The labor theory of value is worthless

[Wraith]

I believe that the marxist labor theory of value and the theory of plussvalue are anachronic and obsolete since the marginalist revolution of Jevons and Menger and that the theory of marginal utility of Marsall and Von Wieser completely shatters the fundations of marxist economy.

Convince me otherwise.

PD: Im a libertarian :cool:

[Baconator]

I believe that the marxist labor theory of value and the theory of plussvalue are anachronic and obsolete since the marginalist revolution of Jevons and Menger and that the theory of marginal utility of Marsall and Von Wieser completely shatters the fundations of marxist economy.

Convince me otherwise.

PD: Im a libertarian :cool:

Thats pretty much correct my friend. :D
But to be fair, the LTV wasn't only Marx's theory as it was Ricardian also and the mantle of classical economics since they couldn't properly figure out value. Marx only learned from the CEs.

Btw, I also embrace libertarian principles. Let me ask you, are you a Market Anarchist ( Anarcho-Capitalist) or a minarchist ( small govt libertarian)?

[Wraith]

Im a flexible minarchist, I think the state is necessary to put order in a society but must not arbitrariously limit the political or economic freedom in it.

Greetings

[Baconator]

Im a flexible minarchist, I think the state is necessary to put order in a society but must not arbitrariously limit the political or economic freedom in it.

Greetings

Ah,OK. Well we have something to debate then. :D
I'm gonna attempt to bring you to libertarianism's logical conclusions which is Market Anarchism. Cool? :D

Anyway, Well talk. Glad to have a fellow libertarian here.

[Demogorgon]

What the hell is anachronic? :laugh: I think you mean archaic, or maybe anachronistic.

Anyway, it is quite funny all the teenagers who come to this board without the slightest knowledge of economics but think they have knocked down Marxism bcause they have read on wikipedia that marginalism allegedly bests it. They do this with no understanding of either marginalism or the LTV

Proof of the LTV:

http://www.anonym.to/?http://homepage.newschool.edu/~AShaikh/labthvalue.pdf

An old discussion here of Marginalism's flaws when it comes to its theory pf price setting (well a discussion of the flaws of capitalist economics in general, but it ties in):

http://www.revleft.com/vb/showthread.php?t=58190

Ironically, much of Marxism still works anyway even without the LTV, you just have to approach exploitation from a different angle. So whatever the economic truth of the matter, repeating things you read, but did not understand, from wikipedia does not knock down Marxism.

[Self-Owner]

Ironically, much of Marxism still works anyway even without the LTV, you just have to approach exploitation from a different angle. So whatever the economic truth of the matter, repeating things you read, but did not understand, from wikipedia does not knock down Marxism.

Can you elaborate a little bit? I'd love to hear a definition or an analysis of exploitation not using the LTV that supports even the slightest Marxist conclusion. I think it's pretty telling that even the most Marxist modern political philosophers like GA Cohen are forced to reject the traditional concept because it has really very libertarian consequences.

[Baconator]

What the hell is anachronic? :laugh: I think you mean archaic, or maybe anachronistic.

Anyway, it is quite funny all the teenagers who come to this board without the slightest knowledge of economics but think they have knocked down Marxism bcause they have read on wikipedia that marginalism allegedly bests it. They do this with no understanding of either marginalism or the LTV

Proof of the LTV:

http://www.anonym.to/?http://homepage.newschool.edu/~AShaikh/labthvalue.pdf (http://www.anonym.to/?http://homepage.newschool.edu/%7EAShaikh/labthvalue.pdf)

An old discussion here of Marginalism's flaws when it comes to its theory pf price setting (well a discussion of the flaws of capitalist economics in general, but it ties in):

http://www.revleft.com/vb/showthread.php?t=58190

Ironically, much of Marxism still works anyway even without the LTV, you just have to approach exploitation from a different angle. So whatever the economic truth of the matter, repeating things you read, but did not understand, from wikipedia does not knock down Marxism.


Demo? What is your knowledge of economics? :o
CR and I debated before and he bases his arguments on the work of Sraffa who tried salvage classical economic (lack of) theory of value and I threw it right back in his face. Notice he never spoke to me after that again? :rolleyes:

If you really want, I'll take apart the 'empiricism' of the LTV as well in another post but just to let you know they completely confuse and bungle price and value. CR's calculus approach to economics is what prevented him from organizing a valid argument against me in the first place. ( hmm, wonder where that guy is?:confused:)

You see, you're typical farmer doesn't do calculus in his head nor does he chalk it out in equations. He gets his info through the pricing mechanism based on supply + demand. There really isn't a point in arguing against S+D as it is certainly foolish. Furthermore, CR's calculations assume a static economy with only a couple changing variables which only comply to the chalkboard but not real life as people have preferences and they change. Furthermore, its even more ridiculous to try to accurately measure demand in aggregate of all markets.

(Hint: This is why technocracy and 'energy vouchers' would utterly fail)

He also made the CE/Marxist theory mistake that so many here make about economics. They believe that production determines consumption and that consumption in a model is that predictably changing variable based on given inputs of production. (Secret: If you flip that around backwards, thats how the economy really works.;)) That theory cannot explain how wealth is created.


Yours lovingly,
Dejavu

[KC]

By What is the Price of A Commodity Determined?

By the competition between buyers and sellers, by the relation of the demand to the supply, of the call to the offer. The competition by which the price of a commodity is determined is threefold.


The same commodity is offered for sale by various sellers. Whoever sells commodities of the same quality most cheaply, is sure to drive the other sellers from the field and to secure the greatest market for himself. The sellers therefore fight among themselves for the sales, for the market. Each one of them wishes to sell, and to sell as much as possible, and if possible to sell alone, to the exclusion of all other sellers. Each one sells cheaper than the other. Thus there takes place a competition among the sellers which forces down the price of the commodities offered by them.


But there is also a competition among the buyers; this upon its side causes the price of the proffered commodities to rise.


Finally, there is competition between the buyers and the sellers: these wish to purchase as cheaply as possible, those to sell as dearly as possible. The result of this competition between buyers and sellers will depend upon the relations between the two above-mentioned camps of competitors – i.e., upon whether the competition in the army of sellers is stronger. Industry leads two great armies into the field against each other, and each of these again is engaged in a battle among its own troops in its own ranks. The army among whose troops there is less fighting, carries off the victory over the opposing host.


Let us suppose that there are 100 bales of cotton in the market and at the same time purchasers for 1,000 bales of cotton. In this case, the demand is 10 times greater than the supply. Competition among the buyers, then, will be very strong; each of them tries to get hold of one bale, if possible, of the whole 100 bales. This example is no arbitrary supposition. In the history of commerce we have experienced periods of scarcity of cotton, when some capitalists united together and sought to buy up not 100 bales, but the whole cotton supply of the world. In the given case, then, one buyer seeks to drive the others from the field by offering a relatively higher price for the bales of cotton. The cotton sellers, who perceive the troops of the enemy in the most violent contention among themselves, and who therefore are fully assured of the sale of their whole 100 bales, will beware of pulling one another's hair in order to force down the price of cotton at the very moment in which their opponents race with one another to screw it up high. So, all of a sudden, peace reigns in the army of sellers. They stand opposed to the buyers like one man, fold their arms in philosophic contentment and their claims would find no limit did not the offers of even the most importunate of buyers have a very definite limit.


If, then, the supply of a commodity is less than the demand for it, competition among the sellers is very slight, or there may be none at all among them. In the same proportion in which this competition decreases, the competition among the buyers increases. Result: a more or less considerable rise in the prices of commodities.


It is well known that the opposite case, with the opposite result, happens more frequently. Great excess of supply over demand; desperate competition among the sellers, and a lack of buyers; forced sales of commodities at ridiculously low prices.


But what is a rise, and what a fall of prices? What is a high and what a low price? A grain of sand is high when examined through a microscope, and a tower is low when compared with a mountain. And if the price is determined by the relation of supply and demand, by what is the relation of supply and demand determined?


Let us turn to the first worthy citizen we meet. He will not hesitate one moment, but, like Alexander the Great, will cut this metaphysical knot with his multiplication table. He will say to us: "If the production of the commodities which I sell has cost me 100 pounds, and out of the sale of these goods I make 110 pounds – within the year, you understand – that's an honest, sound, reasonable profit. But if in the exchange I receive 120 or 130 pounds, that's a higher profit; and if I should get as much as 200 pounds, that would be an extraordinary, and enormous profit." What is it, then, that serves this citizen as the standard of his profit? The cost of the production of his commodities. If in exchange for these goods he receives a quantity of other goods whose production has cost less, he has lost. If he receives in exchange for his goods a quantity of other goods whose production has cost more, he has gained. And he reckons the falling or rising of the profit according to the degree at which the exchange value of his goods stands, whether above or below his zero – the cost of production.


We have seen how the changing relation of supply and demand causes now a rise, now a fall of prices; now high, now low prices. If the price of a commodity rises considerably owing to a failing supply or a disproportionately growing demand, then the price of some other commodity must have fallen in proportion; for of course the price of a commodity only expresses in money the proportion in which other commodities will be given in exchange for it. If, for example, the price of a yard of silk rises from two to three shillings, the price of silver has fallen in relation to the silk, and in the same way the prices of all other commodities whose prices have remained stationary have fallen in relation to the price of silk. A large quantity of them must be given in exchange in order to obtain the same amount of silk. Now, what will be the consequence of a rise in the price of a particular commodity? A mass of capital will be thrown into the prosperous branch of industry, and this immigration of capital into the provinces of the favored industry will continue until it yields no more than the customary profits, or, rather until the price of its products, owning to overproduction, sinks below the cost of production.


Conversely: if the price of a commodity falls below its cost of production, then capital will be withdrawn from the production of this commodity. Except in the case of a branch of industry which has become obsolete and is therefore doomed to disappear, the production of such a commodity (that is, its supply), will, owning to this flight of capital, continue to decrease until it corresponds to the demand, and the price of the commodity rises again to the level of its cost of production; or, rather, until the supply has fallen below the demand and its price has risen above its cost of production, for the current price of a commodity is always either above or below its cost of production.


We see how capital continually emigrates out of the province of one industry and immigrates into that of another. The high price produces an excessive immigration, and the low price an excessive emigration.


We could show, from another point of view, how not only the supply, but also the demand, is determined by the cost of production. But this would lead us too far away from our subject.


We have just seen how the fluctuation of supply and demand always bring the price of a commodity back to its cost of production. 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.


The determination of price by the cost of production is not to be understood in the sense of the bourgeois economists. The economists say that the average price of commodities equals the cost of production: that is the law. The anarchic movement, in which the rise is compensated for by a fall and the fall by a rise, they regard as an accident. We might just as well consider the fluctuations as the law, and the determination of the price by cost of production as an accident – as is, in fact, done by certain other economists. But it is precisely these fluctuations which, viewed more closely, carry the most frightful devastation in their train, and, like an earthquake, cause bourgeois society to shake to its very foundations – it is precisely these fluctuations that force the price to conform to the cost of production. In the totality of this disorderly movement is to be found its order. In the total course of this industrial anarchy, in this circular movement, competition balances, as it were, the one extravagance by the other.


We thus see that the price of a commodity is indeed determined by its cost of production, but in such a manner that the periods in which the price of these commodities rises above the costs of production are balanced by the periods in which it sinks below the cost of production, and vice versa. Of course this does not hold good for a single given product of an industry, but only for that branch of industry. So also it does not hold good for an individual manufacturer, but only for the whole class of manufacturers.


The determination of price by cost of production is tantamount to the determination of price by the labor-time requisite to the production of a commodity, for the cost of production consists, first of raw materials and wear and tear of tools, etc., i.e., of industrial products whose production has cost a certain number of work-days, which therefore represent a certain amount of labor-time, and, secondly, of direct labor, which is also measured by its duration.
Wage Labour & Capital (http://www.marxists.org/archive/marx/works/1847/wage-labour/ch03.htm)

[Baconator]

Oh yeah. Spamola here. I'll reply to some of that stuff in a bit.

[KC]

It's not spam, it's a perfectly good explanation that ties the labour theory of value to the theory of supply and demand and explains the context in which the labour theory of value is valid.

[pusher robot]

It's not spam, it's a perfectly good explanation that ties the labour theory of value to the theory of supply and demand and explains the context in which the labour theory of value is valid.

Can you elaborate? It seems to me that this article is saying that value is actually determined by supply and demand, not labor.

[mikelepore]

To Wraith, the original poster -- wait a minute -- any analytical model has to begin with a choice of what phenomena you intend to explain. Did you think Marx's intent was to explain the prices of the commodities that you go shopping for? Marx's intent was to explain the systematic source of the social relationships we see around us. To explain social relationships, one has to consider what mechanisms are causing personal idleness to be correlated with concentrated ownership of wealth, and hard work to be correlated with poverty, which are the observed features of the capitalist class and the working class, features that can be empirically observed even we had no theory at all. To explain social relationships, it has to be investigated why the exchange value of labor power almost always turns out to be some amount such that workers don't get paid enough to back their own products, that is, workers receive in the form of wages only a small fraction of the wealth they collectively produce. What force is causing the result that the buying power of workers' wages (real wages) has a tendency to keep gravitating back to the mere "living wage" level, even as automated mass production increases productivity a thousandfold? The theory needs to explain what causes periodic crises, such as the war-depression-war-depression cycle. To explain modern human society, those economic facts need to be explained. You said, "convince me." It's the other way around. Marx wrote dozens of chapters that explain how observed sociological data can be accounted for by assuming a particular economic model. You tell us how Jevons' theory of marginal utility could explain these sociological observations.

[KC]

Can you elaborate? It seems to me that this article is saying that value is actually determined by supply and demand, not labor.

Keep in mind that this article is written by Marx, and is part of his pamphlet Wage Labour & Capital.

What this part of the article says is that the fluctuations in price equilibrate at the cost of production of the commodity and in the end of this part of the pamphlet it is concluded that "the price of a commodity is indeed determined by its cost of production, but in such a manner that the periods in which the price of these commodities rises above the costs of production are balanced by the periods in which it sinks below the cost of production, and vice versa".

This is not only setting up a basis for the determination of value within this context (that price is determined by cost of production) but it is also setting up the context for which the determination of value is valid (not in individual transactions but in many transactions throughout a whole branch of industry, when price is equilibrated at cost of production). So the conclusion that we arrive at is that commodities are exchanged based on their cost of production.

[pusher robot]

This is not only setting up a basis for the determination of value within this context (that price is determined by cost of production) but it is also setting up the context for which the determination of value is valid (not in individual transactions but in many transactions throughout a whole branch of industry, when price is equilibrated at cost of production). So the conclusion that we arrive at is that commodities are exchanged based on their cost of production.

This can't be the LTV though. It is widely accepted by practically all economists that the price of a commodity (marginal revenue) in a competitive market trends toward the marginal cost of production. That's the basis of capitalist rent-seeking.

[JazzRemington]

I believe that the marxist labor theory of value and the theory of plussvalue are anachronic and obsolete since the marginalist revolution of Jevons and Menger and that the theory of marginal utility of Marsall and Von Wieser completely shatters the fundations of marxist economy.

Convince me otherwise.

PD: Im a libertarian :cool:

Burden of proof rests on the person making the positive statement.

[Baconator]

By the competition between buyers and sellers, by the relation of the demand to the supply, of the call to the offer. The competition by which the price of a commodity is determined is threefold.

Ok...



The same commodity is offered for sale by various sellers. Whoever sells commodities of the same quality most cheaply, is sure to drive the other sellers from the field and to secure the greatest market for himself.

Heh. Wrong. Where's your reasoning behind this? There becomes a generally agreed upon price or else the constant bidding down of the price will kill supply and incur losses. Its inequitable. If you bid down your prices to the point where your sustaining loses , you'll sell until you're not profiting forcing you to jack up your prices again to cover the loss. This is where I can just swoop in and lower my prices. It just becomes a cycle of little profit and not worth the trouble to most entrepreneurs.
If an item sells hot, it sends signals through out the market drawing competition like vultures to a meal. So if one guy just kept lowering his prices to the point of net loss , he'd have to keep on doing so until he goes broke.



Thus there takes place a competition among the sellers which forces down the price of the commodities offered by them.

This is mainly because of increased supply offered by other sellers.



But there is also a competition among the buyers; this upon its side causes the price of the proffered commodities to rise.

Only if the demand rises. Demand is based on individual preferences of consumers. Just because something is produced doesn't mean its going to be liked and preferred by consumers. Typically something is produced because of demand, not the other way around.



Finally, there is competition between the buyers and the sellers: these wish to purchase as cheaply as possible, those to sell as dearly as possible. The result of this competition between buyers and sellers will depend upon the relations between the two above-mentioned camps of competitors – i.e., upon whether the competition in the army of sellers is stronger. Industry leads two great armies into the field against each other, and each of these again is engaged in a battle among its own troops in its own ranks. The army among whose troops there is less fighting, carries off the victory over the opposing host.

LOL. A producer isn't knocked out because of another producer. He's knocked out because of the consumer unless that producer produces something more or something else to cater to the demand of the consumer. But if the inefficient producer is knocked out or weakened why is this a bad thing?



Let us suppose that there are 100 bales of cotton in the market and at the same time purchasers for 1,000 bales of cotton. In this case, the demand is 10 times greater than the supply. Competition among the buyers, then, will be very strong; each of them tries to get hold of one bale, if possible, of the whole 100 bales.

So you mean 1,000 people are in demand for 100 supply of cotton bales? Ok. You made a grave mistake though. How do you know each buyer wants 100 bales? It could be that each of those buyers wants 2 bales , 20 bales , 24 bales , etc. It doesn't stand to reason that each buyer would prefer exactly 100 bales of cotton. You're making the assumption that each consumer would prefer 100 bales of cotton. Truth is , you don't know this.



This example is no arbitrary supposition. In the history of commerce we have experienced periods of scarcity of cotton, when some capitalists united together and sought to buy up not 100 bales, but the whole cotton supply of the world.

It was capitalists , by way of demand , that created the reality of cotton being available for consumption. ;) Its not as if something magically comes into existence without saving and investing a.l.a. entrepreneurial capitalist.



In the given case, then, one buyer seeks to drive the others from the field by offering a relatively higher price for the bales of cotton.

Err. Ok. The 100 bales of cotton aren't static. In order to profit , from all 1,000 consumers, the producer is going to try to produce a bigger supply of cotton. So you're talking about a capitalist that wants to buy out the 100 stock of cotton bales. Fine, but it only works for him if he sells the commodities on the market afterwards. He can sale at the price the next highest bidding consumer is willing to pay. Again, it doesn't stand to reason that all 1,000 consumers would prefer exactly 100 bales of cotton. Plus, if there is a strong demand for cotton, other producers will jump into to try to create more supply of cotton. Don't assume that 100 stock is static always and forever. Wealth isn't just there , it can be created.


The cotton sellers, who perceive the troops of the enemy in the most violent contention among themselves, and who therefore are fully assured of the sale of their whole 100 bales, will beware of pulling one another's hair in order to force down the price of cotton at the very moment in which their opponents race with one another to screw it up high. So, all of a sudden, peace reigns in the army of sellers. They stand opposed to the buyers like one man, fold their arms in philosophic contentment and their claims would find no limit did not the offers of even the most importunate of buyers have a very definite limit.

What? I couldn't understand what you were saying through the myriad of propaganda. Sorry.



If, then, the supply of a commodity is less than the demand for it, competition among the sellers is very slight, or there may be none at all among them. In the same proportion in which this competition decreases, the competition among the buyers increases. Result: a more or less considerable rise in the prices of commodities.

You're assuming the supply is always and forever static. You clearly don't understand what demand for a commodity does to the supply of it. You also seem not to understand that an increased supply and/or decreased demand lowers the prices.



It is well known that the opposite case, with the opposite result, happens more frequently. Great excess of supply over demand; desperate competition among the sellers, and a lack of buyers; forced sales of commodities at ridiculously low prices.

Well yeah. Its called market clearing prices. How are extremely low priced goods bad?



But what is a rise, and what a fall of prices? What is a high and what a low price? A grain of sand is high when examined through a microscope, and a tower is low when compared with a mountain. And if the price is determined by the relation of supply and demand, by what is the relation of supply and demand determined?

You're analogy sucks. Supply+Demand is effected the most by consumer's preferences and their subjective evaluations. Some people like this , some people like that. Some people like more of this , some people like less of that. Preferences vary from individual to individual and its ultimately up to the consumer on how much she's willing to pay.



"If the production of the commodities which I sell has cost me 100 pounds, and out of the sale of these goods I make 110 pounds . But if in the exchange I receive 120 or 130 pounds, that's a higher profit; and if I should get as much as 200 pounds, that would be an extraordinary, and enormous profit."

But here's the thing. The producer really doesn't get to determine how much profit he makes. Just because he produces a good that has cost him 100 pounds in production doesn't necessarily mean he will make a profit. The laborer thats helping produce the good will certain get paid for its production but it doesn't mean the capitalist will. Capitalist profit is completely dependent on the consumer ( assuming we're talking about a free market and not state-capitalism).


What is it, then, that serves this citizen as the standard of his profit? The cost of the production of his commodities. If in exchange for these goods he receives a quantity of other goods whose production has cost less, he has lost. If he receives in exchange for his goods a quantity of other goods whose production has cost more, he has gained. And he reckons the falling or rising of the profit according to the degree at which the exchange value of his goods stands, whether above or below his zero – the cost of production.

Ok cutting through the rhetoric , I'm gonna see if I got this right. The producer deems he makes a profit if the returns are higher than the cost of production and he determines if he makes a loss if the returns are lower than the cost of production. I think thats what its saying. All I can say is that the producer might have to sell below the cost of production if consumers do not value his product. Say I spent 100 pounds in production of each of this good. Then I want to sell it for about 110 pounds or so ( normally the rate of interest which is the difference my time made in the process of production ...investing then profiting later). If the thing doesn't sell at 110 pounds very well ( i.e. consumers aren't willing to buy it for that price) then I have to keep on lowering it until consumers are willing to pay something for it. Or else I sustain a near total loss instead of 50% or so. Which means that I will cease production of this good if the costs of production are greater than the returns or I will lower the cost of my production to fit the demand ( consumption trends).



We have seen how the changing relation of supply and demand causes now a rise, now a fall of prices; now high, now low prices. If the price of a commodity rises considerably owing to a failing supply or a disproportionately growing demand, then the price of some other commodity must have fallen in proportion; for of course the price of a commodity only expresses in money the proportion in which other commodities will be given in exchange for it.

How does it stand to reason that the price of 'another -mystery- commodity' has fallen. I guess that makes sense if one thinks if a consumer is at this moment consuming X , then he isn't consuming Y. But some people prefer Y to X , or Y and X. That cannot be determined with certainty. Money itself is just a commodity. The commodity that is considered money (i.e. gold, silver, etc) is preferred in indirect exchange. So lets think of three commodities, widgets , smidgets , and money.
Lets say a widget costs $1 and a smidget costs $2. In terms of price, it demonstrates 2 widgets should trade for 1 smidget. How about in practice? Probably not. Because not every smidget producer may desire a widget or vice versa. However, they both desire money. So 1 smidget will trade for $2 but not necessarily 2 widgets, not directly.




If, for example, the price of a yard of silk rises from two to three shillings, the price of silver has fallen in relation to the silk, and in the same way the prices of all other commodities whose prices have remained stationary have fallen in relation to the price of silk.


Not exactly. If the price of silk raises from 2 to 3 shillings that means one of two things ( or both in some cases). Either the supply of silk has decreased ( and/or demand increased) or the supply of silver has increased ( and/or demand for it decreased). If the supply relative to demand of silk has changed, then this will not effect all other goods in the market unless silk is the preferred commodity of indirect exchange ( money). If silver is the universally preferable commodity for indirect exchange ( money) and the supply relative to demand of silver has fluctuated then this will effect the price of all other goods in the market. In other words , if changes in supply + demand in the commodity preferred as money fluctuates , then this effects all other goods in the market.(known as inflation/deflation) If the changes in the supply + demand of a single commodity changes that isn't money, then this will not effect all other goods in the market.



A large quantity of them must be given in exchange in order to obtain the same amount of silk. Now, what will be the consequence of a rise in the price of a particular commodity?

Or a greater amount of silk may be produced. Depends on if silk is considered money.


A mass of capital will be thrown into the prosperous branch of industry, and this immigration of capital into the provinces of the favored industry will continue until it yields no more than the customary profits, or, rather until the price of its products, owning to overproduction, sinks below the cost of production.

Conversely: if the price of a commodity falls below its cost of production, then capital will be withdrawn from the production of this commodity. Except in the case of a branch of industry which has become obsolete and is therefore doomed to disappear, the production of such a commodity (that is, its supply), will, owning to this flight of capital, continue to decrease until it corresponds to the demand, and the price of the commodity rises again to the level of its cost of production; or, rather, until the supply has fallen below the demand and its price has risen above its cost of production, for the current price of a commodity is always either above or below its cost of production.

Prices which are determined by supply + demand , which are determined by consumer preferences, direct capital in the (free) economy. Prices and interest rates are translations to investors on what people are currently demanding and exactly how much they're demanding. Capital goes where there is demand. If signals in the market are distorted ( like by the state) then you get a problem of bad investment.



We see how capital continually emigrates out of the province of one industry and immigrates into that of another. The high price produces an excessive immigration, and the low price an excessive emigration.

Capital goes where consumers want it to go since supply is the result of demand. Whats wrong with producing stuff people like and not producing stuff people don't like?



We could show, from another point of view, how not only the supply, but also the demand, is determined by the cost of production. But this would lead us too far away from our subject.

Demand is not determined by the cost of production. Its backwards actually. Cost of production is determined by demand.



We have just seen how the fluctuation of supply and demand always bring the price of a commodity back to its cost of production.

Nope. This is getting funny. Demand is elusive and dynamic and not static, it constantly changes , sometimes a little sometimes alot. It
is determined by individual preferences ( subjective evaluation) and thus supply is always increasing or decreasing to meet the demand. General equilibrium is sought after but never truly obtained. Of course , this is what drives the economy.
If I gave everyone on this board $100 to go spend on the store then it is highly probable that we will not all spend that $100 bucks on the same things at the store in the exact same quantities. Similarly , if you got in a car wreck and got fired from your job , your preferences in consumption would likely change.



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.

The price never truly stands in one place. It shifts around depending on demand in a free economy. I don't know how the hell you came to your conclusion dude. The price is not determined by the cost of production since the price isn't always static. Naturally the seller is going to want to charge more than the cost of production ( the interest added for his time) but thats completely at the mercy of the consumers and how much they're willing to pay based on how much they value your commodity. If you have $1 and I want to sell you a newspaper, we are only gonna trade voluntarily if you value my newspaper over your $1 and vice-versa. If you don't trade then obviously you value your $1 higher. So if I really want to sell the newspaper then I negotiate a price that you and I both can agree on to where we value the other commodity the other person holds more than the one we currently hold. I may value your .70 cents more than my newspaper and vice versa, then we trade for .70 cents/ 1 newspaper. Depending on what other people are willing to pay for my newspaper determines how much I will produce in the future. Price is determined by supply + demand , especially demand which drives everything.



The determination of price by the cost of production is not to be understood in the sense of the bourgeois economists. The economists say that the average price of commodities equals the cost of production: that is the law.

Perhaps you don't understand what this means. Production wouldn't even exist without the demand. If we all adopted Amish custom tomorrow and decided we won't value diamonds anymore, what is the value of all diamonds then? Thats right , its zilch because nobody cares to buy them. Unless someone enjoys throwing money down a pit , all production of diamonds ceases. Demand determines the amount of supply ( i.e. production to be done) , not vice versa , e.g. you get back into the supply+demand dynamic giving its inputs about price.


The anarchic movement, in which the rise is compensated for by a fall and the fall by a rise, they regard as an accident. We might just as well consider the fluctuations as the law, and the determination of the price by cost of production as an accident – as is, in fact, done by certain other economists. But it is precisely these fluctuations which, viewed more closely, carry the most frightful devastation in their train, and, like an earthquake, cause bourgeois society to shake to its very foundations – it is precisely these fluctuations that force the price to conform to the cost of production. In the totality of this disorderly movement is to be found its order. In the total course of this industrial anarchy, in this circular movement, competition balances, as it were, the one extravagance by the other.

No, any sensible economist calls it spontaneous order. Supply doesn't drive demand , rather opposite. Thats what you fail to understand but thats like so 150 yrs ago. I suggest picking up a modern book about economics to get the jist of what has been discovered since then. Its hard reading through the rhetoric sometimes. I think its meant to confuse young potential communists. Heh.




The determination of price by cost of production is tantamount to the determination of price by the labor-time requisite to the production of a commodity, for the cost of production consists, first of raw materials and wear and tear of tools, etc., i.e., of industrial products whose production has cost a certain number of work-days, which therefore represent a certain amount of labor-time, and, secondly, of direct labor, which is also measured by its duration.

False premise = false conclusion. ( about reality anyway).


Boo yah. Done. I'll answer questions if you got em' :)

[KC]

I'd love to see pusher robot respond to the post above, as since he agrees with what Marx wrote above that I've posted, he would be able to, and it would make a far more interesting debate to have pusher robot defend Marx's writings.

[Baconator]

I'd love to see pusher robot respond to the post above, as since he agrees with what Marx wrote above that I've posted, he would be able to, and it would make a far more interesting debate to have pusher robot defend Marx's writings.

I didn't try very hard and just spanked this shoddy attempt ( your article) to give any legitimacy to the LTV. Its too easy. The LTV tells us nothing of value thus it should not still be considered a 'theory of value.' If you guys refined it into the 'labor theory of production' and got rid of the nonsense it might be somewhat informative. But far greater economists than Marx ( whom I really don't consider an economist btw) have already explained well labor as a factor of production.

[Demogorgon]

Demo? What is your knowledge of economics?
Eight years of study up to and including University level.

What is yours? Reading wikipedia?

[Schrödinger's Cat]

I believe that the marxist labor theory of value and the theory of plussvalue are anachronic and obsolete since the marginalist revolution of Jevons and Menger and that the theory of marginal utility of Marsall and Von Wieser completely shatters the fundations of marxist economy.

Convince me otherwise.

PD: Im a libertarian :cool:


A few points:

1.) Anachronic does not make sense in the context of your post.

2.) Libertarian is a very broad term. Indeed it is often used to describe socialists in the fields of communism, individualism, mutualism, and collectivism.

3.) Are you like Baconater by trying to confuse price with value?

Without using google, can you tell me how Marx's phrase "socially necessary abstract labor time" breaks from supply and demand - if it does? I think it is also my duty to bring up the fact Jevons saw marginilism in tune with the LTV.

[Dean]

Ah,OK. Well we have something to debate then. :D
I'm gonna attempt to bring you to libertarianism's logical conclusions which is Market Anarchism. Cool? :D

Anyway, Well talk. Glad to have a fellow libertarian here.

More corporate martial law. Lovely.

[Post-Something]

I like where this thread is going, I really want to finally see this battled out, since most people always shut my communist rant up with "communism has economic flaws".

[pusher robot]

I'd love to see pusher robot respond to the post above, as since he agrees with what Marx wrote above that I've posted, he would be able to, and it would make a far more interesting debate to have pusher robot defend Marx's writings.

Not everything in the article is defensible, particularly the description of buying and selling as a kind of violence (!), and Baconator pointed some of these out. The overall thrust, though, that MR=MC, was and still is a general principle of microeconomics.

[Wraith]

What the hell is anachronic? :laugh: I think you mean archaic, or maybe anachronistic.

Anyway, it is quite funny all the teenagers who come to this board without the slightest knowledge of economics but think they have knocked down Marxism bcause they have read on wikipedia that marginalism allegedly bests it. They do this with no understanding of either marginalism or the LTV


I hit a proletarian nerve there, didnt I?
At least elaborate on that instead of putting a couple of links :rolleyes:

[Die Neue Zeit]

Business practices rather validate LTV than contradict it (through marginalism): cost-plus pricing.

http://en.wikipedia.org/wiki/Cost-plus_pricing


Another variant of cost plus pricing is activity based pricing. This involves being more careful in determining costs. Instead of using arbitrary expense categories when allocating overhead, every activity is linked to the resources it uses.

Cost will need to be recalculated and the percentage markup will likely need to be adjusted as the product goes through its life cycle. This is sometimes referred to as product life cycle pricing, although it is seldom done deliberately or in a planned and organized manner. Price skimming and penetration pricing are also types of product life cycle pricing but they are demand based pricing methods rather than cost based.

BTW, I know the mechanics of activity-based management in general (costing, pricing, etc.). :)

[Wraith]

To Wraith, the original poster -- wait a minute -- any analytical model has to begin with a choice of what phenomena you intend to explain. Did you think Marx's intent was to explain the prices of the commodities that you go shopping for? Marx's intent was to explain the systematic source of the social relationships we see around us. To explain social relationships, one has to consider what mechanisms are causing personal idleness to be correlated with concentrated ownership of wealth, and hard work to be correlated with poverty, which are the observed features of the capitalist class and the working class, features that can be empirically observed even we had no theory at all. To explain social relationships, it has to be investigated why the exchange value of labor power almost always turns out to be some amount such that workers don't get paid enough to back their own products, that is, workers receive in the form of wages only a small fraction of the wealth they collectively produce. What force is causing the result that the buying power of workers' wages (real wages) has a tendency to keep gravitating back to the mere "living wage" level, even as automated mass production increases productivity a thousandfold? The theory needs to explain what causes periodic crises, such as the war-depression-war-depression cycle. To explain modern human society, those economic facts need to be explained. You said, "convince me." It's the other way around. Marx wrote dozens of chapters that explain how observed sociological data can be accounted for by assuming a particular economic model. You tell us how Jevons' theory of marginal utility could explain these sociological observations.

Ok, so you are saying that Marx didnt intend to produce an economic theory but he tried to explain the social relantionships that he saw in his time and by doing so he came up with the labor theory of value and the theory of plussvalue not because he made scientific research on the factors that determined value in a commodity but because it was the theories that best suited his sociological observations.

I think Marx lacked the knowledge on economic modeling necessary to understand the factors that provided value in a productive process and the simple "empirical observation" is not enogh to support an economic theory.

[Baconator]

Eight years of study up to and including University level.

What is yours? Reading wikipedia?


Well WTF then? Debate me!
Here I am posting my own responses to things I agree and disagree with and all you can do is cry that my encyclopedic(?) knowledge is flawed. Why don't you debate the points I have brought up instead of resorting to ad-hominems by suggesting my premise is flawed just because you say so. :o

Btw, I don't think you have much formal knowledge of Econ or else you would be able to demolish my points instantaneously if they truly weren't valid. Or it could be that you do accept my points as valid but you're angry about it and thus resorting typing in little potshots instead of addressing any points I have brought up.

[Wraith]

A few points:

1.) Anachronic does not make sense in the context of your post.

2.) Libertarian is a very broad term. Indeed it is often used to describe socialists in the fields of communism, individualism, mutualism, and collectivism.

3.) Are you like Baconater by trying to confuse price with value?



1) English is not my first language so be nice

2) Yes well socialists like to have a bunch of names

3) I do think that value is linked with price trough its marginal usefulness



Without using google, can you tell me how Marx's phrase "socially necessary abstract labor time" breaks from supply and demand - if it does? I think it is also my duty to bring up the fact Jevons saw marginilism in tune with the LTV.

Its an interesting theory but a little obsolete.

[Baconator]

3.) Are you like Baconater by trying to confuse price with value?GeneCosta, What are you even doing in this conversation? You clearly have nothing constructive to tribute and your knowledge of about basic tenets in a market economy is very poor indeed. You've proven this even more acutely to me based on our more direct skype conversations. Geno , remember it was you that was confusing price with value and I told you the difference and how value effects price. Look , if you're gonna take these weasel shots then at least back it up with some substance.
Show me where I am wrong in my chain of reasoning.

Perhaps you should go back to talking about how big government regulation seems like the best thing since sliced bread. At least in those conversations you were a tad more decent than in these conversations about economics where clearly you seem out of your league.

[Demogorgon]

Well WTF then? Debate me!
Here I am posting my own responses to things I agree and disagree with and all you can do is cry that my encyclopedic(?) knowledge is flawed. Why don't you debate the points I have brought up instead of resorting to ad-hominems by suggesting my premise is flawed just because you say so. :o

Btw, I don't think you have much formal knowledge of Econ or else you would be able to demolish my points instantaneously if they truly weren't valid. Or it could be that you do accept my points as valid but you're angry about it and thus resorting typing in little potshots instead of addressing any points I have brought up.
Get over yourself. I have debated you plenty. I am just bored of doing it now because you are a stuck up little jerk who knows so little about the subject on hand that you rarely understand the answers given to your drivel.

It is pretty rich for you to talk about ad hominens. All you ever do is say that people must have lesser knowledge than you. At any rate very few people are interested in debating with you anymore because you are too damn thick to hold a coherant position.

[Wraith]

Baconator do you agree that value is determined by the marginal utility of a commodity and that price is determined by the supply and demand on the market wich at the same time is linked to the marginal utility of the comodity?

[Baconator]

Get over yourself. I have debated you plenty. I am just bored of doing it now because you are a stuck up little jerk who knows so little about the subject on hand that you rarely understand the answers given to your drivel.

It is pretty rich for you to talk about ad hominens. All you ever do is say that people must have lesser knowledge than you. At any rate very few people are interested in debating with you anymore because you are too damn thick to hold a coherant position.

There is nothing here. Nothing.
Is this the best you can do? Lets talk about the person instead of the ideas? Small minds.

[Baconator]

Baconator do you agree that value is determined by the marginal utility of a commodity and that price is determined by the supply and demand on the market wich at the same time is linked to the marginal utility of the comodity?

Yes.There is where value is determined. ( Subjective) Value influences demand which in turn influences supply. The relationship of supply relative to demand, and demand be being influenced by value, gives you your prices.

Think of the Marginal Revolution in four words to simplify it. Customer is always right.

[Baconator]

Wraith. Here is a simple question I'm sure you can answer. The commies might find it difficult though.

Suppose you have five shocks of corn. What is the value of a shock of corn?

[Wraith]

Suppose you have five shocks of corn. What is the value of a shock of corn?

Depends on how hungry I am :cool:

[Schrödinger's Cat]

GeneCosta, What are you even doing in this conversation? You clearly have nothing constructive to tribute and your knowledge of about basic tenets in a market economy is very poor indeed. You've proven this even more acutely to me based on our more direct skype conversations. Geno , remember it was you that was confusing price with value and I told you the difference and how value effects price. Look , if you're gonna take these weasel shots then at least back it up with some substance.
Show me where I am wrong in my chain of reasoning.

Perhaps you should go back to talking about how big government regulation seems like the best thing since sliced bread. At least in those conversations you were a tad more decent than in these conversations about economics where clearly you seem out of your league.

Whoa; I confused no such thing. You were the one messing around with the definitions of price and value.

I never said big government regulation was the best thing since sliced bread. You must have a lying problem. I indicated that it's absurd to advocate getting rid of welfare targeted towards the working class as a concession while forgiving the larger subsidies being done at the top through hand-outs and tax exemptions. Tucker would have addressed you as I do right now.

Your trollish behavior is intolerable. I'm done talking to you until you grow up and actually post something worth responding to, instead of your personal attacks (written with libel).

[pusher robot]

Depends on how hungry I am :cool:

Are we also agreed that in the long run in an ideally competitive market MR=MC? Or is my microecon obsolete?

[La Comédie Noire]

Thats pretty much correct my friend. http://www.revleft.com/vb/labor-theory-value-t80746/revleft/smilies/biggrin.gif
But to be fair, the LTV wasn't only Marx's theory as it was Ricardian also and the mantle of classical economics since they couldn't properly figure out value. Marx only learned from the CEs.

Btw, I also embrace libertarian principles. Let me ask you, are you a Market Anarchist ( Anarcho-Capitalist) or a minarchist ( small govt libertarian)?


Well if you can do that then why can't you shove all that shit about free market competition into the trash with it?

I mean after all we no longer have seperate firms competing as in the days of Marx and Ricardo. What we have now are oligarchys that embrace multiple industrys at once, allowing them to adjust prices however they see fit. What's oil now? $138 a barrel? You want to try to start a rival firm to compete with that? Ain't happening.

How do you propose we stop that? How do we reach "perfect competition"? Goverment intervention? I thought libretarians hated that shit. :laugh:

But for all your fluff you do raise some very good questions. Does the Labour Theory of Value hold weight? After all we no damn well it doesn't cost $138 dollars to extract and ship a single barrel of oil.

[Wraith]

How do you propose we stop that? How do we reach "perfect competition"? Goverment intervention? I thought libretarians hated that shit. :laugh:

Thats why we have a legal frame that prevents monopolies and ensures free access to the markets, to manipulate prices goes against the core of Friedman teachings.

[Bright Banana Beard]

Thats why we have a legal frame that prevents monopolies and ensures free access to the markets, to manipulate prices goes against the core of Friedman teachings.

I have to lol @ this. Loophole? Wait, no I will be fair to the competition as my motivation is to give the demand to make money. no!!!! he taking over! [/sarcasm]:lol:

[Wraith]

I have to lol @ this. Loophole? Wait, no I will be fair to the competition as my motivation is to give the demand to make money. no!!!! he taking over! [/sarcasm]:lol:

I have no idea what you are talking about :confused:

[Bright Banana Beard]

I have no idea what you are talking about :confused:
I was mocking myself with your previous post. :)

[Wraith]

I was mocking myself with your previous post. :)

And why is that?

[Plagueround]

Anytime I see a Libertarian thread I want to post this.
http://i95.photobucket.com/albums/l156/phobosblack/1206263172638.jpg

[Awful Reality]

By What is the Price of A Commodity Determined?

By the competition between buyers and sellers, by the relation of the demand to the supply, of the call to the offer. The competition by which the price of a commodity is determined is threefold.


The same commodity is offered for sale by various sellers. Whoever sells commodities of the same quality most cheaply, is sure to drive the other sellers from the field and to secure the greatest market for himself. The sellers therefore fight among themselves for the sales, for the market. Each one of them wishes to sell, and to sell as much as possible, and if possible to sell alone, to the exclusion of all other sellers. Each one sells cheaper than the other. Thus there takes place a competition among the sellers which forces down the price of the commodities offered by them.


But there is also a competition among the buyers; this upon its side causes the price of the proffered commodities to rise.


Finally, there is competition between the buyers and the sellers: these wish to purchase as cheaply as possible, those to sell as dearly as possible. The result of this competition between buyers and sellers will depend upon the relations between the two above-mentioned camps of competitors – i.e., upon whether the competition in the army of sellers is stronger. Industry leads two great armies into the field against each other, and each of these again is engaged in a battle among its own troops in its own ranks. The army among whose troops there is less fighting, carries off the victory over the opposing host.


Let us suppose that there are 100 bales of cotton in the market and at the same time purchasers for 1,000 bales of cotton. In this case, the demand is 10 times greater than the supply. Competition among the buyers, then, will be very strong; each of them tries to get hold of one bale, if possible, of the whole 100 bales. This example is no arbitrary supposition. In the history of commerce we have experienced periods of scarcity of cotton, when some capitalists united together and sought to buy up not 100 bales, but the whole cotton supply of the world. In the given case, then, one buyer seeks to drive the others from the field by offering a relatively higher price for the bales of cotton. The cotton sellers, who perceive the troops of the enemy in the most violent contention among themselves, and who therefore are fully assured of the sale of their whole 100 bales, will beware of pulling one another's hair in order to force down the price of cotton at the very moment in which their opponents race with one another to screw it up high. So, all of a sudden, peace reigns in the army of sellers. They stand opposed to the buyers like one man, fold their arms in philosophic contentment and their claims would find no limit did not the offers of even the most importunate of buyers have a very definite limit.


If, then, the supply of a commodity is less than the demand for it, competition among the sellers is very slight, or there may be none at all among them. In the same proportion in which this competition decreases, the competition among the buyers increases. Result: a more or less considerable rise in the prices of commodities.


It is well known that the opposite case, with the opposite result, happens more frequently. Great excess of supply over demand; desperate competition among the sellers, and a lack of buyers; forced sales of commodities at ridiculously low prices.


But what is a rise, and what a fall of prices? What is a high and what a low price? A grain of sand is high when examined through a microscope, and a tower is low when compared with a mountain. And if the price is determined by the relation of supply and demand, by what is the relation of supply and demand determined?


Let us turn to the first worthy citizen we meet. He will not hesitate one moment, but, like Alexander the Great, will cut this metaphysical knot with his multiplication table. He will say to us: "If the production of the commodities which I sell has cost me 100 pounds, and out of the sale of these goods I make 110 pounds – within the year, you understand – that's an honest, sound, reasonable profit. But if in the exchange I receive 120 or 130 pounds, that's a higher profit; and if I should get as much as 200 pounds, that would be an extraordinary, and enormous profit." What is it, then, that serves this citizen as the standard of his profit? The cost of the production of his commodities. If in exchange for these goods he receives a quantity of other goods whose production has cost less, he has lost. If he receives in exchange for his goods a quantity of other goods whose production has cost more, he has gained. And he reckons the falling or rising of the profit according to the degree at which the exchange value of his goods stands, whether above or below his zero – the cost of production.


We have seen how the changing relation of supply and demand causes now a rise, now a fall of prices; now high, now low prices. If the price of a commodity rises considerably owing to a failing supply or a disproportionately growing demand, then the price of some other commodity must have fallen in proportion; for of course the price of a commodity only expresses in money the proportion in which other commodities will be given in exchange for it. If, for example, the price of a yard of silk rises from two to three shillings, the price of silver has fallen in relation to the silk, and in the same way the prices of all other commodities whose prices have remained stationary have fallen in relation to the price of silk. A large quantity of them must be given in exchange in order to obtain the same amount of silk. Now, what will be the consequence of a rise in the price of a particular commodity? A mass of capital will be thrown into the prosperous branch of industry, and this immigration of capital into the provinces of the favored industry will continue until it yields no more than the customary profits, or, rather until the price of its products, owning to overproduction, sinks below the cost of production.


Conversely: if the price of a commodity falls below its cost of production, then capital will be withdrawn from the production of this commodity. Except in the case of a branch of industry which has become obsolete and is therefore doomed to disappear, the production of such a commodity (that is, its supply), will, owning to this flight of capital, continue to decrease until it corresponds to the demand, and the price of the commodity rises again to the level of its cost of production; or, rather, until the supply has fallen below the demand and its price has risen above its cost of production, for the current price of a commodity is always either above or below its cost of production.


We see how capital continually emigrates out of the province of one industry and immigrates into that of another. The high price produces an excessive immigration, and the low price an excessive emigration.


We could show, from another point of view, how not only the supply, but also the demand, is determined by the cost of production. But this would lead us too far away from our subject.


We have just seen how the fluctuation of supply and demand always bring the price of a commodity back to its cost of production. 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.


The determination of price by the cost of production is not to be understood in the sense of the bourgeois economists. The economists say that the average price of commodities equals the cost of production: that is the law. The anarchic movement, in which the rise is compensated for by a fall and the fall by a rise, they regard as an accident. We might just as well consider the fluctuations as the law, and the determination of the price by cost of production as an accident – as is, in fact, done by certain other economists. But it is precisely these fluctuations which, viewed more closely, carry the most frightful devastation in their train, and, like an earthquake, cause bourgeois society to shake to its very foundations – it is precisely these fluctuations that force the price to conform to the cost of production. In the totality of this disorderly movement is to be found its order. In the total course of this industrial anarchy, in this circular movement, competition balances, as it were, the one extravagance by the other.


We thus see that the price of a commodity is indeed determined by its cost of production, but in such a manner that the periods in which the price of these commodities rises above the costs of production are balanced by the periods in which it sinks below the cost of production, and vice versa. Of course this does not hold good for a single given product of an industry, but only for that branch of industry. So also it does not hold good for an individual manufacturer, but only for the whole class of manufacturers.


The determination of price by cost of production is tantamount to the determination of price by the labor-time requisite to the production of a commodity, for the cost of production consists, first of raw materials and wear and tear of tools, etc., i.e., of industrial products whose production has cost a certain number of work-days, which therefore represent a certain amount of labor-time, and, secondly, of direct labor, which is also measured by its duration.
Wage Labour & Capital (http://www.marxists.org/archive/marx/works/1847/wage-labour/ch03.htm)

Was just going to post that. These straw-man marginalists assume that price is value, which only they believe really.

[Baconator]

Arguing in favor of the LTV is exactly equivalent to arguing that the earth is flat. The theory is an antique resolved over 100 yrs ago. It might be a good idea for some of you to pick up a book in modern economics and perhaps learn some of the discoveries that have been made from the 19th century up to now.

On a related note, I think this confuses some other individualist and mutualist anarchists who draw their inspirations from great thinkers like Tucker. I also draw much inspiration from him and surely he would've been a market anarchist if he wasn't trapped in a period of classical economist confusion with value.

[Baconator]

Was just going to post that. These straw-man marginalists assume that price is value, which only they believe really.


Clearly your understanding of the marginal view of price and value isn't up to date. I suggest some study into the matter before making these kinds of claims.

[mikelepore]

Ok, so you are saying that Marx didnt intend to produce an economic theory but he tried to explain the social relantionships that he saw in his time and by doing so he came up with the labor theory of value and the theory of plussvalue not because he made scientific research on the factors that determined value in a commodity but because it was the theories that best suited his sociological observations.

I think Marx lacked the knowledge on economic modeling necessary to understand the factors that provided value in a productive process and the simple "empirical observation" is not enogh to support an economic theory.

It is an economic theory, but it's not the kind of economic theory where we say let's look at the price of a can of beans or a share of Exxon and now let's see if Marxism can predict this. It's a theory that begins with: where do wages and profits essentially come from? - what is their source? If I hire $100 worth of labor to act on $100 worth of materials, yielding a product that sells for $800, where did the other $600 come from? - does it make a difference whether one says it came from overcharging the buyer or whether one says it came from underpaying the worker? Are workers wages just another form of a fungible commodity fetching a certain amount on the auction block, as with sacks of potatoes? If employees ask for a raise the employer hates to say yes, as this would make profits go down -- how is this reciprocal relationship best described? How about the historical inertia of things: those who have most of the capital today dont have to spend all of their income to eat, so they tend to be the same families who will have most of the capital tomorrow.

This is the Marxian idea of what economic theory means. It's not the same definition of what an economic theory should be as in the viewpoint of a guy who's going to trade on the stock market and wants to know whether to go with fundamental analysis or technical analysis, or the view of a college professor who is going to pronounce on what will happen to the secondary market in bonds when the money supply is increased. No, the Marxian idea of economic theory is to understand modern human society, especially the fate of the human beings who are inside the "black box", and then hopefully to use that knowledge to seek a workable political and industrial program that can change the society and solve its problems.

[Die Neue Zeit]

But for all your fluff you do raise some very good questions. Does the Labour Theory of Value hold weight? After all we no damn well it doesn't cost $138 dollars to extract and ship a single barrel of oil.

That's not the point of LTV. The point is to demonstrate the extraction of surplus value from labour.

In the case of oil, the speculation is added surplus value.

[Baconator]

That's not the point of LTV. The point is to demonstrate the extraction of surplus value from labour.

In the case of oil, the speculation is added surplus value.

Speculation is added surplus value? Surplus in relation to what? Labor? :confused:

WTF are you smoking dude? Seriously...ok. I'll give you a chance to reason this out before I formulate anymore judgment on peoples' knowledge of economics here. :rolleyes:

[Awful Reality]

Clearly your understanding of the marginal view of price and value isn't up to date. I suggest some study into the matter before making these kinds of claims.

I never made a claim about marginalism. I simply stated that too many marginalists create a straw man about the LToV and its relation to price.

[Awful Reality]

Speculation is added surplus value? Surplus in relation to what? Labor? :confused:

...Yeah. If you were to put a drill wherever you wanted, likelyhood is that you wouldn't find oil. So the scarcity of oil makes it relative to other oil extraction. Ergo, speculation is labor.
And your question about what surplus means says you haven't read Marx. So go read, find out what the LToV is, and then come back.

[Baconator]

I never made a claim about marginalism. I simply stated that too many marginalists create a straw man about the LToV and its relation to price.

Labor hardly influences price, there is no direct correlation. Labor, as a factor of production, influences supply , which in turn influences price only relative to demand. ( Again were back to S+D) Labor is only part of production because of demand in the first place.

If we all decided to think like Amish people tomorrow and rejected diamonds what would be the value of diamonds? If the value of diamonds is zilch , then what is the status of labor in relation to diamonds?

Can you name a straw man? I basically took apart that article Zampano posted and have received no feedback against my criticism. In fact a Marxist here even suggested it was a good criticism. You can go back and see where I am wrong and point it out and we can reason through it.

[mikelepore]

Arguing in favor of the LTV is exactly equivalent to arguing that the earth is flat.

Let's see if that holds. If an airplane goes on one direction continuously it will return to the original spot. It seems that the observation doesn't match the idea that the earth is flat. Now let's see if the labor theory of value matches up with observations. There's a lot more mining labor invested in the extraction of each unit of mass of gold than there is the same mass of iron, so this says that gold should have a greater exchange value than iron. Does it? Sure. But maybe that's just a coincidence, so let's try something else. There's very little human labor needed to make a sheet of paper, or a pencil, etc., so we would expect such items to have very small exchange values. Do they? Yes, but, just in case those cases are only coincidences, let's try something else. More human effort (labor time) must go into all of the steps to make a jet plane than to make a car, so we would expect to find that an a jet plane has a greater exchange value than a car. Does it? Sure, but couldn't that be a coincidence? Wait a minute -- how many times can a person say "this might only be a coincidence" before we get the clue that there might really be a correlation involved? So it seems that the labor theory of value isn't at all like saying the earth is flat. One hypothesis corresponds closely to everyday observations, while the other doesn't.

[Baconator]

...Yeah. If you were to put a drill wherever you wanted, likelyhood is that you wouldn't find oil. So the scarcity of oil makes it relative to other oil extraction. Ergo, speculation is labor.
And your question about what surplus means says you haven't read Marx. So go read, find out what the LToV is, and then come back.

Question. So why don't drillers just drill anywhere? Why wouldn't I invest into drilling in my backyard?
Speculation, the way it works in the real world , is capital investment. I don't know how you arrive at labor? So you base it off surplus value? Again, Marx's theory fails because labor holds no objective value. This has been debunked.
If a bad investment is made then it is simply a waste of resources and this comes back through the pricing mechanism of the market. Bad investment means loss of capital and nothing 'taken' from labor but actually something 'given' to labor. Capital investment is used in part to pay labor for their role in production regardless of the profit or loss of the final good.

If you still don't get it , I guess I can explain it to you in more simpler terms. Thats if you're interested in learning.

[mikelepore]

If we all decided to think like Amish people tomorrow and rejected diamonds what would be the value of diamonds? If the value of diamonds is zilch , then what is the status of labor in relation to diamonds?

How did you like all the passages where Marx explained that items for which there is no market are not commodities in the first place, so they have nothing to do with a discussion of the economic laws governing the exchange of commodities? Oh, yeah - you never read those... Oops.

I've been debating this subject since the 1960s and I have yet to find one person who says Marx's theory was wrong and then doesn't immediately show that he misunderstands what Marx actually said.

[Dean]

Speculation is added surplus value? Surplus in relation to what? Labor? :confused:

WTF are you smoking dude? Seriously...ok. I'll give you a chance to reason this out before I formulate anymore judgment on peoples' knowledge of economics here. :rolleyes:

You don't have any grand ideas. You just take a few standpoints from an extremely flawed portion of our academia which seems to think that you can judge future human activity based on a few very naive, mechanical concepts. And you have the audacity to call others ignorant.

[Baconator]

Let's see if that holds. If an airplane goes on one direction continuously it will return to the original spot. It seems that the observation doesn't match the idea that the earth is flat. Now let's see if the labor theory of value matches up with observations. There's a lot more mining labor invested in the extraction of each unit of mass of gold than there is the same mass of iron, so this says that gold should have a greater exchange value than iron. Does it? Sure. But maybe that's just a coincidence, so let's try something else. There's very little human labor needed to make a sheet of paper, or a pencil, etc., so we would expect such items to have very small exchange values. Do they? Yes, but, just in case those cases are only coincidences, let's try something else. More human effort (labor time) must go into all of the steps to make a jet plane than to make a car, so we would expect to find that an a jet plane has a greater exchange value than a car. Does it? Sure, but couldn't that be a coincidence? Wait a minute -- how many times can a person say "this might only be a coincidence" before we get the clue that there might really be a correlation involved? So it seems that the labor theory of value isn't at all like saying the earth is flat. One hypothesis corresponds closely to everyday observations, while the other doesn't.


OMG , this is like asking to get pwned. :rolleyes:
Example#1 Iron and Gold. mike says gold is more valuable than iron because it takes more labor hours to extract it. However I ask the question, is the gold valuable because the labor time that went into getting it or is it because the gold is already valued that the labor is there mining it in the first place. It is the demand for gold that creates the production necessary to put it in supply. I'll pose the same question to you that I posted to Awful. If everyone adopted the belief that nobody should care about gold then what happens to the value of that gold? Will there be any production of gold if the demand goes to zero? Gold is highly valued by people for various reasons and it is(was) universally preferable in exchange giving it the status of money. This is probably due to its value/weight ratio. Gold, being money,has a high demand thus making it more expensive relative to its scarce supply.

Example#2 Paper and Pencils. mike says these have a low price because of relatively little labor going into their production. The resources required to produce paper+pencils are pretty abundant ( relative to gold) and there is a relatively high enough demand for those products with a plentiful supply. This goes back to marginal utility. Because there are many more pencils and paper than gold nuggets relative to demand , then the value of each pencil and paper is considerably lower. If you go shopping for pencils and paper, you're not shopping for how much labor time went into their production, your shopping for what kind of utility they can provide for you. If there was a mass shortage of P&P but still a high demand the marginal utility of P&P would sky rocket and the prices would go up. Make sense? If nobody saw any use for pencils and paper , the demand would go to zero, the production factors ( including labor) for pencils and papers would be non-existent.

Example#3 Cars and Airplanes. mike says because more labor goes into building an airplane, this is why they are more expensive in exchange than cars. This is pretty ridiculous. Again, marginal utility explains this. How many airplanes are in existence relative to cars? I think its safe to say that cars are far more plentiful than airplanes which lowers their marginal utility. :laugh:
Again this is all dependent on demand. If nobody wanted cars or airplanes, the production of such things would be non-existent.

Heres a fun example. If mike acquired all the materials necessary for building his own Yugo car and did it himself there would be a lot of labor hours put into such an operation. Handcrafted Yugo. :D Now, a brand new Lexus ( many of them) can be built on the assembly line with a lot less labor energy put into it. Is mike's Yugo more valuable than 10 Lexus'? It could be if a customer values the handcrafted Yugo greater than a Lexus but I think its a safe bet that the Lexus would be more valuable to people. In other words the demand for mike's Yugo would be extremely low and the demand for the Lexus' would be much higher.

IBM didn't profit from its mainframe investments in the 1980s. It made a bad for cast assuming that consumers would value the mainframes which were to come out in the 90s. It was the PCs started by Mac that beat out the massive mainframes. Going by the LTV , mainframes would have a higher value because of the labor required to build them as opposed to PC. However, the in reality , the demand for mainframes went down to nearly zero relative to PCs which had an increased demand meaning PCs became more valuable than mainframes.

I know some software engineers that spent massive amounts of labor on constructing various software programs that didn't sell too well. The same software engineers spend considerably less labor on other programs that sold very well. This of course is the result of demand based on consumer preferences.

If I have a bottle of water I want to carry with me 3,000 miles to sell in NYC then why wouldn't that bottle of water have a greater value than a bottle of water in a local NYC supermarket? It took much more labor time to get my bottle of water to NYC than the water already in NYC.

Finally mike, if you had a laptop computer was priced at $1000, and I had 1000 coffee bags priced at $1/piece , would you trade me your laptop for 1000 bags of coffee?

[Baconator]

You don't have any grand ideas. You just take a few standpoints from an extremely flawed portion of our academia which seems to think that you can judge future human activity based on a few very naive, mechanical concepts. And you have the audacity to call others ignorant.

1. I never claimed to have any grand ideas.
2. I never claimed to be able to judge the future.
3. Can you show me exactly where my reasoning is flawed in everything I have said about value so far?

[Baconator]

How did you like all the passages where Marx explained that items for which there is no market are not commodities in the first place, so they have nothing to do with a discussion of the economic laws governing the exchange of commodities? Oh, yeah - you never read those... Oops.

I've been debating this subject since the 1960s and I have yet to find one person who says Marx's theory was wrong and then doesn't immediately show that he misunderstands what Marx actually said.

Actually. You didn't even answer the question. Can you explain how there becomes a market for commodities in the first place? I have heard no explanation that made any sense on how the LTV accurately describes exchange in reality. Have you read Marx? Das Capital Vol 1 ? He clearly states that exchange can only non exploitive if two commodities are exchanged with the same labor 'value' inputs. Something like X amount of silk for Y amount of Iron based on the labor inputs of each. Do you understand how ridiculous this sounds?

I've responded to your other post above. I really hope you address the points I've made.

[Demogorgon]

Labor hardly influences price, there is no direct correlation. Labor,
Don't be thick. Price is closely related to cost of production. If something costs next to nothing to produce it will usually be very cheap. If something is very expensive to produce it will be expensive to buy. As all costs are ultimately labour costs it is a little disingenuous to say that labour has little to do with price


If we all decided to think like Amish people tomorrow and rejected diamonds what would be the value of diamonds? If the value of diamonds is zilch , then what is the status of labor in relation to diamonds?

If we all decided to be Amish nobody would bother to mine for Diamonds because there would be no reason to.

[mikelepore]

A lot of chores to do, so I'll have to answer a little bit at a time ...


If I have a bottle of water I want to carry with me 3,000 miles to sell in NYC then why wouldn't that bottle of water have a greater value than a bottle of water in a local NYC supermarket? It took much more labor time to get my bottle of water to NYC than the water already in NYC.

When refering to the "quantity" or "amount" of labor, as measured in units of labor time, that doesn't mean the amount of time *that was expended*. It means the amount of time that is made technically necessary by the kind of methods and equipment that have been invented and are typically in use in that society in that period of history. The method and tools for the New Yorker to obtain local water have been invented are typically in use; to use that less labor intensive method is all that is "socially necessary".

Marx's own example has to do with some guy who made cloth with a hand loom after the power loom was already invented. He found that the product would only fetch the lower price that followed the appearance of the power loom. Your question is about the same general issue -- the meaning of "socially necessary", which refers to the state of development of the skills and tools.

I think intuitively we all know this. If we went to pick up a pizza, and the cashier said it'll be $100 because the cook rubbed two sticks together to make the fire, we would just walk out without buying it. We would go instead to the competitor who uses just the amount of labor that is technically necessary and therefore charges a lower price.

[mikelepore]

IBM didn't profit from its mainframe investments in the 1980s. It made a bad for cast assuming that consumers would value the mainframes which were to come out in the 90s. It was the PCs started by Mac that beat out the massive mainframes. Going by the LTV , mainframes would have a higher value because of the labor required to build them as opposed to PC. However, the in reality , the demand for mainframes went down to nearly zero relative to PCs which had an increased demand meaning PCs became more valuable than mainframes.

Same issue about socially necessary methods. Previously, circuits using bipolar transistors were signficantly faster than circuits using cmos transistors, so the customer who wanted speed more badly than he or she wanted a lower electric bill and space savings would often choose to buy the multimillion dollar mainframe containing the bipolar logic and memory. But miniturization continuously made the mosfet circuits faster and faster, the speed of digital devices alway going up when the size goes down. Bipolar circuits couldn't be miniaturized at the same rate because they are current driven, requiring surface area to dissipate all that heat, whereas mosfets are voltage driven, with negligible current flowing. Eventually the little box on the desktop worked better than the room-sized clunker. What was now socially necessary had been revolutionized by the invention of new tools.

But here is the empirical test of the law of value (or, as skeptics call it, the labor theory of value): With all that miniaturization of integrated circuits, millions of devices in the same area of silicon where before there were thousands, there was now *less labor time* materialized in each clock cycle of logic and in each byte of memory than there was in the past. Therefore, if Marx's theory is correct, we would expect to see the price of computing power drop from 1976 to the present. Did the price drop? Well, in 1977 the most powerful IBM machine was the model 3033 computer, 80 nanosecond clock, upgradable to a maximum of eight megabytes of memory, price: six million dollars. Yes, the reduction of the socially necessary labor time that is necessary to produce each unit of computing power was correlated with the cheapening of it in the marketplace. The result agrees closely with Marx's theory.

[mikelepore]

Heres a fun example. If mike acquired all the materials necessary for building his own Yugo car and did it himself there would be a lot of labor hours put into such an operation. Handcrafted Yugo. :D Now, a brand new Lexus ( many of them) can be built on the assembly line with a lot less labor energy put into it. Is mike's Yugo more valuable than 10 Lexus'? It could be if a customer values the handcrafted Yugo greater than a Lexus but I think its a safe bet that the Lexus would be more valuable to people. In other words the demand for mike's Yugo would be extremely low and the demand for the Lexus' would be much higher.

The degree of mechanization in this state of history makes it not typical, not usual, to make ones own car by hand, so the additional labor can't add to the exchange value of the product.

Marx said: "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." Capital, Chapter 1

(A thing that Marx said, that his critics didn't know he said, is almost always in chapter 1!)

[mikelepore]

Finally mike, if you had a laptop computer was priced at $1000, and I had 1000 coffee bags priced at $1/piece , would you trade me your laptop for 1000 bags of coffee?

As a consumer interested in the use value of the article, no, but if we were talking about trading futures (warehouse receipts) for lots of such commodities in those proportions at the Chicago Mercantile Exchange, we might make that deal.

I don't know what this question has to do with the previous discussion....

[mikelepore]

Actually. You didn't even answer the question. Can you explain how there becomes a market for commodities in the first place?

Why would you expect any disagreement about why there's a market for things in the first place? Doesn't everyone in the world agree that it's because people want stuff, and will sacrifice one thing to get another thing?


I have heard no explanation that made any sense on how the LTV accurately describes exchange in reality. Have you read Marx? Das Capital Vol 1 ? He clearly states that exchange can only non exploitive if two commodities are exchanged with the same labor 'value' inputs. Something like X amount of silk for Y amount of Iron based on the labor inputs of each. Do you understand how ridiculous this sounds?

That kind of consideration, it being ridiculous to say whether something is exploitative or not, is fuzzy language, not easy to debate about. But why would I overcharge you too much silk for my iron,out of proportion to the work we have to do for them, unless you were at a disadvantage, and you couldn't make iron as easily as I could, or you needed it desperately? So, I'm taking advantage of your misfortunes. To call this behavior exploitative is fuzzy, and not precise enough for a social science, but I don't think it's ridiculous. What's the problem with it?

Let me offer you this: I'll mow your lawn one time if you'll build me a house one time. deal? No, you say? Why not? Because you have a preexisting idea of how much work in involved in each task. That affects the price.

[La Comédie Noire]

Can you name a straw man? I basically took apart that article Zampano posted and have received no feedback against my criticism. In fact a Marxist here even suggested it was a good criticism. You can go back and see where I am wrong and point it out and we can reason through it.


"socially necessary labour" Marx defined useful labour power as determining the price of a commodity. People seem to jump over that little detail.

[Baconator]

Don't be thick. Price is closely related to cost of production. If something costs next to nothing to produce it will usually be very cheap. If something is very expensive to produce it will be expensive to buy. As all costs are ultimately labour costs it is a little disingenuous to say that labour has little to do with price

If we all decided to be Amish nobody would bother to mine for Diamonds because there would be no reason to.

I didn't say production didn't have any inputs on price. After all, it is production that influences supply. Labor is one factor of production. The other factors are land ( natural resources) and capital. A capital intensive production facility may be able to produce more/hr than a labor intensive one. This is the case in modern production compared to older labor intensive production. One laborer with capital at his disposal might be able to produce 10x as much as his grand father in the same industry using less labor hours doing so. Labor itself is a market subject to the same laws of S&D. You need to understand how demand imputes value back into the factors of production effecting the costs of production. Thats what I'm trying to explain to you guys. Ultimately, all market value is set by consumer demand which effects the price and value of all factors of production including labor. This is what was discovered over 100 years ago.

And you are correct with the diamonds. All production factors relating to diamond production would have zilch value. This is how I am demonstrating that value is not determined by labor inputs , its determined by what people want. Price is a translation in monetary and measurable terms of that demand relative to the supply of whats in demand.

[Baconator]

A lot of chores to do, so I'll have to answer a little bit at a time ...



When refering to the "quantity" or "amount" of labor, as measured in units of labor time, that doesn't mean the amount of time *that was expended*. It means the amount of time that is made technically necessary by the kind of methods and equipment that have been invented and are typically in use in that society in that period of history. The method and tools for the New Yorker to obtain local water have been invented are typically in use; to use that less labor intensive method is all that is "socially necessary".

Marx's own example has to do with some guy who made cloth with a hand loom after the power loom was already invented. He found that the product would only fetch the lower price that followed the appearance of the power loom. Your question is about the same general issue -- the meaning of "socially necessary", which refers to the state of development of the skills and tools.

I think intuitively we all know this. If we went to pick up a pizza, and the cashier said it'll be $100 because the cook rubbed two sticks together to make the fire, we would just walk out without buying it. We would go instead to the competitor who uses just the amount of labor that is technically necessary and therefore charges a lower price.


Ok, but you seem to be ignoring other factors of production here too, namely, natural resources and capital. Along with that , you don't seem to be addressing well the relative demand and how it effects all these factors of production. Lets look at 'socially necessary labor' and our hypothetical pizza industry.

Now you seem to be suggesting that price is ultimately determined by labor inputs. You give some some room to subjective value on the part of consumers here because you realize consumers wont pay $100 for a pizza when they can pay $14 somewhere else but you reasoning and conclusions are all wrong. It appears to me that you're saying given all the advancement in capital, which makes labor more productive, it is the lower cost of supplying labor that ultimately determines price. I'm gonna say you're wrong as labor is only one input in production and all production costs are ultimately determined by demand.

1. Everything hinges on the demand for pizza. If people desire more pizza relative to the current supply then the prices of pizza will go up. Production of pizza will then increase in more competition for all the production inputs that go into pizza ( natural resources like cheese , more labor , and capital).

2. Resources in the pizza industry are also in competition with other industry thats require the same resources such as dairy products in which the increased competition, caused by an increased demand , effects the price of dairy resources.

3. The increased demand for pizza also shifts the labor inputs and the S&D thereof. A market like pizza and dairy ( and all other relevant markets) increases the demand for labor which effects the price of labor relative to supply thereof.

4. Example, something like govt subsidies for ethanol can shift more production inputs to producing corn which effect the production of other agricultural goods such as dairy products increasing their prices which can effect the price of pizza. This is a fact with many pizza companies here in my neighborhood as I've seen pizza prices jump about $1 due to the lowered supply of cheese relative to cheese's high demand.

Clearly, it is demand on the part of consumers which effects the price of all relevant factors of production including labor inputs. The cost of labor is merely an effect of that demand.

[Robert]

Bacon, can you address how the quality element factors in the pizza example as you did with the Lexus versus Yugo?

I shudder to think how boring our money-free and class-free society may become as it's conceived by some: seems to me there will still be good pizza and bad pizza depending on who is cooking it, where the anchovies (yes, anchovies) come from, whether the sauce is freshed versus canned, and so on. How does society reward you for making fresh wood-fired pizza instead of frozen crap? Or does it? Do you get a Comrade-of-the-Year ribbon?

What if that's not enough for you? I'm afraid you'll close. That is just wrong, no matter how many of your wage slaves are liberated in the process.

[La Comédie Noire]

Marx talked about capital(technology). It has to do with the tendency of the rate of profit to fall over time. The more efficent and easily something is made, the cheaper it is. This causes the rate of profit to fall because then anyone can make it or have access to it. Look what's happening to the music industry, no one's going to pay $20 for a cd when they can just download it for free.

Why do you think coporations like to hire human labour in third world countries instead of just building advanced factories? More profit.

[Baconator]

Same issue about socially necessary methods. Previously, circuits using bipolar transistors were signficantly faster than circuits using cmos transistors, so the customer who wanted speed more badly than he or she wanted a lower electric bill and space savings would often choose to buy the multimillion dollar mainframe containing the bipolar logic and memory. But miniturization continuously made the mosfet circuits faster and faster, the speed of digital devices alway going up when the size goes down. Bipolar circuits couldn't be miniaturized at the same rate because they are current driven, requiring surface area to dissipate all that heat, whereas mosfets are voltage driven, with negligible current flowing. Eventually the little box on the desktop worked better than the room-sized clunker. What was now socially necessary had been revolutionized by the invention of new tools.

But here is the empirical test of the law of value (or, as skeptics call it, the labor theory of value): With all that miniaturization of integrated circuits, millions of devices in the same area of silicon where before there were thousands, there was now *less labor time* materialized in each clock cycle of logic and in each byte of memory than there was in the past. Therefore, if Marx's theory is correct, we would expect to see the price of computing power drop from 1976 to the present. Did the price drop? Well, in 1977 the most powerful IBM machine was the model 3033 computer, 80 nanosecond clock, upgradable to a maximum of eight megabytes of memory, price: six million dollars. Yes, the reduction of the socially necessary labor time that is necessary to produce each unit of computing power was correlated with the cheapening of it in the marketplace. The result agrees closely with Marx's theory.

:lol:

This is quite ridiculous attributing the lowered cost of more advanced computers to the labor theory of value and then calling it 'empirical.' :laugh:
You know where you always mess up? Its where you give little to no heed to demand. This is the same mistake the classical economists made. I am very impressed you have technical knowledge about computers , thats very informative, but unfortunately it doesn't tell us anything about value or price. :crying: Because your average consumer doesn't care about every technical input or production factor. He just cares about performance and utilizing the commodity as a means to achieve an ends. I would feel comfortable in saying that most people here do not know exactly how their computers work down to the circuit level, but do they have to know? Not really, they care about overall performance for their own utilization. This is like ComradeRed suggesting that every farmer is a calculus major and they use static conditions within long drawn out equations to figure out price and value. :o Problem is, not every farmer is a calculus major and they use real world inputs and common sense to determine future production which the farmer knows hinges on relevant demand. This is why CR stopped debating me. Anyway back to the point. Since the LTV depends on 'intrinsic' labor value , 'socially necessary labor time,' and demand being an effect of labor , then they cannot explain how an alternative technology comes into being or , in the broader sense , how wealth is created. PCs came into being because some guys desired a 'mini mainframe' of sorts to be utilized for personal use. Just because they spend the labor time in production of this good doesn't mean that it will yield any value. It could be that once this PC is put out into the marketplace, nobody will value it , then what? If people value the invention, demand will increase which effects all production factors , including labor , giving way to increased supply. The more PCs produced relevant to demand the cheaper the price even of the same labor time is required to produce each computer , the price keeps on falling. Why do you think that is? Similarly , if demand increased relative to current supply , the same labor time would still go into constructing each PC but the prices will rise. Why do you think that is?
In fact, the value of labor itself is dependent on demand and the relative supply of labor currently available in the same industry.

It doesn't stand to reason that just because something is produced with less socially necessary labor time that the prices will be stable or that the commodity will even be worth anything more than $1. This is absolutely dependent on demand for such a good and whether people want it or not. Their demand ( or lack thereof) determines the commodity's value, which determines price, which determines the price of all production factors including labor. Therefore , ' socially necessary labor' isn't always a known quantity and gives no input to value or pricing as it is , itself , subject to demand. Logically , all pricing , even of labor , falls into the dynamic of S&D. :D

[Baconator]

As a consumer interested in the use value of the article, no, but if we were talking about trading futures (warehouse receipts) for lots of such commodities in those proportions at the Chicago Mercantile Exchange, we might make that deal.

I don't know what this question has to do with the previous discussion....

Well you're only going to trade for something of value to you . Seeing how money is just a commodity , and these warehouse receipts basically function as money, then you would trade for money ( a commodity universally preferable in indirect exchange) over my coffee bags. You know that not everyone will desire coffee bags and then you're back to barter.

The point is , there is nothing intrinsic about value. It is all subjective. You're only gonna trade with me freely if we both value what the other person currently possesses more than what we currently posses.

[Demogorgon]

I didn't say production didn't have any inputs on price. After all, it is production that influences supply. Labor is one factor of production. The other factors are land ( natural resources) and capital. A capital intensive production facility may be able to produce more/hr than a labor intensive one. This is the case in modern production compared to older labor intensive production. One laborer with capital at his disposal might be able to produce 10x as much as his grand father in the same industry using less labor hours doing so. Labor itself is a market subject to the same laws of S&D. You need to understand how demand imputes value back into the factors of production effecting the costs of production. Thats what I'm trying to explain to you guys. Ultimately, all market value is set by consumer demand which effects the price and value of all factors of production including labor. This is what was discovered over 100 years ago.

And you are correct with the diamonds. All production factors relating to diamond production would have zilch value. This is how I am demonstrating that value is not determined by labor inputs , its determined by what people want. Price is a translation in monetary and measurable terms of that demand relative to the supply of whats in demand.Seems to me that you don't understand marginalism any better than you understand the LTV.

Anyway labour intensive vs. capital intensive production does not make a good example because capital intensive production still requires the labour that makes the equipment. All costs are labour costs ultimately.

I am not sure if you have a very good grasp of demand and supply here. Demand is what determines what and how much of something is produced, but it still needs to be produced. If not much of something is demanded the market will set a low price and only those who can produce at low cost (with relatively little labour) will produce. If there is a great deal of demand everyone and his dog will produce even if they are not very efficient. Further if production doesn't rapidly increase the greater demand will push up price in an inflationary manner, but that has nothing to do with demand changing the value.

The Diamond example is a case in point. Demand for Diamonds is pretty inelastic and remains fairly constant. It is a reliable market. This makes it worth digging for Diamonds and the large amount of Labour needed to mine them keeps the price extremely high. Should Diamonds be discovered just sitting on the ground in large numbers, the price would fall dramatically, even with no change in demand.

To use another example, this time based on something actually happening. Australian Coal is far cheaper than British coal-even in Britain-which is why very little British coal is still produced. Both countries coal is more or less identical and the demand can not be separated, coal is coal after all. The reason Australian coal is so much cheaper is because it is very close to the surface and can just be scooped up very quickly whereas British coal needs to be mined. If it were simply demand that set value then that wouldn't happen.

This is the thing that you seem to be missing. Demand drives production, but it cannot change the costs of production. Theoretically markets tend towards Equilibrium and as anyone with any knowledge of economics knows, the price will be exactly what the supplier wants to charge at that level of production. A change in demand will set a new point of equilibrium, but that is because when the market changes like that, some suppliers either stop supplying or new suppliers enter the market. Some will be more efficient than others and that will change the average amount of labour time.

Marginalism probably has something to offer in terms of analysing demand. It is likely that people do choose goods they want based upon marginal utility. Certainly people demand goods for the use value rather than the exchange value. How that can be proven either way is beyond me though as Utility is abstract and can't be measured. At any rate though, whatever the truth of marginalism there, the demander is not setting price anyway, she is setting the amount that will be supplied. The only circumstances where demand will directly set price rather than simply cause it to alter because of changes in quantity supplied is when demand is unexpectedly low and suppliers cut prices to shift already produced stock to minimise losses or when there is a shortage of goods and prices go up and up until more of the goods become available. Both cases are caused by the market being out of equilibrium however, not some mystical power of demand.

BTW one can't help but notice that the "good" with the Highest marginal utility is oxygen (each breath directly staves off death after all) and that is free. There is a lesson there.

Where marginalism really falls flat on its arse however, is where it tries to explain how allocation of income within a firm is fair. Principally it holds that the marginal benefit of the last worker sets the fair pay for all workers. As it is still profitable to produce past the most efficient point this means that it is saying that because the last worker is of less value than the previous one, all should receive less. That is an obvious flaw.

Essentially what it is trying to do is take the marginal value of labour rather than the average value so that there is surplus value left over that can be claimed is rightfully the capitalists. That won't wash I am afraid.

[mikelepore]

Baconator, you attribute too much power to demand. The demand for the article is why people bother at all, but once it's already given that they do bother, then the prices of various articles will be in about the same sequence as the cost of production of those articles. (And, of course, the cost of production of various articles is usually in the same sequence as the socially necessary labor time.)

Then there is demand, now considered a quantifiable measure and not a description of a psychological state. It is a follower of the price, not the leader of it. This is because there's no such thing as the demand for an article with that as the end of the sentence. There is only demand at a given price. There is this much demand for the article if its offered for $100, and that much demand for the article if it's offered for $10. So demand, the quantifiable kind, is reflecting the price, not determining it.

Then if new technology is invented to make production easier, the first thing that affects is the supply. For example, if someone invented a robotic machine that would allow anyone to assemble a house a day, then a lot more people would be doing just that, so there would be an increase in the number of houses put on the market. Now the demand-at-each-price would respond to the increased supply. There would be less demand for houses offered at higher prices, with a transfer to demand for those with lower prices. Due the sudden decrease in the amount of necessary labor materialized in the article, there has been a collapse of its exchange value.

(I have been switching loosely between saying "value" and saying "price", but I've done that where my statements are allowed by the fact that the price usually oscillates around the value.)

[Schrödinger's Cat]

Bacon, can you address how the quality element factors in the pizza example as you did with the Lexus versus Yugo?

I shudder to think how boring our money-free and class-free society may become as it's conceived by some: seems to me there will still be good pizza and bad pizza depending on who is cooking it, where the anchovies (yes, anchovies) come from, whether the sauce is freshed versus canned, and so on. How does society reward you for making fresh wood-fired pizza instead of frozen crap? Or does it? Do you get a Comrade-of-the-Year ribbon?

What if that's not enough for you? I'm afraid you'll close. That is just wrong, no matter how many of your wage slaves are liberated in the process.

Delve into absurdity and nonsense a lot, I see.

[pusher robot]

Where marginalism really falls flat on its arse however, is where it tries to explain how allocation of income within a firm is fair. Principally it holds that the marginal benefit of the last worker sets the fair pay for all workers. As it is still profitable to produce past the most efficient point this means that it is saying that because the last worker is of less value than the previous one, all should receive less. That is an obvious flaw.

That's not right. Marginalism tries to explain the decisions of firms to hire an additional employee at market labor prices or not. Here you seem to be saying that it's the solely the firm's demand that determines the price of labor, the exact opposite point you had argued in the rest of your post! Rather, labor's price, like anything else, is set by both the demand and the supply. The more readily available the labor desired by the firm (e.g., cleaners and ditch diggers), the lower the price is going to be, and the less readily available (e.g., doctors and engineers) the more expensive it will be. That's why the price for labor doesn't vary wildly from firm to firm, adjusting for other factors like locality cost-of-living.

[Baconator]

Bacon, can you address how the quality element factors in the pizza example as you did with the Lexus versus Yugo?

I shudder to think how boring our money-free and class-free society may become as it's conceived by some: seems to me there will still be good pizza and bad pizza depending on who is cooking it, where the anchovies (yes, anchovies) come from, whether the sauce is freshed versus canned, and so on. How does society reward you for making fresh wood-fired pizza instead of frozen crap? Or does it? Do you get a Comrade-of-the-Year ribbon?

What if that's not enough for you? I'm afraid you'll close. That is just wrong, no matter how many of your wage slaves are liberated in the process.

Quality can be any variable of things depending on the properties of the good as a means to serve an ends. It depends on what you subjectively prioritize too. A particular metal alloy might be more durable but that property might not be important to you depending on what your preferences and purposes are for the good. As far as the pizza goes, its pretty much subjective. Any factors of things can go into describing a pizza that more qualitative. It might taste better to you because of some better cheese or something. You might have a long standing relationship with a local pizzeria as opposed to pizza chain and that could be a reason you deem local pizza more qualitative.

And the Lexus and Yugo. The properties of the materials the materials that went into building the Lexus , and the Lexus itself , might be more luxurious and complicated. It still depends on your own subjective preferences. Clearly there are cases where people believe ' they just don't make em' like they used to.' Many people prefer , in terms of quality and utility, older cars as opposed to newer cars. Its possible there is a guy out there that might prefer a hand built Yugo instead of a factory built Lexus. The reasons could be anything or any combination of things. I would say in general though that the demand for the Lexus would exceed the Yugo or even a fleet of Yugos. ( Thats not solid fact, thats speculation but highly probable, i.e. If I were an investor , I'd take throw my lot in with the Lexus')

Thats a funny but fair point about the frozen vs fresh pizza though. :laugh:

[Baconator]

mike + demo ,

At least we're having a constructive conversation. It seems that you guys might not be understanding what I mean with demand. Demand , in and of itself, does not determine prices, it must always be relative to supply in order get a price formulation.

Demand, however , imputes value back into 'stages of production' relative to the supply of various consumer and capital goods within the process of production which can change the cost of all those things. The mistake the LTV and the classical economists made is that they marginalized a very important factor in the economy, that factor's name is Mr. Consumer. Marxian LTV and Classical Economics, while both acknowledged general market functions and S&D , mainly dealt with the factors on the side of production and just kinda assumed that Mr. Consumer's inputs were just a given and never explained how vital the consumer is to the entire economic process.
Classical Economists and Marx , to some extent , also put goods into 'classes' instead of examining them as individual units. Why is this important? Because it explains value and its relation to marginal utility. We consume things in units , not aggregate classes. When we go to the store , some of us might by 2 six packs of beer, some might by one or three. Why is it that each consumer stops ( differently from each other) in selecting units of various goods?

Demand and consumption by the consumer imputes value back to the stages of production the most vital inputs and changes the whole structure of it including the costs. Naturally, the demand of the commodity ( lets say 'bread') is relative to the supply of total bread , but not only that , its relative to the supply of all the factors of production that went into making bread.

Consumer demand ( and consumption) of bread is going to align inputs for the baker, and from the baker that will effect the miller , from the miller that will effect the farmer , from the farmer that will effect the metal producers who make his farming equipment. The fertilizer for the farm will also be effected as well as the wheat output, etc. I think you get it. All the factors of production ( land, labor, and capital) are effected by the consumer demand and consumption of the bread.

Of course , from the consumer to the baker and the baking equipment , and the suppliers of the baker , and the supplier's suppliers , etc, are all subject to S+D law which will configure the costs of production. In a free economy, your purchase and consumption of that bread effects many things and its all based on the value of the bread which is subjective to your preferences. Pretty neat eh?

PS: This complex relation between millions of consumers and producers is coordinated in prices from the consumer level all the way to all stages and factors of production. S&D.

[Demogorgon]

That's not right. Marginalism tries to explain the decisions of firms to hire an additional employee at market labor prices or not. Here you seem to be saying that it's the solely the firm's demand that determines the price of labor, the exact opposite point you had argued in the rest of your post! Rather, labor's price, like anything else, is set by both the demand and the supply. The more readily available the labor desired by the firm (e.g., cleaners and ditch diggers), the lower the price is going to be, and the less readily available (e.g., doctors and engineers) the more expensive it will be. That's why the price for labor doesn't vary wildly from firm to firm, adjusting for other factors like locality cost-of-living.
I didn't make myself very clear there. The argument was not about setting the price of labour, rather the way marginalism explains the "fair contribution" of the capitalist.

Anyway it is important to point out that the market in Labour does not in fact work the same way as the market in goods and services. It is probably true to say that the demander there has significantly more power than in the market for goods.

[Baconator]

I didn't make myself very clear there. The argument was not about setting the price of labour, rather the way marginalism explains the "fair contribution" of the capitalist.

Anyway it is important to point out that the market in Labour does not in fact work the same way as the market in goods and services. It is probably true to say that the demander there has significantly more power than in the market for goods.

The capitalist's contribution is time and making an inter-temporal exchange with the workers and/or producers with capital goods. In relation to the laborer , the capitalist gives the laborer access to present goods while the capitalist gets to claim access to future goods created by the production. It actually guarantees the laborer payment without risk of worrying about whether the final product makes sales or not. That risk is assumed by the capitalist.

Of course, A laborer in a worker's run production facility, will defer receiving of payment until the final product is finished and put out in the marketplace. But this essentially turns the worker into a capitalist since he must :
A. save so he may invest into the production and also have enough to provide himself with goods in the present to live off of.
B. He must forgo payment until production is finished
C. He takes the risk of loss if the final product doesn't sale very well.

This can be particularly strenuous in the production of airplanes for example which takes several years to get from drawing board to fruition. Also, if one desires a home, he must save ahead of time turning a home into a future good instead of a present one. Needless to say very few people would be able to afford houses in the present which will move capital away from home building ( because it necessarily moves in the direction where the workers are working since they are also capitalists basically) and production of homes would slump.

Not everyone has a low time preference and not everyone desires to save for years for some of the simple utilities in life they can have such as homes and automobiles. The people that do save and accumulate capital and then invest it are those that actually drive the economy into a mode of constant production+consumption and growth.

[Demogorgon]

mike + demo ,

At least we're having a constructive conversation. It seems that you guys might not be understanding what I mean with demand. Demand , in and of itself, does not determine prices, it must always be relative to supply in order get a price formulation.

Demand, however , imputes value back into 'stages of production' relative to the supply of various consumer and capital goods within the process of production which can change the cost of all those things. The mistake the LTV and the classical economists made is that they marginalized a very important factor in the economy, that factor's name is Mr. Consumer. Marxian LTV and Classical Economics, while both acknowledged general market functions and S&D , mainly dealt with the factors on the side of production and just kinda assumed that Mr. Consumer's inputs were just a given and never explained how vital the consumer is to the entire economic process.
Classical Economists and Marx , to some extent , also put goods into 'classes' instead of examining them as individual units. Why is this important? Because it explains value and its relation to marginal utility. We consume things in units , not aggregate classes. When we go to the store , some of us might by 2 six packs of beer, some might by one or three. Why is it that each consumer stops ( differently from each other) in selecting units of various goods?

Demand and consumption by the consumer imputes value back to the stages of production the most vital inputs and changes the whole structure of it including the costs. Naturally, the demand of the commodity ( lets say 'bread') is relative to the supply of total bread , but not only that , its relative to the supply of all the factors of production that went into making bread.

Consumer demand ( and consumption) of bread is going to align inputs for the baker, and from the baker that will effect the miller , from the miller that will effect the farmer , from the farmer that will effect the metal producers who make his farming equipment. The fertilizer for the farm will also be effected as well as the wheat output, etc. I think you get it. All the factors of production ( land, labor, and capital) are effected by the consumer demand and consumption of the bread.

Of course , from the consumer to the baker and the baking equipment , and the suppliers of the baker , and the supplier's suppliers , etc, are all subject to S+D law which will configure the costs of production. In a free economy, your purchase and consumption of that bread effects many things and its all based on the value of the bread which is subjective to your preferences. Pretty neat eh?

PS: This complex relation between millions of consumers and producers is coordinated in prices from the consumer level all the way to all stages and factors of production. S&D.

That's nonsense. Demand determines what and how much of something is produced but it doesn't do anything to change the costs of producing it. Demand will affect what is sold, but presuming the demand is there it is supply that will ultimately set the price.

[Demogorgon]

When in doubt you can always rely on devotees of the Austrian School to fall back on metaphysical nonsense about time.

The only people suppling time are watchmakers

[Baconator]

That's nonsense. Demand determines what and how much of something is produced but it doesn't do anything to change the costs of producing it. Demand will affect what is sold, but presuming the demand is there it is supply that will ultimately set the price.

Yeah but this just kinda proves everything I said. Perhaps you didn't understand that you basically agreed with me?

If there is an increased demand in bread for example, this lures capital investment into bread to create a greater supply which then translates into biding for resources and labor ( i.e. more bakers and wheat). This effects the farming, farming equipment industry , etc all bidding up higher because of the increased demand.

[Baconator]

When in doubt you can always rely on devotees of the Austrian School to fall back on metaphysical nonsense about time.

The only people suppling time are watchmakers

Guys like you and Icarus are pretty bitter. Again, if its wrong , challenge reasoning of the proposition and point out the inconsistencies.

[pusher robot]

I didn't make myself very clear there. The argument was not about setting the price of labour, rather the way marginalism explains the "fair contribution" of the capitalist.

I'm afraid I still don't understand. Could you perhaps restate your argument?



Anyway it is important to point out that the market in Labour does not in fact work the same way as the market in goods and services. It is probably true to say that the demander there has significantly more power than in the market for goods.

I disagree, it's probably not true.

[Demogorgon]

Yeah but this just kinda proves everything I said. Perhaps you didn't understand that you basically agreed with me?

If there is an increased demand in bread for example, this lures capital investment into bread to create a greater supply which then translates into biding for resources and labor ( i.e. more bakers and wheat). This effects the farming, farming equipment industry , etc all bidding up higher because of the increased demand.
No, that is just greater resources being allocated. Not any change in exchange value. The point is that demand determines what labour is socially useful and what is socially useful will change over time. However so long as Labour is being allocated into something that is useful at the time, it will be setting the value.

It seems to me rather strange to attempt to claim that very rare items excepted, the cost of production will not have any bearing upon the value.

[Baconator]

No, that is just greater resources being allocated. Not any change in exchange value. The point is that demand determines what labour is socially useful and what is socially useful will change over time. However so long as Labour is being allocated into something that is useful at the time, it will be setting the value.

It seems to me rather strange to attempt to claim that very rare items excepted, the cost of production will not have any bearing upon the value.

Err, the increased demand for limited supply of resources and labor raises the price of those things. So yes , costs of production are effected.

Oh, and don't mix up price and value. :D

[Demogorgon]

Guys like you and Icarus are pretty bitter. Again, if its wrong , challenge reasoning of the proposition and point out the inconsistencies.
I don't bother challenging the reasoning of people who justify everything they say by referring to the Bible. There is not much more point in challenging the reasoning of people who simply continuously refer to their holy texts of economics.

However if you really want an explanation of why Austrian theories of time are bunk:

Time preference theory really shows itself as utter crap when it is used to justify usury, the original motivation for creating it. However as you want to use it in terms of the capitalist providing time in production.

The theory states that a capitalist will defer consumption in order to provide the means to produce now in the hope of receiving more later. Immediately we have a problem capitalist's principally don't intend to use much of their resources for consumption anyway. They use them for accumulation. So the capitalist is usually not sacrificing consumption at all.

Austrian's talk about production as becoming more "roundabout" in order that there will be greater long term pay off at the expense of short term loss (borne by the capitalist). However when you examine carefully what is happening, what the capitalist is actually doing is using his surplus value to reallocate resources in such a way that the long term pay-off will be greater. This seems to justify the capitalist, but you have to remember that he is only capable of doing this because he is extracting surplus value in the first place. Were workers receiving the full value of their work, they would be able to re-allocate resources themselves without needing the capitalist. It is pretty dissengenuous to say this justifies the capitalist. It is like the apocryphal story of the fireman angling for a raise trying to prove his worth by starting fires and then putting them out. He says he is needed because he is putting out all the fires. Well he is, but they wouldn't be there in the first place if not for him.

That criticism is for the more sophisticated version of Austrian Theory of time though. You gave the simpler version of claiming that the capitalist is guaranteeing pay for work long before the consumer pays for it. The winemaker being paid immediately even though the wine can't be used for some time.

However if that were true, the faster the period between the worker doing the work and the capitalist receiving the income for the final profit, the greater the share the worker would get. Is that the case?

[Demogorgon]

Err, the increased demand for limited supply of resources and labor raises the price of those things. So yes , costs of production are effected.

Oh, and don't mix up price and value. :D

You mean if supply cannot match an increase in demand price shoots up?

The best example I can think of is the chaos that will be seen in Vienna in a few weeks time when the European Cup final is held. The organisers will be charging entry price based on their costs, with profit as well of course. However as most of Europe wants to be in that stadium it is safe to say that demand will outstrip supply somewhat.

The result is that ticket touts on the streets of Vienna (and on ebay if they can avoid detection) will be selling tickets to thousands upon thousands of Euros to people desperate for entry. Those touts aren't contributing anything though. They are just ****s trying to exploit people desperate for entry. They are however going to reflect the price caused by a situation where demand so ridiculously outstrips supply that one can barely contemplate it.

However that is a special case. In normal cases over the long run suppliers can match demand and prices don't have massive fluctuations.

And of course, in the case of this football match, the suppliers will be selling close to the actual exchange value rather than the extreme prices the touts will be selling at.

[Green Dragon]

However if you really want an explanation of why Austrian theories of time are bunk:

Time preference theory really shows itself as utter crap when it is used to justify usury, the original motivation for creating it. However as you want to use it in terms of the capitalist providing time in production.


Its more along the lines of recognising there is only a limited period whereby production can occur during the day.



Austrian's talk about production as becoming more "roundabout" in order that there will be greater long term pay off at the expense of short term loss (borne by the capitalist). However when you examine carefully what is happening, what the capitalist is actually doing is using his surplus value to reallocate resources in such a way that the long term pay-off will be greater. This seems to justify the capitalist, but you have to remember that he is only capable of doing this because he is extracting surplus value in the first place. Were workers receiving the full value of their work, they would be able to re-allocate resources themselves without needing the capitalist.

But again, it becomes an issue of "time" and also division of labor. The claim on your end seems to be that the workers will become proficient at their job, as well as allocating resources. The objection is that both can require years of study and work in and of itself. In other words,. "time." The Austrians are skeptical that a "jack of all trades, and a master of none" approach yields the best results possible.




That criticism is for the more sophisticated version of Austrian Theory of time though. You gave the simpler version of claiming that the capitalist is guaranteeing pay for work long before the consumer pays for it. The winemaker being paid immediately even though the wine can't be used for some time.

However if that were true, the faster the period between the worker doing the work and the capitalist receiving the income for the final profit, the greater the share the worker would get. Is that the case?
[/QUOTE]


The way to look at it would what was mentioned earlier: The winemaker can do the work and NOT be paid because nobody wanted the wine. That does not seem particularly fair to the winemaker.

[Baconator]

Demo,

You miss one important element. The past. You see ,the capitalist has saved in the past by accumulating capital for the future based on expectations that a certain industry will boom. Not everyone saves and accumulates capital, its just a fact of life. In fact , if we all did that and just tried to be as efficient as possible and save , save ,save , we'd never enjoy the finer things in life. The point of saving is to spend later and profit ( not necessarily monetarily either) from that savings.

So the laborer thats skilled at working job X hasn't saved in the past which means he isn't interested in many future goods. He's interested in present goods. So who's gonna have the ability to pay him now and who's going to want to pay him now? Oh yeah, its the guy thats saved and is willing to forgo present goods for future goods. So he forwards the laborer payment from the future good to the present , with the savings in the past ( confused yet !) in exchange the capitalist gets to have the future good and assumes all the risks of it being successful in the market or a complete botch.

Increased demand for a good imputes back to the stages of production. Relative to the current limited supply the price of labor goes up. This happens because the demand stimulates inward capital flow which bids for all factors of production through competition ( resources, capital goods, and labor).

As far as those tickets in Vienna go, why are you so upset? Perhaps because you don't quite yet understand where value comes from. :glare:
If anyone exploited anyone , it was the people that were willing to buy the tickets! Yes, you are correct in recognizing that the high demand relative to little ( left) supply of tickets has given the touts the ability to raise the price. Remember , price isn't value.
The suckers that would buy the tickets from the touts still valued the expected satisfaction of attending the event more than holding on to however many thousand Euros. I.e. for the suckers, the marginal utility of X thousand Euros was lower than the marginal utility of the expected satisfaction of getting the ticket and attending the event. :rolleyes:

Funny how that works eh?


GreenDragon. Good post.

[mikelepore]

Baconator, your post #79 describes everything affecting everything else, loops within loops, a million variables. Yes, you're right that the demand for the baker's bread affects the demand on for the miller's grain, which affects the demand for the farmer crop. So is that your demonstration that the theory of marginal utility is the better theory? I didn't see that demonstrated there.

Several people have pointed out that, as we can all see with our very own eyes, items with a high cost of production tend to be the same items that have high exchange value. I don't believe that reality is dominated by certain coincidences. Where there is a pattern, there is also a reason.

[Baconator]

Baconator, your post #79 describes everything affecting everything else, loops within loops, a million variables. Yes, you're right that the demand for the baker's bread affects the demand on for the miller's grain, which affects the demand for the farmer crop. So is that your demonstration that the theory of marginal utility is the better theory? I didn't see that demonstrated there.

Several people have pointed out that, as we can all see with our very own eyes, items with a high cost of production tend to be the same items that have high exchange value. I don't believe that reality is dominated by certain coincidences. Where there is a pattern, there is also a reason.

I brought the consumer into the picture basically. This shifts the whole dynamic and posits that the classical economic theories in terms of value, price , and production to consumption are actually backwards.

Economics is about the unseen, not the seen. Costs are those things you don't see directly, they are the lost production in not allocating resources for alternative use. ;)

[mikelepore]

Of course the consumer is in the picture, but what the consumer *ends up doing* is not based on what the consumer wants, thinks, says, wishes, or anything else. Here's a hypothetical scenario for the near future. One month from today, I say a certain consumer who lives in Hoboken, New Jersey will buy two things on that day, one of the items for $20,400.00 and the other item for $4.79. I won't indicate which is which, but one of the items is a new car and the other item is a can of ground coffee. Can you tell me which item is which? Or are we incapable of saying which is which, until we have a chance to find out about the individual's personality and mood? If the people who say "value is subjective" are right, we can't at this time have the foggiest idea which item is which.

[Baconator]

Of course the consumer is in the picture, but what the consumer *ends up doing* is no what the consumer wants, thinks, says, wishes, or anything else. Here's a hypothetical scenario for the near future. One month from today, I say a certain consumer who lives in Hoboken, New Jersey will buy two things on that day, one of the items for $20,400.00 and the other item for $4.79. I won't indicate which is which, but one of the items is a new car and the other item is a can of ground coffee. Can you tell me which item is which? Or are we incapable of saying which is which, until we have a chance to find out about the individual's personality and mood? If the people who say "value is subjective" are right, we can't at this time have the foggiest idea which item is which.

Thats sorta a straw man and you know better than to just throw those out there mike. Comparing a new car to a can of coffee based on only labor inputs and also implying the consumer is irrelevant in their value determination is pretty silly. A consumer must have the means at her disposal to even make such a comparison!
Its more reasonable to suppose that the consumer has a total of $20,400 at her disposal and she may choose between a new car or a can of coffee which is -$4.79 from the $20,400 which leaves $19,921 to also spend on anything else. The cost of the car is not just the can of coffee but rather anything else she could possibly purchase with an additional $19,921.
It could be the case that she does not have $20,400 in the present but does have $10. She may desire a new car for around that price range but she doesn't have the means right now to buy it unless she saves for the future and possibly forgoes coffee consumption as a result. If it is out of her means then the car isn't more valuable than other things she can consume right now. The car is an unattainable means right now.
But lets take two examples to see that value isn't two things ( exchange and use) but rather value is purely subjective and this comes only from the consumer. First, it should be said, value or 'exchange value' isn't the price. Price is determined by supply and demand, demand is determined on how much consumers subjectively value goods enough to purchase and consume them.
The car, coffee , and $20,400. In order for the consumer to make a purchasing decision between both goods , it must be assumed that she has the means of $20,400 at her disposal. To keep it simple , lets assume that she can only choose between can(s) of coffee and a new car. Each unit/ new car is priced at $20,400. This is determined by the supply of that particular kind of car relative to the demand for it. Ideally, the car's price would be set by the seller based on the costs of production ( resources , labor , capital , time) but it is not a sure thing that the seller can place that price tag and even profit from it. What I mean is this. The production of cars , from drawing board to fruition, takes time. Easily a couple years. This means the investor(s) of the project for a new car ( lets call it small 2 door coupe model type) must speculate about the the future demand for that type of car before production even begins. They may calculate the costs of production based on prices in the present and relevant consumer trends. They may speculate that the future demand relative to the future supply of cars they would produce would sell for approx $20,400. If the price tag for all relevant production is about $18,000 , then they stand to profit $2,400 for their first fleet of new cars. Again, if they estimate that the future demand will yield a loss ( say the cars would probably sell for only $16,000 but the price tag for all production factors in the present would be $18,000) then they wont make that investment and the cars won't come into being. Needless to say its risky but during the process of production they can easily be wrong in their initial speculation and the cars may only sell for several thousand $$$ less than $18,000 , the initial price take for production factors. In that case you either take a 10% loss or a 100% loss if you refuse to bring down the price to fit demand. Yes, its a guessing game based on future demand and thats why being an entrepreneur isn't always easy. Ask TomK who owns a business, I'm sure he has an idea what I'm talking about.
Anyway , lets suppose that the speculation of future demand was roughly correct and each unit of new car costs $20,400. Lets also suppose that the only alternative commodity to buy with $20,400 is cans of coffee priced at $4.79. ( the coffee undergoes the same speculation process by the way though the time is shorter and the price tag for production factors are lower). So lets ask ourselves a question , how many cans of coffee can I buy for $20,400? About 4,258 cans of coffee! So in terms of price ( NOT value) 4,258 cans of coffee = 1 new car. Here is the question, which would you rather buy for $20,400? Are you going huh?!? Now one can say , well, its whatever has more use value depending on the consumer. The perceived usefulness of the commodity as a means in relation to a consumer's ends is correct but it doesn't stand to reason that this can only be determined with 4,258 cans of coffee equally priced with 1 new car. I will demonstrate this in just a couple lines down. But its not this 'two value' system ( exchange and use value) that tells us the answer on which a consumer would buy. Its marginal utility ! Marginal utility doesn't look at ' classes of goods,' it looks at units of goods as individuals always consume units , not entire 'classes' of goods. The marginal utility of the one new car is evaluated subjectively ( subjective value) by the consumer based on how it can serve as a means to achieve an desired ends. The marginal utility of the coffee is the 4,258th can of coffee and how it may serve as a means to achieve a desired ends for the consumer. We also have a third commodity , money! Money doesn't do any good unless its traded. If coffee and cars were the only two commodities on the market the money would be irrelevant and not needed. But in the real world , the money would also have a marginal utility based on what else it can purchase besides car and coffee. In a normal situation, I think most of us would think that cars yield the higher marginal utility as opposed to 4,258 cans of coffee and I think most of us would take the car. However , if you've maybe created some type of invention that gives energy, and the fuel for it is coffee beans....well then , the marginal utility of 4,258 cans of coffee might go up, even beyond the one car , in which case you'd take the coffee. Of course, that would increase demand for coffee and that high value judgment by consumers imputes back to the stages of production and all this sudden a can of coffee might be much more pricey but still require roughly the same labor inputs per unit.
Last example. Suppose you're in the desert , middle of no where. You're wandering about for 3 days with no water. You're rapidly approaching death from thirst but you have something very interesting on your person. You have a very pricey diamond! Just when you feel you're gonna kick the bucket from thirst you see another wandering man and he has an extra gallon of water! He says if you trade him your diamond then he will give you the gallon of water ... even throw a rickety little compass in there. Would you trade the diamond for the gallon of water in that situation? Damn right you would unless you'd rather die! You see, this is where marginal utility comes in again. The marginal utility of 1 nice ass diamond was much lower than 1 gallon of water. The marginal utility of 1 gallon of water was your life. Its certainly different in a situation where water is plentiful and thus the marginal utility of water is usually lower than scarce diamonds.( if people valued them still).

LTV explains that commodities have value 'imbued' in them by labor which is the commonality between all commodities ( never mind non-labor natural goods) and thus can be compared for exchange. LTV doesn't explain that there is actually nothing intrinsic about the commodity or even anything valuable about it apart from the consumer (evaluator). Commodities only gain value ( for exchange or use) when a consumer gives it value depending on how that commodity may serve as a means to achieve a desired ends. The commodity isn't important , its ability to serve a person's ends makes it important and valuable. Based on those subjective evaluations, supply and demand handle the price tag.

:D

[Baconator]

Of course the consumer is in the picture, but what the consumer *ends up doing* is not based on what the consumer wants, thinks, says, wishes, or anything else. Here's a hypothetical scenario for the near future. One month from today, I say a certain consumer who lives in Hoboken, New Jersey will buy two things on that day, one of the items for $20,400.00 and the other item for $4.79. I won't indicate which is which, but one of the items is a new car and the other item is a can of ground coffee. Can you tell me which item is which? Or are we incapable of saying which is which, until we have a chance to find out about the individual's personality and mood? If the people who say "value is subjective" are right, we can't at this time have the foggiest idea which item is which.

Oh , and yes I noticed you said she will buy both things. The comparison is still flawed a bit. If she has a desire for transport and getting from A to B then obviously she will value the car higher. If she desires utility from drinking coffee, she will value the coffee can higher. Why would you go to a car lot to buy a can of coffee? Both of those commodities serve different ends. Whats going to end up she's gonna buy the car and coffee. She's gonna brew the coffee and possibly throw it in a thermos and then drink the new coffee while driving the new car. :D

[mikelepore]

actually nothing intrinsic about the commodity or even anything valuable about it apart from the consumer (evaluator). Commodities only gain value ( for exchange or use) when a consumer gives it value depending on how that commodity may serve as a means to achieve a desired ends

The marginal utility of the product is different for each person, but the product has only one exchange value for everyone. So we need a kind of statistical mechanics, as in the kinetic theory of heat, where we don't know what any one individual will do, but we can make a statement about the aggregate of all the people. But if you are going to imagine a kind of statistical mechanics, then the result is no longer subjective, now it's a fact, a published news item. Now that it's an objective property, the reasoning behind the labor theory should be easier to recognize. Unless you do that, you still have a coincidence theory, that it's a pure coincidence that exchange value lines up so neatly with cost of production. Critics of the labor theory say "the consumer doesn't care how much labor goes into it" -- but now we have the result that the value doesn't "care" whether the consumer cares or not.

[mikelepore]

LTV explains that commodities have value 'imbued' in them by labor which is the commonality between all commodities

It's a figure of speech that the intrinsic property is "in" the commodity. What it's really "in" is the rate at which nature yields results to people's efforts, which is often about the state of development of the tools.

[mikelepore]

Last example. Suppose you're in the desert , middle of no where. You're wandering about for 3 days with no water. You're rapidly approaching death from thirst but you have something very interesting on your person. You have a very pricey diamond! Just when you feel you're gonna kick the bucket from thirst you see another wandering man and he has an extra gallon of water! He says if you trade him your diamond then he will give you the gallon of water.

I understand your example, but consider why the Marxian theory just focuses on the society-wide avaerge for commodities that are continuously produced and available, and not focus on the thirsty person wandering in the desert? Because, as several writers in this thread have already pointed out, the Marxian theory of value is only trying to model that aspect of capitalism that explains the relationships among wages, profits, the duration of the work day, etc. - the sociology of class. The thirsty guy in the desert is an interesting case study in psychology, but it's everyone's regular weekday patterns that are revealing for what the theory is trying to achieve.

Mainstream college economics also considers everyday patterns when it postulates the idea called perfect competition. I'm calling it an "everyday" thing, even though it's an idealization that never happens, because, by supposing the ultimate in availability and information, it's the opposite extreme of the entirely unique story, the thirsty guy in the desert.

[shareinfoline]

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[Baconator]

hi
if You Like Risk In Life And Want To Make Fast Money Then Share Trading Is The Best Option For You. However If You Are Someone Who Wanna Play Safe And Is Happy With Fix Returns Then Simply Go For Mutual Funds. Still In Both Its Good To Have Experts Views And Tips. So Just Have Them If And Only If You Want To Earn From These Areas.
regards www Shareinfoline Com:):)
^^^ Wtf?

[Baconator]

The marginal utility of the product is different for each person, but the product has only one exchange value for everyone. So we need a kind of statistical mechanics, as in the kinetic theory of heat, where we don't know what any one individual will do, but we can make a statement about the aggregate of all the people. But if you are going to imagine a kind of statistical mechanics, then the result is no longer subjective, now it's a fact, a published news item. Now that it's an objective property, the reasoning behind the labor theory should be easier to recognize. Unless you do that, you still have a coincidence theory, that it's a pure coincidence that exchange value lines up so neatly with cost of production. Critics of the labor theory say "the consumer doesn't care how much labor goes into it" -- but now we have the result that the value doesn't "care" whether the consumer cares or not.

Right. MU is subjective to each individual consumer. This means there are combinations for millions of inputs in the real life economy. We already do have an objective way of measuring what consumers want ( i.e. value) and thats called prices. Unfortunately I don't think you've read much of anything I was writing or else you'd see I've already answered how value is subjective and how that value imputes back to the stages of production from the consumer. I mean I've explained several times already so I don't know much else I can do. You're still stuck 150 years ago mistaking the function of price and this thing called 'exchange value.' Think about it, nothing exchanges 'equally' or there would be no exchange. Would you go out of your way to exchange with me something thats of no more value than what you currently posses? Exchange implies a double inequality of value or else the transaction would never happen. And if you've read my imputing value argument you'll see that nothing is 'coincidental' but actually its a very elaborate , organized , abeit decentralized , process. Value is not abstract from the consumer. If you wake up this morning and decide to build something ( lets call it X) with no thought given to future demand what guarantees you that X will yield any value, even in exchange? You can charge a price based on what costs went into labor alone but it doesn't say anything about value, especially if no one wants to exchange anything for it. :rolleyes:

If I started a business for mackerel and squid milk shakes, what is the value or 'exchange' value of that? I can imagine you would say its the price = the exchange value based on labor inputs. But if no one wants mackerel and squid milk shakes (i.e. no one is willing to exchange anything for them) then what is the actual 'exchange value' of mackerel and milk shakes? Yep, ZERO! What happens to the price and all the production inputs of that disgusting milk shake? The production will be worthless as it will cease altogether and the price will come down next to nothing just to clear the market of all the produced milk shakes. "Exchange value" is nothing more than what I'm willing to pay for your product. If I don't want to pay the price which will yield you a profit , then you must lower your price to sustain a smaller loss than a total loss or you just might sustain a total loss if nobody is even willing to pay 0.01 cent for it.

[Baconator]

It's a figure of speech that the intrinsic property is "in" the commodity. What it's really "in" is the rate at which nature yields results to people's efforts, which is often about the state of development of the tools.

Marx certainly believed (exchange) value was something abstract generated only by labor inputs. The classical economists were a bit more realistic and also conceded that labor inputs weren't the only determining factor in 'exchange value' but were still wrong because they just assumed the consumer's inputs would just be a given but they never explained how important the consumer was in this whole process. Demand was acknowledged by Marx but kinda shoved aside in an appendix-like manner. :rolleyes:

Its not really Marx's fault as he learned about economics from the prevailing thought of the London School of Economics. A labor theory of value was certainly disseminated from the LS. Marx just fine tuned it and constructed his own LTV based on his views of dialectical materialism and class struggles. Marx was dead set on proving that the 'capitalist mode of production' was inherently exploitive like all others that came before it and the his LTV was a perfect way to try to point out the exploitation. Remember, Marx even thought that exploitation was harder to see in capitalism than in previous economic systems. He adopted the classical school's theories of value , which is bifurcated into 'exchange' and 'use.' He also delved deeper trying to tie it into his class theory by elaborating on an element known as 'surplus labor value' and pointed to this as the element of exploitation. But I don't need to tell you much of this since you already know it. :rolleyes:

Marx was a brilliant man and postulated his arguments so that the only conclusion available would be the one Marx was seeking. He did this by representing a flawed or partial premise. For example, Marx asserted that a commodity is only useful because labor manpower transformed the commodity into something of use. Iron Ore isn't very useful to most people but labor transforming it into a shovel = useful . This is certainly true, I don't think any rational thinker would disagree with it. Marx then asserted that since all useful commodities are the result of labor 'transformation' then the one thing that all heterogeneous commodities share in common is their labor inputs and thus any exchange value should be determined by the labor that went into each commodity. This would reflect in the price. Now, to a newb reader, this would make total sense actually, I gotta admit that, but to someone experienced with a critical mind it barely scratching the surface. Exchange just doesn't involve producer, it involves consumer. I agree that human energy does transform many resources into commodities that can be useful. ( I actually defend this as an argument for property rights.) But the question to be asked is , ok , why did labor transform the commodity in the first place? Surely we can use our human energy to transform all kinds of things but what is the purpose of transforming particular things into goods and services? Clearly value doesn't begin with labor inputs , labor inputs are the result of something called demand.
Pearls at the bottom of the ocean don't become valuable because of the divers going to get them but rather the divers go and get them because the pearls are already valuable. What LTV people had a hard time explaining was why are some commodities so valuable in exchange and yield little use value and other commodities are less valuable in exchange but extremely valuable for use? And why were prices always fluctuating for goods even though each unit of the good had the same labor inputs? Adam Smith , and Karl Marx to some extend , both chose to focus primarily on 'exchange value' while leaving 'use value' as less important. The only way questions such as these could be answered is if you focused heavily on the consumer in the market. I'll explain more in my next reply...

[Baconator]

I understand your example, but consider why the Marxian theory just focuses on the society-wide avaerge for commodities that are continuously produced and available, and not focus on the thirsty person wandering in the desert?

And this was one huge weakness in the Marxian LTV to explain value. It attempted to put goods in a class or 'average' them out based on several proposed social inputs. What MU did was totally destroy that by focusing deeper than that and getting to the reality of the situation. Consumers are really individuals in the marketplace and each has their own subjective evaluation of various goods ( I guess you could think of this as 'use value' though the term is completely inaccurate). Here's the funny thing about everyone in the marketplace, nobody purchases entire 'classes of goods' but rather everyone purchases units of goods in reality. Since different goods can be used to serve different ends ( on the part of consumers) the inputs of each market for every single good can fluctuate rather chaotically based on how many units of each good consumers are willing to buy. Supply and demand is really only accurate when you examine units of each good as opposed to aggregate wholes of all commodities. The study of the individual consumer in the economy was a methodological individualist ( and more realistic approach) to solving the value paradox than Marx's methodological wholeism. Our desert guy is important for this because whats only relevant to him and the value of water vs diamonds is the currently available stock of water vs diamonds given his present situation. The merchant in the desert might have a couple gallons of water while it can also be true that the entire marketplace of the world might have a plentiful stock of water. This shows that the value of goods ( combining finally exchange and use into a single value) is determined by the consumer in relation to his desired ends relative to the units of water/diamond goods available. This is what marginal utility explains.




Because, as several writers in this thread have already pointed out, the Marxian theory of value is only trying to model that aspect of capitalism that explains the relationships among wages, profits, the duration of the work day, etc. - the sociology of class. The thirsty guy in the desert is an interesting case study in psychology, but it's everyone's regular weekday patterns that are revealing for what the theory is trying to achieve.Marx believed his labor theory of value was an accurate explanation of how value comes about in the marketplace as a whole. Because advancement in economic understanding shows that position to be inaccurate later Marxists changed the concept of the the Marxian LTV to just be a methodology for examining exploitation in capitalism and not so much a concrete concept for describing actual value. Once upon a time Marxism relied on the accuracy of the LTV but most Marxist today have changed that position.


Mainstream college economics also considers everyday patterns when it postulates the idea called perfect competition. I'm calling it an "everyday" thing, even though it's an idealization that never happens, because, by supposing the ultimate in availability and information, it's the opposite extreme of the entirely unique story, the thirsty guy in the desert.I am critical of the neoclassical models myself. You wont find me a huge supporter of them since they assume to many abstract conditions that may not be reflective on reality. This is why I personally find the Austrian school to reveal much more accurately the realities of individual actors in the marketplace.

Funny thing was however, I was educated formally in neoclassical economics. :lol:

[Red Lobster]

I do not like Banonator liberal views but he is definite winner in this debate. I accept marginalism. I thank you for good information baconator. I learn a lot. but r u also saying that since everything is 'individualist' that society is not important in market? Even tho you are right about economy it does not prove socialism to be bad concept to me.

[Red Lobster]

bacon, what you think of Keynesian?

[mikelepore]

These are observed facts. The segment of the population who are ambitious and hard-working, this is the segment of the population who suffer from poverty and financial insecurity. The population group that does nothing but relax and hang around, producing nothing, this is the group that earns the highest incomes and accumulates the most wealth. These facts are known to everyone who went to school and reads newspapers. For an economic theory to be of any interest to the socialist movement the theory must explain this. Any theory must explain what can see -- a theory of optics must explain why there are rainbows; a theory of fluids must explain why boats can float. Understanding has to refer back continuously to what we see. We can see empirically a reciprocal relationship between work and income. We see the population sharply stratified into those who produce all of the wealth but don't own much of it, and those who own most of it but don't produce any of it. If a theory can't account for that then it's not a theory of economics that should be of any interest to the movement to emancipate the working class. You might have a set of definitions and theorems that are of use to a group of capital investors or to the department that prints the paper money, but it doesn't concern the working class. Marxian economics explains why the product of the workers gets divided into two parts, the small part which workers receive back in the form of wages, and the greater part which is expropriated from the workers by the parasitic elements. Marx left some questions unanswered, and left some vocabulary words defined with insufficient rigor, but he was the only writer in history who every proposed a theoretical model that comes close to explaining several important results that we observe. There are second-order effects that Marx's method doesn't explain, and someone in the future may derive a better theory, but so far Marx's method is the only one that was ever proposed. While the theory of marginal utility is just great for explaining certain believe-it-or-not curiosities and anedotes, like the person dying of thirst who would would rather have a glass of water than a bag of diamonds, so far there is only one writer who made any progress explaining in practical terms the what everyday life is like in modern class-divided society, and that was Marx.

[pusher robot]

These are observed facts. The segment of the population who are ambitious and hard-working, this is the segment of the population who suffer from poverty and financial insecurity. The population group that does nothing but relax and hang around, producing nothing, this is the group that earns the highest incomes and accumulates the most wealth.


Observed by whom exactly? These "facts" certainly do not seem to match my observations.

[Baconator]

mikelepore , I noticed in this last post you've pretty much abandoned the LTV of being any kind of objective explanation of where value comes from. The Marxian LTV was exactly what you show it to be in this last post, a means to reinforce an ideology about society be it reflective of reality or not. Which is fine if you confine it to part of the greater ideology and not something objective and independent of it that explains truth about economic value. :D



These are observed facts. The segment of the population who are ambitious and hard-working, this is the segment of the population who suffer from poverty and financial insecurity.This was Marx's prediction for the western countries which would start a revolution. The harder and longer laborers worked , the more they would be impoverished. Unfortunately for Marx , the exact opposite happened as the majority of the populous became more wealthy and moved from what is described as the 'poverty line' to the 'middle class.' Thats not saying poverty was eliminated and didn't kick back up when the government felt it should regulate economic matters more. But this obligates you to define 'ambitious' and 'hard-working' and tell exactly what you mean by poverty and financial insecurity in relation to the former.




The population group that does nothing but relax and hang around, producing nothing, this is the group that earns the highest incomes and accumulates the most wealth. These facts are known to everyone who went to school and reads newspapers.So in other words these 'facts' are disseminated in public indoctrination schools and mainstream media newspapers? Or are these the socialist weekly columns? ;) I can't argue against this being true for people like Paris Hilton but to imply anyone who has wealth is lazy and unproductive show a severe lack of understanding about the economy. The ones that typically produce nothing but coercively extract wealth from the productive 'class' is the individuals in government.



For an economic theory to be of any interest to the socialist movement the theory must explain this.So it must be relative or subjective to Socialist ideology(ies). Which means that it is not as important if the theory reflects objective truth about value or anything of that sort. Gotcha.


Any theory must explain what can see -- a theory of optics must explain why there are rainbows; a theory of fluids must explain why boats can float. Understanding has to refer back continuously to what we see. Actually , scientific theories explain what you don't see. In the case of rainbows we see colors in the sky that seems to cut off somewhere. What we see is the moon being roughly the same size of the sun, and people believed that for a long time. The scientific method showed that when concepts in our minds meet reality , reality must win.



We can see empirically a reciprocal relationship between work and income. We see the population sharply stratified into those who produce all of the wealth but don't own much of it, and those who own most of it but don't produce any of it.You can't just draw on a conclusion based on a premise in which you feel you see everything there is to see. If wealth can simply be 'produced' then why to people go to places designated as 'work?' Why don't they just start producing whatever or anything in their bedrooms when they wake up. If the LTV holds, then whatever they produce will yield value since it receives labor inputs. I agree that a lot of people get screwed in modern capitalism but even in this perverted system you can generally see how the flow of capital works. I think you also understand little about this aspect of economics. No offense.



If a theory can't account for that then it's not a theory of economics that should be of any interest to the movement to emancipate the working class. So if I come up with some quick fix economic theory that sounds like its for the 'working class' ( I assume you mean 'proletariats') then it can be considered valid by socialists.



You might have a set of definitions and theorems that are of use to a group of capital investors or to the department that prints the paper money, but it doesn't concern the working class. No. You're bordering on polylogism here and thats dangerous and incredibly naive. There is no such thing as 'bourgeois economics' and 'proletarian economics.' People are people despite their 'class' and the basic tenets about economics are universal to all individuals. When have I ever defended the government enforced monopoly on money or the legal fiction known as corporations? I believe these concepts to be invalid as well.




Marxian economics explains why the product of the workers gets divided into two parts, the small part which workers receive back in the form of wages, and the greater part which is expropriated from the workers by the parasitic elements.It explains it wrong or not nearly good enough. It examines what it wants to examine and draws its conclusions upon that without looking at the entire picture about how the factors of production ( land , labor , capital , and time) are related to the consumer. It just extrapolates labor and runs with that basically. Clearly the most parasitic elements are those of the state that coercively extract the product of a worker's labor through taxes.




Marx left some questions unanswered, and left some vocabulary words defined with insufficient rigor, but he was the only writer in history who every proposed a theoretical model that comes close to explaining several important results that we observe. There are second-order effects that Marx's method doesn't explain, and someone in the future may derive a better theory, but so far Marx's method is the only one that was ever proposed. While the theory of marginal utility is just great for explaining certain believe-it-or-not curiosities and anedotes, like the person dying of thirst who would would rather have a glass of water than a bag of diamonds, so far there is only one writer who made any progress explaining in practical terms the what everyday life is like in modern class-divided society, and that was Marx.Well then, Marxian theory of economics wasn't really a theory economics was it? It was a theory that was adjunct to a social theory of 'classism'
Marginal utility nails value and you know it does. I have no attachment to any theories btw. I accept those propositions that are rational only even if I might disagree with them at first. If they are rational then my current concepts which disagree with them are clearly wrong and I must adjust. Its kinda like when a strong theist realizes the rationality of atheism.
Actually, I have a common end with communists. Communists want to eliminate classism and have a classless society. I do to but our methodology and concepts about class is completely different. Communists acknowledge the validity of classism as a concept where I do not. I believe classism is a construct in our minds that doesn't tell us anything about reality and used as a tool to exploit individual people.

[Baconator]

I do not like Banonator liberal views but he is definite winner in this debate. I accept marginalism. I thank you for good information baconator. I learn a lot. but r u also saying that since everything is 'individualist' that society is not important in market? Even tho you are right about economy it does not prove socialism to be bad concept to me.

Thanks man! I think. :rolleyes:
Society is very important for the market. In fact, the market is dependent on society and vice versa. A market implies a forum of trade between two or more individual which is a social interaction by definition. We are individuals but if we wish to prosper, we must collaborate with other individuals and form a society. Having a free market naturally goes hand in hand with having a free society, the two are inextricably linked. So yes, society is important in the market. The market would not exist without social human beings.

Socialism stresses on the need of social cooperation as well but takes it as far as forced collectivization. Socialism ultimately believes that individualism must be destroyed or at the very lease always subversive to collectivism.
(Free) Market supporters and especially market anarchists believe that individuals come before a collective and that, in fact , a collective is not a proper way to describe individuals freely collaborating with one and other.
A collective is nothing without the individuals that make it up. To declare the collective can invalidate any right of the individual or any of the individuals from which it is composed is completely and utterly invalid and , frankly , absurd.

[Baconator]

bacon, what you think of Keynesian?


I utterly detest Keynesianism. I find Marxism more tolerable!

[mikelepore]

Observed by whom exactly? These "facts" certainly do not seem to match my observations.

Don't you know hundreds of diligent, hard-working, productive people who have only economic insecurity to show for it?

[mikelepore]

If wealth can simply be 'produced' then why to people go to places designated as 'work?' Why don't they just start producing whatever or anything in their bedrooms when they wake up. If the LTV holds, then whatever they produce will yield value since it receives labor inputs.

How many times was the meaning of socially necessary labor time already explained here?

Where's there any commodity in your example? You said you read Capital, chapter 1. What does the text say a commodity is?

[mikelepore]

There is no such thing as 'bourgeois economics' and 'proletarian economics.'

On the contrary, every explanation begins with a decision about what kinds of things you are trying to explain. The economics we took in college is just what a person needs to know to abide by the procedures of capitalism, while assuming that it's normal and natural and eternal. The ultimate for mainstream economics is that I may pour a hundred dollars in the front end of a process, the some kind of unseen miracle occurs, and one hundred and ten dollar pops out the back end. But Marxian economics is humanitarian economics, concerned with the fate of the people who are chained up inside the cornucopia-box.

[Die Neue Zeit]

Communists acknowledge the validity of classism as a concept where I do not. I believe classism is a construct in our minds that doesn't tell us anything about reality and used as a tool to exploit individual people.

At least you've come out of the closet and dumped that crap about "productive classes" and the "state class" :p

[As if you know anything whatsoever about M-C-M :rolleyes: ]

[mikelepore]

This was Marx's prediction for the western countries which would start a revolution. The harder and longer laborers worked , the more they would be impoverished. Unfortunately for Marx , the exact opposite happened as the majority of the populous became more wealthy and moved from what is described as the 'poverty line' to the 'middle class.'

The class gradient is extremely steep, moreso than ever in the past. Net assets of 400 richest people in the U.S.: $300 billion. Net assets of the 150 MILLION poorest people in the U.S.: zero. (U.S. Census Bureau, 1991.)


But this obligates you to define 'ambitious' and 'hard-working'

Any definition at all will work fine here, as long as the "work" of burglars and pickpockets and pirates isn't called "producing wealth" -- because that's the kind of "work" that capitalists do.


and tell exactly what you mean by poverty and financial insecurity in relation to the former.

If you don't already know then it can't be explained to you. If you've never had to say to your family "the reason it's cold in the house this winter is because it can't be heated while we pay the medical bills at the same time", or "no, children, you can't take piano lessons because having dinner is more important," if you've never been part of the vast majority of the population who have know what this is like, then it can't be conveyed in words.

[Baconator]

How many times was the meaning of socially necessary labor time already explained here?

Where's there any commodity in your example? You said you read Capital, chapter 1. What does the text say a commodity is?

It goes to demonstrate value isn't determined by labor inputs. Labor inputs are the result of imputed value.

[Baconator]

On the contrary, every explanation begins with a decision about what kinds of things you are trying to explain. The economics we took in college is just what a person needs to know to abide by the procedures of capitalism, while assuming that it's normal and natural and eternal. The ultimate for mainstream economics is that I may pour a hundred dollars in the front end of a process, the some kind of unseen miracle occurs, and one hundred and ten dollar pops out the back end. But Marxian economics is humanitarian economics, concerned with the fate of the people who are chained up inside the cornucopia-box.

I am not a mainstream economist. But no, thats not what you learn in university. Nothing is 'eternal' nor is capitalism propagated that way. I spent the majority of this thread explaining to you how a $110 profit results from a $100 price tag for all combined production. Theres nothing 'magical' or 'mystical' about it. Marxian economics doesn't explain how value is created nor does it explain labor's relation to consumption. I mean even you admitted theres a lot of information missing from the Marxian explanation and I'm saying that information is important for developing a full picture on how the economy works.

[Baconator]

The class gradient is extremely steep, moreso than ever in the past. Net assets of 400 richest people in the U.S.: $300 billion. Net assets of the 150 MILLION poorest people in the U.S.: zero. (U.S. Census Bureau, 1991.)



Any definition at all will work fine here, as long as the "work" of burglars and pickpockets and pirates isn't called "producing wealth" -- because that's the kind of "work" that capitalists do.



If you don't already know then it can't be explained to you. If you've never had to say to your family "the reason it's cold in the house this winter is because it can't be heated while we pay the medical bills at the same time", or "no, children, you can't take piano lessons because having dinner is more important," if you've never been part of the vast majority of the population who have know what this is like, then it can't be conveyed in words.

In Marx's time period, he speculated that the industrialized nations would fall to socialism because the labor and common folk would get poorer and poorer. The exact opposite happened as real wages and total income + total production and lower prices increased the standard of living for almost everyone and the common man was typically more wealthy than a rich guy in feudalism. Socialism took over in a underdeveloped country like Russia.

Whats happening today is the result of state management of the economy. The enforced monopoly on a nothing-backed currency. The ability to inflate and destroy savings. The ability to distort market signals and create boom/bust business cycles. This results in transfer of wealth from the poor to the rich. I never defend modern 'capitalism.'

The burglars and crooks you speak of surely are the state as this is exactly how the state operates. State protected Corporations also are complicit in stealing wealth from hardworking people. However, many capitalists do the opposite and create wealth through savings and then disseminate it through the population via employment and increased production of goods.

I certainly feel for the less wealthy. I am not really that far above the 'poverty line' myself and in order to have some basic utilities I have to watch how I spend my cash. However, I can see no justification in coercing other people with the threat of force to give up their wealth for some politician's egalitarian plans. Especially since the state's favored corporations are exempt from a lot of pressure while the regular people and honest businesses are not.

[Awful Reality]

Demo,

You miss one important element. The past. You see ,the capitalist has saved in the past by accumulating capital for the future based on expectations that a certain industry will boom. Not everyone saves and accumulates capital, its just a fact of life. In fact , if we all did that and just tried to be as efficient as possible and save , save ,save , we'd never enjoy the finer things in life. The point of saving is to spend later and profit ( not necessarily monetarily either) from that savings.


And this is supposed to pass off as economics?:laugh:

It's absolutely ludicrous to suggest that one's current economic status is determined by how much money they've saved- and to take this as far as to say that if we all decided to save we'd all "enjoy the finer things in life."
Plenty of people can save all they want, but the amount of money they save relative to the amount of money necessary to "enjoy the finer things of life" is still going to be low if they are paid a low wage. And who pays the wage? The capitalist, to whom the labor is sold! There's this idiotic idea of "choice" among anti-Marxists; the idea that people can choose to save, choose what job to have, etc etc. Your fundamental error is that wage, in the capitalist sense, is only the amount of money necessary for one to continue to work and produce surplus-value. There is no "surplus-wage."

[Awful Reality]

Err, the increased demand for limited supply of resources and labor raises the price of those things. So yes , costs of production are effected.

Oh, and don't mix up price and value. :D
...And then, this entire argument goes to hell when I post this:


By what is the price of a commodity determined?

By the competition between buyers and sellers, by the relation of the demand to the supply, of the call to the offer. The competition by which the price of a commodity is determined is threefold.



LTV explains that commodities have value 'imbued' in them by labor which is the commonality between all commodities ( never mind non-labor natural goods) and thus can be compared for exchange. LTV doesn't explain that there is actually nothing intrinsic about the commodity or even anything valuable about it apart from the consumer (evaluator). Commodities only gain value ( for exchange or use) when a consumer gives it value depending on how that commodity may serve as a means to achieve a desired ends. The commodity isn't important , its ability to serve a person's ends makes it important and valuable. Based on those subjective evaluations, supply and demand handle the price tag.

:D

Please stop ending your posts with this: :D

Marxian economics dictates that a customer's mis-evaluation of price, while it does create capital, becomes a non factor as its value moves along in the market. The relation between the seller and buyer exposes its real, inherent value. Let me put it this way: The commodity starts as relative value, or raw material, is extracted from the earth. In the factory, workers turn it into equivalent value by changing its use-value, so that it can be sold on the market. In doing so, the commodity accrues exchange-value. However, in order to produce a commodity, a precise amount of average labor (depending on the skill of the worker), a precise amount of machinery, a precise amount of raw material, and a precise amount of wage for the labourer are necessary. This all goes into the product. However, once all is said and done, and the product has been created and put to market, we find that due to the nature of an equivalent value, being an object changed by labour (and starting as material produced by the earth), it has only in it as much value as was necessary to produce it! So, how do we get a profit from it? We can never change the amount of wage necessary- we have put it as low as it can be in an effort to produce capital. We can never change the amount of relative value: 20 pounds of Linen will never produce more than a 20 pound coat, and we can not change the amount of labor relative to the tools of production (machinery): Better machinery means less labour time. So then, what can we change? We have eliminated all but one factor... Average human labor socially necessary! We may overwork the workers- make them produce more than is necessary to cancel out the cost of the means of production. This is the origin of surplus value, and capital. The value inherent to the commodity has now become more than the cost of production. So, our commodity goes to market. A buyer, who has a need/want for the use-value, decides to buy the commodity. This is, of course, with money. However, our buyer is not the most intelligent, so he pays more than is necessary. Our seller, wanting more capital, does not complain. But after a while, our buyer no longer needs the use-value- but wants the exchange value- and he tries to sell it for a lesser price than he bought it. But, this becomes irrelevant! Our capitalist, the old producer and seller, is no longer concerned. He has turned use-value into capital. This we explain, how much we are not concerned.

[Baconator]

...And then, this entire argument goes to hell when I post this:
[/b]



Please stop ending your posts with this: :D

Marxian economics dictates that a customer's mis-evaluation of price, while it does create capital, becomes a non factor as its value moves along in the market. The relation between the seller and buyer exposes its real, inherent value. Let me put it this way: The commodity starts as relative value, or raw material, is extracted from the earth. In the factory, workers turn it into equivalent value by changing its use-value, so that it can be sold on the market. In doing so, the commodity accrues exchange-value. However, in order to produce a commodity, a precise amount of average labor (depending on the skill of the worker), a precise amount of machinery, a precise amount of raw material, and a precise amount of wage for the labourer are necessary. This all goes into the product. However, once all is said and done, and the product has been created and put to market, we find that due to the nature of an equivalent value, being an object changed by labour (and starting as material produced by the earth), it has only in it as much value as was necessary to produce it! So, how do we get a profit from it? We can never change the amount of wage necessary- we have put it as low as it can be in an effort to produce capital. We can never change the amount of relative value: 20 pounds of Linen will never produce more than a 20 pound coat, and we can not change the amount of labor relative to the tools of production (machinery): Better machinery means less labour time. So then, what can we change? We have eliminated all but one factor... Average human labor socially necessary! We may overwork the workers- make them produce more than is necessary to cancel out the cost of the means of production. This is the origin of surplus value, and capital. The value inherent to the commodity has now become more than the cost of production. So, our commodity goes to market. A buyer, who has a need/want for the use-value, decides to buy the commodity. This is, of course, with money. However, our buyer is not the most intelligent, so he pays more than is necessary. Our seller, wanting more capital, does not complain. But after a while, our buyer no longer needs the use-value- but wants the exchange value- and he tries to sell it for a lesser price than he bought it. But, this becomes irrelevant! Our capitalist, the old producer and seller, is no longer concerned. He has turned use-value into capital. This we explain, how much we are not concerned.


Umm... Does a person more familiar with Marxian economics want to correct the above before I do? Much of it was incoherent, even for a Marxist explanation. I'll let it sizzle and hopefully a Marxist will correct the obvious errors before I do. :D

[Baconator]

Please stop ending your posts with this: :D:D


Marxian economics dictates that a customer's mis-evaluation of price, while it does create capital, becomes a non factor as its value moves along in the market.Huh? What? Can you or someone else rephrase this? Its not coherent to me.



The relation between the seller and buyer exposes its real, inherent value.You mean price? Supply and demand???


Let me put it this way: The commodity starts as relative value, or raw material, is extracted from the earth.Relative to what? How is it determined?


In the factory, workers turn it into equivalent value by changing its use-value, so that it can be sold on the market.Equivalent value?



In doing so, the commodity accrues exchange-value.A price?


However, in order to produce a commodity, a precise amount of average labor (depending on the skill of the worker), a precise amount of machinery, a precise amount of raw material, and a precise amount of wage for the labourer are necessary.And time. You mean optimal right?


This all goes into the product. However, once all is said and done, and the product has been created and put to market, we find that due to the nature of an equivalent value, being an object changed by labour (and starting as material produced by the earth), it has only in it as much value as was necessary to produce it! Equivalent value? To what? What if no one wants it? Whats the value?



So, how do we get a profit from it?Voodoo economics?



We can never change the amount of wage necessary- we have put it as low as it can be in an effort to produce capital.Low wages equal more capital? More capital = lower wages?



We can never change the amount of relative value: 20 pounds of Linen will never produce more than a 20 pound coat, and we can not change the amount of labor relative to the tools of production (machinery): Better machinery means less labour time.You mean quantity? 20 pounds of linen can produce a coat or anything else that can consume 20 pounds of linen. Machinery can't replace labor? Isn't it that more machinery / laborer amounts to more production/laborer in a given period of time ( say an hour)? Don't you think that would result in a higher wage because of more productivity / laborer? Can you then get rid of other labor? Are you familiar with history of labor in industrialized countries?


So then, what can we change? I guess you're gonna tell me....


We have eliminated all but one factor... Average human labor socially necessary! Socially necessary for what? What about the factor of production time total? What about how the factory got there in the first place? What about explaining why that particular good is being produced?



We may overwork the workers- make them produce more than is necessary to cancel out the cost of the means of production.Or we can cut down on labor intensity and increase capital intensity which would give each laborer still in production far more productivity earning him a higher wage.



This is the origin of surplus value, and capital.I don't even know if you know what Marx's correlation was between 'surplus value' and capital.



The value inherent to the commodity has now become more than the cost of production.O rly? Voodoo economics?


So, our commodity goes to market. A buyer, who has a need/want for the use-value, decides to buy the commodity. This is, of course, with money. However, our buyer is not the most intelligent, so he pays more than is necessary.Who decides whats necessary? Our comrades in the CC?


Our seller, wanting more capital, does not complain. But after a while, our buyer no longer needs the use-value- but wants the exchange value- and he tries to sell it for a lesser price than he bought it. But, this becomes irrelevant! ?????





Our capitalist, the old producer and seller, is no longer concerned. He has turned use-value into capital. This we explain, how much we are not concerned.?????????


This is one of the poorest explanations I have heard. Demogorgan's and mikelepore's explanations were far more coherent. I think you should probably stay out of debates involving economics and plop a seat in the learners' section with GeneCosta.:D

[Baconator]

edit

[Awful Reality]

Huh? What? Can you or someone else rephrase this? Its not coherent to me.
I'd assume not much is.


You mean price? Supply and demand?
And yet again our marginalist confuses value and price...


Relative to what? How is it determined?
Irrelevant, it's simply a term used by Marx. Doesn't matter if it was "grapefruit-ABBA value," it still has the same meaning: Raw materical to be converted from labor.


Equivalent value?
See above, and it here becomes obvious you've never read Capital.
A price?


And time.
There is only a certain amount of labor that can take place in a certain amount of time.


Equivalent value? To what? What if no one wants it? Whats the value?
Value=/=Price.


Voodoo economics?
Straw man economics?


Low wages equal more capital? More capital = lower wages?
...Yes, same amount of Profit minus less expense. Sort of like how 9-1 is more than 9-2. Interesting idea, eh?


You mean quantity? 20 pounds of linen can produce a coat or anything else that can consume 20 pounds of linen. Machinery can't replace labor? Isn't it that more machinery / laborer amounts to more production/laborer in a given period of time ( say an hour)? Don't you think that would result in a higher wage because of more productivity / laborer? Can you then get rid of other labor? Are you familiar with history of labor in industrialized countries?
The precise productivity of labor is not relevant, all that is relevant is that there is a specific productivity of labor.


I guess you're gonna tell me...
Yes, I will.


Socially necessary for what? What about the factor of production time total? What about how the factory got there in the first place? What about explaining why that particular good is being produced?
Socially necessary to produce a commodity! Time is labor. The part about the factory is factored in as part of the means of production. And why it is produced does not change the fact that it was produced.


Or we can cut down on labor intensity and increase capital intensity which would give each laborer still in production far more productivity earning him a higher wage.
No, a lower wage, because less labor means less wage is necessary to keep a worker at his job.


I don't even know if you know what Marx's correlation was between 'surplus value' and capital.
Apparently quite a bit better than you do.

Who decides whats necessary? Our comrades in the CC?
Material conditions.


?????????
...Yes. I don't give a shit how much capital has been created, just that it has been.

All you've essentially done in your post is proven to us that you have never read Marx and therefore do not know what the LToV is, or how Marx proves it. I suggest you go pick up a copy of Capital before you start arguing about it. I'll be waiting.

:D

[mikelepore]

In my earlier posts I made the comment that Marxian economics explains the source of wages and profits, but I didn't elaborate.

Marx explained that the workers has two involvements that are easily lumped together in our speech but need to be distinguished.

They are called "labor power" and "labor".

One is the commodity called labor power, the fact that the workers has a body and mind to sell the use of at the labor market. This isn't work itself, but the capacity to do work. This is what the capitalist buys from the worker: control over the worker's body and mind for most of the hours that the worker is awake. Now this capacity belongs to the capitalist who purchased it. The capitalist now forms an assembly of purchased commodities, including mastery over the worker's brain and body (labor power), tools, materials, energy, etc.

Then the second involvement of the workers becomes important. Labor power is now transformed into labor. The ability to work becomes an actual hour or day of working.

The characteristics that this labor has are disconnected in some way from the labor power that the capitalist purchased.

In economic terms the most important dissimilarity between labor power and labor is this: there is a detachment of the value that labor imparts to products from the value of the labor power. After labor transforms the materials into goods, there is no linkage between the exchange value of those goods at their own markets and the exchange value of the worker's body on the the labor market.

It consistently turns out that the value of the worker's product is greater than the sum of the values of all commodities that were combined to make that product. This isn't so for collections of commodities that don't involve labor. Only the addition of labor power turns out to have this feature. For combinations of commodities that are not modified by labor, a "conservation of value", similar to the physicist's conservation of mass and energy, is observed. If you were to take $10 skid, and on top of it you placed a $5 can of oil and a $15 spool of wire, you would have a bundle that will (assuming there's a market for it) usually sell for about $30. This collection of goods that is generally unmodifed by labor will usually have a value that is simply the sum of the parts. But labor imparts to the finished goods more than it's own value as an input commodity. A capitalist might apply $30 in labor power to $30 in tools and raw materials to yield a product that enters into its own market with a value of $200. Marx calls the tools and materials "constant capital" because they usually impart their own value to the product, but calls labor power "variable capital" because a so-called expansion takes place, from the smaller initial value of the commodity labor power, to the greater final value that the labor adds to the product.

Every commodity has a use value, which is a non-quantified statement of why the recipient desired it, for example, the use value of copper wire is that it conducts electricity, etc. To the capitalist, the use value of labor power is the fact that it is variable capital, the fact that, at the moment the labor power becomes labor, it will impart to the finished product a value-added that is greater than it's own value on the labor market.

I said that that the worker, upon selling the control of one's brain and body on the labor market, will get a wage that is not linked to the value-added that the labor will impart to the finished product. Then what is that wage more closely linked to? The wage is linked to the sum of the exchange values that go into producing the worker as a commodity. The exchange value of this commodity, the human being who is for sale, is closely linked to the cost of food, housing, education, and other elements needed for this commodity's production.

This is important because it explains the source of your employer's profits.

The laws of economics do not tie your income in any way to how productive you are, even though, in the age of automation, we might see the productivity of an hour of labor increase by a factor of a hundred or more. Instead, your exchange value, when you sell yourself at the wage-slave auction, is more closely determined by the sum of the values needed to produce you materially for that auction, the values of the necessities of life that produce you.

Therefore, "real wages" (what wages will buy) have a recurrently tendency to gravitate back to the bare "living wage" or subsistence level. While modern automation makes the productivity of your labor multiply again and again and again, it is only the cost of the continued production of your body and your training for the labor marketplace that determines your wage.

The value that labor adds to the finished product, minus the value of the labor power expended on it, is called surplus value. This is the wealth that the workers produce, but which they don't get paid, because it's the excess that the average workers don't need to keep them alive and returning to the labor market.

This is the source of your boss's profits: the fact that your labor is so productive that you produce so much more wealth than you require to keep you alive, and this difference legally belongs to your boss to confiscate.

The cause of many several problems becomes clear when one understands the capitalist's extraction of surplus value from the workers. For example, since all worker as a class don't get paid enough to buy back their own products, even while each employer pressures each worker to produce more wealth in each unit of time, this recurrently causes surpluses which must be sold but can't be sold. This is the cause of all economic recessions. In the hope of selling the pile-ups than must be sold but can't be sold, capitalists globally fight over markets and trade routes (in addition to fighting over sources of raw materials). This is a much more common cause of war and militarism than all of the ideological causes.

That's all the time I have time for writing today. Bye!

Mike Lepore in New York

[Djehuti]

I believe that the marxist labor theory of value and the theory of plussvalue are anachronic and obsolete since the marginalist revolution of Jevons and Menger and that the theory of marginal utility of Marsall and Von Wieser completely shatters the fundations of marxist economy.

Jevons and Menger shifted the focus of political economy from value to price, from the process of production to the process of selling. They did not rebute anything of what Marx had written; the LTV never was a price theory, it never was any means for calculation or anything like that.

[dannydandy]

communism still has its intellectual virtue as an critic to capitalism... or else the capitalist would never bother to improve their ways