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In [OPE-L:2061] Costas wrote:
>
> I have a question on this. If the gold industry is subject to profit rate
> equalisation (as I agree that we must assume), how will this happen
without
> resorting to the quantity theory of money? Profit rate equalisation
relies
> on, say, increased supply driving own price down and bringing the rate of
> profit down to the average. For gold, that means increased quantity
driving
> other prices up (own price being one). That's the quantity theory.
>
I don't think so. First of all, gold doesn't have a price, thus there
cannot
be a fall in its price. Whatever the labour content of an ounce of gold, it
will always be converted into the same number of coins or credit money.
The case you make seems actually to be a simple example of a drop in the
value of gold (=money), resulting from technical improvement in production,
which translates into an increase in the prices of the commodities,
assuming
their values remain constant. The velocity remaining also constant, there
must be an increase in the amount of money in circulation, but this is not
the cause of the increase in prices, but its result, contrarily to the
quantity theory. Isn't that correct?
Claus Germer
cmgermer@sociais.ufpr.br
Departamento de Economia
Universidade Federal do Paraná
Rua Dr. Faivre, 405 - 3º andar
80060-140 Curitiba - Paraná
Brasil
Tel: (041) 360-5214 - Ufpr
(041) 254-3415 Res.
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