From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Tue Sep 10 2002 - 11:20:15 EDT
Makoto, thanks again for your reply. I will respond to specific points below. But first a general point. It seems to me that the fundamental error in your interpretation of money and the transformation problem is that you assume that gold as the money commodity HAS A PRICE OF PRODUCTION, which in general is not proportional to the labor-time required to produce gold (following Bortkiewitz and Sweezy in this respect). I don't have a copy of your *Basic Theory* with me, but for example your Table 2 on p. 75 of your *Value and Crisis* (and the discussion of the surrounding pages). But the concept of price of production is defined as an exchange-ratio with the money commodity. Therefore, the money commodity itself cannot have a price of production, because the money commodity is not exchanged with itself. And it makes no sense at all to assume that the "price of production" of the money commodity could be something other than 1, as in your interpretation. I thought you agreed in an earlier post that the money commodity has no price of production? On Tue, 10 Sep 2002, Itoh Makoto wrote: > (Itoh) I disagree. Firstly, Marx's theory of absolute rent itself > in chap 45 of the 3rd vol. of Capital clearly states that it depends > on the general condition of market how the market price of a land > product comes closer to its value, and that landownership can not > determines it. If you insist that the exchange-value of gold is > determined by its value in accord with Marx's theory of absolute rent, > then you have to explain how and why the general condition of market (or > the balance between social demand and supply of gold) always sssures it, > while all the other coomidities are subject to fluctuations of market > prices. There cannot be a capitalist mechanism of competition and the > function of landownership to assure such a difficult balancing. I agree that, in Marx's general theory of absolute rent, as applied to agricultural and mineral commodities, the level of demand plays a role in the determination of the prices of these commodities (how much the prices of these commodities are above their values and how close to their values). However, this is not true in the case of the money commodity. As I have discussed in (7588), the result of production in the gold industry is not a commodity with a price, which still has to be converted into actual money through exchange, as in all other industries. For all other commodities, we may theorize that the prices of these commodities is first equal to their values and then are transformed into their prices of production, as different magnitudes. But this is not true for the money commodity. The result of production in the gold industry is already a quantity of money. This quantity of money does not have a price, and certainly does not have a price that can change as a result of the transformation of values into prices of production, as in your interpretation. Therefore, demand cannot play a role in the determination of the price of gold, because gold does not have a price. Demand might affect the quantity of gold produced, but it cannot affect the nonexistent price of gold. This also explains why the market price of gold cannot fluctuate around its center of gravity price, because gold, as the money commodity, has neither a market price nor a center of gravity price. > At least my former qustion as for how to think the social demand for > gold in relation to its supply remains in this context. Makoto, I answered this question in (7609), as follows: > As I understand Marx's theory, the demand for gold is determined by the > sum of the prices of commodities divided by the velocity of money > (Volume 1, Chapter 3, Section 2.c), and this demand determines the > quantity of gold in circulation in the long-run. If more gold is > produced as money than is demanded, then the excess supply will be > hoarded. So the demand for gold as money is not "without limit". Is this what you have in mind by the social demand and supply of gold? Or something different? > > > (Itoh) There are two pints here to be clarified here beside > > already noted. First do you negate the theory of prices of production > > for the whole prodcts paying the absolute rent? If not, what is the > > basic difference in this point between the gold industry and > > agricutrue? In a sense, all the land owners can reject investment to > > gain the abosulte rent to the extent that the comepetive pressure from > > the additiona investment to the existing lease land allows it. > > The theory of prices of production is not negated in the sense that > capitalist farmers still receive the average rate of profit. But the > theory of prices of production is negated in the sense that the prices of > agricultural goods do not equal to prices of production, but are instead > equal to values (or monopoly prices), because the prices of agricultural > goods must a component of absolute rent. Because of their monopoly power > over the land, landlords are able to block the redistribution of the extra > surplus-value from agriculture to other industries, and thus block the > transformation of values into prices of production. Marx said this many > times. > > > > (Itoh) If we define absolute rent in relation with the > monopolistic power of land owners to be able not to allow investment > without paying rent, absolute rent can exist in any industries including > urban manufacturing regardless of composition of capital, and it > represent certain compromising redistribution of surplus-value from > capitals to land owners. Monopoly rent then can be dfined as a sort of > rent due to special natural condition for products which can enjoy > exceptional monopoly prices in a market. Just as prices of production > and differential rent represent redistribution of surplus-value through > competition among capitals, the social source of absolute rent would not > need to be limitted within each industry to pay it. A true problem here > is how to understand the theoretical limit to the effect of land > ownership to raise the market prices beyond the prices of production for > the commodities produced by using land. Will you refer to my book on > this point further if you are interested? I have a different understanding of Marx's concepts of absolute and differential rent. My understanding is the following (please see especially C.III, pp. 892 and 898) The monopoly ownership of land enables landlords to collect rent on the least fertile land. Marx distinguishes between two possible cases of this rent on the least fertile land: ABSOLUTE rent: comes from surplus-value produced WITHIN agriculture, because the value of the agricultural commodity is greater than its price of production, which itself is because the composition of capital on the least fertile land is lower than average composition of capital. MONOPOLY rent: comes from surplus-value produced OUTSIDE agriculture, because the price of production of the agricultural commodity is greater than its value, which itself is because the composition of capital on the least fertile land is higher than average composition of capital. Marx argued that Ricardo thought that the only possible source of rent on the least fertile land was monopoly rent, in which case the price of the agricultural commodity was greater than its value. But Marx argued that this is not true. One does not have to resort to monopoly rent (i.e. rent produced outside agriculture) to explain rent on the least fertile land. Such rent could also come from within agriculture, and thus be absolute rent, not monopoly rent (which Marx generally thought was the case at the time). Marx's explanation of absolute rent obviously depends on the crucial difference between the value and the price of production of commodities. Marx argued that Ricardo did not understand the possibility of absolute rent because he did not understand this crucial difference between the value and the price of production of commodities, but instead tended to identify the two, or to treat them as identical. (see especially TSV.II, pp. 129-33) Comradely, Fred
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