Are They Going Back to Gold to Preserve Money (And the Rouble)?

The survival of capitalism in the imperialist phase brings its own logic. Moscow, for instance, is driven towards pursuing the establishment of parity between the rouble and gold in an attempt to recover the value of the rouble and thus re-establish a more favourable exchange rate with the dollar. The prospect of a monetary system made up of currencies based on states that produce and control strategic raw materials (such as Russia and China), payable no longer in dollars but in roubles and yuan, is a bit worrying for some. At stake is command (partial or possibly total) over the entire world, provided that the crisis does not overwhelm both.

Russia has officially announced its aim to "restructure the economy” and is trying to improve production lines and supply chains, and possibly revive profit rates even though this is very difficult. The ultimate goal is to be able to plan a better industrial policy that allows it to return — by repairing some rusty links — to the fundamental chain of value for capitalism. So Moscow intends — in reality it feels obliged — to turn to a new clientele (no longer the West) of suppliers and, above all, of buyers.

However, foreign trade outlets for Russia appear to be rather limited. When calculated in dollars, Moscow already has exports equal to $45 billion against imports of $24 billion. Investments abroad amount to $12 billion, including a debt of $0.4 billion.

According to the Russian Central Bank itself, rather than looking at how to boost exports of goods, Moscow should be looking at how to improve domestic demand, something that is necessary to "stabilise the country" and guarantee it "social peace”. Well, in order to qualitatively and quantitatively improve the production of goods for the domestic market, it is also indispensable to "restructure" the labour market. And for capitalism — which has reigned in Russia since Stalin's time when it was passed off as "socialism in one country" — this means weeding out superfluous workers and sending them to swell the army of the unemployed. Such an economic restructuring would also require wage increases for those who remain in work, so that the goods produced do not simply fill warehouses due to lack of consumers. Otherwise "domestic demand" would drop as the unemployed were unable to buy ... and were left looking at the "offers" in shop windows.

No matter what it is called, whatever the nature of the selected economic model, when it comes to the balance sheet of income and expenditure, there needs to be a guarantee of "fair profit", though this continues its downward trend in both the West and the East. For it is capitalism that does not work. Whether it is the “neoliberal model” or, if you prefer, the “capitalist-socialist” one, both are subject to cycles of valorisation which force them into adverse “circumstances” (as some “beautiful spirit” of the bourgeois world defines them!), especially regarding profit rates.

By expanding markets, domestic or global, and promising high and stable wages to the few who will have — by divine grace and will of capital — a permanent job, the "experts" of capital aim to regulate capital flows. However, this requires a continuous increase in productivity (and the sale of goods) derived from the application of new knowledge and scientific and technological innovations into the production processes, where the so-called "development of human capital" yields a reduction in its cost and makes for exploitation with the maximum possible extraction of relative surplus value. But — at a certain point — here are the well-known consequences: jobs for proletarians, and low remuneration (profit) for capital which has been forced to change its organic composition. The illusory recipes for "controlling" the system — if you prefer, for programming or planning — are shattered.

Let's go back to the currency sector. What’s needed here is a real stabilisation of the exchange rate and the availability of strong financial reserves. To this end, Moscow and Beijing are dreaming of profitable capital investments by eyeing up the "clients" residing in countries not yet aligned with the dollar monetary circuit, or at least who are frustrated with it.

For Russia, above all, it is becoming essential to find a "better" position in the value chain. It is because of this, and looking at the possibility of creating another "World Financial Order", that its dollar exposure is shrinking. The idea is to link trade in basic commodities such as oil, natural gas, mineral raw materials and gold to the rouble. Moscow would like the rouble to become the benchmark currency for its gas market, which has now expanded in Asia. For this reason it maintains convertibility into gold and makes purchases by paying thousands of roubles (up to 5) for a single gramme, in the hope of turning it into a safe haven asset, a means of exchange between goods, a channeller of international speculative capital towards Russia.(1)

In the meantime, however, liquidity on the domestic Russian market only increases inflation (already at + 20%!), and the reduction of currency reserves continues despite the imposition of high interest rates (about 15%) which favour exchanging the rouble for other currencies in the tacit hope that it will acquire more and more value.

Nevertheless, first and foremost, we need to take account of the American armed forces whose enormous potential remains a threat to all those who no longer intend to accept the role that the dollar has been performing for decades. It should never be forgotten that the dollar is accepted all over the world, not only to exchange goods but also to service debts. In fact, the USA lives more off the income on its debts which circulate as a reserve currency accepted throughout the world, rather than from the trade of what it produces. Over the long run, a real economic domination with a consistent trade surplus, would not fail since it would act as a concrete source of money and strong reserves to expand the exchange of goods produced. Otherwise, the more the currency itself is treated as a commodity, the more the uncertainty and risks increase due to accumulating it as fictitious wealth: wealth that is based on ‘value’ acquired in the movements on the international financial market. A wealth that in any case forces hundreds of millions of human beings into misery, part of that so-called "active population" — workforce, engaged in the production of goods — which is shrinking in the world. According to some, the current number of productive workers is less than ¼ of the total employed in the "world of work" (it could even be as low as 8% in the USA!).

Where will they get surplus value from if the labour force to be exploited decreases rather than increases?

Battaglia Comunista



(1) Russia is the world's third largest producer of gold: what if we return to a link between gold and currencies, hoping to "pacify" monetary tensions, as some suggest? Moscow has been buying gold lately (by the tonne …) and the Russian Central Bank is now ranked 5th in the world for gold reserves. And it has already sold — in order to buy gold — a part of its dollar reserves (treasury bills) for almost half a billion. Ultimately, however, this will be nothing but a leap from the frying pan into the fire …

Tuesday, January 31, 2023


Yesterday the US Federal Reserve announced sn interest rate hike of .25%. This follows a sequence of hikes which were at first an aggressive .75%, the penultimate being .5% and now .25%. Though of course nothing can be absolutely ruled out, these are signs that the system has used up its capacity to fight inflation. High interest rates bring immediate economic pain, for example, servicing an astronomical debt which at the time of writing is $31.5 trillion and rising. Many enterprises rely on cheap money to stay above water and the current environment is killing them. In response to the FED announcement, gold leapt up. At the time of writing, $1956 per ounce. According to Reuters,

Gold rises to highest since April after Powell strikes dovish tone