Where I write >>But second, Marx explicitly assumes that the profit rate is equalized >>across all sectors of commodity productio Rakesh responds >No he does not! Marx explicitly says that natural and artifical >monopolies opt out of the equalisation process (Capital 3, p. 301). Right. He also says he will "say nothing here" about them. Thus, he assumes away factors that preclude equalization of profit across sectors, as I said. If there's doubt about this, ask Fred if he thinks his understanding of Marx's argument is premised on the operation of monopolies. >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) First, this commits the fallacy of confusing the actual with the possible. It's also true that not that much horse manure is produced *for sale* (some is, for fertilizer), but that doesn't imply it's not reproducible. Moreover, gold is reproducible--just, perhaps, at a high cost (more on that below). But second, and more to the point, the quotes I adduced from K.III Part 1 indicate that Marx *assumed* the money commodity at the level of abstraction he pursues here, and he says nothing about problems of reproducibility associated with that commodity. So if it is in fact a problem he seems to have assumed it away at the level of abstraction under which he studies the system of capitalist production in K.III Part 1. >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. First, Marx does not mention these problems when he asserts that money takes commodity form, so he evidently abstracts from them, as suggested above. Second, the above does not suggest gold is not "reproducible"--e.g., the quantity supplied of gold could have been constant over this period--rather it suggests that marginal cost of production is significantly rising beyond a given margin of production. However this problem is not unique to gold as a money commodity. It would also exist for gold, or silver, or any other precious metal used for intermediate or final consumption; other minerals and metals (cobalt?); and some agricultural products. So this would be a problem for Marx's analysis of capitalist production *whether or not* he assumed a money commodity. But again, he evidently assumed all such problems away--and if he assumes them away for non-money commodities, he can just as well do so for a money commodity. >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. I don't see how *this* historically-based argument applies to the purely theoretical point under discussion any more than does Fred's historically based argument. Marx evidently abstracts from such considerations in his analysis of KIII Part 1. Gil > 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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