[OPE-L:1326] Re: A Problem w. Transformation

Duncan K Foley (dkf2@columbia.edu)
Tue, 5 Mar 1996 11:48:07 -0800

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On Tue, 5 Mar 1996, John R. Ernst wrote:

> Duncan,
> I think your "solution" still forces another assumption upon us.
> Specifically, if gold producers capture absolute as well as
> differential rent, we still would not know how much absolute rent
> is involved. That is, absolute rent seems to be determined, in part,
> by demand unless we assume that the marginal producer "sells"
> gold at its value and has a lower composition of capital than
> average.
Maybe it would help to take each of the levels of abstraction one at a
time. To begin with, assume the money commodity (and all other
commodities) are produced only with reproducible resources, so that there
are no rents at all. In this case if the money-commodity participates in
competitive profit-rate equalization, it will have a price of production,
which will establish the level of money prices of commodities.

Next step: assume that some commodities use nonreproducible resources.
(I'm basically uncomfortable with this as an analytical idea, since in
fact all resources are reproducible at a cost: gold or petroleum reserves
can be extended through search, or improved extraction methods, etc.)
Then establish your theory of competitive profit rate maximization for
all commodities, and you will find a price of production for the money
commodity, too. (To do this you will need to take account of demand,
since rents depend on demand.)

Third step: if you think you understand what Marx meant by "absolute
rent", and you think absolute rent is important in the money-commodity
case, work out the consequences of profit-rate equalization taking into
account the absolute rents. Again, the money commodity price will emerge,
on the assumption that the money commodity participates in the
competitive profit-rate equalizing process.

(I hesitate to raise the issue of absolute rent in OPE-L, since it arises
much later in Capital than where we are in the rough order we're working
through, and the issue seems to me to be quite confused at best. I take
"absolute rent" to be a relic of feudal social relations that Marx used
to analyze certain payments peasants had to make for access to East
German forests, and wonder how important it is in gold production in the
19th century.)

Yours in solidarity,