From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Tue Sep 10 2002 - 15:41:11 EDT
Hi, Fred. Where I wrote > > > > I should have instead said that if the presence of scarcity in Fred's > sense > > "adds an unknown" to the Sraffian equation system, it *necessarily* also > > adds an additional equation in the form of the binding scarcity > constraint, > > which will generally take the form that the level of demand for gold > equals > > the constrained production of gold--thus creating the rent in > > question. Therefore, whether or not the realized level of rent is zero, > > the inconsistency I suggested in the original presentation of the scenario > > remains. you asked >Gil would you please give the explicit formulation of this equation, >so I can understand better what you are suggesting. Yes. Again, sorry for the lack of specificity in this and the prior post. Let me take up where I just left off in responding to your reply to that earlier post: as I understand it, you and I are invoking a virtually identical sense of the notion of "absolute scarcity," subject to two caveats. The first one, I think, is minor: granting that the ability of landlords to charge a rent for natural resources is a *general* feature of exchange relations under the capitalist mode of production is not precisely the same as asserting that the rent itself must be non-trivially greater than zero in *any possible* manifestation of capitalist reality. To put this another way, unless landlords get direct use value out of their holdings of natural resources, they are essentially indifferent between not renting these resources out and letting them be used for zero rent, so that they would *strictly* prefer any level of rent above zero, even infinitesimally so (I'm abstracting here from transaction costs or depreciation). The question is then what is it that allows landlords to charge a rent non-trivially above zero. If we agree in *assuming* they do not act collusively to set a cartel price on their resources (and I explained in my previous post why I think this possibility should be ignored, at least for the time being), then there is only one economically coherent answer: the demand price for the natural resource in question is strictly positive at the absolutely scarce level of supply. This demand price is determined by the equation of market demand to the absolute supply constraint. This is the additional equation that I've argued must be incorporated into the model if one is going to assert the existence of a strictly positive rent. I note that this conclusion holds even if one refuses to accept the possibility that landlords would be indifferent between supplying the resource or not at zero rent (say, because they're petulant: "by gosh, if people are going to use my resource, then they're going to have to pay a rent, even if I have no other use for it!"), since it would still be true that any non-negligible rent actually received would necessarily correspond to the demand price at the absolute supply constraint. Gil
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