[OPE-L:7609] Itoh on gold money

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Thu Sep 05 2002 - 16:11:19 EDT

On Mon, 2 Sep 2002, Itoh Makoto wrote:

> 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. 

I agree with what you say here, and I have tried to clarify this point in
my recnet OPEL posts.  I have emphasized in this discussion that gold (as
the money commodity) has no price, and therefore the transformation of
value into price of production is not possible for the gold
commodity.  Instead the "value product" (or the income) of the gold
industry is a definite quantity of gold, which does not change as a result
of the  transformation of values of other commodities into their prices of

> 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. 

Yes, gold capitalists earn the average rate of profit.  But they also pay
(or earn) rent, including absolute rent for the least productive
mines.  Therefore, according to Marx's theory, the exchange-value of gold
is not determined by its "price of production", as you seem to
suggest.  If the composition of capital in the least productive gold mines
is lower than the social average, as seems likely, then the exchange-value
of gold is determined by its "value", not by its "price of production."  

I have tried to elaborate this important point in several recent posts,
and I would appreciate any comments you might wish to make.  

> 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?  

As I understand Marx's theory, the demand for gold is determined by the
sum of the prices of commodities divided by the velocity of money (Volume
1, Chapter 3, Section 2.c), and this demand determines the quantity of
gold in circulation in the long-run.  If more gold is produced as money
than is demanded, then the excess supply will be hoarded.  So the demand
for gold as money is not "without limit".  

This discussion of this issue at the beginning of the 20th century between
Varga, Hilferding, Kautsky, and Bauer which you mention in your book
(p. 271, footnote 10) looks interesting.  Did anyone argue that the social
demand for gold money is "without limit"?  Did anyone utilize Marx's
theory of the quantity of money in circulation in Chapter 3?  Do you know
of any part of this discussion that has been translated into English?


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