[OPE-L:2381] Re:

Chai-on Lee (conlee@chonnam.chonnam.ac.kr)
Tue, 28 May 1996 01:12:26 -0700

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Dear Michael

Thank you for your post.

You wrote:
This is of course the standard theory of market adjustments for any
commodity. But how well do they apply to gold as a monetised store
of value: do CB's stocks of Gold respond to perceived changes in
demand? [Chai-on: Yes, I think so] Is the world gold price primarily
market determined? [chai-on: yes, of course] The first sentence is
also suggestive of (linear) production theories of price
determination. [Chai-on: ?? most competitive supplier of the
commodity must have the current production method, which has
nothing to do with the linear or non-linear production theories] But why
do you believe that physical and technical conditions of production are the
attractors of fluctuating prices in any modern commodity market, let alone
in the monetised gold market? (I do not doubt that such conditions provide
some kinds
of abstract outer bounds on persistent price levels - but what
reasons do we have for believing that these theoretical bounds
systematically, or even ever, come into play? [Chai-on: the most
largest supply condition is of the current production method.
Other suppliers have limited amount of commodity, given the free
mobility of resources]

I am, of course, aware that it is the value-form view that has pushed
furthest out along the abstract labour axis of all Marxist (and
post-Classical value theories). So like all good defenders of an orthodoxy,
you may prefer to dismiss it out of hand. But I would be
interested in any arguments or evidence that you can refer to support your
account of the gold market specifically. [perhaps,
I must have learned from tsru sigeto, perhaps. I read it in my
undergraduate. I cannot remember the reference exactly. At that
time, there were plenty of literature discussing about how the price of
gold measures the value of commodities]

Michael (2) suggests:
You seem to be wanting to have your cake and eat it here. As long as US
capital supported by the US state is strong enough, the rest of
the world ( as you have pointed out several times) will have to accept
the US deficit. [chai-on: Of course, a series of credit money reflects
a stratum of capitalist powers] To the extent that that power has
faltered, your earlier arguments about the strength of US productive
capital must also be adjusted, and the US CB (etc.) will have to pay
more actual and ideological attention to the US deficits. Once again, we
have a whole barrage of tendential determinants of world gold prices well
short of the current (or expected) costs of production
coming into play - do we not? [No, I doubt it. Quite a different scenario
will be deployed].

With comradely greetings,