[OPE-L:7506] Re: Naples on gold

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Mon Aug 12 2002 - 08:45:19 EDT

On Fri, 9 Aug 2002, Rakesh Bhandari wrote:

> Michele Naples writes in her contribution to *Marx and Non 
> Equilibrium Economics*, ed. Alan Freeman and Guglielmo Carchedi 
> (1996):
> "Marx used 'value of money' and 'exchange value' of money 
> interchangeably because to him, gold, was a non transformed 
> value...As I have suggested elsewhere...Marx's language is consistent 
> because gold is produced in mines. Thus *gold exchanges at its value* 
> rather than price of production, since mineowners collect absolute 
> rent. The neo Ricardian solution is wrong on gold because it 
> abstracts from land, a crucial means of production in mining, and 
> from landowners' rent. It treats gold as infinitely reproducible, 
> like other commodities. But Marx made clear that the good which 
> serves as commodity money must be scarce to serve as money. Just as 
> Marx rejected Ricardo, he would reject the neo Ricardian model where 
> the exchange value of money is determined in the same way as other 
> commodities' price of production." p.103

I think Rakesh and Michele are on the right track here.  I think this
passage points to the fundamental theoretical reason why Gils "accounting
equation" for gold does not belong in Marx's theory of prices of
production.  The money commodity, gold, is a scarce mineral, that is
privately owned in capitalism.  Therefore, the exchange-value of gold with
other commodities MUST INCLUDE RENT for the owners of the gold mines,
including absolute rent on the least fertile gold mines.  This component
of rent is missing entirely from the Sraffian concept of the
numeraire.  Sraffa's theory assumes the numeraire is one of the
manufactured goods, with no rent.  I had temporarily forgotten about this
important difference between Marx's theory and Sraffa's theory.  Thanks to
Rakesh (and Michele) for reminding me.  

According to Marxs theory, presented in Part 6 of Volume 3, and especially
Chapter 45, the prices of minerals and of agricultural commodities are
DETERMINED DIFFERENTLY from the prices of manufactured goods.  Minerals
and agricultural commodities are determined by their VALUES, not by their
prices of production.  Marx assumed that mining and agricultural
industries have a lower than average composition of capital.  Therefore,
the values of mining and agricultural commodities are greater than their
prices of production, and the surplus-value produced in these industries
is greater than the average rate of profit.  However, because of their
monopoly over these scarce natural resources, the owners are able to block
the transformation of values into prices of production and secure the
extra surplus-value for themselves as absolute rent.  In other words,
mining and agricultural industries DO NOT PARTICIPATE IN THE EQUALIZATION
OF PROFIT RATES with manufacturing industries.  

Therefore, the n Sraffian equations that we have been discussing do not
correctly represent Marxs theory.  The prices of mining and agricultural
commodities, and the exchange-value of gold, are determined by their
values, independent of manufacturing industries and the average rate of
profit.  Therefore, the system of equations expressing the determination
of prices of production and the equalization of the profit rate should not
include equations for mining and agricultural commodities, and in
particular should not include an equation for gold.  

Lets say there are (n-1) non-mining and non-agricultural industries.  In
this case, there would be (n-1) equations in (n+1) unknowns  the
(n-1) absolute prices, the wage rate and the rate of profit.  As I have
discussed before, taking the wage rate as given in this system does not
uniquely determine the rate of profit.  These (n-1) equations  and the
wage rate are consistent with an infinite number of rates of profit, which
could be determined outside this system of equations, as in Marxs
theory.  And, if the rate of profit is also taken as given, along with the
wage rate, then this system is not overdetermined, but rather determinant
of the (n-1) absolute prices.  
Thanks again to Rakesh for helping to clarify this crucial point.  

I have a family trip for a couple of days, and  will be off OPEL until the
end of the week.


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