[OPE-L:7637] Re: Gold & prices of production--Postscript

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Tue Sep 10 2002 - 10:39:28 EDT

On Fri, 6 Sep 2002, Gil Skillman wrote:

> 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 
> remains.

Gil would you please give the explicit formulation of this equation, 
so I can understand better what you are suggesting.  


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