[OPE-L:7629] Re: RE: Itoh on gold money

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Mon Sep 09 2002 - 00:33:49 EDT

On Fri, 6 Sep 2002, Itoh Makoto wrote:

> Dear Fred;
> Thanks for your reading our book and commenting on my post. The issues
> are not easy to solve instantly and we need to cooperate patiently
> within our limitted time. Let me try to answer or clarify the problems
> you raised by inseting may reply beginning with (Itoh) into your post.
> 	(Itoh) There must be at least three different steps to be analyzed
> even within the basic theory. The first step is on the values of
> commodities including gold. The effect of equalization of profit rates
> among capitalists and the ground rent should still be
> abstracted. Otherwise you have to discuss the determination of exchnage
> values of agricultural products, etc. in relation with differential and
> absolute rent from the beginning of 'Capital'. The second step is on the
> theory of prices of production. Here, we still should abstract from the
> theory of rent  in clarifying the basic logic of determination of prices
> of production.      
> 	(Itoh) It is because even after introduction of the differential
> and absolute ground rent at the third step of theoretical system, the
> basic first two steps can remain in their fundamental logic to clarify
> the working of laws of capitalist economy, and the theory of ground rent
> is dependent on them. As you put it, gold has not really price of
> production. However, its exchange value is inverse of prices of other
> commodities. Under the given standard of price, say an ounce of gold is
> 3 pounds 17 shilling 10.5 pence, the profit rate of gold producing
> capitalists with given technical conditions must fluctuate according to
> the changes of prices of other commodities. I don't see any reason why
> capitalists in other industries can not competitively invest or come
> into the gold industry, if its profit rate is constantly higher than the
> social average. The fact that gold producers are relatively small sized
> is also a good evidence for assuming such competitive pressure. Without
> such competitive pressure among producers, even the value itself can
> not work as the gravitational center of exchange values. Marx's theory
> of absolute rent does not refute the equalization of profit rates among
> capitalists including those who pay absolute rent in agriculture.

But the key question is: after the introduction of absolute and
differential rent, how is the exchange-value of gold money determined: by
its "value" or by its "price of production"?  

I argue that the exchange-value of money is determined by its "value",
because the least productive gold mines have a lower than average
composition of capital and the owners of the gold mines are able to
appropriate the extra surplus-value produced in the form of absolute
rent.  This does NOT mean that gold capitalists do not receive the average
rate of profit.  They do.  But it also means that, in addition, gold
landlords are able to appropriate absolute rent.  

Do you agree or disagree?

> 	(Itoh) There are two pints here to be clarified here beside
> already noted. First do you negate the theory of prices of production
> for the whole prodcts paying the absolute rent? If not, what is the
> basic difference in this point between the gold industry and
> agricutrue? In a sense, all the land owners can reject investment to
> gain the abosulte rent to the extent that the comepetive pressure from
> the additiona investment to the existing lease land allows it.

The theory of prices of production is not negated in the sense that
capitalist farmers still receive the average rate of profit.  But the
theory of prices of production is negated in the sense that the prices of
agricultural goods do not equal to prices of production, but are instead
equal to values (or monopoly prices), because the prices of agricultural
goods must a component of absolute rent.  Because of their monopoly power
over the land, landlords are able to block the redistribution of the extra
surplus-value from agriculture to other industries, and thus block the
transformation of values into prices of production.  Marx said this many

> Second, in this regard, as I argued in my boook, The Basic Theory of
> Capitalism
> (Macmillan, Barns and Noble, 1988, p.248),  Marx's theory itself to pose
> the value as the source and limit of ablolute rent is problematic. Do
> you think that absolute rent disppears or does not exist either when the
> organic composition of capital in agriculture bacomes higher than the
> social average or in case of the urban land for manufacturing industries
> with higher composition of capital than the social average?  The concept
> of monopoly rent is in my understanding may not well applicable to
> those cases.

I would say that in this case that absolute rent becomes monopoly rent,
and this is not a problem.  The difference is that the source of the
absolute rent is surplus-value produced outside agriculture, rather than
withing agriculture.  Why do you think it is a problem?  

In any case, this condition does not apply to gold, where the composition
of capital in the least productive mines is lower than the social average
composition of capital.

I look forward to continued patient discussion.


This archive was generated by hypermail 2.1.5 : Tue Sep 10 2002 - 00:00:01 EDT