Costas
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In Marx's schema the main balancing mechanism is, it seems to me, the
hoarding of gold, rather than its export. So long as the per unit
value of gold remains the same, capital will be moving into the
gold industry and gold hoards will be expanding. Since prices are not
rising, the profitability of the gold industry remains above
average. Equilibrium will be restored, as above, when less fertile
mines are opened. Is this a credible picture of capitalist gold
production and the role of golg as money? Most definitely not, and I
don't think that Marx would have claimed that. Long before the hoards
became enormous the capitalists would have lent the money. The
Marxian approach, therefore, leads us directly to credit and to re-
establishment of equilibrium through credit phenomena, as you imply
by mentioning the business cycle. That is why, I feel, it is superior
to the narrow (but analytically beautiful) Ricardian model.
Paul
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As a description of the Australian international
trading position in the late 19th century, is the
Ricardian model not pretty accurate?