The daily worker. [volume] (Chicago, Ill.) 1924-1958, 1927-09-19


of prices to pre-war level is to be
expected about the year 1885. This
fall will come about, according to
Professor Eide, because by that date
there will exist world shortage of
gold.
EyAD the professor stopped with that
"a observation we would not ques-
ton the soundness of his abstract
formula. Granted that the value of
all other commodities remains sta
tionary shortage of gold would I'M
questionably result in a fall in prices.
This is true because Of the fact that
the gold standard prevails through
out the world. Gold is the one COM
Nudity that is predominant as money,
the universal equivalent of all COM
modities. The value of gold is de-
termined in precisely the same man.
ner as the value of any other COM
modify is determined the amount
of socially-necessary labor-time re-
quired for it's reproduction. If, for
any reason whatsoever, it is possible
to produce gold with less expenditure
of labor its value will fall, just the
same as the value of a coat, sack of
flour or one of Professor Edie's text
books falls with increased productivity
of labor. On the other hand its value
will rise in case it requires more ex-
penditure of sociallyrnecessary labor
time to produce it.
If, as Edie predicts there will be
world shortage of gold it will in
dictate rise in its value, hence it will
require a smaller amount of gold than
formerly to purchase other COM
modities. If Edie can bring forth
facts regarding the probable fall in
gold production to substantiate his
declaration, then he is on solid ground
as far as his argument is concerned.
But he doesn't produce any evidence
at all to substantiate his claim. In
fact he says nothing at all about the
productivity Of gold mines, but bases
his predictions solely upon the super
fetal phenomena of bank deposits
Says the eminent pedagogue:
"Since 1925 demand deposits in
the banks have remained prac-
tically stationary. The normal
process of growth would have re-
quired that they increase about
per cent annually. Their failure to
do so is an indication of deficiency
in such deposits. Unless bank de-
! posits grow at the rate of about
4 to per cent per annum prices
are certain to fall"
One who rejects the MARKHAM labor
law of value and concocts a "new
economics" out of synthesis of the
Austrian marginal-utility school which
is based upon the idea that the de-
sires of the consumer determines
value. the school of John Bates Clark
and Thomas Nixon Carver which en-
phasize group motives and the-Vagar-
les of the "new psychology" would
be capable Of confusing gold produc-
ton with bank deposits as does this
eminent writer of textbooks for uni
versity economic classes.
THE indescribable confusion of Pro.
fessor Edie is due to his in.
vincible ignorance Of the function Of
money as a medium of circulation
Like so many of the vulgar econ
nomists he imagines that the volume
of money determines the circulation
Of commodities.
Although money is the circulating
medium, it is not the cause of the
circulation of commodities. 1t is not
the movement of money that deter.
mines the circulation of commodities
but the circulation Of commodities
that determines the movement Of
money.
Edie's prediction contains another
grave fallacy, the idea that the
volume of money required for circu.
lation must be equal to the volume
Of commodities in circulation, when
as matter Of fact, under certain
conditions a comparatively small
amount of money functions as the
medium Of circulation for a large
number of commodities. For in.
stance, let us say the circulation Of
commodities is Sly nor dav of 1ls