[OPE-L:7581] RE: Re: RE: From Michele Naples on Gold

From: Itoh Makoto (mktitoh@kokugakuin.ac.jp)
Date: Sun Sep 01 2002 - 14:03:18 EDT

Dear Rakesh and other friends;
As I have not followed the OPEL thread on gold indusutry, will you kindly repeat your position on the following points briefly?
1. What do you mean to sell gold at its value under the gold standard system? In my understanding, gold as money can buy other commodities at their prices of production (in the theory of prices of production), but is not sold. A fixed standard of prices, or the nomination of a certain quantity of gold (say an ounce of gold = 3 pounds 17 shilling 10.5 pence) is not the price of gold, and is certainly different from the exchange value of gold. 
2. Assuming that the gold industry is included in capitalist process of production, why can its capitalists be exempt from the competitive pressure to equalize the rate of profit even after paying differential and absolute rent? In Marx's theory of ground rent, payment of differential and absolute rent (or even monopoly rent) to landowners would not prevent eqalization of profit rate for capitalists. 
3. How do you think of social need or demand for gold? How is its quantity theoretically determined, or is it without limit in principle?  
All the best,

	-----Original Message----- 
	From: Rakesh Bhandari [mailto:rakeshb@stanford.edu] 
	Sent: 2002/09/01 (日) 3:47 
	To: ope-l@galaxy.csuchico.edu 
	Subject: [OPE-L:7579] Re: RE: From Michele Naples on Gold

	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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