Duhring makes the following comment, in relation to Law, a version of which can also be found, today, in the argument of proponent of MMT.

Engels comments,

That, of course, has been the goal of all states that sought to pay their bills by corrupting the currency, and passing off such devalued tokens at their face value. Marx discussed it in "A Contribution To The Critique Of Political Economy", in relation to the predecessors of Keynes, and the proponents of MMT, the Birmingham Little Shilling Men.

Engels returns to Petty and the further elaboration of these points.

Engels quotes Duhring's assessment.

Marx deals with North, Locke, Hume, as well as Massie, in Theories of Surplus Value. Locke, in particular, represented the interests of the rising industrial bourgeoisie, as also, for example, set out in his Second Treatise on Government. As Marx sets out, in Capital, so long as restrictions existed on the lending and borrowing of money, it meant that it amounted to usury. Once those restrictions are lifted, it is not only those desperate for money that can borrow, but those who seek to borrow in order to invest in real industrial capital accumulation. When it is only the desperate who borrow, there is no limit to the usurious rates they will pay, especially given the limited number of lenders. But, when restrictions are lifted, whilst the additional demand for money-capital acts to raise interest rates, the fact that industrial capitalists will only borrow if the rate of interest is lower than their anticipated rate of profit, acts to put a cap on it.

Moreover, it is not the supply of currency/money tokens that is relevant, for the reasons set out earlier, in determining the rate of interest, but the supply of money-capital. The main source of new money-capital is realised profits. Other sources are money reserves (savings). So, when industrial capital expands, it produces greater masses of realised profit, and so increases the supply of money-capital, thereby, putting downward pressure on interest rates, as happened, for example, from the 1980's onwards.

The arrival of Trump, and his cabal of petty-bourgeois nationalists in the White House, as with other processes, made this prediction an inevitability. The moralists and idealists, who cling to the idea of a world divided into “good” and “bad”, “white hats” and “black hats”, “democracies” and “authoritarians”, not only were thrown into disarray, by the arrival of the “authoritarian” Trump, as leader of the “democracies” global alliance, upon which they had relied for so long, but, in order to deal with that reality, as with so much else, they have been led into simply denying it, as though it is not real, a temporary divergence from the true path, to which they will return. In order to sustain that delusion, they have been led to prostitute themselves even more at the feet of Trump, and his reactionary regime, most glaringly seen in the gut-wrenching sycophancy of the likes of Starmer, and of Rutte.

But, the more they deluded themselves into the idea that they could simply win over the moronic, narcissistic Trump by their increasing prostration and arse-licking, the more Trump simply treated them with the contempt they deserved. In that, Trump's petty-bourgeois nationalism also, coincides with the longer-term interests of US imperialism, and those interests do not coincide with those of EU imperialism. The liberals, idealists and moralists have continued to frame their narrative as one in which the world is at risk from the evil “black hats”, of the “authoritarian” regimes in Russia, China and so on. As Marxists, of course, we recognise the threat those regimes represent. But, our solution to that threat, just as with the threat represented by authoritarians within our our own states, is not to subordinate the working-class to the liberal bourgeoisie, and its class interests. Every time workers have done that, in the past, it has resulted in disaster, betrayal, and the victory of the forces of reaction. There is no reason to believe it would be different this time.

As I set out in the review of Prediction 1, for more than 30 years, globalisation represented the interests of an unconstrained US imperialism, as it invested real industrial capital, across the globe, exploiting vast reserves of labour, creating new masses of surplus-value. This huge mass of surplus-value, produced by labour in newly industrialising economies, was often, realised as profits, by US commercial capital, as this deluge of consumer goods, flooded into the US market. Wal-Mart still sources around 60% of its stock from China. As I set out in my book, this was the other side of the deindustrialisation of the 1980's, and the ability to realise the surplus value produced in China and elsewhere, was also the basis for employing a growing army of workers in the West, in retail, and a growing service sector.

But, China, India, South Korea, Malaysia and so on, just as with Japan before, and indeed the US, as it went from being a British colony, to an industrialised economy, changed the material conditions in which US imperialism found itself. The end of globalisation is not simply the result of a temporary rise to power of petty-bourgeois nationalists. It represents a recognition, by US imperialism, in particular, that its hegemony in the world economy has ended. It acts as a fetter on the further development of capital itself. US imperialism is not confronting Chinese imperialism because of the authoritarian nature of the Chinese regime, but because Chinese imperialism has now grown to an extent that it undermines US hegemony.

For all the propaganda about the expansionist intentions of Russia, as I set out earlier in the year, its not Russia that is talking about occupying Greenland, in order to secure control over the vast mineral reserves, and Arctic waters, it is the US. It is not Russia, nor China, that is talking about seizing the Panama Canal, but the US, just as it is the US that is seeking to provoke Venezuela into responding to the acts of piracy by the US, so as to give a pretext for another US forever war, as it seeks to consolidate its neo-colonial power in Central America. In Central and South America, just as in the Middle East, Africa and Asia, China has extended its influence, not by colonialism, not by the use of military might, but by the power of its capital. The US has no means of competing on that basis, and so seeks to revert to the methods of colonialism, as does the UK, as it acts as Trump's lap dog, and the proposals for the colonisation of Gaza.

The growing separation of EU imperialism from US imperialism is manifest in the talk of the need for the EU to increase its military spending. The rationale, as I set out during the year, is for the establishment of an EU army, and that would mean an inevitable separation from NATO. The discussion of that by the likes of Macron, and of Draghi, may be presented as a response to Trump's own distancing of the US from NATO and Europe, as well as the ridiculous talk about military attacks on Europe by Russia, but the reality is that the creation of an EU army is the necessary corollary of the growing political union, as the EU moves to the formal creation of a multinational state, as it faces the contradictions seen over the last 20 years of a single market, single currency and central bank, but a continuation of nation states within it. The greatest power the EU has in terms of its relations with Russia, is not an extension of its military power, but the development of the EU economy, and the raising of living standards within it. Subordination to US imperialism acts as a fetter to that development.

The main reason that the liquidity injections by central banks, in the late 1980's and after, did not result in higher commodity prices, and higher nominal interest rates, is because the liquidity was directed, by central banks and financial institutions into the purchase of existing financial and property assets, causing serial asset price bubbles, which also resulted in falling yields on those assets (because this kind of speculation is not investment/capital accumulation, and so does not result in increased production of surplus value, of which interest and rent are simply components along with profit of enterprise and taxes). The other reason is that rising productivity from the microchip revolution, reduced the unit value of commodities, so that without inflation of the currency, prices would have fallen.

Engels quotes Duhring's comment,

And notes,

The mercantilists believed that there was something special about the amount of precious metal hoarded in state treasuries, as a measure of the wealth of nations. As Marx described in Theories of Surplus Value, its understandable that such ideas arise in economies that dominated maritime trade such as Britain and the Netherlands, just as its natural that they should identify surplus value/profit as arising from the process of trade/exchange, rather than production. In fact, as Marx also wrote, the mercantilists were not as stupid, in that regard, as some of their later detractors suggested.

Unlike Law, or the proponents of QE/MMT, they understood that this accumulation of precious metal arose from the ability to export more than was imported. It was not possible to increase the wealth of the nation by simply replacing precious metal currency with paper notes, so as to print more of them, any more than by reducing the amount of gold contained in a gold coin, and issuing more such coins.

As I wrote in the addenda to this prediction, it was already confirmed by the time it was posted. The fall of the rotten Assad regime brought in an even more rotten and reactionary Islamist regime, as well as the inevitable chaos and communal conflict, as the country disintegrates, much as seen previously in Libya, and elsewhere. All to clearly, events appear to be following a well worn path, described previously in relation to the analysis of the Balkan Wars at the start of the 20th century, set out by Trotsky, and which led up to World War I. The rapidity of that fall probably took the Zionist state and US/NATO imperialism by surprise too, and that has led to a certain amount of sitting on their laurels during the last year.

The Zionist state quickly moved to colonise more land in Syria, as is its nature as a colonialist/imperialist state. The rapidity of the fall gave a certain amount of stability to the Islamist regime that took over in Damascus. Western imperialism, and its media mouthpieces which had previously noted the Islamist nature of the jihadists, quickly absolved it, much as all of the coverage of the corrupt and illiberal nature of Zelensky and his regime, prior to 2021, was quickly ditched when they sought to fight Russia to the last Ukrainian.

But, simply denying and attempting to hide the reality does not change it. The inevitable communalist and sectarian chaos is still unfolding in Syria. However much western imperialism tries to put lipstick on the reactionary, Islamist pig in Damascus, it does not change its nature, nor the contradictions that involves. Those contradictions have continually broken out inside Syria, as competing powers, using local communalist rivalries, jostle for influence. As with the aftermath of the Iraq War, it has also opened up space for a revival of ISIS in Syria, and it also has its own reactionary agenda. US imperialism, even in the last few weeks has seen its forces attacked by ISIS, giving it the pretext for more open intervention.

The front lines in the region have clearly shifted, just as, formerly, they shifted in Europe with the aggressive military expansion of US/NATO imperialism Eastwards, right up to Russia's borders, which inevitably provoked the military response into Ukraine by Russian imperialism, backed by its own imperialist bloc. Empires based on territorial expansion, created by military power, always become weaker, as they expand further. Its one reason that colonialism was superseded by modern imperialism, which rests, fundamentally, not on force, but on the power of industrial capital to conquer, by purely economic means, global markets, and, thereby, to exploit the global working-class, whilst offering it the prospect of rising living standards, security and the illusion of bourgeois-democracy/political freedom.

So long as US/NATO imperialism faced no real global economic competitors, the former dynamics gave it free rein, hence the rapid development of globalisation from the late 80's, into the 2010's. The petty-bourgeois moralism of much of the Left, meant it failed to analyse that expansion in Marxist terms, and, instead, simply presented it as being a continuation of the old forms of colonial imperialism that existed up to the 20th century, resting upon the use of military force. Whilst, of course, the use of overwhelming military might by US imperialism, in Vietnam, for example, gave credence to such a view, and certainly, in the 1960's, and early 1970's, facilitated a rapid growth of that petty-bourgeois Left, as it swam in the voluminous current of “anti-War”/Anti-Imperialist” protest, the reality was that force played only a subsidiary role in the expansion of imperialism, and globalisation in the post-war period. Indeed, as in Vietnam, the use of military force, more frequently proved itself to be inadequate, and even counter-productive. Imperialism has expanded rapidly in Vietnam, after the defeat of the US military.

The expansion of imperialism, of the dominance of monopoly capital, as Marx and Engels first described, and as Lenin later analysed, is a massively progressive development. Globalisation, the creation of an inextricably connected world economy, which that imperialism created in the 1980's and after, is, also, a massively progressive development. It is the fundamental basis, the creation of the material conditions required for Socialism. As Lenin put it,

But, just as the reactionary, petty bourgeois moralism that has dominated much of the Left after WWII, saw monopoly capitalism as something to be opposed rather than welcomed, on a national basis, so too, it opposed globalisation. The reality of imperialism was that it expanded rapidly, much as industrial capitalism itself had done on a national basis, precisely because it was able to provide billions of labourers with higher living standards, even as it exploited them more intensively. It rescued billions of them from the idiocy of rural life.

Marx and Engels pointed out that large-scale, industrial capital, inevitably takes the form of socialised capital, which is the collective property of the associated producers, whether that is in the form of a cooperative or a joint stock company. It is, they note, the transitional form of property between capitalism and socialism. The struggle, by the end of the 19th century, even, was, therefore, not to engage in some moralistic, Sismondian opposition to the development of this monopoly capitalism, but to bring about the required extension of the democratic struggle from the political sphere to the industrial sphere, to engage with “the property question”, and to ensure that just as workers achieved political rights, so, now, they obtained their rightful democratic control, in each enterprise, over their collective property.

It is why they opposed the petty-bourgeois, moralism of Sismondi who sought to hold back the rapid development of industrial capitalism, and, later, opposed the petty-bourgeois, moralism of Proudhon and his followers, who sought to oppose the economic struggles of the workers in the trades unions, because they saw it as antagonistic to the interests of the petty-bourgeoisie, whose interests they represented, with their reactionary, utopian views of a world of small commodity producers, a view also adopted by the Narodniks in Russia, and which also forms the basis of the Third Worldists/Maoists in the post WWII period. But, Marx and Engels, and later Lenin, whilst recognising the role that economic/industrial struggle plays in organising the workers as a class, also opposed the limitations on the further development of the class that Economism, trades union consciousness, also, involved. It is most clearly set out in “Value, Price and Profit”.

Huge amounts of political energy was wasted by the petty-bourgeois Left, in the last 70 years, opposing the expansion of monopoly-capitalism/imperialism, both within the national economies, and across the globe. Millions of former peasants and small commodity producers, however, flocked to the towns and cities in order to be exploited by global multinational corporations, and did so, not because they were forced, but because they saw the prospect of a much better standard of living. When the moralistic Left opposed colonialism, they were, in fact, pushing at an open door, and when, the old colonial empires collapsed, in the post-war period, they simply sought to continue as though the world had not really changed, understandably, as such a view implied a continuation of those mass mobilisations in which they had grown rapidly in the 50's, and 60's.

The progressive mobilisations, against colonialism and militarism, became reactionary mobilisations against monopoly-capitalism/imperialism, and its corollary of globalisation, which has raised productivity to unprecedented levels. The consequence is easily seen when the reactionary mobilisation against it, resulted in Brexit, for example. It has resulted in terrible economic consequences for the British economy, and for the living standards of British workers. A similar process is occurring, now, with the impact of Trump's Tariffs, in the US, which act as an additional drain on US profits. Similarly, the decision of EU leaders to boycott Russian energy has drained surplus value from European capital, and slowed its economy further, which will intensify as the EU pumps even more billions of Euros into funding the means of destruction to continue fighting the war against Russia.

Those that continued to frame their world view on the basis that the main enemy of US imperialism was China, failed, also, to recognise that, economically, it is the EU that continues to pose the biggest threat to US capital. Trump has simply been more open about it, just as he has also been more open in renaming the US Department of Defence to what it has always been, the Department of War. The period of US hegemony has ended, and consequently, the period in which it could expand its capital simply on the basis of the dominance of its capital, has also ended.

In the 1950's, for a short period, the central planning system in the USSR, faced with the need for a rapid industrialisation of its economy, outperformed its imperialist rivals. But, it never achieved the same performance as those rivals, when it came to the production of consumer goods, and the general living standards of its workers. So, although Stalinism was able to compete with US imperialism when it came to the production of capital goods, a lot of which, also, went into he production of military production, and competed with it, in terms of the space race, as well as the development of a science and technology, it never presented a challenge to US imperialism economically.

The idea that imperialism had to create welfare systems, and raise living standards of workers to prevent them being attracted to the offerings of the East is ludicrous. The border guards shooting people trying to escape were all on the Eastern side. The EU subordinated itself to US imperialism, not because it was economically challenged by Russia/COMECON, but, because, particularly in its devastated condition, it felt militarily challenged by Russia. Those conditions have gone.

The idea that Europe is militarily challenged, today, by Russia is hilarious. For four years, it has been bogged down in a war, just in Eastern Ukraine. True US/NATO imperialism has backed Ukraine massively to conduct its proxy war against Russia/China, including the use of its own special forces inside Ukraine, but China has likewise backed Russia, as it recognises that a defeat for Russia, would simply mean the war coming even closer to its own border, as US/NATO imperialism seeks to encircle it. A Russian military unable to quickly win in Eastern Ukraine, is not in any position to be considering any of the ludicrous schemes for an invasion of Europe that the western military-industrial complex propagandists are proposing, as a means of stirring up war fever, and justification for even more of workers taxes to be spent on war, rather than rebuilding shattered public services and infrastructure created by nearly two decades of austerity to pay for the bailing out of financial and property speculators.

We are told that Russia has been testing the West's borders with drones flying over various locations, and even Russian fighter jets. Maybe they have, or maybe they have not. That Lavrov invited European states to shoot down any Russian fighters actually over their territory, indicates where the balance of probability lies. The media continually refer to Russian jets or Russian ships near to British territorial waters, but near to is not inside. Given the expansion of NATO forces up to the Russian borders, it is clear what the context is.

US imperialism cannot simply expand on the basis of the dominance of its industrial capital any longer. The dialectic of that expansion is playing out. It is, now, the rising power of Chinese industrial capital that is asserting its dominance. So, US imperialism is led to resort increasingly to a defence of its global positions by military might.

Having established these laws for precious metal coins, its then possible to analyse the laws for paper currency and credit. As Marx describes, where such currency is redeemable for gold, the same laws apply, but, where they are not redeemable, different laws apply. What Hume saw was that when the amount of gold in circulation increased, prices rose, and the value of the currency fell. As Marx notes, what Hume saw was correlation not causation. The increase in the amount in circulation was the consequence of a fall in the value of gold, as new discoveries were made. The lower value of gold required more of it to act as money, more to be put into circulation. But, with non-redeemable, i.e. fiat currency, these laws are turned on their head.

If an excess of fiat currency is put into circulation, it is not taken out to be redeemed for gold, or melted down. It stays in circulation, and the value of each note/token, thereby, falls. There is inflation, and is manifest as a rise in prices. The idea that convertible paper notes can fulfil the same function as precious metal coins, provided they are issued on the same basis, is quite different to the idea put forward by Law, the Pereire Brothers, or, today, the proponents of QE and MMT. As Marx describes, with redeemable paper, any excess circulation results in inflation and rising prices, including the price of gold. So, paper notes would be redeemed for gold at the official rate. In other words, if a £1 note is redeemable for ¼ ounce of gold, but the market price of gold rises to £1.20 per ¼ ounce, due to the inflation of the currency supply, the holders of the paper notes would redeem them for ¼ ounce of gold, which, in the market, they could sell for £1.20!

This is essentially what happened in 1971, when France demanded to redeem its Dollars at the official rate of $35 an ounce, when the market price of gold was actually $350 an ounce, causing Nixon to end convertibility of the Dollar. In fact, as Marx set out in "A Contribution To The Critique Of Political Economy", convertibility becomes impossible in a regime of paper currency, and credit.

Contrary to Law or MMT, or QE, printing more paper tokens does not create more “money”, for the reasons Marx sets out in "A Contribution To The Critique Of Political Economy", and summarised above. If the value of commodities, in total, is equal to 1 million hours of labour, then the equivalent form of that value – money – can, also, only be 1 million hours of labour, whether it takes the form of, say, 1,000 ounces of gold, each ounce with a value of 1,000 hours of labour, or the form of 1,000 paper notes, each note symbolising 1,000 hours of labour. The limiting factor is the 1 million hours of labour/value, and, if 2,000 £1 paper notes are put into circulation, (assuming each performs one transaction), then, the value of each note must be halved to only 500 hours of labour. Prices would double.

This is why, as Marx sets out in Theories of Surplus Value, quoting Massie, the idea put forward by the proponents of QE, that inflating the currency acts to reduce interest rates is a fallacy. It confuses money tokens with money, and confuses money with money-capital. The rate of interest is determined by the interaction of the demand for and supply of money-capital. The demand for money-capital is a demand for money to buy commodities, either for productive or personal consumption, or to pay bills for commodities already consumed, or similarly as prepayments for such consumption.

Suppose the demand is for £1 million, and that to satisfy this demand, an interest rate of 6% is required to produce the supply of £1 million of money-capital from its owners. The quantity of money tokens put in circulation is doubled, but, the result of that is that each token is halved in value, and prices double. It may, at first, seem to be the case that the increased supply of liquidity increases the supply of money-capital, and so causes interest rates to fall. However, in reality, the reduced value of currency means that the prices of commodities double. Instead of the demand for money-capital being £1 million, it rises to £2 million. So the rate of interest remains 6%.

Indeed, for so long as the inflation persists, the suppliers of money-capital will require a higher rate of interest to cover the equivalent of depreciation of their capital. In other words, if they lend £1 million, today, with inflation running at 10%, they would require a return of £1.1 in a year's time just to maintain its net present value, before any actual interest is taken into consideration, just as, for example, someone who loans a machine, with a value of £1 million, would require the lessor to cover the wear and tear of the machine, as well as the payment of interest. On the basis of the above, example, they would require, at the end of the year, £1.1 million plus the 6% interest, the equivalent of a 16% nominal rate of interest.