[OPE-L:2358] Re: A Responce to Duncan Foley

Chai-on Lee (conlee@chonnam.chonnam.ac.kr)
Fri, 24 May 1996 20:20:29 -0700

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Dear Duncan,

It seems that we are now getting clser to the same conclusion.

Duncan (1):

> Although it is true that the new production of gold is quite small in
> relation to the current stock, the new production increases or decreases according to
!! (recorrection) !! the deviation between the market price and the
> market value (the production price/the production cost, whatever
> you like). There is no limit to the amount of the supply from
> the current production of gold, once the free mobility of resources
> is given.

I don't think the last remark is correct. The supply is limited by what
could be produced if all social resources went into gold mining, for

Chai-on (1):
Natural resources are limited but we have to presume there is no such
a limit in the world market.

Duncan (2):

>From the point of view of the individual speculator, the prices are
given and he chooses his portfolio, but from the point of view of the
system as a whole the portfolio is given and prices have to adjust to
make speculators willing to hold it. I put forward a model of this
situation in my paper for Bergamo.

Chai-on (2):

Honestly speaking, your topic of the paper presented to the Bergamo
conference was so huge and terribly squeezed my brain.
It is true that the absolute level of prices is important in the instance
of the speculation system as a whole. Speculation fund would
eventually determine the amount of total demand, and to that extent
would be influential in the determination of the absolute level of
prices. So, in speculating the expected price changes, we should
take into account the expected increment of the speculation fund
(the increase of GNP, the increase of the freed capital, the expected
increase of the windfall incomes in the future, etc.) But all this can
never be analysed prior to labor values, surplus-values calculation
in my opinion.

Duncan (3):

If they're worrying about it, they don't show it very often. In effect we
do pay off maturing debts by issuing more.

Chai-on (3):


Duncan (4):

>> What is at issue is not if the gold mining is free and competitive, but
>> if we have to pay a labor (or a labor product) or not to get a printed slip
>> of money just as when we dig out a piece of gold. Even in the
> >standard, workers or entrepreneurs could not produce freely the gold money.

> I don't think I understand your point of view here. In a gold standard
>system workers have to labor in order to earn a wage in gold, but >that's
>not the same as producing gold.

Chai-on (4):

The point is even the paper money is not given free. We have to
expend labor or surrender a product of labor to get it.

With Regards


PS: I will soon summarise this debate proceeded between me and