Carl Menger refutes the Labor Theory of Value [Archive]

trivas7

17th November 2008, 22:54

The trouble with this outlook is that it places all the importance on demand, which is mistaken. It is a hallmark of Austrian economics of course to maintain that it is the demander rather than the supplier that is driving the exchange, but it doesn't work that way. The price of a good isn't in the medium to long run going to come from the subjective value consumers place on it but rather how much it costs to produce it.

Consumers do decide what to buy based on subjective preferences and suppliers do produce based on what consumers buy (they want to make a product that will sell after all), but beyond that it is what the supplier does that determines the value of a product. Changes in demand will cause changes in price but that is because if demand falls, less will be sold and only the most efficient producers will remain, lowering the average amount of social labour time needed to produce the product and the converse happens if demand grows.

The crucial point is though that this is happening because of suppliers changing their behaviour in response to demanders, not happening because of the demanders changing their behaviour in of itself. The exchange value of a product is ultimately going to come down to how much it cost to make and all costs are ultimately labour costs.
Menger's argument is that Marx repeated Aristotle's error that if there were no common medium of exchange (money) that could determine equality bt goods, then there would be no market exchange and no association of humans beyond the scope of the household.

According to Aristotle, if money serves to measure some equality bt goods and exchange depends on the ability to establish such equality, then it follows that equality must exist in the goods themselves. And this becomes the viciously circular argument which Marx repeats: If the value of a commodity depends on the labor that went into constructing it, then how do we determine the value of the labor? Marx argued that the value of goods was determined by the "socially useful" labor that went into producing them and the value of that labor by the goods it produced.

Menger saw that Aristotle had erred in regard to exchange. One can make no sense of the relationship of value to market prices if one regards value as a property of goods themselves.

Demogorgon

18th November 2008, 00:02

Menger's argument is that Marx repeated Aristotle's error that if there were no common medium of exchange (money) that could determine equality bt goods, then there would be no market exchange and no association of humans beyond the scope of the household.

According to Aristotle, if money serves to measure some equality bt goods and exchange depends on the ability to establish such equality, then it follows that equality must exist in the goods themselves. And this becomes the viciously circular argument which Marx repeats: If the value of a commodity depends on the labor that went into constructing it, then how do we determine the value of the labor? Marx argued that the value of goods was determined by the "socially useful" labor that went into producing them and the value of that labor by the goods it produced.

Menger saw that Aristotle had erred in regard to exchange. One can make no sense of the relationship of value to market prices if one regards value as a property of goods themselves.
That is too abstract. It is a common Austrian trick to use sophistry to obscure a point anf this is a prime example of it.

Menger probably isn't the best person o turn to when it comes to arguing against the LTV as the Austrian School is thought of as bunk by mainstream economists too, not just Marxists, but to try and address him let's look at what is meant by value. Marxists distinguish between use value and exchange value. Use value presumably is affected by subjective preferences and drives demand, that would seem to be common sense, but it is ultimately exchange value that determines how much a good is worth. Money isn't really important here, it is just an expression of that, a good's exchange value is really how much of another good you should expect to get in return for it.

Menger of course disagrees saying that separating value out like that is wrong and that the market is driven entirely by subjective desires. Or to put it more conventionally, Utility determines value. However if that is the case there should be a direct correlation between utility and price and there plainly isn't, whereas there is such a link between cost of production and price. The old Waters and Diamonds debate. Of course marginalists will answer that it is marginal utility that determines utility rather than overall utility. Of course that is a pretty big supposition in of itself. How do they know that the marginal utility of diamonds is greater than it is for water?

It doesn't convince me though, how do they account for goods with very high marginal rates of utility that are either free or virtually free without accounting for a separate exchange value?

trivas7

18th November 2008, 01:31

That is too abstract. It is a common Austrian trick to use sophistry to obscure a point anf this is a prime example of it.

Menger probably isn't the best person o turn to when it comes to arguing against the LTV [...]

Marx himself recognized the problem. All such efforts to conceive of value as dependent on some objective factor boils down to a circular argument: he was stuck w/ explaining the value of goods by the labor that went into them and the value of labor by the goods it produced.

Demogorgon

18th November 2008, 04:08

Marx himself recognized the problem. All such efforts to conceive of value as dependent on some objective factor boils down to a circular argument: he was stuck w/ explaining the value of goods by the labor that went into them and the value of labor by the goods it produced.
It is a philosophical problem, but it is not unassailable. Menger tries to get around it by making his determination of value-utility-entirely abstract, but the value of a product in terms of Labour can be determined empirically, at least if we look at it in a simple manner.

We can simply look at it in terms of amount of labour that goes into it. A computer requires more labour than a sandwich for instance, so computers have a greater value than a sandwich. We have to discount labour that is not socially useful and that is a bit more arbitrary, but we can still make a pretty clear judgement as to what is not useful. Labour that adds nothing to the production process or even undermines it is not socially useful for instance and Labour going towards products that nobody wants is not socially useful either.

A problem may arise when we consider that some forms of Labour could be more socially useful than others, even if these others are still useful in of themselves. That is a problem certainly and could well sink an attempt at Labour-Time vouchers (not saying that it would for sure, I am just theorising here) but I see this as being more of a problem with our ability to judge how useful labour is-which is, I believe, what you are driving at-than with the LTV itself.

The value of Labour should in theory be measurable by how much there is of it and how useful it is. Some people here, I have noticed, make the mistake of only considering the first of these variables and the LTV may well trip up if you do that, but I reckon if we consider both it becomes much more accurate, even if it does make it more difficult to be precise with what the exact value of any given product is.

18th November 2008, 05:27

trivas7

18th November 2008, 05:47

It is a philosophical problem, but it is not unassailable. Menger tries to get around it by making his determination of value-utility-entirely abstract, but the value of a product in terms of Labour can be determined empirically, at least if we look at it in a simple manner.

This begs the question as to how the value of that labor is determined empirically. The truth is consumers don't care how difficult it is to manufacture a product. They care how much satisfaction they get from it. Value is not in the product, but in the importance we attribute to the satisfaction of our needs.

Die Neue Zeit

18th November 2008, 05:49

trivas7, you should read some recent EMPIRICAL studies that have actually validated the labour theory of value (as noted by Paul Cockshott).

trivas7

18th November 2008, 05:59

The value of labour-power isn't the amount of goods it produces; it is the value required to maintain the proletariat as a class.
But the value required to maintain the proletariat is determined by the price of the goods it produces, thus the vicious circle.

trivas7

18th November 2008, 06:09

trivas7, you should read some recent EMPIRICAL studies that have actually validated the labour theory of value (as noted by Paul Cockshott).
If this were the case there would be no problem quantifying what is socially useful.

SchrÃ¶dinger's Cat

18th November 2008, 07:15

Demogorgon

18th November 2008, 11:53

This begs the question as to how the value of that labor is determined empirically. The truth is consumers don't care how difficult it is to manufacture a product. They care how much satisfaction they get from it. Value is not in the product, but in the importance we attribute to the satisfaction of our needs.
You are making a mistake here. By claiming that consumers do not care about the difficulty or complexity or whatever of producing a good and that this matters to this debate, you are inserting a hidden premise that it is consumers that determine the exchange value. This begs the question if favour of Menger and his views as he maintained heavily that it was demanders rather than suppliers who determined the value.

The truth is of course that consumers do not care about such things and do care about utility and that will drive their wants. However any product made has to be sold at a price that will benefit the supplier for them to continue to produce it and that does depend on how much effort is required to make it.

Remember that exchange value is not some abstract concept, it is just how much a product is worth relative to other products, or to put it another way, how much it should be exchanged for. That is different from its use value which is based on utility, but it is exchange value that is going to drive price.

Self-Owner

18th November 2008, 14:34

Provide evidence to this claim. This is a repudiated assertion made by the dictator-loving Hayek. In the long tradition of the Austrian school, he kept out any facts.

This is quite amazing - I don't think I've seen a second order ad hominem before. His argument is suspect because it is like an assertion made by someone else who allegedly professed to liking dictators, is it?

At any rate, I think Trivas is right here. Suppose useful things, like cars, are produced efficiently. But too many of them are produced to sell at a certain price; the price the market clears at is lower than the apparent labour value of the cars. This seems to show that the number of hours of work going into an object (an object with utility!) does not determine its value. To get out from this mess, Marx says that not all of the hours spent making cars were socially necessary, thereby (circularly) defining what is socially necessary via the workings of the market!!!

Junius

18th November 2008, 14:40

Originally posted by Self-Deluded
At any rate, I think Trivas is right here. Suppose useful things, like cars, are produced efficiently. But too many of them are produced to sell at a certain price; the price the market clears at is lower than the apparent labour value of the cars. This seems to show that the number of hours of work going into an object (an object with utility!) does not determine its value.Emphasis mine.

Originally posted by Self-Deluded
To get out from this mess, Marx says that not all of the hours spent making cars were socially necessary, thereby (circularly) defining what is socially necessary via the workings of the market!!!No he doesn't. I really don't have time to refute this garbage but in brief: read a book (or at least something Marx actually wrote).

Demogorgon

18th November 2008, 14:48

This is quite amazing - I don't think I've seen a second order ad hominem before. His argument is suspect because it is like an assertion made by someone else who allegedly professed to liking dictators, is it?

At any rate, I think Trivas is right here. Suppose useful things, like cars, are produced efficiently. But too many of them are produced to sell at a certain price; the price the market clears at is lower than the apparent labour value of the cars. This seems to show that the number of hours of work going into an object (an object with utility!) does not determine its value. To get out from this mess, Marx says that not all of the hours spent making cars were socially necessary, thereby (circularly) defining what is socially necessary via the workings of the market!!!
The fall in prices of the cars though will simply be the market setting a clearing price to get rid of surplus stock. The suppliers have made more than people want so flog them off for whatever they can get in order to minimise their loss. Once the excess stock is cleared, the suppliers will presumably cut production (if the cars remain in production at all of course) and the price will go up again to whatever the exchange value is (which may be lower if the cut in production means only the most efficient producers keep producing).

When there is a surplus, it is not really the market determining that the product is too expensive (unless the supplier has been deliberately inflating the price) but that there has been too much produced to be able to sell all the products at the full exchange value. Prices are often then cut to clear the surplus (better than dumping the goods in landfills) but that is only a temporary solution, what happens thereafter is that the suppliers have to change their behaviour, presumably cutting their production. As this often means less efficient producers have to give up, it could well lead to a fall in price as products have a lower exchange value. At any rate by the time the market reaches close to equilibrium, the price should accurately reflect the exchange value.

Self-Owner

18th November 2008, 14:51

No he doesn't. I really don't have time to refute this garbage but in brief: read a book (or at least something Marx actually wrote).

OK you moron, how about I quote from Capital directly:

"Lastly, suppose that every piece of linen in the market contains no more labour-time than is socially necessary. In spite of this, all these pieces taken as a whole, may have had superfluous labour-time spent upon them. If the market cannot stomach the whole quantity at the normal price of 2 shillings a yard, this proves that too great a portion of the total labour of the community has been expended in the form of weaving. The effect is the same as if each individual weaver had expended more labour-time upon his particular product than is socially necessary."

Self-Owner

18th November 2008, 14:57

When there is a surplus, it is not really the market determining that the product is too expensive (unless the supplier has been deliberately inflating the price) but that there has been too much produced to be able to sell all the products at the full exchange value. Prices are often then cut to clear the surplus (better than dumping the goods in landfills) but that is only a temporary solution, what happens thereafter is that the suppliers have to change their behaviour, presumably cutting their production. As this often means less efficient producers have to give up, it could well lead to a fall in price as products have a lower exchange value. At any rate by the time the market reaches close to equilibrium, the price should accurately reflect the exchange value.

It seems to me that you're saying that the cars are being exchanged at... something other than their exchange value (and given that there's apparently such a huge distinction between price and value, why do you talk about exchange value rather than price)?

Anyway, the point is that this shows a fatal circularity in the idea of 'socially necessary labour' because you need to bring in market exchanges and ratios to be able to explain the situation.

Demogorgon

18th November 2008, 15:04

It seems to me that you're saying that the cars are being exchanged at... something other than their exchange value (and given that there's apparently such a huge distinction between price and value, why do you talk about exchange value rather than price)?

Anyway, the point is that this shows a fatal circularity in the idea of 'socially necessary labour' because you need to bring in market exchanges and ratios to be able to explain the situation.
I am talking about exchange value because we are discussing the LTV!

Price should reflect exchange value fairly accurately when the market is close to equilibrium. When it isn't of course the market has to take measures to clear surpluses or deal with shortages, that's hardly controversial. I don't see how accepting the workings of the market is a problem with the argument.

Self-Owner

18th November 2008, 15:25

I am talking about exchange value because we are discussing the LTV!

Price should reflect exchange value fairly accurately when the market is close to equilibrium. When it isn't of course the market has to take measures to clear surpluses or deal with shortages, that's hardly controversial. I don't see how accepting the workings of the market is a problem with the argument.

I'll try to spell it out. The notion of 'socially necessary labour' reduces entirely to market processes, meaning that it's not a labour theory of value any more.

As far as I can tell, socially necessary labour was brought into the LTV to guard against the argument from useless labour: if I spend 100 hours hammering on a piece of metal and it comes out to be misshapen and useful to no one, it is worthless despite the labour I have expended. The idea that Marx brings in is that it's not just labour that adds value, but socially necessary labour. "The labour-time socially necessary is," in Marx's own words, "that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at that time."

Fine; the problem is that this still isn't enough. Imagine that pens are produced entirely efficiently, at the average degree of skill etc etc, from 1 hour's labour. And imagine that 100 billion pens were produced. The value - exchange value, if you prefer - of a pen on the market would, quite obviously, go down to less than the equivalent of 1 hour's labour, because of the massive oversupply. So what does Marx say? He comes back with this new point that "The effect is the same as if each individual weaver [pen maker] had expended more labour-time upon his particular product than is socially necessary" or, in other words, that the socially necessary labour that has gone into a product is entirely dependent on the market equilibrium rather than the actual amount of labour required to produce the article with the average degree of skill etc. Why, then, is this even a labour theory of value at all?

Anti Freedom

18th November 2008, 15:27

You are making a mistake here. By claiming that consumers do not care about the difficulty or complexity or whatever of producing a good and that this matters to this debate, you are inserting a hidden premise that it is consumers that determine the exchange value. This begs the question if favour of Menger and his views as he maintained heavily that it was demanders rather than suppliers who determined the value.
Well, if you study marketing, you will find that to some extent, it is the nature of the demanders that sets the cost. Not entirely, of course, but certainly they have enough influence for the company to consider their subjective desires in pricing strategy. In any case, it is also true that if the product becomes unpopular or undesirable in some form or fashion, the price of it may even drop below cost, as prices cannot remain high without high demand.

The truth is of course that consumers do not care about such things and do care about utility and that will drive their wants. However any product made has to be sold at a price that will benefit the supplier for them to continue to produce it and that does depend on how much effort is required to make it.
Well, nobody will deny that such a product must be sold above cost in order for the product to continue to be produced, not even the Austrians, but the pricing strategy is still something that subjective demand will have great influence over, and a product that will no longer continue for some reason will no longer continue for a subjective reason.

Remember that exchange value is not some abstract concept, it is just how much a product is worth relative to other products, or to put it another way, how much it should be exchanged for. That is different from its use value which is based on utility, but it is exchange value that is going to drive price.
No doubt, in fact, such a notion is certainly within mainstream economics, then Austrian notions of price as an information carrier would seem to be false, as would the current Neo-classical notions that central planning would fail due to the need to set every price related to every other price and the difficulty of the task. The issue is that exchange value would not be *that* separate from subjective utility as can be noted from the training that marketers are given to sell a product, and so on.

In any case, I do not view Austrian economics as completely without merit(I like Hayek's arguments for decentralization to use knowledge for instance), this is not to say that such a research program is correct, but rather that diverse opinions and methods can be useful, and certainly some of the figures have been intellectual fools or shown signs of intellectual foolishness, but that is probably found in any grouping.

Demogorgon

18th November 2008, 15:42

I'll try to spell it out. The notion of 'socially necessary labour' reduces entirely to market processes, meaning that it's not a labour theory of value any more.

As far as I can tell, socially necessary labour was brought into the LTV to guard against the argument from useless labour: if I spend 100 hours hammering on a piece of metal and it comes out to be misshapen and useful to no one, it is worthless despite the labour I have expended. The idea that Marx brings in is that it's not just labour that adds value, but socially necessary labour. "The labour-time socially necessary is," in Marx's own words, "that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at that time."

Fine; the problem is that this still isn't enough. Imagine that pens are produced entirely efficiently, at the average degree of skill etc etc, from 1 hour's labour. And imagine that 100 billion pens were produced. The value - exchange value, if you prefer - of a pen on the market would, quite obviously, go down to less than the equivalent of 1 hour's labour, because of the massive oversupply. So what does Marx say? He comes back with this new point that "The effect is the same as if each individual weaver [pen maker] had expended more labour-time upon his particular product than is socially necessary" or, in other words, that the socially necessary labour that has gone into a product is entirely dependent on the market equilibrium rather than the actual amount of labour required to produce the article with the average degree of skill etc. Why, then, is this even a labour theory of value at all?Well Labour is only socially useful if it is put into producing a product that is actually wanted. If you produce far too much of something then you have wasted labour on products that are not wanted. In other words you have put in much more labour than is required to fulfill people's wants.

If I understand you correctly, you are saying that even if I am right, my argument is pretty pointless as it relies on market processes anyway. However I am arguing that it is useful because it shows how supply works. If we go back to those lovely demand and supply diagrams that I (and I am guessing you) spent a great deal of time in the company of at School and University, we see that the supply curve should, at least in theory be the marginal cost curve for the product in question. The marginal cost is going to be directly or indirectly the cost of the extra labour put in.

You will presumably answer that that is all well and good, but doesn't tell us anything we can't already know without the LTV. We can still calculate marginal cost without the value of Labour after all and you have a point there. However the LTV is useful in other respects as it shows how exploitation works (in simple terms the difference between what the labour is worth and what it is paid) and to be able to do that we have to first of all understand how it works in a market setting.

If you want to discuss other aspects of the market with me, and doubtless we can find plenty to argue about there, I will happily talk about price alone and leave exchange value out of it if that is what you prefer, but for the purpose of this conversation, it is kind of hard to avoid!

Demogorgon

18th November 2008, 16:01

Well, if you study marketing, you will find that to some extent, it is the nature of the demanders that sets the cost. Not entirely, of course, but certainly they have enough influence for the company to consider their subjective desires in pricing strategy. In any case, it is also true that if the product becomes unpopular or undesirable in some form or fashion, the price of it may even drop below cost, as prices cannot remain high without high demand.You are confusing quantity supplied with supply here. Demanders have an impact on price because suppliers will change the amount supplied in order to be sure of selling what they make, nobody likes being stuck with unsold products after all.

However if we think about it in terms of those lovely supply and demand diagrams, the supply curve isn't moving at all, marketers are just trying to work out where the demand curve is so that they can work out where the market equilibrium is. The reason price will virtually always change with that is that the marginal cost of labour will change depending on how much is produced, changing the exchange value of the product to one extent or another.

The market equilibrium can probably best be described in this context as the point where all products produced can be sold at their exchange value.

Well, nobody will deny that such a product must be sold above cost in order for the product to continue to be produced, not even the Austrians, but the pricing strategy is still something that subjective demand will have great influence over, and a product that will no longer continue for some reason will no longer continue for a subjective reason.Yeah, but again the subjective demand (really the utility demanders are getting from a product) can only alter the demand curve (to go back to those diagrams that are now stuck in my head), whereas price and quantity produced will always sit on the supply curve (until excess stock needs to be shifted or consumers bid amongst themselves to deal with a shortage, in those cases demand will drive the process but notice there is no further production at this point). In reality the market is never in complete equilibrium, imperfect information as well as the fact that demand and supply are forever shifting guarantees that, suppliers can only supply along what they have determined as their "supply curve" and try to work out where the demand curve meets it.

No doubt, in fact, such a notion is certainly within mainstream economics, then Austrian notions of price as an information carrier would seem to be false, as would the current Neo-classical notions that central planning would fail due to the need to set every price related to every other price and the difficulty of the task. The issue is that exchange value would not be *that* separate from subjective utility as can be noted from the training that marketers are given to sell a product, and so on.Well you can;t really put a price on use value, can you? It is far too abstract. But I see what you are driving at. If exchange value were to ridiculously exceed use value, the product wouldn't be sold and probably wouldn't be made in the first place, though it doesn't work the other way round. Water has a high use value and low exchange value for instance. So they can be very seperate.

In any case, I do not view Austrian economics as completely without merit(I like Hayek's arguments for decentralization to use knowledge for instance), this is not to say that such a research program is correct, but rather that diverse opinions and methods can be useful, and certainly some of the figures have been intellectual fools or shown signs of intellectual foolishness, but that is probably found in any grouping.
Well I have very little time for the Austrian School. It rejects all sorts of things that are vital to understanding economics properly. I don't deny stuff like the neo-classical school has worth though, even if I do disagree with it.

trivas7

18th November 2008, 16:02

Self-Owner

18th November 2008, 16:10

If I understand you correctly, you are saying that even if I am right, my argument is pretty pointless as it relies on market processes anyway. However I am arguing that it is useful because it shows how supply works. If we go back to those lovely demand and supply diagrams that I (and I am guessing you) spent a great deal of time in the company of at School and University, we see that the supply curve should, at least in theory be the marginal cost curve for the product in question. The marginal cost is going to be directly or indirectly the cost of the extra labour put in.

That is basically what I'm saying - it's that if socially necessary labour is determined by market processes, it's not really anything to do with labour.

You will presumably answer that that is all well and good, but doesn't tell us anything we can't already know without the LTV. We can still calculate marginal cost without the value of Labour after all and you have a point there. However the LTV is useful in other respects as it shows how exploitation works (in simple terms the difference between what the labour is worth and what it is paid) and to be able to do that we have to first of all understand how it works in a market setting.

But why do we need the LTV at all? Labour is simply one of the different factors of production - with land (inc. natural resources) and capital also - so of course it's only natural that labour costs do factor into the eventual price of products (and I think any empirical research will simply be reflecting this fact.) But once we abandon the LTV for a theory of subjective value (which, I argue, the LTV actually becomes once socially necessary labour is introduced) the range of phenomena we can explain increases vastly. Why are diamonds so expensive? To some degree, because they are a scarce natural resource, and not entirely because of the labour costs. With a subjective theory of value, we can explain this.

And I agree with you that the primary reason why you Marxists are so keen to hold onto the LTV is because of your theory of exploitation - without it, it utterly collapses IMO. But I think this is basically too bad for Marxian exploitation rather than a reason to embrace an explanatorily deficient theory of value.

Demogorgon

18th November 2008, 16:14

Until you can show me how the value of labor is determined empirically you don't convince me that there is any sense at all to talk of a relationship of value to market prices, since the value of labor is itself traded on the market.All costs come back to labour costs though. (Well it is possible under capitalism, and feudalism for that matter, to exploitively add extra costs like virgin land, but lets leave that aside for a moment). While labour can be exploited in a whole host of ways because of the way the labour market works, its going rate is going to be what the cost of making a product is and that will go on to determine price.

Demogorgon

18th November 2008, 16:25

That is basically what I'm saying - it's that if socially necessary labour is determined by market processes, it's not really anything to do with labour.

No it is to do with labour. The market does decide what is socially necessary in terms of how much of something people want, though it won't determine what is necessary to make a product in the most efficient manner, but that is just because suppliers will seek to manufacture the right amount of products in order to sell all they produce. The market equilibrium will be at the exchange value of the product and that level of production, but it hasn't determined it purely through subjective demand.

Demand is certainly subjective to a large extent, but supply isn't.

But why do we need the LTV at all? Labour is simply one of the different factors of production - with land (inc. natural resources) and capital also - so of course it's only natural that labour costs do factor into the eventual price of products (and I think any empirical research will simply be reflecting this fact.) But once we abandon the LTV for a theory of subjective value (which, I argue, the LTV actually becomes once socially necessary labour is introduced) the range of phenomena we can explain increases vastly. Why are diamonds so expensive? To some degree, because they are a scarce natural resource, and not entirely because of the labour costs. With a subjective theory of value, we can explain this.Well all costs come back to labour in the end. Capital goods have to be made, land and natural resources have to be made usable and so forth. Of course land owners can charge rent on land, but that is pure exploitation.

The diamond issue incidentally is a favourite of mine, but the question of why they are so expensive is an easily answered one. Do you realise how much effort it takes to dig them up? Of course nobody would bother if people didn't want them. I'll give you that.

And I agree with you that the primary reason why you Marxists are so keen to hold onto the LTV is because of your theory of exploitation - without it, it utterly collapses IMO. But I think this is basically too bad for Marxian exploitation rather than a reason to embrace an explanatorily deficient theory of value.Well exploitation can still be explained without the LTV, we don't need it, but it is useful.

Really though, I think you are making the mistake of saying that because we don't need the LTV to explain market processes that it is worthless. It isn't, just because there are other ways of explain how the market works doesn't mean that this one doesn't have merit too. And it is useful for spotting exploitation. Marginalists engage in a fair bit of intellectual gymnastics to explain away exploitation but it is wholly inadequate in my view. When the total amount of compensation paid to workers is less than the total price of products they made, something has gone amiss.

18th November 2008, 16:41

But the value required to maintain the proletariat is determined by the price of the goods it produces, thus the vicious circle.

I'm not exactly sure what you're trying to get at here; it's obvious that value in this sense is an equivalent of two things. What you apparently don't understand is that in order for these goods to be exchangeable, and hence representative as the other in terms of value, they both must have a common thread that connects them. That thread is socially necessary labour time. This is all explained in Chapter 1 of Capital...

benhur

18th November 2008, 16:54

Anti Freedom

18th November 2008, 17:18

You are confusing quantity supplied with supply here. Demanders have an impact on price because suppliers will change the amount supplied in order to be sure of selling what they make, nobody likes being stuck with unsold products after all.
Right, I know the concept. I wasn't aware that we were using that conception though, as I do not think that the Austrians typically use that analytical conception.

However if we think about it in terms of those lovely supply and demand diagrams, the supply curve isn't moving at all, marketers are just trying to work out where the demand curve is so that they can work out where the market equilibrium is. The reason price will virtually always change with that is that the marginal cost of labour will change depending on how much is produced, changing the exchange value of the product to one extent or another.
Well, the issue is that using those lovely supply and demand diagrams would be false in this situation, as this is pricing under monopolistic competition, in which suppliers are price-setters not seekers. Thus, the notion of market equilibrium would not necessarily be the best way to look at it. Companies in markets where supply has a specific curve usually do not market as such markets exist where a relatively homogeneous product exists. I am also trying to get where you derive the marginal cost of labor issue from, are you assuming that labor costs are fixed. Frankly, I am also confused as I don't know if we are talking about capitalist theory, socialist theory, Austrian economics or Neo-classical, or where in that matter this fits in.

The market equilibrium can probably best be described in this context as the point where all products produced can be sold at their exchange value.Yeah, but again the subjective demand (really the utility demanders are getting from a product) can only alter the demand curve (to go back to those diagrams that are now stuck in my head), whereas price and quantity produced will always sit on the supply curve (until excess stock needs to be shifted or consumers bid amongst themselves to deal with a shortage, in those cases demand will drive the process but notice there is no further production at this point). In reality the market is never in complete equilibrium, imperfect information as well as the fact that demand and supply are forever shifting guarantees that, suppliers can only supply along what they have determined as their "supply curve" and try to work out where the demand curve meets it.
Well, market equilibrium, from an Austrian standpoint doesn't exist, nor does it exist in situations of heterogeneous goods, as the entire matter gets more confusing in a situation where the market would naturally be a monopolistic competition. Price and quantity produced exist on the intersection of supply and demand in markets for homogeneous products, in heterogeneous products, supply is not a fixed amount, but rather a market mix is set, which would consist of the various costs, and where production would be set at the point where marginal costs = marginal revenue in a capitalistic market. Right, and Austrians argue that the market is never in complete equilibrium due to imperfect information, and because of this they tend to throw out Marshallian supply and demand curves and functions as not getting at the heart of the matter. In any case though, in a situation with monopolistic competition, most markets where marketing matters, and likely to some extent the situation that Austrians have more in mind in terms of market process does not have supply and demand curves in the same sense as markets under perfect competition.

Well you can;t really put a price on use value, can you? It is far too abstract. But I see what you are driving at. If exchange value were to ridiculously exceed use value, the product wouldn't be sold and probably wouldn't be made in the first place, though it doesn't work the other way round. Water has a high use value and low exchange value for instance. So they can be very seperate.
Right, I understand that, however use value and subjective utility are different things. Water is very useful in an absolute sense, but a bottle of water might be very useless to me because I am not thirsty. Because water is abundant here, the value that people give additional bottles of water is rather low, as the demand curve under Marshallian economics is based upon the individual marginal demands which are based upon subjectivity.

Well I have very little time for the Austrian School. It rejects all sorts of things that are vital to understanding economics properly. I don't deny stuff like the neo-classical school has worth though, even if I do disagree with it.
That depends on what we mean by understanding economics properly. In any case, I like the idea of methodological pluralism, so I think that any economics research program from Marxian to Post-Keynesian to Neo-Classical to Austrian could be useful.

In any case, I have now become confused by our discussion, perhaps because I am losing my place in between the theoretical point and the theoretical debate. Sorry, I spend time studying Neo-classical economics, marketing and a variety of business concepts, and if I have to refer to them too much, I start thinking in more capitalistic terms, and start losing focus. Particularly as I have not completely systemized the principles on how a truly free society should work, and probably need to study more economic thinkers in the individualist anarchist tradition.

Anti Freedom

18th November 2008, 17:21

Nice topic, but I am getting a little confused here.:(

Let's say in the future we have the technology to assemble a car in as little time as it takes to make a table. In this situation, how can labor time alone act as the basis of exchange, even though that's the only thing common between the two objects? Wouldn't subjective preferences come into play in such situations, or how will an exchange take place at all?
Yeah, I am thinking about that somewhat too. I mean, the labor issue can be solved somewhat by recognizing that the raw materials are also gained from labor, however, another issue involved is accounting for capital outlays(as the necessary size of a capital outlay could potentially have impact on the price, but capital is still dead labor), which is one of the reasons I started a thread on capital.

Plagueround

19th November 2008, 00:57

OK you moron, how about I quote from Capital directly:

"Lastly, suppose that every piece of linen in the market contains no more labour-time than is socially necessary. In spite of this, all these pieces taken as a whole, may have had superfluous labour-time spent upon them. If the market cannot stomach the whole quantity at the normal price of 2 shillings a yard, this proves that too great a portion of the total labour of the community has been expended in the form of weaving. The effect is the same as if each individual weaver had expended more labour-time upon his particular product than is socially necessary."

I must say I'm enjoying this thread, despite my disinterest in value theories. I especially can't wait for LeftCommunist to come tear you apart, especially after you called her a moron.

Die Neue Zeit

19th November 2008, 05:06

Really though, I think you are making the mistake of saying that because we don't need the LTV to explain market processes that it is worthless. It isn't, just because there are other ways of explain how the market works doesn't mean that this one doesn't have merit too. And it is useful for spotting exploitation. Marginalists engage in a fair bit of intellectual gymnastics to explain away exploitation but it is wholly inadequate in my view. When the total amount of compensation paid to workers is less than the total price of products they made, something has gone amiss.

With that last sentence of yours, I wonder if my corporate finance stuff on "intrinsic value" (http://en.wikipedia.org/wiki/Intrinsic_value_(finance)), "economic value added," and cost budgeting (and allocation) really lie more with marginal economics than with classical economics (Smith-Ricardo-Marx).

Os Cangaceiros

19th November 2008, 06:10

The LTV does have some points that I consider to be...strange. Like the labor equivalency standard:

"A commodity may be the product of the most skilled labour, but its value, by equating it to the product of simple unskilled labour, represents a definite quantity of the latter labour alone.[15] (http://www.marxists.org/archive/marx/works/1867-c1/ch01.htm#15) The different proportions in which different sorts of labour are reduced to unskilled labour as their standard, are established by a social process that goes on behind the backs of the producers, and, consequently, appear to be fixed by custom."

"Social processes"? Is he refering to market forces, here?

Is working two hours as a carver equal to six hours of ditch digging?

In any case, I think the theory is somewhat solid in a number of respects, and many of it's opponents use strawmen to discredit it.

trivas7

19th November 2008, 17:15

All costs come back to labour costs though. [...] While labour can be exploited in a whole host of ways because of the way the labour market works, its going rate is going to be what the cost of making a product is and that will go on to determine price.
If labor costs are ultimately going to be determined in the marketplace, as Self-Owner says above -- it's not really a labor theory of value any more.

Demogorgon

20th November 2008, 01:39

If labor costs are ultimately going to be determined in the marketplace, as Self-Owner says above -- it's not really a labor theory of value any more.
Not quite, I didn't phrase it correctly. The complete costs going into producing something plus certain profits (in the fairly loose sense) extracted will likely define the value of labour because they will represent total labour costs plus surplus value.

trivas7

20th November 2008, 02:11

The complete costs going into producing something plus certain profits (in the fairly loose sense) extracted will likely define the value of labour because they will represent total labour costs plus surplus value.
You're saying that the cost of producing something (plus certain profits) represents total labor costs plus surplus value? Why isn't this a redundancy?

Self-Owner

20th November 2008, 11:30

Not quite, I didn't phrase it correctly. The complete costs going into producing something plus certain profits (in the fairly loose sense) extracted will likely define the value of labour because they will represent total labour costs plus surplus value.

I'm not entirely sure what you mean by this, but I'd probably agree. But this theory is treating the value of labour as something determined/defined by more fundamental factors, namely the relevant a) costs and b) profit of producing a good. This seems to me to completely refute the LTV - there is no single 'value of labour,' because different labour on different products have different values, and labour is just one cost of many which is what I've been saying all along.

20th November 2008, 15:08

Trivas:

5. Exchange-Value

If value exists and appears only in exchange, it is imperative for us to grasp the meaning of exchange. Aristotle is once again a helpful guide.

“Consider an exchange of five beds for one house. These products are not alike. Beds and houses have different qualities and different uses. How, then, can they exchange as equals? Are they really equal? No! Though exchanging them seems to imply their equality, beds and houses are not really equal. The appearance of equality is false. In reality, people simply decide to exchange unequal things.”

However, Aristotle ultimately came to the conclusion that real equality between commodities is impossible. After all, Aristotle reasoned, no two objects are really the same. Though mistaken in his conclusion, Aristotle at least seriously grappled with the problem of ‘equality’ in exchange. This elevates him head and shoulders above most contemporary economists, who refuse even to consider the possibility that exchange embodies an inherent principle of equality.

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

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

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

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

Before work begins, the object already has a particular form derived from nature. Labour adds to this, changing the form of the object. In this way, the purpose guiding labour is ‘objectified’ – it goes into the object.
From here (http://www.revleft.com/vb/showpost.php?p=619258&postcount=7).

benhur

20th November 2008, 19:43

Trivas:

From here (http://www.revleft.com/vb/showpost.php?p=619258&postcount=7).

What if in the future, machines can do the jobs that today are done by human labor? Let's say labor time for TV and table become equal, because of this. Then how would exchange work, would it still be based on LTV (in which case tv=table), or do we consider TV>table by comparing use-values of both.

20th November 2008, 21:03

What if in the future, machines can do the jobs that today are done by human labor? Let's say labor time for TV and table become equal, because of this. Then how would exchange work, would it still be based on LTV (in which case tv=table), or do we consider TV>table by comparing use-values of both.

For goods to be exchanged, the must be exchanged within a capitalist framework. Capitalist production will never be fully automated.

Demogorgon

20th November 2008, 22:43

I'm not entirely sure what you mean by this, but I'd probably agree. But this theory is treating the value of labour as something determined/defined by more fundamental factors, namely the relevant a) costs and b) profit of producing a good. This seems to me to completely refute the LTV - there is no single 'value of labour,' because different labour on different products have different values, and labour is just one cost of many which is what I've been saying all along.
Well as I say, all costs, apart from certain artificial ones like rent of virgin land come back to labour costs. In principal if no effort whatsoever has to go into producing or acquiring something it isn't going to cost anything.

It is a difficult question whether some labour is more valuable than others. Generally labour that seems to be more valuable at first glance will in fact be enhanced greatly by various equipment being used (produced by labour) and prior training.

Demogorgon

20th November 2008, 22:44

What if in the future, machines can do the jobs that today are done by human labor? Let's say labor time for TV and table become equal, because of this. Then how would exchange work, would it still be based on LTV (in which case tv=table), or do we consider TV>table by comparing use-values of both.

Who makes the machines and writes the programmes to get them to function and carry out given tasks?

Self-Owner

21st November 2008, 12:10

In principal if no effort whatsoever has to go into producing or acquiring something it isn't going to cost anything.

I just don't think this is true; if a diamond fell from heaven and landed in my hand, I think this diamond would be just as valuable as one (of equal size etc) that someone had mined. Which seems to me to show that it's not the labour that has gone into something which makes it valuable, it's the fact that people actually want it.

Demogorgon

21st November 2008, 16:18

I just don't think this is true; if a diamond fell from heaven and landed in my hand, I think this diamond would be just as valuable as one (of equal size etc) that someone had mined. Which seems to me to show that it's not the labour that has gone into something which makes it valuable, it's the fact that people actually want it.

No because the value of an individual product is gong to be that of the value of products of its type. So while an individual diamond might be acquired without effort if you are extremely lucky, it is still a diamond and it takes a lot of labour normally to acquire diamonds. Individual items do not change in value based on fluctuations in the amount of labour that went into them, rather the exchange value of a product will change when the amount of socially necessary labour required decreases for the product in general.

If it became the norm for diamonds to just fall from the sky, they would cease to have any cost.

Any example of a good which is free currently because it takes no effort to acquire is air.

benhur

21st November 2008, 20:21

Any example of a good which is free currently because it takes no effort to acquire is air.

But air is always available in abundance. The raw materials required to make other products are not. Which means, even if technology is available to create these products with less labor, it still wouldn't depend on that labor alone, but on the availability (or the lack) of raw materials. So is it not reasonable to conclude that labor+availability are the two factors that give value to a certain product?

Demogorgon

21st November 2008, 21:10

But air is always available in abundance. The raw materials required to make other products are not. Which means, even if technology is available to create these products with less labor, it still wouldn't depend on that labor alone, but on the availability (or the lack) of raw materials. So is it not reasonable to conclude that labor+availability are the two factors that give value to a certain product?

When the raw material is not available in abundance it is always going to take at least some degree of effort to acquire them, else they would still cost nothing. After all why would someone pay for something when it can simply be acquired with no effort?

trivas7

21st November 2008, 22:24

Individual items do not change in value based on fluctuations in the amount of labour that went into them, rather the exchange value of a product will change when the amount of socially necessary labour required decreases for the product in general.

You can't demonstrate this empirically nor does it account for fluctuations in the price of commodities. If individual items don't change in value based on fluctuations in the amount of labor that went into then that labor doesn't account for whatever value they possess.

Demogorgon

21st November 2008, 22:40

You can't demonstrate this empirically nor does it account for fluctuations in the price of commodities. If individual items don't change in value based on fluctuations in the amount of labor that went into then that labor doesn't account for whatever value they possess.

No, because nobody is going to pay more for an item just because it was made less efficiently. To put it another way, one car of identical type is worth the same as another, even if one happened to take more time to make than the other. The reason for this is that the amount of labour time required on average is what matters.

trivas7

22nd November 2008, 00:29

No, because nobody is going to pay more for an item just because it was made less efficiently. To put it another way, one car of identical type is worth the same as another, even if one happened to take more time to make than the other. The reason for this is that the amount of labour time required on average is what matters.
You're confusing value w/ the price of the car. The price of the car doesn't determine its value to me, it is merely one factor I have to take into account if I'm thinking of purchasing it. What makes you think that the amount of labor it takes to make something determines its worth to you?

Demogorgon

22nd November 2008, 00:35

You're confusing value w/ the price of the car. The price of the car doesn't determine its value to me, it is merely one factor I have to take into account if I'm thinking of purchasing it. What makes you think that the amount of labor it takes to make something determines its worth to you?
It makes no difference to me how much labour went into a good when deciding whether I want it, but that is because I decide whether I want goods based on use value rather than exchange value. The exchange value obviously matters because it will determine how much I have to pay, but my evaluation of the worth of the good won't affect that.

trivas7

22nd November 2008, 00:52

It makes no difference to me how much labour went into a good when deciding whether I want it, but that is because I decide whether I want goods based on use value rather than exchange value. The exchange value obviously matters because it will determine how much I have to pay, but my evaluation of the worth of the good won't affect that.
This begs the question: you've already assumed that the amount of labor determines how much you have to pay.

Demogorgon

22nd November 2008, 01:09

This begs the question: you've already assumed that the amount of labor determines how much you have to pay.
Well it would were that the point of that post, but the point was merely that we as consumers make our choices based on use rather than exchange value. I simply added that extra bit to indicate that price matters also so exchange value comes into it.

Mr. Conservative

24th November 2008, 01:21

Well it would were that the point of that post, but the point was merely that we as consumers make our choices based on use rather than exchange value. I simply added that extra bit to indicate that price matters also so exchange value comes into it.

If consumers make choices based on use rather than 'exchange value' (there is no arbitrary exchange value) then wouldn't LTV be discredited? If value is determined by how useful an item is rather than how much labor was put in producing it wouldn't the LTV be inconclusively wrong?

Demogorgon

24th November 2008, 01:36

If consumers make choices based on use rather than 'exchange value' (there is no arbitrary exchange value) then wouldn't LTV be discredited? If value is determined by how useful an item is rather than how much labor was put in producing it wouldn't the LTV be inconclusively wrong?
No because the LTV holds that there are two distinct forms of value, use value, based on the utility of the good and exchange value based on how much labour it takes to make the good.

Consumers naturally choose what goods they want based on the utility they expect to get, that is just common sense, but to get the good, they will have to pay the asking price and that will depend largely on the exchange value.

Mr. Conservative

24th November 2008, 01:41

No because the LTV holds that there are two distinct forms of value, use value, based on the utility of the good and exchange value based on how much labour it takes to make the good.

Consumers naturally choose what goods they want based on the utility they expect to get, that is just common sense, but to get the good, they will have to pay the asking price and that will depend largely on the exchange value.

Nope.

What about an emerald that just suddenly appeared in my room? It would have just as much value as an emerald that was mined in South America.

Demogorgon

24th November 2008, 01:45

Nope.

What about an emerald that just suddenly appeared in my room? It would have just as much value as an emerald that was mined in South America.

With all due respect, could you read the whole thread please? I have answered that identical point already. Emeralds have an exchange value based on how much labour it takes to extract them. Each Emerald will presumably have a slightly varied amount of labour put into getting it, but they will maintain the same exchange value because it is the average amount of labour that matters.

If Emeralds as a rule just suddenly appeared in living rooms they would not be worth very much.

Mr. Conservative

24th November 2008, 01:52

With all due respect, could you read the whole thread please? I have answered that identical point already. Emeralds have an exchange value based on how much labour it takes to extract them. Each Emerald will presumably have a slightly varied amount of labour put into getting it, but they will maintain the same exchange value because it is the average amount of labour that matters.

If Emeralds as a rule just suddenly appeared in living rooms they would not be worth very much.

Have you ever read about the paradox of water or diamonds?

Basically, water has a very low price and diamonds have a very high price. Since water is abundant compared to diamonds the loss of a few gallons of water would be small compared to the loss of a predetermined amount of diamonds. The restricted supply of diamonds compared to water dictates the price - not the amount of labor going into the product.

Demogorgon

24th November 2008, 02:19

Have you ever read about the paradox of water or diamonds?

Basically, water has a very low price and diamonds have a very high price. Since water is abundant compared to diamonds the loss of a few gallons of water would be small compared to the loss of a predetermined amount of diamonds. The restricted supply of diamonds compared to water dictates the price - not the amount of labor going into the product.

Yes, I know about water and diamonds, I believe I mentioned it in this thread. Incidentally according to marginalists, it is the greater marginal utility coming from diamonds compared to water that accounts for the price, not merely that diamonds are harder to come by.

It can't simply be that they have a restricted supply that dictates the high price, it doesn't matter how many are about, given the effort it takes to extract them, nobody would bother if they only had a low price.

Also, we can look at places where water is certainly not abundant, particularly fresh water, Desert areas for instance. The effort of getting water there is greater than it is in the West and consequently it tends to be more expensive, but not exponentially more. In these places water is a very precious resource and in some cases people would gladly give diamonds for it, yet it still costs much less than diamonds. Why do you suppose that is?

trivas7

24th November 2008, 04:36

Labor theory arose from two extremely poor methods of economic research. First it attempted to establish economic laws of exchange by examining only supply – ignoring demand entirely.

Even worse, the entire labor theory is unproven. In the entire first volume of Das Capital, where Marx proposed the labor theory, there is not one "positive proof". Rather Marx offers a fallacious "negative proof" in which he argues:

Premise 1: Some factor in the production of a good gives it value. TRUE;

Premise 2: Only those goods to which man has applied labor have value. FALSE;

Procedure: Examine all the factors producing a good by discarding those which did not create equal value in equal quantity, and end up with one factor – Labor. ARBITRARY;

Conclusion: Labor must be the source of value. FALSE.

Marx promised to provide a positive proof in the Volume 3 of Das Capital. However, that book does not offer a positive proof, and implicitly refutes one. Marx proclaims that two types of capital exist in production, only one of which can produce "surplus value". Thus exchange of items of equal value can have uneven mixtures of these two types of capital, implying that labor alone is not the sole determinant of value.
-- by Donald C. Ernsberger (http://www.isil.org/resources/lit/labor-theory-val.html)

benhur

24th November 2008, 05:52

According to Aristotle, if money serves to measure some equality bt goods and exchange depends on the ability to establish such equality, then it follows that equality must exist in the goods themselves. And this becomes the viciously circular argument which Marx repeats: If the value of a commodity depends on the labor that went into constructing it, then how do we determine the value of the labor? Marx argued that the value of goods was determined by the "socially useful" labor that went into producing them and the value of that labor by the goods it produced.

Menger saw that Aristotle had erred in regard to exchange. One can make no sense of the relationship of value to market prices if one regards value as a property of goods themselves.

Labor that went into creating the product IS the product. And if there's no dichotomy, how can there be circular reasoning?

trivas7

24th November 2008, 16:01

Labor that went into creating the product IS the product. And if there's no dichotomy, how can there be circular reasoning?
No, labor-power is not a commodity.

benhur

24th November 2008, 17:51

No, labor-power is not a commodity.

Value of the commodity and labor are one, because it's time which happens to be the common basis of measurement for both. So I am not sure how there can be circular reasoning.

Mr. Conservative

24th November 2008, 18:31

Yes, I know about water and diamonds, I believe I mentioned it in this thread. Incidentally according to marginalists, it is the greater marginal utility coming from diamonds compared to water that accounts for the price, not merely that diamonds are harder to come by.

It can't simply be that they have a restricted supply that dictates the high price, it doesn't matter how many are about, given the effort it takes to extract them, nobody would bother if they only had a low price.

Also, we can look at places where water is certainly not abundant, particularly fresh water, Desert areas for instance. The effort of getting water there is greater than it is in the West and consequently it tends to be more expensive, but not exponentially more. In these places water is a very precious resource and in some cases people would gladly give diamonds for it, yet it still costs much less than diamonds. Why do you suppose that is?

You are asking the wrong questions. If you stop asking about the value of whole classes of commodities and focus on the value of individual units of that commodity we can see what's really at work.

Water is so plentiful that it can satisfy our most immediate needs and also be used for other things (like baths or fountains for example). Therefore water has a low market price. Diamonds on the other hand are rare and the diamonds available are only used to satisfy important needs. Therefore diamonds have a much higher market price.

Also, it would help if you didn't add things that you have no knowledge of (like your example of trading diamonds for water).

Demogorgon

24th November 2008, 22:51

You are asking the wrong questions. If you stop asking about the value of whole classes of commodities and focus on the value of individual units of that commodity we can see what's really at work.

Water is so plentiful that it can satisfy our most immediate needs and also be used for other things (like baths or fountains for example). Therefore water has a low market price. Diamonds on the other hand are rare and the diamonds available are only used to satisfy important needs. Therefore diamonds have a much higher market price.

Also, it would help if you didn't add things that you have no knowledge of (like your example of trading diamonds for water).
Where did I talk about trading water for diamonds? I said people in places with scarce water would gladly give diamonds for water. That means that they have a much greater desire for water than diamonds, not an allusion to legitimate trade. I don't ask for manners, but it would be nice if you would read my posts and see what I have said rather than presume I am completely ignorant and fail to grasp what I am saying as a result.

You contradict yourself talking about the different applications of water, showing that it has a higher utility than diamonds, people would want more of it even if they cost the same. As for diamonds only being used for important needs, that simply isn't true. Diamonds are used as cutting material, they are brilliant for it, about the only things that can be used in dentist's drills for instance, but there are more than enough of them about to satisfy that, so in fact probably the majority are used for more frivolous things like ornamentation.

It isn't simply the shortage of diamonds driving up their price. To come back to that, we need to once again look at the cost of extracting them. I don't know what your explanation for how exchange value is determined, as you don't seem to be following normal marginalist arguments, but you seem to be driving at demand determining it in terms of how much there is available, but doing that ignores the simple fact that it is the supplier who puts something up for sale and determines the asking price. They have to adjust it if it doesn't sell, or if there is greater than expected demand, of course, but the notion that the price of something is simply coming down to the scarcity of the product is bizarre.

Are you denying incidentally, that if diamonds were cheaper to extract that they would cost less?

25th November 2008, 03:12

You are asking the wrong questions. If you stop asking about the value of whole classes of commodities and focus on the value of individual units of that commodity we can see what's really at work.

Marx's economic theories have to do with the general workings of capitalism and the laws that govern the system as a whole. It has nothing to do with individual transactions, because it is impossible to come up with a law that determines every single exchange ratio or "price" (trading water for diamonds, for example). If you try doing that you just end up with something so vague that it's meaningless. The entire point is that these are exceptions to the working of capitalism as a whole, and that capitalism can't survive on such exceptions. Let me repost what I posted earlier, in case you missed it:

5. Exchange-Value

If value exists and appears only in exchange, it is imperative for us to grasp the meaning of exchange. Aristotle is once again a helpful guide.

“Consider an exchange of five beds for one house. These products are not alike. Beds and houses have different qualities and different uses. How, then, can they exchange as equals? Are they really equal? No! Though exchanging them seems to imply their equality, beds and houses are not really equal. The appearance of equality is false. In reality, people simply decide to exchange unequal things.”

However, Aristotle ultimately came to the conclusion that real equality between commodities is impossible. After all, Aristotle reasoned, no two objects are really the same. Though mistaken in his conclusion, Aristotle at least seriously grappled with the problem of ‘equality’ in exchange. This elevates him head and shoulders above most contemporary economists, who refuse even to consider the possibility that exchange embodies an inherent principle of equality.

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

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

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

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

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

My bold.

benhur

25th November 2008, 05:24

Marx's economic theories have to do with the general workings of capitalism and the laws that govern the system as a whole. It has nothing to do with individual transactions, because it is impossible to come up with a law that determines every single exchange ratio or "price" (trading water for diamonds, for example). If you try doing that you just end up with something so vague that it's meaningless. The entire point is that these are exceptions to the working of capitalism as a whole, and that capitalism can't survive on such exceptions. Let me repost what I posted earlier, in case you missed it:

My bold.

I am assuming it doesn't work that way in services, and it only applies to products? Because surgeons make more than plumbers for the same labor time...

25th November 2008, 05:34

http://www.marxists.org/archive/marx/works/1867-c1/ch02.htm

EDIT: With regards to the OP, I have just read over the article for the first time and found that the author makes the rather obvious and embarrassing mistake of confusing labour with labour-power. This really shows that the author knows next to nothing about Marx's economic theories, which is common with those of the Austrian school.

Moreover, it is possible to show that, based on a unit of socially necessary average labour as predicted by Marx, that market prices in fact do equilibrate at their cost of production, and that Marx's economic theories have been empirically validated (http://homepage.newschool.edu/%7EAShaikh/labthvalue.pdf) (PDF File).

If you wanted to at least provide a half-assed attempt at criticism you could have just linked to Böhm-Bawerk's critiques (although in that case I could just link to Hilferding and that would settle the matter).

trivas7

25th November 2008, 20:55

Value of the commodity and labor are one, because it's time which happens to be the common basis of measurement for both. So I am not sure how there can be circular reasoning.
If there is no demand for a commodity the amount of labor that went into making them is irrevelent. IOW, commodities aren't priced according to the amount of time it takes to make them.

26th November 2008, 00:07

If there is no demand for a commodity the amount of labor that went into making them is irrevelent. IOW, commodities aren't priced according to the amount of time it takes to make them.

1. In other words, socially necessary abstract labour.
2. It has already been empirically validated that market prices equilibrate at their cost of production, as I have already stated (and even linked to the proof).

Octobox

26th November 2008, 14:11

Another Look
A supplier is a "consumer" of raw materials -- Everyone is a "consumer" - every single man, woman, or child -- in terms of economics. Not everyone is a "producer" in the market sense -- therefore the "consumer" is the most powerful and most important person in the economic equation. The only true individual is the consumer.

In American Corporatism, Senior Politicians derive power from Lobbyist Dollars, Regulatory Authority, Committee Appointment Granting, and the Ballot Box (consumers who vote) -- in a true Austrian Free-Market they would derive their power only from the consumer or "us."

In American Corporatism, Lobbyist derive power from Corporatists (Union Dollars, Corporate Dollars, and Wealthy Individual Dollars) -- in a true Austrian Free-Market lobbyist would not exist -- they are the leach that saps intrapreneurialism and entrepreneurial dollars out of R&D, business development, and innovation. Intra-Entrepreneurship comes from within and outside the corporation -- the largest population of intra-entre come from the poor and middle incomes, "wealth distribution."

In American Corporatism - Corporatist derive their power from: 1) Consumers who Purchase, 2) Consumers who Invest, 3) Gov't Subsidization (Politicians who dole out: Regulatory Advantages, Bailouts, Tax Breaks). Thus the "vicious cycle."

Public Education derives very little money from the market -- donations, book drives, private grants, and corporate gifting are the primary ways but this makes up very little of their income -- their income is nearly 100% theft. Are you surprised? In a truly free-market there are only private schools and they live by: donations, book drives, tuition....et al -- however, there is one hidden driver un-seen! They must compete for the honor and right to educate your child -- they must petition you standing 3-feet from your child not the Gov't 3,000-feet away. As it stands you go through public education for 12 years and your child will be worth minimum wage. I homeschooled (1 1/2 - 3 hours) everyday and only 3 years of it was intense and I was tutoring adults at the local Junior College at 14. With an earning potential of $20 - $30 per hour. My trade? Compensating for the 12 year minimum-wage-education and I know both of my parents (and they know me) really well.

What action can we take?

Three very simple actions!

#1 Start home-schooling (the parents and/or private tutor) or a private school w/part-time home-school or public school w/part-time home-school. Again home-schooling means parent and/or private tutor -- preferably someone you know. Recently graduated Liberal Arts majors are fantastic because their degree is nearly impractical and you will saving the tax payer because they will surely be on the "dole" (working for gov't - consumer tax theft). Keep 'em in the private market. Educational Entrepreneurship will be huge in the future!!!

#2 Vote out the Incumbent: This destroys "Senior Political" power and seriously damages the effectiveness of lobbyist dollars (there are only a few "senior" politicians and thus fewer mouths to feed -- if no seniors then you must bribe all of them; nearly impossible).

#3 Form a Consumer Union: We all daily-dollar-vote for the same products -- those corporations who do not receive our dollars we tell them to "lobby" only our demands (to reject all other lobbies) and provide very open and detailed accounting -- those corporations who receive our dollar vote we tell them to stop all lobbying, regulatory advantage seeking, and no more corporate welfare.

If you buy local and organic we can cripple most big boxes and conventional farming (one of the largest lobbies and destroyers of your health -- subsidized starches/grains/flours/sugars make junk food cheap; whereas in a true free-market starches and sugars would be the most expensive -- subsidized grains also makes it so the cancer riddled bodies of factory farmed animals is partly possible -- buy free-range meats (healthy animals). Hire private hunters (eat more game meat -- "game" -- sport/competition -- are you getting it, smile).

The establishment will comply with #2 owing the near destruction #1 causes.

A Minarchism would be the best transitional gov't after the above is effected with zero barriers (complete anarchy) in all markets. This would be a 91% - 93% Free-Society why it’s called a "Min" or Minimal Anarchy or Minarchist Society. We do this as we prepare to transition further into some type of 100% Voluntary American Consumer Society (where the consumers or individuals hold the power -- where gov't has been tamed).

It's not difficult to argue that we currently live in a 91-93% Involuntary American Corporatist Society. Add all forms of taxes (including inflationary) and the fact that the Federal Reserve (a Private Banking Cartel) prints money in "fiat" or without anything backing it. Add the effects of Political Power, Lobbyist Power, and Corporatist Power (as outlined above) and you will see that nearly 10 months of your labor is stolen from you in grotesque inefficiency – tax-theft-paid K-12 education and kids are worth only minimum wage, *shakes head*. I hope this book will be an awakening for you AND that you will free your children from this Matrix like nightmare.

What power does a gov’t have in a Minarchism and why is it transitional? The central government would oversee the Navy – that’s it (hired by an alternating committee made up of warring ideologies – “competitive debate”) – a “Meritocracy.” This “Meritoral” Minarchy would have zero power over consumers (zero regulatory power). A 3% sales tax to fund all Naval projects with a Constitutional Military Efficacy and Financial Efficiency Rubric – they will be paid by incentives based on (efficiency improvements, weapon advancement, and cost savings). This Minarchy could be broken up further by region: Pacific Fleet, Gulf Fleet, Atlantic Fleet – dividing the 3% (logically) and further decentralizing power.
Ideally the states would only have 2 roles: 1) Army and Air Guard and 2) Murder-Rape-Kidnap Investigation. Everything else (like education) can be better handled in the private markets – especially the law. The two most corrupting forces in society occur when Law and Education have lobby-eared governmental oversight.

After a period of Minarchism we can further transition (with only 6 - 9% sales tax to erase) into a 100% Voluntary Society of your chosing: Anarcho-Capitalism, Anarcho-Syndicalism, or Anarcho-Communism.

We must "transition" because after #1 and #2 are effected what former corporatist are you going to trust with the power of the Navy. We become a porcupine rather than an eagle -- eagle's feed off of carion and fly over everyone elses territory. The porcupine guards his body and is otherwise a docile animal. Let's build an American Porcupine Docialist Society that ONLY protects its member body -- non-interventionist with open trade with all countries!!

Djehuti

26th November 2008, 14:36

Menger's breakthrough insight was to realize that "vaiue is nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs...and in consequence carry over to economic goods as the ...causes of the satisfaction of our needs."(Principles of Economics)

IOW, value is an attitude or disposition that someone adopts toward a good, not a store of value.

Wow, cause no one had thought of that before...

In the marginalist theory there's only micro-perspectives and the value (that for them is pretty much the same as the price) of a single commodity is determined by external factors such as demand. Focus is shifted from production to consumtion, from value to price etc. The marginalists also separates the exchange value from the use value and claim that the exchange value simply is a function of the use value (the utility).

You may see marginalist theory as progress from the classical economist perspectives but I rather view it as a less advanced, useful and correct way to understand the economy. The bourgeoisie had lost the LTV to their enemy and so they were forced to develop another one, thus Jevons, Menger and Walras.

What's the objective advantages with the marginalist theory? In what way does it provide a better and more deep understanding of our society than the LTV?

trivas7

26th November 2008, 17:07

What's the objective advantages with the marginalist theory? In what way does it provide a better and more deep understanding of our society than the LTV?
IMO the LTV is no theory at all. It is an ideological rational for an exploitation theory dreamed up by Marx b/c he hated capitalism. Economics has no need of the LTV; for all his studies Marx wasn't an economist: he was a revolutionary socialist. There is no basis to LTV empirically, it is flawed logically b/c it doesn't account for demand, and has never been proved theoretically.

26th November 2008, 18:24

There is no basis to LTV empiricallyFor the third time, yes it does, and it has been proven (I linked to Shaikh's paper above, but I believe Sraffa produced some kind of proof, although I haven't seen it).

Self-Owner

26th November 2008, 21:49

What's the objective advantages with the marginalist theory? In what way does it provide a better and more deep understanding of our society than the LTV?

Are you serious? The subjective theory of value allows coherent and simple explanations of a whole range of phenomena which the LTV just flounders on. For instance, and I'm sure more exist, the list here (http://www.quebecoislibre.org/06/061022-2.htm):

Refutation 1: Argument from Naturally Occurring Valuable Goods: There are economically valuable goods which do not require nearly any labor to produce. These goods are given to man by nature yet are still scarce and not available to every man equally. Wild berries and fruits are an example. Let us presume that person X is walking in a forest and picks up an apple that had fallen from a tree. Picking up the apple involved almost no labor on X's part. There are no further apples to be picked up in the vicinity. Person Y approaches X and wishes to purchase his apple. X can legitimately charge a price for the apple greatly in excess of the minuscule amount of labor required to obtain it. Thus, the economic value of X's apple greatly exceeds the labor expended in procuring it.

Refutation 2: Argument from Useless Labor: There can be activities on which immense labor is expended yet which yield little or no economic value to anyone. For instance, digging a large hole and filling it in both require extensive manual labor – yet the net result of the procedure benefits nobody and improves nothing.

Refutation 3: Argument from Excessive Exertion: A laborer who works hard to create goods for sale can often expend in their creation labor far exceeding their actual economic value. For instance, an individual who spends years writing by hand a single copy of a book might be able to sell the book for the prevailing market price of books, but he will have expended far more effort on the book than the returns to him justify. The demand for his single handwritten book simply does not suffice to compensate him for his labor. Thus, the economic value of goods can be less than the labor expended on their production.

Refutation 4: Argument from Non-Exertion: Some economic value can be created without little or no deliberate individual effort. A would-be entrepreneur might take a walk and notice – without prior intention – that in one part of the city, a good sells for less than it does in another part. This effortless recognition could enable him to – using minimal labor – purchase the cheaper goods and re-sell them in the other part of the city, thereby enhancing their economic value by an amount far exceeding the labor expended. Likewise, the entrepreneur could inform a fellow businessman of his idea in exchange for a cut of the profits – in which case the entrepreneur himself, through his idea alone, has created economic value which required virtually no labor on his part.

Refutation 5: Argument from Unequal Ability: Individuals differ in skills and abilities – and using the same amount of labor, some can create more economic value than others. Let us posit two carpenters, A and B. A can make a table in one hour, whereas B can make two identical tables in one hour; both A and B must exert equal effort to accomplish this, and both experience equal disutility from their labor. Yet if A and B take their tables to market, B will earn twice as much as A, other things equal, because he has provided twice as many valuable goods. Among different occupations and different types of production, the discrepancies among individuals will be even greater; the president of a corporation – whose ideas animate the productive activities of thousands of people – can generate millions of times more economic value than an ordinary day laborer during the same time period.

Refutation 6: Argument from Incentive: If the economic value of the products of labor were exactly equal to the disutility imposed by the labor, there would be no incentive for the laborer to produce the good or service in the first place. He would have no reason to undertake an effort merely to compensate himself for his costs, for doing nothing would achieve the same result in less time. Unless the economic value – and hence the economic returns – of an activity exceed the disutility of performing it, individuals will overall be strongly discouraged from undertaking it.

Refutation 7: Argument from the Unequal Uses of Purchased Goods: Two otherwise identical goods – with the same amounts of labor expended on them – can have dramatically differing economic values. If a guitar is purchased by a musician, it can generate immense economic value if the musician plays it or records himself playing it and sells the recording. If, however, purchased by a musically illiterate person, the same guitar will be idle and not generate that value.

Refutation 8: Argument from Diminishing Marginal Utility: Two otherwise identical goods, within the possession of the same person, can have dramatically different economic values. For instance, a person possessing two units of the same water might use the first to prevent himself from dying of thirst, while using the second to wash himself. The former bottle saved his life, while the latter only preserved his cleanliness. If both units of water required identical labor to be created, their economic value – even to the same person – is not identical. If he were asked to sell the water, he might charge a substantial price for the second unit, and would likely refuse to sell the first at any price – unless he were compensated sufficiently to be assured of his life's continuance. This illustrates the law of diminishing marginal utility: that the value to an individual of each subsequent use of an identical good in his possession will be less than the value of the previous use – assuming that the individual puts the first goods in his possession to his most highly-valued uses and devotes subsequent goods to meet his priorities in descending order.

Now, I'm sure a proponent of the LTV can come up with increasingly complicated refinements of the theory ('it's not labour that has value, it's socially necessary labour.') in order to try and meet all of the above objections: but this is what is called in the philosophy of science a degenerating research program. Sure, you can probably explain all of these phenomena if you take a tortured enough route. But with enough ad-hoc hypotheses, any theory can explain anything. The simple answer is to look around for an alternative theory that doesn't need all these ad-hoc hypotheses, and see how well this alternative theory explains them. And luckily enough, there is such an alternative - it's called the subjective theory of value! And it explains all of the above issues! And this is probably why economists to almost a man have adopted it instead of the LTV!

Of course, I don't expect to convince particularly many people here for the simple reason that you need to keep believing in the LTV - because without the LTV, there is no 'surplus labour' and without 'surplus labour' there is no exploitation. That's the real crux of the issue, people are scared of losing their theoretically unjustified conception of exploitation. (Ironically enough, even if this exploitation of yours was theoretically justified, it still wouldn't get you where you need to go, given that the poor and disabled would technically be exploiters in a socialist society - but that's another thread.)

trivas7

26th November 2008, 22:17

For the third time, yes it does, and it has been proven (I linked to Shaikh's paper above, but I believe Sraffa produced some kind of proof, although I haven't seen it).
How so? (I tried to read Shaikh's paper, I couldn't make heads or tails of it).

How does one empirically measure, e.g., "socially-necessary" labor?

Flaws In The Labor Theory
The assertion that labor is the sole determinant of value is hard to accept just based upon common sense and experience. The assertion that only labor gives an object value ignores the fact that many natural objects in which no labor has been invested – such as scenic views, pure water, gems and minerals, and wild fruits and vegetables – have economic value. Also the labor theory cannot by its nature account for the fact that people value some natural objects, such as diamonds, tremendously more than other natural objects, such as leaves.

The labor theory of value also fails to take into account changing consumer desires and the contextual nature of value. In a horse-and-buggy culture, horse-shoes are tremendously valuable commodities, but in a society without horses they are virtually useless. Similarly in a society with much leisure time, games and recreational facilities become important, but in a subsistence economy in which people must work nearly continuously just to stay alive, such things may actually have negative value.

The labor theory also ignores the importance of time and position. A 20-year-old wine and properly-aged beef are far more enjoyable than one-year-old wine and unaged beef. Oil in a desert is a potentially valuable resource, but oil in the local reservoir or in the middle of a farmer's field is a hazard.

Perhaps the most grievous theoretical fault with the labor theory is that it ignores what economists call time preference. Time preference is the common strong preference for goods and services here and now, rather than later. Present consumption is more valuable than future consumption.
For example, most workers prefer to be paid when their work is completed rather than when their products are sold – which may be months later. For workers to be paid now, rather than later, someone must advance their wages, and clearly this service has a value. But proponents of the labor theory would have it both ways: workers are to receive the full future value of their product now.

The final theoretical failure of the labor theory of value is the value-effort fallacy. It is folly to assume that all effort produces value. Every day each of us wastes time on fruitless efforts. To equate labor with the automatic creation of value is to fallaciously imply that all human effort is infallible and constantly productive.

Absurdities Of The Labor Theory
The labor theory is even more absurd in practice. If all value is derived from labor, and entrepreneurial effort is "parasitic", who would bother to invest the time and money necessary to build factories, plan product development or organize a production process? If all profits are "exploitation", what incentive does anyone have to risk money on a new and untried product or service? Where will the money come from to finance new investment in tools?

Communist countries have not abolished profits. They have merely transferred all profits to the state, which typically uses them to build a huge military apparatus at the expense of consumer production.

The labor theory of value is violently anti-consumer by its nature. Under this theory, sellers are compelled to price all goods by the amount of labor that goes into them, rather than how much they are demanded by consumers. Thus stores could charge no more for an aged foreign wine than for a local cheap wine (given equal labor input) or more for the work hacked out by a beginner. This inevitably produces a surplus of unskilled and shoddy work, and a shortage of skilled work – which is exactly the situation that exists in communist countries.

The labor theory also means the end of all economic freedom. Engels, Marx's disciple, wrote: "For a pure Marxist society to long endure, voluntary exchange between individuals must be abolished." In a communist society you produce what the rulers tell you and consume what scraps they allow you. If you don't like this, you are of course free to relocate – to a slave labor camp.

-- Donald C. Emsberger (http://www.isil.org/resources/lit/labor-theory-val.html)

27th November 2008, 09:29

Do you really want me to link again to Chapter 1 of Capital, where Marx refuted all of these same tired arguments 200 years ago?

Demogorgon

27th November 2008, 10:05

IMO the LTV is no theory at all. It is an ideological rational for an exploitation theory dreamed up by Marx b/c he hated capitalism. Economics has no need of the LTV; for all his studies Marx wasn't an economist: he was a revolutionary socialist. There is no basis to LTV empirically, it is flawed logically b/c it doesn't account for demand, and has never been proved theoretically.
The LTV was laid out long before Marx was born. He used it because it was the mainstream theory of Value in contemporary economics. If the LTV had not been mainstream and Marx had not wanted to question Marginalist Theory he would simply have pointed out what I pointed out earlier that when total income to productive workers in the economy is less than total prices something has gone wrong. You don't need the LTV to prove exploitation, the fact I still argue for it has little to do with my Marxist views and far more to do with the fact that I have come over time to believe that Marginalist theory simply isn't adequate because it cannot account well enough for the difference between cost of production and price.

The LTV does not ignore demand, as I pointed out earlier it is difficult to understand how it applies in Micro-Economics without it.

Self-Owner

27th November 2008, 11:16

Do you really want me to link again to Chapter 1 of Capital, where Marx refuted all of these same tired arguments 200 years ago?

Wow, I'd really be impressed if you could show me where Marx refuted the subjective theory of value, especially as it hadn't even been put forward until Capital had been published.

trivas7

27th November 2008, 16:38

[...] when total income to productive workers in the economy is less than total prices something has gone wrong.
What makes you think this? How do you justify this statement?

Marginal utility is not what Menger proposed AFAIK; I'm not sure why you keep bringing it up.

27th November 2008, 18:03

Wow, I'd really be impressed if you could show me where Marx refuted the subjective theory of value, especially as it hadn't even been put forward until Capital had been published.

Wow, I never said that, so I have no idea what you're talking about. I was referring to all of the "critiques" of the LTV put forward in this thread that were all addressed in Capital 200 years ago.

trivas7

28th November 2008, 00:16

Wow, I never said that, so I have no idea what you're talking about. I was referring to all of the "critiques" of the LTV put forward in this thread that were all addressed in Capital 200 years ago.
Unless and until one can determine the value of labor, there is no LTV.

28th November 2008, 01:03

Unless and until one can determine the value of labor, there is no LTV.

I already addressed this in an earlier post.

trivas7

28th November 2008, 02:08

I already addressed this in an earlier post.
No, you haven't shown how socially necessary labor can be quantified.

28th November 2008, 06:20

No, you haven't shown how socially necessary labor can be quantified.

If you want a mathematical proof then you can read Shaikh's paper. If you want to understand the fundamentals of Marx's LTV then you can read Chapter 1 of Capital. You clearly have done neither and I'm not going to waste my time explaining something to you that you have plenty of access to learn yourself.

turquino

28th November 2008, 07:29

No, you haven't shown how socially necessary labor can be quantified.

Can we say the nominal GDP of the globe divided by the total number of hours worked around the world? It's a very rough estimate because the entire world isn't perfectly integrated into one globalized market, but I think it's moreso than any other time in history.

Nominal GDP in 2007 was approx $55 trillion dollars. Nominal GDP is like the total social product that has been created in a year, and since labour is the only source of value, we should be able to divide it all up and see what we get. So let's take $55 trillion divided by the world's entire working population, say 6.6 billion * 2/3, then divided by the total number of hours worked per year by a worker, 2080 (that's a 40 hour week), and we get about ~$6 per hour. So the value of labour is $6/hour.

Perhaps the value of labour is lower because a 40 hour work week is short for most of the world, and that $ 55 trillion might be a bit too high, especially after this economic crisis. In the end, that $6/hour as the abstract value of labour might be a bit too generous. Inflation and the cost of living throw a small loop in this, but consider that someone living on $2 per day isn't living the luxurious life. Some basic food staples and housing might be available cheaper in poorer nations, but consider that even someone making $7 minimum wage in the US doesn't even have the option of purchasing the same kind of housing because it would probably be torn down. I really don't think the cost of living issue is critical if we're looking for a simple rough estimate.

Demogorgon

28th November 2008, 14:18

What makes you think this? How do you justify this statement?

Marginal utility is not what Menger proposed AFAIK; I'm not sure why you keep bringing it up.
Well if total income for workers is less than total prices in the economy it necessarily follows that workers are receiving less than they are giving (on a side note this is the reason why people need to go into debt). As for why I see it as a problem, at the risk of going rather short hand, I am a member of this board after all, am I not?

And marginal utility is exactly what Menger proposed. Indeed he is often credited for coming up with it. I don't know why you are insisting on using him as your source of arguments though. There are plenty of economists who disagree with the LTV that are not on the extreme right.

trivas7

28th November 2008, 17:36

Well if total income for workers is less than total prices in the economy it necessarily follows that workers are receiving less than they are giving (on a side note this is the reason why people need to go into debt).

Why does this necessarily follow? Bohm-Bawerk argued that workers get the full value of their labor: "The complete just proposition that the worker is to receive the entire value of his product can be reasonably interpreted to mean either that he is to receive the full present value of his product now or that he is to get the entire future value in the future. But Rodbertus and the socialists interpret it to mean that the worker is to receive the entire future value of his product now." IOW, the fact that capitalists get more by selling the product to consumers than the total amount he paid to the workers in producing it is not exploitation, but rather that the workers were paid before the final product could be sold to consumers. It is the time difference that explains the interest income earned by capitalists. If one recognizes that present goods are more valuable than future goods the ambiguity in the exploitation doctrine renders it false.

And marginal utility is exactly what Menger proposed. Indeed he is often credited for coming up with it. I don't know why you are insisting on using him as your source of arguments though. There are plenty of economists who disagree with the LTV that are not on the extreme right.Menger took special pains to explain why individuals should be expected to rank possible uses and then to use marginal utility to decide amongst trade-offs; that is why his is a psychological or subjective theory of value, i.e. his assumptions do not include quantification.

Demogorgon

29th November 2008, 04:02

Why does this necessarily follow? Bohm-Bawerk argued that workers get the full value of their labor: "The complete just proposition that the worker is to receive the entire value of his product can be reasonably interpreted to mean either that he is to receive the full present value of his product now or that he is to get the entire future value in the future. But Rodbertus and the socialists interpret it to mean that the worker is to receive the entire future value of his product now." IOW, the fact that capitalists get more by selling the product to consumers than the total amount he paid to the workers in producing it is not exploitation, but rather that the workers were paid before the final product could be sold to consumers. It is the time difference that explains the interest income earned by capitalists. If one recognizes that present goods are more valuable than future goods the ambiguity in the exploitation doctrine renders it false.
Menger took special pains to explain why individuals should be expected to rank possible uses and then to use marginal utility to decide amongst trade-offs; that is why his is a psychological or subjective theory of value, i.e. his assumptions do not include quantification.
You are troubling me somewhat here. Before we continue, I need to know where you are coming from. As you are using Austrian School, as opposed to mainstream arguments, can I presume you are no longer a leftist?

Octobox

30th November 2008, 02:17

Wouldn't you agree that the only "real" leftist is the "voluntary anarchist" -- regardless of the model used?

Gov't intervention (depending on the degree) moves the voluntary society further and further right, does that seem correct?

The answer is simple, allow people to make mistakes and be imperfect -- inalienable rights are as voluntary as contract rights -- as long as they are free from entrance coercion.

Instead in the "involuntary" versions of Communism and American Corporatism the "blame" is shifted over the entire populace making individuals, families, and neighbors non-repsonsive to errors in contract, accidents, health, and civil law.

The only difference betweein Left-Anarchism and Anarcho-Capitalism (Rothbard consider himself a leftist) is that the latter (being in a voluntary society) can own the capital of their labor or inheritance AND that inviduals can enter freely into contracts. I think the problem the Left-Anarchist has in the Rothbardian model is that they assume the power is in the capital. In fact I think most models are off because they are either pro-capitalist or pro-labor -- both of whom are subserviant to the only one real master (read on).

Any form of anarchy (regardless) must first start with market anarchism (zero gov't regulation in all markets). This completely destroys lobbying and corporatism.

In a truly "free-market" (one that is voluntary and self-determined) with no gov't regulatory advantages corporations answer to their only two income sources: 1) Consumers who Purchase (we the people -- the workers -- et al) and 2) Consumers who Invest. In In-Voluntary Communism, Socialism, and Democratic Corporatism there are three sources: 1) Consumers who Purchase, 2) Consumers who Invest, 3) Gov't Subsidization (Regulatory Advantages, Tax Breaks, Bailouts) --- In-Voluntary Gov'ts all have central banks that print currency in fiat.

Voluntary Societies (regardless how they handle property or "voluntary contracts") have zero intervention between consumer and shop keeper (giving no advantage to either party).

Personally I think the only way to transition into a fully Voluntary Society is to transition through a Minarchy.

You can't transition into a capital-free and private property-free society without force -- thus it's not voluntary. If everyone wants to focus solely on labor value (100% Worker Rights with 0% Capital Rights) then that's fine, but if large pockets of people say the upper 8% who own 80% of the wealth (in America - 24million people) and the upper 30% that own the rest (90million people) do not want to give up their capital ownership then the bottom 62% better come heavily armed with no sell outs.

The highest valuation system is Consumer Choice (it's the reason the Capitalist goes into business <takes risks> and thusly the reason the worker develops focalized skills). This is an easy argument to make if you understand the following (where each gets their power): 1) Capitalist Revenue, 2) Worker Revenue, 3) Lobbyist Revenue (only in In-Voluntary Societies), and 4) Politician (Regulatory Power - Commitee Appointment Power).

All invididuals are "consumers who purchase" and in a voluntary society the only "consumers who invest." Thus, there is no exclusion and full participation (if you get gov't out of all markets).

trivas7

30th November 2008, 17:09

You are troubling me somewhat here. Before we continue, I need to know where you are coming from. As you are using Austrian School, as opposed to mainstream arguments, can I presume you are no longer a leftist?
Well, I am undecided as to my politics at this point; my sympathies as of this moment are w/ the Austrian school of economics. And yes, the collectivist assumptions of the left bother me greatly, as they should any anarchist.

Demogorgon

30th November 2008, 17:28

Well, I am undecided as to my politics at this point; my sympathies as of this moment are w/ the Austrian school of economics. And yes, the collectivist assumptions of the left bother me greatly, as they should any anarchist.
Well I am sorry to hear that. At any rate I should point out two things, the Austrian School is known for its extreme social conservatism, so that should worry an anarchist even more and also that it is way out of the mainstream of economics and is very poorly regarded. Indeed the Marxian school is quite a bit closer to conventional economic thought and unlike the Austrian school it is easily found in journals and university departments. I say this not to claim that lack of popularity means that the Austrian School is wrong but to disabuse you of any notion you might have of moving away from disputed economic theories.

Octobox

30th November 2008, 19:19

Well I am sorry to hear that. At any rate I should point out two things, the Austrian School is known for its extreme social conservatism, so that should worry an anarchist even more and also that it is way out of the mainstream of economics and is very poorly regarded.

I'm an economist by training and intensely so by hobby and I'd like to know who exactly regards the Austrian School in poor light. Are you referring to universities -- well that is simple, of course they do! A university lives by the American Corporatist Revenue Model: 1) Consumers-Students, 2) Consumers-Donations-Grants, 3) R&D Innovation/Research, 4) Gov't Subsidization. This is an Involuntary Society so its educational facilities are going to be Involuntary (non-anarchistic). If we lived in an "Austrian Free-Market" (zero gov't regulation in the markets) then all universities would have to compete for the right to educate receiving zero protectionistic advantages from gov't (no more welfare) -- they would have to produce to survive, as it should be in Anarchy.

Indeed the Marxian school is quite a bit closer to conventional economic thought and unlike the Austrian school it is easily found in journals and university departments. I say this not to claim that lack of popularity means that the Austrian School is wrong but to disabuse you of any notion you might have of moving away from disputed economic theories.

I agree 100% -- The Marxian model is very close to the Keynesian Model (which is the principal form taught in schools -- less those golden and rare professors who give us a tast of liberty).

The Austrian School has been predicting these bubbles and accurately detailing (1000's of papers and books) what the cause was and who is stimulating it.

Marxian and Keynesian Monetarist model both require a centralized bank to regulate choice between consumer and shop keeper.

Kwisatz Haderach

1st December 2008, 07:07

If the value of a commodity depends on the labor that went into constructing it, then how do we determine the value of the labor?
If the height of a person depends on the unit of measurement called "metre," then how do we determine the length of a metre?

Obviously, the answer is that we don't. The length of a metre is an arbitrary length used as a unit of measurement. Any other arbitrary length would serve just as well.

Labour (or rather, socially necessary labour) is the measure of value. In a sense, labour is value; asking about the value of labour is like asking about the monetary cost of money.

Demogorgon

1st December 2008, 08:22

I'm an economist by training and intensely so by hobby and I'd like to know who exactly regards the Austrian School in poor light. Are you referring to universities -- well that is simple, of course they do! A university lives by the American Corporatist Revenue Model: 1) Consumers-Students, 2) Consumers-Donations-Grants, 3) R&D Innovation/Research, 4) Gov't Subsidization. This is an Involuntary Society so its educational facilities are going to be Involuntary (non-anarchistic). If we lived in an "Austrian Free-Market" (zero gov't regulation in the markets) then all universities would have to compete for the right to educate receiving zero protectionistic advantages from gov't (no more welfare) -- they would have to produce to survive, as it should be in Anarchy.

I am trained in economics too, though it wasn't for me as a profession. The disregard for the Austrian School goes a lot deeper than just Universities, no matter how many conspiracy theories you give us to explain that away. The fact is that the Austrian schools rejection of proper methods, particularly empiricism and econometrics (an aspect that I freely admit is not my strong point, but I do acknowledge it) means that they cannot be taken seriously. If I were to barge into a physics department, present a string of theories in contradiction to accepted theories, offer "a priori knowledge" as proof of my views and refuse to follow proper scientific methodology, would I be taken seriously? Of course not. Why should economists have to be any more tolerant of that kind of behaviour?

I agree 100% -- The Marxian model is very close to the Keynesian Model (which is the principal form taught in schools -- less those golden and rare professors who give us a tast of liberty).

The Austrian School has been predicting these bubbles and accurately detailing (1000's of papers and books) what the cause was and who is stimulating it.

Marxian and Keynesian Monetarist model both require a centralized bank to regulate choice between consumer and shop keeper.
Well arguments over Keynesian economics alleged similarities to Marxian economics notwithstanding (if you think they are that similar you are lacking knowledge in one or both of them), Keynesian economics is highly regarded because it has been demonstrated to be correct in a number of fields. Indeed, even though I follow the Marxian school fairly closely, I have been forced to adapt my thought in certain areas to take into account Keynes' (and particularly those who followed him} innovations. You can't say that Keynesian economics is simply regarded because of opposition to "liberty" (something that we can't just define to mean "whatever we support" BTW) but rather because the empirical evidence backs it.

Besides there are no shortage of anti-Keynesians in economic departments and in journals.

Demogorgon

1st December 2008, 08:43

Kwisatz Haderach

1st December 2008, 11:19

Well, I am undecided as to my politics at this point; my sympathies as of this moment are w/ the Austrian school of economics. And yes, the collectivist assumptions of the left bother me greatly, as they should any anarchist.
Be careful about the people you get into bed with. The Austrian School like to pose as freedom-loving individualists, but you need only scratch the surface to find horrific reactionary bile (and I mean reactionary in the very literal sense of advocating a return to the practices of the 19th or 18th centuries). Take for example Hans-Hermann Hoppe, Distinguished Fellow (and informal leader) of the Mises Institute. His most famous book, "Democracy: The God that Failed" - which argues, among other things, that absolute monarchy is a better form of government than democracy - contains such freedom-loving quotes as:

The mass of people, as La Boetie and Mises recognised, always and everywhere consists of "brutes", "dullards", and "fools", easily deluded and sunk into habitual submission. Thus today, inundated from early childhood with government propaganda in public schools and educational institutions by legions of publicly certified intellectuals, most people mindlessly accept and repeat nonsense such as that democracy is self-rule and government is of, by, and for the people.

Hence, the decision by members of the [libertarian] elite to secede from and not cooperate with government must always include the resolve of engaging in, or contributing to, a continuous ideological struggle, for if the power of government rests on the widespread acceptance of false indeed absurd and foolish ideas, then the only genuine protection is the systematic attack of these ideas and the propagation and proliferation of true ones.

Add a sprinkle of social darwinism:

As a result of subsidizing the malingerers, the neurotics, the careless, the alcoholics, the drug addicts, the Aids-infected, and the physically and mentally challenged through insurance regulation and compulsory health insurance, there will be more illness, malingering, neuroticism, carelessness, alcoholism, drug addiction, Aids infection, and physical and mental retardation.

And the best gem of all:

There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and expelled from society. Likewise, in a covenant founded for the purpose of protecting family and kin, there can be no tolerance toward those habitually promoting lifestyles incompatible with this goal. They – the advocates of alternative, non-family and kin-centred lifestyles such as, for instance, individual hedonism, parasitism, nature-environment worship, homosexuality, or communism – will have to be physically removed from society, too, if one is to maintain a libertarian order.
The good professor also happens to be on friendly terms (http://tomgpalmer.com/2005/07/01/hans-hermann-hoppe-and-the-german-extremist-nationalist-right/) with a certain German-language magazine that "upholds the honor of the great cultural and spiritual tradition of the German nation." In case there was any doubt where his sympathies lie...

trivas7

1st December 2008, 17:38

[...] even though I follow the Marxian school fairly closely, I have been forced to adapt my thought in certain areas to take into account Keynes' (and particularly those who followed him} innovations.
Who are prominent Marxian economists? I deny that Marx was an economist at all.

Demogorgon

1st December 2008, 17:46

Who are prominent Marxian economists? I deny that Marx was an economist at all.
You can see a list here:
http://en.wikipedia.org/wiki/List_of_marxian_economists

Anyway you can deny Marx was an economist all you like, but it doesn't change the fact that he wrote a number of books on economics and his ideas have had enormous influence on economics since then. Just about every economist will be in some way influenced by Mar whether it be in agreement with him or through disagreement with him. Denying that he was an economist is ridiculous. Are we going to simply define economists as people we agree with?

Incidentally, shouldn't you resign your CC membership?

trivas7

1st December 2008, 18:17

Incidentally, shouldn't you resign your CC membership?
How do I do this? I never asked for it.

Demogorgon

2nd December 2008, 08:18

How do I do this? I never asked for it.

Just make a thread in the CC saying you don't want it anymore or PM an admin.

Tribune

2nd December 2008, 12:56

I am coming in late to an excellent discussion.

A question, then:

If a diamond falls out of the sky, doesn't it "obtain" value in the effort and expenditure of energy necessary to lift it from the ground, or in the lucky case, catch it?

That it's "falling from the sky" provides no value, since the (at least) minimal effort needed to pick it up (caloric expenditure, labor) and use it to some other end is what allows a person or persons to value it, in the first and second orders?

2nd December 2008, 19:50

If a diamond falls out of the sky, doesn't it "obtain" value in the effort and expenditure of energy necessary to lift it from the ground, or in the lucky case, catch it?If a single diamond fell from the sky in contemporary society it would be worth the same amount as other diamonds (which is an assumption; granted, if a diamond fell from the sky it would probably be worth much more considering the circumstance). This is not because the amount of labour going into it is equal to the amount going into a diamond that was mined and processed.

Again, I'll quote from Marx's Kapital for Beginners. Bold mine:

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

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

Marx also discussed the specific case of diamonds in Capital:

The value of a commodity would therefore remain constant, if the labour time required for its production also remained constant. But the latter changes with every variation in the productiveness of labour. This productiveness is determined by various circumstances, amongst others, by the average amount of skill of the workmen, the state of science, and the degree of its practical application, the social organisation of production, the extent and capabilities of the means of production, and by physical conditions. For example, the same amount of labour in favourable seasons is embodied in 8 bushels of corn, and in unfavourable, only in four. The same labour extracts from rich mines more metal than from poor mines. Diamonds are of very rare occurrence on the earth’s surface, and hence their discovery costs, on an average, a great deal of labour time. Consequently much labour is represented in a small compass. Jacob doubts whether gold has ever been paid for at its full value. This applies still more to diamonds. According to Eschwege, the total produce of the Brazilian diamond mines for the eighty years, ending in 1823, had not realised the price of one-and-a-half years’ average produce of the sugar and coffee plantations of the same country, although the diamonds cost much more labour, and therefore represented more value. With richer mines, the same quantity of labour would embody itself in more diamonds, and their value would fall. If we could succeed at a small expenditure of labour, in converting carbon into diamonds, their value might fall below that of bricks. In general, the greater the productiveness of labour, the less is the labour time required for the production of an article, the less is the amount of labour crystallised in that article, and the less is its value; and vice versâ, the less the productiveness of labour, the greater is the labour time required for the production of an article, and the greater is its value. The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labour incorporated in it.

Rosa Lichtenstein

2nd December 2008, 20:42

Trivas -- I take it that your commitment to dialectics has led you away from Marxism. :lol:

Is that so?

Dejavu

2nd December 2008, 20:43

The problem with the LToV is proving , in the broader sense, that objective value exists.
Value is assigned by sentient beings, its based on needs, wants, and a whole range of preferences. In the economic sphere many tend to confuse the tenets of value determination with that of price determination.

Tribune

2nd December 2008, 23:47

If a single diamond fell from the sky in contemporary society it would be worth the same amount as other diamonds (which is an assumption; granted, if a diamond fell from the sky it would probably be worth much more considering the circumstance). This is not because the amount of labour going into it is equal to the amount going into a diamond that was mined and processed.

Again, I'll quote from Marx's Kapital for Beginners. Bold mine:

Marx also discussed the specific case of diamonds in Capital:

I understand this, and have no argument with the same, but cutting away the denser language, for a moment: even a "free" diamond, found on the ground, is without value until human effort is expended in picking it up, no?

That the idea that the value is entirely subjective, if I understand the arguments of the originating poster and persons subsequently in agreement, is negated even in this most extreme circumstance, because the physical actions necessary to acquire even this easily found theoretical diamond are, in fact, labor?

Dejavu

3rd December 2008, 00:30

I understand this, and have no argument with the same, but cutting away the denser language, for a moment: even a "free" diamond, found on the ground, is without value until human effort is expended in picking it up, no?

Then why pick it up? Does a person expend energy picking up the diamond because it isn't of value until they actually picked it up?

Doesn't it make sense that the diamond already had value to the person and that is precisely the reason why the person expended the energy in picking it up?

Tribune

3rd December 2008, 01:12

Then why pick it up? Does a person expend energy picking up the diamond because it isn't of value until they actually picked it up?

Doesn't it make sense that the diamond already had value to the person and that is precisely the reason why the person expended the energy in picking it up?

The diamond, in this case, ceases to function as a useful example, because we assume that most people calculate the pre-established utility or value of a diamond, because of prior historical, material conditions.

But, to address your question, in its specifics: no. There is no value until labor has been expended in acquiring/producing it. A person - for a host of reasons - may desire a thing, or event - but that desire does not create value. Try for a moment to desire the immediate reappearance of Jesus, called by some Christ. Want this with all your heart and mind.

Will this human organism reconstitute in the self-similar material configurations and patterns, reassume a historically consistent personality and appear before your eyes?

I believe, humbly, that this possibility is nearly non-existent.

Desire is not value. That I, or you, desire an outcome, alone, will not create or initiate it. For that outcome - value, in this case - to occur, some effort must be made. Some energy must transfer from one state to another. Wanting does not transform human energy into some external-to-the-person outcome. It shuffles energy/patterns of thought in persona.

Assume a stick, and a young child. Does a stick on the ground have any value to the young child, until the child expends labor, in acquiring it?

Tribune

3rd December 2008, 18:29

Refutation 1: Argument from Naturally Occurring Valuable Goods: There are economically valuable goods which do not require nearly any labor to produce. These goods are given to man by nature yet are still scarce and not available to every man equally. Wild berries and fruits are an example. Let us presume that person X is walking in a forest and picks up an apple that had fallen from a tree. Picking up the apple involved almost no labor on X's part. There are no further apples to be picked up in the vicinity. Person Y approaches X and wishes to purchase his apple. X can legitimately charge a price for the apple greatly in excess of the minuscule amount of labor required to obtain it. Thus, the economic value of X's apple greatly exceeds the labor expended in procuring it.

The isolation of the act of picking the fruit from the eating and producing and laboring required to fuel the ability to look for, walk towards, extend hand, retrieve fruit, insert into mouth, masticate, swallow and digest seems, at the very least, curious to me.

Dejavu

4th December 2008, 05:23

Dejavu

4th December 2008, 05:42

Argument from Naturally Occurring Valuable Goods: There are economically valuable goods which do not require nearly any labor to produce. These goods are given to man by nature yet are still scarce and not available to every man equally. Wild berries and fruits are an example. Let us presume that person X is walking in a forest and picks up an apple that had fallen from a tree. Picking up the apple involved almost no labor on X's part. There are no further apples to be picked up in the vicinity. Person Y approaches X and wishes to purchase his apple. X can legitimately charge a price for the apple greatly in excess of the minuscule amount of labor required to obtain it. Thus, the economic value of X's apple greatly exceeds the labor expended in procuring it.

Well person X could charge but it doesn't necessarily mean he would. Why wouldn't Y just ask X to share the apple? This scenario could play out many different ways and the conclusion that 'overcharging' for the apple isn't the only possible outcome. Its making a hasty generalization. Not only is this scenario unlikely in reality, it seems to me to try to present the prisoner's dilemma. PD presents a one time scenario which denies social consequences out of an act of cooperation or defection. If Y and X would interact in the future, the long term benefit of X and Y cooperating ( I.e. not trying to screw each other over) could outweigh a one time defection.

Lets say person X and person Y live in the same community forest and will interact again in the future. X wants apples, Y has a limited supply. If Y wanted to overcharge for the apple that only indicates that Y also values the apple highly. It is completely possible that X can pick up something in the future that is wanted but scarce like the apple in which case X would have a low probability of acquiring fair cooperation by Y because of previous defections. In real life scenarios which offer the option between cooperation and defection with human beings, tit for tat seems to be the preferred method of dealing with each other. Tit for tat also encourages more cooperative behavior as its mutually beneficial at lower risk.

That objection wasn't really explanatory when it comes to value determination but did offer an insight on cooperation vs defection in human relationships. The value of the apple pends on how much X and Y subjectively value it and that relation to the scarcity of the apple.

Octobox

4th December 2008, 06:25

Incidentally, I am not terribly interested in discussion of the desirability of an Austrian Free-Market as I do not believe it to be possible. The reason we have a corporatist system is because that is the natural tendency of capitalism. Corporations grow, become strong, start to dominate the economy and in turn have the power to push the Government in the direction they want, or, in the hypothetical situation where there is no Government, create a Government that suits them.

If you are an economist than this will be easy to follow.

In American Corporatist Society - The corporations revenue stream looks like this: 1) Consumers-who-Purchase, 2) Consumers-who-Invest, and 3) Gov't Subsidization both Direct and Indirect (Bailouts, Regulatory Advantages, Tax Breaks, Price Fixing, Non-Competitive Drivers). What makes this possible -- the only thing that makes this possible is that Congress has regulatory power over all our Markets. Now to determine if they are corrupt we need to understand how they earn income, power, re-election, and advancement. We should look at the latter as concerned citizens -- just for fun.

Politicians Power comes by way of: 1) Currency Authority (which they abdicated to the Private Banking Union "Federal Reserve Bank" -- The Fed creates Fiat Debt and Fiat Credit), 2) Granting Regulatory Advantages, 3) Granting Subsidization, 4) Declaring War (which they abdicated that authority over to the President - un-constitutional).

In an Austrian Free-Market (which is Market Anarchism -- meaning consumers and shop keepers set their own contracts -- neither is given protection or advantage) -- The corporation revenue stream looks like this: 1) Consumers-who-Purchase and 2) Consumers-who-Invest.

In a free-market Congress has zero regulatory power over any market. I feel the biggest mistake was to allow politicians to serve more than one term. They should be paid more and 100% so by way of incentives -- based on the following: 1) Innovation, 2) Efficiency, 3) Cost Savings.

To get to the Market-Anarchist position we vote out the incumbents and we form a Consumer Union. These two actions will eliminate "senior" politicians who control most of the lobbying dollars (easier to lobby "buy off" a few senior politicians than to buy the loyalty of 400 reps and 100 senators). To make more money the junior politician sells his vote to the senior --- then the senior gives the junior a special committee seat in a highly subsidized industry (this is where the big lobby money comes from).

Even if we were to create what you want, what would stop it returning to a worse version of the current system within ten years? Lack of a central bank? Sorry, doesn't work that way, you could argue for the elimination of central banks and the return of the Gold Standard and while that would certainly lead to a less stable economy with deeper recessions it certainly wouldn't prevent powerful corporations from forming. Conspiracy theories about the Federal Reserve (which incidentally are ridiculously America-centric) won't change that fact.

Again a Corporation in a Free-Market (wherein a politician has no regulatory power in the markets) receives all their income from only two sources: 1) Consumers-who-Purchase and 2) Consumers-who-Invest --- meaning they are beholding to consumers (individuals). They cannot run to gov't to regulate advantages or to set prices -- they must "earn" the consumer (the individuals) daily dollar vote. In a Free-Market lobbyists become Ad-men. They petition the voter on behalf of the capitalist.

In a free-market monopolies cannot form -- why? Because all monopolies operate in subsidized industry or buy their input components that are in heavily subsidized industries. Gov't helps these companies expand by providing Fiat Currency, Price Fixing, and Fiat Credit (meaning they create credit out of thin air) -- otherwise the cost of expansion in a free-market would be quite high. This is simple economic fact.

Anyway, the Austrian School hardly advocates no Government as a rule anyway. Rothbard did, but he was even more out there. Von Mises for instance certainly favoured a Government (with Female Suffrage removed of course, and also implied removal of non-property owners from the electoral process) that would be very socially Conservative but wouldn't regulate the economy. This is the man who was Dolfuss' main economic adviser after all.

Mises arguement regarding woman's suffrage is a seldom quoted argument because once you actually read Mises you will see exactly what he was talking about. I'm not arguing for a Misesian Society -- I am only arguing that it would be better than what we have now because the markets would be in anarchy they would be "free."

I advocate a very specific Minarchism that would eventually transition into a full-anarchism (but its a very slow transition -- maybe 50 to 100 years).

Demogorgon

4th December 2008, 09:21

If you are an economist than this will be easy to follow.

In American Corporatist Society - The corporations revenue stream looks like this: 1) Consumers-who-Purchase, 2) Consumers-who-Invest, and 3) Gov't Subsidization both Direct and Indirect (Bailouts, Regulatory Advantages, Tax Breaks, Price Fixing, Non-Competitive Drivers). What makes this possible -- the only thing that makes this possible is that Congress has regulatory power over all our Markets. Now to determine if they are corrupt we need to understand how they earn income, power, re-election, and advancement. We should look at the latter as concerned citizens -- just for fun.

Politicians Power comes by way of: 1) Currency Authority (which they abdicated to the Private Banking Union "Federal Reserve Bank" -- The Fed creates Fiat Debt and Fiat Credit), 2) Granting Regulatory Advantages, 3) Granting Subsidization, 4) Declaring War (which they abdicated that authority over to the President - un-constitutional).

In an Austrian Free-Market (which is Market Anarchism -- meaning consumers and shop keepers set their own contracts -- neither is given protection or advantage) -- The corporation revenue stream looks like this: 1) Consumers-who-Purchase and 2) Consumers-who-Invest.

In a free-market Congress has zero regulatory power over any market. I feel the biggest mistake was to allow politicians to serve more than one term. They should be paid more and 100% so by way of incentives -- based on the following: 1) Innovation, 2) Efficiency, 3) Cost Savings.

To get to the Market-Anarchist position we vote out the incumbents and we form a Consumer Union. These two actions will eliminate "senior" politicians who control most of the lobbying dollars (easier to lobby "buy off" a few senior politicians than to buy the loyalty of 400 reps and 100 senators). To make more money the junior politician sells his vote to the senior --- then the senior gives the junior a special committee seat in a highly subsidized industry (this is where the big lobby money comes from).

All of this is really just a pipe dream. You are going to take power from the current breed of corrupt politicians and then give it back to a capitalist market where said corporations can just keep on going?

For a start, how do you propose to vote out incumbent politicians to be replaced with those who will fight corporatism? If you can really find people to stand against incumbents who hold your views and can be trusted to fight for them. Don't you think the corporations will fight with the wrath of the furies to prevent such candidates from getting into power, making huge donations to incumbents?

And suppose you do get people into Congress, what then? There is a well established gravy train there and lobbyists know exactly how to win politicians over no matter how strongly they oppose the current system. With the right incentives you can make a politician do anything. Around the world you can see politicians do things you thought they would never do once the lobbyist money comes. For instance in South Africa in 1994 after the first elections with Universal Suffrage, large numbers of new MPs who had given their hearts and souls to opposing apartheid and who had suffered terribly for their troubles going through hell that most of us can't imagine entered Parliament vowing to bring about racial equality. It took only a few multi-million Rand business offers for them to be tamed and allow existig power structures to remain with only minor tweaking.

But suppose you get people who are not easily corrupted, what then? Well we can see easily enough from Britain where there are a few anti-establishment MPs (on the left mind you) who get elected. People like Jeremy Corbyn get into Parliament and enjoy huge local support and popularity in their constituencies the envy of all other politicians. Nothing can conceivably vote them out and no effort of Lobbyists can corrupt them. A danger to the establishment? Not in the slightest, they simply ignore them. Their parliamentary motions are ignored and voted down summarily and they are left arguing their point to political meetings where they preach to the converted and on late night discussion shows that hardly anybody watches.

I went to see Jeremy Corbyn speak once. He gave a fiery speech denouncing war, capitalism, the very Parliament he is a member of and so forth. He called for socialism, complete religious freedom, the abolition of all laws that restrict civil liberties in any way and we all walked out, electrified by his performance, agreeing with him entirely. Trouble is, we all walked in agreeing with him entirely. He is simply denied the opportunity to address the mainstream and any politicians of your persuasion will be denied the same, that is if they simply aren't co-opted into the movement to selectively de-regulate industries for corporate benefit.

And besides in the case of the United States, ultimate authority over the legislation required to achieve what you want realistically lies with the Supreme Court and you can't just vote them out.

Anyway, I have only discussed why you can't achieve this, now let's look at why we wouldn't want it.

Again a Corporation in a Free-Market (wherein a politician has no regulatory power in the markets) receives all their income from only two sources: 1) Consumers-who-Purchase and 2) Consumers-who-Invest --- meaning they are beholding to consumers (individuals). They cannot run to gov't to regulate advantages or to set prices -- they must "earn" the consumer (the individuals) daily dollar vote. In a Free-Market lobbyists become Ad-men. They petition the voter on behalf of the capitalist.

In a free-market monopolies cannot form -- why? Because all monopolies operate in subsidized industry or buy their input components that are in heavily subsidized industries. Gov't helps these companies expand by providing Fiat Currency, Price Fixing, and Fiat Credit (meaning they create credit out of thin air) -- otherwise the cost of expansion in a free-market would be quite high. This is simple economic fact.

I believe it was in my first ever economics lesson, certainly in the first week that the teacher said "economics is really about common sense". So let's apply some common sense. In the hypothetical situation where you have gotten what you want, all my previous objections disproved. What is a businessman going to do? Well, what does he want? He wants to maximise his profits, that is obvious, but he also wants stability and certainty. An Austrian free market is not particularly stable, both because of the nature of the currency (we will come to that in a moment) and because businesses have no protection against going out of business.

Businessmen aren't going to like that very much (and by the by this can reduce innovation as potential innovators see the risk as being too big), so they will take steps to minimise this, creating stable conditions and seeking profit maximising practices. How are they going to do this? By colluding with other businessmen of course. They will collude, form cartels, create guilds, merge to achieve economies of scale, intimidate and use predatory practices on anyone who doesn't join their scheme, and in the case of an anarchical society without Government initially set themselves (or more likely trusted allies) up as what can only be described as Somalian-style war lords forming a rather nasty Government of sorts. We can be sure this will happen, why? Because it is what has happened? After the Somali Government collapsed something looking a lot like anarcho-capitalism formed-the Von Mises society praises it indeed-and look at the level of violence there, to say nothing of the fact that a very vicious kind of political power has emerged.

Anyway, let's turn our attention to that thorny matter of currency. Austrians love to criticise Fiat money and the fact that banks can create credit out of thin air and turn obscene profits as a result (not that I disagree, but I have a rather different solution in mind), but you do realise the same can be done under a gold standard? Gold is to heavy to carry around, so instead people deposit it in a bank as a rule and use promissory bank notes. Banks soon realise that they can can print more notes than they have gold because people will only withdraw a certain amount of gold at any given time and thereby create new credit. That is how the fractional reserve system is born. The fact that it begins with a precious metal rather than Government Fiat is neither here nor there. The fact is that banks are still creating money out of thin air, with the added explosive fat that there is no one to step in and save the situation should they over-lend. How do you propose to stop that? Ban Fiduciary Money? In an anarchical situation who is going to enforce that?

Mises arguement regarding woman's suffrage is a seldom quoted argument because once you actually read Mises you will see exactly what he was talking about. I'm not arguing for a Misesian Society -- I am only arguing that it would be better than what we have now because the markets would be in anarchy they would be "free."

I advocate a very specific Minarchism that would eventually transition into a full-anarchism (but its a very slow transition -- maybe 50 to 100 years).
I'll leave you with just one thought here. If freedom is what you say it is, rather than what most people understand it as, why would we want to be free?

Dejavu

4th December 2008, 09:48

In American Corporatist Society - The corporations revenue stream looks like this: 1) Consumers-who-Purchase, 2) Consumers-who-Invest, and 3) Gov't Subsidization both Direct and Indirect (Bailouts, Regulatory Advantages, Tax Breaks, Price Fixing, Non-Competitive Drivers). What makes this possible -- the only thing that makes this possible is that Congress has regulatory power over all our Markets. Now to determine if they are corrupt we need to understand how they earn income, power, re-election, and advancement. We should look at the latter as concerned citizens -- just for fun.

Good analysis and I tend to agree. I would say tho source of the power is the monopoly on force. Government 'earnings' are the result of force. The real control over markets comes from their enforcement of the Central Bank's monopoly on the money supply and a money=debt system. Money, after all, is the common denominator of virtually all markets.

Politicians Power comes by way of: 1) Currency Authority (which they abdicated to the Private Banking Union "Federal Reserve Bank" -- The Fed creates Fiat Debt and Fiat Credit), 2) Granting Regulatory Advantages, 3) Granting Subsidization, 4) Declaring War (which they abdicated that authority over to the President - un-constitutional).

Well these are the things politicians do with their power. The source of that power a bit more obscure and shrouded in mysticism. There is no rational basis for their power. It is the product of force.

In a free-market Congress has zero regulatory power over any market. I feel the biggest mistake was to allow politicians to serve more than one term. They should be paid more and 100% so by way of incentives -- based on the following: 1) Innovation, 2) Efficiency, 3) Cost Savings.

Limited terms help ensure the denial of long term interests on the behalf of politicians. I'm not sure if a 'free market' congress can even exist. It certainly wouldn't be a government, it would just be another company that would cater to the wants of consumers. Politicians do not function this way. All rhetoric and little action to back up the rhetoric.

To get to the Market-Anarchist position we vote out the incumbents and we form a Consumer Union. These two actions will eliminate "senior" politicians who control most of the lobbying dollars (easier to lobby "buy off" a few senior politicians than to buy the loyalty of 400 reps and 100 senators). To make more money the junior politician sells his vote to the senior --- then the senior gives the junior a special committee seat in a highly subsidized industry (this is where the big lobby money comes from).

Voting is a ritual that is groveling to the state. Voting on the basis of novelty is even more irrational. Can you explain more what you mean by this 'Consumer Union?'

I advocate a very specific Minarchism that would eventually transition into a full-anarchism (but its a very slow transition -- maybe 50 to 100 years).

Well this is interesting? What kind of Minarchism do you think can properly transform into MA? State power, even from a minarchist base, tends to grow, not shrink.

Tribune

4th December 2008, 12:33

I don't think your examples were particularly good ones. Subjective value does not necessarily mean desire = value. But if value is something external to the mind, then you have the daunting philosophical task of proving value exists outside the minds of sentient beings. You, I think ,would have to present a case for objective value.

The value of something isn't merely determined by lust or desire. There is a hedonist element but its not alone defining. The value of something also depends on its scarcity relative to other goods important to an individual .

The argument gets back to a chicken and egg type scenario. You argue that value is only arrived at after labor inputs. I see what you are saying, the real time value ( or perhaps what you would refer to as trade/use value) is only relevant when the object actually exists which is a result of labor inputs. Note, that labor is only one of other production inputs. However, this begs the question, why was labor exhausted into production of a particular good anyway?

Assume we have manpower energy collectively for about 20 hrs. We can produce a certain amount of any good within that time frame. Why is it that we choose to direct our labor energy at a particular good? How does this good get selected vs another good?

The compelling argument seems to be that some value was placed on the future realization of a particular good, or why produce that particular good? Value comes from people's subjectivity. Remember, if we produce X amount of something it doesn't mean that everyone would voluntarily consume exactly the same amount of the good or even consume it at all. Only those willing to part with the resources they currently hold to trade for our good would assign value to the good.

I'm not suggesting that value is 'external' to the human person. I stating that it is not subjective, because the idea of subjectivity, especially as it is used here, is without support.

You eat, walk to a forest glen, pick a flower and admire it. The value of the flower is not external to you, objectively linked to the flower-of-itself. You create the value. Not as an exaggerated solipsistic isonome, since you can no more erase your mammalian sociality, than you can erase the need to eat, should you like to make it to the morrow, or beyond that.

But not as an indemonstrable subjectivity, especially one which absolves a person of any criticism of the cartesian division between mind and body.

The effort - the labor - of fueling yourself, motion and acquisition are the act of value creation. Simply wanting the flower won't create value.

As argued, elsewhere, by Marx.

4th December 2008, 15:07

Again a Corporation in a Free-Market (wherein a politician has no regulatory power in the markets) receives all their income from only two sources: 1) Consumers-who-Purchase and 2) Consumers-who-Invest --- meaning they are beholding to consumers (individuals). They cannot run to gov't to regulate advantages or to set prices -- they must "earn" the consumer (the individuals) daily dollar vote. In a Free-Market lobbyists become Ad-men. They petition the voter on behalf of the capitalist.

This system stopped being viable after the development of big capital and the subsequent trend towards monopolization. In the end consumers can't wield power because:

1. Consumers are constrained by their income. Therefore, they are only able to buy products up to a certain price based on what they can afford.

2. The trend towards monopolization severely limits choice, which is the driving force of "consumer power". It also forces the smaller competitors to raise their prices due to the fact that they aren't able to produce at such high volumes and therefore can't compete on a per-product basis. This leads back to my first point, which explains the limiting of consumer choice and therefore consumer power.

Consumers are then "forced" into buying certain products due to the limiting of choices based on affordability and availability. While it it certainly possible for consumers to completely boycott buying a product due to this, it is uncommon (see my third point), and it is sometimes impossible, as people still must purchase the necessities.

3. Consumers aren't a class unto themselves. Everyone is a consumer, and because of this they are comprised of different classes holding different interests. This results in a failure of consumerists to organize on any meaningful scale, which again hinders the concept of "consumer power". There are exceptions to this rule, but they are very few and far between.

In a free-market monopolies cannot form -- why? Because all monopolies operate in subsidized industry or buy their input components that are in heavily subsidized industries. Gov't helps these companies expand by providing Fiat Currency, Price Fixing, and Fiat Credit (meaning they create credit out of thin air) -- otherwise the cost of expansion in a free-market would be quite high. This is simple economic fact.

Your entire premise, then, is based upon the fact that monopolies themselves cannot form. Putting aside the fact that this is irrelevant, as the trend towards monopolization is what actually counts, how do you think capitalism works?

The entire basis of competition in capitalism is expansion. People invest capital to not only receive a return on their investment, but to receive a return that they can further invest; capital is invested to create more capital. Moreover, the act of competition leads to increasing production, which in itself presumes the reinvestment of capital, while the outcome of competition is the takeover of a portion of a market by one company from another, whereby the process continues.

Your assertion that it is inefficient for capital to expand really makes no sense at all, as that is the entire basis of the system.

I'm not suggesting that value is 'external' to the human person. I stating that it is not subjective, because the idea of subjectivity, especially as it is used here, is without support.

Marx put this very well at the end of Chapter 1 in Capital (bold mine):

"So far no chemist has ever discovered exchange value either in a pearl or a diamond. The economic discoverers of this chemical element, who by-the-bye lay special claim to critical acumen, find however that the use value of objects belongs to them independently of their material properties, while their value, on the other hand, forms a part of them as objects. What confirms them in this view, is the peculiar circumstance that the use value of objects is realised without exchange, by means of a direct relation between the objects and man, while, on the other hand, their value is realised only by exchange, that is, by means of a social process. Who fails here to call to mind our good friend, Dogberry, who informs neighbour Seacoal, that, “To be a well-favoured man is the gift of fortune; but reading and writing comes by Nature.”"

Dejavu

4th December 2008, 16:18

I'm not suggesting that value is 'external' to the human person. I stating that it is not subjective, because the idea of subjectivity, especially as it is used here, is without support.

You eat, walk to a forest glen, pick a flower and admire it. The value of the flower is not external to you, objectively linked to the flower-of-itself. You create the value. Not as an exaggerated solipsistic isonome, since you can no more erase your mammalian sociality, than you can erase the need to eat, should you like to make it to the morrow, or beyond that.

But not as an indemonstrable subjectivity, especially one which absolves a person of any criticism of the cartesian division between mind and body.

The effort - the labor - of fueling yourself, motion and acquisition are the act of value creation. Simply wanting the flower won't create value.

As argued, elsewhere, by Marx.

LOL. You just don't like the word 'subjectivity.' What is meant by subjective value is simply that value is determined by people involved in trade. I am not quite sure what kind of connection you're trying to make with man's biological imperative to eat.

The subject doesn't seem so complicated that we have to delve into distant philosophical abstracts. ;) The effort , labor , or energy to be expended is the fulfilling of a need,want, imperative. Such direction for labor efforts is guided by the value placed on the activity to be done and what fruits it can yield later.

Wanting the flower enough to part with your own resources ( labor included) to obtain it already implies value placed on the flower. ;)

trivas7

4th December 2008, 16:27

Trivas -- I take it that your commitment to dialectics has led you away from Marxism. :lol:

Is that so?
No, nothing so banal.

Dejavu

4th December 2008, 16:40

1. Consumers are constrained by their income. Therefore, they are only able to buy products up to a certain price based on what they can afford.

Consumers as human beings are not infinite. Since resource scarcity exists, economization is a rational concept. This is why products are designed to tailor to all consumer branches of income. ( Think WalMart - I'm strictly talking about affordable goods. The topic of exported labor is another issue worthy of conversation elsewhere)

2. The trend towards monopolization severely limits choice, which is the driving force of "consumer power". It also forces the smaller competitors to raise their prices due to the fact that they aren't able to produce at such high volumes and therefore can't compete on a per-product basis. This leads back to my first point, which explains the limiting of consumer choice and therefore consumer power.

It drives competition as well. Ultimately, its consumers that decide whether to spend a little more buying from the mom-pop shop or a department chain. Price evaluation is certainly a factor, but not a stand alone factor. In my hometown people willingly pay more at a local store than they do at a large chain for the same products. At first glance some might consider this irrational but consumers here also place value on the historicity of the local store and derive better quality goods from that ( at least in their own minds.) If you oppose monopolization then you certainly cannot support a socialist state since monopolization of nearly all industry is usually propagated from that ideology.

3. Consumers aren't a class unto themselves. Everyone is a consumer, and because of this they are comprised of different classes holding different interests. This results in a failure of consumerists to organize on any meaningful scale, which again hinders the concept of "consumer power". There are exceptions to this rule, but they are very few and far between.

The point isn't to get the consumers to organize to cater to producers, its the opposite. Producers would produce too meet consumer demand which is why a certain line of products is produced as opposed to another. Something like central planning takes the consumer out of the loop.

Your entire premise, then, is based upon the fact that monopolies themselves cannot form. Putting aside the fact that this is irrelevant, as the trend towards monopolization is what actually counts, how do you think capitalism works?

He was referring to a free market system, not a state capitalist(mercantilist) system in which the state sets up barriers towards competitors and favors certain producers. Making this accusation is the same as pointing out the failure of the USSR as an example of communism.

The entire basis of competition in capitalism is expansion. People invest capital to not only receive a return on their investment, but to receive a return that they can further invest; capital is invested to create more capital. Moreover, the act of competition leads to increasing production, which in itself presumes the reinvestment of capital, while the outcome of competition is the takeover of a portion of a market by one company from another, whereby the process continues.

Your assertion that it is inefficient for capital to expand really makes no sense at all, as that is the entire basis of the system.

What he calls capitalism isn't referring to this money=debt exponential system we have today. This is why you are probably confused. Funny, you listed three reasons why consumers are not empowered, then you make an assertion completely taking the consumer out of the loop here. :rolleyes:

4th December 2008, 16:45

If you oppose monopolization then you certainly cannot support a socialist state since monopolization of nearly all industry is usually propagated from that ideology.

Socialization of industry in a socialist society is completely different than monopolization in capitalist society; the two can't be compared as even similar, much less identical, as you are attempting to do here. The conditions of their existence are entirely different.

He was referring to a free market system, not a state capitalist(mercantilist) system in which the state sets up barriers towards competitors and favors certain producers. Making this accusation is the same as pointing out the failure of the USSR as an example of communism.

What does this have at all to do with what you've said here? I don't see how this follows at all from what I've posted.

What he calls capitalism isn't referring to this money=debt exponential system we have today. This is why you are probably confused. Funny, you listed three reasons why consumers are not empowered, then you make an assertion completely taking the consumer out of the loop here.

The reason that the consumer is "taken out of the loop" is because they are not empowered.

Basically your whole post is generally irrelevant to what I've written.

Dejavu

4th December 2008, 16:51

Socialization of industry in a socialist society is completely different than monopolization in capitalist society; the two can't be compared as even similar, much less identical, as you are attempting to do here. The conditions of their existence are entirely different.

Hahahahahaha.

As for the rest, :rolleyes:

4th December 2008, 17:07

Why did you even post in this thread if you aren't going to say anything useful?

Tribune

4th December 2008, 18:42

LOL. You just don't like the word 'subjectivity.' What is meant by subjective value is simply that value is determined by people involved in trade. I am not quite sure what kind of connection you're trying to make with man's biological imperative to eat.

The subject doesn't seem so complicated that we have to delve into distant philosophical abstracts. ;) The effort , labor , or energy to be expended is the fulfilling of a need,want, imperative. Such direction for labor efforts is guided by the value placed on the activity to be done and what fruits it can yield later.

Wanting the flower enough to part with your own resources ( labor included) to obtain it already implies value placed on the flower. ;)

Following your thesis, such as it exists, how can a product have value (be wanted, in your terms) before it is created, produced or acquired?

Is this the case you are arguing - that value, as a judgment, exists independent of any specific item or occurance desired? That it originates the labor, before such labor has been expended in producing the thing to be valued?

You seem to be putting the desire before the efforts which created the thing desired. How, for example, can you desire an actual foffle* before it is created? How can you value it, before anyone labors (yourself included) to create it?

* - foffle: in this case, some thing not yet conceived, made or invented.

*

As for complication - you use the word "subjectivity" as if it were a term that requires no explanation. With all consideration for your opinion, though, you use it as a null set, a rhetorical device.

Please demonstrate this subjectivity, in such a way that it makes some sense. Because it's not that I "don't like the term." I've seen no demonstration of its actual operation, in human relations, especially as you use it, apparently with a nod to some sort of ideal solipsism.

Dejavu

5th December 2008, 00:08

Is this the case you are arguing - that value, as a judgment, exists independent of any specific item or occurance desired? That it originates the labor, before such labor has been expended in producing the thing to be valued?No and Yes to the second. The value of the good or future good also depends on the scarcity and can only be measured in trade. In an economy with many actors, a highly valued good would likely swing into greater production.

I understand you back the LToV but it probably wouldn't hurt to look at what has been discovered about value in the last 100+ years. Such questions are answered in the most basic of Economics introduction.:D

You seem to be putting the desire before the efforts which created the thing desired. How, for example, can you desire an actual foffle* before it is created? How can you value it, before anyone labors (yourself included) to create it?How would you know how to create a foffle? Why would you create a foffle? Why would you invest scarce resources into production of a foffle as opposed to any other good you can whip up with those scarce resources?
Why the foffle and not something else?

As for complication - you use the word "subjectivity" as if it were a term that requires no explanation. With all consideration for your opinion, though, you use it as a null set, a rhetorical device.

Please demonstrate this subjectivity, in such a way that it makes some sense. Because it's not that I "don't like the term." I've seen no demonstration of its actual operation, in human relations, especially as you use it, apparently with a nod to some sort of ideal solipsism.Well it seems like you were having issues with it. I thought you understood I was referencing subjectivity as it relates to value. Isn't that what we were discussing the whole time? Did you complicate that for yourself or something?

You have not noticed subjectivity in human relations?? Ok, what have you noticed instead? I fear this will diverge from the topic though. But I'd like to discuss it with you.

Octobox

5th December 2008, 05:04

Demogorgon -- There is a knot point you continue to skip over to arrive at your analysis -- let me see if I can point it out without triggering more down-stream analysis.

All of this is really just a pipe dream. You are going to take power from the current breed of corrupt politicians and then give it back to a capitalist market where said corporations can just keep on going?

No -- You are misquoting and misinterpreting me. I would educate people to stop "abdicating" power to corrupt politicians and corporatists -- to move from the subservient child to the authoritarian parent --- each consumer (individual) possesses this power.

In a "truly" Free-Market Corporate Revenue Stream: 1) Consumers-who-Purchase and 2) Consumers-who-Invest --- This means the board of directors are consumers. This mean the Corporatist to "grow wealth" must please the consumer and invest in R&D rather than invest in protection schemas by way of Gov't Fiat-Subsidization (Fiat Credit, Bailouts, and Price-fixing). R&D is intrapreneurialism and entrepreneurialism and comes nearly 100% from the poor and middle class (the largest by class is immigrants - the largest by race are blacks - the largest by education are entrepreneurs). The latter means the capitalist (to capture market share) gives his dollars to the poor rather than the lobbyist.

For a start, how do you propose to vote out incumbent politicians to be replaced with those who will fight corporatism? If you can really find people to stand against incumbents who hold your views and can be trusted to fight for them. Don't you think the corporations will fight with the wrath of the furies to prevent such candidates from getting into power, making huge donations to incumbents?

We do not need a politician who will fight against corporatism – we need to stop looking for the “one.” The problem is not the politician it’s the “senior politician.” A senior politicians power is threefold (well the predominance of his powers): 1) Regulatory Power, 2) Control of Party War Chest, and 3) Power to Appoint Special Committee Seats. The lobbyist does not “lobby” the entire Congress and Senate (way way too expensive and no guarantees). Instead he puts most of his money in the hands of senior politicians and special committee members (who are either “rock stars” like Barack and Hillary or they are in their 2nd or 3rd terms). To earn lobbying dollars (and “gifts”) one needs tenure or wield greater power – so the junior politician must sell enough of his votes to get committee seats (lobbying dollars). If that is not enough the senior controls the re-election war chest – yet another reason to sell your vote. One would need to be from a very special district to avoid the sell-out vote. There are only two or three politicians who fit the non-sell-out mold. We would have to de-corrupt all the other districts to put the many “ones” it would take to turn things around.

Understanding the Senior Politicians power where do we strike, what does he need? Re-election. If we vote-out-the-incumbent (which is the only moral vote) the lobbyist would have to attempt to buy out all the seats – against all his competitors attempts. Vote-out-the-Incumbent destroys the party system as there would be no war-chest to dole-out and no tenure to partition powerful committee seats. The Corporatist wants power centralized where it’s easier to buy-out. With no lobbying dollars in Washington idealists would step forward – of course we cannot stop with “vote-out-the-incumbent” – we must form a Consumer Union to Lobby in the interim (the Consumer Union is of prime importance). I can explain what a consumer union is if it is not apparent.

And besides in the case of the United States, ultimate authority over the legislation required to achieve what you want realistically lies with the Supreme Court and you can't just vote them out.

The President and Congress can. Besides my “plan” requires many steps and 2 to 6 years to pass to clear the entire House and Senate.

What is a businessman going to do? Well, what does he want? He wants to maximize his profits, that is obvious, but he also wants stability and certainty. An Austrian free market is not particularly stable, both because of the nature of the currency (we will come to that in a moment) and because businesses have no protection against going out of business.

I’m not arguing for a 1913 Gold Standard, which was highly regulated – There must be “anarchy” (no-sovereignty or no-rule) in all consumer markets including currency for money to remain relatively stable – you’ve never seen or heard of an economy like I’m describing; it cannot become possible until people start thinking out-side the box. American has always been highly regulated and subsidized.

Businessmen aren't going to like that very much (and by the by this can reduce innovation as potential innovators see the risk as being too big), so they will take steps to minimize this, creating stable conditions and seeking profit maximizing practices. How are they going to do this? By colluding with other businessmen of course. They will collude, form cartels, create guilds, merge to achieve economies of scale, intimidate and use predatory practices on anyone who doesn't join their scheme, and in the case of an anarchical society without Government initially set themselves (or more likely trusted allies) up as what can only be described as Somalian-style war lords forming a rather nasty Government of sorts. We can be sure this will happen, why? Because it is what has happened? After the Somali Government collapsed something looking a lot like Anarcho-capitalism formed-the Von Mises society praises it indeed-and look at the level of violence there, to say nothing of the fact that a very vicious kind of political power has emerged.

Your Somaliland comment is far from possible here. Somalia did not enjoy the relative “peace” we have here in the states and the “anarchy” came from chaos and not from a conscious decision from the consumer-base. Also, Somalia had Russia, Saudi Arabia, Eritrea, France, and the United States supporting the opposites sides of a three-pronged civil war. That cannot happen here (well not at present) – if they keep centralizing more and more industries and destroying the currency it just might. You must transition through a form of Minarchism before going into Anarchism.

Anyway, let's turn our attention to that thorny matter of currency.

I am not advocating a Gold Standard like we used to have – it was highly regulated and prices were fixed – come on. You are an economist you cannot skip that point when debating currency. You’ve never studied a currency that wasn’t in fiat or if based on gold/silver not being heavily regulated. We need a Consumer Anarchy in all markets including currency. I’m open to suggestions using some form of e-credit. Gold and Silver un-regulated could work during the Minarchy transition – but we would need to come up with an innovative alternative prior to entering a full Anarchy.

Octobox

5th December 2008, 17:38

This system stopped being viable after the development of big capital and the subsequent trend towards monopolization. In the end consumers wield power because:

1. Consumers are constrained by their income. Therefore, they are only able to buy products up to a certain price based on what they can afford.

This is why I advocate a “Consumer Union” We unionize under a non-partisan banner (all the people that would like to see dynamic gov’t change: Libertarians, Communists, Anarchist, Minarchists, Independents (who are never happy with who they end up with), Anarcho-Communists, and Anarcho-Syndicalists). We chose certain products and certain big boxes to purchase from (consciously) then demand that if they don’t lobby our very simple demands we switch to the “other guy” – At the same time we go to the “other guy” and say lobby our demands or we will not normalize our shopping choices. All major corporations/brands are in some way subsidized, but there is only so much money. Once consumers-who-purchase (unionize choice) consumers-who-invest (at some point) will start pulling their investments – at this point the corporation (if they couldn’t predict this) will lobby our demands or go out of business. Obviously we want to buy organic and local as much as possible, as you said there are monopolies in highly regulated economies and this is how you destroy them (by kicking out one then two of the three legs they stand on: consumers-who-purchase, consumers-who-invest, and gov’t subsidizers (controlled by senior politicians).

Combine the Consumer Union with “Vote-out-the-Incumbent” strategy and there are no senior politicians and thus a 1000% increased lobbying base (all congress and all senators would need to be bought – thus the desire to consolidate power into a small senior politician pool.)

. The trend towards monopolization severely limits choice, which is the driving force of "consumer power". It also forces the smaller competitors to raise their prices due to the fact that they aren't able to produce at such high volumes and therefore can't compete on a per-product basis. This leads back to my first point, which explains the limiting of consumer choice and therefore consumer power.

You are correct and incorrect. A monopoly must either be directly subsidized or indirectly subsidized – otherwise it would fail owing to inefficiencies and lack of R&D (which it uses heavily to buy up regulatory advantages). In a “truly” free-market as a firm gets too large its costs rise exponentially (slowed decision tree and highly diluted R&D) – think of a utility company. To compensate they would seek “entrepreneurs” to develop sub-divisions and slough off the excess fat (sell it off). In fact that probably wouldn’t need to seek – in a free-market there are two ways to keep wealth and gain it (aside from a lottery or inheritance) that is to seek entrepreneurs/intrapreneurs to take over a division (to stay wealthy – also, to invest in firms who think this way) or to be an entrepreneur who comes up with the next big idea or innovation. We know that entrepreneurs come from poor and middle class. When Corporatist Societies regulate “fairness” (welfare to companies) R&D goes down (innovation goes down). Perfect example is gov’t backing the UAW – in Brazil and Japan they have nearly 80% automated car manufacturing facilities – because UAW wont allow American firms to do that here the American firms off-shore or as we see go out of business. This is American firms fault for seeking regulatory restrictions on imports, subsidized steel – subsidized everything – which lowers R&D / entrepreneurialism / innovation.

More to come

Paul Cockshott

5th December 2008, 23:27

That isn't the argument and you know it.

The subjective theory of value is based upon the notion that the price that people will buy things at, and sell them at is rooted in a number of subjective factors. So refuting the subjective theory of value would have to argue that subjective factors in production are a non-point, and still the existence of unique goods such as paintings and sculptures and stuff owned by celebrities, which are valued above the labor put into them, poses some issue for understanding valuation. The extent to which we say unique goods exist will also carry some import. The capitalist will say that certain laborers are unique in terms of what they can provide, thus justifying an unequal payscale where movie stars make millions. In any case, for reasons like this, a real understanding or refutation are more useful. In any case, accepting or rejecting the labor theory of value does not seem to be necessary for a member of the left, as I think Oskar Lange believed in the neo-classical theory of value above a Marxian, and used the former for attempting to create a theoretical socialist system, but I don't know the standards of this board for who is or isn't a leftist, as I know classical Marxians and classical anarchists will be mostly LTV based.

The hypothesis that the relative prices of goods will cause people to adjust their purchases until relative marginal utilities have the same ratios as relative prices in no way contradicts the labour theory of value.
It just says that individuals will accomodate the mix of their consumption to the price ratios established by the law of value.
Even Jevons the founder of marginalist economics was quite explicit in recognising that this would be the case.

trivas7

6th December 2008, 00:04

The hypothesis that the relative prices of goods will cause people to adjust their purchases until relative marginal utilities have the same ratios as relative prices in no way contradicts the labour theory of value.

What do you understand the LTV to be?

Kwisatz Haderach

6th December 2008, 00:27

If you oppose monopolization then you certainly cannot support a socialist state since monopolization of nearly all industry is usually propagated from that ideology.
Monopolization by a democratic state is different from monopolization by a private company, because a democratic state is controlled by the people and therefore its decisions are not guided by a profit-maximizing motive.

Kwisatz Haderach

6th December 2008, 00:37

What do you understand the LTV to be?
As I understand it, he is basically saying that you are confusing cause and effect. Consumer choices are driven by price ratios, as opposed to price ratios being determined by consumer choices.

Self-Owner

6th December 2008, 13:53

Monopolization by a democratic state is different from monopolization by a private company, because a democratic state is controlled by the people and therefore its decisions are not guided by a profit-maximizing motive.

And as everyone knows (and as history tells us) once people obtain government power they automatically turn into angels with motives as pure as the driven snow! Stalin and Mao were fine chaps - at least they weren't guided by a profit-maximising motive. Just imagine how bad it could have turned out if they were!

Bilan

6th December 2008, 14:52

Trivias, the shit you are quoting is laughable.
Like, these people are borderline morons.

The assertion that labor is the sole determinant of value is hard to accept just based upon common sense and experience. The assertion that only labor gives an object value ignores the fact that many natural objects in which no labor has been invested – such as scenic views, pure water, gems and minerals, and wild fruits and vegetables – have economic value.

Wow! What a genius!
But you know whats interesting? No one charges you money to see them unless they are within the exchange of capital!
You can walk through a forest and eat a berry, free of charge.
But the labour embodied in the process of picking and selling these berries (for example) is a major determining factor in its price.
Otherwise, the company organizing this would internally collapse.

Capital-value is based around this formula.

M-C (MP-L)...P...C' M'

In terms of this berry picking example.
A company, or individuals, who want to start a business selling fruit have to start of with a certain amount of money-capital.
This money-capital has to be used to employ labourers and buy the necessary means for the production (whether this is baskets, or whatever, to carry, move, market, etc the fruit).

The capital invested into labour and production have to be made up for within the selling of a commodity, because the entire basis of capitalist production is for profit.
And a company which gains no surplus value what so ever is not one that is going to continue.
So, in the equation C' = C + c, and M' = M + m, meaning that the surplus value is embodied within the commodity once it is has been through the process of production (in this case, picked, and/or packaged, etc).

This is entirely because its within the process of capitalist production that it has to have a price which embodies the value of labour within it.
If it doesn't do this, the product will be sold for less than it costs to make, and naturally, the company will collapse, and further, it will not achieve its desired aim: profit.
This is because they're within the capitalist mode of circulation.
If an object is outside of this, it can not be measured according to this.
But for everytihng within it, can. Pretty simple.

The other examples your guide gave are bullshit.
You will not be charged to see a view unless you are on a guided trip, which encompasses labour because it requires a worker.

I really can't be bothered with this anymore, but you're examples are why I find bourgeois economists so funny.

Also the labor theory cannot by its nature account for the fact that people value some natural objects, such as diamonds, tremendously more than other natural objects, such as leaves.

Hilarious.

ZeroNowhere

6th December 2008, 15:04

Wait, why are we trying to disprove the LTV with examples that aren't commodities?

Also the labor theory cannot by its nature account for the fact that people value some natural objects, such as diamonds, tremendously more than other natural objects, such as leaves.
What.

Bilan

6th December 2008, 15:07

Because they're fucking ridiculous?

Kwisatz Haderach

6th December 2008, 17:11

And as everyone knows (and as history tells us) once people obtain government power they automatically turn into angels with motives as pure as the driven snow! Stalin and Mao were fine chaps - at least they weren't guided by a profit-maximising motive. Just imagine how bad it could have turned out if they were!
Are you suggesting that Stalin and Mao ruled over "a democratic state [...] controlled by the people"? Because that's what I was specifically talking about, as opposed to any state in general.

6th December 2008, 19:20

What is meant by subjective value is simply that value is determined by people involved in trade.If that is the definition of subjective then the LTV could be subjective as well. This is a terrible definition of subjectivism; the difference between subjective and objective theories of value is how value is determined and not who determines it. Subjective theories of value posit that value is determined based on a quantification of utility. It is in this sense that it is a subjective theory, as utility is subjective.

I don't understand how you can argue in support of a theory that you don't even understand.

This is why I advocate a “Consumer Union” We unionize under a non-partisan banner (all the people that would like to see dynamic gov’t change: Libertarians, Communists, Anarchist, Minarchists, Independents (who are never happy with who they end up with), Anarcho-Communists, and Anarcho-Syndicalists). We chose certain products and certain big boxes to purchase from (consciously) then demand that if they don’t lobby our very simple demands we switch to the “other guy” – At the same time we go to the “other guy” and say lobby our demands or we will not normalize our shopping choices. All major corporations/brands are in some way subsidized, but there is only so much money. Once consumers-who-purchase (unionize choice) consumers-who-invest (at some point) will start pulling their investments – at this point the corporation (if they couldn’t predict this) will lobby our demands or go out of business. Obviously we want to buy organic and local as much as possible, as you said there are monopolies in highly regulated economies and this is how you destroy them (by kicking out one then two of the three legs they stand on: consumers-who-purchase, consumers-who-invest, and gov’t subsidizers (controlled by senior politicians).

Combine the Consumer Union with “Vote-out-the-Incumbent” strategy and there are no senior politicians and thus a 1000% increased lobbying base (all congress and all senators would need to be bought – thus the desire to consolidate power into a small senior politician pool.)This was already covered by my third point.

You are correct and incorrect. A monopoly must either be directly subsidized or indirectly subsidized – otherwise it would fail owing to inefficiencies and lack of R&D (which it uses heavily to buy up regulatory advantages). In a “truly” free-market as a firm gets too large its costs rise exponentially (slowed decision tree and highly diluted R&D) – think of a utility company. To compensate they would seek “entrepreneurs” to develop sub-divisions and slough off the excess fat (sell it off). In fact that probably wouldn’t need to seek – in a free-market there are two ways to keep wealth and gain it (aside from a lottery or inheritance) that is to seek entrepreneurs/intrapreneurs to take over a division (to stay wealthy – also, to invest in firms who think this way) or to be an entrepreneur who comes up with the next big idea or innovation. We know that entrepreneurs come from poor and middle class. When Corporatist Societies regulate “fairness” (welfare to companies) R&D goes down (innovation goes down). Perfect example is gov’t backing the UAW – in Brazil and Japan they have nearly 80% automated car manufacturing facilities – because UAW wont allow American firms to do that here the American firms off-shore or as we see go out of business. This is American firms fault for seeking regulatory restrictions on imports, subsidized steel – subsidized everything – which lowers R&D / entrepreneurialism / innovation.I still think you're misinterpreting what I'm saying in this context; I'm not talking about monopolization itself, but the trend towards monopolization.

trivas7

7th December 2008, 02:15

Consumer choices are driven by price ratios, as opposed to price ratios being determined by consumer choices.
Consumer choices are driven by the subjective satisfaction of a human need or desire; price ratios are simply another thing that people take into consideration when they choose their values.

Drace

7th December 2008, 03:25

Well, I am undecided as to my politics at this point; my sympathies as of this moment are w/ the Austrian school of economics

Yikes...

turquino

7th December 2008, 03:35

"Among the bourgeois vulgar economists, another utility theory of value was also once in vogue. According to this theory, the value of a commodity is determined by the amount of utility is possesses. What then is "utility"? This is, in fact, the use value of a commodity. We said earlier that various commodities had different use values which were not comparable. It is simply not logical to say that the value of a commodity is determined by its use value. The utility theorists of value could not intelligently explain why such things as air and sunshine, which are essential for human survival, did not possess any value and could not be sold as commodities." (Fundamentals of Political Economy, p 45).

Kwisatz Haderach

7th December 2008, 10:44

Consumer choices are driven by the subjective satisfaction of a human need or desire.
Suppose a new product is invented, which you never imagined before. Upon learning of it, you desire to buy it and are willing to pay a certain price for it. To what extent can this product's price be said to depend on the subjective satisfaction of a human need or desire, when there was no pre-existing desire before you learned of the product and its price? How do you know what a "reasonable price" would be for this product? Remember that the value of money is the value of goods and services that could be bought with that money. How do you determine the subjective importance of $10 to you? It has to be based on the subjective importance of the products you could buy with $10. But how do you determine that? Based on their price? Then we're stuck in a loop of circular logic, where subjective prices depend on subjective utility and subjective utility depends on subjective prices.

If prices and values are not based on any objective factors at all, then, essentially, values are arbitrary - they only depend on each other, and not on anything external. After all, if value is not a function of socially necessary labour, then what is it a function of?

And more importantly - what does any of this have to do with socialism, communism or capitalism? After all, communists propose to satisfy people's desires too, and much more efficiently than capitalism ever could.

Self-Owner

7th December 2008, 17:27

Suppose a new product is invented, which you never imagined before. Upon learning of it, you desire to buy it and are willing to pay a certain price for it. To what extent can this product's price be said to depend on the subjective satisfaction of a human need or desire, when there was no pre-existing desire before you learned of the product and its price? How do you know what a "reasonable price" would be for this product? Remember that the value of money is the value of goods and services that could be bought with that money. How do you determine the subjective importance of $10 to you? It has to be based on the subjective importance of the products you could buy with $10. But how do you determine that? Based on their price? Then we're stuck in a loop of circular logic, where subjective prices depend on subjective utility and subjective utility depends on subjective prices.

Where you go wrong is to assume that there is an ordinal metric of value. Yes, the value of $10 is the value of the goods and services that can be bought with that $10. But there is no measurement of what exactly this value is, because value is a subjective thing that cannot be put onto a scale in the way that money can.

If prices and values are not based on any objective factors at all, then, essentially, values are arbitrary - they only depend on each other, and not on anything external. After all, if value is not a function of socially necessary labour, then what is it a function of?

What do you say to the points I was making about the dependence of 'socially necessary labour' on, ultimately, subjective desires and preferences?

And more importantly - what does any of this have to do with socialism, communism or capitalism? After all, communists propose to satisfy people's desires too, and much more efficiently than capitalism ever could.

I think you know very well - without the LTV, there is no surplus labour. Without surplus labour, there is no theory of exploitation. Without a theory of exploitation, Marxism is in serious trouble. Which is probably why people here are so adamant to defend the LTV.

Die Neue Zeit

8th December 2008, 01:17

Asset pricing models, the labour theory of value and their implications for accounting (http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6WD4-4H9992F-1&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=1d409fb28ee12e1d505f28b5d1423cc1)

Octobox

8th December 2008, 02:26

KC Wrote: I still think you're misinterpreting what I'm saying in this context; I'm not talking about monopolization itself, but the trend towards monopolization

The "trend towards" monopolization can only happen in an IN-voluntary society: Democracy or Socialism or Communism (the involuntary sorts - I repeat the in-voluntary forms).

This trend cannot happen for very long in a truly free-market without tremendous cash reserves. It would be very poor management and the board would fire the CEO.

If you understand how a corporation (or shop keeper) generates revenue in a free-market then what I'm saying will be very apparent.

Free-Market Revenue: 1) Consumers-who-Purchase and 2) Consumers-who-Invest --- The Capitalist in a "truly" Free-Market serves only one Master -- the consumer. He "lobbies" the consumer for his daily-dollar-vote.

In a truly Free-Market without price fixing, subsidies, regulatory advantages, bailouts, or tax breaks (to name a few) to propell this corporation (to get greater investment - wealth) there are only two models available: 1) Innovation (intrapreneurialism and entrepreneurialism) and 2) Sloughing off inefficient divisions (usually to entrepreneurs who have a management, supply chain, or logistics solution). So innovation within the organization or innovation from without to make efficient the corporation (as is) OR innovation from a start-up or existing company that can run the "weak" division better and pruchases it from the parent. The innovation toward efficiency or innovation toward sell-off gives tremendous profit to the shareholders and builds confidence in its management -- thus Consumers-who-Invest increase their holdings.

In a Corporatist-Market when the above should happen (not that it doesn't ever happen) but when it does there is another option -- seek subsidization/bailout and keep the inefficient division and make no changes. Get corp-welfare above the innovation or sell-off price -- this is like subsidizing cancer in your body (giving lots of bad sugar, starch, dairy, or fried foods -- thus lowering the oxygen "air" and creating a high fungus/viral low temperature envrioment). Same exact thing. Its why cancer patients receive lots of oxygen.

By keep the inefficient division every job is a perpetuation and the building of dependence. These jobs like the corporation are now gov't welfare -- You and I voted them out and gov't said it was wiser and kept them in.

So, our system needs lots of oxygen (truly free-markets) with no subsidization/protectionist schemas.

This is also the Anarchist position -- even Anarcho-Communism does not subsidized corporations -- no free-market model will. A little regulation opens the door to a lot.

trivas7

8th December 2008, 17:25

If prices and values are not based on any objective factors at all, then, essentially, values are arbitrary [...]

No, it makes values subjective to the person doing the valuing.

And more importantly - what does any of this have to do with socialism, communism or capitalism? After all, communists propose to satisfy people's desires too, and much more efficiently than capitalism ever could.Well, for one, you can judge historically which societies espousing which ideology have done better re this.

Bilan

9th December 2008, 04:32

And you believe its free market capitalist which is best at this?
Have you lost your freaking mind?

10th December 2008, 10:06

THE phenomenon of variations in the price of production has shown us that the phenomena of capitalist society can never be understood if the commodity or capital be considered in isolation. It is the social relationship which these occupy, and changes in that relationship, which control and elucidate the movements of individual capitals, themselves no more than portions of the total social capital. But the representative of the psychological school of political economy fails to see this social nexus, and he therefore necessarily misunderstands a theory which definitely aims at disclosing the social determinism of economic phenomena, a theory whose starting point therefore is society and not the individual. In apprehending and expounding this theory he is ever influenced by his own individualistic mentality, and he thus arrives at contradictions which he ascribes to the theory, while they are in truth ascribable solely to his interpretations of the theory.

This confusion may be traced in all the stages of Böhm-Bawerk's polemic. Even the fundamental concept of the Marxist system, the concept of value-creating labor, is apprehended in a purely subjective manner. To him "labor" is identical with "trouble" or "effort" ["Mühe"].To make this individual feeling of distaste the cause of value naturally leads us to see in value a purely psychological fact, and to deduce the value of commodities from our evaluation of the labor they have cost. As is well known, this is the foundation which Adam Smith adopts for his theory of value, for he is ever inclined to abandon the objective standpoint for a subjective. Smith writes: "Equal quantities of labor must at all times and places be of equal value to the laborer. In his ordinary state of health, strength, and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty, and his happiness." [1] (http://marxists.org/archive/hilferding/1904/criticism/ch03.htm#1) If labor regarded as "trouble" be the basis of our personal estimate of value, then the "value of the labor" is a constituent, or a "determinant" as Böhm-Bawerk puts it, of the value of commodities. But it need not be the only one, for a number of other factors which influence the subjective estimates made by individuals take their places beside labor and have an equal right to be regarded as determinants of value. If, therefore, we identify the value of commodities with the personal estimate of the value of these commodities made by this or that individual, it seems quite arbitrary to select labor as the sole basis for such an estimate.

From the subjectivist standpoint, therefore, the standpoint from which Böhm-Bawerk levels his criticism, the labor theory of value appears untenable from the very outset. And it is because he adopts this standpoint that Böhm-Bawerk is unable to perceive that Marx's concept of labor is totally opposed to his own. Already in A Contribution to the Critique of Political Economy Marx had emphasized his opposition to Adam Smith's subjectivist outlook by writing "[Smith] fails to see the objective equalization of different kinds of labor which the social process forcibly carries out, mistaking it for the subjective equality of the labors of individuals." [2] (http://marxists.org/archive/hilferding/1904/criticism/ch03.htm#2) In truth, Marx is entirely unconcerned with the individual motivation of the estimate of value. In capitalist society it would be absurd to make "trouble" the measure of value, for speaking generally the owners of the products have taken no trouble at all, whereas the trouble has been taken by those who have produced but do not own them. With Marx, in fact, every individual relationship is excluded from the conception of value-creating labor; labor is regarded, not as something which arouses feelings of pleasure or its opposite, but as an objective magnitude, inherent in the commodities, and determined by the degree of development of social productivity. Whereas for Böhm-Bawerk, labor seems merely one of the determinants in personal estimates of value, in Marx's view labor is the basis and connective tissue of human society, and in Marx's view the degree of productivity of labor and the method of organization of labor determine the character of social life. Since labor, viewed in its social function as the total labor of society of which each individual labor forms merely an aliquot part, is made the principle of value, economic phenomena are subordinated to objective laws independent of the individual will and controlled by social relationships. Beneath the husk of economic categories we discover social relationships, relationships of production, wherein commodities play the part of intermediaries, the social relationships being reproduced by these intermediate processes, or undergoing a gradual transformation until they demand a new type of inter-mediation.

Thus the law of value becomes a law of motion for a definite type of social organization based upon the production of commodities, for in the last resort all change in social structure can be referred to changes in the relationships of production, that is to say to changes in the evolution of productive power and in the organization of [productive] labor. We are thereby led, in the most striking contrast to the outlook of the psychological school, to regard political economy as a part of sociology, and sociology itself as a historical science. Böhm-Bawerk has never become aware of this contrast of outlooks. The question whether the "subjectivist method" or the "objectivist method" is the sound method in economics he decides in a controversy with Sombart by saying that each method must supplement the other–whereas in truth we are not concerned at all with two different methods, but with contrasted and mutually exclusive outlooks upon the whole of social life. Thus it happens that Böhm-Bawerk, unfailingly carrying on the controversy from his subjectivist and psychological standpoint, discovers contradictions in the Marxist theory which seem to him to be contradictions solely because of his own subjectivist interpretation of the theory.

But if labor be the only measure for the estimate of value and therewith the only measure of value, it is as regards this subjectivist outlook only logical that in that case commodities should exchange solely by the measure of equal quantities of labor embodied in them, for otherwise it would be impossible to see what should induce the individuals to deviate from their personal estimates of value. If, however, the facts do not conform to these premises, then the law of value loses all significance, even if labor be no more than one determinant among several. This is why Böhm-Bawerk lays so much stress upon the contention that commodities are not exchanged one for another by the measure of equal quantities of labor. This necessarily appears to be a contradiction when value is conceived, not as an objective quantity, but as the outcome of individual motivation. For if labor be the measure for my personal estimate of value, then I shall not be inclined to exchange my good for another unless in that other I obtain something which, if I had to produce it for myself, would cost me at least as much labor as my own good has cost me. A permanent deviation of the exchange relationship is in fact, if the subjectivist conception of the law of value be once assumed, a contradiction per se, a suspension of the meaning (that is to say, of the subjectivist meaning) of the law of value, which here supplies the individual's motive for economic action.

Very different is Marx's outlook. In his view, that goods contain labor is one of their intrinsic qualities; that they are exchangeable is a distinct quality, one solely dependent on the will of the possessor, and one which presupposes that they are owned and alienable. The relationship of the quantity of labor to the process of exchange does not come into consideration until they are regularly produced as commodities, produced that is to say as goods specifically destined for exchange; thus this relationship makes its appearance only in a definite phase of historic evolution. The quantitative ratio wherein they are now exchanged becomes thereby dependent upon the time of production, which is in its turn determined by the degree of social productivity. The exchange relationship thus loses its chance character, thus ceases to be dependent upon the caprice of the owner. The social conditions imposed upon labor become objective limitations for the individual, and the social complex controls the individual's activities.Hilferding (http://marxists.org/archive/hilferding/1904/criticism/ch03.htm)

This excerpt from Hilferding's classic critique of Bohm-Bawerk's criticism of Marxian economics arrives at the heart of the matter. Both sides view the issue at hand from a different perspective - Marxists from the position of the system as a whole and and bourgeois economists and their supporters from the position of "the individual". It not only exposes and analyzes this difference in perspective, but also goes on to show why the Marxist position is the correct one, while Bohm-Bawerk's is fundamentally flawed.

Anti Freedom

11th December 2008, 07:58

Well, to be honest, I don't see a reason why one will necessarily lead to an absolute refutation of the other. I mean, both doctrines seem to almost bypass each other, as they seem more a matter of metaphysics than anything else.

In any case, I might have missed something, but I don't see where in the link, Bohm-Bawerk was completely refuted or brought to a full-contradiction, only where he didn't actually refute the LTV, and part of this is just a matter of paradigms, and paradigm shifts happen, some people cling to the older paradigm with the old notions, many others move to the new paradigm, and the paradigms see the same phenomena through different lenses and collect different data for different ends.

Finally, just to say something- as a metaphysical point, the notion that value is objective seems absurd, and I take the collection of straining points against the labor theory of value to be valid. Perhaps this is because I am simply not as well trained in the notion that value is social, as a Marxian would put forward, however, if a famous fellow signs a napkin, it has a value disproportionate to the amount of labor the signature required. Not only that, but it seems pretty objective that under a capitalist society, non-owners of company capital can have varied salaries based upon a number of factors. We can hypothetically create all sorts of convoluted explanations for this, including claims that this shows the corruption of the capitalist system, or that these variations are different forms of capital, or something else along that nature, but when you get down to it, any labor of value that sufficiently describes the phenomenon of valuation in society seems to demand some flexibility.

I also reject the notion of some absolute social laws, I mean, the only economic laws that I see as *possibly* being absolutely valid are tautologies of human choice(human psychologies can make people engage in logically problematic behavior), but Marxian sociological determinism seems dead to me(I will also admit to not being as versed in this as would be best). However, I would sooner accept the classes and sociological notions as the abstractions created by individuals, rather than individuals as abstractions within a sociological system, and the notion that one bias is *more* scientific than another seems nothing more than a bias. I mean, would I agree with Hilferding that this move by bourgeois economics has been suicidal for it? No, I see NeoClassical *and* Austrian economics both as research programs that have value and that can continue to bring knowledge, and I think most economists have disagreed with Hilferding given the number of socialists that have appropriated some elements of NeoClassical or Keynesian economics, and frankly, I would disagree with an utter hatred of the Austrian school as well. I mean, Mises was full of crap at times, Rothbard sometimes seems to lack intellectual integrity, but I still think that Hayek's essay "The Use of Knowledge in Society" is a great essay, and some of the things that the GMU Austrians say are interesting. This is not to say that Marxism is dead, but rather that I think it's pretense to be the *true* science is simply an arrogance, and that it is a research program with a certain focus amongst other research programs.

SchrÃ¶dinger's Cat

11th December 2008, 09:49

It's a common mistake, but for clarification of purposes: Marx did not believe in an "objective value." In fact he comments on individual desires, supply relative to demand, and certain environmental patterns disrupting prices (a bottle of water in the desert is more sought after than when you live next to a fresh water pond). Labor theory of value is more of a general look at what creates this value. Labor is the primary, dare I say, overarching, cause of value. If we take a slab of elkwood, it might cost roughly $1 on the market. If this same slab of wood is made into a wood figurine, it could cost $2. Whatever your notions of value, it is impossible to claim that labor was not the cause of this increased value. Both the actual, presentable labor, and the labor that went into producing the capital equipment.

This is the basic point being made. While the subjective value theory is theoretically true in remote instances, it does not apply to the larger (read as real) world. You as a single consumer do not have much of a say in the price of a 10-foot, fully detailed statue of Zeus, his sex exposed and all. As far as exchange values goes (market relativism), that statue is going to be more sought after than one only five inches tall. If for some strange reason a machine was invented that could produce 10-foot tall Zeus statues at three m/sq per minute (let's try to be slightly realistic), yet no such invention came about for smaller statues, the value of the taller statue would drop. Less labor is required. In fact in this instance you can even use supply and labor interdependently, since labor is the primary reason for why any supply is what it is.

As for the Austrian school, there's some truth wrapped up in it, but generally they fail to acknowledge that:

- There is no objective free market. For a group of people who profess subjective value as a near doctrine of philosophy, this is a harmful conclusion to make, but it's true. The act of "owning" something makes you a sovereign, and regardless of the system we live under (unless it's fascism), we're all going to individually own something. In a decentralized market economy, it's impossible to scrub out socialism. For there to be any mobility, market socialism would have to exist or you would end up with a Somalia-like example.

- Power is concurrent with wealth, even under anarchism. That power may be remote (socialism), or large (capitalism), but it's still going to exist so long as someone owns something others don't (if everyone has the ability to get what they want, then this discussion is fruitless - we'd all be communists). Again going back to Somalia, I talked with someone whose family was killed because her brother didn't pay a "service fee." That's the real world of anarcho-capitalism, not theoretical talk. And much as I like the idea of being my own sovereign, I can't say I'd choose that option of we would end up like Somalia.

- There is no real world evidence that "more open markets" = "more economic success." In fact the market revolution in the United States, Japan, and Germany didn't occur until after economic intervention was introduced, albeit in regards to corporate charters, infrastructure development, and other non-welfare related subjects. Our first major road system in the US didn't come about until after states coordinated monopolies with companies. This increased the tax burden - but Austrian economics dictates that if there's a demand, there should be a way for a "free market" to handle it. Perhaps if 100% of the population was mobile enough to devote 1 hour a day boycotting and organizing, it would work - but most people get home too tired to even do anything beyond television. And I'm willing to bet capitalists would want to go back to the "old" capitalist line of logic in regards to unions: conspiring against one's property is like conspiring against an extension of the self, so it's okay to break up organization.

- Anarcho-capitalists from the Rothbardian, non-agorist perspective ultimately reject or blow off all other forms of repression other than the state in order to not be "socialists," which makes them hypocrites. Noam Chomsky expands on this topic: all power must justify itself, including economic power. If I'm surrounded by plots of land with a landlord who wants me to become an indentured servant just to pass, I am oppressed. Many theorists like Lew Rockwell defend "voluntarily" slavery, sweatshops, and entrapment. That is not anarchism. That is elitist crap.

Anti Freedom

11th December 2008, 10:17

This is the basic point being made. While the subjective value theory is theoretically true in remote instances, it does not apply to the larger (read as real) world. You as a single consumer do not have much of a say in the price of a 10-foot, fully detailed statue of Zeus, his sex exposed and all. As far as exchange values goes (market relativism), that statue is going to be more sought after than one only five inches tall. If for some strange reason a machine was invented that could produce 10-foot tall Zeus statues at three m/sq per minute (let's try to be slightly realistic), yet no such invention came about for smaller statues, the value of the taller statue would drop. Less labor is required. In fact in this instance you can even use supply and labor interdependently, since labor is the primary reason for why any supply is what it is.
Well, the major issue is that the cost of labor is itself going to be influenced by subjective elements, such as the care that individuals in a society place on risk, or upon "dishonorable" professions. Not only that, but the value attributable to a given laborer's work is still hard to break down to a simple expression of time in a market society. So, your statement of "real world" still seems questionable. I mean, yes, everything does fall down to somebody doing something, but no, it is not a uniform value per time as an LTV seems to suggest. Not only that, but the subjective theory of value does not have to fall away when the labor theory of value could be argued as a viable model, thus it could easily be argued that the LTV is an approximation of the STV under certain circumstances, just as Newtonian physics can be argued to be an approximation of Einsteinian relativity under low speed settings. In any case, I still do not see the LTV as worth defending, if it is maintained, then it would have to be done with a lot of alterations. I can only see it being useful as a baseline wage-rate for accounting purposes under certain socialist conceptualizations.

- There is no objective free market. For a group of people who profess subjective value as a near doctrine of philosophy, this is a harmful conclusion to make, but it's true. The act of "owning" something makes you a sovereign, and regardless of the system we live under (unless it's fascism), we're all going to individually own something. In a decentralized market economy, it's impossible to scrub out socialism. For there to be any mobility, market socialism would have to exist or you would end up with a Somalia-like example.
Absolutely, there is no objective free market, however, I don't see this as a death-nail to an Austrian. I mean, to be honest, I would think that an intelligent Austrian would have to admit that there would likely be semi-socialist sectors, and communes and such within their ideal system, and admit that the assignation of property would also be somehow put on the market as well, but I know that non-Austrian David Friedman already promotes a system where the law is completely privatized.

- Power is concurrent with wealth, even under anarchism. That power may be remote (socialism), or large (capitalism), but it's still going to exist so long as someone owns something others don't (if everyone has the ability to get what they want, then this discussion is fruitless - we'd all be communists). Again going back to Somalia, I talked with someone whose family was killed because her brother didn't pay a "service fee." That's the real world of anarcho-capitalism, not theoretical talk. And much as I like the idea of being my own sovereign, I can't say I'd choose that option of we would end up like Somalia.
Ok. I don't think that Austrians have ignored Somalia either, Austrian Peter Leeson published a paper on Somalian progress under anarchism, fortunately for him, his other interest is pirates. Certainly though, Austrians have to recognize these issues and their impact.

- There is no real world evidence that "more open markets" = "more economic success." In fact the market revolution in the United States, Japan, and Germany didn't occur until after economic intervention was introduced, albeit in regards to corporate charters, infrastructure development, and other non-welfare related subjects. Our first major road system in the US didn't come about until after states coordinated monopolies with companies. This increased the tax burden - but Austrian economics dictates that if there's a demand, there should be a way for a "free market" to handle it. Perhaps if 100% of the population was mobile enough to devote 1 hour a day boycotting and organizing, it would work - but most people get home too tired to even do anything beyond television. And I'm willing to bet capitalists would want to go back to the "old" capitalist line of logic in regards to unions: conspiring against one's property is like conspiring against an extension of the self, so it's okay to break up organization.
Right, I think the Austrian response would simply be one of the difficulty of counter-factuals. In any case, I do think that the matter of large-scale coordination is a problem for an Austrian. Large-scale coordination is a problem for all systems to some extent as well, as there are debates over the extent that is desirable, but a good argument for a mixed economy can be made.

- Anarcho-capitalists from the Rothbardian, non-agorist perspective ultimately reject or blow off all other forms of repression other than the state in order to not be "socialists," which makes them hypocrites. Noam Chomsky expands on this topic: all power must justify itself, including economic power. If I'm surrounded by plots of land with a landlord who wants me to become an indentured servant just to pass, I am oppressed. Many theorists like Lew Rockwell defend "voluntarily" slavery, sweatshops, and entrapment. That is not anarchism. That is elitist crap.

I honestly don't like Rothbard much anyway. I have not read everything by him, but everything I have read of him just seems narrow-minded. In any case, I think their idea of this flows from their notions of natural law, but it does carry some issues, as do most systems.

In any case, I certainly would not argue that the Austrians have it perfect on everything at all, and I find some of Rothbard's positions difficult to defend or to do anything but shake your head at. I just think that they are an interesting approach that could perhaps theoretically continue to bear fruit. Perhaps not, we will see.

Self-Owner

11th December 2008, 21:02

It's a common mistake, but for clarification of purposes: Marx did not believe in an "objective value." In fact he comments on individual desires, supply relative to demand, and certain environmental patterns disrupting prices (a bottle of water in the desert is more sought after than when you live next to a fresh water pond). Labor theory of value is more of a general look at what creates this value. Labor is the primary, dare I say, overarching, cause of value. If we take a slab of elkwood, it might cost roughly $1 on the market. If this same slab of wood is made into a wood figurine, it could cost $2. Whatever your notions of value, it is impossible to claim that labor was not the cause of this increased value. Both the actual, presentable labor, and the labor that went into producing the capital equipment.

Labour in some sense is a primary cause of value, but I can't help thinking that you guys simply have it backwards. Things aren't valued by people just because labour has gone into them - on the contrary, labour goes into things because the final product is valued by people. That to me is the fundamental fallacy of the LTV.

This is the basic point being made. While the subjective value theory is theoretically true in remote instances, it does not apply to the larger (read as real) world. You as a single consumer do not have much of a say in the price of a 10-foot, fully detailed statue of Zeus, his sex exposed and all. As far as exchange values goes (market relativism), that statue is going to be more sought after than one only five inches tall. If for some strange reason a machine was invented that could produce 10-foot tall Zeus statues at three m/sq per minute (let's try to be slightly realistic), yet no such invention came about for smaller statues, the value of the taller statue would drop. Less labor is required. In fact in this instance you can even use supply and labor interdependently, since labor is the primary reason for why any supply is what it is.

I honestly fail to see how you can claim that a) the STV is true and that b) it doesn't apply in the 'real' world. If the theory is correct, as I believe it is, that's it - value is always and everywhere a subjective phenomenon. You can't admit that it's correct and then turn around and say 'Oh, but it doesn't technically apply.' Nothing in your example of the statue is really inconsistent with the STV. In a free market, it would be entirely unsurprising for the price of a statue to hover around its cost. And if a machine was built that lowered the cost, it would not be surprising that the savings were passed on. It would not even be surprising to know that the cost of statues approximates very closely the amount of labour that has gone into it - what is the cost (in economic terms, i.e. what is given up) of a statue? Primarily the stone, and the labour that has gone into making it.

As for the Austrian school, there's some truth wrapped up in it, but generally they fail to acknowledge that:

- There is no objective free market. For a group of people who profess subjective value as a near doctrine of philosophy, this is a harmful conclusion to make, but it's true. The act of "owning" something makes you a sovereign, and regardless of the system we live under (unless it's fascism), we're all going to individually own something. In a decentralized market economy, it's impossible to scrub out socialism. For there to be any mobility, market socialism would have to exist or you would end up with a Somalia-like example.

I don't understand what it would mean for there to be 'an objective free market,' or what the world would look like if there was one. Maybe you can clarify what you mean by it?

trivas7

12th December 2008, 17:02

And you believe its free market capitalist which is best at this?
Have you lost your freaking mind?
Abject poverty is humanity's natural state. It is only with the advent of free institutions in the West two centuries ago that sustained technological progress and rising prosperity became possible. The collapse of communism and the abysmal failure of Marxian economic models only confirm this fact.

Kwisatz Haderach

12th December 2008, 18:36

Abject poverty is humanity's natural state. It is only with the advent of free institutions in the West two centuries ago that sustained technological progress and rising prosperity became possible.
Um, no. Technological progress and rising prosperity has been the norm for thousands of years - at least since the invention of agriculture. People first used tools of stone, bone and wood; then they learned to make tools out of bronze, and then iron. They learned to harness the power of water through mills, and later they invented windmills for places without access to large rivers. They built increasingly better sailing ships; they invented the rudder, the compass, paper, gunpowder. They used irrigation to provide a steady supply of food so that famines only occurred once every few decades rather than every year. And so on and so forth. All of this happened long before the past two centuries and the industrial revolution.

Since the industrial revolution, technological progress has greatly accelerated, that is true. But it accelerated everywhere, not just in the West, and rapid economic growth has been the norm in just about every single country over the last century. You may argue that some institutions produce faster growth than others, but it seems just about ANY institutions are capable of producing decent rates of growth.

The collapse of communism and the abysmal failure of Marxian economic models only confirm this fact.
Really? You must be forgetting the fact that the Soviet Union, throughout its existence, sustained faster average economic growth than the United States.

Anti Freedom

12th December 2008, 19:34

Um, no. Technological progress and rising prosperity has been the norm for thousands of years - at least since the invention of agriculture. People first used tools of stone, bone and wood; then they learned to make tools out of bronze, and then iron. They learned to harness the power of water through mills, and later they invented windmills for places without access to large rivers. They built increasingly better sailing ships; they invented the rudder, the compass, paper, gunpowder. They used irrigation to provide a steady supply of food so that famines only occurred once every few decades rather than every year. And so on and so forth. All of this happened long before the past two centuries and the industrial revolution.

Since the industrial revolution, technological progress has greatly accelerated, that is true. But it accelerated everywhere, not just in the West, and rapid economic growth has been the norm in just about every single country over the last century. You may argue that some institutions produce faster growth than others, but it seems just about ANY institutions are capable of producing decent rates of growth.
In any case, the argument that capitalism did not improve economic growth rates seems to go against Marx's position in the communist manifesto, as there he did say that capitalism had created a mass of wealth, he also stated that this was beyond the control of the bourgeois and would logically lead to capitalism destroying itself to some measure.

"The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of nature's forces to man, machinery, application of chemistry to industry and agriculture, steam navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization or rivers, whole populations conjured out of the ground"

Really? You must be forgetting the fact that the Soviet Union, throughout its existence, sustained faster average economic growth than the United States.
He doesn't have to forget that. Even orthodox economists recognize this fact, but still argue that the Soviet model was flawed(usually they then argue that only a capitalism based system can succeed, but obviously most here will disagree with their conclusions). I forget the exact claim made in one of the books I own by one of these orthodox economists, however, I think it usually amounts to saying "communism can create short term growth, but in the long-run, the information problems it deals with end up getting the better of the system, and it collapses." And mostly the ignorant anti-communists ignore the fact that you promote, however, your own stance demands that you say that the communist economic system failed due to external problems, not internal problems(part of the debate might end up being determining the difference between external and internal problems, as it is well-known that production incentives in the USSR were poor and promoted wasteful production, which your opponents might argue to be part of the growth of the economy).

Bilan

13th December 2008, 00:01

Abject poverty is humanity's natural state.

Shut up, moron.

It is only with the advent of free institutions in the West two centuries ago that sustained technological progress and rising prosperity became possible.We call it the development of capitalism.
Have you ever read Marx on free trade (http://www.marxists.org/archive/marx/works/1848/01/09ft.htm)?

The collapse of communism and the abysmal failure of Marxian economic models only confirm this fact.Yeah, if you're a dumb ass.
If you don't understand the relevance of the development of capitalist production models in order to create the fabric from which socialist society can rise from, then yes, you're bourgeois analysis of communism will provide useful to your perpetual ignorance.

If, on the other hand, you want to actually grasp a realistic understanding, then I suggest you actually analyse the productive forces within all societies which undertook socialist revolution and were successful: the conclusion being that all of them, without fail, were vastly under developed, some to the point of extreme (such as Russia and China) meaning that, it was not ripe - economically - for socialism, and in no way could have been because of its underdevelopment.
Socialism is a stage. It is not artificial. It can not just be 'implemented' by a party program. It can only succeed when the productive forces for it actually exist. If they don't, it can't.
That's just reality.
That is why these revolutions degenerated into bureaucratic nightmares; why they reverted to (state) capitalist economic systems; why socialism failed.

You are approaching socialism from the understanding that is artificial. It is not, and can never be.

Die Neue Zeit

13th December 2008, 09:00

^^^ It isn't a "bourgeois analysis of communism," but a PETIT-bourgeois "analysis" which trivas7 now resorts to as a crutch for his Austrian degeneration.

Led Zeppelin

13th December 2008, 09:23

Abject poverty is humanity's natural state. It is only with the advent of free institutions in the West two centuries ago that sustained technological progress and rising prosperity became possible. The collapse of communism and the abysmal failure of Marxian economic models only confirm this fact.

No:

The vast scope of industrialization in the Soviet Union, as against a background of stagnation and decline in almost the whole capitalist world, appears unanswerably in the following gross indices. Industrial production in Germany, thanks solely to feverish war preparations, is now returning to the level of 1929. Production in Great Britain, holding to the apron strings of protectionism, has raised itself 3 or 4 per cent during these six years. Industrial production in the United States has declined approximately 25 per cent; in France, more than 30 per cent. First place among capitalist countries is occupied by Japan, who is furiously arming herself and robbing her neighbors. Her production has risen almost 40 per cent! But even this exceptional index fades before the dynamic of development in the Soviet Union. Her industrial production has increased during this same period approximately 3½ times, or 250 per cent. The heavy industries have increased their production during the last decade (1925 to 1935) more than 10 times. In the first year of the five-year plan (1928 to 1929), capital investments amounted to 5.4 billion rubles; for 1936, 32 billion are indicated.

If in view of the instability of the ruble as a unit of measurement, we lay aside money estimates, we arrive at another unit which is absolutely unquestionable. In December 1913, the Don basin produced 2,275,000 tons of coal; in December 1935, 7,125,000 tons. During the last three years the production of iron has doubled. The production of steel and of the rolling mills has increased almost 2½ times. The output of oil, coal and iron has increased from 3 to 3½ times the pre-war figure. In 1920, when the first plan of electrification was drawn up, there were 10 district power stations in the country with a total power production of 253,000 kilowatts. In 1935, there were already 95 of these stations with a total power of 4,345,000 kilowatts. In 1925, the Soviet Union stood 11th in the production of electro-energy; in 1935, it was second only to Germany and the United States. In the production of coal, the Soviet Union has moved forward from 10th to 4th place. In steel, from 6th to 3rd place. In the production of tractors, to the 1st place in the world. This also is true of the production of sugar.

Gigantic achievement in industry, enormously promising beginnings in agriculture, an extraordinary growth of the old industrial cities and a building of new ones, a rapid increase of the numbers of workers, a rise in cultural level and cultural demands – such are the indubitable results of the October revolution, in which the prophets of the old world tried to see the grave of human civilization. With the bourgeois economists we have no longer anything to quarrel over. Socialism has demonstrated its right to victory, not on the pages of Das Kapital, but in an industrial arena comprising a sixth part of the earths surface – not in the language of dialectics, but in the language of steel, cement and electricity. Even if the Soviet Union, as a result of internal difficulties, external blows and the mistakes of leadership, were to collapse – which we firmly hope will not happen – there would remain an earnest of the future this indestructible fact, that thanks solely to a proletarian revolution a backward country has achieved in less than 10 years successes unexampled in history.

This also ends the quarrel with the reformists in the workers movement. Can we compare for one moment their mouselike fussing with the titanic work accomplished by this people aroused to a new life by revolution? If in 1918 the Social-Democrats of Germany had employed the power imposed upon them by the workers for a socialist revolution, and not for the rescue of capitalism, it is easy to see on the basis of the Russian experience what unconquerable economic power would be possessed today by a socialist bloc of Central and Eastern Europe and a considerable part of Asia. The peoples of the world will pay for the historic crime of reformism with new wars and revolutions.
Link (http://www.marxists.org/archive/trotsky/1936/revbet/ch01.htm)

While the Soviet Union had a more-or-less fully nationalized and centralized planned economic system, all the capitalist nations had to indulge in "state-ism" to keep up with it, and by that I mean having to invest heavily in arms production to keep the economy going and growing, increasing the exploitation of colonies, nationalizing companies and investing heavily in public works, etc.

All of this was done not only outside of the free market-system, but in direct contradiction to it.

This has proven the superiority of socialism, not just back then but now too, when all the capitalist states are rushing to do the same thing all over again. Even most capitalists realize the superiority of "planned, organized intervention in the economic system" (of course on a capitalist basis, not a socialist one, which would be countless times more effective and efficient), hell even fucking Bush realizes it now.

It's really not worth arguing about this any further, just as it wasn't about 70 years ago.

trivas7

13th December 2008, 18:24

While the Soviet Union had a more-or-less fully nationalized and centralized planned economic system, all the capitalist nations had to indulge in "state-ism" to keep up with it, and by that I mean having to invest heavily in arms production to keep the economy going and growing, increasing the exploitation of colonies, nationalizing companies and investing heavily in public works, etc.

All of this was done not only outside of the free market-system, but in direct contradiction to it.

This has proven the superiority of socialism, not just back then but now too, when all the capitalist states are rushing to do the same thing all over again. Even most capitalists realize the superiority of "planned, organized intervention in the economic system" (of course on a capitalist basis, not a socialist one, which would be countless times more effective and efficient), hell even fucking Bush realizes it now.

While the Soviet Union had a more-or-less fully nationalized and centralized planned economic system, all the capitalist nations had to indulge in "state-ism" to keep up with it, and by that I mean having to invest heavily in arms production to keep the economy going and growing, increasing the exploitation of colonies, nationalizing companies and investing heavily in public works, etc.

The Communist takeover in Russia was a moral, political and economic disaster for its people. The slaughter of 20 million of its own citizens and political repression especially (but not limited to) the Stalin era are well documented.

In a country well-blessed with extensive natural resources, after three years of Communist rule Soviet economic conditions were desperate. Lenin after instituting his New Economic Policy in 1921 turned to Western capitalism for salvation. He offered Western firms generous "concessions" in return for rapid industrialization of the economy. English, German, Italian, Swedish Danish and American companies hurried to provide the USSR w/ airfields, railroads, gold, copper, iron mines, oil mines and much more.

But the real Western contributions came during the first Five Year Plan. American firms supplied technical assistance and equipment to build steel plants and automobiles, tractor plants, and dams. All American planned and executed by firms like Henry Ford's, the Cleveland firm of Arthur G. Mackee and John K. Calder of Detroit.

While Russians starved, Communists set up special shops in all major cities and sold food that could be purchased only for gold, silver, jewelry and foreign currency; in effect encouraging friends and relatives of Soviet citizen living abroad to ransom their loved one from Stalin's prison state by paying large amounts in foreign currency. The Soviet secret police set up torture camps across the country to which were brought Russians suspected of owning valuables. After WW II, protected by Roosevelt's sanction, the Soviets proceeded to loot its conquered nations on a massive scale, from Manchuria to Easter Europe.

Throughout its history and into its final days, chronic shortages existed in the most elementary consumer items. At various times it was impossible to find soap, kitchen spoons, hand irons, rugs, towels, paper goods, axes, locks, vacuum cleaners and spare parts for toasters or automobiles, and myriad other commodities. Decent shoes and were notoriously hard to get, shortages of consumer goods was chronic. Despite massive aid from capitalist countries and borrowing billions of dollars from the West, by the 1960s, after 50 years of communism, the country's gross domestic product was half that of the USA.

What is revealing is the degree to which Russian's relationship to the West was a dependency relationship, a parasitical one. Stalin himself acknowledged to Eric Johnson, an American visitor in 1944: "about two-thirds of all large industrial enterprises in the USSR had been built w/ US material or technical assistance." A totalitarian state, which repudiated individual rights and political/economic liberty in favor of brute force and systematic terror, was powerless to achieve on its own and so, inevitably, relied on other nations for an enormous proportion of whatever progress it attained.

Die Neue Zeit

13th December 2008, 19:15

The "Western contributions" arose precisely due to the Great Depression. The Western capitalists whom you now defend in your class collaborationism couldn't expand at home.

Throughout its history and into its final days, chronic shortages existed in the most elementary consumer items. At various times it was impossible to find soap, kitchen spoons, hand irons, rugs, towels, paper goods, axes, locks, vacuum cleaners and spare parts for toasters or automobiles, and myriad other commodities. Decent shoes and were notoriously hard to get, shortages of consumer goods was chronic. Despite massive aid from capitalist countries and borrowing billions of dollars from the West, by the 1960s, after 50 years of communism, the country's gross domestic product was half that of the USA.

Much better than 50 years of British Industrial Revolution, in fact. Face it: Stalin and Co. beat the capitalists at their own primitive capital accumulation game.

13th December 2008, 19:57

trivas7

13th December 2008, 20:03

Much better than 50 years of British Industrial Revolution, in fact. Face it: Stalin and Co. beat the capitalists at their own primitive capital accumulation game.
Are you now defending Stalin as an arch-capitalist? What does this say re Marxian economics?

Die Neue Zeit

13th December 2008, 20:06

Austrian, apparently you aren't aware of the discussions within the Communist Party during the 1920s on something called "socialist primitive accumulation." :rolleyes:

Self-Owner

13th December 2008, 20:12

Self-Owner

13th December 2008, 20:13

Austrian, apparently you aren't aware of the discussions within the Communist Party during the 1920s on something called "socialist primitive accumulation." :rolleyes:

Lol you mean after-the-fact attempted Marxist justifications of the return to partial capitalism that the NED heralded?

Die Neue Zeit

13th December 2008, 20:23

Nope. "Socialist primitive accumulation" revolved around how to end the New Economic Policy, in light of the Scissors Crisis.

Dean

13th December 2008, 22:09

http://english.aljazeera.net/news/europe/2008/12/200812131205875296.html]

We'll pretend it's Christmas Day in my atomic garden!

trivas7

14th December 2008, 03:46

Nope. "Socialist primitive accumulation" revolved around how to end the New Economic Policy, in light of the Scissors Crisis.
The monopoly that high prices created led to an incentive problem; hence, inferior goods were produced. Factories were already falling apart, and total state control destroyed them before new capital actually was acquired. These problems aside, raising prices to unheard of levels affected and exploited the poor peasants the most. This disagreed with the Communism principle of equality in economy, yet Preobrazhensky, for one, advocated it. The right Bolsheviks simply wanted to use NEP to get the economy back on track, then invest in capital, and switch fully to Communism. Like, that really happened. Such is the logic of collectivism: an economy that by design couldn't allocate its resources effectively and immiserated its participants.

Die Neue Zeit

14th December 2008, 03:51

What a doublethink logic here: if the "participants" are immiserated (ironic that you're using Marxist language here, Austrian mole), then why the population decline of ethnic Russians during the stagnation years? [HINT: Rising standards of living have a tendency to check population increases, if not decrease population numbers.]

The start of this population decline *could* be attributed to standards of living that have risen, if anything else, TOO quickly for the economy to adjust. I mean, the Soviet health care system, for example (national health care as an indicator of standards of living), was so developed that the level of specialization was much greater than in today's US health care system. [I raise this as a criticism of Soviet health care's jumping the gun which you, Austrian mole, won't understand.]

Kwisatz Haderach

14th December 2008, 13:48

The Communist takeover in Russia was a moral, political and economic disaster for its people. The slaughter of 20 million of its own citizens and political repression especially (but not limited to) the Stalin era are well documented.
That the Soviet government was responsible for the deaths of millions of its citizens is true but misleading, in the same way it would be true but misleading to say "the United States economy was based on slavery." It's true because the US economy was based on slavery at a certain period in its history, but it's misleading because it doesn't mention that slavery was eventually abolished.

Likewise, the vast majority of the deaths caused by the Soviet government happened during a very narrow timeframe (1929-1933, or 1929-1939 if you want to make sure to include something like 99% of all those deaths). The number is not 20 million, by the way - it is unknown, with every historical source giving a different estimate, and 20 million being the second highest estimate ever given. It's more likely to be below 10 million. But no matter what the number is, the vast majority of those deaths were caused by the famines that occurred between 1929 and 1933, and which may or may not be the government's fault. Of the remainder, most deaths were caused by Stalin's purges in the late 1930s.

In a country well-blessed with extensive natural resources, after three years of Communist rule Soviet economic conditions were desperate.
That might have had something to do with the devastating civil war going on at the time. Honestly, what would you have expected the Communists to do? They took power after three years of the First World War, and held power through 3-4 years of civil war. You think anyone could have avoided getting into "desperate conditions" under those circumstances?

Lenin after instituting his New Economic Policy in 1921 turned to Western capitalism for salvation. He offered Western firms generous "concessions" in return for rapid industrialization of the economy. English, German, Italian, Swedish Danish and American companies hurried to provide the USSR w/ airfields, railroads, gold, copper, iron mines, oil mines and much more.

But the real Western contributions came during the first Five Year Plan. American firms supplied technical assistance and equipment to build steel plants and automobiles, tractor plants, and dams. All American planned and executed by firms like Henry Ford's, the Cleveland firm of Arthur G. Mackee and John K. Calder of Detroit.
And those western firms did all of this for free? No? Then what's your point? Are communists not allowed to buy goods and services from capitalists? There is absolutely no reason why a socialist or communist society could not trade with the capitalist world. In fact, any socialist society that finds itself alone and isolated in a capitalist world must trade with the capitalists in order to survive.

After WW II, protected by Roosevelt's sanction, the Soviets proceeded to loot its conquered nations on a massive scale, from Manchuria to Easter Europe.
Yes, which is exactly what the Western Allies did to Germany and the other Central Powers after the First World War. It's called "war reparations," and it was standard practice.

Despite massive aid from capitalist countries and borrowing billions of dollars from the West, by the 1960s, after 50 years of communism, the country's gross domestic product was half that of the USA.
...which was actually a great achievement, considering the fact that the Soviet Union's GDP was only 25% of the American one when the Soviet Union was founded. It climbed to 40% by 1955, then reached around 50% between 1960 and 1965, and passed above 60% in 1977. In other words, the Soviet Union was in fact catching up to the United States. Had this trend continued, the Soviet GDP could have surpassed the American GDP around the year 2020.

What is revealing is the degree to which Russian's relationship to the West was a dependency relationship, a parasitical one.
Trade is parasitic?

Stalin himself acknowledged to Eric Johnson, an American visitor in 1944: "about two-thirds of all large industrial enterprises in the USSR had been built w/ US material or technical assistance."
In 1944 - you mean after the Nazis had destroyed most of the Soviet Union's pre-war industrial capacity?

A totalitarian state, which repudiated individual rights and political/economic liberty in favor of brute force and systematic terror, was powerless to achieve on its own and so, inevitably, relied on other nations for an enormous proportion of whatever progress it attained.
I wasn't aware that you neoliberals promoted autarky and believed that countries should "achieve on their own" without engaging in trade with the outside world.

Post-Something

16th December 2008, 21:33

Wow, this thread has been going on for ages and I only just read it today. I never thought that Trivas7 would turn away from Marxism, let alone be attracted to Austrian economics. It actually made me incredibly sad. Not in a dissapointed way or anything, just very sad. I hope Trivas comes back to soon enough, or at least keeps posting here. Is this the first time a long time member turned all the way to the other side of the spectrum? I know LSD went social democrat, but anyone gone capitalist?

Bilan

18th December 2008, 00:19

Trivas has lost his mind, evidently.

heiss93

19th December 2008, 05:14

trivas7

19th December 2008, 17:40

Bukharin's Theory of the Leisure Class is the best Marxist polemic against the Austrian School that I know of. Bukharin actually attended Boem's lectures in person. And he was one of the main advocates of a long-term NEP plan.

http://www.marxists.org/archive/bukharin/works/1927/leisure-economics/index.htm

Everything Marx knew re economics he learned from others. 'Marxist economics' is but the thin veneer of a collectivist ideology. Why else have all so-called 'socialist' governments dispensed w/ this pretense? This is nonsense.

benhur

19th December 2008, 20:34

I never thought that Trivas7 would turn away from Marxism, let alone be attracted to Austrian economics. It actually made me incredibly sad. Not in a dissapointed way or anything, just very sad. I hope Trivas comes back to soon enough

Reminds me of Darth Vader, Trivas is tempted by the dark side of the force.:D

btw, who's LSD?

Demogorgon

19th December 2008, 22:55

Everything Marx knew re economics he learned from others. 'Marxist economics' is but the thin veneer of a collectivist ideology. Why else have all so-called 'socialist' governments dispensed w/ this pretense? This is nonsense.
With all due respect, you are starting to sound like a bad parody of Austrians. "Thin veneer of collectivist ideology"? :lol:

And what does that mean that Marx learned all he knew about economics from others, where else might he have learned it? Gabriel coming to him in a dream?

20th December 2008, 03:48

Trivas is just trolling now. He can't offer anything substantive. Just ignore him.

Bilan

20th December 2008, 15:55

Kwisatz Haderach

20th December 2008, 17:52

Dimentio

20th December 2008, 19:17

Really, are there not several different ideas of what constitutes "value"?

LuÃs Henrique

24th December 2008, 14:14

Allow me to squeeze into this battle royal of the economic heavy weights with an illustration and a question:

Let's say we have 2 kinds of tissue paper and there is an equal demand for both.

Would this result in the price of both tissue papers being the same?

Or are there other factors involved?

This is directed towards anybody.

Are those two kinds of tissue paper equivalent? Or is one of them "better" than the other?

Price is determined by offer and demand. But price is not value. What happens is that price cannot deviate from value too often, or too much.

Now, having a price - or a value - is something that only happens to a commodity, and being a commodity is not a natural property of any object. So let me ask, why does anyone buy tissue paper? Why don't we make our own tissue paper?

Luís Henrique

26th December 2008, 03:12

Welcome back, Luís! It's good to see you posting again.

Bilan

26th December 2008, 12:37

Ernest Mandel's introduction to Capital Vol 1. provides some really interesting insight into the critiques of the LTV.
Has anyone read it?

trivas7

29th December 2008, 04:48

As http://www.marxisteconomics.com/index.php?id=38 reminds me, is it as simple as the fact that labor is central to all economies? Is this where Austrian economics gets it wrong? That while the value of commodities are determined by how useful something is; and yes, supply and demand are important, we do more than buy and sell commodities. We have to make them. Commodities are not themselves the universal measure or marker of an economy -- labor is the precondition of all economic activity.

The Validity of the Labor Theory of Value

To conclude, we present three traditional proofs of the labor theory of value.

The first of these is the analytical proof, which proceeds by breaking down the price of a commodity into its constituent elements and demonstrating that if the process is extended far enough, only labor will be found.
The price of every commodity can be reduced to a certain number of components: the amortization of machinery and buildings, which we call the renewal of fixed capital; the price of raw materials and accessory products; wages; and finally, everything which is surplus value, such as profit, rent, taxes, etc.

So far as the last two components are concerned, wages and surplus value, it has already been shown that they are labor pure and simple. With regard to raw materials, most of their price is largely reducible to labor; for example, more than 60 per cent of the mining cost of coal consists of wages. If we start by breaking down the average manufacturing cost of commodities into 40% for wages, 20% surplus value, 30% for raw materials and 10% in fixed capital; and if we assume that 60% of the cost of raw materials can be reduced to labor, then we already have 78% of the total cost reduced to labor. The rest of the cost of raw materials breaks down into the cost of other raw materials – reducible in turn to 60% labor – plus the cost of amortizing machinery.

The price of machinery consists to a large degree of labor (for example, 40%) and raw materials (for example, 40% also). The share of labor in the average cost of all commodities thus passes successively to 83%, 87%, 89.5%, etc. It is obvious that the further this breakdown is carried, the more the entire cost tends to be reduced to labor, and to labor alone.

The second proof is the logical proof, and is the one presented in the beginning of Marx’s Capital. It has perplexed quite a few readers, for it is certainly not the simplest pedagogical approach to the question.

Marx poses the question in the following way. The number of commodities is very great. They are interchangeable, which means that they must have a common quality, because everything which is interchangeable is comparable and everything which is comparable must have at least one quality in common. Things which have no quality in common are, by definition, not comparable with each other.

Let us inspect each of these commodities. What qualities do they possess? First of all, they have an infinite set of natural qualities: weight, length, density, color, size, molecular nature; in short, all their natural physical, chemical and other qualities. Is there any one of the physical qualities which can be the basis for comparing them as commodities, for serving as the common measure of their exchange value? Could it be weight? Obviously not, since a pound of butter does not have the same value as a pound of gold. Is it volume or length? Examples will immediately show that it is none of these. In short, all those things which make up the natural quality of a commodity, everything which is a physical or chemical quality of this commodity, certainly determines its use value, its relative usefulness, but not its exchange value. Exchange value must consequently be abstracted from everything that consists of a natural physical quality in the commodity.

A common quality must be found in all of these commodities which is not physical. Marx’s conclusion is that the only common quality in these commodities which is not physical is their quality of being the products of human labor, of abstract human labor.

Human labor can be thought of in two different ways. It can be considered as specific concrete labor, such as the labor of the baker, butcher, shoemaker, weaver, blacksmith, etc. But so long as it is thought of as specific concrete work, it is being viewed in its aspect of labor which produces only use values.

Under these conditions we are concerning ourselves only with the physical qualities of commodities and these are precisely the qualities which are not comparable. The only thing which commodities have in common from the viewpoint of exchanging them is that they are all produced by abstract human labor, that is to say, by producers who are related to each other on a basis of equivalence as a result of the fact that they are all producing goods for exchange. The common quality of commodities, consequently, resides in the fact that they are the products of abstract human labor and it is this which supplies the measure of their exchange value, of their exchangeability. It is, consequently, the quality of socially necessary labor in the production of commodities which determines their exchange value.

Let us immediately add that Marx’s reasoning here is both abstract and difficult and is at least subject to questioning, a point which many opponents of Marxism have seized upon and sought to use, without any marked success, however.

Is the fact that all commodities are produced by abstract human labor really the only quality which they have in common, apart from their natural qualities? There are not a few writers who thought they had discovered others. In general, however, these have always been reducible either to physical qualities or to the fact that they are products of abstract labor.

A third and final proof of the correctness of the labor theory of value is the proof by reduction to the absurd. It is, moreover, the most elegant and most “modern” of the proofs.

Imagine for a moment a society in which living human labor has completely disappeared, that is to say, a society in which all production has been 100 per cent automated. Of course, so long as we remain in the current intermediate stage, in which some labor is already completely automated, that is to say, a stage in which plants employing no workers exist alongside others in which human labor is still utilized, there is no special theoretical problem, since it is merely a question of the transfer of surplus value from one enterprise to another. It is an illustration of the law of equalization of the profit rate, which will be explored later on.

But let us imagine that this development has been pushed to its extreme and human labor has been completely eliminated from all forms of production and services. Can value continue to exist under these conditions? Can there be a society where nobody has an income but commodities continue to have a value and to be sold? Obviously such a situation would be absurd. A huge mass of products would be produced without this production creating any income, since no human being would be involved in this production. But someone would want to “sell” these products for which there were no longer any buyers!

It is obvious that the distribution of products in such a society would no longer be effected in the form of a sale of commodities and as a matter of fact selling would become all the more absurd because of the abundance produced by general automation.

Expressed another way, a society in which human labor would be totally eliminated from production, in the most general sense of the term, with services included, would be a society in which exchange value had also been eliminated. This proves the validity of the theory, for at the moment human labor disappears from production, value, too, disappears with it.

-- Ernest Mandel, 'An Introduction to Marxist Economic Theory'