[OPE-L:7630] RE: Re: RE: Itoh on gold money

From: Itoh Makoto (mktitoh@kokugakuin.ac.jp)
Date: Mon Sep 09 2002 - 13:17:52 EDT

Dear Fred;
Thanks for your reply.  Let me furhter reply to your comments briefly again by inserting my position. 
I hope that this mail serves as a reply to Rakesh and others too, and is of some interest.

	-----Original Message----- 
	From: Fred B. Moseley [mailto:fmoseley@mtholyoke.edu] 
	Sent: 2002/09/09 (月) 13:33 
	To: ope-l@galaxy.csuchico.edu 
	Subject: [OPE-L:7629] Re: RE: Itoh on gold money

	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) I disagree. Firstly, Marx's theory of absolute rent itself in chap 45 of  the 3rd vol. of  Capital clearly states that it depends on the general condition of market how the market price of a land product comes closer to its value, and that landownership can not determines it. If you insist that the exchange-value of gold is determined by its value in accord with Marx's theory of absolute rent, then you have to explain how and why the general condition of market (or the balance between social demand and supply of gold) always sssures it, while all the other coomidities are subject to fluctuations of market prices. There cannot be a capitalist mechanism of competition and the function of landownership to assure such a difficult balancing.  At least my former qustion as for how to think the social demand for gold in relation to its supply remains in this context.     
	>       (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

	(Itoh) It is confusing to nagete the theory of prices of production by the theory of (differential and) abosolute rent, as the theory of rent depends on the theory of prices of production. The social redistribution of surplus-value is basically understood by the theory of prices of production, and the theory of rent introduces just partial revision to it in relation to the social function of land ownership in capitalism. Just like the basic theory of value need not be negated by the theory of prices of production, we should not negate the theory of production by introducing the theory of rent at the later stage of principles. Marx, in my reading, never stated that the transformation of values into prices of production in the case of agricultural products is blocked by the power of the land ownership, but just said that a part of surplus-value is included in their market prices beyond their prices of production due to the working of the land ownership. In this regard at a le!
vel of theory of prices of production, we should abstract from the effect of landownership so as to calrify the basic principles of capitalist competition to equalize the rate of profit across industries. In this view, your exclusion of gold industry from the theory of prices of production is not appropriate, and not a good critique to Bortikiewicz and Sweezy. My own treatment of gold money in the transformation problem is shown also in my book bellow.     
	> 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? 

	(Itoh) If we define absolute rent in relation with the monopolistic power of land owners to be able not to allow investment without paying rent, absolute rent can exist in any industries including urban manufacturing regardless of composition of capital, and it represent certain compromising redistribution of surplus-value from capitals to land owners. Monopoly rent then can be dfined as a sort of rent due to special natural condition for products which can enjoy exceptional monopoly prices in a market. Just as prices of production and differential rent represent redistribution of surplus-value through competition among capitals, the social source of absolute rent would not need to be limitted within each industry to pay it. A true problem here is how to understand the theoretical limit to the effect of land ownership to raise the market prices beyond the prices of production for the commodities produced by using land. Will you refer to my book on this point further if you !
are interested? 
	Thanks in advance if you will.


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