From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Fri Sep 06 2002 - 04:12:27 EDT
re Gil's 7611 I shall only make a brief reply. > >Insofar as it is logically possible to imagine a world in which the >realized level of this rent is zero, this observation doesn't rebut >my point. What you assert here is, in effect, that by its nature, >the production of gold *must* accrue a strictly positive absolute >rent. Of course, the fact that gold is "privately owned" is not at >issue; all commodities and means of production are privately owned >under capitalism. "Scarcity" in the sense you intend it here only >matters if the scarcity constraint is binding at the margin, which >is once again a matter of historical contingency, not theoretical >necessity. It is not a matter of historical contigency that the money commodity in a system of general commodity production was not a *freely* reproducible or an ordinary, run-of-mill durable consumer good with a small secondary market; as Michele Naples has already suggested: "... 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." Freeman and Carchedi, eds. p.103 Gold is not inherently money, but the money commodity is inherently a scarce precious metal. As a store of value, money would have to be relatively indestructible, and it seems that its role as a store of value would be undermined if the extant supply of money commodity did not dwarf current output a low level of which could only be ensured by inherent scarcity of commodity that is to serve as money. The money commodity cannot be the kind of commodity for which there is a price of production--that is, a freely reproducible good. As an inherently scarce good, absolute rent has to enter in at the ground level in the "price" formation process. One should not use a price of production equation for the money commodity as accounting identity. The question is also not whether the supply of goods in circulation exceeds the amount of current production. That is certainly not the claim which I made. The question is--as Michele has said in her OPE-L post--whether the former "swamps" the latter. And very little of the quantity of the gold which does circulate results from current production--as Fred says, perhaps only 5%; this swamping is not characteristic of so called consumer durables. Moreover, Gil does not speak to my examples in the very non polemic posts which I have written on this question. In those posts I emphasized that the changes in supply which are needed to 'equilibriate' the exchange value of a commodity with its price of production are very difficult to effect in the case of a precious, relatively indestructible metal through changes in the level of its current production. I am not saying that changes in supply cannot be effected at all through variation in current output levels. But that they are so difficult to effect in the case of the money commodity is not a historical accident. And these difficulties greatly complicate any tendency towards the formation of prices of production in the case of precious metals. So I think Gil has to consider why Michele and many of us would not consider it a historical accident that the money commodity does not take part in the transformation process. Of course we have yet to develop our reasons in a systematic way. The above is but a first attempt. A "by the way": it does seem to me that Marx did not determine the exchange value of money in the same way as other commodities' prices of production; if he had, he wouldn't have held constant the general price level as he considered in KIII, part 2 the effects on relative prices from a redistribution of surplus value in the formation of prices of production and a change in the level of wages. Rakesh
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