From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Tue Sep 03 2002 - 08:38:11 EDT
On Sun, 25 Aug 2002, Rakesh Bhandari wrote: > It is of course true that absolute rent can be explained on the > basis of price- "untransformed value" equilibrium as long as the OCC > is lower in these branches than the social average. But Marx also > notes that this is a weak basis for the persistence of absolute rent > since the OCC in these branches may approach the economy average. So > the theory of rent developed before competition is hardly developed > at all. It is important to emphasize here that the value of gold is determined by the labor-time requirements in the LEAST PRODUCTIVE mines, not by the labor-time requirements in the mines of average productivity. Therefore, the relevant composition of capital for comparison with the social average composition of capital is the composition of capital in the least productive mines, not the composition of capital in the mining industry as a whole. The composition of capital in the least productive mines is likely to be low, and lower than the social average composition of capital. This hypothesis of course still has to be tested with data from the gold standard period. During the 19th century (to the extent that gold was produced by capitalist enterprises and not by simple commodity producers), the composition of capital in the gold industry as a whole was very low and almost certainly lower than the social average (Ricardo remarked that the ratio of capital to labor was below average in the gold industry). The composition of capital in the gold industry no doubt increased in the 20th century, but my impression is that it is still very labor intensive, even in the most productive mines, and especially in the least productive mines, which are the relevant mines for comparison with the social average composition of capital. Does anyone know of any possible sources of data related to the composition of capital in the gold industry during the gold standard period? Thanks in advance. In the unlikely case that the composition of capital in the least productive gold mines were not less than the social average, and if gold exchanged at its value, then the rate of profit in the gold industry would be below the average rate of profit in other industries, and there would be no absolute rent. But rent would still have to be paid somehow to the owners of these mines. In other mining and agricultural industries, this could be accomplished by the price of the commodity rising above both its value and its price of production, so that surplus-value would be appropriated from other industries, in the form of monopoly rent. However, this is not possible in the gold industry because gold has no price that could rise above its value and price of production. It seems to me that, since it is not possible to increase the price of gold, the only way to make possible both the average rate of profit and rent in the gold industry would be to have very low wages (much lower than average) and a very high rate of surplus-value. From this perspective, apartheid in S. Africa may have been due in part to the necessity to enforce very low wages, in order to offset a higher than average composition of capital in the S. African gold mines. I say "may" because I still think that the composition of capital in the S. African gold mines was probably lower than the world-wide social average composition of capital, so all this is hypothetical. But also interesting. Comradely, Fred
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