On Fri, 9 Aug 2002, Rakesh Bhandari wrote: > Michele Naples writes in her contribution to *Marx and Non > Equilibrium Economics*, ed. Alan Freeman and Guglielmo Carchedi > (1996): > > "Marx used 'value of money' and 'exchange value' of money > interchangeably because to him, gold, was a non transformed > value...As I have suggested elsewhere...Marx's language is consistent > because gold is produced in mines. Thus *gold exchanges at its value* > rather than price of production, since mineowners collect absolute > rent. The neo Ricardian solution is wrong on gold because it > abstracts from land, a crucial means of production in mining, and > from landowners' rent. It treats gold as infinitely reproducible, > like other commodities. But Marx made clear that the good which > serves as commodity money must be scarce to serve as money. Just as > Marx rejected Ricardo, he would reject the neo Ricardian model where > the exchange value of money is determined in the same way as other > commodities' price of production." p.103 I think Rakesh and Michele are on the right track here. I think this passage points to the fundamental theoretical reason why Gils "accounting equation" for gold does not belong in Marx's theory of prices of production. The money commodity, gold, is a scarce mineral, that is privately owned in capitalism. Therefore, the exchange-value of gold with other commodities MUST INCLUDE RENT for the owners of the gold mines, including absolute rent on the least fertile gold mines. This component of rent is missing entirely from the Sraffian concept of the numeraire. Sraffa's theory assumes the numeraire is one of the manufactured goods, with no rent. I had temporarily forgotten about this important difference between Marx's theory and Sraffa's theory. Thanks to Rakesh (and Michele) for reminding me. According to Marxs theory, presented in Part 6 of Volume 3, and especially Chapter 45, the prices of minerals and of agricultural commodities are DETERMINED DIFFERENTLY from the prices of manufactured goods. Minerals and agricultural commodities are determined by their VALUES, not by their prices of production. Marx assumed that mining and agricultural industries have a lower than average composition of capital. Therefore, the values of mining and agricultural commodities are greater than their prices of production, and the surplus-value produced in these industries is greater than the average rate of profit. However, because of their monopoly over these scarce natural resources, the owners are able to block the transformation of values into prices of production and secure the extra surplus-value for themselves as absolute rent. In other words, mining and agricultural industries DO NOT PARTICIPATE IN THE EQUALIZATION OF PROFIT RATES with manufacturing industries. Therefore, the n Sraffian equations that we have been discussing do not correctly represent Marxs theory. The prices of mining and agricultural commodities, and the exchange-value of gold, are determined by their values, independent of manufacturing industries and the average rate of profit. Therefore, the system of equations expressing the determination of prices of production and the equalization of the profit rate should not include equations for mining and agricultural commodities, and in particular should not include an equation for gold. Lets say there are (n-1) non-mining and non-agricultural industries. In this case, there would be (n-1) equations in (n+1) unknowns the (n-1) absolute prices, the wage rate and the rate of profit. As I have discussed before, taking the wage rate as given in this system does not uniquely determine the rate of profit. These (n-1) equations and the wage rate are consistent with an infinite number of rates of profit, which could be determined outside this system of equations, as in Marxs theory. And, if the rate of profit is also taken as given, along with the wage rate, then this system is not overdetermined, but rather determinant of the (n-1) absolute prices. Thanks again to Rakesh for helping to clarify this crucial point. I have a family trip for a couple of days, and will be off OPEL until the end of the week. Comradely, Fred
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