A little more serious reply to Gary.
> Whether the numeraire is produced by a sector that
>earns the general normal profit rate is irrelevant to its ability to function
>as a standard for expressing relative prices: y apples can be swapped for x
>units of numeraire gold; why should gold-sector capitalists have to earn a
>rate of return different from the normal competitive profit rate in order for
>us to be able to put gold to this use in a Marxian context?
>
>Ciao,
>
>Gary
But Gary, Naples speaks to this directly. A commodity would not be
commodity money if it was not structurally scarce unlike freely
reproducible commodities. And a structurally scarce commodity in
which land is a crucial means of production (as Naples puts it) will
not tend to exchange at its price of production.
In his transformation procedure Marx could only have meant to include
such commodities as can be increased in quantity by exertion of human
industry, and on the production of which competition operates
*without restraint*. This is how for example Richard Jones clarified
Ricardo's meaning in comments on Malthus, and it seems that Pasinetti
would agree. Now to be sure, the supply of gold can be multiplied
(and certainly has been) but it cannot be multiplied without great
difficulties, which it may take time to overcome and overcome at last
with expense, if at all. There is, in other words, a difference
between reproducible and freely or infinitely reproducible. A
commodity would not become commodity money if it were freely or
infinintely reproducible--this seems to Naples' point.
Ultimately this is major reason why monopoly profit in the gold
producing sector would not be competed away.
One should expect monopoly profit in the money commodity sector for
three reasons:
(I) given the non substitutability of the money commodity as a means
of payment, etc, strong demand will not tend to be self correcting.
(II) relative to demand there is scarce supply itself the result of
(a)natural shortage--gold is not freely reproducible and no
commodity that was would have been chosen as the money commodity, as
Naples suggests.
(b) property right constraints on new investments and thus supply
(III) a lower relative OCC in the gold producing sector with the
landowner capturing the extra surplus value and thus preventing that
extra surplus value from being competed away as Fred has explained
Naples' implicit reasoning.
That is, we can assume that
1. if gold was not the money commodity, we can say straighforwardly
that value of gold is greater than what the price of production of
gold would be if the gold sector could enter the equalisation process
(which it cannot as a result of absolute rent)
2. assuming gold as the money commodity, the actual value of gold
rather than the purely hypothetical price of production of gold is
more likely to be expressed as the purchasing power of the money
commodity; there was never any reason to make the price of production
of gold the unit of account in the Bortkiewicz-Sweezy transformation
exercise.
3. the exchange value or rather purchasing power of money is however
ultimately a monopoly price, dependent on the strength of demand. We
can't give a supply side or classical interpretation of the exchange
value of commodity money based on either its value or price of
production. Money simply does not belong in a set of transformation
equations which are meant to derive supply side determined long term
equilibrium exchange ratios.
Given what he was trying to study, Marx was reasonable to assume
that the value of, say, an ounce of gold is fixed unlike the value of
any other commodity and that the exchange value of money or monetary
expression of labor time would not change as a result of the
transformation of values into prices.
So to repeat: there was no theoretical warrant for Bortkiewicz and
Sweezy to have made the price of production of gold the monetary unit
in the transformation from value (or simple prices of value prices)
to prices of production; this lead to the empirically nonsensical
result that the relation between total price of production and total
value price or simple price hinged on the composition of capital in
Dept III. This assumption was driven by the desire to keep the math
game alive, not to study the real capitalist economy. There was no
real sense in saying that if the price of production of gold is lower
(or higher) than its value, as a result of the transformation from
values to prices, this would then be expresses in the sum of prices
of all other commodities rising above (or falling below) their values.
Since gold could only be a non transformed value--as Naples
argues--Marx was quite right to use the 'value of money' and
'exchange value' of money interchangeably even after he carried out
the transformation; and Bortkiewicz, Sweezy and others (including for
example Allin C on this list) are wrong to fault him for doing so.
Marx fixed the value of money and thus the monetary expression of
labor value. There would then be no reason to suppose that any change
from the value prices (or simple prices) of the outputs to their
price of production could change total price in the aggregate; even
if the inputs were to be included in the transformation and
retroactively revalued, there would still no reason for the sum of
the output prices of production to change since neither the labor
value of the output nor the monetary expression of labor value can be
affected by the transformation. And in this latter complete
transformation, it is possible to show via the Shaikh-Gouvnerneur
iteration that that sum of surplus does in fact determine the
capitalists' class real income, composed of profit and revenue.
Marx's own assumptions about money allowed him to concentrate on the
effects of rising productivity or, what is the same thing, the
development of the forces of productiononon the relations of
production--that is, the production and realization of surplus value.
Rakesh
>
> >> 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
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