[OPE-L:7401] RE: Commodity money in a Sraffian system

From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Tue Jul 02 2002 - 15:05:04 EDT

Gary, you wrote in part

>Gil reminds us of Marx's remark that "gold has no price." It is 
>interesting to
>me that Gil interprets that to be equivalent to what a modern economist means
>by "gold is the numeraire and therefore its price is 1."

I wasn't any too clear about this, but I want to note that I didn't add the 
"therefore" comment you attribute to me here, and for a 
reason:  identifying a commodity as the numeraire good in an exchange 
system *can* mean the same thing as "normalizing its price to one," but it 
doesn't have to.  And in my second post, I was arguing that in the specific 
case of commodity money, it is both economically appropriate to call the 
single money commodity the numeraire good and economically implausible to 
say that it has a price--i.e., an exchange ratio with itself--that happens 
to be equal to one, since as Fred and Marx rightly point out, the money 
commodity isn't exchanged for itself.

Instead, the Sraffian "price of production equation" equation for the money 
commodity, say,

1 = [p(c)*a + w*l] (1+r)

is more in the nature of an accounting relation given that the law of one 
price obtains, indicating that each unit of gold produced must be just 
sufficient to cover the associated physical and labor production costs 
(measured in gold), augmented by the rate of profit common to all sectors.

The math is the same as in the standard normalization procedure, of course, 
but the interpretation is different.


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