From: Gerald_A_Levy@MSN.COM
Date: Sun Nov 21 2004 - 07:30:09 EST
> I knew nothing of this debate on inflation in German social
> democracy.
Paul C,
Yes, it's not widely known in the English-speaking realm.
I have referred to it on the list before and it has been
briefly mentioned by others in-print (including Ernest
Mandel's _Late Capitalism_, Ch. 13 and OPE-L member
Makoto Itoh's _The Basic Theory of Capitalism: The Forms
and Substance of the Capitalist Economy_, p. 410).
> Why did they consider the organic composition to be
> important?
Bauer's 1910 book _Die Teuerung_ suggested a number
of causes of inflation including:
-- the development of the productive forces;
-- the anarchy of (capitalist) production;
-- the organization of producers (competition);
-- (international) trade and speculation, and;
-- the decreasing value of gold due to technical progress
in the gold-mining branch of production.
This is a multi-causal explanation and Bauer made no attempt
to assess the relative importance of each of these factors.
It is the last of these factors which sparked the debate (which
is surprising, in part, because Section 5, Part 1 "Das Geld"
was only 5 pages long). The two sources of inflation related
to gold production are, according to Bauer, technical change in
the gold-extracting branch of production causes the surplus-
product of the gold-mineowners to rise generating an
excess demand and causing a general rise in prices. Secondly,
decreasing costs in the gold-extracting branch of production
caused either by technical advances or lower costs for
employing variable capital lowers the value of gold by
decreasing the amount of socially-necessary-labour-time (SNLT)
embodied in a given weight of the commodity gold. Bauer
also argued that it could be shown empirically that the cost of
producing gold had been declining in the preceding 60 years.
Varga, in his reply, wanted to show that "changes in the gold-
extraction (process) can have no influence on inflation." This
is a complex debate with each side making many points so I
guess I should leave the debate there.
> It should not be too difficult to get rough figures for labour
> productivity in gold by comparing employment in the South African
> gold mining industry with the output of the South African mining
> industry.
Mandel suggested that empirical changes in the productivity pf labor
in gold-mining and c and v could be indirectly and roughly calculated.
See _Late Capitalism_, pp. 422-425.
In Allin's thought experiment, should c/v in the gold-extracting
branch of production be higher, lower, or equal to the social
average? Makoto and Costas make a case for the latter:
"Assume further that the organic composition of capital in
the gold industry is equal to the social average. This assumption
ensures that the rate of profit in the gold industry responds
to changes in wages in the same manner as the general rate
of profit. Relaxing it, that is, allowing for higher or lower organic
composition of capital in the gold industry relative to the social
average, complicates the analysis without adding significant
additional insight." (_Political Economy of Money and Finance_,
p. 141).
Is their assertion valid that "significant additional insight" will not be
gained by relaxing this assumption. I'm not sure. I guess the
only way to know is to follow their argument with a theoretical
'test' that allowed for c/v in the gold-mining branch to be
either higher or lower than the social average.
In solidarity, Jerry
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