[OPE-L:7621] Gold & prices of production--Postscript

From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Fri Sep 06 2002 - 13:34:25 EDT

It occurred to me in my drive home last night that my argument against 
Fred's first point is more general than suggested.

Specifically, where Fred said

>>1.  Gold is a scarce, privately-owned mineral, and therefore the income of
>>the gold industry must contain a component of rent.  In terms of Sraffa's
>>theory, this adds an unknown, without adding another equation, so that the
>>rate of profit is not uniquely determined by given technical conditions of
>>production and the wage rate.

and I responded

>Insofar as it is logically possible to imagine a world in which the 
>realized level of this rent is zero, this observation doesn't rebut my 
>point.  What you assert here is, in effect, that by its nature, the 
>production of gold *must* accrue a strictly positive absolute rent.  Of 
>course, the fact that gold is "privately owned" is not at issue; all 
>commodities and means of production are privately owned under 
>capitalism.  "Scarcity" in the sense you intend it here only matters if 
>the scarcity constraint is binding at the margin, which is once again a 
>matter of historical contingency, not theoretical necessity.  That is, one 
>could without contradiction imagine the capitalistic production of gold in 
>which the level of rent were in fact zero.  (And not only *can* one, but 
>the substance of your next point is that it's *quite plausible* to imagine 
>a world in which the scarcity constraint on gold production is 
>non-binding, since by your representation the supply of gold in 
>circulation far exceeds the level of gold production!)  And in that case, 
>the inconsistency I asserted again arises.

I should have instead said that if the presence of scarcity in Fred's sense 
"adds an unknown" to the Sraffian equation system, it *necessarily* also 
adds an additional equation in the form of the binding scarcity constraint, 
which will generally take the form that the level of demand for gold equals 
the constrained production of gold--thus creating the rent in 
question.  Therefore, whether or not the realized level of rent is zero, 
the inconsistency I suggested in the original presentation of the scenario 


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