Q&A with Dejavu : Focus - free enterprise, trade, mutualism, capitalism, etc.

I thought Yazman had a good idea about the technocracy movement so I thought I would shift the convo in this topic about market economies.

Since I used to be an anarchocapitalist and I still agree with much of the Austrian school tradition I thought I would have a unique insight on how several brands of market economics work ranging from free enterprise ( without capitalism) , mutualism ( in the tradition of Proudhon, Tucker , Spooner , market socialism ideas, etc.), trade ( free trade , protectionism, gift economy) , and capitalism ( what we all know and 'love' as it exists today , within this would be covered mercantilism, state and capitalism, anarchocapitalism, etc.)

On top of that I have a degree in Economics and can help explain mainstream economic models as pertains to current events.

Let's get this party started.

Some answers would be appreciated for the below:

In your opinion, how important is the marginal theory of value w.r.t. free market anarchist theory?

How do you account for the class structures within capitalist economies with marginalism? Is the presence of social class-relations w.r.t means of production acknowledged and can they be accounted for?

Well another way of terming marginal utility is 'subjective theory of value.' That is that value is bestowed upon a thing by the people seeking to have the object. Marginal utility comes in when we ask ' how much is a person willing to spend to have X and how important is X to this person relative to other things they can consume with the same resources?'

This is what sets off the whole production process. Things are not produced willy-nilly but rather to meet the demands of consumers. This is why when you have a scarce amount of resources to throw in production you chose to produce certain things over others. You produce them according to their economic value which is bestowed by society and measured in terms of currency or money.

Its relation to markets is self-explanatory as the market encompasses the rate and quantity of how much these things are traded. Markets are the result of exchanges of value in other words.

I don't think marginal utility has much do with the resulting class structures. Though I may have misunderstood your question. Even before marginal theory, classes have always been an element of society. Class structures have more to do with the consolidation of power in particular groups of people. The differences can be outlined with many factors such as 'noble blood,' tradition, caste system, economic disparity, etc.

Acknowledged by whom? I would say it is acknowledged to an extent by different people. Or else we would not have unions, workers' rights movement, etc. If I am misunderstanding the question perhaps you can phrase it a different way.

No. By class structures, I mean the existing class structure w.r.t. ownership of means of production, i.e., a particular class owning the means of production while "allowing" another class to produce commodities using those means of production.

Marginalism: Noting that these class relations have only existed since the industrial revolution and even today, do not exist or exist in a different form in various feudal agricultural economies, doesn't the marginal utility theory assume a market in an industrial society where such a class structure exists?

General questions:Is such a class structure involving wage labor required in the market system you want to see?

Also do you consider communal ownership of the means of production incompatible with a market?

W.r.t. just the ownership of the means of production, which do you see as better: an economy based on class-based wage labor or classless collective use-based economy?

By you.

Throughout history capital has been owned by various people that can be also described as belonging to a particular class. Certainly in America businessmen finance capital growth but in a place like North Korea the political elites of the state control all the capital instead of the business elites.

Of course today the distinctions are more blurred. Corporations are partitioned and owned by various people , including the a lot workers themselves that have stock, particularly retirement. A retirement stock is a long term investment over the revenue said capital is expected to generate. However that does not mean that everyone has equal control over the capital.

I don't really see what marginal utility has to do with class structures. Marginal utility does not directly regard the relationships of production. Marginal utility would be true in any economy since there are always people on the margins when it comes to consumption.

No. Not required.
No, I consider it a perfectly valid option if that's what people in a free society want to do in their community.

I don't like existing wage system. I think people ought to be compensated according to the product of their labor and not necessarily the labor itself. I don't see anything wrong morally with a collective use-based economy so long as its voluntary.

Who will build the roads?

More seriously: If someone loses their job and becomes homeless (for any reason), where are they to go with privitized infastructure and no home? They can't exactly sleep on the streets if they have to deposit 50 cents for every street they go to.

The same question (well, the roads part) applies to Mutualism.

2. How will private law be enforced?

Can you respond to these criticisms of marginal utlility?

Neoclassical theory argues that marginal utility determines demand and price, i.e. the price of a good is dependent on the intensity of demand for the marginal unit consumed. This was in contrast to classic economics, which argued that price (exchange value) was regulated by the cost of production, ultimately the amount of labour used to create it. While realistic, this had the political drawback of implying that profit, rent and interest were the product of unpaid labour and so capitalism was exploitative. This conclusion was quickly seized upon by numerous critics of capitalism, including Proudhon and Marx. The rise of marginal utility theory meant that such critiques could be ignored.

However, this change was not unproblematic. The most obvious problem with it is that it leads to circular reasoning. Prices are supposed to measure the "marginal utility" of the commodity, yet consumers need to know the price first in order to evaluate how best to maximise their satisfaction. Hence it "obviously rest[s] on circular reasoning. Although it tries to explain prices, prices [are] necessary to explain marginal utility." [Paul Mattick, Economics, Politics and the Age of Inflation, p.58] In the end, as Jevons (one of the founders of the new economics) acknowledged, the price of a commodity is the only test we have of the utility of the commodity to the producer. Given that marginality utility was meant to explain those prices, the failure of the theory could not be more striking.

Also, a criticism of Austrian school.

I think your definitions are confusing.

Capitalism being "an economic system in which wealth, and the means of producing wealth, are privately owned, and that land, labor and capital are owned, operated and traded, without force or fraud, by private individuals either singly or jointly", then saying something like free enterprise (without capitalism) is sort of a contradiction.

You should also make a better distinction between capitalism, mixed economies and anarcho-capitalism, for semantics sake:)

What is the theory of land ownership, in otherwords, what is the philisophical justification of it?

Yes, I've responded numerous times on this forum about criticisms to marginal utility. I, myself , have a criticism of how marginal utility is referenced in economic models , particularly by those economists of the the neoclassical disciplines.

However, that does not mean that the price of things or their value is determined by the costs of production. The costs of production is only taken into account when calculating profit margin. But say something costs $5 bucks to produce and in order to make a profit I have to charge more than $5. How do I know what price to charge? Could be $5.50 , could be $10 or $100. That's where I have to make an estimation of what consumers are willing to trade for on the margin. Consequently, if I charge too much then people would buy less forcing the price to go down.

Such an economic analysis only focusing on production costs literally takes the consumer out of the loop suggesting all consumers will mechanistically respond to whatever price is determined by a mathematical equation only using production variables. People , however , simply don't operate that way and there is no such thing as clairvoyance.

Ask yourself, why is a coffee at a coffee shop in a booming metropolitan area typically more expensive to buy than a coffee in a less commercial area? Is the value of the coffee and coffee shop determined by its own production or by the sprawling activity of people around it? Why could we not say the marginal value of the coffee is higher in one area as opposed to the other?

socialist, I have a feeling we're going to keep on going back and forth about this because it is not really economics we are discussing. Ideologically one of us is tied to the notion of what economics ought to be rather than what it actually is.

You can still be socialist minded and accept marginal theory within economics, there is no inherent contradiction there since socialism is not specifically an economic theory , not even Marxists ( serious ones) posit socialist-marxist economics as a positive theory of economics ( rather a negative one to discredit capitalism.) This is part of the reason why Marx said himself " I'm not a Marxist" because serious marxists do not make a positive case for socialist economic theory.

On top of that, marginal theory has nothing to do with necessitating class divisions. It merely talks about individual value scales and how this effects economics collectively.

Yes but 'anarcho-capitalism' is quite vulgar. To some , capitalism might mean individual ownership of capital is allowed , or even encouraged, but on a larger scale capitalism is synonymous with mercantilist practice. You're not going to win the hearts and minds of any potential anarchists by positing capitalism as part of it. Capitalism is functionally a state enforced system and is quite contrary to anarchism. This also makes capitalism incompatible with free enterprise.

There is no reason to romanticize capitalism, especially if you're an anarchist.

Which theory of land ownership are you specifically referring to? Even socialists have a theory of land ownership ( all of it *must be* collectively owned)

I personally think most land is worthless. I'm talking about bare naked land that has no real development on it. Seriously, who's going to find value in dirt and rock?

Land becomes valuable when it is essentially 'capitalized' meaning the land is used for some enterprise or project including a house. Land could have 'potential value' but has no economic value till it is capitalized. When I buy a house I'm not purchasing the house for the sake of the lot or the dirt contained in the lot, I am buying it for the house that stands on the lot. Unfortunately, houses must use up land in order have a a foundation ( unless you're talking about seasteading or something) and there really is no way around this. It takes up space like you take up space standing where you are standing. If you have a house on a particular lot of land then it could be said that the land is yours even by use-occupancy theory. If you decide to build a garden or farm and it is tied to the value of your home ( i.e. a literal extension of your home) then I say its justified.

ok, so you are defining capitalism as state-capitalism. By that logic, then it is quite contrary to anarchism. I don't get the incompatibility with free enterprise though, unless you mean that under "capitalism", the state would still have monopoly over money currency, law, defense and mail delivery:lol:, therefore not allowing for the actual "free enterprise" in those areas.

There is no reason to conflate capitalism with free enterprise. Marx coined the term capitalism and he was certainly speaking of state-enforced private capital.

In otherwords how is landownership justified.

But doesn't such an approach assume that all consumers are the same? How do you know that poor people don't come to a coffee shop in a posh area? I think that by assuming that a single individual exists or that all individuals that exist are the same, the individualistic approach suffers from being not modeled on the real world, but on some fantastic and nonsensical Robinson Crusoe paradigm. Society is not just the sum of its individuals.

Thanks for that clarification. I don't really see the LToV as an absolute alternative to marginal utility nor am I asking you to forgo marginalism and take up LToV. I'm not very qualified in economics to judge either of the approaches to a full, not that I can't use common sense :). For now, I'm skeptical of both and I think that economics is a bogus "science".

As to being "ideologically tied" to a particular economic theory, I don't know what you're talking about.

I agree. Its just a fantastical theory based on non-real situations.

Also, check this thread out.

A better question would be; how is land ownership not justified? I mean, let's suppose its not justified for anyone to own any land, then which people in particular in society can tell a homeowner that the land his house happens to be built on is not also his? In other words, if I have a house , and a front yard, can anyone just come and set up a picnic bbq on the front yard of my house?

No, and that's kinda the point. There will almost always be consumers on the margins.

What is the relevance of this question?


No, that is not individualism at all. I don't assume this. Individualism promotes the opposite. Each individual is unique to an extent and has her own value scales.


I don't really know what you mean by individualist here. This is a new definition for individualism I've just seen you slap on.

Don't worry, I would gladly endorse the LToV if it actually was applicable to reality. I don't care about conclusions, only about sound methodology.

Don't worry, I've noticed economics is not your forte but that's ok. Not many people really get excited about economics and I would say that's because of the way it is taught to people today. Most of a person's life is economics but unfortunately again, the way it is taught does not connect with people as it should.

As far as economics being a science, I think there are some scientific applications ( gathering factual data) but the methodology of economics is , in my opinion, a 'social science' ( for lack of a better term and I don't believe 'social science' to be a hard science) I also happen to think economics is related to psychology in major ways.

Well, I could be wrong. Its just that before you gave me the impression that you are tied to only one way of thinking. I'll gladly stand corrected though.

We disagree. I say methods of methodological holism ( see particular variants of the LToV) fall into this realm of non-reality.