socially necessary and artificial scarcity

No, this isn’t another post about video game money, but it does start there.[1]

I think that the in-game currency that gets sold for real world money has more value (as in socially necessary abstract labor time) than the video games they exist in. I’m not prepared to give a number, but in my interpretation most of the revenue generated in the zero marginal cost industries is monopoly rent. The scarcity of WoW or SWTOR is purely artificial. It is the product of state-enforced monopoly rights and private monopolistic behavior. Ok, fine. Whether you agree with this or not, there is a bigger question. If a video game’s price is (almost) pure rent because they could reproduce another unit at (almost) no cost, why does the same logic not apply to the money in game? While it is true that the scarcity of video game money is also artificial, it is not artificial in the way the video game’s is. The artificial scarcity of video game money is a form of socially necessary artificial scarcity (try to read “scarcity” according to the dictionary definition and not in theory-laden neoclassical terms).

My argument has two basic parts. First, we can not think of money (even commodity money) as a commodity like any other. This goes without saying in the (heterodox) traditions of monetary analysis, but even the most firmly held principles can be forgotten. I’m not going to get into the history of this, but in my reading some of the problems associated with the development of a Marxian theory of money was an insufficient care for the uniqueness of money (in whatever form) . All the worry that theoretical solutions to the value of non-commodity money would throw value theory under the bus or signal a regression to a Smithian theory of value [2] is driven by the assumption that the value of money is like the value of commodities. I do not think it is. For money, it makes sense to think of the value it can command, provided we remember that other side of this coin is the amount of labor workers must provide (offer up to be commanded) in exchange for a unit of money.

Second, the socially necessary conditions of monetary production are influenced by the fact that money is exchange-value, not incidentally but by definition. When Marx writes of the love between money and commodities, he assumes a money commodity, but sees the two as existing at opposite poles.[3] Commodities are use-values “in reality.” Their value remains to be realized by money. Money is exchange-value “in reality.” Its use-value needs to be realized in the form of commodities. The concrete conditions of production of a standard commodity are determined by its use-value. Ice cream requires specific inputs and labor processes in order to satisfy whatever it is we want from it as a use-value. Artificially limiting the amount of ice cream in the economy might change its price, but not its value. Artificial shortages do not help ice cream be ice cream. Money is different. As exchange-value, first and foremost, its socially necessary conditions of production do depend on scarcity. Unlimited ice cream means more ice cream. Unlimited money ceases to be money.

Unlimited video games means more video games. Unlimited money in video games ceases to be money in the video game.

At this point, I am approaching dangerous territory. Without doubt, the artificial imposition of monetary constraints has very rarely been done in a socially just fashion. I am not trying to defend austerity. While I do take issue with the notion that money is purely or arbitrarily artificial [4], I’m not doing so from a monetarist-ish position. Let me return to Marx once more to clarify my perspective. (As usual, this is not done because Das Kapital is the source of all Truth. This is not exegesis. It is just intellectual honesty to cite people.) In Volume 3, Marx differentiates between two types of supervision. There is supervision that exists because complex social production is…complex. There is supervision that exists because of the exploitative class structure of the economy. They may have the same name and even be executed by the same person, by they are very different.[5]

I think the same can be said about money. If we are going to have money, that money will have some degree of social necessary scarcity. However, just like the degree of necessary supervision independent of the mode of production is not a justification for all supervision present in an exploitative economy, the character of monetary scarcity in a capitalist economy is not all socially necessary (in a mode of production independent sense). You could think of this quantitatively – maybe a less capitalist economy (however defined) could have looser monetary policy – but I think it is more interesting to think of it in terms of the relationship between class structure and monetary policy practices.

In short, it is not accidental that monetary policy does not (predominantly) take the form of helicopter drops in capitalist economies. Class biases in monetary policy are not incidental. Although conspiring happens they are also not simply conspiratorial. They have a function. In an economy where some people are incentivized with the promise of endless carrots, but most of the others are motivated with the threat of not enough carrots to get through the day, do not expect central bankers to spend much time passing out fresh produce to the exploited and marginalized.

[1] Much of what follows comes from my dissertation in one way or the other, but the impetus to revisit and reframe comes from a discussion with Mathieu Dufour. Obviously, he is not responsible for anything of the stupidity that may follow.

[2] In the Marxian tradition there have been two basic solutions to the value of non-commodity money. One possibility is to view non-commodity money as a simple representative of the value of commodity money – typically gold. In this case a ratio of paper money in circulation to some quantity of gold (typically the amount that would have been in circulation). Hilferding’s alternative solution is what he calls the “socially necessary value in circulation” (1981, p.47). Instead of linking the value of non-commodity money to a particular commodity, it is tied to the total value of

commodities in circulation. Cutler, Hindess, Hirst and Hussain (1978) argue that both of these solutions are inadequate. In their view, there is no real difference between using one commodity

and using all commodities. Both solutions calculate value in a way that changes the meaning of value itself along the lines of Smith’s command theory of value.

[3] “On the one hand, both sides of this opposition are commodities, hence themselves unities of use-value and value. But this unit of differences is expressed at two opposite poles, and at each pole in an opposite way. This is the alternating relation between the two poles: the commodity is in reality a use-value; its existence as a value appears only ideally, in its price, through which it is related to the real embodiment of its value, the gold…Inversely, the material of gold ranks only as the materialization of value, as money. It is therefore in reality exchange-value. Its use-value appears only ideally in the series of expressions of relative value within which it confronts all the other commodities as the totality of real embodiments of its utility.” (p.199)

[4] “Those at the very tip of our economic pyramid understand that fiat money is unlimited, but most everyone below believes it to be scarce. We live under austerity and debt. But it doesn’t have to be this way. The idea that we don’t have the “money” to supply essential public goods to everyone is a pernicious myth that can only be maintained so long as we remain ignorant of how money actually functions. But this myth is merely justification for power structures that are ultimately backed by guns and the vastly unequal distribution of our finite planet’s resources. Knowledge is no substitute for political power. It is merely somewhere to start.” (link)

[5] I sometimes make a similar point about teaching. Some of the disciplinary or supervisory activities a teacher engages in are due to the complicated nature of education. Even a student who is internally motivated to improve their reading or writing could (at times) benefit from having someone to impose deadlines. In college, I would sometimes take classes I liked, but there were other classes I chose because they taught me things I needed to be partially forced to learn. Some of the disciplinary or supervisory activities are due to the fact that some simply do not want to be in a class, attending due to external motivations like future income, parental demands, or party time.

(Edit: What follows looks atrocious. If anyone has jabref to blogdesk exporting tips, let me know. Otherwise, let it look atrocious.)

Cutler, A., Hindess, B., Hirst, P. & Hussain, A. Marx’s `Capital’ and Capitalism Today Routledge and Kegan Paul, 1978, Vol. 2
Hilferding, R.
Finance capital : a study of the latest phase of capitalist development.
Routledge and Kegan Paul, 1981
Marx, K. Capital Vol. 2 Penguin Books, 1978.
Marx, K. Capital Vol. 3 Penguin Books, 1981.
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