An Economics question

[percept¡on]

In a capitalist system production is allocated to those commodities for which use-value (private benefit) exceeds exchange value (price); from the demand side, commodities are consumed for which utility exceeds price.

In a communist economy we will, if I am correct in my reading of Marx, do away with the superfluous 'exchange value'; We will assign value based on use-value (utility) and 'cost' (in terms of labor). So my question is how do we allocate production? Is it to commodities with the highest social (aggregate or average) use-value? Is it to commodities with the highest proportion of use-value to value (in terms of labor)? Or is it perhaps every commodity for which use-value exceeds value, up to the point where they become equal (as marginal use-value will be continuously diminishing and marginal value/cost continuously increasing)? I'm sure opportunity cost fits in here somewhere as well.

Anyone with an interest in this sort of thing who wants to drop some knowledge feel free.

[redstar2000]

Pretty good question...and one that I'm certainly not qualified to answer.

But that's never stopped me before, so...

I imagine (guess) that production will be allocated largely if not totally by consumer demand -- assuming a ground state of approximate material equality.

"Use value" would be pragmatically defined as "that which people use and want to use more of or less of".

The kinds of calculations that your question implies might never be done, or might be done as a kind of "check" on how over-all production is being allocated as opposed to how it might better be allocated, etc.

But I doubt if there'd be a lot of political support for turning the job over to a super-computer and just doing whatever it recommended.

To be sure, it could come to that someday...

:redstar2000:

The Redstar2000 Papers (http://www.redstar2000papers.fightcapitalism.net)
A site about communist ideas

[percept¡on]

Originally posted by [email protected] 28 2004, 05:22 PM
I imagine (guess) that production will be allocated largely if not totally by consumer demand -- assuming a ground state of approximate material equality.

Obviously, as this is implied by assigning use-value as the determining factor. The problem is that individuals have different use-values(henceforth I'll call it utility) for different products and different individuals have different amounts of utility for the same products. Determining whose utility is greatest for what is incredibly difficult; mainstream economists admit they can only estimate that if someone consumes something, their utility must be greater than the price, if they don't consume it, it must be less - without price as an indicator, determining the exact quantity of this abstract concept is going to be, quite frankly, impossibly difficult.




"Use value" would be pragmatically defined as "that which people use and want to use more of or less of".

The kinds of calculations that your question implies might never be done, or might be done as a kind of "check" on how over-all production is being allocated as opposed to how it might better be allocated, etc.

But I doubt if there'd be a lot of political support for turning the job over to a super-computer and just doing whatever it recommended.

To be sure, it could come to that someday...



I don't personally believe we can just let the chips lay where they fall. There's too much at stake and too much room for failure, unless you believe some 'invisible hand' will guide us to an efficient and equitable allocation.

[Vinny Rafarino]

First rule of communist economics;

Forget everything that you have learned about bourgeois economics and throw it out the window; it will never apply in a communist society.

[antieverything]

So, self-deception, eh RAF?

[percept¡on]

Originally posted by COMRADE [email protected] 29 2004, 12:00 AM
First rule of communist economics;

Forget everything that you have learned about bourgeois economics and throw it out the window; it will never apply in a communist society.
Well I'd love to hear the second and third rule, or any rule other than "throw capitalism out the window."

But since these are rarely forthcoming I've been forced to extrapolate from Marx and other classical economists.

[percept¡on]

UP!

Honestly being philosophocally, morally, and emotionally down with the revolution is good, but contributing to the science behind it is essential. Communism is an economics system, and I have yet to find a thread on economic principles outside of OI.

[redstar2000]

There have been a few threads over the last couple of years.

But let's face it: most people who get interested in communist ideas are not trained economists (I'm certainly not!)...much less trained Marxist economists (exceedingly rare folks since they have to train themselves).

Why? Because the economics of Marxism (and, for that matter, bourgeois economics) is really hard stuff once you try to get past a few introductory basics. The political, sociological, and cultural aspects of Marxism are much easier to grasp and provide more than sufficient motivation for political activity...as well as a sound intellectual foundation for that activity.

You sound like someone who wants to take your economic knowledge to a higher level...and, believe me, I vigorously encourage you to do that. The best thing that this board could have is someone who had a real mastery of Marxist economics and could effectively explicate these matters in language that we could grasp.

But you would have to be patient with us...as we would inevitably ask many "dumb questions" and make many "foolish comments" due to our fragmentary knowledge.

For example, the specific question with which you began this thread: how would you do it? What criteria would you use to allocate production in a communist society and why? What arguments would you use to convince the public (there are no more classes) that your option was better than other possible options?

You see, this could be and probably is one of those situations where you might have the best ideas on the board right now...and we need to learn from you more than you need to learn from us.

See what I'm saying?

:redstar2000:

The Redstar2000 Papers (http://www.redstar2000papers.fightcapitalism.net)
A site about communist ideas

[percept¡on]

Yeah, I agree with what you're saying. I am myself trying to learn Marxist economics and like you said, it's pretty much something you have to teach yourself, which is alright with me, except I like to discuss what I'm 'learning' with others in order to better grasp it. Unfortunately I haven't found any leftist boards where this is possible.

[AC-Socialist]

Firslty i think we have to understand value in the marxist sense, then I'll see if you cant answer your own question, as good as it is.

Firslt y he ratio of exchange in the market system, or innmarixst terms the substance and magnitude of value. In Das KApital Marx starts with the isolated asct of exchange of one commodity for another, for instance ten biros equates to a pint of beer (both £2 or $4.50). As inhebitants of this market system we dont blink at this notion. However biros do not really confront pints of beer. PEople confront each other, but they do so via the products of their labour. That is why market forces are so important to us. Relations between people appear to us as relations between things. This is what Marx calles "commodity fetishism"

MArx Starts with an isolated act of exchange of one commodity for another, which is unusual in a capitlaist economy we are trying to understand and to which you are attempting to apply your logic too comrade perception. In a market economy we do not usially exchange things we've produced but do not want for things we havent produced but do not want. We swap things around with money. But Marx does not want to take money for granted, as capitalist economists invariably do. He wants to show how the universal equivalant (money) emerges inevitably as exchange becomes generalized. The money form derives from in an isolated act of exchange. Since ten pens are being exhcnaged for a single pint, they must have something in common. CLearly this connot be a phisical characteristic. Bourgeoise economics argues that they are both objects of utility as you said, but if workers produce biros all day they are not producing for their own use and selling the surplus. They are producing the pens for sale from the word go. In other words the biro has no utility for its maker. Sure, if nobody wants to buy it, it will turn out to have no exchange value.

There are exceptions of course, marx was aware that paintings by Van Gogh were exaples of an exeption to the law of value, we need to understand the how an expansion of demand calls forth a capital inflow and an increase in the supply of the vast bulk of goods that can be increased in quanity of human effort.

Phew, I spent too long on that, but i t wa senjoyable. I too am a disenfranchised economist, but my idea for an sole economics forum was objected by many (incl. Redstar) and advocated by only a few :(. It hasent answered your question i will write more on marxist Use-value and exchange value.

[percept¡on]

I was more specifically referring to the allocation of our scarce productive resources.

We can allocate them either:

a) to produce commodities with the highest use-value (either on average or to the greatest number of people)

b) to produce commodities for which the ratio of use-value (to consumers) to labor-power (embodied in or required to produce the commodity) is greatest. In other words, U:L of 3:1 would be better than 2:1 if these values could be quantified.

or

c) to produce any commodities for which the marginal use-value (benefit to consumers from producing/supplying one more unit of the commodity) exceeds the marginal cost (including opportunity cost) in terms of labor and resources. This is practical since the greater the number of commodities being produced, the greater the opportunity cost of labor will be, and thus production will, in this manner, be allocated to commodities with higher and higher use-values.