Faulty economic theory

[t_wolves_fan]

Reading Jazz Remington's blog (http://www.revolutionaryleft.com/index.php?act=blog&id=9734) I noticed that his "Theories in Economics, pt. 1" was absurd in its lack of depth.

Here is the post:

"Given the idea that the value of a commodity is the socially necessary amount of labor necessary to produce it, I have developed a theory to explain how things will naturally become cheap and eventually free, leading to the full blown gift economy of communism. It's a little crude, but I think it will suffice for the time being.

Marx wrote that the value of a commodity, as stated above, is the socially necessary amount of labor to produce it. Meaning, if it takes a skilled individual 5 hours to produce a table on average, tables will be worth 5 hours. But this is if he does it by hand. Let us assume that he obtains a machine that helps him cut, trim, and shape wood (not necessarily the same machine, but bare with me). It cuts down the labor time to about 1 hour per table on average. By way of automation and new technology, labor time necessary to produce a good has gone down.

This is the key to the transition to a gift economy. Goods will be produced so easily and with little human labor that they will eventually become dirt cheap, leading to the eventual evolution out of a rationing system. "


The problem with this is that Jazz's analysis of what goes into the production of a table is paper thin. Jazz, like so many other Communists here, doesn't seem to understand that building and distributing goods goes a little bit farther than "having a machine to build tables with".

There is no mention in Jazz' analysis of the value of the labor that goes into building the machine that builds the tables. There's no mention of the labor that went into designing the table. There's no mention of the labor that went into building the building in which the tables are built. There's no mention of the labor that went into building the building in which the machine that builds the tables was built. There is no mention of the labor required to transport the table from factory to showroom. There is no mention of the labor required to build the truck that takes the table from factory to showroom. There is no mention of the labor required to cut down the trees from which to get the lumber to build the table.

So many transaction points and so many different prices and volume of products to be produced, and you all think these can be decided socially by consensus?

:D

[colonelguppy]

either way it doesn't matter no matter how many tables you produce you can't produce an infinite number so they'll be "free".

[JazzRemington]

Of course it doesn't include any information on transportation or building of machines. It's a simplification that is used to demonstrate a point. If I were to include the process of building the machines the that is used to build the table, I would have to get intot he process of which the machines were built, then go further back tot he process of which those machines were built, etc. etc. etc.. It would over complicate something that was supposed to be a basic and simplified (albeit overly) theory. Hell, even examples in mainstream Economics books do the same thing.

But how can a social consensus be met? By the same process one theoritically determines prices in Capitalism: you buy the cheapest. Let us assume it takes Person A 5 hours to produce a table, Person B 8 hours, and Person C 10 hours. Obviously, people will be more willing to purchase tables from Person A because they would be cheaper, either because he somehow produces more efficiently (either having advanced machines, skilled labor, or cuts corners, which would change the situation). Thus, with the need to compete and stay in business the other Persons will try to find ways to produce their tables more effeciently and we will see a gravitation toward Person A's prices. Of course labor time is not literally equal to prices, but rather a component, which would be beyond the scope of this argument to demonstrate as well as beyond my current understanding of Marxist economics.

I don't understand how producing an infinite number will make them free. All I said was that they would become cheaper and cheaper as time goes on, which would be a step, not the WHOLE step, out of a rationing system.

[colonelguppy]

well value is inpart determined by scarcity so having close to an infinite amount or an infinite amount would render objects valueless or free.

[nickdlc]

There is no mention in Jazz' analysis of the value of the labor that goes into building the machine that builds the tables. There's no mention of the labor that went into designing the table. There's no mention of the labor that went into building the building in which the tables are built. Thats called "dead labour" and it wouldn't be hard to keep track of dead labour in communism. Communism would be able account for use-values through labour time accounting and simple arithmetic. A group of council communists wrote a great book on it. This isn't a new idea either marx when imagining communist society thought labour time accounting would be essential to the new socialist society.

http://www.geocities.com/Athens/Aegean/6579/

Just remember (C + P) + L


So many transaction points and so many different prices and volume of products to be produced, and you all think these can be decided socially by consensus? The only concenus there will be is whether certain use-values should be provided freely or not, labour time accounting is objective though i.e. not determined subjectively by state administrators or workers.

[red team]

Originally posted by t wolves fan
There is no mention in Jazz' analysis of the value of the labor that goes into building the machine that builds the tables. There's no mention of the labor that went into designing the table. There's no mention of the labor that went into building the building in which the tables are built. There's no mention of the labor that went into building the building in which the machine that builds the tables was built. There is no mention of the labor required to transport the table from factory to showroom. There is no mention of the labor required to build the truck that takes the table from factory to showroom. There is no mention of the labor required to cut down the trees from which to get the lumber to build the table.


There is no mention in Jazz' analysis of the value of the labor that goes into building the machine that builds the tables.

#1
build machines that build machines that build tables

then build machines that repair machines that build tables.


There's no mention of the labor that went into building the building in which the tables are built.

#2
build machines that build parts for buildings

then build machines that take parts for buildings and assemble them.


There's no mention of the labor that went into building the building in which the machine that builds the tables was built.

See #2


There is no mention of the labor required to transport the table from factory to showroom.

#3
Build machines that auto-navigate trucks.

Build machines that auto-loads and auto-unloads trucks after docking.


There is no mention of the labor required to cut down the trees from which to get the lumber to build the table

Why do we need forestry? Grow wood plants in a lab.


Seriously, I would trust a machine more than I trust a human worker. Human workers make mistakes after many repetitions and when fatigued. A machine never tires, never makes mistakes, never gets bored, is extremely precise every single time, doesn't take breaks, doesn't need to take breaks.

[KC]

either way it doesn't matter no matter how many tables you produce you can't produce an infinite number so they'll be "free".

Sure, but it isn't happening in a capitalist society. Objects won't have exchange-value anymore. The commodity form will cease to exist.

[colonelguppy]

Originally posted by Khayembii [email protected] 7 2006, 12:53 AM

either way it doesn't matter no matter how many tables you produce you can't produce an infinite number so they'll be "free".

Sure, but it isn't happening in a capitalist society. Objects won't have exchange-value anymore. The commodity form will cease to exist.
um yes they will thats my whole point.

[KC]

um yes they will thats my whole point.

No, they won't.

[colonelguppy]

Originally posted by Khayembii [email protected] 7 2006, 02:07 AM

um yes they will thats my whole point.

No, they won't.
yeah they will.

you know this could go on for awhile.

[Dean]

Originally posted by [email protected] 6 2006, 09:26 PM
Reading Jazz Remington's blog (http://www.revolutionaryleft.com/index.php?act=blog&id=9734) I noticed that his "Theories in Economics, pt. 1" was absurd in its lack of depth.

Here is the post:

"Given the idea that the value of a commodity is the socially necessary amount of labor necessary to produce it, I have developed a theory to explain how things will naturally become cheap and eventually free, leading to the full blown gift economy of communism. It's a little crude, but I think it will suffice for the time being.

Marx wrote that the value of a commodity, as stated above, is the socially necessary amount of labor to produce it. Meaning, if it takes a skilled individual 5 hours to produce a table on average, tables will be worth 5 hours. But this is if he does it by hand. Let us assume that he obtains a machine that helps him cut, trim, and shape wood (not necessarily the same machine, but bare with me). It cuts down the labor time to about 1 hour per table on average. By way of automation and new technology, labor time necessary to produce a good has gone down.

This is the key to the transition to a gift economy. Goods will be produced so easily and with little human labor that they will eventually become dirt cheap, leading to the eventual evolution out of a rationing system. "


The problem with this is that Jazz's analysis of what goes into the production of a table is paper thin. Jazz, like so many other Communists here, doesn't seem to understand that building and distributing goods goes a little bit farther than "having a machine to build tables with".

There is no mention in Jazz' analysis of the value of the labor that goes into building the machine that builds the tables. There's no mention of the labor that went into designing the table. There's no mention of the labor that went into building the building in which the tables are built. There's no mention of the labor that went into building the building in which the machine that builds the tables was built. There is no mention of the labor required to transport the table from factory to showroom. There is no mention of the labor required to build the truck that takes the table from factory to showroom. There is no mention of the labor required to cut down the trees from which to get the lumber to build the table.

So many transaction points and so many different prices and volume of products to be produced, and you all think these can be decided socially by consensus?

:D
your problem is that you think of communists as a monolithic entity. For me, it has always been a problem of psychological development, which is what the main thesis of Marx's expectations was. I am not a marxist, however, because I do not think that it is by the means of the workers alone that one can achieve a classless society. Ironically, I am more marxist than most here because I defend the religious as being potentially free, as Marx did, while most here act like their main enemy is religion more than capitalism.

Your critique raises a few minor points, but those are ones that rely more on the importance of addendum to his theory than permanent holes within it.

[red team]

No, the problem has to do with distribution of resources. In other words it's economic. It's always been economic. Other problems with culture and "human nature" simply flows from the original economic problem.

Think about money for a while and what you can do with it and what it supposedly is traded for and you'll get why present economic theory is total crap.

Just take one example. What does it mean if you could save money while the prices for merchandise supposedly corresponds to is the per unit division of the total wages for labour that went into making the total amount of inventory available for sale? That means that if the economy is run like this then it is an impossibility for the total cost of merchandise as measured by wages paid out to make it to be sold to cover the cost of paying the wages in the first place because what you saved can't be used to buy back (pay yourself) the merchandise that was made with waged labour in the first place. This means profit, that is the marking up of prices above the cost of wages so that a smaller proportion of the total merchandise sold can be returned to cover cost of operations and profit for owners is inevitable. Capitalism is inevitable with money being used as a medium of exchange.

[colonelguppy]

wait i missed the part where present eocnomic theory is total crap

[t_wolves_fan]

Originally posted by Khayembii [email protected] 7 2006, 07:07 AM

um yes they will thats my whole point.

No, they won't.
Sure they will...we will want material goods based on rational or emotional reasons without caring how much labor went into procuring it.

If the cost of something I want is $10 and I'm willing to pay it, why would I care if the labor that went into making it was $1 or $9?

[JazzRemington]

Originally posted by t_wolves_fan+Oct 9 2006, 12:06 PM--> (t_wolves_fan @ Oct 9 2006, 12:06 PM)
Khayembii [email protected] 7 2006, 07:07 AM

um yes they will thats my whole point.

No, they won't.
Sure they will...we will want material goods based on rational or emotional reasons without caring how much labor went into procuring it.

If the cost of something I want is $10 and I'm willing to pay it, why would I care if the labor that went into making it was $1 or $9? [/b]
You wouldn't, and that's the point. The capitalist mode of production produces commodity fetishism, meaning consumers focus on teh commodity and do not know, understand, or waht to know about the process that was used to produce said commodity.

[colonelguppy]

Originally posted by JazzRemington+Oct 9 2006, 06:22 PM--> (JazzRemington @ Oct 9 2006, 06:22 PM)
Originally posted by [email protected] 9 2006, 12:06 PM

Khayembii [email protected] 7 2006, 07:07 AM

um yes they will thats my whole point.

No, they won't.
Sure they will...we will want material goods based on rational or emotional reasons without caring how much labor went into procuring it.

If the cost of something I want is $10 and I'm willing to pay it, why would I care if the labor that went into making it was $1 or $9?
You wouldn't, and that's the point. The capitalist mode of production produces commodity fetishism, meaning consumers focus on teh commodity and do not know, understand, or waht to know about the process that was used to produce said commodity. [/b]
i really don't see why knowing how a particular good was made makes a difference in how useful/desirable an object is to you.

[JazzRemington]

It's not just that the consumer doesn't know how the commodity was made, it's also the fact that the producer and the consumer rarely, if ever meet and actually know each other. With markets, exchanges revolve around commodities. Sure, a few consumers and producers may know each other in their exchanges, but at the core of such exchanges lies the commodity.

But, knowing how a product was made effects how useful or desireable a lot. For instance, let's assume Person A hates child labor and Producer B is selling shirts that are known to be made by child labor. Odds are, Person A would not desire Producer B's shirts because of that fact.

[colonelguppy]

Originally posted by [email protected] 9 2006, 09:14 PM
It's not just that the consumer doesn't know how the commodity was made, it's also the fact that the producer and the consumer rarely, if ever meet and actually know each other. With markets, exchanges revolve around commodities. Sure, a few consumers and producers may know each other in their exchanges, but at the core of such exchanges lies the commodity.

But, knowing how a product was made effects how useful or desireable a lot. For instance, let's assume Person A hates child labor and Producer B is selling shirts that are known to be made by child labor. Odds are, Person A would not desire Producer B's shirts because of that fact.
yeah but that doesn't change the fact that even under communism things will have subjective value.

[ComradeRed]

yeah but that doesn't change the fact that even under communism things will have subjective value. :lol: Good to know that criticisms of Neoclassical nonsense have been taken to heart by the OIers here.

[colonelguppy]

Originally posted by [email protected] 9 2006, 10:36 PM

yeah but that doesn't change the fact that even under communism things will have subjective value. :lol: Good to know that criticisms of Neoclassical nonsense have been taken to heart by the OIers here.
yeah whatever

[t_wolves_fan]

It's not just that the consumer doesn't know how the commodity was made, it's also the fact that the producer and the consumer rarely, if ever meet and actually know each other. With markets, exchanges revolve around commodities. Sure, a few consumers and producers may know each other in their exchanges, but at the core of such exchanges lies the commodity.

Assuming I live in Washington, DC, it is slightly difficult to get to know the Koreans who worked on my car, the Canadian farmer who raised the wheat in my bread, the guy from Washington state who grew my apples, the Orange grower in Florida who grew the apples in my juice, the dockworker in Los Angeles who offloaded the crate that contained the alarm clock made by the Japanese guy that I bought at Target which is run by the folks in Minnesota.


But, knowing how a product was made effects how useful or desireable a lot. For instance, let's assume Person A hates child labor and Producer B is selling shirts that are known to be made by child labor. Odds are, Person A would not desire Producer B's shirts because of that fact.

Unless person A does not have the time to research where the shirt was made and that country's labor practices.

[JazzRemington]

Originally posted by colonelguppy+--> (colonelguppy)yeah but that doesn't change the fact that even under communism things will have subjective value.[/b]

Who said things weren't subjectively valued? Use-value, if one cares to research it, is subjective. If no one values the Use-value it probably either won't be made or bought.


t_wolves_fan
Assuming I live in Washington, DC, it is slightly difficult to get to know the Koreans who worked on my car, the Canadian farmer who raised the wheat in my bread, the guy from Washington state who grew my apples, the Orange grower in Florida who grew the apples in my juice, the dockworker in Los Angeles who offloaded the crate that contained the alarm clock made by the Japanese guy that I bought at Target which is run by the folks in Minnesota.

Exactly.


Unless person A does not have the time to research where the shirt was made and that country's labor practices.

Oh, externalities! Will you ever learn?

[t_wolves_fan]

Originally posted by JazzRemington+Oct 10 2006, 05:21 PM--> (JazzRemington @ Oct 10 2006, 05:21 PM)
t_wolves_fan
Assuming I live in Washington, DC, it is slightly difficult to get to know the Koreans who worked on my car, the Canadian farmer who raised the wheat in my bread, the guy from Washington state who grew my apples, the Orange grower in Florida who grew the apples in my juice, the dockworker in Los Angeles who offloaded the crate that contained the alarm clock made by the Japanese guy that I bought at Target which is run by the folks in Minnesota.

Exactly.


Unless person A does not have the time to research where the shirt was made and that country's labor practices.

Oh, externalities! Will you ever learn? [/b]
What is your solution to these two factors.

[colonelguppy]

Who said things weren't subjectively valued? Use-value, if one cares to research it, is subjective. If no one values the Use-value it probably either won't be made or bought.

ok then i have no idea what point you're trying to make

[JazzRemington]

Originally posted by [email protected] 10 2006, 01:44 PM

Who said things weren't subjectively valued? Use-value, if one cares to research it, is subjective. If no one values the Use-value it probably either won't be made or bought.

ok then i have no idea what point you're trying to make
I wasn't trying to make a point. I was responding to a half-assed critique of something I put in my blog a while ago and the conversation got off track.

[t_wolves_fan]

Originally posted by JazzRemington+Oct 10 2006, 08:29 PM--> (JazzRemington @ Oct 10 2006, 08:29 PM)
[email protected] 10 2006, 01:44 PM

Who said things weren't subjectively valued? Use-value, if one cares to research it, is subjective. If no one values the Use-value it probably either won't be made or bought.

ok then i have no idea what point you're trying to make
I wasn't trying to make a point. I was responding to a half-assed critique of something I put in my blog a while ago and the conversation got off track. [/b]
Is your point then that because subjectivity would become obsolete in communism, so would use-value?

[JazzRemington]

Originally posted by t_wolves_fan+Oct 10 2006, 03:47 PM--> (t_wolves_fan @ Oct 10 2006, 03:47 PM)
Originally posted by [email protected] 10 2006, 08:29 PM

[email protected] 10 2006, 01:44 PM

Who said things weren't subjectively valued? Use-value, if one cares to research it, is subjective. If no one values the Use-value it probably either won't be made or bought.

ok then i have no idea what point you're trying to make
I wasn't trying to make a point. I was responding to a half-assed critique of something I put in my blog a while ago and the conversation got off track.
Is your point then that because subjectivity would become obsolete in communism, so would use-value? [/b]
Again, I was not trying to make a point. I was merely responding to a critique of something I wrote.

Subjectivity can never become obsolete. A use-value, while based on subjective evaluations, will never be obsolete because use-value IS the commodity.

[t_wolves_fan]

Originally posted by [email protected] 11 2006, 04:47 AM
Subjectivity can never become obsolete.
Some of your friends here disagree.

[JazzRemington]

Originally posted by t_wolves_fan+Oct 11 2006, 08:42 AM--> (t_wolves_fan @ Oct 11 2006, 08:42 AM)
[email protected] 11 2006, 04:47 AM
Subjectivity can never become obsolete.
Some of your friends here disagree. [/b]
And? It depends on the TYPE of subjectivity. It is a fact that people subjectively value goods. No one is arguing that Person A may like this commodity while Person B does not. What they're arguing against is that you cannot quantify how much someone values the commodity BECAUSE it is subjective.

The point is, you cannot measure subjectivity. It's not that it's worthless and has no point.

[t_wolves_fan]

Originally posted by JazzRemington+Oct 11 2006, 06:09 PM--> (JazzRemington @ Oct 11 2006, 06:09 PM)
Originally posted by [email protected] 11 2006, 08:42 AM

[email protected] 11 2006, 04:47 AM
Subjectivity can never become obsolete.
Some of your friends here disagree.
And? It depends on the TYPE of subjectivity. It is a fact that people subjectively value goods. No one is arguing that Person A may like this commodity while Person B does not. What they're arguing against is that you cannot quantify how much someone values the commodity BECAUSE it is subjective.

The point is, you cannot measure subjectivity. It's not that it's worthless and has no point. [/b]
Actually you can measure subjectivity in an economic sense on a macro scale.

Individuals may vary widely on how much they'll pay for a good or service. But groups of those individuals over time will create trend data - market prices - that is objective and measurable.

In a public policy sense, subjectivity can be measured by votes. People will vote for or against a policy choice for their subjective reasons.

What you cannot do is the reverse: make people change their subjective opinion with objective data. As a result, consensus on hard political issues is nearly impossible to achieve.

[ComradeRed]

Originally posted by [email protected] 11 2006, 10:51 AM
Actually you can measure subjectivity in an economic sense on a macro scale.

Individuals may vary widely on how much they'll pay for a good or service. But groups of those individuals over time will create trend data - market prices - that is objective and measurable.
Actually, you can't measure it at the macro level since the way it is measured is by integrating over the population (or market) size.

So really all you are doing is adding up every individual's preferences, which is subjective and immeasurable.

Further, you can't really predict the future based on the past. Otherwise you are forgetting that people are unique individuals that change their mind quite frequently.


In a public policy sense, subjectivity can be measured by votes. People will vote for or against a policy choice for their subjective reasons.

What you cannot do is the reverse: make people change their subjective opinion with objective data. As a result, consensus on hard political issues is nearly impossible to achieve. But the problem is that you are neglecting information, and the subjective evaluation therein.

We can measure use to be 1 (useful) as opposed to 0 (useless). Utility is nothing more than a boolean...it's there (1) or it isn't (0), it's a discrete measurement not a continuous one!

What you are instead trying to do is figure out the utility at a specific time (and then erreneously assume that it doesn't change with respect to time or information), and that is ultimately useless data.

There are easier ways to figure out the value of a thing without having to go through the contradictions of measuring subjectivity; but that would mean that the market would cease to be the magically effecient allocator of resources. And therein lies the problem for capitalists.

[t_wolves_fan]

Actually, you can't measure it at the macro level since the way it is measured is by integrating over the population (or market) size. So really all you are doing is adding up every individual's preferences, which is subjective and immeasurable.

Right, that's called putting together trend data. People may act for subjective reasons but you can measure their actions. That measurement is objective.


Further, you can't really predict the future based on the past. Otherwise you are forgetting that people are unique individuals that change their mind quite frequently.

Yes but the probability that people are going to en masse start valuing a Big Mac at 45 cents instead of $2 is quite low, and anyhow if suddenly enough people refuse to pay the going price for your good or service, you lower it until enough people are paying for you to stay in business or you go out of business.

It's called econometrics. Or more simply put, statistics.


There are easier ways to figure out the value of a thing without having to go through the contradictions of measuring subjectivity;

And that would be.

[ComradeRed]

Right, that's called putting together trend data. People may act for subjective reasons but you can measure their actions. That measurement is objective. Brilliant reasoning! Absolutely astounding!

People will do what they have done and never take into account experience. What a brilliant statement that is :rolleyes:


Yes but the probability that people are going to en masse start valuing a Big Mac at 45 cents instead of $2 is quite low, and anyhow if suddenly enough people refuse to pay the going price for your good or service, you lower it until enough people are paying for you to stay in business or you go out of business.

It's called econometrics. Or more simply put, statistics.Go to your local university bookstore or library, look up in the index of any introductory textbook on Econometrics the "identification" and Supply and demand curves.

You'll be shocked at what stupid assumptions are explicitly stated just trying to measure something as subjective as utility. Why? Because you can't model what you are describing...how much someone is willing to spend on any item is trivial.

If the price for an arbitrary item changes, that changes the money flow in the economy; where does this money go? Does it disappear into the void? Or does it go to pay for the means of production, which is used cyclically to pay for those means of production to be produced and so on.

It's a complex system of internal feed back loops; you simply cannot do as you are doing and state point blank "Ah, but that cannot happen because if the value changes then people will refuse to buy it because it's overpriced" etc etc etc. You are neglecting too much of the complexity of the economy if you do that.


And that would be. Neo-Ricardian economics, everyone knows this.

[t_wolves_fan]

Brilliant reasoning! Absolutely astounding!

People will do what they have done and never take into account experience. What a brilliant statement that is :rolleyes:

Except that isn't what I said. Let me try to be more clear. People will value a good at various rates. They'll value it for subjective reasons (it's pretty!) or objective reasons (I'm short this month). It doesn't matter. Enough people over time will purchase a good within a price range. The area of the price range above the cost to make that product will be the range that sellers will choose as their price.

That's playing the trend. Naturally, events will lead to prices that vary wildly from the trend, or something major will happen that causes the trend line to swing one way or the other. When that happens, I simply have to adjust my price based on the objective data.


It's a complex system of internal feed back loops; you simply cannot do as you are doing and state point blank "Ah, but that cannot happen because if the value changes then people will refuse to buy it because it's overpriced" etc etc etc. You are neglecting too much of the complexity of the economy if you do that.

Good thing I didn't say that either. If you want to relive the capital controversy be my guest; I'm not even sure why you're bringing it up.

[ComradeRed]

Except that isn't what I said. Let me try to be more clear. People will value a good at various rates. They'll value it for subjective reasons (it's pretty!) or objective reasons (I'm short this month). It doesn't matter. Enough people over time will purchase a good within a price range. The area of the price range above the cost to make that product will be the range that sellers will choose as their price.
And you really don't suppose that this changes enough such that it would effect statistical analysis? :huh:

It's just so terribly ironic that you are proposing that the economy is complex, yet should be analyzed in a reductionistic way to ignore the complexity rather than a holistic way to incorporate the irregularities.

By the by, this really doesn't explain the phenomena of value. The choice of a consumer is irrelevant to the price of a good. If you suppose that the STV is right, it doesn't even work under its own assumptions! Again, look at the Neo-Ricardian critique.


Good thing I didn't say that either. If you want to relive the capital controversy be my guest; I'm not even sure why you're bringing it up. Look, you are intentionally using ceteris paribus (albeit tacitly) which neglects the complexity of the economy.

What's so tragicomical is that if you bother to go and look at the US real GDP for the last 50 or so years and graph this against the size of the labor force, then take the labor derivative of the regression, you get a constant. According to Neoclassical analysis you should get a curve, but that's all tangential...I guess observation is only selectively used in economics, eh?

At any rate, the capital controversy demonstrates one of the many undeniable flaws in Neoclassical economics; of course I can't blame you for trying to ignore them. And that's the only way that this entire rant of yours would be consistent, about the STV and so forth, that you initially had in the beginning of this thread.

Selective observation used, once again, in economics.

[colonelguppy]

its really not all that difficult to monitor commodity values in the market.

[ComradeRed]

Originally posted by [email protected] 11 2006, 01:31 PM
its really not all that difficult to monitor commodity values in the market.
You really don't have a clue, do you?

[colonelguppy]

i guess but we'll never know enless you actually give a response.

[ComradeRed]

Originally posted by [email protected] 11 2006, 01:50 PM
i guess but we'll never know enless you actually give a response.
I presume you subscribe to the STV?

Well, you can't measure utility, since it's by definition subjective (and subjective things are conceptually those that cannot be measured, like emotions or utility).

This is a serious problem because if you draw a function of the number of commodities consumed and have that be equal to the total utility yielded from the number of commodities consumed, then take the quantity derivative of this function, you get the diminishing marginal utility curve, OK?

Now this diminishing marginal utility curve is used to find the demand curve and that gives us (coupled with the supply curve) the price of the supposed good, OK?

Well, as the utility definition states, you can't measure utility, which means you cannot measure the demand curve, OK?

That is a serious problem for the STV.

[colonelguppy]

demand ism't necessarilly related to utility of product. it often does, but that doesn't mean you have to make an arbitrary calculation of to know how much of something is being sold and consumed. if you wish to predict future demand this may become problematic, but its not entirely difficult to make an accurate guess. if your wrong you adjust and learn, its not that big of a deal.

i really don't see the impact of your arguement.

[ComradeRed]

Originally posted by [email protected] 11 2006, 02:15 PM
demand ism't necessarilly related to utility of product. it often does, but that doesn't mean you have to make an arbitrary calculation of to know how much of something is being sold and consumed. if you wish to predict future demand this may become problematic, but its not entirely difficult to make an accurate guess. if your wrong you adjust and learn, its not that big of a deal.

i really don't see the impact of your arguement.
Well, first off I would suggest that you read a fucking book. Every elementary microeconomics textbook has a section on deriving the demand curve from the diminishing marginal utility curve.

The method of post-factum calculations are contrary to the Neoclassical notion of "science" since you aren't making definite predictions (see Friedman's infamous article on the scientific method in Economics for details on the Neoclassical notion of science).

How would you predict future demand curves? You can't even predict present demand curves, and would have an extremely difficult time attempting to piece together those of the past!

So your solution is to "guess-and-check"? Yeah, it's like weather forecasting: the weatherman is always wrong; or in your case, the economist.

"I predict there will be a recession in the next 10 years" :lol: brilliant!

[t_wolves_fan]

And you really don't suppose that this changes enough such that it would effect statistical analysis? :huh:

Of course not, changes will be picked up in the statistical analysis. I'm not trying to say the analysis will be predictive, I'm saying the analysis will provide a snapshot of the choices being made.


It's just so terribly ironic that you are proposing that the economy is complex, yet should be analyzed in a reductionistic way to ignore the complexity rather than a holistic way to incorporate the irregularities.

You're taking what I said on a very simple and high level and trying to make it more complex than it is.

Of course the global economy is completely complex. Of course a statistical model of the aggregate choices being made today does not predict the choices of tomorrow.


By the by, this really doesn't explain the phenomena of value. The choice of a consumer is irrelevant to the price of a good. If you suppose that the STV is right, it doesn't even work under its own assumptions! Again, look at the Neo-Ricardian critique.

I don't suppose the STV is right and I've looked at the Neo-Ricardian critique. Neither really explains value all that well, which is why they're theories.


I guess observation is only selectively used in economics, eh?

Observation is always used selectively in theoretical arguments. You're pretending that I'm some staunch defender of a certain economic theory. I'm not because theories help explain things sometimes but generally fail to provide proof of why everything works. I learned plenty of theory about how government works in grad school, but once I worked in government I found most of those theories went out the window.

I am talking about observation for observation's sake. Right now, people seem to be willing to pay $1 for a can of soda and suppliers are willing to sell it at that price. I don't pretend that observation explains why the price is what it is.

[ComradeRed]

Of course not, changes will be picked up in the statistical analysis. I'm not trying to say the analysis will be predictive, I'm saying the analysis will provide a snapshot of the choices being made. No, not really, unless you mean explained as part of the standard deviation and then dismissed as an uninteresting fluke.


You're taking what I said on a very simple and high level and trying to make it more complex than it is.

Of course the global economy is completely complex. Of course a statistical model of the aggregate choices being made today does not predict the choices of tomorrow.No, I'm merely pointing out that your modus operandi is a contradiction.


I don't suppose the STV is right and I've looked at the Neo-Ricardian critique. Neither really explains value all that well, which is why they're theories. Economics is not a usualy science, in the sense that it uses the words "Theory", "Law", and "Principle" interchangeably.

Even the economists admit this!

So I could have just as easily said the Law of Subjective Value ;)

At any rate, the Neo-Ricardians have demonstrated that it is impossible to find the supply and demand curves under the two assumptions of a static analysis and the economy being in constant equilibrium.

I don't know what you think about that, but that (just on face value) presents a serious problem to the STV paradigm.


I am talking about observation for observation's sake. Right now, people seem to be willing to pay $1 for a can of soda and suppliers are willing to sell it at that price. I don't pretend that observation explains why the price is what it is. And the explanation you've adopted is the STV's explanation...which, as I've mentioned, has serious problems.

Frankly, you seem to be wondering why people are willing to pay $1 for soda, but that's really an irrelevant question.

The fact is that they do, and this can be represented as a boolean value (1 or 0)...and the process to decide to buy or not would be some arbitrary boolean valued function. That's pretty much all that is necessary to do here; if we assumed that the consumer determines the price directly, then we would switch the dependent and independent variables around which is not good.

The consumer may have indirect influence on price, but it's hard to say; it could be that they instead have indirect control of inflation which affects the price instead. But price is not set directly by the consumer, and then the firms just randomly say "Hey, that sounds like a good price, OK!" It's the other way round, the firms set the price and the consumer says "Hey, that sounds like a good price, OK!" in modern economies anyways.

[t_wolves_fan]

:lol:

Good lord.

Red, all I've said is that you can measure actions made for subjective reasons with objective tools. That's it.

Do you understand that? Is that clear enough for you?

I specifically said I'm not trying to measure why people make a given decision, yet you claim that's exactly what I'm trying to do.

But, at the risk of encouraging you further,


But price is not set directly by the consumer, and then the firms just randomly say "Hey, that sounds like a good price, OK!" It's the other way round, the firms set the price and the consumer says "Hey, that sounds like a good price, OK!" in modern economies anyways.

This is not true. Firms do not simply come up with new products and slap prices on them. They analyze the market, determine how much their good would cost to make, and decide if they can offer the product at a price that people will pay that will enable them to make money. So yes, the consumer does help determine the price because if too few consumers are willing to pay, the producer is not going to sell. And vice-versa, if consumers decide they will pay only $2 for something that costs $3 to make, nobody is going to produce and sell it (except perhaps for commercial airlines. :lol:).

[t_wolves_fan]

I tell you what Red, if you want to have this discussion, let's have it based on how Candy Land (communist utopia) would work, instead of on the strengths or weaknesses of any given economic theory. My economic theory education has been drank away.

[red team]

The consumer may have indirect influence on price, but it's hard to say; it could be that they instead have indirect control of inflation which affects the price instead. But price is not set directly by the consumer, and then the firms just randomly say "Hey, that sounds like a good price, OK!" It's the other way round, the firms set the price and the consumer says "Hey, that sounds like a good price, OK!" in modern economies anyways.

That's also assuming that consumer demand is elastic and always corresponds to price which is not always the case. For example, if the price of gasoline rises I would have to pay more for gas to drive to my job. So should I pay more for gas or lose my job? Most cities don't have enough public transport capacity for everybody to take a bus to work and in the free market public goods are detrimental to business by interfering with "natural" market price determination.

[t_wolves_fan]

Originally posted by red [email protected] 12 2006, 07:16 PM
That's also assuming that consumer demand is elastic and always corresponds to price which is not always the case. For example, if the price of gasoline rises I would have to pay more for gas to drive to my job. So should I pay more for gas or lose my job? Most cities don't have enough public transport capacity for everybody to take a bus to work and in the free market public goods are detrimental to business by interfering with "natural" market price determination.
How many commodities out there are inelastic in the way gasoline is.

"Food" as a sector may be inelastic, but there are plenty of substitutes within the sector. Pretty much anything else can be bought used.

[colonelguppy]

Originally posted by ComradeRed+Oct 11 2006, 05:33 PM--> (ComradeRed @ Oct 11 2006, 05:33 PM)
[email protected] 11 2006, 02:15 PM
demand ism't necessarilly related to utility of product. it often does, but that doesn't mean you have to make an arbitrary calculation of to know how much of something is being sold and consumed. if you wish to predict future demand this may become problematic, but its not entirely difficult to make an accurate guess. if your wrong you adjust and learn, its not that big of a deal.

i really don't see the impact of your arguement.
Well, first off I would suggest that you read a fucking book. Every elementary microeconomics textbook has a section on deriving the demand curve from the diminishing marginal utility curve.

The method of post-factum calculations are contrary to the Neoclassical notion of "science" since you aren't making definite predictions (see Friedman's infamous article on the scientific method in Economics for details on the Neoclassical notion of science).

How would you predict future demand curves? You can't even predict present demand curves, and would have an extremely difficult time attempting to piece together those of the past!

So your solution is to "guess-and-check"? Yeah, it's like weather forecasting: the weatherman is always wrong; or in your case, the economist.

"I predict there will be a recession in the next 10 years" :lol: brilliant! [/b]
do you ever provide an impact for your arguements?

either way, i've always looked at economics as a social science, not an exact one. hard empirical analysis can be useful in many applications but not in all.

[Dr. Rosenpenis]

Originally posted by t_wolves_fan+Oct 12 2006, 05:06 PM--> (t_wolves_fan @ Oct 12 2006, 05:06 PM)
red [email protected] 12 2006, 07:16 PM
That's also assuming that consumer demand is elastic and always corresponds to price which is not always the case. For example, if the price of gasoline rises I would have to pay more for gas to drive to my job. So should I pay more for gas or lose my job? Most cities don't have enough public transport capacity for everybody to take a bus to work and in the free market public goods are detrimental to business by interfering with "natural" market price determination.
How many commodities out there are inelastic in the way gasoline is.

"Food" as a sector may be inelastic, but there are plenty of substitutes within the sector. Pretty much anything else can be bought used. [/b]
all utilities -- which accounts for a tremendous share of many household's expenses

[ComradeRed]

Originally posted by [email protected] 12 2006, 08:47 AM
I tell you what Red, if you want to have this discussion, let's have it based on how Candy Land (communist utopia) would work, instead of on the strengths or weaknesses of any given economic theory. My economic theory education has been drank away.
Don't worry, I know you'll never understand it.

[t_wolves_fan]

Originally posted by [email protected] 13 2006, 04:43 AM

Don't worry, I know you'll never understand it.
:lol:

Figures.

You're like the arch-capitalists I used to argue with who thought they were geniuses because they got an "A" in high school economics.

"Look at me! I know the ins and outs of Austrian economics! I'm brilliant!"

The arrogance and ignorance of youth.

:D