[OPE-L:7401] RE: Commodity money in a Sraffian system

[Gil Skillman <gskillman@xxxxxxxxxxxxxxxxx>]

Gary, you wrote in part


> Gil reminds us of Marx's remark that "gold has no price." It is
> interesting to
> me that Gil interprets that to be equivalent to what a modern economist means
> by "gold is the numeraire and therefore its price is 1."

I wasn't any too clear about this, but I want to note that I didn't add the
"therefore" comment you attribute to me here, and for a
reason:  identifying a commodity as the numeraire good in an exchange
system *can* mean the same thing as "normalizing its price to one," but it
doesn't have to.  And in my second post, I was arguing that in the specific
case of commodity money, it is both economically appropriate to call the
single money commodity the numeraire good and economically implausible to
say that it has a price--i.e., an exchange ratio with itself--that happens
to be equal to one, since as Fred and Marx rightly point out, the money
commodity isn't exchanged for itself.

Instead, the Sraffian "price of production equation" equation for the money
commodity, say,

1 = [p(c)*a + w*l] (1+r)


is more in the nature of an accounting relation given that the law of one
price obtains, indicating that each unit of gold produced must be just
sufficient to cover the associated physical and labor production costs
(measured in gold), augmented by the rate of profit common to all sectors.

The math is the same as in the standard normalization procedure, of course,
but the interpretation is different.

Gil