[OPE-L:2240] Re: Gold and QMT

[Allin Cottrell <cottrell@xxxxxxxxxxxxxxxxxxx>]

On Wed, 19 Jan 2000 coslap@xxxxxxx quoted Duncan:

> "If capitalists are trying to move capital into the gold
> industry to capture higher than average rates of profit,
> won't they bid up the prices of labor and other inputs to
> gold production? Isn't this a possible mechanism for
> equalizing profit rates that doesn't involve the quantity
> theory?"

and responded:

> I suppose that this is true, and analogous to what happens
> in other sectors...

To some degree, but doesn't Duncan's argument threaten to do too
much work?  If the attempt to get into some industry X that is
earning super-normal profit simply drives up the prices of
inputs to that industry to the point where its profit rate is
reduced to normal, then profit-rate equalization occurs without
any transfers of real resources between uses, nor any movement
of final output prices: do we think that's right?

I think Costas's orignal question stands; of course it's pretty
much academic given the limited historical span of true
commodity-money systems, but I think that Ricardo's answer is
quite OK.

Allin Cottrell.