Some questions about the labor theory of value...

[Judicator]

-Does the LTV say anything about the time value of money/resources? Is 100 hours of labor a thousand years from now just as valuable as 100 years of labor now?

-Why should the value of anything that requires more labor to produce necessarily be worth more? What's wrong with the assumption that user preferences matter when determining an objects use value?

-If I understand it correctly the LTV claims that the value of a worker's labor is the amount of extra stuff they produce, after subtracting the value of the labor embodied in the inputs of production. The capitalist is then ripping the worker off by paying the worker less than the value of his labor (product price minus costs). What about things like opportunity cost? The capitalist's factory could be used elsewhere to produce twice as much of something else.

-In general why treat labor as the critical input in production, rather than natural resources or capital or whatever?

[turquino]

"-Does the LTV say anything about the time value of money/resources? Is 100 hours of labor a thousand years from now just as valuable as 100 years of labor now?" -The bourgeois economist’s time value isn’t the same as labour value. After inflation, the rate of interest is simply the portion of surplus value that goes to the lenders as payment. Ceteris paribus, the objective value of whatever they lent out did not appreciate in terms of labour, but accrued surplus value produced somewhere else in exchange for their service of lending.

100 hours (or seconds, minutes, days etc.) of abstract labour is exactly the same today as it was a century ago, and 100 years from now if capitalism persists that long. What differs is the quantity and quality of the commodities that were produced with the 100 hours of labour.


" -Why should the value of anything that requires more labor to produce necessarily be worth more? What's wrong with the assumption that user preferences matter when determining an objects use value?" -Something that requires more labour to produce is not *necessarily* worth more. A factory with low productivity might require more concrete labour to produce a commodity than one with high productivity, but that doesn’t mean the low productivity capitalist gets to sell his commodity for more. This is because the value of the commodity in the market is determined by the abstract average amount necessary to produce it.

And your assumption is not incorrect. User preferences DO matter in determining use values. It is demand that determines what use values are produced by capitalists.


"-If I understand it correctly the LTV claims that the value of a worker's labor is the amount of extra stuff they produce, after subtracting the value of the labor embodied in the inputs of production. The capitalist is then ripping the worker off by paying the worker less than the value of his labor (product price minus costs). What about things like opportunity cost? The capitalist's factory could be used elsewhere to produce twice as much of something else." -Workers create surplus value for capitalists when they are paid less than the value of their labour. The capitalist ‘rips off’ the worker by purchasing the worker’s labour-power for a period of time, the value of which is the labour necessary to sustain and reproduce the worker in commodities for that period. However, the value produced by the worker in only 4 hours might be sufficient to sustain and reproduce her for a day, but the capitalist has purchased her ability to work for the entire day, and so the next 4 hours is surplus value. The capitalists are able to do this because they own the instruments of production and the workers do not.

I don’t understand your point about opportunity cost. Exploitation isn’t measured in the amount of ‘extra stuff’ the worker produced, but in the additional time expended labouring for the capitalist above what is necessary for the satisfaction of the worker.


" -In general why treat labor as the critical input in production, rather than natural resources or capital or whatever? " -There are a couple ways to look at this problem. Every commodity or tool used to make a commodity can ultimately be reduced to the mixture of labour and raw materials. Since raw materials are ‘free’ in nature, their value is only the labour that went into their acquisition. Thus all commodities, even very complex ones, can be reduced to some quantity of labour if one were able to peer far enough back.

Furthermore, commodities of all quantities and qualities produced by a multitude of different techniques are exchanged everyday on the market. For example, the exchange value of 1 tractor is x tons of coal, or y sewing machines, or z troy ounces of gold … and so on. This exchange implies some sort of equality between these commodities. However no weight, shape, colour, texture or other physical property has been discovered that would allow for commodities to exchange in these definite ratios. Therefore, we have to look for something that all commodities share in common that is not a physical property of the commodity. Eventually we settle on labour (measured by average time and intensity) expended in production for lack of any other non-physical commonality. Notice that the amount of labour expended producing 1 pencil is very small while the amount of labour expended producing 1 trawler is very large comparatively, consequently the value and price of the trawler is much more than the pencil. Simplistic, but it illustrates a common sense idea.

[New Tet]

-Does the LTV say anything about the time value of money/resources? Is 100 hours of labor a thousand years from now just as valuable as 100 years of labor now?

Uh, what?



-Why should the value of anything that requires more labor to produce necessarily be worth more? What's wrong with the assumption that user preferences matter when determining an objects use value?


The principle is the socially necessary amount of labor time required for production. Socially necessary.



-If I understand it correctly the LTV claims that the value of a worker's labor is the amount of extra stuff they produce, after subtracting the value of the labor embodied in the inputs of production. The capitalist is then ripping the worker off by paying the worker less than the value of his labor (product price minus costs). What about things like opportunity cost? The capitalist's factory could be used elsewhere to produce twice as much of something else.

actually, you understand it incorrectly. In the first hour or so of work the worker has produced the equivalent in value of his wages. The rest of the time he is working for free, producing surplus value.



-In general why treat labor as the critical input in production, rather than natural resources or capital or whatever?


Because labor is the only 'resource' that can produce or add new use values.

[SocialismOrBarbarism]

-Does the LTV say anything about the time value of money/resources? Is 100 hours of labor a thousand years from now just as valuable as 100 years of labor now?

Something that takes 100 hours of labor now could end up taking only 5 minutes in a thousands years.


-Why should the value of anything that requires more labor to produce necessarily be worth more?It's not a description of what anything "should" be worth, nor does it deal with the value of "anything." It deals with the value of commodities, not "mud pies" or other nonsense.


What's wrong with the assumption that user preferences matter when determining an objects use value?
How does this contradict the LTV?


If I understand it correctly the LTV claims that the value of a worker's labor is the amount of extra stuff they produce, after subtracting the value of the labor embodied in the inputs of production. The capitalist is then ripping the worker off by paying the worker less than the value of his labor (product price minus costs). What about things like opportunity cost? The capitalist's factory could be used elsewhere to produce twice as much of something else.The capitalists factory was produced by workers with capital he likely got through the same process. We try to look outside the framework of capitalism and understand that nothing necessitates an economy based on capitalists graciously giving up their factory for us to work in.

Anyway, if he could be using it to produce more value than it's currently being used to produce but isn't then he's a bad capitalist and bad example.


-In general why treat labor as the critical input in production, rather than natural resources or capital or whatever?Because only labor can create value. Turquino dealt with that well.

[mikelepore]

Why should the value of anything that requires more labor to produce necessarily be worth more?

As I said to someone in the other topic, ask yourself why exchange values of commodities line up in a certain order. Look at a $15,000 new car and a $2 loaf of bread. Why didn't their exchange values appear in the reverse order? Why don't they have a steady-state manufacturing and marketing process for a $2 new car, and a steady-state manufacturing and marketing process for a $15,000 loaf of bread? Surely there must be a better explanation than the seller's and buyer's feelings, opinions, attitudes and moods. There must be a physical explanation. What is it?

[Judicator]

After inflation, the rate of interest is simply the portion of surplus value that goes to the lenders as payment. Ceteris paribus, the objective value of whatever they lent out did not appreciate in terms of labour, but accrued surplus value produced somewhere else in exchange for their service of lending.

Doesn't this make money lending valuable because of its ability to create surplus value which would not have been created without lending?


100 hours (or seconds, minutes, days etc.) of abstract labour is exactly the same today as it was a century ago, and 100 years from now if capitalism persists that long. What differs is the quantity and quality of the commodities that were produced with the 100 hours of labour.

If the LTV does accept the subjective valuation of goods by consumers, isn't 100 hours of labor now worth more because consumers value it more now?


A factory with low productivity might require more concrete labour to produce a commodity than one with high productivity, but that doesn’t mean the low productivity capitalist gets to sell his commodity for more. This is because the value of the commodity in the market is determined by the abstract average amount necessary to produce it.

And your assumption is not incorrect. User preferences DO matter in determining use values. It is demand that determines what use values are produced by capitalists.

So the value is set by consumers as predicted by the subjective theory of value? What assumptions of the subjective theory of value does LTV reject, if any?

Why is the price of a commodity determined by the average amount of labor necessary to produce it, rather than the marginal amount?



Workers create surplus value for capitalists when they are paid less than the value of their labour. The capitalist ‘rips off’ the worker by purchasing the worker’s labour-power for a period of time, the value of which is the labour necessary to sustain and reproduce the worker in commodities for that period. However, the value produced by the worker in only 4 hours might be sufficient to sustain and reproduce her for a day, but the capitalist has purchased her ability to work for the entire day, and so the next 4 hours is surplus value. The capitalists are able to do this because they own the instruments of production and the workers do not.


So under the capitalist model of competitive markets, capitalists hire/rent all factors of production until marginal benefit is marginal cost. Under this model the value of the worker's labor is the marginal amount of production that one unit of labor gives. If you ignore the costs of other factor inputs, then it looks like labor is being paid less than the firm is producing, but once you include them this apparently exploitation disappears. What is the reason not to include other factor prices?


I don’t understand your point about opportunity cost. Exploitation isn’t measured in the amount of ‘extra stuff’ the worker produced, but in the additional time expended labouring for the capitalist above what is necessary for the satisfaction of the worker.

But then here isn't the simple solution not to work the additional 4 hours? In a capitalist economy, the worker will get paid a wage equal to his the marginal value of his labor, so the worker can repurchase his marginal contribution to the factory's productivity with whatever wage he gets.


There are a couple ways to look at this problem. Every commodity or tool used to make a commodity can ultimately be reduced to the mixture of labour and raw materials. Since raw materials are ‘free’ in nature, their value is only the labour that went into their acquisition. Thus all commodities, even very complex ones, can be reduced to some quantity of labour if one were able to peer far enough back.

The STV would have you believe that commodities are valuable while in the ground because you could extract them and use, and also because they are scarce. Does the LTV see anything wrong with this view?

I guess I'm not seeing how the labor value theorist is doing anything more fundamental than using labor hours as a way of expressing prices, instead of say barrels of oil, or whatever. You could say that this pencil costs .01 hours of unskilled labor, or .1 gallons of oil, or anything.



Furthermore, commodities of all quantities and qualities produced by a multitude of different techniques are exchanged everyday on the market. For example, the exchange value of 1 tractor is x tons of coal, or y sewing machines, or z troy ounces of gold … and so on. This exchange implies some sort of equality between these commodities. However no weight, shape, colour, texture or other physical property has been discovered that would allow for commodities to exchange in these definite ratios. Therefore, we have to look for something that all commodities share in common that is not a physical property of the commodity. Eventually we settle on labour (measured by average time and intensity) expended in production for lack of any other non-physical commonality. Notice that the amount of labour expended producing 1 pencil is very small while the amount of labour expended producing 1 trawler is very large comparatively, consequently the value and price of the trawler is much more than the pencil. Simplistic, but it illustrates a common sense idea.


Why not settle on another factor input, say capital, as the feature that commodities have in common? For any manufactured product, you need raw materials. For raw materials, you need to buy the land or mineral rights. For services, you need a building or a computer or something.

Why assume that the equality has to have something to do with how the products came into the hands of the exchangers, isn't it enough to explain the apparent equity between products traded on markets to say that the marginal seller subjectively values the object as much as the marginal buyer?



As I said to someone in the other topic, ask yourself why exchange values of commodities line up in a certain order. Look at a $15,000 new car and a $2 loaf of bread. Why didn't their exchange values appear in the reverse order? Why don't they have a steady-state manufacturing and marketing process for a $2 new car, and a steady-state manufacturing and marketing process for a $15,000 loaf of bread? Surely there must be a better explanation than the seller's and buyer's feelings, opinions, attitudes and moods. There must be a physical explanation. What is it?


Factor prices would be one - given the prices of wheat and iron cars will be more expensive. Rental rate of capital would be another - given the price to rent a bakery versus rent an automotive plant. And finally labor - the wage needed to hire whatever. Why choose labor among all of these as somehow special?

Also, once you actually go and sell whatever you made, regardless of what it cost you, why isn't it enough to say that the prices are set by buyers' and sellers' feelings?

[mikelepore]

Why not settle on another factor input, say capital, as the feature that commodities have in common?

Because it gives the wrong answer. If you were to dig dams for thirty years with one $10 shovel, surely the major factor in all that production isn't the $10 value of the shovel.


For any manufactured product, you need raw materials. For raw materials, you need to buy the land or mineral rights. For services, you need a building or a computer or something.

Raw materials, buildings and computers are products of labor, so when people say "labor time" those things have already been included. Whoever told you otherwise misstated what the theory says, which occurs 99 percent of the time.


Why assume that the equality has to have something to do with how the products came into the hands of the exchangers, isn't it enough to explain the apparent equity between products traded on markets to say that the marginal seller subjectively values the object as much as the marginal buyer?

There's no such thing as a marginal seller or a marginal buyer. Even the theory of marginal utility doesn't use such weird expressions, unless the college professors have become even more crazy in the past couple years.

If exchange value depended on how the buyer or seller "subjectively value" something, then the outcome would depend on the IDENTITIES of the buyer and seller. But it DOESN'T depend on their identities. It's independent of their personal identities. If I were to tell you about two sales that I know of, one for a dime and one was for a billion dollars, and I told you that one was for a stick of bubble gum and the other was for a jet plane, but not necessarily in that order, wouldn't you know immediately which was which? Or would you say there's no way to know which was which until you get familiar with the personalities and the personal idiosyncracies of the buyer and the seller?

[mikelepore]

Factor prices would be one - given the prices of wheat and iron cars will be more expensive. Rental rate of capital would be another - given the price to rent a bakery versus rent an automotive plant. And finally labor - the wage needed to hire whatever. Why choose labor among all of these as somehow special?

If that bakery and automotive plant and the equipment in them could quickly be built from scratch by one guy in five minutes, then the market wouldn't bear the prices that you're picturing the manufacturer paying to buy or rent them. It is only because they are what Marx called "embodied labor" that the manufacturer had to invest a significant amount to obtain them.


Also, once you actually go and sell whatever you made, regardless of what it cost you, why isn't it enough to say that the prices are set by buyers' and sellers' feelings?

Because if that were true then you would find different results for different individuals, and you don't. You can open the Wall Street Journal and look up today's closings at the Chicago Mercantile Exchange. Note that it doesn't say something like "an ounce of gold closed today at $68 for Joe buying from Pete, at $3 for Mike buying from Susan, and $999 for Alice buying from Ebenezer." Instead, it's one number for everyone. There must be a cause other than individual feelings.

[SocialismOrBarbarism]

Doesn't this make money lending valuable because of its ability to create surplus value which would not have been created without lending?Does the money itself create value, or does using it to pay for laborers create value?


If the LTV does accept the subjective valuation of goods by consumers, isn't 100 hours of labor now worth more because consumers value it more now?In the long run subjective valuations are only going to determine what is produced and in what quantities. If demand for something goes down, so will the profit rate in that sector. Capitalists will move out of that sector. We're dealing with equilibrium prices.


So the value is set by consumers as predicted by the subjective theory of value? What assumptions of the subjective theory of value does LTV reject, if any?It ignores the importance of labor and the distribution of social labor. Supply and demand are meaningless without taking this into account.


What is the reason not to include other factor prices?The LTV does not do this.


But then here isn't the simple solution not to work the additional 4 hours? In a capitalist economy, the worker will get paid a wage equal to his the marginal value of his labor, so the worker can repurchase his marginal contribution to the factory's productivity with whatever wage he gets.So the worker is supposed to leave in the middle of the working day and get fired, or?

You're shifting from actual capitalism into your abstract bourgeois models of capitalist competition that do not match reality. There are quite a few critiques of this floating around here in the "economics" section of the theory forum.


The STV would have you believe that commodities are valuable while in the ground because you could extract them and use, and also because they are scarce. Does the LTV see anything wrong with this view?Would it have a price if it could be extracted from the ground and distributed with zero labor?


I guess I'm not seeing how the labor value theorist is doing anything more fundamental than using labor hours as a way of expressing prices, instead of say barrels of oil, or whatever. You could say that this pencil costs .01 hours of unskilled labor, or .1 gallons of oil, or anything.Does everything with value require barrels of oil? Don't barrels of oil themselves require labor? Everything with value breaks down to labor..it is at the basis of value creation.


Why not settle on another factor input, say capital, as the feature that commodities have in common? For any manufactured product, you need raw materials. For raw materials, you need to buy the land or mineral rights. For services, you need a building or a computer or something.Where do you think capital comes from? Magic? It is still the result of labor.

[mikelepore]

-Does the LTV say anything about the time value of money/resources? Is 100 hours of labor a thousand years from now just as valuable as 100 years of labor now?

You seem to be refering to the "present worth of future money", the "annual worth of present money", and so forth, which are based on the exponential compound interest formula, and expressed in tables in the appendices of economics textbooks. The topic is there is the prices on the money market. The Marxian theory of value isn't about such factors in doing business. It is about something very specific.

The theory begins with comparisons between two or more categories of fungible (generic) commodities that are being continuously produced and marketed, such as a square yard of cotton cloth, a ton of iron ore, a barrel of crude oil, a bushel of coffee beans, etc. - why are they found to exchange for each other in certain ratios, and why in ratios that usually change very slowly from year to year, but ratios which often change rapidly when manufacturing processes have been revised?

***

In the 1800s why did the exchange value of a unit area of cloth collapse suddenly as soon as it became the standard for manufacturers to use power looms and discard the old hand looms?

In recent years, why did the exchange value of computer circuitry collapse as soon as the same amount of silicon began to contain millions of transistors instead of the previous density of thousands of transistors?

As Marx wrote: "socially necessary labor time."

[Judicator]

Because it gives the wrong answer. If you were to dig dams for thirty years with one $10 shovel, surely the major factor in all that production isn't the $10 value of the shovel.


Some produces are capital intensive, some are labor intensive. The point is only that nearly everything is going to use at least a little bit of labor or a little bit of capital. It seems rather arbitrary to choose labor.



Raw materials, buildings and computers are products of labor, so when people say "labor time" those things have already been included. Whoever told you otherwise misstated what the theory says, which occurs 99 percent of the time.


Yeah I'm sure there are tons of common misconceptions about Marxism. I'm trying to ask honest questions so I can correct some of my own. My point about buildings was that you need capital *and* labor to produce stuff, even though you can express one in terms of the other (like you said you can describe a computer in terms of the labor you could buy by selling it).



There's no such thing as a marginal seller or a marginal buyer. Even the theory of marginal utility doesn't use such weird expressions, unless the college professors have become even more crazy in the past couple years.

I doubt the term appears in the economics literature - I only intended it to mean the buyer and the seller whose individual willingness to pay/willingness to accept are closest to the market price.



If exchange value depended on how the buyer or seller "subjectively value" something, then the outcome would depend on the IDENTITIES of the buyer and seller. But it DOESN'T depend on their identities. It's independent of their personal identities. If I were to tell you about two sales that I know of, one for a dime and one was for a billion dollars, and I told you that one was for a stick of bubble gum and the other was for a jet plane, but not necessarily in that order, wouldn't you know immediately which was which? Or would you say there's no way to know which was which until you get familiar with the personalities and the personal idiosyncracies of the buyer and the seller?


I know which is which only because I know the approximate market prices of gum and airplanes. The market price incorporates the idiosyncracies of individual buyers and sellers, so there would be no need to observe them directly. So it does depend on their identities but you can of course observe the market price without getting to know anyone - that's the whole point of a market price.


If that bakery and automotive plant and the equipment in them could quickly be built from scratch by one guy in five minutes, then the market wouldn't bear the prices that you're picturing the manufacturer paying to buy or rent them. It is only because they are what Marx called "embodied labor" that the manufacturer had to invest a significant amount to obtain them.

That's true for any factor of production - if the auto plant could be produced with 5 minutes of labor, or 5 grams of iron, or on 5 square inchese of land, it would be much cheaper. The manufacturer pays the amount he does for the factory because of the scarcity of each input needed to build and run the factory.



Because if that were true then you would find different results for different individuals, and you don't. You can open the Wall Street Journal and look up today's closings at the Chicago Mercantile Exchange. Note that it doesn't say something like "an ounce of gold closed today at $68 for Joe buying from Pete, at $3 for Mike buying from Susan, and $999 for Alice buying from Ebenezer." Instead, it's one number for everyone. There must be a cause other than individual feelings.


Individual feelings dictate willingness to pay and together they determine the market price. In the CME example, say Joe is willing to pay up to $100 for an oz of gold, Mike is willing to pay $50, and Alice is willing to pay $1000. On the selling side Pete will take over $25, Susan will take over $2, and Ebenezer will take over $20. To clear the market you just need an equal number of people willing to buy and sell. In this case the market would clear at a price somewhere between $25 and $50. Everythng else is producer or consumer surplus (basically gains from the exchange).

Sorry for the incoming double post I didn't want to get slapped with a character limit or something.

[Judicator]

Does the money itself create value, or does using it to pay for laborers create value?

The act of lending creates value. The money itself is just a store of value.


In the long run subjective valuations are only going to determine what is produced and in what quantities. If demand for something goes down, so will the profit rate in that sector. Capitalists will move out of that sector. We're dealing with equilibrium prices.

Hmm? How does that address the problem with the LTV if it claims that 100 hours of labor now is worth the same as 100 hours in the future? Demand for money now is higher than demand for money delivered in the future.


It ignores the importance of labor and the distribution of social labor. Supply and demand are meaningless without taking this into account.

It includes labor in virtually all classical models of production - how is this ignoring labor's importance? It also takes distribution of labor into account with migration and trade models.


So the worker is supposed to leave in the middle of the working day and get fired, or?

You're shifting from actual capitalism into your abstract bourgeois models of capitalist competition that do not match reality. There are quite a few critiques of this floating around here in the "economics" section of the theory forum.

I don't know if I am "shifting from" actual capitalism in the sense that I am mostly concerned with abstract models just to see how well they are logically able to explain different plausible but ultimately theoretical situations. We could get into debates about whether or not people are rational and if people aren't this would of course be very problematic for capitalism but I think that might be a better debate for another thread.

Anyway, if the worker wanted to have even consumption over time he could work part time or work full time for part of his life and part time for another part of his life.


Would it have a price if it could be extracted from the ground and distributed with zero labor?

Yeah if it were scarce and people valued it.


Does everything with value require barrels of oil? Don't barrels of oil themselves require labor? Everything with value breaks down to labor..it is at the basis of value creation.

Ah ok so it is more than simply a way of denominating value. How is labor the basis of value creation if it is one among many factors of production?


Where do you think capital comes from? Magic? It is still the result of labor.

My point was only that capital is a factor input that all commodities have in common. This led me to wonder why labor would be economically fundamental just because it "came first" so to speak.

It seems like you're sort of asking - where do you think labor comes from, magic? It's still the result of arable land...



You seem to be refering to the "present worth of future money", the "annual worth of present money", and so forth, which are based on the exponential compound interest formula, and expressed in tables in the appendices of economics textbooks. The topic is there is the prices on the money market. The Marxian theory of value isn't about such factors in doing business. It is about something very specific.

The theory begins with comparisons between two or more categories of fungible (generic) commodities that are being continuously produced and marketed, such as a square yard of cotton cloth, a ton of iron ore, a barrel of crude oil, a bushel of coffee beans, etc. - why are they found to exchange for each other in certain ratios, and why in ratios that usually change very slowly from year to year, but ratios which often change rapidly when manufacturing processes have been revised?


So you can just plug in "oil now" and "oil in the future" for "money now" and "money in the future." The same analysis applies.



In the 1800s why did the exchange value of a unit area of cloth collapse suddenly as soon as it became the standard for manufacturers to use power looms and discard the old hand looms?

In recent years, why did the exchange value of computer circuitry collapse as soon as the same amount of silicon began to contain millions of transistors instead of the previous density of thousands of transistors?

As Marx wrote: "socially necessary labor time."


So here wouldn't technology be the deciding factor, since it determines the amounts of each input you use, and thus the amount of labor?

[mikelepore]

So here wouldn't technology be the deciding factor, since it determines the amounts of each input you use, and thus the amount of labor?

The technology is important in establishing the amount of labor that is socially necessary.

Quoted from Marx, Capital, Chapter 1:

"The labour-time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time. The introduction of power-looms into England probably reduced by one-half the labour required to weave a given quantity of yarn into cloth. The hand-loom weavers, as a matter of fact, continued to require the same time as before; but for all that, the product of one hour of their labour represented after the change only half an hour's social labour, and consequently fell to one-half its former value."

[mikelepore]

Your attribution of prices to "feelings" is partially true in that any kinds of psychological factors may result in the random noise in the market. Prices of commodities fluctuate above and below their values. In 1985 all of the financial markets in the U.S. reacted bearishly to the diagnosis of a tumor in the colon of Ronald Reagan, obviously random noise that had nothing to do with underlying values.

But the level about which the random fluctuation is occurring cannot be subjective, because if it were then it would be like saying that accidents instead of causes dominate reality. It's not feasiable to say that, by pure coincidence, a thousand goods that have high costs of production also have high exchange values, while a thousand goods that have low costs of production also have low exchange values. A subjective explanation would require the dominance of too many coincidences all of which are found to go in one direction. That would be like saying that objects released from rest in a gravitational field may fall either up or down, randomly, but, by pure coincidence, only downward falling has been observed so far, and not the upward falling which is equally likely. Reality doesn't work that way. Where there is a pattern, there is a reason. It is directly observable that labor-intensive production is correlated with large exchange values.

The production factors that you earlier suggest as determinants of value, instead of limiting it to labor -- you mentioned land, raw materials, capital, etc. -- would still mean that objective production costs that are independent of the wills of the actors are the deteminants of value, therefore we still wouldn't be a tiny bit closer to attributing values to marginal utility, feelings, willingness, or any other subjective causes. Therefore, you should notice, you criticized the "labor theory" by coming at it from two angles, but those two angles contradict one another.

***

"You would be altogether mistaken in fancying that the value of labor, or any other commodity whatever, is ultimately fixed by supply and demand. Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for that value itself." --- Karl Marx, in _Value, Price and Profit_ (1865)

[Judicator]

The technology is important in establishing the amount of labor that is socially necessary.

Quoted from Marx, Capital, Chapter 1:

"The labour-time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time. The introduction of power-looms into England probably reduced by one-half the labour required to weave a given quantity of yarn into cloth. The hand-loom weavers, as a matter of fact, continued to require the same time as before; but for all that, the product of one hour of their labour represented after the change only half an hour's social labour, and consequently fell to one-half its former value."


It also reduces the capital that is necessary. Before $1 of labor and $1 of capital produces you 100 widgets, now it gets you 200. Now the owners of the labor and capital used can respectively purchase 100 widgets each, instead of 50 before. Everyone becomes richer.

Of course if it's factor-biased technological change (for example you replace skilled laborers with unskilled ones) then I think the skilled laborers can suffer, but not simply because the factory uses less labor, because the factory uses a totally different factor of production.



Your attribution of prices to "feelings" is partially true in that any kinds of psychological factors may result in the random noise in the market. Prices of commodities fluctuate above and below their values. In 1985 all of the financial markets in the U.S. reacted bearishly to the diagnosis of a tumor in the colon of Ronald Reagan, obviously random noise that had nothing to do with underlying values.


If they expect that when Ronald Reagan dies corporate income taxes will go up this is a totally rational response. The stocks price approximates present value of future earnings, so higher taxes mean lower earnings.



But the level about which the random fluctuation is occurring cannot be subjective, because if it were then it would be like saying that accidents instead of causes dominate reality. It's not feasiable to say that, by pure coincidence, a thousand goods that have high costs of production also have high exchange values, while a thousand goods that have low costs of production also have low exchange values. A subjective explanation would require the dominance of too many coincidences all of which are found to go in one direction.

It's not a coincidence, its because you produce everything until exchange values cover costs. Individuals subjectively determine their willingness to pay which determines the demand curve which suppliers use to decide what to produce. What part of this is controversial?



The production factors that you earlier suggest as determinants of value, instead of limiting it to labor -- you mentioned land, raw materials, capital, etc. -- would still mean that objective production costs that are independent of the wills of the actors are the deteminants of value, therefore we still wouldn't be a tiny bit closer to attributing values to marginal utility, feelings, willingness, or any other subjective causes. Therefore, you should notice, you criticized the "labor theory" by coming at it from two angles, but those two angles contradict one another.


Production costs aren't objective either (until you're given a price), since their prices are determined by all the things you can use them for, which are determined by all the subjective valuations of buyers. Do you think this avoids the contradiction? Can you be more specific about the contradiction? Production costs are objective, given prices. Prices are objective, given supply and demand. Demand is objective, given preferences. Preferences are subjective.



"You would be altogether mistaken in fancying that the value of labor, or any other commodity whatever, is ultimately fixed by supply and demand. Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for that value itself." --- Karl Marx, in _Value, Price and Profit_ (1865)


Supply and demand capture the willingness to pay/willingness to accept. Value is easily accounted for - it is simply the price that causes the market to clear.

[mikelepore]

Any theory that considers "willingness to pay" and "willingness to accept" to be fundamental is self-referential and tautological. It's offering as an explanation the very thing that it's supposed to be explaining.

Willingness or any other subjective factor is undetectable in principle, leading to a theory that is unfalsifiable in principle. How would one check someone's amount of willingness? Have a psychoanalyst give them an ink blot test? Measure their brain synapse voltages? Then how would you make it quantitative -- how would we find out that my mental state has, for example, 547 times as many willingness magnitude units to take one action compared to some other action? You can't judge my willingness by observing what I end up doing, after the real world has notified me of what I may get away with, and what I may not get away with, because that's what you're trying to explain in the first place.

What we _end up doing_ is paying high prices for items that have a high cost of production, and paying low prices for items that have low costs of production. It's not because we are willing to do that, and unwilling to do the opposite. It's because the manufacturers couldn't be in business if it weren't the case. There is a natural selection process going on. Manufacturers who set their prices grossly out of proportion to their costs of production are unable to sustain the processes. If the manufacture of one product is disproportionately profitable, more capital migrates toward it, there are too many competitors, and the rising supply destroys the previous potential for disproportionately high profit. Even the capitalist investment theory known as the "efficiency of the stock market" establishes that fact, which amounts to a sheepish admission that Marx was right.

[New Tet]

Why is the price of a commodity determined by the average amount of labor necessary to produce it, rather than the marginal amount?


Because labor--itself a commodity in this system we call capitalism--on average, is always greater than the marginal amount. Assuming, of course, that the "marginal amount" we are talking about here is what capitalists and their financial servants contribute to the process of commodity production.

[SocialismOrBarbarism]

Some produces are capital intensive, some are labor intensive. The point is only that nearly everything is going to use at least a little bit of labor or a little bit of capital. It seems rather arbitrary to choose labor....capital is still embodied labor.


My point about buildings was that you need capital *and* labor to produce stuff, even though you can express one in terms of the other (like you said you can describe a computer in terms of the labor you could buy by selling it).And you need labor to produce the capital, buildings, or whatever it is, so in the end it still all boils down to labor being the source of value.


The manufacturer pays the amount he does for the factory because of the scarcity of each input needed to build and run the factory.What determines how well supplied something is? The amount of labor it takes to produce.


The act of lending creates value. The money itself is just a store of value.So the simple act of lending someone money will, say...create a tractor? Giving money to someone just shuffles around existing value, it doesn't expand it.


Hmm? How does that address the problem with the LTV if it claims that 100 hours of labor now is worth the same as 100 hours in the future? Demand for money now is higher than demand for money delivered in the future.It doesn't. What does demand for money have to do with how prices for commodities are determined?


I don't know if I am "shifting from" actual capitalism in the sense that I am mostly concerned with abstract models just to see how well they are logically able to explain different plausible but ultimately theoretical situations. We could get into debates about whether or not people are rational and if people aren't this would of course be very problematic for capitalism but I think that might be a better debate for another thread.But they aren't logically able to explain how capitalism works because they don't take into account the distribution of social labor. They ignore the process that regulates supply and demand. You can't seperate supply and demand from the law of value...it ends up in circular reasoning. In marginalism prices are determined by consumers subjective valuation of goods, but for them to evaluate goods they must already know their price in comparison to other goods. How much we are willing to pay for certain goods rests on our income, or how much surplus value is extracted and how it's distributed, and supply of a good rests on how much labor goes towards producing it. How many times have you been forced to choose a lower quality good because the high quality good was simply out of your price range?

I suggest reading Marx's Wage Labour and Capital, he deals with this. Mikes quote from Value, Price and Profit touches on this also.


Anyway, if the worker wanted to have even consumption over time he could work part time or work full time for part of his life and part time for another part of his life.You missed the point entirely. He was explaining how workers are only compensated for a fraction of the value they add to the good, and so they end up working a portion of their day to cover the wage, and the rest of the day they work directly for the benefit of the capitalist.


Yeah if it were scarce and people valued it.But the more abundant a good is, the less labor is needed to procure it. The more scarce it is, the more labor is required. If this good required zero labor to procure, it would have no value..it would be like air. No one is going to pay you for something they can get without any labor.

Maybe you should take a look at this: http://www.marxists.org/archive/deleon/pdf/usbj/jan31_1897u.pdf


Ah ok so it is more than simply a way of denominating value. How is labor the basis of value creation if it is one among many factors of production?Are you being willfully ignorant or just ignoring posts? All factors of production still boil down to labor. Factories don't just *exist,* they have to be produced by human labor.


My point was only that capital is a factor input that all commodities have in common. This led me to wonder why labor would be economically fundamental just because it "came first" so to speak.And my point was the capital is embodied labor. It is still labor that is determining value.


It also reduces the capital that is necessary. Before $1 of labor and $1 of capital produces you 100 widgets, now it gets you 200. Now the owners of the labor and capital used can respectively purchase 100 widgets each, instead of 50 before. Everyone becomes richer.The working class gets poorer under capitalism, not richer.

[Judicator]

Any theory that considers "willingness to pay" and "willingness to accept" to be fundamental is self-referential and tautological. It's offering as an explanation the very thing that it's supposed to be explaining.


I don't know if it's tautological in any sense other that being fairly straightforward or obvious. The concepts of private willingness to pay isn't assumed by itself, you get it from assumptions about preferences which are testable. The two key assumptions that come to mind (there may be others in the formal theory which I'm missing) are utility maximization, transitive preferences, and increasing willingness to give up one good for another as you consume more of the former good. With this and a supply curve you'd get a market clearing price.

The question we're trying to answer is 'why do people all buy and sell at the same price'? This provides an explanation that's not simply repeating the question as you asserted it was.


Willingness or any other subjective factor is undetectable in principle, leading to a theory that is unfalsifiable in principle. How would one check someone's amount of willingness? Have a psychoanalyst give them an ink blot test? Measure their brain synapse voltages? Then how would you make it quantitative -- how would we find out that my mental state has, for example, 547 times as many willingness magnitude units to take one action compared to some other action? You can't judge my willingness by observing what I end up doing, after the real world has notified me of what I may get away with, and what I may not get away with, because that's what you're trying to explain in the first place.

If I bought it, I was willing to pay at least the listed price. If I sold it, I was willing to accept something at or below the listed price.


What we _end up doing_ is paying high prices for items that have a high cost of production, and paying low prices for items that have low costs of production. It's not because we are willing to do that, and unwilling to do the opposite. It's because the manufacturers couldn't be in business if it weren't the case. There is a natural selection process going on. Manufacturers who set their prices grossly out of proportion to their costs of production are unable to sustain the processes. If the manufacture of one product is disproportionately profitable, more capital migrates toward it, there are too many competitors, and the rising supply destroys the previous potential for disproportionately high profit. Even the capitalist investment theory known as the "efficiency of the stock market" establishes that fact, which amounts to a sheepish admission that Marx was right.

There are many items with high costs of production that simply aren't produced because nobody is willing to buy them. It is the subjective individual preferences combined with factor scarcity that determine which goods are produced at all.


Because labor--itself a commodity in this system we call capitalism--on average, is always greater than the marginal amount. Assuming, of course, that the "marginal amount" we are talking about here is what capitalists and their financial servants contribute to the process of commodity production.

No the marginal amount is the amount the last hired laborer contributes to production of the good - the marginal value of his labor.



...capital is still embodied labor.


The point is simply that you need both to produce stuff. Labor that went into capital goods in the past is a sunk cost, all you have left is the capital.


And you need labor to produce the capital, buildings, or whatever it is, so in the end it still all boils down to labor being the source of value.

This fails to take factor scarcity into consideration. If half the factories suddently exploded (or more realistically something caused severe depreciation) capital would become much more valuable because capital would be scarce. Sure, someone somewhere once built the factory with tools build by someone else somewhere and so on. However, that seems beside the point as it will not help us account for the present value, only tell us that at the time it was built (in the past) the builders thought it would be worth it.

I guess it might be helpful to know what the LTV claims about why undeveloped seaside property is worth more than undeveloped inland property.


What determines how well supplied something is? The amount of labor it takes to produce.

What do you mean by "well supplied?" Crude oil products won't be well supplied at all even if oil is just as easy to extract as it ever was because of underlying scarcity.


So the simple act of lending someone money will, say...create a tractor? Giving money to someone just shuffles around existing value, it doesn't expand it.

So say I'm sitting around with $100,000. You are broke and I'm the only one who can give you a loan. I'm unable or unwilling to operate the tractor myself. Without my loan you would have to manually work your farmland, yielding a harvest worth $50,000. However, with my loan you can buy more land and a tractor to yield a harvest worth $75,000. The fact that I loaned you the money meant your harvest increased by $25,000.

Loans move value to where it's most needed. This results in more value than there would have been if the money just sat around.


It doesn't. What does demand for money have to do with how prices for commodities are determined?

Demand for commodities now is greater than demand for commodities delivered in the future.


But they aren't logically able to explain how capitalism works because they don't take into account the distribution of social labor. They ignore the process that regulates supply and demand. You can't seperate supply and demand from the law of value...it ends up in circular reasoning.

Can you explain what you mean by distribution of social labor and the "law of value"? They are deriving demand from individual preferences/utility functions and supply from optimal factor substitution.


In marginalism prices are determined by consumers subjective valuation of goods, but for them to evaluate goods they must already know their price in comparison to other goods. How much we are willing to pay for certain goods rests on our income, or how much surplus value is extracted and how it's distributed, and supply of a good rests on how much labor goes towards producing it. How many times have you been forced to choose a lower quality good because the high quality good was simply out of your price range?

You don't need to know the price of a good to define a demand curve - the whole point of a demand curve is it gives you the demand for any price. Presumably consumers know what their income is so that isn't a problem.

Economic theory exists precisely to explain why people purchase certain things when they can afford many many different bundles of goods. I'm rarely "forced" to choose a lower quality good - there are many products I'm capable of paying for (a $100 bottle of wine) but I'd prefer a larger quantity of a very close substitute (10 $10 bottles of wine).



I suggest reading Marx's Wage Labour and Capital, he deals with this. Mikes quote from Value, Price and Profit touches on this also.


So much to read so little time :scared:. I'll see if I can pick up a copy and get around to it sometime?? :blushing:



You missed the point entirely. He was explaining how workers are only compensated for a fraction of the value they add to the good, and so they end up working a portion of their day to cover the wage, and the rest of the day they work directly for the benefit of the capitalist.

Ah, so he is claiming that workers need their full monetary wage, but that the wage is less than what it should be? That seems more sensible.

However, suppose he's correct and the worker who is paid $5 produces $9 worth of stuff. In most cases, this probably just means that the capital the firm was using cost $4. So they don't really work for the benefit of the capitalist - the capitalist just has other costs that he must cover.


But the more abundant a good is, the less labor is needed to procure it. The more scarce it is, the more labor is required. If this good required zero labor to procure, it would have no value..it would be like air. No one is going to pay you for something they can get without any labor.

If oil were twice as abundant as it is now, but in equally hard to reach places, it would be less scarce but take about the same amount of labor (making the oil well) to extract.

Undeveloped land is valuable although it lacks added labor.


Are you being willfully ignorant or just ignoring posts? All factors of production still boil down to labor. Factories don't just *exist,* they have to be produced by human labor.

Nono I think we agreed I was misinterpreting your claims and thought we disagreed about something we didn't. Of course at some point in the past someone made the tool that made the other tool and so on and so forth. I treat capital as a separate factor only because the value of currently available capital is a function of how much capital there is relative to other currently available labor and raw materials. Of course current labor costs will factor into how many capital goods are produced on an ongoing basis, but this is separate from current working capital if capital is assumed to be fixed in the short run.


And my point was the capital is embodied labor. It is still labor that is determining value.

If I understand you correctly I agree with the first part. However, subjective human wants and factor scarcity (eg how much capital there is available right now) determine value.



The working class gets poorer under capitalism, not richer.


How are they poorer if they get more stuff?

[SocialismOrBarbarism]

The point is simply that you need both to produce stuff. Labor that went into capital goods in the past is a sunk cost, all you have left is the capital.Yes, and capital is embodied labor, so the point is simply that you need labor to produce something. Why is that so hard to understand?


This fails to take factor scarcity into consideration. If half the factories suddently exploded (or more realistically something caused severe depreciation) capital would become much more valuable because capital would be scarce.Besides not having anything to do with what you quoted, it also has nothing to do with the labor theory of value. Yes, supply and demand cause price fluctuations, and If you had read the work by Marx I suggested you would know that this in no way contradicts the LTV.


I guess it might be helpful to know what the LTV claims about why undeveloped seaside property is worth more than undeveloped inland property.Because it's land.
In speaking then of commodities, of their exchangeable value, and of the laws which regulate their relative prices, we mean always such commodities only as can be increased in quantity by the exertion of human industry, and on the production of which competition operates without restraint.

If you're going to argue about the LTV you need to understand that it's more than just attempting to explain prices, it's about attempting to explain production relations. "individuals have preferences" doesn't exactly help explain social relations and phenomena.


So say I'm sitting around with $100,000. You are broke and I'm the only one who can give you a loan. I'm unable or unwilling to operate the tractor myself. Without my loan you would have to manually work your farmland, yielding a harvest worth $50,000. However, with my loan you can buy more land and a tractor to yield a harvest worth $75,000. The fact that I loaned you the money meant your harvest increased by $25,000.

Loans move value to where it's most needed. This results in more value than there would have been if the money just sat around.That's like saying oil creates value because there is more value than if oil was just left sitting. By this logic almost all things create value.


Can you explain what you mean by distribution of social labor and the "law of value"? They are deriving demand from individual preferences/utility functions and supply from optimal factor substitution.What do you think it means? How value is distributed among people. You have said nothing of substance here. Preferences don't just *exist.* You assume preferences being independent of their income and the prices they're somehow determining. All you are left with is a huge, meaningless abstraction: People have desires.


You don't need to know the price of a good to define a demand curve - the whole point of a demand curve is it gives you the demand for any price. Presumably consumers know what their income is so that isn't a problem.So demand is independent of price? Are you saying the demand for cars will be the same if the average price of cars was lowered to $2000? You should check out some of the posts by invariance where the assumptions necessary for this theory are shown and it is demolished.


I'm rarely "forced" to choose a lower quality good - there are many products I'm capable of paying for (a $100 bottle of wine) but I'd prefer a larger quantity of a very close substitute (10 $10 bottles of wine).Really? Do you just exist in some magical bubble of bourgeois economics while never actually doing the things you theorize about? I'm not sure about you, but I don't go shopping knowing exactly which product I'm going to get. I have to actually see the prices. If a brand I don't like as much is cheaper, I get it. Maybe this isn't necessary for someone rich enough to refrain from saving a few dollars here and there.


So much to read so little time . I'll see if I can pick up a copy and get around to it sometime?? It's short. And on the internet.


Ah, so he is claiming that workers need their full monetary wage, but that the wage is less than what it should be? That seems more sensible.He wasn't saying anything, he was simply pointing out a fact.


However, suppose he's correct and the worker who is paid $5 produces $9 worth of stuff. In most cases, this probably just means that the capital the firm was using cost $4. So they don't really work for the benefit of the capitalist - the capitalist just has other costs that he must cover.If this were true there would be no capitalism. I think you're slipping away from real capitalism again.


If I understand you correctly I agree with the first part. If you agree then I'm not sure why you're continuing with your repetitive assertions about capital.


However, subjective human wants and factor scarcity (eg how much capital there is available right now) determine value. So...a more complex way of saying supply and demand. That's a very informative analysis.


How are they poorer if they get more stuff?Workers might have more stuff, but what they get in relation to the total wealth is constantly growing smaller. If I remember the numbers correctly, the wealth going to the majority has fallen by half since the sixties, while for the top 1% it has doubled since the 80s.

I'm not really interested in continuing a discussion about wether capital or oxygen or cars create value, or whether "individuals act"(which is what your arguments pretty much boil down to) but there are plenty of works on the LTV you could read that are available on the internet...I might try "Economic Theory of the Leisure Class" by Bukharin.

[mikelepore]

If I bought it, I was willing to pay at least the listed price. If I sold it, I was willing to accept something at or below the listed price.

("At or below" was a typo. You meant to write "at or above.")

I just don't see a potential for developing a theory with any explanatory power by beginning with talk about subjective experiences. It reminds me of this kind of reasoning: Problem: 120 volts are applied across a light bulb whose filament has a resistance of 240 ohms. How much power is dissipated? Solution: The light bulb is certainly very bright -- oh, look how shiny it is. Okay, but where's the theory?

***

Maybe you didn't see this point anywhere. The purpose of Marx's economic theory isn't to predict prices or to explain prices. The purpose of Marx's theory is to explain the fundamental sources of such quantities as values, prices, wages, profits, quantities that are so far-reaching in their effects that they establish broad types of social relationships. Where do they come from?

Marx developed an internally-consistent algebraic model showing that the source of the employer's profit is a systematic deduction from the workers' wages. In short, profits are unpaid wages.

This is the thing that drives Marx's critics to want to "disprove" his theory. It gets in the way of the capitalist catechism that the source of the employer's profits is that the employer is a "genius" who "had a good idea" and "took a risk." Marx is able to sweep away all that mumbo-jumbo and show the actual relationships involved: the employer makes a profit simply by being in such a position of power that he can pay workers less in the form of wages than the value-added that their labor introduces.

The capitalist is nothing but a pickpocket, and his "good idea" is nothing but a good idea about how to be an effective pickpocket. Marx having demonstrated this result mathematically is what drives his critics nuts. They sense intuitively that they must "disprove" this guy. In other words, a university economist is nothing but a pickpocket's defense lawyer.

[Judicator]

I just don't see a potential for developing a theory with any explanatory power by beginning with talk about subjective experiences. It reminds me of this kind of reasoning: Problem: 120 volts are applied across a light bulb whose filament has a resistance of 240 ohms. How much power is dissipated? Solution: The light bulb is certainly very bright -- oh, look how shiny it is. Okay, but where's the theory?

With the ligtbulb we use theoretical models with simplifying assumptions to describe their behavior - ohm's law. With economics, we make assumptions about the nature of peoples' preferences which allow us to make objective predictions, even though the actual content of preferences are subjective. I think this is more of a side point but somehow we got into an objectivity-subjectivity debate.



Maybe you didn't see this point anywhere. The purpose of Marx's economic theory isn't to predict prices or to explain prices. The purpose of Marx's theory is to explain the fundamental sources of such quantities as values, prices, wages, profits, quantities that are so far-reaching in their effects that they establish broad types of social relationships. Where do they come from?

The point about classical economic theory though is that price is value, so by explaining price you explain value. In the same fashion economists explain wages, profits, etc.


Marx developed an internally-consistent algebraic model showing that the source of the employer's profit is a systematic deduction from the workers' wages. In short, profits are unpaid wages.

This is the thing that drives Marx's critics to want to "disprove" his theory. It gets in the way of the capitalist catechism that the source of the employer's profits is that the employer is a "genius" who "had a good idea" and "took a risk." Marx is able to sweep away all that mumbo-jumbo and show the actual relationships involved: the employer makes a profit simply by being in such a position of power that he can pay workers less in the form of wages than the value-added that their labor introduces.

Employers lack market power in a competitive marketplace - wages are set for the industry and individual firms simply take the wage as given. If employers were making a profit (beyond costs of labor and capital) they would enlarge their firms until they no longer made a profit on the last worker hired.

[New Tet]

No the marginal amount is the amount the last hired laborer contributes to production of the good - the marginal value of his labor.


But that is precisely what you factor in and artfully avoid calling it by its proper name.

There is no point in hiding the existence of the capitalists in the process of commodity production; their presence is all too obvious. Putting them behind the label of "last hired laborer" is like trying to hide a fat lady behind a pine sapling. You get the picture, right?

This 'marginal amount' you are referring to is the amount of actual labor a capitalist adds to the process of commodity production.

Once the marginal amount you are referring is added nothing else can accrue to it that adds additional value, be it of use or exchange.

Therefore I think that you and I can agree that the portion that accrues to capital as a result of the 'labor' of the capitalist is so small and so thin as to truly constitute a marginal amount.

So the question arises, if what capitalists contribute to the great mass of commodity production is so small as to be deemed marginal, why do they own so much of it?

[Judicator]

Because it's land.


What? How does this explain the difference in values of types of land?


If you're going to argue about the LTV you need to understand that it's more than just attempting to explain prices, it's about attempting to explain production relations. "individuals have preferences" doesn't exactly help explain social relations and phenomena.

Individual preferences along with scarcity are the core determinants of what is produced in a capitalist system. Of course you don't simply stop at saying individual have preferences, you characterize the nature of these preferences and can then formulate theories.


That's like saying oil creates value because there is more value than if oil was just left sitting. By this logic almost all things create value.

What? I'm missing your analogy so just tell me how the loan doesn't create value. The farmer can make an additional $25,000 in harvest with the same amount of labor if and only if he gets the loan.


What do you think it means? How value is distributed among people. You have said nothing of substance here. Preferences don't just *exist.* You assume preferences being independent of their income and the prices they're somehow determining. All you are left with is a huge, meaningless abstraction: People have desires.

Preferences exist independent of prices, preferences together with income and price yield choices.



So demand is independent of price? Are you saying the demand for cars will be the same if the average price of cars was lowered to $2000? You should check out some of the posts by invariance where the assumptions necessary for this theory are shown and it is demolished.


Demand is a function of price - given a price you have a quantity for any arbitrary price.



Really? Do you just exist in some magical bubble of bourgeois economics while never actually doing the things you theorize about? I'm not sure about you, but I don't go shopping knowing exactly which product I'm going to get. I have to actually see the prices. If a brand I don't like as much is cheaper, I get it. Maybe this isn't necessary for someone rich enough to refrain from saving a few dollars here and there.


I've bought wine before, so no its not a theory in a bubble. Seeing a price before your make a decision is fine, but your preferences have to exist beforehand, otherwise what would the decision be based upon?



It's short. And on the internet.


It wasn't terribly short.... I'll go through it again to see points where I have questions.



If this were true there would be no capitalism. I think you're slipping away from real capitalism again.


What? In real capitalism you have to pay for the upkeep of capital, Marx says so himself.



So...a more complex way of saying supply and demand. That's a very informative analysis.


Not really, supply and demand is the result of the factors I mentioned in the part you quoted. They aren't the same thing.



Workers might have more stuff, but what they get in relation to the total wealth is constantly growing smaller. If I remember the numbers correctly, the wealth going to the majority has fallen by half since the sixties, while for the top 1% it has doubled since the 80s.


So really the complaint is just that workers can't keep up with their capitalist neighbors, not that they're actually materially worse off?



I'm not really interested in continuing a discussion about wether capital or oxygen or cars create value, or whether "individuals act"(which is what your arguments pretty much boil down to) but there are plenty of works on the LTV you could read that are available on the internet...I might try "Economic Theory of the Leisure Class" by Bukharin.


There's really no need to create straw men. If "individuals act" were all of bourgeois economics there would be nothing controversial about it and all Marxists would be fine with it. This clearly isn't the case.

Anyway, I'll try to pull some passages from Wage Labor and Capital that I didn't really get.

[Skooma Addict]

Putting them behind the label of "last hired laborer" is like trying to hide a fat lady behind a pine sapling.

Except Capitalists are not the "last hired labored". The last worker hired is the one whos DMVP is greater than the cost of his labor.


This 'marginal amount' you are referring to is the amount of actual labor a capitalist adds to the process of commodity production.


No it is not. If that is what he is referring to, he is wrong.


Once the marginal amount you are referring is added nothing else can accrue to it that adds additional value, be it of use or exchange.


I am not sure if I follow what your saying. Can you expand on this?


Therefore I think that you and I can agree that the portion that accrues to capital as a result of the 'labor' of the capitalist is so small and so thin as to truly constitute a marginal amount.

The capitalist supplies the required capital. So he serves a very important function.

[Judicator]

But that is precisely what you factor in and artfully avoid calling it by its proper name.

There is no point in hiding the existence of the capitalists in the process of commodity production; their presence is all too obvious. Putting them behind the label of "last hired laborer" is like trying to hide a fat lady behind a pine sapling. You get the picture, right?

This 'marginal amount' you are referring to is the amount of actual labor a capitalist adds to the process of commodity production.

Once the marginal amount you are referring is added nothing else can accrue to it that adds additional value, be it of use or exchange.

Therefore I think that you and I can agree that the portion that accrues to capital as a result of the 'labor' of the capitalist is so small and so thin as to truly constitute a marginal amount.

So the question arises, if what capitalists contribute to the great mass of commodity production is so small as to be deemed marginal, why do they own so much of it?

The marginal amount I'm referring to is the amount of additional sales the capitalist gets from hiring the last workers. Suppose the capitalist has 1 worker in a factory that makes revenues of $10 on inputs which cost $2. The capitalist then hires another worker, causing his factory to make $18 on $4 of inputs. The marginal contribution of this worker is $6. Before he was making $8, now he is making $14. If the prevailing market wage is $6 he will stop hiring, but if it is lower he will continue hiring until the worker he hires increases his profit by exactly the amount it cost to hire that worker. In this example where wages are $6, the capitalist would keep $2.

[SocialismOrBarbarism]

What? How does this explain the difference in values of types of land?There's a reason I posted the quote from Ricardo.


What? I'm missing your analogy so just tell me how the loan doesn't create value. The farmer can make an additional $25,000 in harvest with the same amount of labor if and only if he gets the loan.The farmer can make an addition 25,000 in harvest with the only if he breathes air. Does air then create value?


Preferences exist independent of prices, preferences together with income and price yield choices. You have the same preferences no matter what the price is? Capitalism isn't simply geared towards meeting existing demands, it is geared towards producing demand.


I've bought wine before, so no its not a theory in a bubble. Seeing a price before your make a decision is fine, but your preferences have to exist beforehand, otherwise what would the decision be based upon?And your preferences are limited by your income, which is what you abstract from. Demand is somehow independent of the variable it is supposedly determining.

I suggest you check this out:

http://www.revleft.com/vb/irrationality-rationality-t106590/index.html?t=106590


Neoclassical economics (in order to avoid the problems with aggregating individual demand curves) declared the golden principle of homothetic tastes. To quote my mircroeconomics book, Microeconomics – a Modern Approach, Andrew Schotter, 3rd ed., 2001, page 68:

‘When a consumer has homothetic preferences, all goods are superior and purchased in the same proportion no matter what the consumer’s income. In a world where all consumers have homothetic preferences, we might think of rich people as simply expanded versions of poor people. The tastes of such rich people do not change as their incomes change. They allocate their incomes exactly the way they did when they were poor. They just buy proportionally more of each good as their income grows.’

I hope you found that as humorous as I did when I first read it. In effect, Schotter is saying that if Bill Gates spent 10% of his income on pizza when he just another university computer science nerd, then he now spends 10% of his total income on pizza. In other words, he spends hundreds of millions on buying pizza for his own consumption.lol


What? In real capitalism you have to pay for the upkeep of capital, Marx says so himself.In your example all revenue simply covered costs, there was no profit. That would be a very strange capitalism indeed.


So really the complaint is just that workers can't keep up with their capitalist neighbors, not that they're actually materially worse off?Why is everything a complaint with you people? I'm simply stating a fact: the majority becomes poorer as capitalism develops.


There's really no need to create straw men. If "individuals act" were all of bourgeois economics there would be nothing controversial about it and all Marxists would be fine with it. This clearly isn't the case.That's all it really boils down to.


The capitalist supplies the required capital. So he serves a very important function. Only within the context of capitalism. There's no need for someone to supply capital if capital doesn't exist.

[New Tet]

Except Capitalists are not the "last hired labored". The last worker hired is the one whos DMVP is greater than the cost of his labor.

What is DMVP?



No it is not. If that is what he is referring to, he is wrong.

He may not know that himself.



I am not sure if I follow what your saying. Can you expand on this?

Yes, there is a point at which the value of a commodity begins to decline in relation to the ability of the capitalist or worker to enhance it or sell it.

Here's an example in the form of a question: What is the one principal commodity a worker can sell?

And here's a followup question that answers it: What happens to real wages in general when unemployment in the U.S. is high and availability in the job market falls below an average level?


The capitalist supplies the required capital. So he serves a very important function.

But if we agree that the near totality of capital is composed of crystallized, uncompensated labor, where does the capitalist get it from, himself?

[Skooma Addict]

What is DMVP?

Discounted marginal value productivity. A workers marginal productivity discounted by the market rate of interest.


And here's a followup question that answers it: What happens to real wages in general when unemployment in the U.S. is high and availability in the job market falls below an average level?

High unemployment is only possible due to minimum wage laws and other government restrictions. So some people will see a wage increase at the expense of others. Overall, real wages will fall.


But if we agree that the near totality of capital is composed of crystallized, uncompensated labor, where does the capitalist get it from, himself?

Except we don't agree. Because the production process includes many other factors besides labor. Not only that, but the workers are being paid before their product is ever sold. This explains why they earn less than the final price of their product. 1 dollar now is worth more than 1 dollar 5 years from now.

[SocialismOrBarbarism]

Not only that, but the workers are being paid before their product is ever sold. This explains why they earn less than the final price of their product. 1 dollar now is worth more than 1 dollar 5 years from now.

How does this explain fast food workers? Their product is sold within minutes of being produced, but they are payed every two weeks. This is the complete reverse of your example. Why aren't they payed more than they contribute?

It's not as if workers are given the option of waiting the week or month for their product to be sold in exchange for it's full value. I see no point to this theory besides capitalist apologism.

[mikelepore]

The point about classical economic theory though is that price is value, so by explaining price you explain value. In the same fashion economists explain wages, profits, etc.

When Marx say value he means the level that the price is a departure from, the level that the price would have been it were not oscillating due to time-varying supply and demand factors. How do you explain, not the instantaneous price, but the line about which the price fluctuates? Clearly that line can't be zero because a price never goes negative. It's always a positive magnitude. How can you explain the positive number which represents what the price would have been if upward and downward tendencies were in equilibrium, and to which the price gravitates back after previous departures? Reference: the discussion in Marx's pamphlet _Value, Price and Profit about Adam Smith's concepts of "natural price" versus "market price."

[Skooma Addict]

How does this explain fast food workers? Their product is sold within minutes of being produced, but they are payed every two weeks. This is the complete reverse of your example. Why aren't they payed more than they contribute?

Good point. However I was referring to workers who are paid before their product is sold. They will earn less than if they had to wait 5 months until their product is sold to be paid. That is what I meant to say. I didn't mean to imply time preferences were the sole reason workers earn less than the selling price of their final product. Only that all other things being equal, the earlier you are paid, the less you will earn. If a fast food worker were paid every 6 months, his annual income would be greater than if he were paid every day.

I re-read my previous post and I realize I should have worded it differently.

[SocialismOrBarbarism]

Good point. However I was referring to workers who are paid before their product is sold. They will earn less than if they had to wait 5 months until their product is sold to be paid. That is what I meant to say. I didn't mean to imply time preferences were the sole reason workers earn less than the selling price of their final product. Only that all other things being equal, the earlier you are paid, the less you will earn. If a fast food worker were paid every 6 months, his annual income would be greater than if he were paid every day.

I re-read my previous post and I realize I should have worded it differently.

You were using it to defend wage labor. That's what the theory is always used for. Perhaps it was a good defense back in 1880s Austria, but not as much today. It is not capable of explaining profit for huge portions of the economy. Perhaps you should ask whether workers actually have the choice to work for payment now instead of later, and if not, why? But then you'd end up with the idea of classes, and I don't think you guys like where those kinds of questions lead.

[mikelepore]

Not only that, but the workers are being paid before their product is ever sold. This explains why they earn less than the final price of their product. 1 dollar now is worth more than 1 dollar 5 years from now.

Did you just make that up, or is there some deranged economist who said such a crazy thing? I'm trying to make head or tail of that explanation. It seems to go like this: The capitalist pays the workers now, but can only sell the product later. This means the capitalist is morally entitled to be reimbursed for some lost interest. Let's call that Fact #1. It's also true, simply from the meaning of "profit" in any context, that if the capitalist happens to takes in more in revenue than is needed to pay the bills, if income exceeds outgo on the balance sheet, the difference permits the capitalist to declare a profit. Call that Fact #2. So now what? The Supreme Being performs a miracle to see to it that Fact #1 and Fact #2 will be numerically equal? The fortuitous difference between the capitalist's income and outgo will mysteriously become the same amount as the capitalist's lost interest for having been required to pay the workers now and sell the product later? Man... and I thought Noah's Ark was an unbelievable story.

[Skooma Addict]

The marginal amount I'm referring to is the amount of additional sales the capitalist gets from hiring the last workers. Suppose the capitalist has 1 worker in a factory that makes revenues of $10 on inputs which cost $2. The capitalist then hires another worker, causing his factory to make $18 on $4 of inputs. The marginal contribution of this worker is $6. Before he was making $8, now he is making $14. If the prevailing market wage is $6 he will stop hiring, but if it is lower he will continue hiring until the worker he hires increases his profit by exactly the amount it cost to hire that worker. In this example where wages are $6, the capitalist would keep $2.

I am not sure if you are purposely being simplistic in order for your post to be more clear. But if not, you should know a capitalist will stop hiring when the next workers DMVP is less than the cost to hire the worker. In your example, the capitalist stops hiring when a workers MVP is less than the cost to hire the worker. You need to take the markets rate of interest into account. Another worker will not be hired if the return is less than the markets rate of interest.

[New Tet]

Not only that, but the workers are being paid before their product is ever sold.

You're the victim of capitalist sleight of hands, Olaf.

Workers on average are always paid after they have sold their labor power as a commodity to the capitalists and always at a fraction of its actual worth. IOW, on average the worker is paid after the product he/she contributes to production is already consumed in the process of production.

That's how capital, in the form of commodities is accumulated by the buyer of labor power (the capitalist).

The funny thing about it all is that at some point the great mass of accumulated commodities (capital) is so large as to defy the capacity of its capitalist owner to dispose of it through sale or re-investment. Look at the U.S. auto industry as an example of that.

That's when the shit hits the proverbial fan: Production slows down or halts altogether.

We are experiencing one such period now.

[Skooma Addict]

You were using it to defend wage labor. That's what the theory is always used for. Perhaps it was a good defense back in 1880s Austria, but not as much today. It is not capable of explaining profit for huge portions of the economy. Perhaps you should ask whether workers actually have the choice to work for payment now instead of later, and if not, why? But then you'd end up with the idea of classes, and I don't think you guys like where those kinds of questions lead.

Huh? Workers being paid ahead of time is one of the main reasons they choose to work for capitalists. Unlike the capitalist, they will not lose money if the product fails to sell. They bear little risk, while the capitalist bears a huge amount of risk. The capitalists income completely depends on how well the product sells. Also, in a free market, workers wouldn't have to work for a capitalist if they didn't want to. They could form their own business, and they could earn as much as their product sells for...as long as they were willing to work for weeks or months (possibly years) without pay...all with the risk of the product failing to sell.

[Skooma Addict]

Workers on average are always paid after they have sold their labor power as a commodity to the capitalists and always at a fraction of its actual worth. IOW, on average the worker is paid after the product he/she contributes to production is already consumed in the process of production.


So an auto worker is only payed after the car he helps build is sold?


That's how capital, in the form of commodities is accumulated by the buyer of labor power


Capital can be accumulated in many different ways. The capitalist could be a retired worker who spent years saving his money. Now he is in a position to use his savings in the production process.



The funny thing about it all is that at some point the great mass of accumulated commodities (capital) is so large as to defy the capacity of its capitalist owner to dispose of it through sale or re-investment. Look at the U.S. auto industry as an example of that.

In the free market, the sale of capital and commodities would not be a problem. The auto industry is heavily regulated. The price of labor is held artificially high, and businesses are not being allowed to fail.

You should know it is the very poor who stand to benefit most from a completely free market. It is the politically well connected rich who will lose the most if we had a free market.

[SocialismOrBarbarism]

Huh? Workers being paid ahead of time is one of the main reasons they choose to work for capitalists.

Again, this fails to account for many workers, like fast food workers. They work for the capitalists because they control the means of production and can't reasonably sustain themselves otherwise. I'm sure plenty of workers would choose to wait the month or the week or the 3 minutes until their product was sold in exchange for receiving it's full value. But that choice does not exist, which makes this entire idea meaningless.


Unlike the capitalist, they will not lose money if the product fails to sell. They bear little risk, while the capitalist bears a huge amount of risk. Yes, right, the only reason wage workers are wage workers is because they are unwilling to take risks. It doesn't really matter if they don't have the opportunity to take these risks in the first place.

While it is extremely risky to sit around waiting to receive your dividends, there's never any risk involved in working for a capitalist.

http://2.bp.blogspot.com/_mmBw3uzPnJI/SZ6zCj4j84I/AAAAAAAAhQU/xEczdhXCCD4/s400/Dangerous-Jobs-14.jpg

:rolleyes:


The capitalists income completely depends on how well the product sells. Also, in a free market, workers wouldn't have to work for a capitalist if they didn't want to. They don't have to work for a capitalist now if they don't want to. Whether they're willing to starve or allow their family to be forced into poverty is another story. But you guys don't recognize economic coercion, so why do I even bother?


They could form their own business, and they could earn as much as their product sells for...as long as they were willing to work for weeks or months (possibly years) without pay...all with the risk of the product failing to sell.
Yes, because that's exactly what capitalism is like. :rolleyes: I really wonder how you reconcile your petty bourgeois utopia with modern production, where just a single small factory employing 150 people can cost 100 million dollars. Without a state how will technological advancement progress when all of societies resources are divided among thousands of seperate, competing businesses?

[Skooma Addict]

Again, this fails to account for many workers, like fast food workers. They work for the capitalists because they control the means of production and can't reasonably sustain themselves otherwise.

I wasn't referring to all workers. Only the ones who choose to work for capitalists who pay them ahead of time. I was trying to show how there is nothing wrong with this. I know not all workers are paid before their product is sold...do you think I am stupid or something?


I'm sure plenty of workers would choose to wait the month or the week or the 3 minutes until their product was sold in exchange for receiving it's fully value. But that choice does not exist, which makes this entire idea meaningless.

Some would, some wouldn't. Some like being paid ahead of time. However, I don't think many people would want to go a year without being paid. If a person wants to wait until a product is sold before he is paid, and he is willing to pay for the costs of production, and bear the risks, he has no need to work for a capitalist.


Yes, right, the only reason wage workers are wage workers is because they are unwilling to take risks.

I never said that.


While it is extremely risky to sit around waiting to receive your dividends, there's never any risk involved in working for a capitalist.

http://2.bp.blogspot.com/_mmBw3uzPnJI/SZ6zCj4j84I/AAAAAAAAhQU/xEczdhXCCD4/s400/Dangerous-Jobs-14.jpg

That worker bears little financial risk. He is either being paid an hourly wage, or his income will depend on how many windows he cleans. Now, his job does involve other kinds of risks. But the owner of the business he works for could lose his life savings if his business fails.


They don't have to work for a capitalist now if they don't want to. Whether they're willing to starve or allow their family to be forced into poverty is another story. But you guys don't recognize economic coercion, so why do I even bother?

You are making it look like I have something against the poor. When in fact the free market stands to benefit the poor more than anyone else.



Yes, because that's exactly what capitalism is like. :rolleyes: I really wonder how you reconcile your petty bourgeois utopia with modern production, where just a single small factory employing 150 can cost 100 million dollars. Without a state how will technological advancement progress when all of societies resources are divided among thousands of seperate, competing businesses?

My "petty bourgeois utopia" involves helping the poor find employment, and ridding the political rich of their unproductive, worthless jobs. Technological advancement will occur where it is profitable.

[SocialismOrBarbarism]

I wasn't referring to all workers. Only the ones who choose to work for capitalists who pay them ahead of time. I was trying to show how there is nothing wrong with this. I know not all workers are paid before their product is sold...do you think I am stupid or something?It doesn't matter, this is just a corollary. Workers work for capitalists because they have a monopoly on the means of production. Sometimes this correlates with workers being payed before their product is sold, but it's not the main issue.


You are making it look like I have something against the poor. When in fact the free market stands to benefit the poor more than anyone else.

:laugh: Reality and history really bear this out. I'm sure workers will love it when there are no longer any restrictions on the working day, workplace safety laws, or all of those other state mandated benefits.


Technological advancement will occur where it is profitable.That's the point. Divvying up the resources between so many different companies makes it too costly for any single business to invest in researching advanced technologies, whereas a socialist economy can contribute far more resources to research and development. There's a reason the state had to develop computers.

[Skooma Addict]

:laugh: Reality and history really bear this out. I'm sure workers will love it when there are no longer any restrictions on the working day, workplace safety laws, or all of those other state mandated benefits.

All of this benefits some workers at the expense of other workers. By making it more expensive to hire workers, some will remain unemployed. Still, all of he problems you listed do not require legislation to solve. The free market can do a better job. Not to mention how unfair state mandated benefits are. The more mandated benefits, the harder it will be to find employment.


That's the point. Divvying up the resources between so many different companies makes it to costly for any single business to invest in researching advanced technologies, whereas a socialist economy can contribute far more resources to research and development. There's a reason the state had to develop computers.

There is also a reason why the sate built the atomic bomb. Besides, the state cannot rationally allocate societies scarce resources. I am sure you have heard of the "Calculation Debate".

[SocialismOrBarbarism]

All of this benefits some workers at the expense of other workers. By making it more expensive to hire workers, some will remain unemployed. Still, all of he problems you listed to not require legislation to solve. The free market can do a better job. Not to mention how unfair state mandated benefits are. The more mandated benefits, the hardermit will be to find employment.

This is not necessarily true. Cutting working hours can be used in the same was as cutting the minimum wage. No one on this website would ever suggest that simply reforming capitalism could ever solve these problems anyway.


There is also a reason why the sate built the atomic bomb.

You're changing the subject. The state had to create the computer because it was simply not profitable for any company to do so, and this was in the age of monopoly capitalism.


Besides, the state cannot rationally allocate societies scarce resources. I am sure you have heard of the "Calculation Debate".

It's more like a baseless assertion than anything. There are threads about this all over the place.

[Skooma Addict]

I tried to correct the spelling errors in my previous post.


This is not necessarily true. Cutting working hours can be used in the same was as cutting the minimum wage. No one on this website would ever suggest that simply reforming capitalism could ever solve these problems anyway.

That still would not help people who's marginal productivity is less than the cost to hire them. As long as there is a minimum wage, there will be unemployment.


It's more like a baseless assertion than anything. There are threads about this all over the place.

I think it is more than a baseless assertion. Disproving it should be one of your top priorities. That calculation problem is socialism's biggest flaw. It is practically a knock out punch.

Let me ask you, are you a socialist for moral or economic reasons? If it turned out the worker would benefit more under a free market than under socialism, would you then advocate for free market reform?

[Judicator]

The farmer can make an addition 25,000 in harvest with the only if he breathes air. Does air then create value?

It certainly avoids destroying value, I don't know if that's equivalent to creating it.



You have the same preferences no matter what the price is? Capitalism isn't simply geared towards meeting existing demands, it is geared towards producing demand.


I will enjoy steak more than pizza regardless of their prices (because of my preferences). However, different prices may cause me to choose pizza over steak or vice versa.



And your preferences are limited by your income, which is what you abstract from. Demand is somehow independent of the variable it is supposedly determining.


In what sense do you understand demand to be "independent" of price and how is this an issue?



I suggest you check this out:

http://www.revleft.com/vb/irrational....html?t=106590 (http://www.revleft.com/vb/../irrationality-rationality-t106590/index.html?t=106590)


Alas I'd get banned for responding there.

Anyway I guess the short answer is that usually assuming linear income expansion paths makes for decent local approximations, even though this probably isn't the case globally.



In your example all revenue simply covered costs, there was no profit. That would be a very strange capitalism indeed.


Oh yeah I guess you can throw in the usual 5% "normal profit" but this is really just the opportunity cost.



Why is everything a complaint with you people? I'm simply stating a fact: the majority becomes poorer as capitalism develops.


Oh okay if we're just stating fun facts, the GDP of the US is $14.264 trillion.



Only within the context of capitalism. There's no need for someone to supply capital if capital doesn't exist.


I guess if you just call it something else, you can say it "doesn't exist" but this is more of a word game than a substantive claim. But you need factories to make stuff on a large scale, factories are capital, and if you have property rights someone will own the factories.


When Marx say value he means the level that the price is a departure from, the level that the price would have been it were not oscillating due to time-varying supply and demand factors. How do you explain, not the instantaneous price, but the line about which the price fluctuates? Clearly that line can't be zero because a price never goes negative. It's always a positive magnitude. How can you explain the positive number which represents what the price would have been if upward and downward tendencies were in equilibrium, and to which the price gravitates back after previous departures?

Oscillations caused by shifts in supply and demand are actual changes in value. If you are in a state of disequilibrium for whatever reason, the value would be whatever price causes the market to clear.


I am not sure if you are purposely being simplistic in order for your post to be more clear. But if not, you should know a capitalist will stop hiring when the next workers DMVP is less than the cost to hire the worker.

To keep things simple.


Workers on average are always paid after they have sold their labor power as a commodity to the capitalists and always at a fraction of its actual worth. IOW, on average the worker is paid after the product he/she contributes to production is already consumed in the process of production

If this were the case capitalists would be hiring more workers, since it would be an easy arbitrage opportunity.



They don't have to work for a capitalist now if they don't want to. Whether they're willing to starve or allow their family to be forced into poverty is another story. But you guys don't recognize economic coercion, so why do I even bother?


First I would wonder why they chose to have families in the first place. Were they coerced into doing that? Assuming welfare is accessible that basically ensures survival - so really its more of a choice between higher and lower standards of living, rather than life and death as Marx would have it.



That's the point. Divvying up the resources between so many different companies makes it too costly for any single business to invest in researching advanced technologies, whereas a socialist economy can contribute far more resources to research and development. There's a reason the state had to develop computers.


The state is good at things like basic research, but for applied research and innovation what's wrong with private markets coupled with IP protection?