[OPE-L:7585] Re: RE: Re: RE: From Michele Naples on Gold

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Mon Sep 02 2002 - 13:40:45 EDT

re 7581

Dear Makoto,
As I think about your questionsin 7581, may I call your attention to 
Fred Moseley's earlier (quite excellent) post 7541 a part of which I 
repost here.

Fred Moseley wrote in OPE-L 7541:

>2.  I argue that the crucial flaw in Gary and Gil's argument is that it
>assumes that the exchange-value of the numeraire, or the money commodity
>(e.g. gold), is determined in the same way as the prices of all other
>commodities, i.e. that the gold industry participates in the equalization
>of profit rates like all other industries.  This means that there is an
>equation for the gold industry that is essentially the same as all the
>other equations, i.e. that the price of gold is equal to production costs
>plus the average profit.
>However, this crucial assumption is NOT TRUE.  The exchange-value of gold
>is DETERMINED DIFFERENTLY from the prices of manufactured commodities,
>because gold is a scarce, privately-owned mineral, and thus the price of
>gold MUST CONTAIN A COMPONENT OF RENT, which is paid to the owners of the
>gold mines, including an "absolute" rent paid on the least fertile mines
>(not just differential rent paid on all other mines).
>3.  Marx explained the existence of absolute rent in the following way:
>The prices of agricultural (and mineral) commodities are not equal to the
>PRICES OF PRODUCTION of these commodities, but are instead equal to the
>VALUES of these commodities, i.e. are proportional to the labor-time
>requirements to produce these commodities; and more specifically, are
>proportional to the labor-times required on the least fertile land.
>Because the composition of capital on the least fertile land is lower than
>the social average composition of capital, the values of agricultural
>commodities are greater than their prices of production, and thus the
>surplus-value contained in these commodities is greater than the average
>profit.  Landlords are able to secure for themselves this surplus profit,
>and block the transformation of values into prices of production, because
>of their ownership of the land.  In other words, mining and agricultural
>manufacturing industries.
>Marx argued that Ricardo denied the existence of absolute rent because he
>failed to recognize clearly the distinction between the values and the
>prices of production of commodities.
>Gary, I hope you will agree that Marx's explanation of absolute rent
>follows directly from his labor theory of value.
>4.  The main point for the purposes of our current discussion is that,
>since gold is a scarce, privately-owned mineral, Marx's theory of absolute
>rent also applies to gold.  This means that the exchange-value of gold is
>determined by the value of gold, and not by the price of production of
>gold.  In other words, the exchange-value of gold is determined
>independently of the price of production equations for the manufacturing
>industries, and independently of the equalization of the profit rate among
>manufacturing industries.

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