Supply-side economics: labour supply-side economics?

[Die Neue Zeit]

"Supply side" isn't one-dimensional. Consumption is demand-based, and capital is supply-based, but labour is supply-based as well.


C'mon -- yes it *is*, conventionally.

Yes, I agree that, *technically*, labor is a material *supply*, but it's just not conventionally referred to as such. Outside of a strict economic context it would be most appropriate to conceptualize labor as a potentially militant, collectively directed force politically expressing its own best interests (for control over the means of mass production, etc.).

Only on your worst enemy, I hope....

True, but popularizing this (labour) supply-side economics would need to be reconciled with Marx's critique of Say's Law (http://delong.typepad.com/sdj/2010/03/karl-marx-on-says-law-theories-of-surplus-value-chapter-17.html) (Keynes said of Say, "supply creates its own demand (http://en.wikipedia.org/wiki/Supply_creates_its_own_demand)").

From a certain POV, could it be said that Marx was a supply-side economist?

[RadioRaheem84]

Very interesting, DNZ. I will be watching this thread.
:thumbup1:

[Dean]

This was basically my thesis here:

The LTV describes a constant function of the work force. That is to say, the LTV, when applied to a given product, reflects a fraction of potential output, which in turn is directly tied to the available labor force and hours in a given society.

The Market value model describes a fluctuating, leverage-based model of pricing. This model is tied to political and economic constructs, as well as provincial characteristics. So when the market values something, it reflects the dynamics of power - not of available productive capacity.

I struggled in describing my idea here because I wasn't thinking precisely in terms of supply. I'm not sure to what degree that is a good characterization of the problem, though. Supply-side economics tend to specifically refer to the leverage that is accumulated by ownership over the means of production - but labor is not a form of production held by a minority, but the vast majority.

I'm not sure precisely how Say's law is consequential to this, though.

[Die Neue Zeit]

Could Say's Law actually be applicable to the supply of labour and something like information technology? Or am I merely referring to its bastardization courtesy of Keynes - "supply creates its own demand"?

In IT, the corporate control over supply does create demand to a certain extent. For example, I don't like the newer versions of Office, but Microsoft's new twist has been liked by many.

In the case of labour (and this goes directly against any direct or indirect "capital theory of value"), without the labour supply, the "innovative entrepreneur" (http://www.ft.com/cms/s/2/59fc597c-f363-11df-b34f-00144feab49a.html) who needs to hire for a profit can't realize his innovation (a poor book against rent-seeking when compared to more radical assessments by Michael Hudson).

[Dean]

Could Say's Law actually be applicable to the supply of labour and something like information technology? Or am I merely referring to its bastardization courtesy of Keynes - "supply creates its own demand"?

I don't think Keynes is wrong in his interpretation. I just don't think that labor (or the means of production, production itself) actually beget their own demand. They provide the means of satisfying demand.


In IT, the corporate control over supply does create demand to a certain extent. For example, I don't like the newer versions of Office, but Microsoft's new twist has been liked by many.

At first, I was going to say that there was already demand for improvements on the old product. But there is some truth to what you say.

Say's law might be revised to say the following: supply of valued goods creates a necessary prerequisite for the satisfaction, and sometimes the very occasion for demand.


In the case of labour (and this goes directly against any direct or indirect "capital theory of value"), without the labour supply, the "innovative entrepreneur" (http://www.ft.com/cms/s/2/59fc597c-f363-11df-b34f-00144feab49a.html) who needs to hire for a profit can't realize his innovation (a poor book against rent-seeking when compared to more radical assessments by Michael Hudson).

Right. But we are still dealing with a concept of supply-side economics which has Marxism turned-on-its-head: most would point out that possession over the material means of production constitutes a controlling stake in the production force. Your example is contrary: the labor-force could just as easily refuse its services (strikes, general strikes) and command the owners of capital.

In fact, I think you're right to a degree. The working class not only deserves, but ultimately demands the fruit of their labor in full.

But what you discuss in the OP - the traditional concept of supply-side economics - refers to accumulated capital and its role in the market, specifically, in controlling the supply of production. Labor-supply-side economics seems, to me, to define the role labor would play in a socialist economy. But even then, what other "side" would there be without returing to the laboring class, or unless the bourgeois class hadn't yet fully been subsumed into the former?

[ckaihatsu]

I could spark a debate on whether ELR is still demand-side economics or (labour) supply-side economics.





Only on your worst enemy, I hope....


= )








True, but popularizing this (labour) supply-side economics would need to be reconciled with Marx's critique of Say's Law (Keynes said of Say, "supply creates its own demand").





Okay, thanks back at ya -- yeah, the ELR sounds fine.... On this other stuff I'll let you enjoy hacking your way through the dense foliage -- make sure to send us back a postcard or something from wherever you end up...(!)

(There's always my own model, at my blog entry, waiting for you when it all gets too tough...!)


I really don't know where you're going with all of this -- by focusing only on the *economic* realm you're falling into the problems of economism-type thinking that any (bourgeois) economics type would do...(!)

It's *imperative* to acknowledge labor as a living *political* force that can "change the game" in the midst of things, simply due to being the counterpart -- and potentially willing antagonist -- to the interests of capital.

[Die Neue Zeit]

I don't think Keynes is wrong in his interpretation. I just don't think that labor (or the means of production, production itself) actually beget their own demand. They provide the means of satisfying demand.

At first, I was going to say that there was already demand for improvements on the old product. But there is some truth to what you say.

Say's law might be revised to say the following: supply of valued goods creates a necessary prerequisite for the satisfaction, and sometimes the very occasion for demand.

Fair enough.


Right. But we are still dealing with a concept of supply-side economics which has Marxism turned-on-its-head: most would point out that possession over the material means of production constitutes a controlling stake in the production force. Your example is contrary: the labor-force could just as easily refuse its services (strikes, general strikes) and command the owners of capital.

In fact, I think you're right to a degree. The working class not only deserves, but ultimately demands the fruit of their labor in full.

But what you discuss in the OP - the traditional concept of supply-side economics - refers to accumulated capital and its role in the market, specifically, in controlling the supply of production. Labor-supply-side economics seems, to me, to define the role labor would play in a socialist economy. But even then, what other "side" would there be without returing to the laboring class, or unless the bourgeois class hadn't yet fully been subsumed into the former?

One of the reasons for my suggesting the discussion in this thread is the economic theories of the Post-Keynesian school. I'm sure you've already read my stuff about Hyman Minsky, L. Randall Wray, etc. and their public-employer-of-last-resort program for consumer services.

My thinking is that, when compared to throw-money-away-left-and-right "demand management" as a means of boosting "aggregate demand" (with universal basic income being the most extreme form of this), this ELR policy is more supply-sided. You boost the bargaining position of labour more directly, which then spills over into consumer demand and savings.

A number of Post-Keynesians also subscribe to the Chartalist theory of money. The gist of this is that perpetual deficit spending is necessary even in good times, or else the credit system won't expand. Governments spend money first (despite the rhetoric of budgeting), and then they collect taxes (which according to Chartalism shrinks the money supply). The boosting of the money supply spills over into increased demand somewhere.

[RedZelenka]

True, but popularizing this (labour) supply-side economics would need to be reconciled with Marx's critique of Say's Law
Unless you think Marx is wrong to begin with. As Bakunin pointed out, 'overproduction' is nonsense. The problem is the allocation of resources to various sorts of productive processes, not any excess of production.

Keynes is an idiot.