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A response to Clauss' [OPE-L:2107] comments on gold industry profit rates.
(in capitals).
I do not see an easy answer and the issue goes to the heart of the labour
theory of value.
Costas
At 09:16 AM 1/12/00 -0200, you wrote:
>
>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.
CREDIT MONEY IS SUPERFLUOUS HERE - WORSE, IT COULD CONFUSE THINGS. IT SEEMS
TO ME THAT THE ISSUE SHOULD BE SETTLED IN A RICARDIAN WORLD OF N
COMMODITIES, ONE BEING MONEY. SO GOLD DOES HAVE AN IMPLICIT PRICE.
>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.
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?
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?
FOR THE CASE YOU ARE EXAMINING, I.E., FALL IN THE VALUE OF GOLD AS A RESULT
OF TECHNICAL CHANGE, THAT SEEMS TO ME CORRECT. BUT THAT IS NOT MY QUESTION.
PERHAPS WE COULD FIND AN ANSWER BY DEVELOPING A SEPARATE THEORY OF HOARDING
(I.E. DEMAND FOR MONEY TO HOLD). THERE ARE OLD GERMAN DEBATES ON THIS. THAT
WOULD PROBABLY HAVE TO BE COMBINED WITH A THEORY OF GOLD DEMANDED AS
PRODUCTION/CONSUMPTION GOOD. OR IT COULD BE DONE IN TERMS OF PRICE LEVEL
CHANGES IN THE COURSE OF THE BUSINESS CYCLE OVER SEVERAL BUSINESS CYCLES.
I hope this makes my query clearer.
Cheers
Costas
>
>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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