[OPE-L:1988] Re: Re: Value of Au

Duncan K. Foley (foleyd@cepa.newschool.edu)
Tue, 28 Dec 1999 20:31:45 -0500

Some comments on John's OPE-L 1967:

John writes:
>... I have no idea what you are thinking when
>you read sections of CAPITAL where Marx holds the value of money constant.
>If the money commodity is simply like any other commodity, it's value changes
>as technical changes take place in the production of any other commodity
>that directly or indirectly goes into the production of gold. It seems
>to me that your "money" generally can't have a constant value. The
>constant you envision would seem to be abstract labor itself and not the
>value of money.
>Basically, according to your interpretation of the value of money, Marx has
>no business assuming that it is constant. Indeed, in making that assumption
>he contradicts his own notion of value. This would seem, at least, to call
>into question the validity of his effort.

Duncan replies:

Here I think we're just tangled up on the word "constant", which I meant in
the sense of "given". The great majority of Marx's examples are concerned
with explaining the effect of some change, like a rise or fall in the money
wage, on variables like the rate of exploitation or the rate of profit. In
these passages he typically assumes that the labor time represented by a
unit of money remains constant. It is true that one would have to make some
special assumptions to assure this in a general profit-rate equalizing
framework, but I don't think that calls into question the validity of
Marx's effort to explain profit in terms of unpaid labor time.

Over time the MELT clearly can change with changes in the costs of
production of commodities and of the money commodity, as well as changes in
the standard of price. In general a change in the real wage will also
change the value of the money commodity.

John writes:

>...Granted there is (was) competition in the gold sector. Does this mean
>it is not a monopoly? Is there no rent at all paid to the owners of
>those mines or is it all competed away? Given rent, an increase in
>the exchange value of the produced means of production used in gold
>production would force marginal producers to quit the industry. Must
>the value of gold itself then change?

The owners of low-cost mines do have a monopoly in the same sense that any
land resource owner does, and collect rents. These rents will depend on the
scale of production of gold, but my reading of Marx is that he views this
as a second-order effect, which can be abstracted from in analyzing the
role of money in representing social labor time.

John writes:

>...I don't think we differ on whether or not money must be a
>produced commodity. But if, as we read Capital, any commodity could be
>money, then we might as well say that the aim of capitalists is
> C(1) - C(2) - C(1)'
>where C(1) is the initial means of production used to produce C(2) which
>can be exchanged at the end of the process for more C(1) or C(1)'. The
>rate of profit becomes [C(1)'-C(1)]/C(1). If we measure the rate of
>profit in this fashion, then the irrationality of capitalists disappears.
>Afterall what is irrational about trying to create a growing amount of
>use values?

I think this misses the point about the dual nature of the money commodity
in Marx's theory. It is a specific commodity with a specific use value
(gold can fill teeth or be used as jewelry) but it also and simultaneously
functions as the socially accepted measure of value. The capitalist seeks
value, not the money commodity: in the pursuit of surplus value the
capitalist turns over the money commodity as fast as he can. The capitalist
does not want gold for the sake of its use as jewelry (except as a
consumer); he does not even want gold itself as a form of value (which is
the neurosis of the miser); he wants expanding value in the circuit of


Duncan K. Foley
Department of Economics
Graduate Faculty
New School University
65 Fifth Avenue
New York, NY 10003
messages: (212)-229-5717
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e-mail: foleyd@cepa.newschool.edu
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webpage: http://cepa.newschool.edu/~foleyd

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