[OPE-L:7642] Re: Re: Gold & prices of production--Postscript

From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Tue Sep 10 2002 - 15:41:11 EDT

Hi, Fred.  Where I wrote

> >
> > 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.

you asked

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

Yes.  Again, sorry for the lack of specificity in this and the prior 
post.  Let me take up where I just left off in responding to your reply to 
that earlier post:  as I understand it, you and I are invoking a virtually 
identical sense of the notion of "absolute scarcity," subject to two 
caveats.  The first one, I think, is minor:  granting that the ability of 
landlords to charge a rent for natural resources is a *general* feature of 
exchange relations under the capitalist mode of production is not precisely 
the same as asserting that the rent itself must be non-trivially greater 
than zero in *any possible* manifestation of capitalist reality.  To put 
this another way, unless landlords get direct use value out of their 
holdings of natural resources, they are essentially indifferent between not 
renting these resources out and letting them be used for zero rent, so that 
they would *strictly* prefer any level of rent above zero, even 
infinitesimally so (I'm abstracting here from transaction costs or 

The question is then what is it that allows landlords to charge a rent 
non-trivially above zero.  If we agree in *assuming* they do not act 
collusively to set a cartel price on their resources (and I explained in my 
previous post why I think this possibility should be ignored, at least for 
the time being), then there is only one economically coherent answer:  the 
demand price for the natural resource in question is strictly positive at 
the absolutely scarce level of supply.  This demand price is determined by 
the equation of market demand to the absolute supply constraint.  This is 
the additional equation that I've argued must be incorporated into the 
model if one is going to assert the existence of a strictly positive rent.

I note that this conclusion holds even if one refuses to accept the 
possibility that landlords would be indifferent between supplying the 
resource or not at zero rent (say, because they're petulant:  "by gosh, if 
people are going to use my resource, then they're going to have to pay a 
rent, even if I have no other use for it!"), since it would still be true 
that any non-negligible rent actually received would necessarily correspond 
to the demand price at the absolute supply constraint.


This archive was generated by hypermail 2.1.5 : Thu Sep 12 2002 - 00:00:01 EDT