[OPE-L:7599] Re: Re: Re: Re: RE: Fred's remarks on Marx, Sraffa & Rents

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Thu Sep 05 2002 - 03:40:30 EDT

Fred writes in 7588:

>Because gold has no price, the transformation of the price from value to
>price of production is NOT POSSIBLE for gold.  After the transformation of
>the prices of all other commodities from values to prices of production,
>the value product of the gold industry continues to be the same quantity
>of money, which cannot be transformed from value to price of production
>(i.e. cannot be changed into a different quantity of money) in order to
>equalize the rate of profit in the gold industry.

It seems to me (and I could be wrong indeed) that the question is not 
whether there is a transformation in the gold industry but whether 
the rate of profit is equalized in the gold industry as Makoto 
suggests it should be. But (following Michele) I would say no:  the 
rate of profit cannot be equalized because gold capitalists have to 
make or appropriate profit over and above the average so that they 
can pay absolute rent (Michele). Gold capitalists have to make a 
higher rate of profit than the average if they are going to able to 
work mines in the first place.

So the gold industry's (M'-M)/(C + V) or (M'-M)/M has to be > than 
industry wide average r or gold capitalists would not be able to pay 
absolute rent without undermining their ability to "earn" (as they 
say) the average rate of profit or r.

But both Ricardo and his follower Bortkiewicz assumed that M'-M/C+V 
in the gold industry has to be the same as in the economy as a whole.

Because of this assumption Bortkiewicz and his follower Sweezy could 
write a price of production equation for gold and then use that as an 
accounting equation, as Gil recommends.

But you Fred, Michele, David and I seem agreed that there is more 
than one reason not to set M'-M/M in the gold industry equal to the r 
in the rest of the economy.

I am also saying that once one drops this assumption that the gold 
industry is essentially similar to all other industries, then all the 
problems Ricardo raised about an invariable standard of value 
disappear (all the movement in total price happens as a result of 
trying to keep M'-M/M in the gold industry equal to the r in the rest 
of the economy as distributional parameters are shifted) and there is 
no need in Marx's framework for the standard commodity which is at 
best a  solution to a problem in Ricardian economics.

Ricardo messed up on the exchange value of the money commodity (I 
have tried to indicate one way in which the confusion shows through 
in his own writing), and this is what led to the futile search for an 
invariable standard of value, culminating in Sraffa's standard 
commodity which in any given form cannot even serve as such an 
invariable standard over time.

Fred, you raise many important and counterintuitive points, and I 
find myself responding in a state of distraction. So I hope this 
reply doesn't waste your time. You have made many subtle points which 
I shall have to think about.

All the best, Rakesh

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