[OPE-L:1777] Value of Au

Subject: [OPE-L:1777] Value of Au
From: John Ernst (ernst@pipeline.com)
Date: Tue Nov 30 1999 - 12:24:17 EST

In Capital, Marx generally assumed that the value
of money was constant. For example, we could say that
1 oz of Gold represents 10 hours of abstract labor and
be consistent with Marx's assumption. If we say that
the capitalist producing gold spends 10 oz on circulating
constant capital and negligible amounts for fixed capital
and wages to produce 13 oz of gold, then his/her rate
of profit would be (13-10)/10 or 30%.

Now given that the purchase prices of the means of production
go up prior to his purchasing them for use in the next period
to, say, 11 oz, does the amount of labor that 1 oz of
gold represent change? Note there has been no technical change in
the gold producing sector. Does the value of gold change due to
changes in the prices of other commodities? If so, how can
Marx make the assumption he makes concerning the relation between
gold and abstract labor as he discusses, say, decreases in the
prices of other commodities? Is Marx dealing with the exchange
value of gold or the value of gold?

If we put this into the usual static framework and, of course,
assume that the gold producer makes the average rate of profit,
the above is, at best, a bizarre example. If, on the other hand,
we treat gold something other than any other commodity, then the
questions stand. We should note that like other natural monopolists
the producer of gold would earn "extra profit" in the form of
rent. Hence, the static solution is less than adequate.

My own solution to this problem is to adjust the living labor hours
of abstract labor such that the total labor time to oz. of gold
remains constant. I'd be interested in how others see this problem.



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