Even if no one would actually exchange a kilo of gold for another kilo of
gold it is possible to deduce from the transitivity of statement 2 that
gold is exchangeable for gold, and of course if anyone were perverse enough
to actualise it each woudl end up with the same value.
>ajit sinha
>On transitivity, I was not alluding to the problem of arbitrage, which both
>Gil and Duncan have mentioned. My point is even simplier, and may be wrong
>but I don't think so yet. Let's suppose coal exchanges against steel and
>steel exchanges against coal. Furthermore dynamite exchanges against coal
>and coal exchanges against dynamite. This does not imply that steel will
>exchange against dynamite and dynamite will exchange against steel. Simply
>because these two industries don't need each others goods. So exchange
>between these two commodities can only be carried out through the use of
>coal as money. And this destroys the transitivity axiom for exchange of
>commodities.
>
>Once you have money in the relationship, then of course you can say that so
>much of steel and so much of dynamite are equal in value in terms of coal
>(money). But such statements are generally charecterized as "trivial",
>meaning it does not add anything to our knowledge.
_____
Chris
The same point about specifying the relation applies as above. As long as
dynamite is exchageable for steel arbitragers can step in when possible.
Practically however I think lack of information makes arbitrage difficult
until we have money. The consequences of money are certainly not trivial
because now the capital form gets off the ground.