference will address issues around the role of money in contemporary capitalism, in both national and international contexts. Its starting point is a new book by Prabhat Patnaik ("The value of money", Tulika Books and Columbia University Press 2008) which will also be released at the conference. The first part of the conference will focus on a consideration and assessment of the arguments made in the book, at both theoretical and empirical levels. The second part of the conference will be devoted to analyses of recent tendencies in money, finance and real economies in particular countries and in the world economy.

About the book
This book provides a logical critique of monetarism, which has become the dominant stream of contemporary macroeconomics. However, it is a critique along lines very different from what is generally advanced. As against the monetarist view that the value of money vis-à-vis commodities is determined by demand and supply of money, it argues that the value of money is given from outside the realm of demand and supply.

This latter position (described as "propertyism" by Patnaik) is one that also characterised the work of both Marx and Keynes. In Keynes the value of money vis-à-vis commodities in any period was given from outside the realm of demand and supply, by the fact that the exchange ratio between money and the commodity labour power, i.e. the money wages, were given. In Marx the value of money vis-à-vis commodities was given by the Labour Theory of Value. Therefore Patnaik posits a different division of economics: not in terms of the usual distinction made between the "classical" (i.e. Ricardo-Marx) and the "marginalist" (i.e. Menger-Jevons-Walras) traditions, but one between "monetarists" (including Ricardo) on the one hand and Marx and Keynes on the other.

Patnaik argues that the recognition that the value of money is fixed from outside the realm of demand and supply is a logical pre-requisite for recognizing that there may be a deficiency of aggregate demand in a capitalist economy, since this fixing of the value of money independent of demand and supply is what underlies the holding of money as a form of wealth. This is why both Marx and Keynes had talked of "involuntary unemployment" caused by insufficient demand while neither Ricardo nor contemporary monetarists recognize this possibility.

However, even while Patnaik argues for the logical superiority of the Marx-Keynes tradition over the monetarist one, and hence by implication over the Walrasian tradition in a money-using world, he also critiques both Marx and Keynes for the incompleteness of the break they made with orthodoxy. This incompleteness is based on their perception of capitalism as a self-contained system. Patnaik shows that the break from monetarism can become logically complete only if we recognize that capitalism is not a self-contained system, but one that is ensconced within a pre-capitalist setting and interacts with it incessantly.

This theory of the value of money in capitalism therefore logically leads to a theory of imperialism. This leads Patnaik to a discussion of the international monetary system. He argues that even while the world economy may appear to have done away with commodity money by de-linking the US dollar from gold, in fact it can never actually do so. The value of money, even paper/credit money, arises because of its link to commodities. Stability in the international monetary system requires the persistence of the confidence of the capitalist world’s wealth-holders in the leading economy’s currency as a stable medium for holding wealth, and this depends on the continued perception of global hegemony of the leading economy. Patnaik refers to the current international monetary regime as the oil-dollar standard, and provides an explanation for the Iraq war in terms of the need to stabilise the oil-dollar standard.

Recent developments in money, finance and the world economy
The rest of the conference will be devoted to recent developments in money, finance and the world economy. Some of the topics likely to be taken up are:

• The global implications of the current financial crisis in the US.
    
• The role of the Euro, and the possibility and implications of growing inter-imperialist rivalry.
    
• Control over natural resources in the world economy – emerging trends and issues of distribution.
    
• The nature and sustainability of recent rapid growth in the developing world.

June 19, 2008.