Marxist economics versus bourgeois economics

[Dejavu]

Informative post. You realized what I realized a long time ago. I used to be a Marxist until I started becoming more familiar with economics. Then I realized that Marx's Labor Theory of Value made no sense in the real world and cannot be justified as functioning within markets already.

By effectively debunking the Labor Theory of Value ( See Bohm-Bawark and Mises) the whole premise of worker 'exploitation' sinks in the water.
Since the LTV was Marx's foundation to the rest of his social , political , and economic additions his whole argument is meaningless and apart from reality.

What the US economy is today is a mixed economy. Defenders of the Free Market such as myself see diminishing capitalistic qualities within the US markets because of the massive government intervention.

LSD , you started on the path to wisdom though I wouldn't hang my hopes on someone like Obama or any of the Republicrats. A mixed economy is doomed to fail since socialism and capitalism are directly in opposition to the ownership of the means of production. It is that very ownership that either allows the economy to prosper or fail.

[Led Zeppelin]

By effectively debunking the Labor Theory of Value ( See Bohm-Bawark and Mises) the whole premise of worker 'exploitation' sinks in the water.

You're a bit of a moron aren't you?

Böhm-Bawerk was refuted about 100 years ago: Böhm-Bawerk's Criticism of Marx (http://www.marxists.org/archive/hilferding/1904/criticism/index.htm)

[RNK]

Lol, that is the most retarded claim I've ever seen since that one guy who tried to argue that Bill Clinton was a Marxist.

The big point, which everyone (capitalist) seems to forget, is that this all depends on who is in control of the government.

Overwhelmingly the author of that little diatrab seems to be completely oblivious to the difference between a democratically-decided function, and a beauraucratic officiality.


If you do not comply with the government about your 'own' property they can shut down your business or seize your property outright.

This doesn't help when business leaders and corporate interests are the ones who control the government. I somehow doubt Bush would seize the property of his daddy's company, or the companies of the thousands of rich businessmen who donate tens of millions of dollars to him and his party annually.


This gives the government the ability to hike up taxes when every they wish. Indeed, we have a progressive Income Tax.

Again, in a government controlled by the rich, what do you think is in their best interests?


Were partially there and the government is still the ultimate authority on this.

Who's the ultimate authority? And has it been abolished? Is it on the way to being abolished? No and no.


See IRS.

Probably the silliest of them all.


See the United States Central Bank commonly called the Federal Reserve.


And yet private banks shuffling private finance still exist, and generate billions in profit per annum.


6. Centralization of the means of communication and transport in the hands of the state.

Oh, so the government (and thus the people) own CBS, NBC, Fox? And all of those truck drivers, pilots and shippers work for the government?


Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.


Keyword "owned by the state" (and thus the people).

No use in going on further. The author obviously is incapable of distinguishing the difference between something owned by democracy, and a beauraucratic department headed by corporate interests whose tasks are nothing more than observation and recommendation.

[Dejavu]

Heh, people around here are so against the market. Yet most of them don't even know what the "market" is (no, it isn't "capitalism"). Remember what I said about anarchism above? Well some anarchists answered this question with "the market". They thought that freedom was only achievable when a person was able to have full control of their own life, which meant "owning" property to do so.


Capitalism implies private ownership including over the factors of production over all orders in production. Every order of production has a market price for all the factors; land,labor, and capital.

The market is merely a social structure that facilitates trade of ownership between two or more parties. There is always a buyer and always a seller. Without two or more parties of ownership prices cannot be determined , economic calculation cannot be done, and irrational allocation of resources ensue causing shortages.

In a socialist commonwealth implying one common owner the market simply cannot function.

If we lived in a world absent of scarcity then there would be no need for markets,economics,and certainly not capitalism. Of course, thats just unrealistic.

[Dejavu]

You're a bit of a moron aren't you?

Böhm-Bawerk was refuted about 100 years ago: Böhm-Bawerk's Criticism of Marx

Yet mainstream economics seems to accept Bohm-Bawerk's conclusion. Marginal Utility based on Subjective Theory of Value is the prevailing authority in economic evaluation.

[Dejavu]

RNK : I was simply pointing out the centralization tactics of the Federal Government which seems to follow the Communist Manifesto closely.

[RNK]

Only if you first cut out certain incredibly important aspects of both, in which case you are looking at nothing more than a fabricated connection and not anything based in any sort of reality. By such a tactic you could easily find similarities between two of anything, if you narrow the fields of observation down enough.

[Led Zeppelin]

Yet mainstream economics seems to accept Bohm-Bawerk's conclusion. Marginal Utility based on Subjective Theory of Value is the prevailing authority in economic evaluation.

Who gives a shit?

Most people also believe in God, that doesn't mean he exists.

[Dejavu]

Who gives a shit?

Most people also believe in God, that doesn't mean he exists.

Two things. We should be able to move on since Bohm-Bawerk clearly did defeat Marx on Value Theory and showed 'exploitation' to be a false construct of Marx's mind. Whether you accept it or not the market functions precisely because individuals subjectively evaluate everything they think of purchasing including you.

Just as surely there is no proof that God exists, there is no 'smoking gun' proof that He doesn't exist. ;)
But I'm an agnostic personally.

[Dejavu]

Only if you first cut out certain incredibly important aspects of both, in which case you are looking at nothing more than a fabricated connection and not anything based in any sort of reality. By such a tactic you could easily find similarities between two of anything, if you narrow the fields of observation down enough.

The reality is obvious. An increase of government through very similar methods as described in the Communist Manifesto.

[Led Zeppelin]

Two things. We should be able to move on since Bohm-Bawerk clearly did defeat Marx on Value Theory and showed 'exploitation' to be a false construct of Marx's mind. Whether you accept it or not the market functions precisely because individuals subjectively evaluate everything they think of purchasing including you.

You have to learn that just because you say something is so, it doesn't make it an objective fact.

Read that link I posted which refutes Böhm-Bawerk's criticism of Marx and then proceed to shut up.

[RNK]

Lol, that is one of the most bloated claims I've ever seen in OI. Did you take a lot of drugs in your hippy days, pops?

[Dejavu]

Facades usually stay up long after core of the system is rotted out, if we look behind the capitalist facade the capitalism system has been dying since the 1970's. The crises of capital keeps getting worse, the current housing/debt bubble is far worse then the tech bubble that is worse then the stagflation of the 70's. Corruption in the capitalist world is now surpassing anything that was in the USSR, and there is rising worker apathy toward their tasks thus less and less gets done (like in the USSR leading up to collapse of the USSR).

Even the bourgeois are petrified of the recent market crash, more and more bourgeois economists are starting to say the sky is falling they are not even factoring the peaking of production due to finite nature of Earth that is looming.

You see a capitalist system that endures, I see a crumbling system.

I have to agree with this. Capitalism has been under fire and pretty much reverted back to Mercantilism ever since the late 1800s. Thanks of course, to interventionalist government.

[Bud Struggle]

Facades usually stay up long after core of the system is rotted out, if we look behind the capitalist facade the capitalism system has been dying since the 1970's. The crises of capital keeps getting worse, the current housing/debt bubble is far worse then the tech bubble that is worse then the stagflation of the 70's. Corruption in the capitalist world is now surpassing anything that was in the USSR, and worker apathy toward their tasks thus less and less gets done (like in the USSR leading up to collapse of the USSR).

Even the bourgeois are petrified of the recent market crash, more and more bourgeois economists are starting to say the sky is falling they are not even factoring the peaking of production due to finite nature of Earth that is looming.

You see a capitalist system that endures, I see a crumbling system.

The Capitalist system changes, grows, mutates, evolves, expandes, contracts, biforcates, dies and then rises from it's own ashes. It's a pretty resilient system to say the least. It's demise has been forcast for the past 150 years, by Marx and Engels and Lenin, and Luxemburg and Trotsky and Mao and others and they are all gone. But Capitalism still here bigger and stronger than ever.

There's been market crashes, real estate crashes, bond crashes, stock scams and all sorts of fraud and deception. Yet it still reins supreme.

China, a Communist country (kind of at least) is (without democracy) growing to be one of the biggest Capital markets in the world. The Soviet Union is gone, the Communist countries of Eastern Europe are gone, Castro is on his death bed.

And you are waiting (waiting!)
Waiting for the world to change.

All the best to you.:hammersickle:

[RNK]

An increase of government through very similar methods as described in the Communist Manifesto.

As I said, the word similar in this instance is entirely subjective and relies upon conveniently ignoring quote a bit of fact. But judging by everything you've said thus far, it seems one of your forte's is conveniently ignoring fact.

[Dejavu]

You have to learn that just because you say something is so, it doesn't make it an objective fact.

Read that link I posted which refutes Böhm-Bawerk's criticism of Marx and then proceed to shut up.

You're falling fast in this debate. I'd suggest comming up with better refutations.

Lets take a short example and see if I'm right.

If you're sitting in a resturant and your hungary, and objective fact is that you are hungary. Now the issues of how hungary are you? What do you wan't to eat? and how much are you willing to pay? are completly subjective.
You see a menu, you are evaluating what you feel like eating on that menu which is completly a subjective analysis by you. You see an item for $10 that your going to go with and your willing to pay that much.

Now whats really going on? Whats going on is this, you want to spend $10 on that particular item because you already evaluated the alternative costs. By alternative costs I mean you value that $10 item more than the $10 and anything else you can purchase with that $10.

You, as an individual, evaluated what you value most at that time. You determine the value of a commidity because you see it as a particular means to satisfy an ends ( in this case food you like to satisfy your hunger.)

Its not that difficult to understand I don't think. It might be for you though.

[Dejavu]

As I said, the word similar in this instance is entirely subjective and relies upon conveniently ignoring quote a bit of fact. But judging by everything you've said thus far, it seems one of your forte's is conveniently ignoring fact.

Its not that difficult RNK. I wish you wouldn't overcomplicate things for yourself. Its obstructs understanding.

Provision 5 of the CM calls for a Central Bank.
We know the United States in 1913 passed the Federal Reserve act creating a central bank that hasn't been dismantled yet.

Its pretty clear cut.

[Led Zeppelin]

You're falling fast in this debate. I'd suggest comming up with better refutations.

Lets take a short example and see if I'm right.

If you're sitting in a resturant and your hungary, and objective fact is that you are hungary. Now the issues of how hungary are you? What do you wan't to eat? and how much are you willing to pay? are completly subjective.
You see a menu, you are evaluating what you feel like eating on that menu which is completly subjective analysis by you. You see an entry for $10 that your going to go with and your willing to pay that much.

Now whats really going on? Whats going on is this, you want to spend $10 on that particular entry because you already evaluated the alternative costs. By alternative costs I mean you value that $10 entry more than the $10 and anything else you can purchase with that $10.

You, as an individual, evaluated what you value most at that time. You determine the value of a commidity because you see it as a particular means to satisfy an ends ( in this case food you like to satisfy your hunger.)

Its not that difficult to understand I don't think. It might be for you though.

Look you dimwit, I'm not going to discuss this with you here because:

1. Even you don't know what the subjectivist economic theory is about, so I would be arguing against your version of it which is moronic anyway.

2. I already linked you to a work which refutes the subjectivist theory, and me arguing with you wouldn't change the fact that it has already been refuted. If you would move your fingers around a little and stop being such a lazy idiot, you would click on that link and start reading.

3. It would derail this thread and I'm not interested in having to split this thread because I wouldn't pursue that discussion anyway for the reasons I mentioned above.

Now as I said before, proceed to shut up, or I'll have to split your post into the trash can.

[Demogorgon]

Deja Vu, I will make this brief, I am trying not to argue with lunatic free-marketters like you because it is like trying to discuss democracy with a Stalinist, but I must make a few brief points

1. Not withstanding my own support for the LTV, you can show how exploitation happens without using it at all. See David Schweickart

2. You have some cheek appealing to "mainstream economics" when the shit you are sprouting here is far from mainstream. The Austrian style crap you are coming up with here is anything but mainstream-largely because it is crap

3. This last one isn't so much a point as me simply laughing at your expense, but you do realise there is a reason capitalism has never existed with anything close to a lack of government intervention, don't you? Let's go one step further, can you think why? :lol:

[Psy]

The Capitalist system changes, grows, mutates, evolves, expandes, contracts, biforcates, dies and then rises from it's own ashes. It's a pretty resilient system to say the least. It's demise has been forcast for the past 150 years, by Marx and Engels and Lenin, and Luxemburg and Trotsky and Mao and others and they are all gone. But Capitalism still here bigger and stronger than ever.

There's been market crashes, real estate crashes, bond crashes, stock scams and all sorts of fraud and deception. Yet it still reins supreme.

China, a Communist country (kind of at least) is (without democracy) growing to be one of the biggest Capital markets in the world. The Soviet Union is gone, the Communist countries of Eastern Europe are gone, Castro is on his death bed.

And you are waiting (waiting!)
Waiting for the world to change.

All the best to you.:hammersickle:
If you look the crises in capitalism keep getting worse, the bourgeois states had to bail the last crash but the fall out of the last crash is still happening.

Capitalism is weaker then ever, capitalism was stronger even during the Great Depression then it is now. The market is swimming in debt, has sluggish growth and the last wave of speculation has destroyed large amounts of capital and shaken peoples faith in the market.

[Dejavu]

Look you dimwit, I'm not going to discuss this with you here because:

1. Even you don't know what the subjectivist economic theory is about, so I would be arguing against your version of it which is moronic anyway.

2. I already linked you to a work which refutes the subjectivist theory, and me arguing with you wouldn't change the fact that it has already been refuted. If you would move your fingers around a little and stop being such a lazy idiot, you would click on that link and start reading.

3. It would derail this thread and I'm not interested in having to split this thread because I wouldn't pursue that discussion anyway for the reasons I mentioned above.

Now as I said before, proceed to shut up, or I'll have to split your post into the trash can.

1. LOL, sorry. I don't know what subjective theory of value is? :laugh: Why don't you educate me in your own words or is it that you don't know what you're talking about?

2. The link attempts to refute Bohm-Bawerk but fails miserably and this is due to the fact that mainstream economics declares Bohm-Bawerk the winner. And Bohm-Bawerk was of the Austrian school as well which isn't even mainstream but some Austrian ideas are at least. Furthermore, its a Marxist site that is biased and hardly objective. Just look at the results and you will see Marx was plainly wrong (as were some of the classical economists) with the LTV. Accepting that fact isn't always easy ( It wasn't immediate for me back when I was a Marxist) but the sooner you accept it the sooner you will see clarity.

3. See the clarity in the simple example I illustrated for you. The fact that you would attempt to dismantle my postings only shows the frustration of a defeated debator.

[Publius]

You're falling fast in this debate. I'd suggest comming up with better refutations.

Lets take a short example and see if I'm right.

If you're sitting in a resturant and your hungary,

Whose Hungary?

I don't have a Hungary, and I suspect Zep doesn't either.


and objective fact is that you are hungary.

First you suppose he has a Hungary, now you're trying to tell us he IS Hungary?

I'm having trouble following.



Now the issues of how hungary are you?

Well, if he WERE Hungary, then he'd be about as Hungary as it's possible to be.


What do you wan't to eat?

Austria?

[Dejavu]

Deja Vu, I will make this brief, I am trying not to argue with lunatic free-marketters like you because it is like trying to discuss democracy with a Stalinist, but I must make a few brief points

1. Not withstanding my own support for the LTV, you can show how exploitation happens without using it at all. See David Schweickart

2. You have some cheek appealing to "mainstream economics" when the shit you are sprouting here is far from mainstream. The Austrian style crap you are coming up with here is anything but mainstream-largely because it is crap

3. This last one isn't so much a point as me simply laughing at your expense, but you do realise there is a reason capitalism has never existed with anything close to a lack of government intervention, don't you? Let's go one step further, can you think why? :lol:

1. Learn about Time Preference , interest, and marginal productivity to see that the 'exploitation' aspect is utter crap lest you want to remain a lightweight in the economic field. Schweickart is a pseudo-utopian. The very term ' market socialism' is an oxymoron. Learn something about the absurdity of socialist economics. You can start with evaluating the LTV one more time.

2. Austrians were instrumental in the marginalist revolution originally inspired by Carl Menger. Mainstream economics acknowledges the contributions of the Austrians school ( along with others) in this regard and applies it today. The reason the Austrians are 'side-lined' is because Austrianism would require virtually all reliquishment of the iron grip the govt has on the market. The government has an addiction to inflationism and wont heed the words of the Austrians, which by-the-way, predicted the Great Depression with pioneering the ABCT.

3. Capitalism can thrive best without intervention. Contrary to this , socialism needs central authority and central planning or else it would devolve into violent primitivism simply because of the lack of the ability to economize resources. Non-interventionalism allows free markets to work freely. When the government controls the markets like it does it becomes more akin to Mercantilism. The old American wild-west for the most part was semi-anarchy mixed with capitalism. The American West already cultivated a prosperous civilization before the government assumed full control.

[Demogorgon]

1. Learn about Time Preference , interest, and marginal productivity to see that the 'exploitation' aspect is utter crap lest you want to remain a lightweight in the economic field. Schweickart is a pseudo-utopian. The very term ' market socialism' is an oxymoron. Learn something about the absurdity of socialist economics. You can start with evaluating the LTV one more time.

2. Austrians were instrumental in the marginalist revolution originally inspired by Carl Menger. Mainstream economics acknowledges the contributions of the Austrians school ( along with others) in this regard and applies it today. The reason the Austrians are 'side-lined' is because Austrianism would require virtually all reliquishment of the iron grip the govt has on the market. The government has an addiction to inflationism and wont heed the words of the Austrians, which by-the-way, predicted the Great Depression with pioneering the ABCT.

3. Capitalism can thrive best without intervention. Contrary to this , socialism needs central authority and central planning or else it would devolve into violent primitivism simply because of the lack of the ability to economize resources. Non-interventionalism allows free markets to work freely. When the government controls the markets like it does it becomes more akin to Mercantilism. The old American wild-west for the most part was semi-anarchy mixed with capitalism. The American West already cultivated a prosperous civilization before the government assumed full control.

Oh for fucks sake :lol: This is why I try to avoid you lunatics, as mad as hatters the lot of you.

1. I know about all of those things, and can tell straight away that even if I had never heard of them I would still likely know more economics than you. Your absolutely woeful level of understanding of capitalist economics, never mind leftist varieties ensures that.

2. You need to resort to a conspiracy theory to explain why your pet theory is ignored. Oh dear. How about the rather more obvious point that it is ignored because it is unscientific junk that is ignored by everyone save for lonely teenagers down to the fact that it says it is right "just because" and it ignores such things as econometrics, utterly vital for any understanding of economics

3. God help us, a wild west fantasy to try and back you up. Tell you what seeing as this town ain't big enough for the both of us (and you are incredibly unlikely to come up with a real advantage) we will duel it out on our six shooters...I get to be John Wayne though.

[mikelepore]

1. LOL, sorry. I don't know what subjective theory of value is? :laugh: Why don't you educate me in your own words or is it that you don't know what you're talking about?

The subjective theory of value says that it's only your state of mind, for example, that a candy bar is a dollar, and a jet plane is a billion dollars. I you were to go in with a different state of mind, in a different mood, you could just as likely find the opposite, that a candy bar sells for a billion dollars, while a jet plane sells for a dollar. The theory says that neither scenario is more real or more probable than the other, that it's only a mental preference, like one person saying that pepperoni on a pizza tastes better than mushrooms, while the other person believes the opposite.

Ovviously, the subjective theory of value is absolutely wrong. The quantitative exchange relationships among various commodities are external realities; they are not states of mind. If capitalism is to be defended by use of the subjective theory of value, we shouldn't be too surprised that people will defend a brutally oppressive system by invoking a preposterous excuse.

[mikelepore]

Your signature quote:


"All rational action is in the first place individual action. Only the individual thinks. Only the individual reasons. Only the individual acts."- Ludwig Von Mises

Professor Mises must have suffered from hallucinations to offer that as an defense of capitalism. Just about the first thing the capitalists realized they had to do was to get rid of the sole proprietorship by the "Captain of Industry", and replace it with the joint stock corporation that uses decision-making by committee.

Then, when socialists recommend that the committee of directors should be composed of workers' delegates instead of stockholders' delegates, a defender of capitalism pretends that it's capitalism that enjoys the rationality that can be found only in the all-wise individual.

[mikelepore]

3. Capitalism can thrive best without intervention. Contrary to this , socialism needs central authority and central planning or else it would devolve into violent primitivism simply because of the lack of the ability to economize resources. Non-interventionalism allows free markets to work freely. When the government controls the markets like it does it becomes more akin to Mercantilism. The old American wild-west for the most part was semi-anarchy mixed with capitalism. The American West already cultivated a prosperous civilization before the government assumed full control.

Your point #3 is devoid of content because it is self-referential, like a dictionary that defines a word by using the same word. You claim that the goal and the tactic are the same thing. The goal is to have a competitive market that is left alone by government, and the tactic for achieving that goal is to have a competitive market that is left alone by government.

Your claim could have been structured so that it does have some argumentative content, but then it would still rely on historical fiction just as much. It has always been profit-seeking business that has wanted big government. It has always been capitalism's government over the population. When "government controls the markets" it has always been the capitalists who participate in those markets who are exerting control over their own markets, by use of their own convenient instrument, the government.

Finally: The whole discussion of interventionism versus non-intervensionism has _nothing_ to do with the discussion of capitalism versus socialism. You speak as though socialists are people who want a capitalist marketplace with the addition of several new regulations. Anyone who thought that may need to attend a remedial reading class.

[Demogorgon]

I wouldn't argue with him too much, he has read a few Wikipedia articles and thinks he is now Adam Smith. The fact he thinks that current capitalism is Mercantilism kind of indicates that.

I am not very good at it yet, but I am doing my best not to argue with lonely misanthropic teenagers who come up with capitalism is free-dumb LOL" arguments. They usually grow out if it in a few months anyway. Why waste the effort?

[ComradeRed]

Capitalism implies private ownership including over the factors of production over all orders in production. Uh...no.

The important characteristics of capitalism pertain to the method of production and distribution of commodities, as well as the class structure.

That's how one can contrast it from feudalism.


Every order of production has a market price for all the factors; land,labor, and capital. The "three factors of production" have been rather rigorously criticized. The response from the marginalists: nothing!

See Sraffa's 1926 paper "The Laws of Returns Under Competitive Conditions" (http://cepa.newschool.edu/het/texts/sraffa/sraffa26.htm).


The market is merely a social structure that facilitates trade of ownership between two or more parties. There is always a buyer and always a seller. This is more or less right, it's been identified since Smith's times and Marx expounded upon it rather rigorously in Das Kapital vol. I, Chapter 2 (http://marxists.org/archive/marx/works/1867-c1/ch02.htm).


Without two or more parties of ownership prices cannot be determined , economic calculation cannot be done, and irrational allocation of resources ensue causing shortages. Where did you copy/paste this from?

As per the price mechanism, it works with or without a consumer agent.

The price mechanism isn't determined by the buyer...that's kind of one of the big points Austrian economists miss completely.

Largely because if you assume it works in such a manner, you end up with mathematically inconsistent models.


If we lived in a world absent of scarcity then there would be no need for markets,economics,and certainly not capitalism. Of course, thats just unrealistic. If you use the unrealistic definition of "scarcity" as used by economists, then you may be on to something.


Yet mainstream economics seems to accept Bohm-Bawerk's conclusion. Marginal Utility based on Subjective Theory of Value is the prevailing authority in economic evaluation. Yet mainstream economics is mathematically inconsistent.

You can't measure marginal utility, so much for the "Subjective" theory of value.

Ignoring this difficulty, there are other obstacles to the marginalist theory of consumer behavior.

The economic theory of consumer behavior collapses to this: if the market economy has only one consumer, the economy consisted of only one commodity, and that consumer only ever consumes the one commodity, then individual utility can be summed to yield social utility.

With more than one consumer or more than one commodity, Gorman correctly identifies that "Community indifference and utility possibility loci are among the most useful concepts of welfare economics. Their great disadvantage s that they may intersect...Thus the analysis...frequently becomes inconclusive." (Gorman, "Community Preference Fields", Econometrica, 21: 63-80)

This "disadvantage" formally invalidates much of economic theory.

It should be noted this only scratches the surface of the numerous criticisms of marginalist consumer behavior.


2. The link attempts to refute Bohm-Bawerk but fails miserably and this is due to the fact that mainstream economics declares Bohm-Bawerk the winner. This isn't a logically valid argument. As a matter of fact, it's a fallacy! It's called "appealing to authority".

"Well, conventional economics says Bohm-Bawerk is right, so it must be so!" :lol:

What stone age reasoning!


And Bohm-Bawerk was of the Austrian school as well which isn't even mainstream but some Austrian ideas are at least. Splitting hairs at best.

Neoclassical economics and Austrian economics are cousins in the marginalist framework.


Furthermore, its a Marxist site that is biased and hardly objective. It's a book published about a century ago.

We could equally as well use the same argument for Bohm-Bawerk though: "He was a bourgeoisie, so his assessment of Marxist economics is biased and hardly objective."


Just look at the results and you will see Marx was plainly wrong (as were some of the classical economists) with the LTV. Accepting that fact isn't always easy ( It wasn't immediate for me back when I was a Marxist) but the sooner you accept it the sooner you will see clarity. The empirical strength of the labor theory of value is with less than 9% error (see The Empirical Strength of the Labor Theory of Value (http://homepage.newschool.edu/~AShaikh/labthvalue.pdf)).

Compare this to the empirical weakness of Neoclassical economics...as a matter of fact, it's a statistical anamoly that any manager would use the price setting prediction when MC=MR...see Eiteman and Guthrie, "The Shape of the Average Cost Curve", American Economic Review 42: 832-838 (1952).

The percent of West Germany managers that did was measured twice: 18 out of 316 managers went with marginalist predictions (by firms), and 62 out of 1020 managers went with marginalist predictions (by products).

If you do the statistical analysis, it turns out to be anomalous if any manager follows marginalist predictions.

For more modern surveys see Blinder 1998 (ftp://all.repec.org/RePEc/wuk/stafwp/WP98-13.PDF), etc.


3. See the clarity in the simple example I illustrated for you. The fact that you would attempt to dismantle my postings only shows the frustration of a defeated debator. Uh one of the ironies of the marginalist input/output analysis is that it confirms the labor theory of value!

See "Laws of Production and Laws of Algebra: The Humbug Production Function" (http://homepage.newschool.edu/~AShaikh/humbug.pdf), in The Review of Economics and Statistics, Volume 56(1), February 1974, p. 115-120.

[Joby]

Question, Dejavu:

How does the Austrian school think taxation should work? I know the Chicago-school types believe that nobody should be taxed for a service they don't benefit from. For example, Gas taxes should go to roads and things drivers pay for, since it is optional for people to drive. Income taxes, however, shouldn't, since one can work without driving.

Is it the same w/Mises?

Also, let's say the Govt stops intervening in the market. What's going to compensate for this spending, when, as Kaynes theorized, Consumer spending declines, dragging Investment spending with it. What's going to 'fill the gap' and bring the market back?

Lastly, is Austrian economics possible in a post-Great Depression America, were people believe the government has a direct role in the economy?

[Tungsten]

2. You have some cheek appealing to "mainstream economics" when the shit you are sprouting here is far from mainstream. The Austrian style crap you are coming up with here is anything but mainstream-largely because it is crap
None of the communist economic theories are mainstream either, so does that mean...?

If you look the crises in capitalism keep getting worse, the bourgeois states had to bail the last crash but the fall out of the last crash is still happening.

Capitalism is weaker then ever, capitalism was stronger even during the Great Depression then it is now. The market is swimming in debt, has sluggish growth and the last wave of speculation has destroyed large amounts of capital and shaken peoples faith in the market.
Most of upcoming crises are linked to, and caused by excessive welfare spending.



Austria?
Are you insane? The only edible country is Turkey. Marinaded in Greece.


The subjective theory of value says that it's only your state of mind, for example, that a candy bar is a dollar, and a jet plane is a billion dollars.
That's subjectivism (philosophy), not the subjective theory of value (economics).

Ovviously, the subjective theory of value is absolutely wrong. The quantitative exchange relationships among various commodities are external realities; they are not states of mind.
Go on then, Mr LTV, prove the "external reality" that pepperoni is a better pizza topping to ham. Prove how "quantitative exchange relationships" make white cars better sellers than brown ones. You can't; it's pseudo-scientific drivel. The preference for one commodity over another is largely subjective because it differs from person to person. i.e. it's subjective.

If capitalism is to be defended by use of the subjective theory of value, we shouldn't be too surprised that people will defend a brutally oppressive system by invoking a preposterous excuse.
Because there's no way that trying to legally impose your personal preferences on others could ever result in a brutally oppressive regime, right?

It has always been profit-seeking business that has wanted big government.
And the rest.

[ComradeRed]

None of the communist economic theories are mainstream either, so does that mean...? That means it's still an appeal to authority to assert "Conventional economics says x so it must be true."

It's inconsistent when conventional economics, which deja appeals to, says Austrian economics is more or less wrong (see Sameulson's criticisms of Austrian economics).


Most of upcoming crises are linked to, and caused by excessive welfare spending. Yes ignore the debt problems of mortgage.

It's all about the excessiveness of welfare :lol:


Go on then, Mr LTV, prove the "external reality" that pepperoni is a better pizza topping to ham. Prove how "quantitative exchange relationships" make white cars better sellers than brown ones. You can't; it's pseudo-scientific drivel. The preference for one commodity over another is largely subjective because it differs from person to person. i.e. it's subjective. Uh, the labor theory of value talks about value not preference.

That's something that critics often ignore.

Remember use-value? That's the whole point of preference.

On the other hand, this does not determine exchange-value.

Marginalists often assert that utility (diminishing marginal utility) determines the demand curves and thus plays a role in the price mechanism, but they ignore the mathematical shortcomings of this theory.

I have to go meet some colleagues in a few minutes, but let me cite some quotes if there is time dealing with the problems of marginal utility.

"First , when preferences are homothetic and the distribution of income (value of wealth) is independent of prices, then the market demand function (market excess demand function) has all the properties of a consumer demand function...Second, with general (in particular non-homothetic) preferences, even if the distribution of income is fixed, market demand functions need not satisfy in any way the classical restrictions which characterize consumer demand functions...The importance of the above results is clear: strong restrictions are needed in order to justify the hypothesis that a market demand function has the characteristics of a demand function. Only in special cases can a monomy be expected to act as an 'idealized consumer'. The utility hypothesis tells us nothing about market demand unless it is augmented by additional requirements." (Shafer and Sonnenschein "Market Demand And Excess Demand Functions", in Arrow and Intriligator (eds), Handbook of Mathematical Economics (vol. II), North-Holland, Amsterdam (1982).)

The "strong restrictions" are: 1) consumers are identical, 2) there is only one commodity on the market.

If either of these conditions are not met, marginalist analysis is no longer valid.

Various restrictions are identified by Chipman (in case you do not believe me):

"Two criteria will be considered which lead to the possibility of aggregation: (1) identical preferences (hence identical demand functions), and (2) proportional incomes...These results have a number of interesting applications in the pure theory of international trade." (Chipman "Homothetic preferences and Aggregation", Journal of Economic Perspectives, 5 (2): 171-177)

I've already cited various papers dealing with the problems with determining the supply curve...which pretty much is half of the price mechanism.

So much for the subjective theory of value :lol:

[Dejavu]

The important characteristic of capitalism pertain to the method of production and distribution of commodities, as well as the class structure.


Class structure is the foundation of the LTV. It wasn't to inagurate a viable economic system, it was merely an endeavor to ostend the defects in capitalism.

Capitalism is a system distinguished by private ownership of productive goods that are determined by private decisions of investment calculated by market prices of various goods.


The "three factors of production" have been rather rigorously criticized. The response from the marginalists: nothing!

This is one of the cheif areas where Marxian 'economists' fall flat on their faces. Technology and lower prices of more abundent goods have only been made possible by accumulation of capital and stringent adhesion to diminishing returns as to not expend time,money,and energy by underproduction or overproduction with labor or captial.
If you owned McDonalds and you had two stoves for making hamburgers intended one burgerflipper each, why hire more than two burgerflippers? If you don't have extra stoves, accounterments ,or enough ground beef to proportion the extra labor then it is unthrift since the surplus and unesscential burgerflippers can't really produce anything of gain.


As per the price mechanism, it works with or without a consumer agent.

The price mechanism isn't determined by the buyer...that's kind of one of the big points Austrian economists miss completely.

This is facetious at best. It utterly repudiates the demand standpoint of consumers. The prices are resolved by how much consumers are willing to pay contingent upon how much the producer invested into production of the commodity. The highest bidder dictates the maximal price (with respect to competition for the same commodity and how much that consumer values the commodity). Commodities don't have intrinsic value, they're value is soley determined by the individual buying. Its a question of how can that particular commodity serve as a means to satisfy an ends. If a consumer sees no use for the commodity it will not sell. If a prodigious quantity of labor was hired digging a hole and filling it back up again does that make the filled hole valuable? lol. 150 years ago people used horses and buggies for transportation before the automobile revolution. Erstwhile, crafted horse shoes were of high value for unambiguous reasons. Most consumers in the present don't use horses and accordingly horse shoes arn't rudelyvaluable as 150 years ago. A hand crafted horse shoe today and 150 years ago would require virtually the same amount of labor but the value relative to each time period is utterly different. Consumer demand ( and therefore producer supply) went down signifigantly. If you're a book writer and you decide to write a book by hand that requires more labor than sending it to a publisher with a printing press. You'd be lucky if you can sell you're hand written book at the market price of books, that is, if consumers valued your book at all. If you spent a signifigant amount of labor hand building a Toyota car would it sell more for one that was produced in an assembly line? No it wouldn't, because if you charged the labor disutility you exhausted on the car virtually all consumers would just buy a cheaper car out of the assembly line.


The empirical strength of the labor theory of value is with less than 9% error

You cannot,through emperical charts,accurately predict the market simply because consumer wants are changing constantly and, well, human beings engaged in the market are not like protons to be studied in physics.Humans are constantly changing their wants always employing different means through subjective evaluation on how they can achieve an unlimited range of ever changing ends.
The fact that human beings constantly think and learn,there is not a mathematical way to predict what each individual desires in the future let alone a society of individuals. What is the unit of measurement to determine the overall happiness of all individuals in society? The reason I ask that is because of the very fact that we want things means that we seek to rid ourself in the future of any dissatisfaction we have now.


If you use the unrealistic definition of "scarcity" as used by economists, then you may be on to something.

As far as we as humans know, virtually all things are limited. To 'economize' means to employ the best possible allocation of scarce resources relative to alternative uses.
If nothing was scarce , if no production was needed, then we wouldn't have to economize. Thats just unrealistic.


The percent of West Germany managers that did was measured twice: 18 out of 316 managers went with marginalist predictions (by firms), and 62 out of 1020 managers went with marginalist predictions (by products).

That has nothing to do with labor theory of value. IBM's incrediable loss in the early 1990s prove that they were allocating their resources efficiantly. Bill Gates and other entrepenures in the 80s saw the potential in the application of PCs for universal use, business and personal. IBM in the 80s decided to invest everything into their mainframes instead insisting that PCs wouldn't be a big part of the future market. They were wrong. IBM wasted resources and lost billions on the mainframe project and lowered the prices of their useless mainframes signifigantly. This sent a signal to other entrepenures DON'T invest into mainframes and hence resources for PCs were used more efficiantly. How does the LTV along with commowealth ownership without market prices conform to such an adjustment in consumer demand?


Uh one of the ironies of the marginalist input/output analysis is that it confirms the labor theory of value!

Don't be a putz. :laugh:

[Dejavu]

The "strong restrictions" are: 1) consumers are identical, 2) there is only one commodity on the market.


Ridiculous! But I'll bite. Lets say the one commodity is animal hides. Since this is such a stupid contention it belongs within a primative example. As if humans are brain dead and won't figure out other ways to stay warm. :laugh:

But lets say everyone ONLY trades animal hides. Say I produced (somehow?) 4 animal hides (this would require other goods for me to use to actually make an animal hide which is a different market all together :laugh:) But anyway , I made four animal hides.

QUESTION is, are they all the same VALUE since we're assuming I exhausted the same amount of labor on them? The answer is no because 1. I own the 4 animal hides 2. each one might hold a different value to me depending on how I seek to achieve an ends with them.

Example : FOUR ANIMAL HIDES...
I might want to use them for:

1: Coat to stay warm
2: Insulation for my hut so I can sleep warm
3: Shoes/Socks
4: Rug

Hence, I have already evaluated what I would do with each animal hide which does NOT make them the same in value. The 4th hide, or the hid I intent to use for a rug is less valuable to me. If I wanted to somehow , disgard a hide ( that can be a rug now) I would least value the hide as a rug. As I disgard ( for any reason) the other hides I would would expect more compensation obviously beacuse those other hides are more valuable to me and I won't disgard them so easily.

Example :

4 animal hides :
1: Warm Coat ( most compenstation expected)
2: Insulation for Hut ( more compensation expected)
3: Shoes/Socks ( compensation expected)
4: Rug ( least compensation expected - MY MARGINAL UTILITY)


Now go to school and learn something about economics.

[Dejavu]

Question, Dejavu:

How does the Austrian school think taxation should work? I know the Chicago-school types believe that nobody should be taxed for a service they don't benefit from. For example, Gas taxes should go to roads and things drivers pay for, since it is optional for people to drive. Income taxes, however, shouldn't, since one can work without driving.

Is it the same w/Mises?

Also, let's say the Govt stops intervening in the market. What's going to compensate for this spending, when, as Kaynes theorized, Consumer spending declines, dragging Investment spending with it. What's going to 'fill the gap' and bring the market back?

Lastly, is Austrian economics possible in a post-Great Depression America, were people believe the government has a direct role in the economy?

1. Most Austrians view any coercive taxation as theft and nothing more than theft. It is the government, which is non productive in of itself, that forcibly extracts wealth from productive society and uses it for its own purposes. 'Tax' per say could be volunatary. If a group of individuals decide to pool their resources for a common cause or 'insurance' then there is nothing wrong with that. As it stands today, with government present, taxation should be limited and even more important government spending should be. I agree with the notion that if people wanted Universal Healthcare for example, it should be a voluntary tax. Those who pay and trust the government to fix their problems have access to the government provided healthcare. Those who don't want govt healthcare purchase private insurance provided that the government has nothing to do with the private insurance sector either through restrictions or subsidies. As far as roads and such go, many Austrians would advocate privatization of these things or at least a voluntarly agreed upon local tax if it were to remain public.

2. The government spends way too much as it is. Keynes was dumb. :laugh: Keynes wanted to separate investing from savings ( vice versa) and wanted zero interest which just isn't realistic. He rationalized that consumption is the neccessary key and investments would be determined by 'multiples' of consumption. Yeah it was pretty absurd. If the government got out of the market it would definatly usher in some 'creative destruction' and certain subsidized businesses would be forced to shape up or go out of business. I don't view this as a bad thing. Less spending is good even if it retracts the market a bit. The govt spending (especially on wars) is like the 'broken window fallacy.' But I hope I understood your question correctly.

3. Implimenting principles of a real Free Market like Austrians advocate isn't easy. Partially its pyschological, many people have already become far too dependent on government to solve all their problems. Another pscyhological factor is having people understand that the federal reserve notes they call 'money' is nothing more than paper which is unbacked. Honest workers deserve honest money and we do this by cutting off the monetary expansion created by the Fed and Govt spending. Of course the Chicago school monaterists have a whole different view altogether...

[Joby]

1. Most Austrians view any coercive taxation as theft and nothing more than theft. It is the government, which is non productive in of itself, that forcibly extracts wealth from productive society and uses it for its own purposes. 'Tax' per say could be volunatary. If a group of individuals decide to pool their resources for a common cause or 'insurance' then there is nothing wrong with that. As it stands today, with government present, taxation should be limited and even more important government spending should be. I agree with the notion that if people wanted Universal Healthcare for example, it should be a voluntary tax. Those who pay and trust the government to fix their problems have access to the government provided healthcare. Those who don't want govt healthcare purchase private insurance provided that the government has nothing to do with the private insurance sector either through restrictions or subsidies. As far as roads and such go, many Austrians would advocate privatization of these things or at least a voluntarly agreed upon local tax if it were to remain public.

That seems interesing.

But an argument on why we can't afford to get everyone insured (and how it would be much more effective to allow people to buy their drugs from any source) is stumped by the left's "Yes We Can!"



2. The government spends way too much as it is. Keynes was dumb. :laugh: Keynes wanted to separate investing from savings ( vice versa) and wanted zero interest which just isn't realistic. He rationalized that consumption is the neccessary key and investments would be determined by 'multiples' of consumption. Yeah it was pretty absurd. If the government got out of the market it would definatly usher in some 'creative destruction' and certain subsidized businesses would be forced to shape up or go out of business. I don't view this as a bad thing. Less spending is good even if it retracts the market a bit. The govt spending (especially on wars) is like the 'broken window fallacy.' But I hope I understood your question correctly.


Not quite. I'm no economist, but how would Austrian economics prevent a Market collapse and, if it happened, how would they propose we recover?

(This is if we implemented them now, not when the Dollar/Housing was actually worth somthing)


3. Implimenting principles of a real Free Market like Austrians advocate isn't easy. Partially its pyschological, many people have already become far too dependent on government to solve all their problems. Another pscyhological factor is having people understand that the federal reserve notes they call 'money' is nothing more than paper which is unbacked. Honest workers deserve honest money and we do this by cutting off the monetary expansion created by the Fed and Govt spending. Of course the Chicago school monaterists have a whole different view altogether...

Yeah, I saw the response Ron Paul got (and he isn't even that far out there!)

What?! You want to go back to the Gold Standard?!
What?! You want to end the income tax?!
What?! You want to end Social Security?!
What?! You want to end the Trade Embargo on Cuba?!
What?! You want to close the Federal Reserve?!

You're Crazy!

(fuckin idiots....)

[Demogorgon]

Class structure is the foundation of the LTV. It wasn't to inagurate a viable economic system, it was merely an endeavor to ostend the defects in capitalism.

How on earth do you expect to be taken seriously when you come up with this? Do you even know whose theory the LTV is?

[Dejavu]

Not quite. I'm no economist, but how would Austrian economics prevent a Market collapse and, if it happened, how would they propose we recover?


Well the Austrians hold that the business cycle is created by the Fed. See Austrian Business Cycle Theory which was accepted before the government eliminated the gold standard. Basically the Fed does it buy lowering interest rates which pumps more printed money into the economy and then raises interest rates slow down the inflation which creates booms and busts ( growth and recession). The reccession is intentionally caused to liquidate any malinvestments unfortunatly this causes bubbles to burst and the higher interest rates hit people in the pocketbook. The way to stop is QUIT PRINTING MORE MONEY and limit the government spending which uses this new money. Secondly you have to back the money with something in order to reestablish credit to our dollar. But I'm not so sure a market crash would be the worse thing in the world if it wakes us up to the fact that we've been handling the economy all WRONG in a flawed monetarist fashion. Most Austrians would object to creation of more credit and money to 'cure' a crash but rather promote the old fashioned way with better backed money. We don't need false prosperity , we need real growth. Most Austrians would therefore advocate a return to a 100% gold standard to anchor the currency. Of course there are many debates about the gold standard itself and if it were accepted , how to get back to it the most effective way. Of course this is a whole different topic altogther...

[ComradeRed]

It should be noted that all these economists I am citing (with the exception of Marx) are not Marxist economists...they are either Neoclassical economists or Neoricardian.


Class structure is the foundation of the LTV. Uh no, no it isn't.

Class structure is irrelevant completely to the Labor Theory of Value, and vice versa.


It wasn't to inagurate[sic] a viable economic system, it was merely an endeavor to ostend the defects in capitalism. Don't use your entire vocabulary up in one sentence!

Class, economic class mind you not social class, is the relation of a group of humans to the means of production and labor.

This is the strongest indicator of what mode of production one is observing as class contains the vital information of how commodities are produced and how commodities circulate.

But knowing how things are produced and circulate tells you the mode of production.


Capitalism is a system distinguished by private ownership of productive goods that are determined by private decisions of investment calculated by market prices of various goods. Not quite.

Capitalism has the distinguishing mark of allowing the laborers to be "free"...in the sense that they are no longer property. Compare this to feudalism, or previous modes of production which typically involved slavery of one form or another.

Next, since laborers are now paid for their labor-power (their capacity to work), the circulation of commodities depends on the exchange of commodities heavily.

There is a surplus, or a difference between the amount paid and the revenue, which is used in the expansion of capital.

Capitalism now visibly has these characteristics, which can be observed in the business cycle.

But even your definition has flaws...

First, the market doesn't calculate anything. This is a borderline pathetic fallacy.

Second, even if the market did calculate out anything, you just said it was private decisions that determined the amount invested.


This is one of the cheif[sic] areas where Marxian 'economists' fall flat on their faces. Technology and lower prices of more abundent[sic] goods have only been made possible by accumulation of capital and stringent adhesion to diminishing returns as to not expend time,money,and energy by underproduction or overproduction with labor or captial.[sic] This does not respond to the point I made, you are only asserting without any proof or evidence that Marginalist dogma is correct.

This is not the case. Piero Sraffa went through this concept of diminishing returns and demonstrated it to be internally inconsistent in the cited paper.

And for the record, Sraffa was no "Marxian economist". Nor was Joan Robinson who criticized Neoclassical economics heavily.

Your response pertaining to the "law" of diminishing returns is obviously one based out of ignorance.

Sraffa's argument is critical here since the "law" of diminishing returns determines everything in the economic theory of production...but you obviously can't read for one reason or another.

The output function determines the marginal product, which in turn determines marginal cost. With diminishing marginal productivity, the marginal cost of production eventually rises to equal marginal revenue. Since firms seek to maximize profit, and since this equality of (rising) marginal cost to marginal revenue gives you maximum profit, this determines the level of output (see how important it is?).

If constant returns are the norm, then the output function instead is a straight line through the origin...just like the total revenue line, but with a different slope.

If (as factory owners hope) the slope of revenue is greater tha the slope of the cost curve, then after a firm had met its fixed costs, it would make a profit from every unit sold: the more units, the more profit.

At least in terms of the economic model of production, there would be no limit to the amount of a competitive firm would want to produce.

So economic theory could not explain how firms in a competitive industry decided how much to produce.

In fact -- according to economic theory -- each firm would want to produce an infinite amount.

This is patently impossible. Many economists reply "Well if Sraffa is right, why don't firms produce an infinite amount" which is tantamount to asking "Ah, but does it work in theory?"

Conventional economics is dead wrong here, and if you'd like to read the details of the argument, the paper is cited and linked. And it's free.


If you owned McDonalds and you had two stoves for making hamburgers intended one burgerflipper[sic] each, why hire more than two burgerflippers? If you don't have extra stoves, accounterments[sic] ,or enough ground beef to proportion the extra labor then it is unthrift[sic] since the surplus and unesscential[sic] burgerflippers can't really produce anything of gain. Trying to argue for "rational management" eh? Well, since you obviously are incapable of reading Sraffa's paper, allow me to demolish this with one of Sraffa's examples.

Specifically a numerical example. Yours is comical (1 unit of capital for 1 unit of labor produces 1 unit output), lets use a textbook's numerical example and apply Sraffa's logic.

You're a wheat farmer and you own 100 hectares; with one worker per hectare, there is an output of 1 bushel per hectare. With 2 workers per hectare, 3 bushels output; 3 workers per hectare produces 6 bushels, 4 per hectare produces 10 bushels, and 5 workers per hectare produces 12 bushels.

According to economists, if a farmer had 100 workers, he would spread them out so there is 1 worker per hectare. That's 100 bushels output.

But if he had 100 workers working on 25 hectares, 4 workers per hectare, that's 10 bushels per hectare, or a total of 250 bushels output. That's 150 bushels more than the "rational" choice.

Similarly, if a farmer had 200 workers spread over the farm's 100 hectares, that's 300 bushels of output. That's the recommendation from our "rational" economist.

But a sensible farmer would leave 50 hectares fallow, and have 4 workers per hectare, resulting in 10 bushels output per hectare, for a grand total of 500 bushels of output. That's 200 more bushels than the "rational" decision.

This trend continues until 400 workers are employed, when diminishing returns kicks in. Rational firms do not obtain optimal output...as secondary school math would indicate.


This is facetious at best. It utterly repudiates the demand standpoint of consumers. Out of curiosity, why are you using a thesaurus? You don't come off sounding smart, you're just bombastic and pretentious.

The "demand standpoint" holds if and only if we are working with a barter economy.

Otherwise, the sellers set the price.

You appear to reject the conclusions of Neoclassical mathematical economists about the conditions and consequences of consumer behavior working...perhaps you should reconsider your school of thought?


The prices are resolved by how much consumers are willing to pay contingent upon how much the producer invested into production of the commodity. This is according to the Austrian theory of value.

If you have been to the 7/11 and tried to "resolve" the price of a "slurpee" with the clerk, he'll give you an odd look then tell you to give him $x or get out.

If this were a barter economy, that would be an accurate description...but this isn't a barter economy, so it's inaccurate.


You cannot,through emperical[sic] charts,accurately predict the market simply because consumer wants are changing constantly and, well, human beings engaged in the market are not like protons to be studied in physics.Humans are constantly changing their wants always employing different means through subjective evaluation on how they can achieve an unlimited range of ever changing ends. Well, you can't but I can; that's because I understand how to use numbers...I'm a mathematical physicist after all. In all seriousness this argument doesn't hold water.

"You use numbers, and you can't predict subjective behavior."

That presupposes that you're right...you're not. At least, according to the mathematical economists in your own school of thought you appeal to so often.

First and foremost because you are assuming consumer behavior is as described by marginalism...which - as was covered - has been demonstrated to mathematically break down when there is more than one consumer or more than one commodity (the economy actually diverges from equilibrium...and/or more than one equilibrium point occurs).

You have asserted time and time again that "consumers determine price".

That's not correct...hell, even Alfred Marshall - father of Western marginalism(!) - recognized this!


The fact that human beings constantly think and learn,there is not a mathematical way to predict what each individual desires in the future let alone a society of individuals. What is the unit of measurement to determine the overall happiness of all individuals in society? The reason I ask that is because of the very fact that we want things means that we seek to rid ourself in the future of any dissatisfaction we have now. You still haven't even answered the question on measuring marginal utility, perhaps you should tackle that one first sport?


As far as we as humans know, virtually all things are limited. To 'economize' means to employ the best possible allocation of scarce resources relative to alternative uses. This is in a static equilibrium which is absurd.

For example, consider the following there are x trees in the world that I know of because I am rational and omnipotent.

Someone cuts down a tree.

Then there is x-1 trees left in the world...and according to static models, that number will only decrease.

If you have taken basic biology, you'd recognize this to be comically wrong...well, you wouldn't otherwise you may begin to understand the problems of marginalism.


If nothing was scarce , if no production was needed, then we wouldn't have to economize. Thats[sic] just unrealistic. Only in a static equilibrium economy!

But the reality is we're in a dynamic economy in disequilibrium, so anything you say that is "backed" by conventional economics is totally useless!


That has nothing to do with labor theory of value. I never said it did, read what I wrote or is reading too hard for you?

It empirically debunks the Marginalist approach to economics. That's the whole point!

But you're too thick to understand this: every prediction made by marginalism has turned out wrong. We can look back and say that too.


How does the LTV along with commowealth ownership[sic] without market prices conform to such an adjustment in consumer demand? Since you seem to be coining terms at your convenience (e.g. a commonwealth is a type of nation-state, not a method of ownership), it becomes incredibly hard to respond...this is true for responding to any sophist.

Further, you are assuming the LTV is the theory of value that will be used in a socialist economy...that's an incorrect assessment of it.

No doubt from your scrupulous studies of Austrian economists do you pick up such an incorrect and misinformed perspective.


Ridiculous! But I'll bite. [idiotic example not shown] No, son, you still don't get it through your thick skull: it has been mathematically shown that marginalist analysis breaks down when multivariate calculus is used.

Perhaps if you look up the citation and read it you may learn a thing or two!

[Publius]

How does someone who can't spell the word "hungry" find a word like "ostend"? I'd never heard that word before in my entire life. Maybe...

http://thesaurus.reference.com/search?q=show&x=0&y=0

Yes, there it is...

I would like to thank you though for showing me that word. It's a keeper. But next time just use the word that you know. I mean, you don't think the fact that you seem to have, at best, a tenuous grasp of English spelling and syntax can be hidden by the fact that you can use a $10 word that 95% of dictionaries don't even contain?

[mikelepore]

The verb "ostend" is rare but the adjective "ostentatious" is common.

[mikelepore]

Go on then, Mr LTV, prove the "external reality" that pepperoni is a better pizza topping to ham.

You misread what I wrote. I said that taste for food is an example of something subjective, there is no right or wrong involved; but the fact that it has turned out that an airplane has a greater exchange value than a candy bar is an example of objective reality, it is the real world, to deny it is to be wrong about a fact.


Prove how "quantitative exchange relationships" make white cars better sellers than brown ones. You can't; it's pseudo-scientific drivel.

You don't think it's a factual issue whether or not one kind of car turned out to be a better seller than another? Why don't you just look it up in an annual report, or an almanac, or a chart in Forbes? There nothing subjective about the reported result. The numbers that someone quotes are either right or wrong.


The preference for one commodity over another is largely subjective because it differs from person to person. i.e. it's subjective.

Of course a person's preference is subjective, but a discussion of person's preference has nothing to do with a discussion of exchange value.

The outcome for the market, both in its long term behavior (related to value) and in its short term behavior (related to prices) is the same for everyone. The fact that gold has a greater exchange value than tin is an objective reality for everyone regardless of their psychological state. A tin-loving individual who expected that tin would have a greater listed value than gold at the Chicago Mercantile Exchange is a person who turned out to be wrong about a factual matter.

Therefore, exchange value is an objective reality, it has nothing to do with anyone's preferences, QED.

[Tungsten]

That means it's still an appeal to authority to assert "Conventional economics says x so it must be true."
Are you not familiar with the phrase "hoisted by your own petard"?

It's inconsistent when conventional economics, which deja appeals to, says Austrian economics is more or less wrong (see Sameulson's criticisms of Austrian economics).

Yes ignore the debt problems of mortgage.


It's all about the excessiveness of welfare :lol:

A mortgage isn't a welfare cheque. Welfare is excessive and it's going to get more excessive over the next 25 years.

Uh, the labor theory of value talks about value not preference.
And that's why it's wrong. What you prefer isn't considered important. It might be okay for dealing with an economy of mindless robots, but not for human beings who do have preferences.


Marginalists often assert that utility (diminishing marginal utility) determines the demand curves and thus plays a role in the price mechanism, but they ignore the mathematical shortcomings of this theory.

I have to go meet some colleagues in a few minutes, but let me cite some quotes if there is time dealing with the problems of marginal utility.

"First , when preferences are homothetic and the distribution of income (value of wealth) is independent of prices, then the market demand function (market excess demand function) has all the properties of a consumer demand function...Second, with general (in particular non-homothetic) preferences, even if the distribution of income is fixed, market demand functions need not satisfy in any way the classical restrictions which characterize consumer demand functions...The importance of the above results is clear: strong restrictions are needed in order to justify the hypothesis that a market demand function has the characteristics of a demand function. Only in special cases can a monomy be expected to act as an 'idealized consumer'. The utility hypothesis tells us nothing about market demand unless it is augmented by additional requirements." (Shafer and Sonnenschein "Market Demand And Excess Demand Functions", in Arrow and Intriligator (eds), Handbook of Mathematical Economics (vol. II), North-Holland, Amsterdam (1982).)

The "strong restrictions" are: 1) consumers are identical, 2) there is only one commodity on the market.

If either of these conditions are not met, marginalist analysis is no longer valid.

I'm not exactly an Austrian, but I find it difficult to believe that all consumers are likely to be identical and that one commodity is likely to remain that way on the market for any length of time and that either of these of conditions somehow refute the STV.


Various restrictions are identified by Chipman (in case you do not believe me):

"Two criteria will be considered which lead to the possibility of aggregation: (1) identical preferences (hence identical demand functions), and (2) proportional incomes...These results have a number of interesting applications in the pure theory of international trade." (Chipman "Homothetic preferences and Aggregation", Journal of Economic Perspectives, 5 (2): 171-177)

I've already cited various papers dealing with the problems with determining the supply curve...which pretty much is half of the price mechanism.

So much for the subjective theory of value :lol:
But this doesn't actually refute it...


Uh no, no it isn't.

Class structure is irrelevant completely to the Labor Theory of Value, and vice versa.
The LTV and class structure are the only things propping up the claims of exploitation. What would be left of, or justify communism without that?


If you have been to the 7/11 and tried to "resolve" the price of a "slurpee" with the clerk, he'll give you an odd look then tell you to give him $x or get out.
On the contrary, a market trader will be happy to barter with you.

If this were a barter economy, that would be an accurate description...but this isn't a barter economy, so it's inaccurate.
This is a barter economy- even in the case of the 7/11. If something doesn't sell, its usually ends up with "sale" written on it.


Well, you can't but I can;that's because I understand how to use numbers...I'm a mathematical physicist after all. In all seriousness this argument doesn't hold water.
But you're dealing with numbers only indirectly. Economics is mainly about human action.

"You use numbers, and you can't predict subjective behavior."

That presupposes that you're right...you're not.
Well you're certainly not. It's precisely when the rubber touches the track - reality - where you peope all fall flat on your arses. Don't you get that people will tend to decide for themselves what they do or don't want to purchase and what they will or won't pay for it? And that no mathematical circle jerking is going to predict this behaviour no matter what school of economics you care to attend?


Further, you are assuming the LTV is the theory of value that will be used in a socialist economy...that's an incorrect assessment of it.

No doubt from your scrupulous studies of Austrian economists do you pick up such an incorrect and misinformed perspective.
The LTV is the only thing that justifies a socialist economy. Labour isn't the source of value? Then how are the working class exploited? How then is revolution justified? How then is communism justified? It isn't.

Again, sloppy thinking and a failure to see the big picture.


"The right to enslave is a positive right." - Tungsten
Wasn't that plucked from the thread where I was opposing positive rights and you were defending them? :laugh:

[Kwisatz Haderach]

I may write a more extensive post later, but for now I will confine myself to two points:


individuals subjectively evaluate everything they think of purchasing
I hope you realize the implications of a theory that rests on the premises that (1) "value" depends entirely on the subjective judgements of individuals so that an object acquires value whenever people decide to consider it valuable, and (2) the purpose of the economy is to maximize value as defined under point 1.

If indeed value is entirely subjective - that is to say, a figment of your imagination - then value is not created by work or by any kind of physical process, but merely by an effort of will. Under such a paradigm, I can "create value" simply by convincing myself that my computer, for example, is worth more than I previously thought. Value then becomes a function of desire - the more people want things, the more they value those things, and the more value is thus "created." In that case, "maximizing value" means maximizing desire. Your ideal society is one filled with people consumed by a fanatical desire for possessions and driven to insanity by the urge to accumulate property. And since you don't need to work in order to create value - it can be created just as easily by convincing people to desire things more - it follows that it is more economically efficient to increase desire through hype and advertising than to do productive work. So that is the kind of society that would maximize value if value is indeed subjective: a society of fanatical madmen whose main activity consists of trying to get each other even more fanatical in order to increase value.

But such a society would be a dystopian nightmare. The logical conclusion of the subjective theory of value is that we should strive to create such a dystopian nightmare. Therefore we should reject the STV, because it is contrary to human happiness and promotes insanity.


I have to agree with this. Capitalism has been under fire and pretty much reverted back to Mercantilism ever since the late 1800s. Thanks of course, to interventionalist government.
Consider also the fact that the period of time since the late 1800s has seen the greatest technological progress and the greatest advances in human happiness and freedom since the dawn of civilization.

So, if what you say is true, then we should all thank interventionist government for giving us such a golden age. You may begin thanking now.

[Green Dragon]

If indeed value is entirely subjective - that is to say, a figment of your imagination - then value is not created by work or by any kind of physical process, but merely by an effort of will. Under such a paradigm, I can "create value" simply by convincing myself that my computer, for example, is worth more than I previously thought.

Your computer can be the most valuable item you possess, or the least valuable. Or somewhere in between. I have no idea. Its up to you.
But that value you assign for your computer does not have to be shared by anyone else for them.

When a computer is being built, value is being created, but only to the extent that somebody else wants that computer at that level of value. How could it be otherwise? Building computers that people do not value makes no sense regardless of the work or physical process involved in such production.


Value then becomes a function of desire - the more people want things, the more they value those things, and the more value is thus "created."

It would seem that the socialist community has an interest in producing those things people want-what they value. I have been repeatedly told socilaism will do a better job of providing with those things.
Now you are saying this is a problem.


In that case, "maximizing value" means maximizing desire. Your ideal society is one filled with people consumed by a fanatical desire for possessions and driven to insanity by the urge to accumulate property.

If people value such things. I am not aware that socialism requires a vow of poverty.


And since you don't need to work in order to create value - it can be created just as easily by convincing people to desire things more - it follows that it is more economically efficient to increase desire through hype and advertising than to do productive work.

No. You need to work to produce those items that others value. Again, I am not sure why the socialist community would not be producing, or more accurately, not WANT to produce those items people want.


So that is the kind of society that would maximize value if value is indeed subjective: a society of fanatical madmen whose main activity consists of trying to get each other even more fanatical in order to increase value.

I would see a type of society which is able to respond to the needs and want of its people. As opposed to a society where someone else tells people what is and is not productive and worthwhile

[ComradeRed]

Are you not familiar with the phrase "hoisted by your own petard"? The difference is I'm not appealing to Neoclassical economists...I'm pointing out that mathematical economists have openly admitted that there are absurd conditions when marginalism is correct.

It is true that marginalism is correct only under those conditions which I have listed.

When they are contradicted, marginalism is no longer true.

Since they will always be contradicted, marginalism will always not work.

And the track record of marginalism proves it.


A mortgage isn't a welfare cheque. Welfare is excessive and it's going to get more excessive over the next 25 years. Adjustable rate mortgages are kind of more of a problem.

Giving loans to those that cannot repay it is a serious problem when you expect to be repaid...with interest.

Welfare is irrelevant to the problem that adjustable rate loans have created.

But if that's your scapegoat for all of life's problems, then that's just dandy.

This is irrelevant to the entire conversation however.


And that's why it's wrong. What you prefer isn't considered important. It might be okay for dealing with an economy of mindless robots, but not for human beings who do have preferences. Value and preference are unrelated despite your assertions.

And now...now you expect me to believe that the existence of preference magically determines value. :lol:

Your lack of a logical argument is yet again so compelling!


I'm not exactly an Austrian, but I find it difficult to believe that all consumers are likely to be identical and that one commodity is likely to remain that way on the market for any length of time and that either of these of conditions somehow refute the STV. Because when either of these conditions don't hold (if there is more than one consumer, or more than one commodity), the demand curve for individuals cannot be summed together.

Ever hear the phrase "the whole is more than the sum of its parts"? That's the reason why without using math.

It's been demonstrated (see the Blinder paper for mathematical details) that when either one of these (or even both) conditions have been violated, the demand curve no longer looks nice and intersects the supply curve multiple times.

Then you don't know which "equilibrium point" is best.

That's assuming the demand curve doesn't diverge totally, and becomes asymptotic to the supply curve...in which case, there is no equilibrium!

And consequently price cannot be determined by supply and demand.

Geeze, perhaps y'all should refer to the citations?


But this doesn't actually refute it... Well, if you actually go out in the world you'd realize that the first restriction doesn't hold.

I hate seafood. I know of at least one person that loves it. Therefore we have different demand curves, and the marginalist analysis fails to hold.

Holy shit, basic empiricism refuted it.


The LTV and class structure are the only things propping up the claims of exploitation. What would be left of, or justify communism without that? This is irrelevant to refuting the claim that class structure and the LTV are independent of one another, quit straw manning the subject.


On the contrary, a market trader will be happy to barter with you.

This is a barter economy- even in the case of the 7/11. If something doesn't sell, its usually ends up with "sale" written on it. You don't haggle at a 7/11, nor at any other outlet.

You either buy the good at the price determined by the buyer or you don't.

But, holy hell, that assents to the fact that the sellers determine the price which they sell at!

And your assertion that if something doesn't sell, they lower the prices, indicates that income and price are not independent of each other...contradicting another marginalist assumption.


But you're dealing with numbers only indirectly. No, I dealt with them directly if you look at what I did.


Economics is mainly about human action. Sophistry.

This is an ambiguous definition, but similar to the one given by Neoclassical economists in that it's completely wrong.

"Economics is mainly about human action"...as in, what motivates humans to act, or how humans act, or why humans act, or what humans act on or with, who humans act on?

This is a narrow response that's closely related to the correct answer: economics is about the production and distribution of commodities.

"Human action" is biophysics.


Well you're certainly not. It's precisely when the rubber touches the track - reality - where you peope[sic] all fall flat on your arses. Don't you get that people will tend to decide for themselves what they do or don't want to purchase and what they will or won't pay for it? And that no mathematical circle jerking is going to predict this behaviour no matter what school of economics you care to attend? Don't you get this is a straw man?

You assert that value is determined by preference then give no logical argument.

You assert that math is useless in economics.

You assert that the STV is correct despite the fact that the conditions for it to be valid (and it is valid and correct only under those circumstances) are obviously not met.

You assert that the mathematical economists who have openly admitted this are wrong.

What you don't do is prove anything!

But a proof is part of math which you reject, so there is little room to wonder why.


The LTV is the only thing that justifies a socialist economy. Labour isn't the source of value? Then how are the working class exploited? How then is revolution justified? How then is communism justified? It isn't.

Again, sloppy thinking and a failure to see the big picture.
You miss the big point, unsurprisingly enough.

Dejavu posited that the theory of value would somehow change under a workers' rule.

That's not the idea at all.

Your response is a straw man of a straw man. Good job.

[Kwisatz Haderach]

Your computer can be the most valuable item you possess, or the least valuable. Or somewhere in between. I have no idea. Its up to you.
I certainly do make subjective judgements about how much I like this or that object. But unlike STVers, I make no pretense that these judgements are rational - they are usually not - and most important of all, I do not claim that such judgements should be used to guide economic decisions without taking into consideration objective factors.


But that value you assign for your computer does not have to be shared by anyone else for them.
The "value" I assign to my computer - that is to say, the degree to which I like my computer - is not measurable in simple mathematical terms.


When a computer is being built, value is being created, but only to the extent that somebody else wants that computer at that level of value. How could it be otherwise? Building computers that people do not value makes no sense regardless of the work or physical process involved in such production.
Correct, but that does not mean that the monetary price of a computer is or should be solely determined by the extent to which people like computers.

It is true that an unwanted object has no value. If desire for an object is zero, its value is zero. But that is not enough to justify the STV. Just because a hypothesis is true when x = 0 that does not mean that it will be true for every other value of x.


It would seem that the socialist community has an interest in producing those things people want-what they value. I have been repeatedly told socilaism will do a better job of providing with those things.
Now you are saying this is a problem.
I am saying that there is a problem with taking people's wants as the sole measure of value; there is a problem with any value theory that considers all increases in wants and desires to be good things. Certainly we should strive to satisfy people's existing wants. But the STV implies that we should also strive to create new wants - that is the problematic part.


If people value such things. I am not aware that socialism requires a vow of poverty.
Again, the problem with the STV is that you can increase "value" simply by persuading people to want an object more than they wanted it before. That is ridiculous.


No. You need to work to produce those items that others value.
People's subjective judgements of "value" are not exogenous to the economic system. They do not fall from the sky. You talk as if people decide to want things independent of the world around them. That's not how things work in reality. People's wants are a function of, among other things, the goods being produced. In other words, firms do not merely produce what people want - they also help influence those wants, and sometimes create whole new wants where none existed before.


I would see a type of society which is able to respond to the needs and want of its people.
Again, wants do not fall from the sky. Society does not merely respond to wants - it also creates and shapes them to a large extent. It's a feedback loop. Society determines what you want, your wants determine what society produces, the products of society determine what you want next, which determines what society produces next and so on.

[Schrödinger's Cat]

I have to agree with this. Capitalism has been under fire and pretty much reverted back to Mercantilism ever since the late 1800s. Thanks of course, to interventionalist government.
Nonsense. This myth is continually rehashed to Westerners in an attempt to discredit the progressive intervention. The labor movement was relatively weak until the later half of the 19th century; businessmen (and aristocrats) have been jacking around with the market since its conception. There has never been a completely free market, nor will there be, nor should there be. The rich will always attempt to intervene when their revenue is shrinking. Corporations in particular need constantly increasing returns.

State intervention on part of the rich is the best thing for keeping the capitalist system alive. Without state intervention (tariffs) the textile industry in the newly formed United States would have sank as British production was much more superior. We see this today in China and East Europe where companies from outside the respected regions are making the most money. Free trade actually hurts domestic firms.

Let's not forget corporations have been the biggest source of growth in the history of mankind, and they're essentially just another branch of government. The stock market is actually a forced mechanism for growth.

The only "reasonable" position one can take on "capitalism" is left-libertarian market economics with direct democracy, and even then you're susceptible to the problems of a market.

[Dejavu]

You're a wheat farmer and you own 100 hectares; with one worker per hectare, there is an output of 1 bushel per hectare. With 2 workers per hectare, 3 bushels output; 3 workers per hectare produces 6 bushels, 4 per hectare produces 10 bushels, and 5 workers per hectare produces 12 bushels.

According to economists, if a farmer had 100 workers, he would spread them out so there is 1 worker per hectare. That's 100 bushels output.

But if he had 100 workers working on 25 hectares, 4 workers per hectare, that's 10 bushels per hectare, or a total of 250 bushels output. That's 150 bushels more than the "rational" choice.

Similarly, if a farmer had 200 workers spread over the farm's 100 hectares, that's 300 bushels of output. That's the recommendation from our "rational" economist.

But a sensible farmer would leave 50 hectares fallow, and have 4 workers per hectare, resulting in 10 bushels output per hectare, for a grand total of 500 bushels of output. That's 200 more bushels than the "rational" decision.


What is this intended to prove? It appears to me that if the farmer knew the relevant facts, he would sell 50 hectares and farm the other 50. The erroneousness in all of it is the presupposition that farmers know all the applicable numbers - but so what? I think through trial and error that this is exactly what most farmers would do. Why is this a problem for free markets?

What if part of the intended harvest,say100 bushels, something unintended happens and 10 bushels are destroyed or just gone?

[Dejavu]

. Under such a paradigm, I can "create value" simply by convincing myself that my computer, for example, is worth more than I previously thought.

Value isn't exactly 'created.' Goods, which hold particular properties which make them goods, are usually tangible objects. The evaluation comes from you and only you and its dependent upon the fact whether that object or good would serve as a means to achieve whatever ends you desire at the moment.

It would take an enormous amount of labor to build a 5 story apartment for example. But what if the apartment is ugly and not a lot of people want it? Do you think the owner would raise or lower the price of the apartment building? If people don't like it ,what is the real value of the ugly apartment building? Assuming you pick the correct answer and the owner would either lower the rent per unit or lower the price of the whole apartment building wouldn't that serve as a signal for other builders not to build such an ugly monstrosity or unappealing monstrosity? Wouldn't it serve to reason that the real 'cost' of that apartment building was the alternative uses for all the land,labor, and capital that went into constructing it?

Your computer. First off all, the price of your computer, depending on how old it is, probably fell in the market. This is due to the fact that more computers have been produced since then and at least most consumers desire newer stuff. Now if you added stuff on your computer, depending on how much other people like it, would be willing to pay a higher price if you sell it. Furthermore, when you did buy your computer ( I don't know what the price was at the time but for example sakes lets say $1000)it means that at that point in time you valued the computer more than the $1000 you had and anything else you could have bought with that $1000.

Question, why did you select that particular computer over others in the same price range? Would you pay a few hundred dollars more for some extra GBs?

[Dejavu]

The "value" I assign to my computer - that is to say, the degree to which I like my computer - is not measurable in simple mathematical terms.

Now you're catching on.

You have to think about why an authentic Babe Ruth original baseball card would be so much. What about classical art which sells at a much higher price than what a LTV theorist would deem correct considering the time of labor that went into painting them.

I don't think the LTV people can solve the 'value paradox' much like the classical economists couldn't. They mistakingly 'divided' value into exchange value and use-value.

Why does a diamond have such a high exchange value and such a low use value (assuming non industrial uses)?
And why does water have such a low exchange value and such a high use value?

Suppose a man was in the desert and he was carrying a valuable diamond. The problem is that he hasn't had any water in nearly three days. If the man found another drifter in the desert that had a pint of water to spare but demanded the diamond in exchange, would the man then value the pint of water over the diamond? The alternative is likely death.

I'll explain how subjective evaluation reflects in prices when I come back next time.




:laugh:

[mikelepore]

Why does a diamond have such a high exchange value and such a low use value (assuming non industrial uses)?

Diamonds have a large exchange value because a large amount of labor time is required to extract from nature a given mass or volume of diamonds.


And why does water have such a low exchange value and such a high use value?

Water has a small exchange value because a small amount of labor time is required to extract from nature a given mass or volume of water.

[mikelepore]

What about classical art which sells at a much higher price than what a LTV theorist would deem correct considering the time of labor that went into painting them.

You shouldn't make things up like that.

You have never seen, and you will never be able to find, a single sentence from an LTV theorist that claims that there is significance in the labor time that went into painting classical art.

[mikelepore]

They mistakingly 'divided' value into exchange value and use-value.

Naturally you would think it was a mistake if you didn't know what they meant by their phrase "use value." In the subsequent sentences you show that you didn't know what they meant. You show this by using the phrases "low use value" and "high use value", as though use value were a quantity along a graduated scale.

Use value is a binary switch representing the existence or nonexistence of a list of uses for the product by potential buyers at the marketplace. For example: copper conducts electricity -- it is not necessary to list any of its additional uses, because having at least one use is a sufficient condition to make the list of uses non-empty -- therefore copper has use value.

The use value criterion disposes of all of the silly examples of wasted labor that the confused critics of the LTV often mention -- "what if I built a ship at the top of a mountain?" - "what if I made mud-pies?" - etc. The answer is that such things are not commodities in any market; i.e., their use value is zero -- and anything multiplied by zero is zero -- therefore their exchange value is zero.

[Tungsten]

Adjustable rate mortgages are kind of more of a problem.

Giving loans to those that cannot repay it is a serious problem when you expect to be repaid...with interest.

Welfare is irrelevant to the problem that adjustable rate loans have created.
No one is disputing that.

But if that's your scapegoat for all of life's problems, then that's just dandy.
Scapegoats don't usually leave a $46 trillion hole in your economy by 2050.


Value and preference are unrelated despite your assertions.

And now...now you expect me to believe that the existence of preference magically determines value. :lol:
You've provided no proof to the contrary, so why not?

Because when either of these conditions don't hold (if there is more than one consumer, or more than one commodity), the demand curve for individuals cannot be summed together.
Having more than one consumer? What's that got to do with what the individual prefers or values? More than one commodity? What difference does that make besides adding new dimentions to the question of preference?

Ever hear the phrase "the whole is more than the sum of its parts"? That's the reason why without using math.
Preference and value aren't mathematical phenomenon. They're parts of the human condition.

It's been demonstrated (see the Blinder paper for mathematical details) that when either one of these (or even both) conditions have been violated, the demand curve no longer looks nice and intersects the supply curve multiple times.
How does that address the point I've just made?


Well, if you actually go out in the world you'd realize that the first restriction doesn't hold.
I hate seafood. I know of at least one person that loves it.
There you go. They prefer it, you don't. Subjective theory of value wins again.



You don't haggle at a 7/11, nor at any other outlet.
You need to get out more.

You either buy the good at the price determined by the buyer or you don't.
Well if the price is too high, you can haggle or go elsewhere. Either they'll except your offer or they won't. Do you honestly think prices are determined without reference to what the buyer is likely to pay for them?


But, holy hell, that assents to the fact that the sellers determine the price which they sell at!

And your assertion that if something doesn't sell, they lower the prices, indicates that income and price are not independent of each other...contradicting another marginalist assumption.
Which part of "I'm not exactly an Austrian" did you not understand?


Sophistry.

This is an ambiguous definition, but similar to the one given by Neoclassical economists in that it's completely wrong.

"Economics is mainly about human action"...as in, what motivates humans to act, or how humans act, or why humans act, or what humans act on or with, who humans act on?

This is a narrow response that's closely related to the correct answer: economics is about the production and distribution of commodities.
No, that only tells us how thing get produced and how they're distributed, not why or if anyone will buy it.

Don't you get this is a straw man?

You assert that value is determined by preference then give no logical argument.
The argument I gave was perfectly logical. Do you think people value things they don't prefer? Perhaps you have a list of phony equations that says people value things they don't prefer, but reality, and therefore logic, says otherwise.

You assert that math is useless in economics.
I didn't say that. Useful for determining prices and concept integration, but not always useful for determining value or preference.

You assert that the STV is correct despite the fact that the conditions for it to be valid (and it is valid and correct only under those circumstances) are obviously not met.
Your argument was a straw man.

But a proof is part of math which you reject,
I reject the idea that value and preference can be determined by mathematics, therefore I reject mathematics for everything?

And you call me illogical.

It's nice of you to grant yourself a monopoly on proof, but the world can't be reduced to numbers and curves and you've offered no alterative theory of your own. If it's the LTV, then good luck- it doesn't have much of a repuatation and for good reason. It's false.

You miss the big point, unsurprisingly enough.

Dejavu posited that the theory of value would somehow change under a workers' rule.

That's not the idea at all.

Your response is a straw man of a straw man. Good job.
I've hit the nail right on the head, which is why you've offered no proof to the contrary.


The "value" I assign to my computer - that is to say, the degree to which I like my computer - is not measurable in simple mathematical terms.
Good. Try explaining that to your comrade. ^

You might have better luck than I.

[Tungsten]

You shouldn't make things up like that.

You have never seen, and you will never be able to find, a single sentence from an LTV theorist that claims that there is significance in the labor time that went into painting classical art.
I wouldn't have thought they would have needed to. The principle was laid out quite clearly: The more labour, the more value. It's clearly false.

[Dimentio]

You're falling fast in this debate. I'd suggest comming up with better refutations.

Lets take a short example and see if I'm right.

If you're sitting in a resturant and your hungary, and objective fact is that you are hungary. Now the issues of how hungary are you? What do you wan't to eat? and how much are you willing to pay? are completly subjective.
You see a menu, you are evaluating what you feel like eating on that menu which is completly a subjective analysis by you. You see an item for $10 that your going to go with and your willing to pay that much.

Now whats really going on? Whats going on is this, you want to spend $10 on that particular item because you already evaluated the alternative costs. By alternative costs I mean you value that $10 item more than the $10 and anything else you can purchase with that $10.

You, as an individual, evaluated what you value most at that time. You determine the value of a commidity because you see it as a particular means to satisfy an ends ( in this case food you like to satisfy your hunger.)

Its not that difficult to understand I don't think. It might be for you though.

And there comes the problem. If a person wants a dip of water in a desert, you could actually put so high prices that only the rich could afford that. A more sentient and humane solution would be to build aqueducts.

[careyprice31]

"Two things. We should be able to move on since Bohm-Bawerk clearly did defeat Marx on Value Theory and showed 'exploitation' to be a false construct of Marx's mind. Whether you accept it or not the market functions precisely because individuals subjectively evaluate everything "

I doesn't have anything to do with economics, so i wont get into that

but holy smoke, who tries to defend capitalism , or anything for that matter, saying that exploitation is false?

when exploitation is known to be a fact, it has been going on almost as long as there have been people.

a holocaust denier says something like that, despite evidence to the contrary.

and the hunger and the food worth ten dollars isnt really a good example to use either. Of course the food is more valuable than the ten dollar bill or ten dollars in, coins. If u didnt give up ur money for food you would starve.

[mikelepore]

The principle was laid out quite clearly: The more labour, the more value. It's clearly false.

Of what page of what book did you see "the more labour, the more value"?

You made it up.

[Zurdito]

I have to agree with this. Capitalism has been under fire and pretty much reverted back to Mercantilism ever since the late 1800s. Thanks of course, to interventionalist government.

right...and why did that happen? was it due to...you know...class struggle?


You're falling fast in this debate. I'd suggest comming up with better refutations.

Lets take a short example and see if I'm right.

If you're sitting in a resturant and your hungary, and objective fact is that you are hungary. Now the issues of how hungary are you? What do you wan't to eat? and how much are you willing to pay? are completly subjective.
You see a menu, you are evaluating what you feel like eating on that menu which is completly a subjective analysis by you. You see an item for $10 that your going to go with and your willing to pay that much.

Now whats really going on? Whats going on is this, you want to spend $10 on that particular item because you already evaluated the alternative costs. By alternative costs I mean you value that $10 item more than the $10 and anything else you can purchase with that $10.

You, as an individual, evaluated what you value most at that time. You determine the value of a commidity because you see it as a particular means to satisfy an ends ( in this case food you like to satisfy your hunger.)

Its not that difficult to understand I don't think. It might be for you though.


Again you don't deal with any of the things which really interest us as marxists, so your argument just reads like textbook theory which excludes considerations of anything outside your framework. Unfortunately, the real battles which have always taken place - via bourgeois politics or via revolution - have never, on the part of the working class, held "private property" to be sacred. Therefore, you are left stumped by "mercantilism" and "government intervention", and you are left on the sidelines, shouting at the masses "you can't demand X because to grant you it we would have to violate someone's property rights". In other words, your vision presupposes the very thing - private property - which is actually continually challenged in the real world. This is why you find yourself so dismayed at the actual course capitalism has taken. It's because your rules don't apply.

Let me use your example:

Your example presupposes me only having £10, and £10 only being able to get me a certain amount of food. Me only having £10 is not "subjective" - ok, I might, within the framework of my wealth, prioritise food slightly higher or lower compared to say clothing, but broadly, my "price-range" is an objective reality. And, key to your argument, I do not "accept" that - rather I try to change it. Hence the existence of trade unionism, social democracy and at times, outright revolution.

I can change that £10 price range by unionising at work to demand better pay, and then forcing the government to introduce price-controls, property confiscation, and a sliding-cale of wages, to offset the inflationary effects of my "wage rises" within a capitalist market. I can win, at the expense of my bosses and the food producers. :)

In other words...class struggle.

It surprises me that you were a marxist, but now you ignore altogether the inevitability of people within capitalism forming common-interest blocs to distort the "market" in our favour.

[mikelepore]

The law of value is a law of economics that operates in a capitalist market, particularly to the extent that the market for a given commodity approaches the idealization that modern economists call "perfect competition."

The law of value is a description of how the market reacts to goods which are sold only by quantity and category, such as barrels of crude oil, bushels of barley, ounces of gold, etc. It applies to commodities where every unit is assumed to be identical to every other unit in the same category; for example, the buyer has no motive to hand-pick the particular ounce of gold or the particular barrel of oil. These are what modern economists call fungible commodities.

The law of value applies to goods which are continuously reproducible at will, whenever the capital investment is applied.

As the above makes clear, a critic of Marxian economics can only have one of two possible reasons for saying that rare collectibles such as classical art are counter-evidence: either he is sincere but uneducated about the theory, or he wants to deceive the reader.

[Dejavu]

Suppose a farmer produces 5 bushels of wheat. It would stand to reason that he would designate each bushel for a particular end.

1st bushel : Food to get by.
2nd bushel : More food for health and vitality.
3rd bushel: Seed for the next harvest
4th bushel: Feed chickens.
5th bushel: Make whiskey.

What is the value of 5 bushels of wheat?

Overnight, a pack of rats destroy his second bushel which leaves him with 4 total.
Would the farmer give up his allocation of the 2nd bushel of wheat?
What is the value of 4 bushels of wheat?


Farmer has three horses and two cows. He bought these animals obviously to serve a certain purpose. He allocates three horses and two cows in the following :

1. horse to pull the plow.
2. horse to pull another plow.
3. cow for milk.
4. cow for meat.
5. horse leisure horseback riding.

If this is how the farmer rates the importance of the five animals, which is animal has a higher value , the horse or the cow?


Have fun with that guys .:drool: :drool:

[mikelepore]

In your example, there was no need to mention the the situation of one farmer. The value that the national or world market assigns to cattle or grain isn't going to set by interviewing any particular person. So your question - what are the values of these things? Answer: No relevant data was provided.

[Dejavu]

In your example, there was no need to mention the the situation of one farmer. The value that the national or world market assigns to cattle or grain isn't going to set by interviewing any particular person. So your question - what are the values of these things? Answer: No relevant data was provided.

Ok, but it makes no sense that a farmer would have five bushels of wheat and not know what to do with them. Ask any farmer if they assign a purpose for their produce.

The market has prices, not value. :laugh:

But I'll give you some 'data.' Assume each bushel of wheat required the same amount of production and each is the same in quantity and weight.

Also with the horses and cows. Assume that all three horses are the same in size and weight and assume that both cows are the same in size and weight.

Now figure it out :laugh:

[Zurdito]

Ok, but it makes no sense that a farmer would have five bushels of wheat and not know what to do with them. Ask any farmer if they assign a purpose for their produce.

The market has prices, not value. :laugh:

you proved it does have value, but that the value is not reflected in price. Because if the farmer has five horses for those 5 purposes you named and horse no.2 dies, he will reassign the horses to the first 4 purposes, instead of missing out on having his field ploughed. Yet, the price of a horse is standardised - so someone buying a horse to plough a field pays the same as someone buying a horse for pleasure.

However as your own example shows, some activities are more valuable than others, therefore, a "free market" which allows one farmer to accumulate 5 horses and use them for purposes 1-5 (5 being riding for pleasure), whilst another farmer has no horses and can't even carry out no.1 (field ploughing), is clearly an inefficient, wasteful economy. If you planned the economy so that all horses were ploughing fields, you would produce more value (as you yourself proved when you admitted he would reassign horse no.5 to carry out taks no.2).

Now clearly an economy based on accumulation will be subject to the subjective whims of those who over-accumulate. Marxists don't deny that in a capitalist market, your value is defined by what you can offer to a capitalist, and that some workers carry out "key" jobs while others are employed to carry out worthless "services" such as working in tanning salons or as pedicurists. Christ, in fact that's the very core of our criticism of the system. The point is that those workers could perform other tasks, useful tasks, in a well-run economy. Yet you've done nothing to address that at all. Instead you presuppose this state of affairs in your example. All your example shows is how a capitalist market works, not that that's a good way of doing things.

[Dejavu]

you proved it does have value, but that the value is not reflected in price. Because if the farmer has five horses for those 5 purposes you named and horse no.2 dies, he will reassign the horses to the first 4 purposes, instead of missing out on having his field ploughed. Yet, the price of a horse is standardised - so someone buying a horse to plough a field pays the same as someone buying a horse for pleasure.Pretty good, you just proved marginal utility. But consumer evaluation is reflected in price. For example , if consumers desired cows far more than horses, then the price of all the cows available would go up and the price for the surplus of horses would go down. This is utterly based on supply and demand. Prices change with consumer demand and commodity supply relative to demand. Consumer evaluation is imputation back to the producer goods and this is only calculated through prices. Hence, producers would attempt to put more cows on the market and less horses on the market. The present horses on the market would drop in price until it is desirable to consumers to purchase. The highest bidding consumer would pay less for the present supply of horses but pay more for the present supply of cows.
Value cannot be measured since there is no unit of measurement available to calculate each consumers evaluation. Its sort of like friendship. You can 'rank' your friends from best friend and onwards but its ridiculous to say through some mathematical equation that you value your best friend 45.7% more than your next highest ranked friend. The only true statement can be that you value your best friend more than other friends.
Consumer evaluation also helps producers to rationally allocate factors of production.

Our farmer here is unlikely to give up his 4th bushel of wheat for what he would receive with his 5th bushel of wheat. In the broader sense this means supply of wheat has gone down but consumer demand is still high which drives up the price of wheat.

If farmer A has 5 horses and farmer B has none. Farmer B would have to trade Farmer A ( or any other vendor) something more valuable than what the vendor considers his horse (depending on how many). But if Farmer B wanted one of Farmer A's horses, that means Farmer B would have to present Farmer A with something Farmer A values more than horseback riding. Now this can be done with money since Farmer A would evaluate anything he can purchase with a sum of money that is greater than horseback riding.

Trade implies a double inequality of wants. Why would someone trade if they don't benefit? It means that both parties in trade must value what the other has over what they currently posses themselves. If you buy a newspaper for $1, you must value that newspaper more than your $1 and the newspaper vendor must value your $1 more than his newspaper. And so on and so forth.

[Dejavu]

And take our newspaper here. If demand goes down for the current supply of newspapers because people might like the web news or TV news better and consumers are not willing to pay $1 for the paper, the paper's price would fall.
The NY Times might then charge 90 cents / paper and keep dropping until the highest bidding consumer is willing to pay a smaller price.

This would create a loss for the newspaper. This is determined through economic calculation through prices based on consumer demand and current supply of papers. The news paper would then allocate its factor's of production to either print less papers or smaller papers. They would cut the costs of production to meet consumer demand. In turn the paper and ink suppliers to the NY Times would allocate less production to NY Times , which in turn the lumber companies would allocate less paper to the paper suppliers, etc. This is how consumer evaluation generates imputation back to the ' higher order of goods.'

The NY Times would have to market something more desirable to consumers to earn more revenue again or perhaps at the same time try to best competition in the journalism market.

[Dejavu]

If farmer A has 5 horses and farmer B has none. Farmer B would have to trade Farmer A ( or any other vendor) something more valuable than what the vendor considers his horse (depending on how many). But if Farmer B wanted one of Farmer A's horses, that means Farmer B would have to present Farmer A with something Farmer A values more than horseback riding. Now this can be done with money since Farmer A would evaluate anything he can purchase with a sum of money that is greater than horseback riding.I'm quoting myself because I can predict what someone here is going to ask. What about poor farmer B? What if he doesn't have anything to exchange with farmer A then what happens to poor farmer B?

My answer is simple.
Three things , I can think of for now, can cause farmer B not to have anything to exchange:

1.Some natural disaster happened to wipe out all of Farmer B's business. - But, if Farmer B knew ahead of time that his business would be prone to stuff like this it means he agreed to the risks involved with farming. In this case Farmer B would have been wise to purchase some kind of insurance. But its highly unlikely a natural disaster would cause Farmer B to be utterly broke. If the same thing happened to farmer A but farmer A decided to cover himself knowing the risks , then farmer A was obviously more responsible than farmer B.

Most likely its for the following reasons farmer B would be broke:

*Farmer B is a new entrepreneur to the business and obviously didn't save enough to get himself established starting in the farming business. In which case he was inefficiently planning and saving and should start business when he's ready or not at all.

*Farmer B might have been in business for a while but clearly incurred huge losses which means he was an inefficient farmer unlike farmer A and obviously didn't do enough to please consumers. In this case if farmer B isn't apparently good at his profession he should sell his capital and consider other work.

A more free market does a wonderful job of allocating division of labor to their most productive occupations. Clearly Farmer B then was not ready for the farming business. Its governments that protect inefficient producers and harm consumers in the pocket. Many inefficient businesses are protected in America with govt subsidies that clearly do not belong in business. Crystler's bailout, farmer subsidies , steel tariffs, medical subsidies , etc , all harm the hard working consumer.

[Green Dragon]

[quote=Edric O;1087144]I certainly do make subjective judgements about how much I like this or that object. But unlike STVers, I make no pretense that these judgements are rational - they are usually not - and most important of all, I do not claim that such judgements should be used to guide economic decisions without taking into consideration objective factors.


It may very well that your judgements are not rationale- even by your standard. I have no idea.
But why should my objective judgements on your judgements carry more weight in the community, over your judgements?


The "value" I assign to my computer - that is to say, the degree to which I like my computer - is not measurable in simple mathematical terms.

No. But it is measured in some fashion. It has to be. Even in a socialist community.




Correct, but that does not mean that the monetary price of a computer is or should be solely determined by the extent to which people like computers.


It isn't. Its also determined whether people subjective judgements determine whether the cost is worth it to them, over satisfying some other want.



It is true that an unwanted object has no value. If desire for an object is zero, its value is zero. But that is not enough to justify the STV. Just because a hypothesis is true when x = 0 that does not mean that it will be true for every other value of x.


Why?



I am saying that there is a problem with taking people's wants as the sole measure of value; there is a problem with any value theory that considers all increases in wants and desires to be good things. Certainly we should strive to satisfy people's existing wants. But the STV implies that we should also strive to create new wants - that is the problematic part.


I would suggest that it is not so much creating new wants, as fullfilling existing wants that people were unaware was there.



Again, the problem with the STV is that you can increase "value" simply by persuading people to want an object more than they wanted it before. That is ridiculous.


Why? If more people want the object, why should not its value increase?



People's subjective judgements of "value" are not exogenous to the economic system. They do not fall from the sky. You talk as if people decide to want things independent of the world around them. That's not how things work in reality. People's wants are a function of, among other things, the goods being produced. In other words, firms do not merely produce what people want - they also help influence those wants, and sometimes create whole new wants where none existed before.


Well, yes. When personal computers strarted being produced, I suppose that could be conceived of a "want" being created. The same is probably true of automobiles, trains, planes, bicycles ect ect. But it would seem that a socialist community would find satisfying such wants "problematic."

[Dejavu]

I certainly do make subjective judgements about how much I like this or that object. But unlike STVers, I make no pretense that these judgements are rational - they are usually not - and most important of all, I do not claim that such judgements should be used to guide economic decisions without taking into consideration objective factors.We never claim judgments in the broader sense are rational. But in the narrow sense of an individual acting purposefully by employing a means to achieve an ends is very rational. For example, not to long ago people in Arkansas gathered in prayer and prayed for rain.
Now in the broader sense, perhaps prayer is not the right technology to bring about rain and can be considered irrational but that doesn't mean the action itself was.
However, the individuals that prayed acted purposefully. They acted by using prayer as a means to achieve an ends (rain).
We don't claim people always make the BEST decisions we merely hold to the fact that when people employ means to achieve an ends ( even not the best way) they are acting rationally in the narrow sense.



People's wants are a function of, among other things, the goods being produced. In other words, firms do not merely produce what people want - they also help influence those wants, and sometimes create whole new wants where none existed before.You have this backwards. Production is a factor of peoples' wants. When the economy began with man by evaluating and therefore 'economizing' the scarce means available to him to achieve ends , did he produce something that he didn't want or need?

Why did ancient man produce + employ spears as a means? To not use them or somehow the spears already existed and employed man? :laugh:

[mikelepore]

Ok, but it makes no sense that a farmer would have five bushels of wheat and not know what to do with them. Ask any farmer if they assign a purpose for their produce.

Your example was a small quantity of wheat produced for personal use, to feed to the chickens, etc. You asked what its value is. Its value is determined by nationwide or worldwide conditions that prevail in that period of history.

[Dejavu]

Your example was a small quantity of wheat produced for personal use, to feed to the chickens, etc. You asked what its value is. Its value is determined by nationwide or worldwide conditions that prevail in that period of history.

I was explaining, in a more abstract but accurate way the laws of supply and demand. The value of of the wheat is its marginal utility. More affordable wheat would result if supply increased or demand decreased.
If our farmer managed to produce 100 bushels of wheat , the wheat would have a lower marginal utility. He wanted to sell 50 bushels out on the market well then he can introduce a price , the prevailing market price , but that price is always subject to change based on available supply and consumer demand. If you're asking ' Where did the market price come from?' that is the current supply-demand determined price of wheat on the market now. If demand remained fixed ( i.e. people are consuming the same amount of wheat) at this point in time and the farmer put out a greater supply of wheat then the prices of wheat would fall.

Remember , when supply exceeds demand , this means lower prices. When demand exceeds supply , means higher prices. Hence, based on this law of supply and demand market price for wheat is constantly changing ( usually not radically thank God) but at any given point in time there is a price.

[Dejavu]

Plus , it is because of this law of supply and demand which determines market prices that the farmer , even before he decides to invest into producing wheat , can use economic calculation and figure out how much wheat he wants to produce in the future.

Take this scenario. Assume our farmer has dairy and farming capital. The costs of investing into wheat is $10,000 a lower price than market trends in the past , and the cost of investing into dairy is $15,000 which is a higher price for past market trends.

This would tell the farmer not to invest so much into wheat because of the low price. The low price signals the farmer that there is already a surplus of wheat on the market and consumer demand is lower. Investing all his factors of production to produce a much larger supply of wheat would incur a loss. However, the dairy market tells him that prices are higher which means there is demand which he could likely profit from if he invests into more dairy.

These price signals , based on supply and demand, help producers rationally allocate resources.

[mikelepore]

Value cannot be measured since there is no unit of measurement available to calculate each consumers evaluation. Its sort of like friendship.

Okay, just be aware that you're using a different meaning of the word "value."

People shouldn't swap back and forth between the various meanings of a word. If someone tells you that an atom is excited in the sense that its electrons have been moved to higher potential energy states, don't assume that they mean it's excited in the sense that it has a palpitating heart and shallow breathing.

Should you or anyone else around here decide at some point to discuss the Marxian economic theory, everyone should be aware that the word "value" in such a context has nothing to do with anyone's preferences, wants, wishes, desires, likes and dislikes, hopes, fears, or anything else in that category.

***

""The actual price of a commodity, indeed, stands always above or below the cost of production; but the rise and fall reciprocally balance each other, so that, within a certain period of time, if the ebbs and flows of the industry are reckoned up together, the commodities will be exchanged for one another in accordance with their cost of production. Their price is thus determined by their cost of production." -- Marx in _Wage-Labor and Capital_

[Dejavu]

Okay, just be aware that you're using a different meaning of the word "value."

People shouldn't swap back and forth between the various meanings of a word. If someone tells you that an atom is excited in the sense that its electrons have been moved to higher potential energy states, don't assume that they mean it's excited in the sense that it has a palpitating heart and shallow breathing.

Should you or anyone else around here decide at some point to discuss the Marxian economic theory, everyone should be aware that the word "value" in such a context has nothing to do with anyone's preferences, wants, wishes, desires, likes and dislikes, hopes, fears, or anything else in that category.

***

""The actual price of a commodity, indeed, stands always above or below the cost of production; but the rise and fall reciprocally balance each other, so that, within a certain period of time, if the ebbs and flows of the industry are reckoned up together, the commodities will be exchanged for one another in accordance with their cost of production. Their price is thus determined by their cost of production." -- Marx in _Wage-Labor and Capital_


In the second paragraph , many of us know that Marxists think value is 'infused' by the labor. Therefore it is objective and measurable. Thats simply wrong. Value is assigned by the consumer, believing otherwise disobeys the law of supply and demand.

In this quote by Marx he made the typical mistake most of the classical economists did. He focused purely on supply and hardly looked at demand. Most economists , besides Marxists and Scraffites , have accepted the imputation from the consumers as determining price. Actually the neoclassicals take the 'middle road' and use the 'Marshallian scissors' insisting that just like a scissors can't cut with only one blade but two , price also is determined by production factors and consumer demand. This is technically correct though they negate the origin of prices which comes from consumer preference.

The 'supply siders' like yourself would insist that the reason a coffee from the Broadway coffee shop cost $1.50 is because of the high production costs of operating on Broadway. When in reality the high production costs are determined by the large quantity of consumers that prefer coffee on Broadway after the show rather than hitching cab or walking to some other part of town.

[mikelepore]

Nope, that's wrong. You didn't see any evidence that Marx deemphasized the importance of demand.

It was Marx's assertion that supply and demand are the important factors that make prices fluctuate.

He defined "value" as the average level about which that fluctuation occurs. If you don't accept at least tentatively his use of the word "value" to mean the center line about which the price fluctuates due to supply and demand, then you don't have a common vocabulary to enable you to understand his theory.

"You would be altogether mistaken in fancying that the value of labor, or any other commodity whatever, is ultimately fixed by supply and demand. Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for that value itself." -- Karl Marx, _Value, Price and Profit_ (1865)

Prices must gravitate around a level that correlates with the cost of production, because, if they didn't, that would create unstable "free lunch" opportunities for some investors, who might find, for example, a new investment where the market for a product bears a price that's six times its cost of production, a much better deal than investments in another industry where the market for a product bears a price that's four times its cost of production. Such a no-brainer opportunity is unstable because capital would continue to migrate toward that sector until the supply becomes excessive relative to the demand, ruining the free-lunch opportunity for all of the investors. Even mainstream capitalist stock market theory (both the fundamental and the technical methods) accepts such reasoning as part of what it calls the "efficiency" of the stock market. Therefore, in the long run, prices have to track with an effect that is proportional to the cost of production.

This is observed empirically, of course, unless you can show me a seller who routinely sells pencils for a million dollars each, and sells airplanes for one dollar each. Everyone knows the close relationship between the typical price and the typical cost of production.

And if the price has a positive correlation with the entire cost of production, then it must also have a positive correlation with the direct labor and the stored labor (tools and supplies) component of that cost of production.

Therefore the result is inevitable: the value of a commodity is determined by amount of labor time that is typically necessary to produce it.

[Dejavu]

It was Marx's assertion that supply and demand are the important factors that make prices fluctuate. Did he explain why?


, a new investment where the market for a product bears a price that's six times its cost of production, a much better deal than investments in another industry where the market for a product bears a price that's four times its cost of production.This is correct but this simply means if the product is selling demand is high but production (supply) is low. This means consumers are willing to pay a higher price for the commodity but its not a bad idea at all to invest into something like this since more supply to be produce will bring down prices. This benefits the consumer, investor , and worker by creating jobs.


. Such a no-brainer opportunity is unstable because capital would continue to migrate toward that sector until the supply becomes excessive relative to the demand, ruining the free-lunch opportunity for all of the investors.

This is why we have market prices that change through supply and demand. I agree, without calculation it would be impossible for producers to know how much to supply. This is actually a problem with a socialist economy because there is no price mechanism. So long as profits are being made it means consumers desire this product still but as soon as losses occur then production will be cut.



This is observed empirically, of course, unless you can show me a seller who routinely sells pencils for a million dollars each, and sells airplanes for one dollar each. Everyone knows the close relationship between the typical price and the typical cost of production.No investor/producer would shoot themselves in the foot like this. :laugh:
Remember , don't forget about time. Its a risky business because as the producer you're not concerned with market prices of airplanes today, you're concerned about how airplanes would sell several years from now when you bring the design on the drawing board to fruition. An airplane line cannot be produced right away to reflect present market trends, but rather the price you sell your airplanes at must reflect the market price of planes in the future. Of course this is supply and demand determined as well. For instance if you sunk 100,000,000$ into production of 10 planes NOW, and the future price of the typical plane is only $5,000,000 ea. then you already incurred a loss. Charging the full production price of planes , i.e. $10,000,000 each wouldn't sell and you'd take a full loss unless you lowered your price to at least reflect a partial loss ( perhaps with 10 selling at 5 mil each then you take a loss of 50 mil instead of 100 mil.) The only thing available to investors are prices of present factors to determine a potentially good ( but not certain) investment and these same prices are determined by supply + demand. ( i.e. high price for airplane capital concludes that consumers demand airplanes but they are short in supply relative to demand.)

Of course with the LTV and communal capital , there would be no way to calculate profit-loss and resources would be inefficiently allocated.



Therefore the result is inevitable: the value of a commodity is determined by amount of labor time that is typically necessary to produce it.Consumer imputation . :D

[mikelepore]

In the second paragraph , many of us know that Marxists think value is 'infused' by the labor. Therefore it is objective and measurable.

Actually, while the value certainly is objective, I think its NOT measureable.

I have come to the conclusion that Marx's theory has hidden variables. All we can know is the price of a commodity, which is asserted to be the sum of two invisible terms: a quiescent level from which a deviation takes place, and the deviation from that quiescent level. No matter what a price happen to be, an observer can't know how much of it is base line and how much of it is the supply-and-demand departure. It's made more obscure because in the absense of perfect competition there can be permanently upward or permanently downward offsets, rather than an oscillation that we might measure the root-mean-square of.

Therefore my own criticism of Marx's model is that it's not falsifiable. Marx's model has the advantage that it's the only internally consistent model ever proposed that explains with rigorous algebra why labor is punished with poverty and idleness is rewarded with riches, and several other sociological effects, but it has the disadvantage that some of the assumptions of the model can't be checked.

[Dejavu]

Actually, while the value certainly is objective, I think its NOT measureable.

Then the LTV falls flat on its face. A LTV economist would be measuring value by labor but how can you form a mathematical or quantitative calculation if there is nothing that constitutes a measurable unit of labor? Its like trying to measure distance with no defined unit of measure. Claiming you are able to measure distance requires a defined unit of measurement.


Marx's model has the advantage that it's the only internally consistent model ever proposed that explains with rigorous algebra why labor is punished with poverty and idleness is rewarded with riches, and several other sociological effects, but it has the disadvantage that some of the assumptions of the model can't be checked.

But you just claimed that there is no measurable unit of labor. How then is mathematics possible with cardinal numbers? How can you measure utility or value in an entire society when 1. these things are not constant , 2. individuals in society have different evaluations. 3. valuation of utility changes constantly?

Arithmetic cannot measure value nor utility within human society and therefore no cardinal equation can be presented to predict the future. Humans are ever thinking , learning, and changing.

The only thing that can be measured is price in terms of money. The price, as I explained is subject to supply + demand and consumer imputation based on peoples' preferences.

[Self-Owner]

However as your own example shows, some activities are more valuable than others, therefore, a "free market" which allows one farmer to accumulate 5 horses and use them for purposes 1-5 (5 being riding for pleasure), whilst another farmer has no horses and can't even carry out no.1 (field ploughing), is clearly an inefficient, wasteful economy. If you planned the economy so that all horses were ploughing fields, you would produce more value (as you yourself proved when you admitted he would reassign horse no.5 to carry out taks no.2).

This sounds a lot like the (very common) argument for egalitarian redistribution called the argument from diminishing marginal utility of money. It goes like this: the utility of $1 spent by a starving man on food is more valuable to him than the utility of $1 spent by a rich man on a yacht. Therefore, redistributing money from the rich to the poor increases efficiency, and so if we are utilitarians we should do it. It's a very common argument because it is very plausible.

Unfortunately, it's wrong. Even if we grant all the premises (which I wouldn't - interpersonal utility comparisons are meaningless), it still doesn't follow that redistribution increases utility. David Schmidtz refutes it pretty much entirely, I can't post links apparently but look up "schmidtz diminishing marginal utility" on google for his paper on the topic.

[mikelepore]

Arithmetic cannot measure value nor utility within human society and therefore no cardinal equation can be presented to predict the future.

The predictive power of the law of value, which demonstrates the economic law operating, can be seen in broader "delta" or change trends.

For example, in the 1960s-1970s we would have said: If the manufacturing process that now puts a single transistor onto one silicon chip could be changed somehow to put a thousand or even a million transistors on that same silicon chip, then the "socially necessary labor time" (Marx's term) embodied in each computer clock cycle and byte would be much less, therefore the exchange value of computing would drastically drop. Well, did it happen? The effect that Marx's model predicted turned out to be right.

Now we could continue to explain possible future events in the same way. Suppose, a hundred years in the future, someone invents a new way that a $100 robot can build a house in ten minutes. Then so many people would go into the business of doing that, buying $100 robots and making them pop out houses in ten minutes, that the market would become supersaturated. The prices of houses would collapse. And what would have been the cause? A drastic drop in the "socially necessary labor time" that is materialized in the production process.

Every capitalist economist would agree that the prices would have to collapse in those cases, but they would refuse to admit that it was in response to a change in the necessary labor time. Why do they refuse to admit that association with the necessary labor time? Because to say that would seem too close to admitting, "It is labor that produces social wealth", and to admit that would seem too close to finishing the sentence: "... and labor is entitled to all that it produces...." It would tend to make consciousnes aware of class robbery.

[mikelepore]

The price, as I explained is subject to supply + demand and consumer imputation based on peoples' preferences.

That's also a qualitative and not a quantitative explanation, with no more predictive power than what Marx's theory can come up with on its worst day.

There's no way to say we have a "people's preferences" measure for a four bedroom house house that is a hundred thousand time the "people's preferences" measure for a loaf of bread, so now let's see if the price of the house also happens to be a hundred thousand times the price of the loaf of bread ... oh, yes, the number do match, and the theory is vindicated. You see, we can't do that.

"Marginal utility", same problem. Only qualitative descriptions. I want to buy that object with such lethargy that I would hardly bother to cross the street for it, but I want to buy this other object so fiercely that I'm jumping up and down and turning purple. So that's a numerical measure of a new car having ten thousand times as much "marginal utility" points as a loaf of bread, so now let's see if the new car also has a price that's ten thousand times the price of the loaf of bread ... oh, yeah, the numbers match just fine. Can we do that? No. It's all a qualitative description of psychological states, and there is no capacity for making the procedure numerical.

At least the Marxian theory references something which might be measurable at least in theory, despite its pragmatic problems -- a large number of time operations in the production process. In contrast, such terms as "utility" and "preference" must always be no more than psychological descriptions.

So, does Marx's model have the fault of lacking quantitative predictive power? Yes, but it lacks it to a lesser extent than all other economic theories do.

[pusher robot]

[quote=mikelepore;1089605]For example, in the 1960s-1970s we would have said: If the manufacturing process that now puts a single transistor onto one silicon chip could be changed somehow to put a thousand or even a million transistors on that same silicon chip, then the "socially necessary labor time" (Marx's term) embodied in each computer clock cycle and byte would be much less, therefore the exchange value of computing would drastically drop. Well, did it happen? The effect that Marx's model predicted turned out to be right.
It's not hard to always be right when you're predicting events that already happened. But by embedding the concept of "socially necessary labor time" you are making the theory entirely circular. How do you know it's socially necessary? Because the labor, creating value, is valuable! How do you know the labor is valuable? Because it's socially necessary! Amazingly enough, a tautology is proven correct!


Now we could continue to explain possible future events in the same way. Suppose, a hundred years in the future, someone invents a new way that a $100 robot can build a house in ten minutes. Then so many people would go into the business of doing that, buying $100 robots and making them pop out houses in ten minutes, that the market would become supersaturated. The prices of houses would collapse. And what would have been the cause? A drastic drop in the "socially necessary labor time" that is materialized in the production process.
But the traditional house-builder's labor has not changed in the slightest. So what has suddenly caused his labor - the exact same labor - not to be valuable? "Because," you say, "it's not socially necessary any more." And how do we know it's not socially necessary? "Because it's no longer valuable!" Brilliant!

Of course, this has no actual explanatory power. Why not simply declare that the robot-building labor is not socially necessary but the house-building labor is? Without prices, how would you know?


Every capitalist economist would agree that the prices would have to collapse in those cases, but they would refuse to admit that it was in response to a change in the necessary labor time.
I highly doubt that, since labor is an obvious cost. Since we know that in a competitve market, prices pressure toward resource cost, logically we would expect a product that requires fewer labor resources to cost less.


Why do they refuse to admit that association with the necessary labor time? Because to say that would seem too close to admitting, "It is labor that produces social wealth", and to admit that would seem too close to finishing the sentence: "... and labor is entitled to all that it produces...." It would tend to make consciousnes aware of class robbery.

I will take your argument seriously if you can find even one credible economist who argues that labor is not a cost factor in production.

[RNK]

That's the problem, isn't it. What defines one as "credible"? How does one "become credible"? Mainly by being employed by business development firms and advisory groups -- a position they'd hardly get if they were talking about what an evil and irrational bastard corporations are.

[Self-Owner]

That's the problem, isn't it. What defines one as "credible"? How does one "become credible"? Mainly by being employed by business development firms and advisory groups -- a position they'd hardly get if they were talking about what an evil and irrational bastard corporations are.

If your premise (that mainstream economists, like everyone else, respond to incentives and want safe jobs) is correct, there's far more of a case to be made that they lean towards more Statist economic policy than pro-corporation policy. Who pays the salary of the average economics professor? Of course, it's not businesses or advisor groups, it's the government. Which, when you think about how libertarian economists are despite this, makes you wonder where the truth really lies.

[mikelepore]

How do you know it's socially necessary? Because the labor, creating value, is valuable! How do you know the labor is valuable? Because it's socially necessary! Amazingly enough, a tautology is proven correct!

"Socially necessary" refers to the state of development of the tools in a given period of history.

This is in chapter 1 of Marx's _Capital_, not so far into the book that people willing to read it would have difficulty locating it.

"The labour-time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time. The introduction of power-looms into England probably reduced by one-half the labour required to weave a given quantity of yarn into cloth. The hand-loom weavers, as a matter of fact, continued to require the same time as before; but for all that, the product of one hour of their labour represented after the change only half an hour's social labour, and consequently fell to one-half its former value."