[OPE-L:7579] Re: RE: From Michele Naples on Gold

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Sat Aug 31 2002 - 14:47:54 EDT

re Makoto's 7577

>?As for the special nature and process of equlaization of profit 
>rate for the gold industry under the gold standard system, Makoto 
>Itoh and Costas Lapavitsas, Political Economy of Money and Finance 
>(Macmillan and St.Martin's, 1999)  tried to clarify the basic 
>principle in relation with the balancing process of demand and 
>supply of gold through business cycles in a section 6.3.2. It 
>assumes that the gold industry is subject to equalization of propfit 
>rate though in a specicial way different from other industries.

But David Y's, Michele's, Fred's and my point is not that gold 
producing capitalists do not tend to receive the average rate of 
profit but that gold will tend to sell at its value rather than its 
price of production as mine owners appropriate absolute rent.  If 
however the composition of capital on the marginal mine at which the 
value of gold is determined (Fred's ingenious clarification) is not 
below the social average, then gold may even have to sell above its 
value so that the owner of the scarce means of production (the gold 
mine, in particular the marginal mine) will be able to appropriate 
absolute rent. Gold could then have an element of monopoly price.

  But there is no tendency for the exchange value of gold to be 
determined by its price of production--that is the crucial point 
because undermines the case Bortkiewicz and Sweezy made for gold 
being part of the transformation process. This OPE-L thread began as 
I objected to Gil's statement that gold and  any commodity which uses 
inputs with prices of production and is produced by capitalist firms 
should be represented in Marx's transformation tables. This is simply 
not true. The introduction of production prices gives Marx no reason 
to drop the assumption that the exchange value of gold  is determined 
by its value.

  David Yaffe seems to have been the first to point out the inclusion 
of money in the formation of prices of production runs against the 
grain of Marxian theory.

All the best, Rakesh

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