[OPE-L:7649] Re: Re: Re: Gold & prices of production--Postscript

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Wed Sep 11 2002 - 11:37:29 EDT

```Gil, I still don't understand your equation.  Would you please write the
equation in mathematical symbols?

Let's not forget that this is supposed to be an equation for gold as the
money commodity (as in your earlier 7621).  Why then do you speak of the
demand PRICE, since gold has no price?

When you say the "demand price for the natural resource", do you mean the
price of the currently produced gold or the price of the gold mines?  We
are discussing the currently produced gold, right?  But gold has no price.

What is the demand for gold money a function of?  (Makoto has been asking
a similar question, I believe.)  Surely not the price of gold, since gold
has no price.

And what do you mean by the "absolute supply constraint"?  A given
quantity supplied (i.e. a vertical supply curve, as in the neoclassical
market period)?  Or something else?

It seems odd to add this demand equation to a Sraffian system of
simultaneous cost of production equations.  I wonder why the Sraffians
themselves do not add such an equation, and instead assume that absolute
rent = 0.  Gary, can you help us out here?

Fred

On Tue, 10 Sep 2002, Gil Skillman wrote:

>
>
> >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
> depreciation).
>
> 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.
```

This archive was generated by hypermail 2.1.5 : Fri Sep 13 2002 - 00:00:01 EDT