LTV and supply & demand

[Comrade-Z]

There seem to be two competing strains of thought with regards to how the values of things are determined. One strain of thought, the labor theory of value (LTV), says that labor is the dominant aspect. The "supply & demand" argument says that utility is what determines pricing, right?

But think about this:

Isn't it true that the labor of rational beings will continuously adjust itself in the direction of maximum perceived utility?

That is to say, a rational laborer won't knowingly perform labor that is either useless or disadvantageous to himself, right?

So doesn't labor itself automatically adjust itself to supply & demand? Isn't supply & demand just a sub-set of the all-encompassing LTV?

Advocates of the supply/demand argument point to examples where labor is being performed, but goods with little or no net utility result, thus "proving" that labor is not the fundamental component of value.

But what they fail to realize is that, in the real world, this scenario would never happen. Laborers with any rational capacity whatsoever will continuously adjust their efforts in the direction of perceived maximum utility (to themselves, in line with the notion that people act out of perceived self-interest). If they are getting bad information (from a central planning board, perhaps), then their perceptions might be wrong, resulting in lower utility, but in time better information will arrive and these errors will continually be corrected in the direction of maximum utility.

So the LTV really is supreme, it would seem, and the utility factor is just a sub-set of the LTV.

Do you all understand what I'm getting at?

[ComradeRed]

I understand what you are getting at, and that's the argument coming from some supply siders (of all people!).

But I'd hate to break it to you, bourgeois economics is mathematically WRONG! Never have I laughed myself to tears from mathematical errors.

For starters, how do you measure utility? :huh: What is the units of utility? Give me then quantity of utility you get from, say, a pancake.

And assuming people mythically instantaneously act to maximize their utility, that means people consume an infinite quantity of goods. The diminishing marginal utility reaches zero when the quantity consumed is infinite (lim x->0 n/x = infinity for some constant n).

Marx actually took great pain to incorportate utility (use-value) in his system; read his comments on Witgenberg (I think that's the fellows name).

[Janus]

This isn't really pertinent. But isn't supply and demand simply an aspect of the subjective theory of value?


And assuming people mythically instantaneously act to maximize their utility
Well, organisms in systems generally act to maximize efficiency. Does this correlate with utility in economics at all?

[ComradeRed]

This isn't really pertinent. But isn't supply and demand simply an aspect of the subjective theory of value? Yes, that's one of the main problems between trying to think of the two as the same.

But bourgeois economics is just tragicomically flawed, look up Debunking Economics, it's a good read that dissects bourgeois economics clearly and critically.


Well, organisms in systems generally act to maximize efficiency. Does this correlate with utility in economics at all? And organisms are always greedy bastards that saves every fraction of a penny? :huh:

Allow me to reiterate: UTILITY IS SUBJECTIVE, IT CANNOT BE QUANTIFIED.

[Intelligitimate]

Neoclassical bourgeois economics was conclusively refuted, using its own assumptions, by the Marxist Pierro Sraffa in the 70s. Even the giant of the field himself, Paul Samuelson, admitted defeat. The event is known as the Cambridge Capital Controversy, and it revolved around the capital reswitching problem.

Yeah, I would agree with ComradeRed also regarding utility theory. Except I would point out it isn't so much utility theory, but the idea of revealed preference that makes bourgeois economics useless.

[Comrade-Z]

Well, what I was getting at was that the LTV is correct, and that people who focus on supply and demand are ignoring certain implied aspects of the LTV. So how is that bourgeois economics? Unless I don't properly understand the LTV and/or bourgeois economics... :unsure:

[Janus]

And organisms are always greedy bastards that saves every fraction of a penny?
I was talking about more of a biological aspect. That this is generally the case, they move toward that tendency. I was asking if this was the case in economics.

[Comrade-Z]

I was talking about more of a biological aspect. That this is generally the case, they move toward that tendency. I was asking if this was the case in economics.

I think all rational human behavior, whether economic, social, etc., reduces down to perceived material self-interest. So in that sense, people are selfish.

But that does not mean they are necessarily greedy or, more precisely, acquisative or prone to hoarding from others. Greediness only has perceived utility in advancing self-interest in certain situations. In other situations, cooperation and/or sharing has more perceived utility in advancing self-interest.

In other words, in some situations, one is apt to share with others out of selfishness.

For instance, in conditions of superabundance, greediness would have no utility whatsoever as far as advancing self-interest. People, in being selfish, would instead cooperate and share with each other.

[ComradeRed]

Yes, bourgeois economists tend to downplay the severity of their assumptions that people are insatiably greedy bastards.

Anyways, supply and demand are parts of the bourgeois economical thought of the so called "subjective value" theory (though this means that value is immeasurable and thus nonexistent -- and so would price be nonexistent).

I actually calculated out the formula necessary to show the value via dated labor, it's essentially an infinite series (or if you prefer an integral ;)). It's fun like a trip to the dentist without anesthetic! :D

[anomaly]

Originally posted by Comrade-Z
Well, what I was getting at was that the LTV is correct, and that people who focus on supply and demand are ignoring certain implied aspects of the LTV.
Yea, I would pretty much agree.

However, ComradeRed mentioned a few things. First of all, utility is a boolean, meaning it either exists or it doesn't. There are no 'units' of utility other than 1 or 0.

Secondly, while supply can be measured, demand cannot be measured. Demand is always changing, incessantly in fact.

So I think that's all Comrade Red was saying.

[LoneRed]

Marx made it a point to differentiate between the value of a commodity and its price. He believed that all commodities had a value that was a sum of the labor put into them, indirect and direct. He thought price as having to do with an objects value coupled with the profit rate.

thats all for now, gotta get to sleep.

[Shredder]

Utility is subjective. Demand is always changing.

But they can be measured.

Microeconomics: I would pay up to m USD$ for commodity c.

Macroeconomics: For commodity c, n1 people would pay m1, n2 people would pay m2, etc.

In Marxist economics, the labor theory of value applies specifically to capitalist commodity production. It presupposes supply and demand. It presumes that market forces bring the allocations of labor power into equilibrium with demand, in the way similar to what Comrade-Z outlined in the original post.

[ComradeRed]

Utility is subjective. Demand is always changing.

But they can be measured.
I'm sorry, but this is rather comical.

How do you measure a subjective thing? :huh: Mathematically, it can't be done.

On the diminishing marginal utility curve, what units are used on the utility curve? How do you propose on measuring this? And how do you standardize utility?

How do you create the metric for utility?

Just a little hint...You can't.

Demand, by the by, is simply multiplying the price per unit utility by the diminishing marginal demand curve; which is troubling for bourgeois economics when diminishing marginal utility is nonexistent.



Microeconomics: I would pay up to m USD$ for commodity c.

Macroeconomics: For commodity c, n1 people would pay m1, n2 people would pay m2, etc.

In Marxist economics, the labor theory of value applies specifically to capitalist commodity production. It presupposes supply and demand. It presumes that market forces bring the allocations of labor power into equilibrium with demand, in the way similar to what Comrade-Z outlined in the original post. Let L_{a_{n}} be the labor inputs for a time period n and some arbitrary sector a.

The w be the wages (or 1-r/R for the rate of profit r and the maximum rate of profit R).

Let price per unit a be denoted as p_{a}.

Then there is an infinite series that point wise converges to the price per unit a times the quantity of the current output of A (the total quantity a produced). In other "words",

\SUM_{n=0} w * (1+r)^n * p_{a} * L_{a_{n}} = A*p_{a}.

"Supply and demand" are not presupposed by this. Instead, the labor theory of value presupposes that value depends on the inputs of a commodity.

If you want, you can make this a Lebasque integral ;) but that's too much work.

[Entrails Konfetti]

How is supply really a factor when it's not limited, unless artifically?

The supply on diamonds can satisify anyone who wishes to have them, it's just a matter of labour extracting them.

How can you measure demand when its not stactic?
Through prediction?

[ComradeRed]

How can you measure demand when its not stactic?
Through prediction? That's a very interesting point, because the economists take time to be static.

For example, I can't ride a bike. So I go to a bike guru; he tells me to balance myself when the bike isn't moving.

I master this. Then he tells me to start peddling my feet while remaining balanced. And hey! Here I am now riding a bike; but now I need to turn.

Remember this gurus advice, I keep balanced while turning and take a nasty spill! :o What happened?

What occurred was that I was using statics in place of dynamics. The same thing occurs with economics.


How is supply really a factor when it's not limited, unless artifically? Economists actually assume that everything is always scarce...which magically plays no role for capitalism, but is severely constraining every other system in existence :rolleyes:

This too is a good point. The productivity doesn't change with aditional workers unless the technology of capital changes.

So the marginal productivity would always be 0!

Congratulations! There's the ideal wage for a worker! :lol:

This actually is a crippling criticism of bourgeois economics, too bad they won't pay no attention none ;)

[Shredder]

How do you measure a subjective thing?

...

Prime example of the way ideological evangelists work. You are posed an argument, and react by splitting my ideas into multiple parts. To the first portion, you pose a question, which is answered in the second portion, which does not arrive until a sufficient amount of paragraphs have been slung so that the reader has forgotten a question was asked.

Value, a subjective thing, is quantified when it is exchanged with another thing. This is the ABCs of Marxism-- but sadly, you only know numbers.

Please explain to me why the conclusions from your series contradict the true fact that Barry Bond's 714th home run ball is bound to fetch far more on the market than his 713? His 700th? Than any random home run? Each has approximately the same amount of labor in it. You require value to depend on its inputs, but in this scenario we have an astonishing amount of 'inputs' unaccounted for. More proof of dark matter, perhaps? Alternatively, you can accept the Marxist doctrine that the LTV applies to capitalist commodity production, where commodities are explicitly defined as being created for the sole purpose of exchange. But if you accept this much, without presupposing supply&demand as the catalysts, you are forced to explain why (marxist)commodities obey one law of value, and 'rarities' like fine art seem to obey another.

[ComradeRed]

Prime example of the way ideological evangelists work. You are posed an argument, and react by splitting my ideas into multiple parts. To the first portion, you pose a question, which is answered in the second portion, which does not arrive until a sufficient amount of paragraphs have been slung so that the reader has forgotten a question was asked. Wow, such poor reasoning skills are astounding! :o

Ad hominems do not change the fact that subjective quantities remain immeasurable, sorry.



Value, a subjective thing, is quantified when it is exchanged with another thing. This is the ABCs of Marxism-- but sadly, you only know numbers. Shredder...hmmm, how could you get such a name? Could it be with what you do to books? It would greatly explain the misconceptions of Marxism that you hold.

Exchange value is a relative thing, not a subjective thing. Relative things are measurable.

Utility is neither measurable nor relative, it's subjective.

When I ask you to demonstrate the measurement of a subjective thing, you dodge the question.



Please explain to me why the conclusions from your series contradict the true fact that Barry Bond&#39;s 714th home run ball is bound to fetch far more on the market than his 713? His 700th? Than any random home run? Each has approximately the same amount of labor in it. You require value to depend on its inputs, but in this scenario we have an astonishing amount of &#39;inputs&#39; unaccounted for. More proof of dark matter, perhaps? Alternatively, you can accept the Marxist doctrine that the LTV applies to capitalist commodity production, where commodities are explicitly defined as being created for the sole purpose of exchange. But if you accept this much, without presupposing supply&demand as the catalysts, you are forced to explain why (marxist)commodities obey one law of value, and &#39;rarities&#39; like fine art seem to obey another. <_< Again, reading comprehension is a problem here; take Marx&#39;s own words:

Originally posted by [email protected],Ch.7
In a wider sense we may include among the instruments of labour, in addition to those things that are used for directly transferring labour to its subject, and which therefore, in one way or another, serve as conductors of activity, all such objects as are necessary for carrying on the labour-process. These do not enter directly into the process, but without them it is either impossible for it to take place at all, or possible only to a partial extent. Once more we find the earth to be a universal instrument of this sort, for it furnishes a locus standi to the labourer and a field of employment for his activity. Among instruments that are the result of previous labour and also belong to this class, we find workshops, canals, roads, and so forth.

In the labour-process, therefore, man’s activity, with the help of the instruments of labour, effects an alteration, designed from the commencement, in the material worked upon. The process disappears in the product, the latter is a use-value, Nature’s material adapted by a change of form to the wants of man. Labour has incorporated itself with its subject: the former is materialised, the latter transformed. That which in the labourer appeared as movement, now appears in the product as a fixed quality without motion. The blacksmith forges and the product is a forging.

If we examine the whole process from the point of view of its result, the product, it is plain that both the instruments and the subject of labour, are means of production, [6] and that the labour itself is productive labour. [7] Obviously, Marx must be wrong&#33;

Would you like me to continue quoting Marx on Marxist economics? Home runs are absurd in terms of comparison for value; useful labor&#39;s irrelevant.

Again, you assert baselessly that supply and demand are somehow "presupposed" in Marx&#39;s economics yet fail every time to prove it...should we just take it "on faith"? Speak of evengelicals&#33; :lol:

[Shredder]

The Marx quote you used doesn&#39;t even contain any discussion of value. It&#39;s just about labor. Specifically, labor&#39;s ability to shape things. It&#39;s almost as if you just selected the quotation completely at random.

Though, we know it&#39;s not random. It&#39;s merely caused by the known fact that you have a mild autism-spectrum syndrome, which impels you toward deeply intellectual subject matter, while also tragicomically preventing you from ever understanding that subject matter because you can only read by rote.

So let me go back and repeat my answer from a month ago, which you ignored and then proceeded to accuse me dodging your question.

You say that if value is subjective, it cannot be measured.

But this is evidently wrong from what real people do in the world every day when they make purchasing decisions. When an economist, based on real data, makes a chart that plots the varying amount of sales of the same product at various prices, it is precisely a measurement. Individual people make individual measurements when they make purchasing decisions. The sum of several of these individual measurements yields another measurement.

Denying that it&#39;s a measurement does not change what it is. It is patently absurd to say that it&#39;s just a relation and not a measurement, since a measurement is another name for a relation.

Now look at what you advocate instead: that the &#39;value&#39; of something is determined solely by the socially necessary labour congealed in it regardless of supply and demand. What I must ask is, what are you actually measuring? Is it the prices goods are exchanged at? You have made clear the answer is no. So what, where or how does socially-necessary-labor-value manifest itself? When you divorce the LTV from demand, you divorce it from reality. You are dealing with a pure concept in autism-land, a concept which states that value is labor. But that leaves us essentially nowhere, since neither labor nor value measure anything else outside of their fantasy-built-for-two. Your model doesn&#39;t explain anything we see in real life whatsoever. Thus, it is you who posit something immeasurable, simply because it purports to be a measurement but doesn&#39;t measure anything real.

[KC]

Are commodities always sold at value? Or are they sold above/below their value at times?

[OneBrickOneVoice]

LTVs along with production goals are necessary means of measuring production in order to prevent starvation. They are also a incentive to work hard as an individual in a otherwise collective society. If there are no LTVs, working hard or hardly working would be indistinguishable.

Of course by the time of the end of the revoltution, people might be dedicated to the idea of working as a commune that LTVs won&#39;t be needed. Until then however, I think it&#39;s a necessary position for communists to adopt.

[Dooga Aetrus Blackrazor]

Can someone explain to me whether or not the LTV is correct - and why or why not? The first question that comes to mind is rarity. If something exists in a smaller quantity, and it is demanded, the price will go up, presumably, because demand has increased. Yet LTV doesn&#39;t take into account rarity. The amount of labour is the only factor. Then again, maybe not...

It seems almost that supply and demand economics are simply a different way of analyzing the economy in capitalist society - as the LTV certainly doesn&#39;t work for the capitalists seeking to overcharge everyone.

[OneBrickOneVoice]

Can someone explain to me whether or not the LTV is correct - and why or why not? The first question that comes to mind is rarity. If something exists in a smaller quantity, and it is demanded, the price will go up, presumably, because demand has increased. Yet LTV doesn&#39;t take into account rarity. The amount of labour is the only factor. Then again, maybe not...

It seems almost that supply and demand economics are simply a different way of analyzing the economy in capitalist society - as the LTV certainly doesn&#39;t work for the capitalists seeking to overcharge everyone.

The rare object will just cost more LTVs then a non-rare object. Simple as that. Prices will be set by the planners in the workplace it is produced.

There is no real reason why there shouldn&#39;t be LTVs. There is no reason why, if a worker shows up and works normally, that he shouldn&#39;t get them.

[ComradeRed]

Originally posted by Shredder+--> (Shredder) The Marx quote you used doesn&#39;t even contain any discussion of value. It&#39;s just about labor. Specifically, labor&#39;s ability to shape things. It&#39;s almost as if you just selected the quotation completely at random.[/b] How do you propose to measure value? With money, whose value fluctuates in addition to that of the commodities being exchanged? <_<

We could listen to Marx and use labor, but what an outlandish idear is that?&#33;



Though, we know it&#39;s not random. It&#39;s merely caused by the known fact that you have a mild autism-spectrum syndrome, which impels you toward deeply intellectual subject matter, while also tragicomically preventing you from ever understanding that subject matter because you can only read by rote. Irrelevant.



You say that if value is subjective, it cannot be measured. BY THE VERY DEFINITION OF SUBJECTIVE ITSELF, YES&#33;



But this is evidently wrong from what real people do in the world every day when they make purchasing decisions. When an economist, based on real data, makes a chart that plots the varying amount of sales of the same product at various prices, it is precisely a measurement. Individual people make individual measurements when they make purchasing decisions. The sum of several of these individual measurements yields another measurement. How patently absurd is this argument "Well, economists do it, so therefore it must be right" :rolleyes:

Stop and think for a moment (I know it hurts your head to think, but try): how the hell do you measure utility? You have been avoiding this question, and the sad reality is it&#39;s impossible&#33;

Go ahead, what marginal utility do you get from a toaster? Before you answer, what is your standard unit of utility?



Now look at what you advocate instead: that the &#39;value&#39; of something is determined solely by the socially necessary labour congealed in it regardless of supply and demand. What I must ask is, what are you actually measuring? Is it the prices goods are exchanged at? You have made clear the answer is no. Well you have obviously used specious reasoning to reach an irrelevant point.

Look, if we were to use "supply and demand" you would have the same problem trying to measure the "labor" factor of production (*hint* you can&#39;t just use the money paid out in wages).

You notionally standardize labor around a certain productivity margin...like a normalized vector.

This is then the unit vector of value.

Think about it for a moment as well: is it incorrect to reduce a commodity to its inputs? You assert that it is, yet provide no reasoning why. If you actually read Marx you would know that the LTV uses a "reduction to dated inputs" method.


So what, where or how does socially-necessary-labor-value manifest itself? When you divorce the LTV from demand, you divorce it from reality. You are dealing with a pure concept in autism-land, a concept which states that value is labor. But that leaves us essentially nowhere, since neither labor nor value measure anything else outside of their fantasy-built-for-two. Wow, you&#39;re fallacious personal attacks astound me. Honestly, such genius lies behind these irrelevant arguments that I cannot do anything more than tell you to go read Marx&#39;s Kapital.


Your model doesn&#39;t explain anything we see in real life whatsoever. Thus, it is you who posit something immeasurable, simply because it purports to be a measurement but doesn&#39;t measure anything real. You are challenging my "model" to realism? You who cannot measure utility but asserts it to be possible, challenges a mathematical model to a litmus test of "realism"?

When you part from your marginalist superstition, we can then talk about realism; until then, you have no place to speak of realism.


Dooga Aetrus Blackrazor
Can someone explain to me whether or not the LTV is correct - and why or why not? Yes it is correct, inasmuch as Math is correct (so if you believe shredder, then nothing is correct).

The idea is that the value of a commodity is equal to its inputs, and its non-labor inputs can be reduced to its inputs. You just keep doing this until all the inputs are labor.

The value of the object is thus reduced down to labor, i.e. labor determines the value of the object.

So we take the total labor input (the dated labor + fresh labor) divided by the total output and we get the value per commodity produced (relative through labor to other commodities).

THat is to say, if we have one commodity A with 10 hours of labor to produce 1 unit A, and one commodity B with 4 hours of labor to make a unit B, then 10/4 = 2.5 units B is equal in value to 1 unit A.

This is not a static relation, I should note. It is very dynamic, but the math gets damn hard (even for me&#33;).

[Shredder]

I&#39;ve answered your question numerous times. When an exchange is made, i.e., when a consumer makes a purchase, that is a measurement of demand. If she chooses to buy X of one thing instead of Y of another at the same price, she has inadvertantly measured her demand for X of the first thing versus Y of the second. In the next month, when prices change, the things she purchases of the two commodities will change in quantity and/or ratio. Measurements of this kind can then also be taken over long periods of time and over large markets.

Now, if you&#39;re wanting to know how to measure utility and in what units, then you can&#39;t be dealth with because you are too formal. Supply and demand does not contradict the fact that utility is arbitrary and thus cannot be predicted as if it were newtonian mechanics. In fact, supply and demand is economics way of getting around the fact that they can&#39;t predict utility. Instead of utility, we have demand, which is quite measurable.

And here (http://www.sfecon.com/Supply%20Demand.htm) is a website I found that you will get a kick out of.

[ComradeRed]

I&#39;ve answered your question numerous times. No, you haven&#39;t. You&#39;ve dodged the question by quoting textbooks.


If she chooses to buy X of one thing instead of Y of another at the same price, she has inadvertantly measured her demand for X of the first thing versus Y of the second. In the next month, when prices change, the things she purchases of the two commodities will change in quantity and/or ratio. You haven&#39;t answered my question, but you have changed the subject.

The "Law of diminishing marginal utility" dictates that for every additional unit of some arbitrary commodity consumed, the utility "gained" from that consumption decreases.

What economists do is simply change the "Utility" axis into a "Price level" axis, then we have the demand curve for an individual. For an economy, what economists do is multiply this curve by the number of people in the economy (i.e. everyone has the same tastes -- a shocking contradiction of the economists&#39; "You are all individuals" bullocks).

What I am asking is how do you measure utility? You then go off about measuring future demand based on past demand (which is a fallacy in elementary statistical reasoning, not to mention a contradiction in the economic principle of "individualism" embodied by supply &#39;n&#39; demand).

If you cannot measure utility, you then can&#39;t measure demand; thus supply and demand become irrelevant.


Now, if you&#39;re wanting to know how to measure utility and in what units, then you can&#39;t be dealth with because you are too formal. Supply and demand does not contradict the fact that utility is arbitrary and thus cannot be predicted as if it were newtonian mechanics. In fact, supply and demand is economics way of getting around the fact that they can&#39;t predict utility. Instead of utility, we have demand, which is quite measurable.

-- emphasis added Such innocence.

You have failed to logically present a sound method to measure demand, in its place you have suggested that through long term studies of certain people&#39;s behaviors will determine everyone&#39;s behavior indefinately.

You have also done a tragicomical blow to how time should be dealt with, rendering it as a discrete thing rather than a continuous variable; the only justification for which is because it makes things easier for you.



And here is a website I found that you will get a kick out of. Yes, such philistinism is often present on the internet.

Equilibrium has no place in economics, just as it has no place in nonlinear thermodynamics. It deals horribly with time and change.

To give an example of how equilibrium dynamically works, I can&#39;t ride a bike. So my "bike guru" tells me to first balance on a bike without peddling, then after mastering balance to start peddling.

This works perfectly...until I need to take a turn. Then because I don&#39;t know that I need to shift my balance, I fall over completely.

In Economics, its the same idear. By taking a static picture of the economy and then trying to introduce dynamics around it, the entire model falls apart completely in practice. Economists have always dodged this by the excuse "Uh...well...we&#39;re not scientists after all, there were unknown variables at play and...stuff..."

The site you referenced me to completely avoids the topics that I bring up (huh, I wonder why? :rolleyes: ). It&#39;s a waste of bandwidth and server space. It&#39;s not even wrong.

[red team]

Suppose that we use LTVs to measure labour inputs and therefore also compensation for labour done by any given worker, how do you compensate for the distorting effects on labour output through the use of technology by workers?

Example: suppose a farmer uses a tractor (or in the future automated greenhouses) to grow and harvest food. The labour done by any arbitrary farmer in this situation would provide material output far in excess of the manual labour put into the production process because of the powerful machinery which provides many times the "labour" from the simple labour of the operator of the machines.

Should then the farmer demand 1000x what manual labour can produce alone for labour credits?
If that happens wouldn&#39;t then workers which uses labour magnifying machinery in their work gain an advantage in terms of output per unit of labour performed over workers whose field of work have not yet been automated?

An even more serious problem would then be who would have all the necessary labour credits to purchase products made through technology assisted labour since a automated factory "worker" or farmer would only require a fraction of the output produced through their own field of work. A farmer only wants and need a limited amount of the food produced from industrial farming. Similarly I would expect from future developments that factory workers would work from a control room monitoring automated machines doing the actual work on the assembly line. In this situation who would have all the labour credits and desire to purchase all 100,000 cars produced from automated manufacturing for consumption purposes only?

If it&#39;s not for consumption purchases only then you&#39;ve just got a market economy back again with sellers of surplus being workers having an advantage in technology assisted production, but with labour credits instead of money.

[OneBrickOneVoice]

well most jobs nowadays use machinery so thus that&#39;ll be accounted for in the work done. For example farmers, will be assigned a goal that is realtive to what a tractor can produce. So he&#39;ll be expected to plow at least six fields in a week as opposed to one manually in order to get LTVs. Also it won&#39;t be a market economy because the tractor and everything from the seeds to his clothes and home are provided by the community. Only non-necessities to work and life won&#39;t be provided.

[JazzRemington]

I may be slow on this, but I still don&#39;t understand the Marxist response to Supply and Demand. By this I Mean I don&#39;t get how Supply and Demand relates to LTV. I undetstand that, from ComradeRed&#39;s introduction to Marxist economics, that labor drives supply and demand and that demand cannot be measured.

Are you saying that because demand cannot be objectively measured, that the whole idea of Supply and Demand together is flawed and does not exist? If so, then how does one explain that prices change according tot eh supply and the demand of a good? And how does LTV (to reiterate for clarity) relate to Supply and Demand?

[ComradeRed]

Sorry for the belated reply :blush:

Anyways, the problem is that if you can&#39;t measure demand, you can&#39;t have a demand curve. This means that the concept of supply and demand determining value is incorrect since one of the two variables can, in practice, be "anything".

So it&#39;s sort of like a guessing game, where the economist always gets it wrong and when told the answer says "I knew that, I was just...testing you to see if you knew it."

In reality, economists don&#39;t have a clue.

The concept of supply and demand is something that may make sense, but if you work out the details, it doesn&#39;t work.

Neoclassical economics demonstrates this just fine and dandily.

But Marginalism, the microeconomic supply and demand school, is so flawed that I don&#39;t have the time or space to point out everything. For a layman&#39;s introductory criticism, look up Steve Keen&#39;s Debunking Economics.

[Janus]

This means that the concept of supply and demand determining value is incorrect since one of the two variables can, in practice, be "anything".

So it&#39;s sort of like a guessing game, where the economist always gets it wrong and when told the answer says "I knew that, I was just...testing you to see if you knew it."
So you&#39;re saying that it&#39;s impossible to "predict" rather than actually measure? Or are you saying that price needs to be relatively fixed &#39;cause I can understand how it is somewhat of a guessing game(though well suited to capitalism for that matter).

[ComradeRed]

So you&#39;re saying that it&#39;s impossible to "predict" rather than actually measure? Or are you saying that price needs to be relatively fixed &#39;cause I can understand how it is somewhat of a guessing game(though well suited to capitalism for that matter). How it works right now is a more "after the fact" markup, so the bourgeois economists look tothe past and say "This is why X happened, because the demand curve changed this ways and we &#39;know&#39; that the supply curve moved this way".

So it&#39;s track record is, to be blunt, "God"-awful for predictions.

As far as explaining the past, it&#39;s "great" because the demand curve can be manipulated to be anything. We "know" what the supply curve because of the GDP from a given sector and the "average price per unit", which allows us to calculate the quantity produced (this itself has serious problems).

To be blunt it&#39;s impossible to measure, but this makes it impossible to predict. Predictions are, as I explained, "after the fact".

You can&#39;t measure utility; and this dooms the whole marginalist school right here and now. Of course, the marginalists are too proud to accept reason, logic, math, and empiricism.

We know better.

:cool:

[Janus]

You can&#39;t measure utility; and this dooms the whole marginalist school right here and now
Right, I don&#39;t see how it could be quantified.

Which means that the marginal utility curve is make-believe as well.

I knew it seemed a bit too idealistic.

[JazzRemington]

IF you can&#39;t measure demand, meaning you can&#39;t accurately figure supply and demand, then how is it that this nonexistent concept affects prices? Is it merely the capitalist fixing his prices to account for the idea that supply and demand affects them?

[Comrade-Z]

First, you must realize that the LTV does not account for each price of a particular unit of commodities. One reason for that is that it works off "socially-average labor." So while the quality of labor at any particular enterprise may differ, on the whole there is a level of "socially-necessary labor" needed to produce something. So the LTV calculates the "average price" of all of the units of the same type of commodity. Given enough time, and keeping everything else stable (which never happens), all the prices for a particular product will converge to the product&#39;s value. (And does that not make sense? After all, people are going to try to by the cheapest types of a product that they can, but at the same time the capitalists are not going to sell their products for under their value and lose money--so, on average and over time, the average price for a product will be its value, as determined by its labor inputs).

You also must realize that if supply of a particular item (for instance, apples) exceeds demand, then the labor put into the production of the superfluous apples becomes socially unnecessary, and thus that labor doesn&#39;t create value. So only the portion of that labor that makes the useful apples creates value. Yet all of the apples still approach the market (it&#39;s not like some person oversees the entire economy and says "Your apples that you produced are useful, but yours are useless." Thus, the entire labor put into all those apples, both useful and superfluous, gets treated together, but gets valued only with the value of the labor going into making the useful apples. The value of each unit of labor in making the apples drops, and so the value of each of the apples themselves drop, and so do their prices.

Marx reminds people in Das Kapital that commodities must have a potential use-value for someone in society before they can have an exchange value (but even have a use-value--being useful to someone in society--does not guarantee that it will fetch an exchange value either. Having a use-value is a necessary but not sufficient requirement).

[Shredder]

Originally posted by Comrade&#045;[email protected] 29 2006, 11:15 PM
You also must realize that if supply of a particular item (for instance, apples) exceeds demand, then the labor put into the production of the superfluous apples becomes socially unnecessary, and thus that labor doesn&#39;t create value. So only the portion of that labor that makes the useful apples creates value. Yet all of the apples still approach the market (it&#39;s not like some person oversees the entire economy and says "Your apples that you produced are useful, but yours are useless." Thus, the entire labor put into all those apples, both useful and superfluous, gets treated together, but gets valued only with the value of the labor going into making the useful apples. The value of each unit of labor in making the apples drops, and so the value of each of the apples themselves drop, and so do their prices.
So if A apples are useful to society, but 2a apples are produced and placed on the market, the value per apple would be halved? If the value per apple is halved, do you mean the price is halved?

If not, explain the formula. If a apples are useful and have value v each, but (x)a apples are produced, each apple has value _____ ??

[Entrails Konfetti]

Originally posted by Comrade&#045;z
Thus, the entire labor put into all those apples, both useful and superfluous, gets treated together, but gets valued only with the value of the labor going into making the useful apples. The value of each unit of labor in making the apples drops, and so the value of each of the apples themselves drop, and so do their prices.

But thats not to say people will buy more apples because they are cheaper as compared to other fruits. If such happened the owners wouldn&#39;t be making any more profit than what they were before when the apples were full price.

It really seems that in a way demand hinders productivity.

[Janus]

then how is it that this nonexistent concept affects prices?
This concept is wrong because its explanation is wrong. It amy seem right at a frist glance but as ComradeRed showed, the process for finding demand is nigh impossible.

[vyborg]

Well comrades, this topic has dealt with a number of different arguments, all very important. But I think its not good to mix discussions as they cannot been deepened accurately.

So I propose we concentrate here on the qustion of the relationship betwenn the LTV and supply and demand, opening other topics fot the other arguments (I consider the nature of the utility being the most interesting of all).

Well even before Marx, the great bourgeois economist David Ricardo explained the question very clearly. I suggest to all to read (or reread) the Principles published almost two centuries ago, as Ricardo dealt there qith the question very well.

Every commodity has a price that is the social labour needed to produce it (social meaning average and needed meaning using the dominant technics). But of course in the short run, there are disturbing factors (supply and demand). But this is not the question as in any phenomenon we have disturbing factors, the question is that the result of these factors. When demand of a particular commodity, lets&#39; say cars, is very high this means that the commodity, ie the cars, can be sold at a price higher than the social value (of course this mean that other commodities are sold at a lower level). So the producers of this commodity retains a higher than average profit rate, thus actracting investment thus expanding production thus lowering the price.

In other terms, supply and demands, this "noises", tends to reduce the profit rate of any sector to the average rate just like the water tends to stay in a flat level so that if u move the water of a glass after a while it goes back to a flat level.

if I was clear, its easy to understand the connection between the general law (the LTV and the law of the equal rate of profit) proposed by the classical burgeois economists as Ricardo, and refined by Marx and the role, secondary but important nontheless, of supply and demand.

From here it could be useful to analyze why demands of some commodity is higher or lower than normal, and this would bring us to the distribution of income in the society. but I stop myself here for now

[ComradeRed]

So I propose we concentrate here on the qustion of the relationship betwenn the LTV and supply and demand, opening other topics fot the other arguments (I consider the nature of the utility being the most interesting of all). My point is that Supply and Demand is bourgeois economics (it&#39;s the canonical bourgeois economic school of thought right now).

The demand curve depends directly on marginal utility, according to bourgeois microeconomics.

Marginal utility cannot be measured. This means the demand curve cannot be measured.

The result is that Supply and demand cannot be used under any conditions.

ASSUMING THAT IS IRRELEVANT, supply and demand work in a static economy. As a physicist whose emphasis is general relativity, I can tell you right now using Occam&#39;s razor Supply and demand is bull shit because of its treatment of time.

Oddities appear when dynamics are applied properly. You&#39;ll never see them with bourgeois economics. That&#39;s why the economy, capitalism, works (supposedly) so simply and effeciently; bourgeois economics ignores the complications therein.

[Shredder]

You&#39;re the most educated idiot I&#39;ve ever met. You don&#39;t need to measure marginal utility. You measure demand.

To measure demand you measure the buying habits and trends of consumers.

Prices are, in reality, set by exactly this practice. Market researchers gather as much data as possible as to what money is being spent by who on what. They take that data and create the demand curve. Then they take the data for the supply side and make the supply curve. Then they calculate where the two algorithms intersect, and that tells them exactly how much to make and what to sell it for. And then they make that many and sell it for that much. This is the practice that occurs in every office building in every city, every day. To deny supply & demand is to deny everything that happens in every single one of those office buildings.

Either supply & demand is compatible with the LTV, or the LTV is wrong. There isn&#39;t a third option, sorry guys.

No one denies that utility is subjective, that it is a property of the subject, the beholder, rather than the object beheld. But this is clearly no obstable to the beholder who, as a consumer, acts on his subjective motives and buys shit. Each time a consumer buys a piece of shit, we have exactly the measurement supply & demand needs: a measurement of demand--and, merely incidentally, a de facto measurement of subjective utility.

[ComradeRed]

You&#39;re the most educated idiot I&#39;ve ever met. :lol:


You don&#39;t need to measure marginal utility. You measure demand. Not according to Microeconomics. How do you get demand?

There are all sort of nifty ways that have been invented to circumnavigate the problem of measuring the diminishing marginal utility curve (e.g. the Dollar Vote, I believe it is called). The problem is that these methods tacitly integrate the diminising marginal utility curve into them.

The "traditional" method is to calculate everyone&#39;s diminishing marginal utility curve, then (somehow magically figure out the value per arbitrary units utils, then) substitute in the value per arbitrary unit of utils for the individual&#39;s util axis to make it the PL axis.

Voila&#33; The demand curve, it is constructed from the diminishing marginal utility curve. Then, you just have a summation of all these cruves; but no&#33; Economists are too lazy to do that even. They use an integral&#33;

That means, we are all individuals and we are all the same.


Prices are, in reality, set by exactly this practice. Market researchers gather as much data as possible as to what money is being spent by who on what. They take that data and create the demand curve. Then they take the data for the supply side and make the supply curve. Then they calculate where the two algorithms intersect, and that tells them exactly how much to make and what to sell it for. And then they make that many and sell it for that much. This is the practice that occurs in every office building in every city, every day. To deny supply & demand is to deny everything that happens in every single one of those office buildings. Well, I don&#39;t know what sense of Supply & Demand you are using it, but the way "modern" economists do it in microeconomics, the general scheme is this: price is set when marginal revenue = marginal costs.

This seems logical enough, the goods are allocated effeciently, etc. The catch: there is no profit&#33; :lol:

Well, there goes the theory of Supply and Demand...since even the most basic uses of observation would indicate that "There Exists Profits" would be an empirically verified proposition in economics.

That is a counter-example for the microeconomic theory of value; supply and demand is either constructed incorrectly or it is simply wrong, there is no middle road.

I would be, for one, interested in supply and demand using nonlinear thermodynamics as its basis. That would be much more of a fun challenge to find flaws in it.

Curiously if I may brush off the old words of a reactionary philistine, a theory does two things: one it explains a large body of observations (in this case, the phenomena of value), and two it gives definate, testable predictions.

Supply and Demand can only do one of those things, and "test" the past. That&#39;s not prediction.

Now, I suppose the same *could* be said for the LTV...but that&#39;s where it is wrong. Using the dated labor inputs method (basically a summation of a function whose variables include the dated labor inputs), and observing the labor input of the current production cycle, you can make a definite prediction for the value of future items.

That makes the LTV a better theory than the STV (so sayeth the old fart Karl Popper).


Either supply & demand is compatible with the LTV, or the LTV is wrong. There isn&#39;t a third option, sorry guys. Simple: the LTV is correct&#33;

There is plentiful mathematical formalisms of it (if you have the time, I highly recommend Piero Sraffa&#39;s Production of Commodities by Means of Commodities -- it demonstrates two things: one it is mathematically impossible to find supply and demand curves in a static economy in constant equilibrium, the model Supply and Demand Economists use, and Two it gives plenty of mathematical proof that the labor theory of value is correct.


No one denies that utility is subjective, that it is a property of the subject, the beholder, rather than the object beheld. But this is clearly no obstable to the beholder who, as a consumer, acts on his subjective motives and buys shit. Each time a consumer buys a piece of shit, we have exactly the measurement supply & demand needs: a measurement of demand--and, merely incidentally, a de facto measurement of subjective utility. Now this, this is a rather interesting point that you have.

The problem is, as illustrated above, using the microeconomic way of finding the demand curve, you run into many a problem if utility is subjective. Like there is no value, it&#39;s state is change, etc.

Not to mention the paradox of utility being subjective and measurable, which would immediately give reason to reject the STV for being quasi-subjective, quasi-objective.

[Spirit of Spartacus]

Sigh...

All of this confusion arises when people are taught the confused mass of bullshit known as neo-classical economics.

I mean, there are some major logical flaws in neo-classical economics, which make you wonder why people ever accepted this bullshit. :)