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Costas writes (in part) in reply to Claus:
>
>I HAVE NOT ASSUMED ANYTHING ABOUT TECHNICAL CHANGE NOR ABOUT THE VALUE OF
>GOLD. WHAT I WOULD LIKE TO KNOW IS THE MECHANISM FOR BRINGING THE RATE OF
>PROFIT IN THE GOLD INDUSTRY BACK TO AVERAGE, IF IT IS ABOVE IT. FOR OTHER
>COMMODITIES WE USUALLY ASSUME THAT THIS HAPPENS THROUGH CAPITAL MOVEMENT,
>CHANGE IN SUPPLY, AND FALL IN PRICE. FOR GOLD THIS CANNOT HAPPEN. THE RATE
>OF PROFIT OF THE GOLD INDUSTRY COULD ONLY FALL IF OTHER PRICES WENT UP. HOW
>WOULD THAT HAPPEN WITHOUT THE QUANTITY THEORY?
>
If capitalists are trying to move capital into the gold industry to capture
higher than average rates of profit, won't they bid up the prices of labor
and other inputs to gold production? Isn't this a possible mechanism for
equalizing profit rates that doesn't involve the quantity theory?
Duncan
Duncan K. Foley
Department of Economics
Graduate Faculty
New School University
65 Fifth Avenue
New York, NY 10003
(212)-229-5906
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