Cooking the Books II: Iron asteroids and golden meteorites

Iron asteroid that can make us billionaires’, read the headline in the Times (6 March), explaining:

Somewhere far away hurtling through space is a giant ball thought to be made from enough metal to make everyone on Earth a billionaire. (…) American scientists have said that the body, probably once the core of a planet, contains iron worth £8,000 quadrillion. A quadrillion is one followed by 15 zeros. Shared among the world’s nearly eight billion people, this would amount to about £1 billion each.’

Actually, the asteroid is currently worth nothing as its iron is not available for human use, but even if it were to be brought to Earth it would be worth nothing like that amount.

This is because the value of items of wealth produced as commodities, i.e., for sale, is determined by the average amount of labour that has to be expended under average conditions to produce it from start to finish; or, more accurately, to reproduce it, as, if this average falls for newly produced items, then it falls too for all previously produced ones.

In his pamphlet Producers and Parasites John Keracher pointed out:

Gold as dug out of the mine has a value the same as other metals have a value and for the same reason. They are all repositories of human labor. More labor is required to get an ounce of gold than an ounce of iron. If gold were as plentiful as iron or coal, requiring the same amount of labour to produce as these two commoner minerals, gold would be just as cheap.’

Eugen von Boehm-Bawerk, a nineteenth-century Austrian economist, tried to refute the Marxian labour theory of value by invoking the example of a ‘gold lump which falls down on the parcel of a landed proprietor as meteor’. This lump of gold, he claimed, would have value, the same as that of other lumps of gold of the same weight, without having been the product of any human labour.

Louis Boudin replied in his The Theoretical System of Karl Marx:

Its value, like that of all commodities, is the socially necessary labor that must be spent on its reproduction. The clouds not being in the habit of showering gold on us, and the necessarily prevailing method of obtaining gold being by spending labor on its production (…), this gold, if wasted as suggested by Boehm-Bawerk, could not be obtained again from the clouds, but would have to be produced by labor’ (p. 110).

On the other hand, if golden meteorites should become a regular occurrence, the value of gold would fall, from the cost of mining it to the cost of collecting the meteorites. This is what would happen to the value of iron if the asteroid could somehow be brought to Earth. The cost of producing iron would fall to the cost of chipping it off the grounded asteroid. This would be considerably less than the value of iron today and so considerably reduce the worth of the asteroid.

So, everyone on Earth would not become a billionaire. That assumes that the value of the asteroid would be shared evenly amongst the world’s population, which of course it wouldn’t be under capitalism as the asteroid would be the private property of some rich individual, corporation or state. But it would also be impossible because capitalism is based on there being a propertyless class obliged to work for wages and, if we were all billionaires, who would do the work of keeping society going?