August 27, 2007

Purchases without Sales (Counterfeit Money)

Filed under: Economics, Philosophy — duncan @ 7:51 pm

Apologies again for the snails pace of this blog’s progress. I can burn through literature – but when it comes to reading economics, I need to stop after every ten pages to have a little lie down.

Something I’ve encountered quite a bit in my desultory reading is the idea that every sale has its corresponding purchase. Here’s Milton Friedman: “the number of pairs of shoes sold is precisely equal to the number bought. Arithmetic is arithmetic and one man’s purchase is another man’s sale.” (Capitalism and Freedom, p. 61). Obviously this makes a lot of sense, but let’s stay with it for a minute. As it happens I bought a new pair of shoes this weekend, so I’m up to speed here. Imagine that when I bought my Clarkes discount store pair of smart black work shoes I paid with a fake twenty. It looked like a regular twenty, but on close inspection bore the likeness of Montesquieu, not Adam Smith. Now, the honest but bored shop assistant didn’t notice anything wrong at the time; that evening, however, when cashing up, she spotted the forgery.

What’s happened to this sale and purchase? I’ve got my pair of shoes; I’ve paid for it with money I got from Tesco Metro (breaking a fifty). Honest Clarkes don’t put the fake back into circulation – they send it to the Bank of England. They’ve lost out.

If we choose we can now retrospectively say that this was not a sale or a purchase; it was a witting or unwitting theft. Or, if we like, we can say that this was a proper sale and purchase, and Clarkes will include the loss in the generalised section of their accounting reserved for theft and misadventure, divorcing it from this particular (untraceable) transaction. But it seems to me to make just as much sense to say that I’ve purchased some shoes, but Clarkes haven’t sold them.

I don’t think there’s any empirical fact of the matter. It’s a matter of definitions. The question is: why do economists choose to define sales and purchases as necessarily equivalent, when such deviations from the norm of exchange are a constitutive possibility of exchange itself?

If you’ve read much of this blog, you’ll be way ahead of me: I’m trolling around for a crack in the structure of economic arguments into which I can insert the thin end of the wedge of Derridean differance. Here’s Marshall again: “the element of Time… is at the centre of the chief difficulty of almost every economic problem.” And Keynes: “the importance of money essentially flows from its being a link between the present and the future.” And Derrida: “As long as the monetary specie functions, as long as one can reckon with its phenomenality, as long as one can count with and on cash money to produce effects…, as long as money passes for (real) money, it is simply not different from the money that, perhaps, it counterfeits. There is in any case no possible sense, no possible place, no possible mark for this difference, at least when the situation is framed thus, that is, in the contextual frame of this convention or of this institution.” (Given Time I: Counterfeit Money, p. 153).

There would be no money without the possibility of counterfeit money. Counterfeit money is a constitutive possibility of money as such. Counterfeit money thus insinuates itself into the as such of real money; and counterfeit money itself has no ‘as such’. “Counterfeit money is never, as such, counterfeit money. As soon as it is what it is, recognised as such, it ceases to act as and to be worth counterfeit money. It only is by being able to be, perhaps, what it is.” (op. cit. p. 87).

Like the pledge that money always forms (complete with forgeable signature), money’s function can be broken in the time it bridges. In the space between the moment I pay for something with a cheque and the moment that cheque is cleared, any number of things can break the pledge that my signature on the cheque sealed. Money is a link between the present and the future; but that link can fail; it can be illusory; and when the link is broken (as it always can be) what becomes of the supposedly necessary link between sales and purchases? Can this link be given the status of necessity?

Over at The Pinocchio Theory, Steven Shaviro has an outstanding post on Derrida’s ‘Specters of Marx’. He’s critical of the book, and I think his criticisms are cogent. Chief among them is that, although Derrida may be right to pursue his usual project of rooting out nostalgic desire for presence in Marx’s economic and philosophical writings, this analysis takes Derrida to a level of abstraction at which he is unable to engage with the specific, valuable claims Marx makes. Further, the deconstructive impulses Derrida finds at work in Marx already play a far more active and positive role in his arguments than Derrida acknowledges.

Marx, dialectician, is always on the lookout for paradox and contradiction; and the contradictions he uncovers may be of the greatest use for a deconstructive reading of economics. Take this passage, for instance, from ‘A Contribution to the Critique of Political Economy’: “The separation of sale and purchase makes possible not only commerce proper, but also numerous pro forma transactions before the final exchange of commodities between producer and consumer takes place. It thus enables large numbers of parasites [my emphasis] to invade the process of production and to take advantage of this separation. But this again means only that money, the universal form of labour in bourgeois society, makes the development of the inherent contradictions possible.” (p. 98).

Blog at

%d bloggers like this: