[OPE-L:2082] Re: Gold (questions)

From: John Ernst (ernst@pipeline.com)
Date: Tue Jan 11 2000 - 00:28:32 EST

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RE: OPE-L 2075
Duncan wrote:

I always thought "absolute rent" was a remnant of feudalism, a monopoly
charge sustained by a formal or informal collusion of landowners.

My comment:

Not according to Marx. One captures absolute rent when the worst
producer earns a rent. He manages to do so when the composition of
his capital is less than the average. Unlike those in the industrial
sector, these capitals do not "share" the excess profit with those
having higher compositions. Note that all capitals in a given industry
would earn absolute rent given that the worst producer earns an
absolute rent.

There's no collusion here. Just the free market and private property
at work.

It is worth noting that to get absolute rent Marx assumes that the
natural monopolies have a lower composition of capital than the average.
In V3, he also assumes that the products of the worst producers earning
absolute rent sell at their values -- not at prices of production. He
does remark that he'll consider other cases later.

Marx saw his concept of absolute rent as an advance from the Ricadian
concept of rent which consists entirely of differential rent.
Marx was also aware that his concept depended upon the assumption
of a lower composition of capital in the rent producing sector.
On the one hand, he thought the assumption legitimate since, unlike in
the industrial sector, few if any, raw materials are used. On the
other hand, he did see that as capitalism developed the composition
of capital in the rent sector would grow relative to the industrial
sector. Hence, of the total rent, absolute rent would fall relative to
differential rent.

For more than a few years, I thought that Sraffa like Ricardo had no
concept of absolute rent. Ajit pointed out to me that around para 75-76
in his PCMC Sraffa does develop a set of conditions under which the
worst land can earn rent. I find those conditions less realistic
in that they involve something close to diminishing returns. Without
those conditions I think the Sraffian framework becomes problematic.

Duncan wrote:

"Was it a feature of California in the 1840s or Alaska in the 1890s?"

My comment or answer:

To be honest, I have no idea. You could only get at this after the
mines are producing and balance sheets available. Further, since
none of the newly opened mines need be the worst gold producer, it
would be impossible to separate absolute from differential rent.


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