[OPE-L:7699] Absolute rents

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Sat Sep 21 2002 - 18:02:21 EDT

Dear Fred,
Entertain the possibility of a willfully blinkered understanding of 
what Marx, you, Michele and I have been trying to say. One may not 
want to understand why Michele, you and I are saying there would tend 
to be extra surplus value in the gold industry (lower than average 
OCC as a result of i. the use of little to no raw materials in the 
extraction of precious metals as Marx emphasizes, ii. economic 
disincentives for large investment on scarce, privately owned land 
for which the lease cannot be counted on to last as long as  long 
lived fixed capital, iii. value of gold being set at marginal mine 
which will tend have the most labor intensive technique of production 
as you have underlined though I am not clear about this, iv. inherent 
technical difficulties in raising the capital intensity of in 
agriculture and mining etc.) and why instead of being competed away 
this extra surplus value would tend to be appropriated by the owner 
of the land which is an inherently scarce means of production as 
absolute rent even as the gold capitalists themselves tend to make 
the average rate of profit. Of course demand may not be strong enough 
for the full extra surplus value in the gold industry to be realized 
but given that gold is immediately exchangeable there seems little 
reason to doubt that the extra surplus value would in fact tend to be 

Whether there is place for absolute rent in Sraffa's framework, the 
point remains that M'-M/M in the numeraire/money producing sector 
should not be set equal to the uniform profit rate. Aside from the 
reason of absolute rent, there is little chance that output can be 
varied to regulate supply towards the end of equilibriating the 
exchange value of gold to its value or price of production but my 
point is a digression from the main argument here.

More importantly, the dubious assumption that the money commodity is 
like any other commodity in that M'-M/M in gold production should 
tend to be equal to M'-M/M in the bulk of commodity producing 
branches was shared by both Malthus and Ricardo who both did not 
grasp the contradiction between or the mutual exclusivity of or 
polarization of commodities and money. Money is not like any other 
commodity even when money is a commodity, and one aspect in which it 
is distinguished is in that its exchange value is not determined in 
the same way as the bulk of commodities.

At any rate, the assumption that the money commodity would have a 
price of production was shared not only by Malthus and Ricardo but by 
Ricardo's  followers Bortkiewicz and Sraffa  in the latter's 
construction of the standard commodity as an invariable standard of 
value. Once this assumption is dropped and the standard commodity 
with it, what is left of the Sraffian theory?

All the best, Rakesh

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