[OPE-L:2030] Re: Value of Au

From: John Ernst (ernst@pipeline.com)
Date: Wed Jan 05 2000 - 00:12:03 EST

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In OPE-L 1988,

Duncan wrote:

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.

John responds: OK. Let's say that the "given" value of money is constant
in the examples he constructs. Maybe that untangles things a bit.

But Marx starts from money with a given value and then gets to labor
time. For example, in his discussion of relative surplus value the
price of the commodity is reduced from 12 to 10 as the new technique is
introduced. But the individual value of the commodity is 9. Still
Marx tells us that the real or the social value is 10. At no point
is he running around adding up hours of labor to arrive at the social
value; he need not given his assumption about money's given relation
to value and hence to abstract labor time. Our way of proceeding is
generally the opposite of his. We add up hours of abstract labor
and compute a MELT. He has a MELT and computes hours of abstract
labor. Now if this breaks down when we enter "a general profit-rate
equalizing framework", his examples become at least misleading. But
I'm not sure we've fully considered his argument with the given MELT.

Duncan wrote:

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 replies: Yes, the MELT can and does change. But to see how such
changes impact his effort, I am suggesting we proceed with his assumption
first and evaluate his argument on that basis. We can then get to the
various cases in which the MELT changes.

John had written:

>...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?

Duncan wrote:

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 replies: Frankly, I'm not sure how Marx views this. Again the
given value of gold in his examples is constant. I do think it is worth
noting that since gold producers produce rent -- absolute and
differential, the commodity, gold, becomes somewhat resistant
to changes in its social value due to changing input prices.

John had written:

>...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.
>After all 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

My comment: I think you get to the heart of the matter here.

First, I'd agree that the capitalist is not a hoarder -- he
doesn't want M for its own sake. Indeed, he will not allow money
in whatever form to merely accumulate. But then you go on to
say that the capitalists seek "expanding value." But how are we
to measure this expanding value? It seems to me that Marxists
have done so in one or more of 3 ways.

1. In simple models, the degree to which outputs exceed inputs
is seen as an expansion of value. The rate of expansion can be
computed in terms of the use values of the commodities themselves.


[C(1)'-C(1)]/C(1) where C(1)' > C(1).

One needs no concept of value at all to proceed in this fashion.

2. In somewhat more complex models, all commodities can be seen as
embodied abstract labor and a rate of expansion calculated. Here,
folks differ about simultaneous valuation. Using it, in the simpler
models one gets the same rate of expansion that we have in 1.

3. The same difference concerning simultaneous valuation occurs if we
compute a MELT in order to measure the degree to which value
expands. Why? For all of us, the different MELTs are a result of
adding up different amounts of abstract labor time. The argument
simply moves to another level. Matters change if we adopt
Marx's way of proceeding by starting and ending with money whose
value is given and constant. If a $10 investment produces a profit
of $1, we could not argue that the rate of profit is anything other
than 10%. Even with falling input prices which may occur as this
profit is produced, there is no way to argue that $10 was not
advanced. Or is there?


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