Gil writes in 7494: > As we know, Marx's analysis of capitalism proceeded on the basis of >given levels of abstraction rather than on the basis of >descriptively faithful representations of that system. And the >theoretical analysis Marx develops in K.III, Ch. 9, so far as I can >tell, assumes both that (1) money is in commodity rather than fiat >form and (2) all commodities (thus also the money commodity) are >produced by capitalist firms. Therefore I understand his >theoretical results, which you defend, to depend on these >conditions. The point of my scenario, of course, was to show that >the rate of profit *could not* be coherently understood as being >determined analytically "prior" to prices of production under the >conditions envisioned by Marx. > >With regard to the form of money assumed in his analysis, Marx first >posits that the "value of money" is fixed (K.III, p. 142), and then >considers the implications of allowing "the value of the money >commodity" to vary (K.III, p. 236, 238). Between these passages and >the treatment of the "transformation problem" a few chapters later, >Marx neither outlaws commodity money nor even introduces the >prospect of fiat money. Consequently it is presumptive that his >analysis is based on money taking the commodity form. > >But second, Marx explicitly assumes that the profit rate is >equalized across all sectors of commodity production. No he does not! Marx explicitly says that natural and artifical monopolies opt out of the equalisation process (Capital 3, p. 301). Further, Marx's theory of competitive price formation only applies to freely reproducible commodities. This Marxian 'selection' follows Ricardo of course. That gold is not that kind of commodity is suggested by the fact that the 125,000 tons of it now in existence is such an insignificant a volume that the US steel industry turns out that much tonnage in a just a few hours while the industry as a whole produces 120 million tons a year (Peter Bernstein, Power of Gold, p. 3) It matters not whether gold is extracted by self proprietors or capitalist firms, though Fred's post is very insightful indeed. Gold simply cannot enter into Marx's theoretical analysis in general and his transformation process in particular as that process only applies to *reproducible* commodities which gold is not however and by whomever it is extracted. Wouldn't Pasinetti agree? For example, heavy demand for gold reserves by emergent industrial powers (Germany and the US along with the UK who all tried to maintain and build up gold reserves) may have contributed to late 19th century deflation (as Bismarck noted, it was as if three big men were trying to cover themselves with a blanket too small for all of them); this price deflation may have been partially overcome by new South African mining on the quasi industrial basis of cynadisation. But cynadisation did not mean that gold was produced by industrial capital as a truly reproducible commodity the price of which was subject to the indirect law of value. The price of gold does not seem ever subject to have been subject at the farthest remove to a direct or indirect law of value, i.e., the law of price of production; gold simply has to be considered apart from the process of competitive price formation. The assumption of the gold standard by emergent powers, the demonetization of silver,,and international crises, etc all have decisive effects on the price formation of gold. Gold belongs in neither Marx's five industry example of competitive price formatation nor in Sraffian linear equations. We'll have to settle for the standard commodity as the only kind of "money" which belongs in the Sraffian framework. There is a further problem with the above. Gil grants that Marx posits the value of no other commodity as fixed, so why then does Marx stipulate a fixed value for the money commodity alone? There is no answer in the above. In so doing, Marx has certainly not attempted a descriptively faithful representation of the bourgeois system. Even in Gil's passages Marx only briefly and most superficially considers a changing value of money to underscore that doing so only needlessly complicates his point. Moreover if one grants that Marx has stipulated a constant value of money and cost prices have to be in some price form (market, price of production, direct), then it follows that Marx begins his transformation analysis with a monetary expression of labor time already fixed. On what grounds would one justify changing it in the course of the transformation? Rakesh
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