[STUDY GROUP] Das Kapital Chapter 1

[ComradeRed]

I'll begin with section one.

In capitalism, wealth is merely a collection of commodities. Deductively, the unit of wealth is a commodity. It seems only reasonable to begin any investigation of capitalism with the analysis and investigation of the commodity.

Well, first of all, a commodity is some object. This object satisfies some desire, some want, enabling it to have some sort of use. This property is called the use-value, I denote it as mu (μ); the reason why I use a greek letter is because of convention. Any boolean (or mathematical object that returns 1 if some property or condition is fulfilled and 0 otherwise) is depicted as a greek letter. Use-value either exists or does not, pure and simple. We don't care how or the "nature of the want"!

Every useful thing can be observed from two perspectives: we may examine its quantity, and we may examine its character. The use-value, μ, is a composite of a nearly infinite number of other booleans (elementary use booleans).

To discover these "elementary use booleans" is the work of history, so we won't really go too in depth at all; but so too is the standards of exchange for these objects. How much was exchanged for what is the study of history (or a study of it).

The diversity of these objects and the exchange thereof has its origins partly in the diverse nature of the objects and partly in convention.

Utility of an object makes the object a use-value. In this respect use-value, as an adjective, is a property of an object whereas use-value as a noun is a commodity. To avoid confusion hereonout "utility" will describe the property of having a use-value and "use value" will be the commodity.

It is important that utility doesn't fall from the sky. Instead, the physical characteristics of the commodity makes it useful or not. Something is a commodity so far as it has utility. When we discuss utility, we always discuss finite quantities; a gallon of milk may be useful, but a hog's head (62.5 to 140 gallons) of milk is not!

We realize this when we consume the good, and say "Holy Crap! I can't drink this much milk in a week!" But when someone comes over, opens the fridge, they say to themselves "Damn, this dude is rich! Look, who but a rich guy has a hogshead of milk!?"

Within capitalism, however, they also play a role in evaluating an exchange. This is where the boolean (μ) comes in. If we think something is a deal, μ=1; if we think we are being cheated, μ=0. As I have stated, there are a number of other factors that plays a role (e.g. if I am being cheated but I need it to live, μ = 1).

We will not, I repeat, will not go any further than this in terms of utility of the commodity. All we are concerned about is that in order for there to be value, there must be utility (i.e. μ must equal 1).

On the other hand, we are also dealing with exchange values. This looks accidental, at first; as though there were no rhythm or rhyme to it. Just a relation that changes (and is constantly changing) with place and time.

So, it easily appears to be something accidental and purely relative. This makes an intrinsic value (an exchange value that is inseperably connected with, inherent in commodities) seem like a contradiction in terms. How could there be an objective value that is relative to place and time?

Well, let us examine the phenomenon a little closer. A given commodity is exchangeable for a proportion of different goods.

For example, 1 car is exchangeable for 20000 eggs, 1000 pigs, or 3 tons of iron. This proportion is the exchange value of a car.

We can set up this proportion as an equation, say 1 car = 20000 eggs, 1 car = 3 t. iron, or 1 car = 1000 pigs. This equation in turn tells us that there is some property of both objects that is equal. That is, object 1 is equal to some third object, and object 2 is equal to this third object as well; thus permitting us to write object 1 = object 2.

This relationship can be explained geometrically. Suppose we had to calculate the area of two polygons. Well, the easy route is to divide them into triangles, calculate the area of the triangle, then add them up. The areas of the polygons equals to the summed areas of the internal triangles of each respective polygon.

In the same sense, there is some sort of "triangle" within each commodity that permits exchange.

But this "triangle" cannot be a geometric, chemical, or any other natural property of the commodity. Such properties affect the utility of the commodity.

But the exchange trait of commodities is an act indicated by a total seperation from the utility trait of commodities. Then one use value is just as good as another, provided it be present in sufficient quantity.

As use-values, commodities are of different qualities ("elementary booleans"), but as exchange values they are merely different quantities. As a consequence, the trait of value contains not even a single atom of utility.

But suppose we totally ignored the property of utility from the concept of a commodity. What do we have left? Well, one other property: the products of labor. That is, it took labor to make the commodity. But even labor has undergone a change in our hands. If we make a seperation of the commodity from its utility, we simultaneously make a seperation from the material elements and shapes that make the product a use-value (that is, without utility, an object is no longer a use-value).

The thing's existence as a material thing is put out of sight. Neither can we view it as a product of labor. Because we seperated the quality of utility, the thing has lost the ability to have value. That is, we notionally set μ=0, and because value V exists if and only if there is utility (that is, within a commodity C=μV and by setting μ=0 the whole thing is reduced to 0).

Summary Thus Far
[list]
In Capitalism, wealth is a collection of commodities.
Commodities have two propertiesL exchange value (V) and utility (μ).
Utility is a boolean quantity, that is, it is representable by a mathematical object that returns "1" if there is in fact any utility in the object (evaluated by a subjective consumer at the time of exchange, or during consumption), and returns "0" if there is no utility in the object.
A commodity has to have utility in order to have an exchange value.
A commodity, C=μV thus if utility (μ) is zero, so is value.
Value is representable as a proportion between two given commodities, one of a given quantity.
[list]

Now let us think about the residue of the commodity. It is, in reality, a time integral of the labor input per quantity of time (alternatively, it is the summation of the sum labor per discrete time interval for all the time intervals for all of the inputs).

Human labor power is thus (provided we take the latter route in terms of summation) lumps of "social crystals". This social crystal is common to all commodities: it is called "value".

More Mathematical Explanation

This section is a more mathematical explanation of the concept outlined above, you may skip it if you wish, but a thorough understanding of Marx's economic theory merits wading through the following Marsh of Mathematics. I have bolded a RESUME HERE section to indicate where to stop skipping over.

Now we can consider a hypothetical economy. Suppose for simplicity it has two sectors (corn and iron). We have:

280 qr. Corn + 12 t. Iron --> 400 qr. Corn
120 qr. Corn + 8 t. Iron --> 20 t. Iron

How are we to solve the proportions of exchange? Well, the answer is not "supply and demand"! Instead, we have a (mathematically) simpler route.

The outputs are equal in value to the inputs.

Thus we get for this economy 400 qr. Corn - 280 qr. Corn = 12 t. Iron becomes 120 qr. Corn = 12 t. Iron, which reduces to the exchange proportion 10 qr. Corn = 1 t. Iron. This intuitively makes sense if we plug it in for the iron sector (120 qr Corn * (1 t. Iron / 10 qr. Corn)) + 8 t. Iron = 12 * 1 t. Iron + 8 t. Iron = 20 t. Iron.

Both sectors can exchange for what they need, a perfect fit!

But this works for "only" two sectors, right?

Wrong!

It works for any number! All it is, well, quite simply it is a system of linear equations if there is no surplus product.

"Aha! There is no surplus product!"

Wrong Again!

The surplus product is easily adopted into the equation by means of setting one of the sectors as "constant". It is usually the sector with the surplus. Consider a modified version of the previous model:

280 qr. Corn + 12 t. Iron --> 575 qr. Corn
120 qr. Corn + 8 t. Iron --> 20 t. Iron

How do we solve for the exchangeability now???

Well, we treat it as a quadratic equation! We introduce the rate of profit (r) by doing so. First we put it in the form:

(1+r)(280y + 12x)/(1+r)(120y + 8x) = (575y/20x)

for the value per ton of iron x, and the value of a quarter of corn as y. Then we just multiply this out to get:

20x(280y + 12x) = (120y + 8x)575y

which then gives us

240x^2 + 5600xy = 69000y^2 + 4600xy

Through subtraction we get

240x^2 + 1000xy - 69000y^2 = 0.

And now we divide through by 10 for the sake of simplicity to get

24x^2 + 100xy - 6900y^2 = 0.

We can plug this into the quadratic equation, recall the quadratic equation is of the form

(-b +or- sqrt(b^2 - 4*a*c))/(2*a)

for the equation ax^2 + bx + c. Thus we get

(-100 +or- sqrt(10000 - 4*24*-6900))/(2*24)

and now we can note that there are two answers: a positive one and a negative one. We will take the positive one. So now we get

(-100 +or- 820)/(48).

Thus (through ignoring the negative result x=-115y/6) we get x = 720/48 = 15. Or, in other words, 1 t. Iron = 15 qr. Corn.

"But what's the rate of profit???"

Simple, it is equal to

(Corn used - Corn produced) + r(Corn used + Iron used) = 0

we then plug in our relations, giving us

-175y +r(400y + 20x) =0

then by substituting in our answer above, we get

r(400y + 20(15y)) = 175y

Or, in other words,

r = 175y/700y = .25

This is our solution.

We can now mathematically reduce this entirely to dated labor inputs. Or, in other words, by creating a summation of labor

input per production process for all production processes, we get the exchange values (V) of the commodities.

+=+RESUME HERE+=+

Well, now anyways.

Let's take apart a commodity. We know that value is not derived from utility no moreso than a house is finished when the foundation is done.

A useful thing is useful because humans worked on it (directly or indirectly). How do we measure this? Simply by the time of labor spent on the thing.

Some people think that if the labor determines the value, then if we use a large quantity of idle labor the product would be priceless.

The problem is that the labor power spent is the same; think of it like making cookies. If a recipe calls for 3 eggs, and I buy a dozen, I'm going to use three eggs. The other nine won't affect it any!

And carrying on with my cookie example, if we made two batches and did exactly the same thing with both batch, they'll taste the same! Likewise, if we had a commodity (cookie) and we didn't change the inputs, its relative value would stay the same! The value of other commodities may fluctuate however.

Marx used the example of corn output in a favorable season with a certain amount of labor being the same as twice the output as that of an unfavorable season with the same amount of labor. It would take more work to get the same output in the unfavorable season!

Or a rich mine requires less labor to get the same output as a poor mine. If the output is constant, the amount of labor would fluctuate. The tools used would be the same, so logically the labor component would play the key role in the value of the output.

We can reduce the tools to dated labor inputs, then the value can be expressed purely in terms of labor inputs(it "converges" towards the value in terms of labor).

And just because something has a use-value doesn't mean it has a value. Use-value is a foundation, value is the house. We can't live in a foundation, nor can we have value purely because there exists utility in something!

And if there is value in something like water, that doesn't mean that human labor made the water.

That's the first section, probably the hardest section, so if anyone has any questions, discussion, comments, mention it here.

[anomaly]

Just want to make sure I get this.

Using this equation, C=μV, the utility is either one or zero, so the value, if the utility is one, is determined only be the exchange value, V, right?

And the value of a commodity always exists as a proportion between two commodities (EG, 1 car=20,000 eggs).


In the second part, if a mine is poor, thus taking greater quantities of labor to equal the output of a rich mine, that which is mined from the poor mine is more valuable than that which is mined from the rich mine?

So let's say we have two different commodities, a car and a plane. If more labor time was spent producing the plane, it has more value than the car, right? And does this go for all commodities? That is, so long as the commodity is a use-value, that commodity which required more labor time is more valuable?

Does this also mean that if a commodity requires more labor time than another, that which requires more labor time has a higher exchange value? So, let's say 20 cars=1 plane. Therefore, because the exchange value of the plane is higher, we can assume more labor time was required in its production?

Now, I may be getting ahead of myself here, but it is also true that a commodities value is determined by C=μV, while the price is determined by supply and demand? This means that the price of an object does not neccesarily equal that object's value, correct?

[ComradeRed]

Using this equation, C=μV, the utility is either one or zero, so the value, if the utility is one, is determined only be the exchange value, V, right? Yeah, utility is the foundation of the commodity. If a house has no foundation, it collapses.

If a commodity has no utility, it has no value. Why would there be value on a useless thing?



And the value of a commodity always exists as a proportion between two commodities (EG, 1 car=20,000 eggs). Yeah, but this is covered more in depth in the next section.


In the second part, if a mine is poor, thus taking greater quantities of labor to equal the output of a rich mine, that which is mined from the poor mine is more valuable than that which is mined from the rich mine? From that mine, it is. If there were two mines, mine A and mine B with one being rich (A is rich) and the other (B) is poor. The bang per buck from A is more than it is from B.

It is not that B's output is "more valuable" but the labor per output is relatively high compared to A's.

This, I think, is a common misconception when first approaching Kapital that I fell into too.


So let's say we have two different commodities, a car and a plane. If more labor time was spent producing the plane, it has more value than the car, right? And does this go for all commodities? That is, so long as the commodity is a use-value, that commodity which required more labor time is more valuable? The value of the commodity, just to bear in mind, is how much it gets exchanged for.

So if I had a hypothetical economy with three sectors: iron, gold, and corn.

There are two sorts of inputs ("iron" and "labor").

And we measure value through hypothetical units of value, where 1 unit of labor produces 1 unit of value.

It takes 5 units of corn to feed 80 units of labor.

The economy is determined by three equations:
28 units iron + 56 units labor --> 56 units iron
16 units iron + 16 units labor --> 48 units gold
12 units iron + 8 units labor --> 8 units corn.

Through some algebra, we mark the value of a unit iron as X and a unit of value as an integer, we get:

28X + 56 = 56X

then we set it up as a convergence:

.5(28X+56)+56 = 56X
.5(.5(28X+56)+56)+56 = 56X
.5(.5(.5(28X+56)+56)+56)+56 = 56X
.5(.5(...(28X+56)...)+56)+56 = 56X
112 = 56X

And by division we get
2=X.

Thus we fiddle around some more and figure out that by substituting this in for the value of iron, because capital transfers its value whereas labor produces vale. What we mean by this is that a unit of iron transfers 2 units of value and sells for that much whereas labor produces 1 unit of value yet sells for a quarter of a unit of iron.

The three quarters has to go somewhere!!!

And if we changed the output of the corn sector to represent, say, a hurricane that the incompotent capitalists failed to recognize, the value would go up if the inputs stayed the same. The amount of labor it would take to grow food on destroyed land is tremendous!

So if the resources became scarce, the value would go up for them.

On the other hand, having a bunch of workers around does not increase the value at all! I gave the parallel of buying a dozen eggs to make cookies, yet I only use three...the other nine contribute nothing to the cookies.

The same goes for workers, if they contribute nothing, value doesn't go up.

DO NOT MIX UP "TIME SPENT PRODUCING" AND LABOR CONTRIBUTED!!! There is also the factor of the dated labor in the tools being used, which is added to the "fresh" labor that is exploited. I can try to spend all day cutting down a tree with a plastic knife, but the value created by that (if it could be considered value) is trivial compared to a lumberjack because of the equiptment used as well.



Now, I may be getting ahead of myself here, but it is also true that a commodities value is determined by C=μV, while the price is determined by supply and demand? This means that the price of an object does not neccesarily equal that object's value, correct? No, to carry on with my mathematical model above, the price is simply the exchange ratio to a medium (a money commodity). This is discussed in the next section too I think, but I'll explain it here.

The units value per unit of iron is 2. The units value per unit gold is 1 and the units value per unit corn is 4. The "price" at this time for a unit of corn is 1 unit gold. The price for a unit of iron is 2 units of gold.

Supply and demand plays no role in price!

Of course, this is the simplified version, and it is extremely complicated as Marx shows later on if we include rates of profit, etc.

And price is proportional to (not equivalent to) the value.

[KC]

Supply and demand plays no role in price!

Let me see if we agree on this. Supply and demand plays no role in "natural price" or price without profit involved. Supply and demand, however, determines the amount of profit. Would you agree with this?

[ComradeRed]

Let me see if we agree on this. Supply and demand plays no role in "natural price" or price without profit involved. Supply and demand, however, determines the amount of profit. Would you agree with this? Well, the proponents of "supply and demand" have asserted based on "Walras' Law" and "Say's Law" that "supply and demand must" determine price.

However, there is a fatal flaw in this. The beginning premise of the two laws (they're really one in the same) assumes that people in class society don't work for profit.

If this were so, then resources would be allocated effeciently, it would be a utopia, etc. etc. etc. Yet capitalists overlook that tiny little assumption which contradicts life in class society: material conditions do influence people!

And if supply and demand plays no role in price, how could it play a role in profit?

Profit is taken from the workers. That is the difference between the value created by, and the wage given to, the worker.

And if you wish to get into the nitty-gritty details, it really is the corn output which controls profit, coupled of course to the productivity of the workers. Supply and demand is not involved here in any sense of the economic words. It's all based on production!

[KC]

I didn't really get anything out of the above post. Anyways, if there is a limited amount of commodities, and demand for those commodities goes up, wouldn't the price of this commodity go up, and the increase in price is an increase in profit?

[anomaly]

"Thus we fiddle around some more and figure out that by substituting this in for the value of iron, because capital transfers its value whereas labor produces vale. What we mean by this is that a unit of iron transfers 2 units of value and sells for that much whereas labor produces 1 unit of value yet sells for a quarter of a unit of iron.
The three quarters has to go somewhere!!!"
I think I'm not getting something, but, where does it go?

Just to clarify, so price is simply the exchange ratio between the commodity in question and another commodity used as money?

[anomaly]

Originally posted by [email protected] 25 2006, 09:59 PM
I didn't really get anything out of the above post. Anyways, if there is a limited amount of commodities, and demand for those commodities goes up, wouldn't the price of this commodity go up, and the increase in price is an increase in profit?
But doesn't profit come from the workers? (surplus value)

I'd assume price would go up if the values of other commodities went up. That is, if wages increased, prices would generally increase.

Is that right, ComradeRed?

[KC]

I'm talking about price, not value.



Just to clarify, so price is simply the exchange ratio between the commodity in question and another commodity used as money?


That's exchange-value, or value, not price. Price is the actualization of exchange-value realized in exchange, and can therefore fluctuate from transaction to transaction. Exchange-value is average or market price.

[anomaly]

ComradeRed, what do you make of the capitalist subjective theory of value? Is it incomplete, flawed in some other way, or what?

This is a bit off topic, but it was on my mind.

[ComradeRed]

Originally posted by Lazar+--> (Lazar) I'm talking about price, not value.[/b]Price is proportional to value.

You see, everything is exchangeable if and only if it has a value. Right?

A certain quantity of one commodity exchanges for a certain quantity of another commodity, right?

What if we set this relation to a common commodity for all commodities? We can use the associative property (well, if 3x = y and 2z = y, then 3x = 2z) to derive the exchangeability of these commodities.

That is price! That common commodity is money. But that is chapter three.



That's exchange-value, or value, not price. Price is the actualization of exchange-value realized in exchange, and can therefore fluctuate from transaction to transaction. Exchange-value is average or market price. I quote (http://marxists.org/archive/marx/works/1867-c1/ch03.htm) from Das Kapital:

"The first chief function of money is to supply commodities with the material for the expression of their values, or to represent their values as magnitudes of the same denomination, qualitatively equal, and quantitatively comparable. It thus serves as a universal measure of value. And only by virtue of this function does gold, the equivalent commodity par excellence, become money.

...

The price or money-form of commodities is, like their form of value generally, a form quite distinct from their palpable bodily form; it is, therefore, a purely ideal or mental form." -- emphasis added.


Anomaly

I think I'm not getting something, but, where does it go? The difference between the value created by the worker and the wage of the worker is the surplus value.

First Law of LTV-dynamics: Labor-inputs, dated and fresh, are conserved! :P


I'd assume price would go up if the values of other commodities went up. That is, if wages increased, prices would generally increase.

Is that right, ComradeRed? Wages would increase if the money commodity's value decreased. That is to say, if there is inflation, the wages should go up correspondingly.

It is not necessarily with some other commodity but with the commodity "inputs" to labor, and the money commodity itself, whose fluctiations cause changes in wage.



Just to clarify, so price is simply the exchange ratio between the commodity in question and another commodity used as money? Correct, the exchange-value between commodity X and the money commodity is the price of commodity X.

[KC]

Wow, I have this definition of price that I was going to use in a presentation that is completely wrong, and I can't find where I got it from. Nevermind all the fuss I made, problem's corrected. :)

EDIT:

Price of a commodity is the actualization of exchange value. This is generally equal to the exchange value, however in some cases it can be different (due to the fact that people aren't forced to exchange things equal to its exchange value; I can pay $50 for a $5 pack of smokes if I wanted, for example). Of course, what exchange-value is is the price of an object in systematic exchange of that object with others, and therefore we can throw these exceptions out the window. That is what I was getting at.

[Severian]

Originally posted by [email protected] 25 2006, 02:40 PM
When we discuss utility, we always discuss finite quantities; a gallon of milk may be useful, but a hog's head (62.5 to 140 gallons) of milk is not!
Hm? To have value, a commodity doesn't need to be useful to you. It needs to be useful to someone - but some people constantly buy things they have no use for, in order to sell them to someone else. They buy and sell whole tons of milk, and that milk is useful - not to them, but to someone, some end user - and so it has value.


The surplus product is easily adopted into the equation by means of setting one of the sectors as "constant". It is usually the sector with the surplus. Consider a modified version of the previous model:

280 qr. Corn + 12 t. Iron --> 575 qr. Corn
120 qr. Corn + 8 t. Iron --> 20 t. Iron

How do we solve for the exchangeability now???

Well, we treat it as a quadratic equation!

We introduce the rate of profit (r) by doing so. First we put it in the form:

(1+r)(280y + 12x)/(1+r)(120y + 8x) = (575y/20x)

for the value per ton of iron x, and the value of a quarter of corn as y.

If I understand right, this is what you've called a Sraffian equation, based on the neo-Ricardian theory that profit comes from a price markup. At least that appears to be what's going on in the equations - there's no labor input.

So how is that compatible with the Marxist theory of surplus-value?

And finally, the big question IMO: by restating these things in mathematical terms, have you learned or uncovered anything that wasn't already known? The conclusions seem pretty much a restatement of Marx's.

[ComradeRed]

Originally posted by Severian+--> (Severian)Hm? To have value, a commodity doesn't need to be useful to you. It needs to be useful to someone - but some people constantly buy things they have no use for, in order to sell them to someone else. They buy and sell whole tons of milk, and that milk is useful - not to them, but to someone, some end user - and so it has value.[/b] Wouldn't the use for milk be different for the scenario of a "milk trader" (for lack of a better word) than a consumer? It would have the same role as a job to labor power, with the exception that the trader gains surplus value.

I agree with you, though; however, utility is rather subjective. What one gets out of something can be broadly classified into two categories, as Marx I think did: as a means to directly support life, or a means of production (indirectly supporting life). With the trader, he'd view the milk as the latter.



If I understand right, this is what you've called a Sraffian equation, based on the neo-Ricardian theory that profit comes from a price markup. At least that appears to be what's going on in the equations - there's no labor input.

So how is that compatible with the Marxist theory of surplus-value? I've found that when teaching Marxist economics, it really helps to first -- as a heuristic crutch -- discuss Ricardo, and Sraffa, et al. Then tweak it a little to be labor based, in my second post I did that.

It's interesting, as an aside, people like Steedman argued that Marx is inconsistent with Sraffa, etc. That Marx is mathematically flawed. If you actually look at his equations, Steedman's formulation of Marx's "algorithm" from Kapital (vol. 3) describing how to change value into price, Steedman missed the boat.

Not only does Marx's form (his real stuff) come within a difference .0008 of Steedmans, but it also is dynamically stable (two "points" Steedman had that "Marx is wrong").

I don't think that they are incompatible. It's that depending on whether the modeler is compotent enough to use labor when it becomes an issue. (And again, that was intro stuff in my first post, the second contains the goodies)



And finally, the big question IMO: by restating these things in mathematical terms, have you learned or uncovered anything that wasn't already known? The conclusions seem pretty much a restatement of Marx's. Well, I never sought out to derive a Mathematical form of Kapital in this thread (or on any online course).

I thought (as a math loving person no less) that it would be clearer to understand; yet I could see how some could be intimidated by its being there.

Again, I stress this, I never intended to invent anything new, manipulate anything mathematically, or deduce anything, I only intended to present a simpler form of the same thing.

Maybe later I'll use some mathematical methods on it. But this is a study group! (Goddammit! :lol:) Not a "think tank"!


Lazar
Price of a commodity is the actualization of exchange value. This is generally equal to the exchange value, however in some cases it can be different (due to the fact that people aren't forced to exchange things equal to its exchange value; I can pay $50 for a $5 pack of smokes if I wanted, for example). Of course, what exchange-value is is the price of an object in systematic exchange of that object with others, and therefore we can throw these exceptions out the window. That is what I was getting at. Yes, I found it rather odd Marx begins discussing value at the beginning and only later goes on to discuss price :huh:

It's like giving someone a car and a week later mailing them a letter with the keys saying "Oh yeah, you might need this..." :D

[anomaly]

How is exchange value determined? Is it reasonable to say that 'supply and demand determine' exchange value? If not, then what does determine it?

[ComradeRed]

Originally posted by anomaly
ComradeRed, what do you make of the capitalist subjective theory of value? Is it incomplete, flawed in some other way, or what? Sorry for answering so late, but it is nothing more than nonsense.

Value is intrinsic, not extrinsic. That is why supply and demand is wrong too; the thought of an extrinsic value is a metaphysical thought.

Why not argue that there is a "God" of the economy that magically regulates and optimizes everything?

Bourgeois economists call it "the invisible hand".


How is exchange value determined? Is it reasonable to say that 'supply and demand determine' exchange value? If not, then what does determine it? Well, if you look at the mathematical models that I gave, supply and demand plays no role in determining value.

Instead the value of the inputs determine the values of the outputs. The exception being labor, which is paid a certain quantity and contributes a greater quantity. The difference between this is -- of course -- the surplus value.

We can reduce the inputs to its dated labor too. At some point in time, there was no capital. It was pure labor that created capital.

That capital contains that labor, and then helps produce better capital. That better capital contains the labor of the previous capital in addition to the fresh labor added!

We can think of this in terms of units: 1 unit of labor produces 1 unit of value. Suppose capital A requires only 1 unit of labor per unit output. Capital B requires 2 units A and 1 unit labor. The value of B is equal to the labor in A (1 u. labor per u. A) multiplied by the quantity of A plus the labor (2 units labor in a unit A plus 1 fresh unit of labor) which in this case equals 3 units of labor.

Thus the exchange value for A and B is 3A=B.

That was a long answer but I hoped it answered your question ;) If you want a more detailed criticism of bourgeois economics, I'll gladly give a detailed one.

[anomaly]

So, you multiply the previous labor by quantity of the amount of labor (A) plus the new labor involved in capital B...basically you multiply the previous labor plus the labor involved in the production of B. So you account for all labor involved, that makes sense.

But why do you multiply it? Rather than add it?

[ComradeRed]

So, you multiply the previous labor by quantity of the amount of labor (A) plus the new labor involved in capital B...basically you multiply the previous labor plus the labor involved in the production of B. So you account for all labor involved, that makes sense.

But why do you multiply it? Rather than add it? I was doing stoichiometry :P you take the "labor per units capital" then multiply this by the "units capital" then add this to the "fresh labor" to get the value of the commodity.

So you do add, I just worded it weirdly.

Also, labor added indirectly is referred to as dated labor whereas labor added directly is fresh labor. Just a side note...

[anomaly]

Ok, thanks. That helped me.

I am shocked by the revelation that everything I was taught in my bourgeois economics class was wrong! But, I suppose I should expect this.

One more thing on price: let's say I buy a case of soda for 5 dollars. Then, we can say that the price is $5 because 1 case of soda (as a unit) has an exchange value of 5 dollars (with a 'dollar' as the money commodity).

You had a quote from Capital that said the money form of commodity is a purely 'ideal or mental form'. Does this mean that this form has 'money value' because, and only because, we think it has value?

[KC]

Let me refer back to what I was previously talking about:


Price of a commodity is the actualization of exchange value. This is generally equal to the exchange value, however in some cases it can be different (due to the fact that people aren't forced to exchange things equal to its exchange value; I can pay $50 for a $5 pack of smokes if I wanted, for example). Of course, what exchange-value is is the price of an object in systematic exchange of that object with others, and therefore we can throw these exceptions out the window. That is what I was getting at.

This amount above the exchange-value that I pay for these cigarettes can be determined with supply and demand. But since we aren't looking at these exceptional cases, and we are just looking at exchange-value, which doesn't deal with these exceptional cases, we don't need to consider supply and demand.

[ComradeRed]

I am shocked by the revelation that everything I was taught in my bourgeois economics class was wrong! But, I suppose I should expect this. When a system is in equilibrium, there is no observable change.

If the economy were in equilibrium, there would be no change. This means there is neither incentrive nor opportunity to innovate. The economy is automatically optimized. This a fallacy.

Further, how do you measure demand? Demand is based on diminishing marginal utility, yet this means that utility can be quantified. Definitionally, utility is inherently subjective; it cannot be objectified.

There are many more examples of the failings of bourgeois economics.



One more thing on price: let's say I buy a case of soda for 5 dollars. Then, we can say that the price is $5 because 1 case of soda (as a unit) has an exchange value of 5 dollars (with a 'dollar' as the money commodity).

You had a quote from Capital that said the money form of commodity is a purely 'ideal or mental form'. Does this mean that this form has 'money value' because, and only because, we think it has value? Well, this money form is given as opposed to the other forms ("A. Elementary or Accidental Form Of Value: x commodity A = y commodity B, or x commodity A is worth y commodity B.", " B. Total or Expanded Form of value: z Com. A = u Com. B, or z Com. A = v Com. C, or z Com. A = w Com. D, or z Com. A = Com. E, or z Com. A = etc.", and the general form is setting everything equal to one commodity, etc.).

The money form is the last form, where that one commodity is money.

It is not "ideal" as in "this is the ideal situation" but because compared to the other forms of exchange, it is the "ideal" form. Our ideas have nothing to do with it.

[anomaly]

Ok, thanks.

Well, I'm ready to move on, if that's what you were planning, ComradeRed.

[ComradeRed]

This amount above the exchange-value that I pay for these cigarettes can be determined with supply and demand. But since we aren't looking at these exceptional cases, and we are just looking at exchange-value, which doesn't deal with these exceptional cases, we don't need to consider supply and demand.
Well, how do you determine demand?

Bourgeois economists use diminshing marginal utility, yet utility cannot be quantified since it is intrinsically subjective. It can only be quantified up to a boolean object (it either exists or doesn't).

How would anyone measure such a subjective thing?

Value, on the other hand, is intrinsic in the commodity. It is not determined outside of the product.

Supply and demand are extrinsic forces at work: depending on what we think and want price changes. A sort of solipsism of the economy.

This is metaphysics, pure and simple.

Value on the other hand is objective and quantifiable. Although it may help someone to think in terms of "supply and demand" the reality proves otherwise.

As a matter of fact, bourgeois economists are facing the gravity of the situation. The econometricians are telling us "Yeah...there really is no way to measure demand!"

That is a serious problem if you believe in that stuff.

Another problem is that supply and demand can't be the acceptable theory because it works only in special cases. Anamolies break the rule, that's what science is.

We can't say "Oh, just ignore this, and it's fine." We'd have to give up scientific rigor.

The labor theory of value, on the other hand, is a theory that explains this phenomenon. That makes it a good theory: it explains a large body of phenomenon and (as we shall see later) it makes definite predictions.

Supply and demand doesn't even meet the first bar.

[Severian]

Originally posted by [email protected] 26 2006, 10:17 AM
What one gets out of something can be broadly classified into two categories, as Marx I think did: as a means to directly support life, or a means of production (indirectly supporting life). With the trader, he'd view the milk as the latter.
I think this is wrong. For a trader, the merchandise (milk, whatever) is not a means of production; it is not an input in any production process. It doesn't fit into either of those categories; it isn't a use-value for the trader.

The trader doesn't care if the commodity has any utility at all, or about the physical properties which use-value depends on. Except that unless it's useful to some end user, some consumer, it won't be salable! Which is another way of saying that it has no exchange-value if it has no use-value.

(And as Marx points out use-value is realized only by use, that is consumption. And "In so far as exchange is a process, by which commodities are transferred from hands in which they are non-use-values, to hands in which they become use-values," link (http://www.marxists.org/archive/marx/works/1867-c1/ch03.htm))

That does leave a problem: what is the utility of money? Only the utility of the things you can buy with it....


I've found that when teaching Marxist economics, it really helps to first -- as a heuristic crutch -- discuss Ricardo, and Sraffa, et al. Then tweak it a little to be labor based, in my second post I did that.

Sorry; I didn't read your second post carefully enough. Though I'm still not completely clear how you get from the equations in the first to the equations in the second....

[KC]

Supply and demand are extrinsic forces at work: depending on what we think and want price changes. A sort of solipsism of the economy.

This is metaphysics, pure and simple.

What we can see is the fact that supply and demand can play a role in determining prices. This we can see as a fact. Measuring supply and demand, on the other hand, is a completely different ballgame (much like how we recognize the falling rate of profit, even though we can't really measure it).

You seem to think that I am arguing subjective economics over Marxist economics, and that is not what I am doing at all. I am merely demonstrating that there is a place for supply and demand, and the place where supply and demand is relevant doesn't concern us as we aren't attempting to determine prices of commodities in various transactions. What we are doing is analyzing capitalism, which involves "zooming out," and which makes the price determinants of individual transactions irrelevant as we are studying trends and the means by which commodities are systematically exchanged.

Unless you disagree with me on the fact that supply and demand does, in fact, play a role in determining the price of individual transactions (regardless of it is measurable or not) - which I am not sure if you agree with me or not on this point - then we don't really have anything more to discuss on this issue.

[anomaly]

ComradeRed, I have heard from my bourgeois economics class that demand is simply amount of consumption. If we label amount of consumption as demand, does it not then become measureable? Or is this not 'demand'?

[ComradeRed]

Originally posted by anomaly+--> (anomaly) ComradeRed, I have heard from my bourgeois economics class that demand is simply amount of consumption. If we label amount of consumption as demand, does it not then become measureable? Or is this not 'demand'?[/b] This is in turn determined by the "law" of diminishing marginal utility. Demand curves are determined by this law.

The problem is that utility is subjective and cannot be quantified beyond 1 or 0!

And demand is the willingness and capability to put up money to acquire something, according to bourgeois theory. Consumption - so sayeth the bourgeois crackpots - is when the product is destroyed/eaten/etc.

That would not be an accurate depiction of demand.


Originally posted by [email protected]

What we can see is the fact that supply and demand can play a role in determining prices. This we can see as a fact. Measuring supply and demand, on the other hand, is a completely different ballgame (much like how we recognize the falling rate of profit, even though we can't really measure it). But if we can see the "fact" that supply and demand plays a role, why can't we measure it?

I assume that you are taking the Neoclassical supply and demand curves? If not, disregard the following.

Price is determined by supply and demand quite blatantly due to marginal utility (the marginal utility of X is denoted as MU(X) and the price P(X) of X), as any intermediate micro book will show the following equation: MU(X) / MU(Y) = P(X) / P(Y). That is to say price is proportional to the marginal utility.

So if I change my marginal utility of the commodity, the price should change too (proportionally of course).

The problem is that this is unobserved in class society (viz. capitalism).


You seem to think that I am arguing subjective economics over Marxist economics, and that is not what I am doing at all. I'm sorry, but initially it did appear as though you were a subjectivist. They tend to use a lot of similiar arguments which set me off.


Unless you disagree with me on the fact that supply and demand does, in fact, play a role in determining the price of individual transactions (regardless of it is measurable or not) - which I am not sure if you agree with me or not on this point - then we don't really have anything more to discuss on this issue. One of the problems is that, unless this is quantized supply and demand, if it is immeasurable, that is essentially saying it is unobservable.

I suspect however that you are arguing that supply and demand plays a role as such: I want to buy commodity X; capitalists want money; if capitalists want money AND I want to buy X, then capitalists will produce X to make money.

However supply and demand (in the canonical, bourgeois sense of the words) means something entirely different.


Severian

I think this is wrong. For a trader, the merchandise (milk, whatever) is not a means of production; it is not an input in any production process. It doesn't fit into either of those categories; it isn't a use-value for the trader.

The trader doesn't care if the commodity has any utility at all, or about the physical properties which use-value depends on. Except that unless it's useful to some end user, some consumer, it won't be salable! Which is another way of saying that it has no exchange-value if it has no use-value. The use-value of the product for the trader (or capitalist, whichever) is that it is a means to bring him/her money which can be abused for a variety of things (food, lodge, re-investment, etc.).

So there is an indirect property of utility as a means to prolong this trader's life. This is at least in the eyes of the trader.

In the eyes of a consumer (which may be a capitalist acquiring capital or a worker acquiring sustenance), the utility of the thing really is subjective. There is a moment of consideration, which we all really experience, where the consumer says "Is this worth it?" Yes or no, 1 or 0.

The consumer finds out soon enough while consuming it.



That does leave a problem: what is the utility of money? Only the utility of the things you can buy with it.... It doesn't "have" a use-value but "is" a use value in the sense that money really doesn't "do" anything, satisfy any want, etc.

Instead it is more convenient to trade with.



Sorry; I didn't read your second post carefully enough. Though I'm still not completely clear how you get from the equations in the first to the equations in the second.... OK, if you don't mind me taking a day to write up a more in depth explanation, I could post it here tomorrow night.

[KC]

But if we can see the "fact" that supply and demand plays a role, why can't we measure it?


Just because we know what affects price, doesn't mean that we can determine how much it affects price. I would go so far as to challenging you to determine the current rate of profit in capitalist society presently, as an analogy. This is immeasurable because of the fact that it is impossible to measure all the different aspects of the rate of profit - surplus value, constant and variable capital - globally at a given time.



I assume that you are taking the Neoclassical supply and demand curves? If not, disregard the following.


That I am. Smith described this phenomenon rather well in Chapter VII of Book I in Wealth of Nations when dealing with natural and effectual price. Remember I am talking about price in specific transactions, so don't mistake me for disregarding Marxist economics, but this is the passage that I am speaking of:


Originally posted by Adam Smith: Wealth of Nations+--> (Adam Smith: Wealth of Nations)The actual price at which any commodity is commonly sold is called its market price. It may either be above, or below, or exactly the same with its natural price.

The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labour, and profit, which must be paid in order to bring it thither. Such people may be called the effectual demanders, and their demand the effectual demand; since it may be sufficient to effectuate the bringing of the commodity to market. It is different from the absolute demand. A very poor man may be said in some sense to have a demand for a coach and six; he might like to have it; but his demand is not an effectual demand, as the commodity can never be brought to market in order to satisfy it.

When the quantity of any commodity which is brought to market falls short of the effectual demand, all those who are willing to pay the whole value of the rent, wages, and profit, which must be paid in order to bring it thither, cannot be supplied with the quantity which they want. Rather than want it altogether, some of them will be willing to give more. A competition will immediately begin among them, and the market price will rise more or less above the natural price, according as either the greatness of the deficiency, or the wealth and wanton luxury of the competitors, happen to animate more or less the eagerness of the competition. Among competitors of equal wealth and luxury the same deficiency will generally occasion a more or less eager competition, according as the acquisition of the commodity happens to be of more or less importance to them. Hence the exorbitant price of the necessaries of life during the blockade of a town or in a famine.

When the quantity brought to market exceeds the effectual demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages, and profit, which must be paid in order to bring it thither. Some part must be sold to those who are willing to pay less, and the low price which they give for it must reduce the price of the whole. The market price will sink more or less below the natural price, according as the greatness of the excess increases more or less the competition of the sellers, or according as it happens to be more or less important to them to get immediately rid of the commodity. The same excess in the importation of perishable, will occasion a much greater competition than in that of durable commodities; in the importation of oranges, for example, than in that of old iron.

When the quantity brought to market is just sufficient to supply the effectual demand, and no more, the market price naturally comes to be either exactly, or as nearly as can be judged of, the same with the natural price. The whole quantity upon hand can be disposed of for this price, and cannot be disposed of for more. The competition of the different dealers obliges them all to accept of this price, but does not oblige them to accept of less.[/b]

Whereas natural price is the exchange-value. Correct me if I'm wrong. This is natural price defined by Smith:


Natural Price
When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land, the wages of the labour, and the profits of the stock employed in raising, preparing, and bringing it to market, according to their natural rates, the commodity is then sold for what may be called its natural price.

Exchange-value is measured by the amount of labour which is embodied in the product, in the form of both constant and variable capital, constant capital being the means of production and variable capital being the work of the workers. From this, we can see how similar both Smith's natural price and Marx's exchange-value are.


I'm sorry, but initially it did appear as though you were a subjectivist. They tend to use a lot of similiar arguments which set me off.

It's certainly understandable. However, I think that above quote by Smith pretty much sums up what I am trying to say here.

[ComradeRed]

Well, as "intuitive" as supply and demand may appear, it is nonetheless rather seriously flawed.

First of all, it is impossible to present evidence supporting it in any way beyond anecdotes.

Second, the progress made thus far with it ignores dynamics. It really is, as the dialecticians like to say incessantly, a metaphysical thing.

Now this isn't to say time is disregarded, but simply allows enough time for changes in prime costs, mark ups, etc., to have their full effects.

Look no further than bourgeois theory to show us this. Supply and demand are treated as independent entities in order to observe them! And as you may expect, this leads to some serious problems!

As a matter of fact, several economists challenged bourgeois theory in 1952 (Eliteman and Guthrie). They looked at the bourgeois rule "Marginal costs = marginal revenue" and concluded on a case by case study of 334 firms and 1082 products, there are only 5.4% of firms that follow the MC = MR rule, and 5.7% of all products.

There are large anamolies needing explanation! The opposite is true for the labor theory of value, somewhere along the lines of 99% of the price is explainable through labor and dated labor, the other 1% can be chalked up to the margin of error.

Worse, demand if represented as a curve does not need to be smooth. It only needs to begin at a higher point than where it ends. It can be a sine wave, it can be anything so long as it satisfies that requirement of being lower where it ends.

So this means that the demand curve can cross the supply curve at a variety of points, which would the market equilibriate to?

Worse, the supply and demand concept ignores time terribly worse than I described. In thermodynamics, when a system is in equilibrium, there is no observable change. When any system is in equilibrium, there is no observable change.

When supply and demand are in equilibrium, that is there exists a price for the product, there would be no observable change for the economy. This contradicts experience, we must reject our premise of supply and demand equilibriating.

=================================================

I suspect that this neoclassical supply and demand is not the above that you are referring to, otherwise you would have seen clearly why Neoclassical (canonical) economics is tragicomically flawed. It is the supply and demand of the circulation of commodities rather than the commodities themselves, I assume?

By "supply and demand" in the broader sense of the words, I'm still skeptical since there is no grounds to justify its existence beyond intuition.

However, if you are asserting that supply and demand work in a disequilibriating fashion, a cyclical fashion, that is actually (as we will see 15 or so chapters from now) the work of the Labor theory of value dynamically.

We both, however, can agree that the market coming into equilibrium is an absurd proposition, at least, right?

[KC]

You do realize that I have been talking about the price of commodities in individual transactions, I hope. In individual transactions, the price of a commodity can be equal to the exchange-value, above it or below it. What determines how much above or below the exchange-value price is?

The answer is in general terms supply and demand. In times of shortage or high demand for a product, the price goes above the exchange-value. In times of excess or low demand for a product, the price falls below the exchange-value. Of course, the problem comes in measuring this; it is relatively impossible to measure. Most of the time this is just "eyeballed" or "guesstimated" based on the amount of that commodity previously sold (demand) or the amount available to sell (supply).

(This has nothing to do with Marxist economics)

[ComradeRed]

You do realize that I have been talking about the price of commodities in individual transactions, I hope. In individual transactions, the price of a commodity can be equal to the exchange-value, above it or below it. What determines how much above or below the exchange-value price is? Well, it has nothing to do with value at all.

As you note, people are "eyeballing it". But they cannot directly change the price of a commodity. That is not present in capitalism, it is in a barter economy however.

How do you really think about demand? If people want something demand goes up?

That intuitively is an adequate definition of demand. Yet this is subjective; who is to objectify this want?

That is the problem is the theory. There is no explanation of demand besides its unquestionable existence and its attempted objectification.

You can't objectify subjective entities! That's just illogical.

But if this were so, then supply and demand has no basis to stand on; how can we determine if the price is going to be up or down if we cannot determine demand?

And it is as you previously noted an immeasurable quantity, which complicates things only more since price is measurable.

Or is it that *gasp* supply and demand has no bearing on the economy at all? The mathematical problems of Neoclassical economics indicates this, the poverty of the Neoclassical theory indicates this; I think it is safe to confirm it.

When something is not connected to reality, be it "the Gods" or "Supply and Demand", we must abandon it in favor of science.

[KC]

Well, it has nothing to do with value at all.

I know it has nothing to do with value. I never said it had to do with value. I am talking about the price of commodities in individual transactions and nothing more!!! I've stated this repeatedly. Yet you repeatedly fail to understand this. We are talking about prices of commodities in individual transactions!!! We are not talking about value!!!

For example: There is an impending gasoline crisis. Cars are lining up at the pump around the block to stock up on gas. As a result of this high demand, the owners of the gas station raise the price of gas. This was seen in the months after 9/11, when gas prices skyrocketed because of this demand.

Note that the value of the gasoline isn't affected in any way by supply and demand. The value is constant (value being the amount of labour embodied in the gasoline). This exchange-value is what gas is priced at systematically, on the average, normally, etc... However, this exchange-value isn't equal to price in every instance (price being the actualization of exchange-value realized in transactions, and can fluctuate between individual transactions).

For the last time, I am not talking about value!!!! I am talking about price, which is obviously affected by the supply of a commodity or the demand for it.

EDIT: When I speak of price, I am not speaking of Marx's price theory. Marx's price theory goes hand in hand with his value theory, which is far more "zoomed out" than what I am talking about. Marx speaks of general trends and I am looking at individual transactions. So when you read my posts, you can't use the Marxist definition of price (which is basically another form of value in his theory).

[Severian]

Originally posted by [email protected] 28 2006, 11:56 PM
For example: There is an impending gasoline crisis. Cars are lining up at the pump around the block to stock up on gas. As a result of this high demand, the owners of the gas station raise the price of gas. This was seen in the months after 9/11, when gas prices skyrocketed because of this demand.
More because of short supply, I think. Or fears that supply would become short.

It can certainly be observed that when something is very scarce the price goes up.

[ComradeRed]

Sorry, double post.

[ComradeRed]

I know it has nothing to do with value. I never said it had to do with value. I am talking about the price of commodities in individual transactions and nothing more!!! I've stated this repeatedly. Yet you repeatedly fail to understand this. We are talking about prices of commodities in individual transactions!!! We are not talking about value!!! What the hell do you think "value" and "price" are exactly?

Price is nothing but the form of a commodity's value relative to money; it is another aspect of value.

Just as force is another aspect of a field.

When we begin talking about price, we are also talking about value!

We can't abstract one away!



For example: There is an impending gasoline crisis. Cars are lining up at the pump around the block to stock up on gas. As a result of this high demand, the owners of the gas station raise the price of gas. This was seen in the months after 9/11, when gas prices skyrocketed because of this demand. Because the refinaries are producing less oil; this means that the labor to output ratio has gone down while the same amount of oil is being imported.

The localized value of gasoline goes down; how this is perceived by the superstructure is as a "shortage". But this is in actuality a myth based on bloated prices.

Simple supply and demand confirms this: supply goes down, so therefore price goes up.

The reasoning is without a base, however, since supply and demand curves can't be measured so we don't really know what the hell bourgeois economists are thinking (because we assume they think).

The output decreases, raising the ratio labor inputs to outputs, raising prices. Simple LTV at work.


EDIT: When I speak of price, I am not speaking of Marx's price theory. Marx's price theory goes hand in hand with his value theory, which is far more "zoomed out" than what I am talking about. Marx speaks of general trends and I am looking at individual transactions. So when you read my posts, you can't use the Marxist definition of price (which is basically another form of value in his theory). Then what the hell kind of price are we discussing?

This price based on "abstract", "immeasurable" supply and demand?

This sounds a lot like Newton's absolute spacetime: immeasurable, unconfirmable, etc. Why was it like this? Because it is wrong.

Based on what has been explained about the mystery of price through supply and demand has the same implications.

[anomaly]

So when using the LTV, value is determined by the ratio of labor to output? This intuitively makes sense, but I'm just checkin'.

Also, ComradeRed, do you have a mathematical example showing that surplus value is true? In other words, if we measure the value of labor done, can we be sure that the worker's wage is lower than this value?

[ComradeRed]

So when using the LTV, value is determined by the ratio of labor to output? This intuitively makes sense, but I'm just checkin'. That is the roughest, simplest outline of it; though I am sure that some others would blast me for oversimplifying it.

That's the gist of it though ;)


Also, ComradeRed, do you have a mathematical example showing that surplus value is true? In other words, if we measure the value of labor done, can we be sure that the worker's wage is lower than this value? Well, suppose we had a product with 10x units of labor in it.

The capital pays itself off, so we are left with the fresh labor added (say 5x units).

If there is to be surplus value (that is to say, if we are investigating a capitalist society) and units labor input is "conserved" :P, then the pay to the labor for giving 5x units is less than the 5x units of value (assuming 1 unit labor creates 1 unit value).

That is to say, for some variable y>0, 5x-y<5x corresponding to (revenue without capital) - profit > value contributed by labor; this is where I think of it like entropy.

Entropy is energy, energy that can&#39;t be used to state it more specifically. In a closed system, the entropy goes up, that&#39;s the second law, now you know what&#39;s up.

Surplus value is labor, labor that can&#39;t be given to the labor power to state it more specifically. In a world market, exploitation must go up. That&#39;s the second law of the LTV ;) (First being labor inputs must be conserved).

[anomaly]

How do we measure output? (in what units)

Yes, I understand the ocncept of surplus value, but I&#39;m wondering whether this concept has ever been studied and proven correct.

For example, let&#39;s say we have a worker who earns a wage of &#036;7.25/hr. Have there been studies showing that the exchange value of his labor is actually greater than &#036;7.25? Let&#39;s sat we count 1 hour of labor as 1 unit. Has it been proven that the exchange value of 1 unit labor>&#036;7.25? (obviously, this exact study probably has not been done, but have similar ones been done?)

Or is such a study even feasible?

[ComradeRed]

For example, let&#39;s say we have a worker who earns a wage of &#036;7.25/hr. Have there been studies showing that the exchange value of his labor is actually greater than &#036;7.25? Let&#39;s sat we count 1 hour of labor as 1 unit. Has it been proven that the exchange value of 1 unit labor>&#036;7.25? (obviously, this exact study probably has not been done, but have similar ones been done?)

Or is such a study even feasible? I&#39;m actually embarking in a mathematical expedition in the modern capitalist wasteland to observe the statistical dynamics of capitalism.

Of course, since it is not humanly possible to manipulate the statistics for a suitably large pool of data (I&#39;m looking at 180+ nations for over 50+ years), I&#39;m programming a bot program to do it for me.

It uses statistical inference to hypothesize the outcomes based on bourgeois theory, admitedly, to disprove it (rather, prove the absurdity of it).

I am also working on the matter of what determines price, hoping to get once and for all the labor theory of value proven right.

Of course, this requires some generalization (like the nations south of the congo is generalized into "Southern Africa" the congo region is "Central Africa", former French West Africa is simply "Western Africa", and the rest is "North/Easter Africa" respectively; or the generalization of the economy into manufacture, agriculture, etc. but this one is more precise).

Yet the outcome should be promising :)

So the answer is "I&#39;m working on it&#33;"

[anomaly]

Good luck there&#33;

That research sounds like it will be very valuable. Be sure to keep me updated on your findings&#33; :)

[KC]

That just so much (not more, not less) is the price of a commodity when supply and demand balance indicates that something else is the basis for this price. If we agree with Aristotle that no two objects are exactly alike – and if they were, why would we exchange them? – we face a difficulty. How can objects that are materially unlike, with unlike properties, systematically exchange for each other in established proportions?

Imagine for a moment that there are just two objects in question – say, a deer and a beaver – and just two owners (both of them hunters). Suppose that it requires one day of hunting to capture a deer, but seven days to capture a beaver. If both hunters are equally skilful at catching both types of quarry, then parting with one beaver for one deer seems unreasonable. Why trade the product of seven day’s labour for the product of one day’s labour? Why hunt for seven days to wind up with a deer requiring only one day of hunting?

It is possible to make this exchange – what would prevent it? Any producer can make an unequal exchange either unwittingly or if s/he so desires. But the matter changes when we talk about systematic commodity exchange, that is, capitalism. Here, the principle that regulates commodity exchange is labour-time. Materially, commodities may be totally dissimilar – but they do have one thing in common: all require human effort for their production or appropriation. This provides a basis for exchange. By this standard, seven deer are equal to one beaver. That is, each embodies an equal quantity of labour. This raises a problem: what does it mean to say that a product ‘embodies’ labor?

Just this: that so much labour ‘goes into’ the product. In production, the material object existing before production changes. The body of the object changes with the labour expended upon it. This labour thus has ‘bodily’ results – it is embodied in a material thing.

Before work begins, the object already has a particular form derived from nature. Labour adds to this, changing the form of the object. In this way, the purpose guiding labour is ‘objectified’ – it goes into the object.

Emphasis mine. This is what I am talking about when I say that price isn&#39;t equal to exchange-value in individual transactions (it could be, but it isn&#39;t always).

Also, I was thinking about this earlier tonight about how to support the labour theory of value (thinking of an exchange I had with my highschool economics teacher a while ag). I thought of measurements. 1 inch = 2.54 centimeters. With this conversion ratio we can determine how many centimeters equals 1 inch and vice versa. Now, without this exchange ratio, we wouldn&#39;t be able to convert between the two. The conversion ratio is determined by length. How much length is embodied in one inch vs. how much length is embodied in one centimeter. In this analogy, inch and centimeter represent different commodities, length represents labour, and the conversion ratio represents exchange-value.

Of course, to determine length we need a ruler; something with which to measure length. This is a problem with labour. There is no way to measure the amount of labour embodied in almost any given commodity. So some questions that I have regarding the labour theory of value are that, if embodied labour can&#39;t be accurately determined, how do we know how much of one object to exchange with another?

[ComradeRed]

Originally posted by Lazar

Of course, to determine length we need a ruler; something with which to measure length. This is a problem with labour. There is no way to measure the amount of labour embodied in almost any given commodity. So some questions that I have regarding the labour theory of value are that, if embodied labour can&#39;t be accurately determined, how do we know how much of one object to exchange with another?Workers can be aggregated by adding up the number of hours they work - after notionally standardising for different levels of productivity by multiplying the hours of skilled labor by some amount to reflect higher productivity.

And as far as the dated labor is concerned, there is a simple and ingenious method to derive it. Reduce capital to dated inputs of labor.

So now we have before us the algorithm to derive units of labor. Value is proportional to labor.

"AHA&#33; WE NEED THE PROPORTIONALITY CONSTANT&#33;&#33;&#33;"

No, we can follow the lead taken by quantum theory: simply divide both sides by the appropriate quantity.

So as one would use the least action in path integrals, so too would one use price and value in our manipulations.

We divide price per hour of labor, after changing the commodity to be in the form of labor (incorporating the above method for total labor inputs), and that&#39;s the value in the money form.

There is a measure, a yardstick, for the labor theory of value for ya ;)

Bourgeois economists: -45; Marxists: 3. :lol:

[KC]

Comrade Red, this is the kind of thing I was talking about. This is a quote from Critique of the Gotha Programme:


Originally posted by Marx
Hence, equal right here is still in principle - bourgeois right, although principle and practice are no longer in conflict, while the exchange of equivalents in commodity exchange only exists on the average and not in the individual case."

Emphasis mine.

[R_P_A_S]

FUCK&#33; i need to read.

[rebelworker]

If some one was interested in joining this study group how would they go about doing it.

Reading chapter 1 of the big book? and then throw in my two cents?

[chimx]

could you provide us with a more concrete definition of utility/use-value. do aesthetic qualities in art constitute utility?

[ComradeRed]

Originally posted by [email protected] 07, 2006 12:43 pm
could you provide us with a more concrete definition of utility/use-value. do aesthetic qualities in art constitute utility?
I think Marx said it best in Das Kapital (http://marxists.org/archive/marx/works/1867-c1/ch01.htm), Vol. I, Chapter I (paragraphs 2 through 5):

A commodity is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another. The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference.[2] Neither are we here concerned to know how the object satisfies these wants, whether directly as means of subsistence, or indirectly as means of production.

Every useful thing, as iron, paper, &c., may be looked at from the two points of view of quality and quantity. It is an assemblage of many properties, and may therefore be of use in various ways. To discover the various uses of things is the work of history.[3] So also is the establishment of socially-recognized standards of measure for the quantities of these useful objects. The diversity of these measures has its origin partly in the diverse nature of the objects to be measured, partly in convention.

The utility of a thing makes it a use value.[4] But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity. A commodity, such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use value, something useful. This property of a commodity is independent of the amount of labour required to appropriate its useful qualities. When treating of use value, we always assume to be dealing with definite quantities, such as dozens of watches, yards of linen, or tons of iron. The use values of commodities furnish the material for a special study, that of the commercial knowledge of commodities.[5] Use values become a reality only by use or consumption: they also constitute the substance of all wealth, whatever may be the social form of that wealth. In the form of society we are about to consider, they are, in addition, the material depositories of exchange value. --emphasis added

So if there is a property which satisfies a "want", then it has a use-value. If there is some property to art which satisfies some want, then it would have a use-value. Going into where this want comes from is really quite irrelevant however.

[KC]

Wow I forgot about this thread. Could reply to my previous post, please, Red?