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Marxism and the workers

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Buzz Killington posted on Sun, Apr 29 2012 11:37 AM

What does everyone here think of Marxism? Doesn't Karl Marx make a good point about capitalists and the workers?

I.e. the capitalist does nothing but sit around and give the workers only a portion of the value that they produce?

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The price of factors of production are determined via supply and demand. Thinking that workers receive a share of their factorites profits is like thinking that the iron that goes into the car receives a share of the cars selling price.

For more, check out Böhm-Bawerk's Marginal pairs: http://mises.org/daily/5903/

After learning what they are, see them applied to labor economics: http://mises.org/daily/5934/The-Irrelevance-of-Worker-Need-and-Employer-Greed-in-Determining-Wages

Finally, some stuff I just found that might be of interest as well:

http://mises.org/daily/1680

http://www.youtube.com/watch?v=uOzotWrHheU

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By "value" I mean how much money a certain item will bring. An example would be if I was hired by Willy Wonka to make chocolate, I create the "value" (the chocolate) through my labor, yet he only gives me a portion of the money that results from him selling the chocolate on the market.

 

That's a common misconception of the origin of value.  Your labor did not create the value; the buyers' desire did.  That is, your labor created chocolate.  The buyers' desire for chocolate made that chocolate valuable.  In your example, then, Mr. Wonka paid you an amount based on his desire to own the chocolate you produced and your unwillingness to produce the chocolate without compensation.  He purchased the output of your labor with a fee agreed upon by both of you.  After the transaction, why is it any of your business what he does with it, either eating it himself, or selling it to someone else?


faber est suae quisque fortunae

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The price of factors of production are determined via supply and demand. Thinking that workers receive a share of their factorites profits is like thinking that the iron that goes into the car receives a share of the cars selling price.

Why does it matter whether or not the price is dictated by "supply and demand"? Whatever the price is dictated by, I am still getting money witheld from me so my employer can become rich.

"Nutty as squirrel shit."
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I decided to make this post into a bunch of three point responses... Why? For the lolz.

"What does everyone here think of Marxism?"

  1. I quite like the works of Karl Marx. They are exceedingly interesting and somewhat useful.
  2. The ultimate conclusions made by Marx, were incorrect in almost every major way. Marx was pretty obviously a megalomaniac who fudged his own methodologies and conclusions so as to lead to his desired conclusions. 
  3. Marxism, as in the traditional ideology that spawned from Marxism, is not only one of the most idiotic doctrines that has ever existed, but also the one responsible for the most tragedy.

Anyway if I had to think of three concise points which destroyed Marx's philosophy:

  1. Historical materialism just plain does not make sense, why is it that all human actions are a result of economic forces? It's not an answer and it defies the very laws of causality. "Well we have this world, and then humans originate, and both before and immediately afterwards their actions are determined based upon instinct, the environment, and random happenstance. Then, suddenly, man creates capital and the type of capital available becomes the thing that shapes all of his actions..." Yea... This theory is unscientific to say the very least.
  2. Capital accumulation in a capitalist society will almost certainly lead to an increase in overall employment either by immediately increasing the value of labor within a firm, or by giving the ability for new firms to expand or come into existence through labor cost-savings.
  3. There's no reason, material or otherwise, that after the fall of a capitalist society that the ignorant and impoverished proletariate to act in a harmonious manner, leading to one ultimate result which is perfect equality and material excellence... I call bullshit. 

"Doesn't Karl Marx make a good point about capitalists and the workers?"

Three points that show this is, usually, not so.

  1. Entrepreneurs, managers, and landowners all serve a very important purpose. Capitalists and landowners perform a similar service of ensuring that two of the factors of production: labor, capital and land, are put to their most ideal uses. Entrepreneurs and landowners take a loss if they do not sell these things to their most valuable uses, which will almost always be those which are more valuable and therefore receive a higher amount of profit. In this way they serve an essential function: They ensure that things are producing in the most effective and desired areas. It is also important to note that both of these services are extremely risky, and if you make a bad investment on one or another then you'll end up with a ton of debt, as opposed to the laborer who just needs to find a new job and who has had nothing but a net gain from his experience at the failed firm or endeavor. This ensures the best pay to laborers and the best deal to consumers. What part of this is not positive? Furthermore managers assure that labor reaches its maximum output potential, by using it intelligently wherever it needs to be allocated, which leads me to
  2. Labor is not inherently valuable. If I go and hit a stick against a barn for an hour, this does not make either the stick or the barn more valuable, indeed labor can oftentimes make things less valuable than they were. For this reason the labor theory of value is inherently bunk. It is brains, as much as brawn, which make labor a valuable commodity. If laborers weren't given the proper technical instructions or provisions then they could realistically create nothing of value. If the laborer's efforts weren't allocated properly, then they would not be able to create something of optimal value. In this way creation is dependent upon two things: ability to produce and ability to produce optimally. Traditional labor is only partially involved with the former. Capital, land, knowledge, and  time are all involved in the first process as much as labor. Without a proper capital supply the laborers could not have produced what they did, nor without the land, nor the proper technological knowledge, nor the ability to take time off from present production (production which produces results almost instantly) to produce something of greater output and value. If I couldn't get any more money from any source, then it would be irrelevant whether or not if by taking one month I could create something that would give me a net profit of a million dollars, because I would starve in the meantime. In this way loaned funds and money-capitalists are essential to any long-lasting production project. Meanwhile, as for ensuring that labor makes the thing of highest value, this is entirely performed through non-labor means.
  3. If workers are being exploited, and nothing other than laborers are needed, then why wouldn't laborers open up their own firms? They could easily undercut capitalistic firms because they can guarantee higher wages to the laborers, to steal away the labor supply available to the capitalists, and provide lower prices for the end result. If non-labor services serve no purpose, there should be no negative repercussions of this, AT ALL.

If you're really interested in the subject of Marxism, especially a criticism of it then I'd recommend any of the following (these are all world class works by the way):

The section on Marxism in "Theory and History" by Mises. You can get it on PDF from this site

The section on Marxism in "Capitalism, Socialism, and Democracy" by Schumpeter. You can find a PDF of this online

Any section from "Karl Marx and the Close of His System" by Eugen Bohm Bawerk

 

If you're looking for nothing more than a description of all the general points of Marxism then any decent economic history can help you out there.

Thanks for info, I'll read up on it.

"Nutty as squirrel shit."
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Buzz Killington:
Because I'd still be given only a portion of the money coming from the product that I produce.

If that's the case, and all it takes is your labor to produce this product, then why the hell are you working for this guy at all?  Just produce the product yourself and keep all the profit.

 

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I watched the video I linked. It blew my mind. I suggest you watch it too. Wow. I had never thought of risk and time preference like that:

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If that's the case, and all it takes is your labor to produce this product, then why the hell are you working for this guy at all?  Just produce the product yourself and keep all the profit.

Lol, that's what I said. But I didn't know too well how deep my question actual question was. Watching that video by Salerno made so many things clear to me.

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Buzz Killington:
The price of factors of production are determined via supply and demand. Thinking that workers receive a share of their factorites profits is like thinking that the iron that goes into the car receives a share of the cars selling price.

Why does it matter whether or not the price is dictated by "supply and demand"? Whatever the price is dictated by, I am still getting money witheld from me so my employer can become rich.

No, the conclusion that you are having money witheld from you depends on the Marxian model where you are "producing the product" and the capitalistist is charging you to use his factory. But this model was refuted by marginal economics, and with it goes that conclusion. Workers are not the ones who "produce the product", the capitalist is. He pays them a market wage to perform a service for him. Wages are not determined by what the capitalist produces.

Its really kind of obvious, just think about iron instead of workers. The iron that goes into a car might say "The car is really made of me, so I should get the money it is sold for. Iron only gets 75% of what the car sells for, the capitalist is witholding money from me!". But we know that iron has to be bought at a market price becaus people who build cars have to compete with people who build bridges or bikes. What the car sells for does not concern the price of iron. Its the same with workers.

The funny thing is, prctically everyone agrees about marginal utility in theory. But for some reason it goes out the window as soon as we are talking about wages.

"They all look upon progressing material improvement as upon a self-acting process." - Ludwig von Mises
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Buzz Killington:
What does everyone here think of Marxism? Doesn't Karl Marx make a good point about capitalists and the workers?

I.e. the capitalist does nothing but sit around and give the workers only a portion of the value that they produce?

No. The capitalist pays the worker a given amount for the latter's labor. Whether that labor is used to provide a service or manufacture products is irrelevant. Whether people are willing to pay the capitalist more for the service or products is also irrelevant. If the worker thinks he can and should be paid more, he's free to not work or stop working for the capitalist.

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Autolykos:

Buzz Killington:
What does everyone here think of Marxism? Doesn't Karl Marx make a good point about capitalists and the workers?

I.e. the capitalist does nothing but sit around and give the workers only a portion of the value that they produce?

No. The capitalist pays the worker a given amount for the latter's labor. Whether that labor is used to provide a service or manufacture products is irrelevant. Whether people are willing to pay the capitalist more for the service or products is also irrelevant. If the worker thinks he can and should be paid more, he's free to not work or stop working for the capitalist.

 

According to this metric the US Constitution is a voluntary contract because you can go live somewhere else.

In States a fresh law is looked upon as a remedy for evil. Instead of themselves altering what is bad, people begin by demanding a law to alter it. ... In short, a law everywhere and for everything!

~Peter Kropotkin

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Laotzu del Zinn:
Autolykos:
If the worker thinks he can and should be paid more, he's free to not work or stop working for the capitalist.
According to this metric the US Constitution is a voluntary contract because you can go live somewhere else.

How in the world did you come to that conclusion?

 

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Laotzu del Zinn:
According to this metric the US Constitution is a voluntary contract because you can go live somewhere else.

No. The Constitution monopolizes a plot of land that would be "free for all humans" otherwise. Factories are monopolized by their owners because they created them. They would not exist without them. (Also, nothing short of violence could change the owner of the US, a factory is easily sold if you offer more than it is worth.)

I know socialists don't believe that, because they treat capital as simply falling from the sky at random intervals. Marxist theory starts its analysis in the middle, with capital already formed, therefore the capitalist is merely some lucky guy who happens to occupy a factory that just as well could be owned by the workerz. But in the real world capital accumulation does require calculation, which can't happen without entrepreneurs and private ownership. The utter lack of car factories in every place on earth except a few propertarian ones should attest to that.

"They all look upon progressing material improvement as upon a self-acting process." - Ludwig von Mises
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Esuric replied on Mon, Apr 30 2012 5:16 PM

 What does everyone here think of Marxism

Marxism is the only internally consistent socialist framework and, for quite some time at least, it corresponded fairly well to the empirical facts. Nevertheless, the world today looks very different from the one that is predicted by Marx's framework, and for good reason. The central premise of Marxism, namely that labor magically creates value during the process of production, is incorrect (and therefore all of the conclusions derived from this premise are incorrect).

 I.e. the capitalist does nothing but sit around and give the workers only a portion of the value that they produce?

First, the laborer gets paid the full net present value of his/her productive contributions to the temporal process of production. It is not the case that laborers instantaneously transform initial inputs into final outputs. They (along with other fops) manage to do this over time. If labor was the only input, and if the fruits of labor came to fruition instantly, then you would be correct (all factors of production are co-dependent; labor actually produces nothing on its own). 

Next, the capitalists provide the workers with productive capital goods which increase their productivity. The laborer is free to save and create his own capital goods, but this is extremely inefficient and takes a torrential amount of time. Additionally, the capitalist's endeavor is inherently risky. He only gets paid once the production process is completed. In fact, if his investment is not successful, he doesn't get paid at all. The laborer, on the other hand, receives his payments no matter what until the contract is terminated (by either side). In other words, the laborer gets paid whether the investment is profitable (successful) or not.

For all these reasons, you are incorrect.

"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."

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No. The Constitution monopolizes a plot of land that would be "free for all humans" otherwise.

Yep.  Property does the same thing.  Are you going to assume a right to property in order to prove a right to property?

Factories are monopolized by their owners because they created them.

They're superhumans who build the factories themselves?  Source plz

Regardless, countries are monopolized because their government created them, and assumes the risk of invasion in doing so.

They would not exist without them.

That's absurd.

(Also, nothing short of violence could change the owner of the US, a factory is easily sold if you offer more than it is worth.)

Nothing short of violence can insure a right to property in the first place, so I don't see what the big deal is.  It's not as if all violence is all bad all the time.

I know socialists don't believe that, because they treat capital as simply falling from the sky at random intervals.

trololol

. But in the real world capital accumulation does require calculation, which can't happen without entrepreneurs and private ownership.

There's a caveat here... if we are defining capital as "legal ownership over the means of production" then yes, this requires the ownership principle.  If we're just defining capital as the means of production themselves... nothing requires that the possessors and controllers over it be granted legal monopoly status upon it.

The utter lack of car factories in every place on earth except a few propertarian ones should attest to that.

First; "factories" are as old as dirt, and as culturally diverse too.  But if we're talking about modern factories... yes, mechinization requires a certain amount of technical progress.  Capitalism truly provides this progress better than all the world's previous systems combined.  Yet there is nothing inherent to the mechanization process that requires ownership, merely what is required is legitimized control; which could be provided in a socialist system (if we're assuming Communism does not equal "the gubment runs everything")

 

In States a fresh law is looked upon as a remedy for evil. Instead of themselves altering what is bad, people begin by demanding a law to alter it. ... In short, a law everywhere and for everything!

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Now wait a second. No one that I've heard of actually is against property. Even the staunchest left-anarchists believe in property - communal. So the question is not whether property is moral, but who should get to exclude others. We propose that homesteading and trade should determine exclusion rights, left-anarchists disagree (some just want a lower abandonment time, like mutualists, while an-syns want (I think) communes controlling the property, regardless of who first put it to use or created the capital).

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"By "value" I mean how much money a certain item will bring."

 

Well then you have a different definition of value to Marx. From the very first page of the first volume of Capital:

 

...The utility of a thing makes it a use value.[4] But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity. A commodity, such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use value, something useful. This property of a commodity is independent of the amount of labour required to appropriate its useful qualities. "

...Exchange value, at first sight, presents itself as a quantitative relation, as the proportion in which values in use of one sort are exchanged for those of another sort,[6] a relation constantly changing with time and place. ...exchange value, generally, is only the mode of expression, the phenomenal form, of something contained in it, yet distinguishable from it."

...Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskilful the labourer, the more valuable would his commodity be, because more time would be required in its production. The labour, however, that forms the substance of value, is homogeneous human labour, expenditure of one uniform labour power. The total labour power of society, which is embodied in the sum total of the values of all commodities produced by that society, counts here as one homogeneous mass of human labour power, composed though it be of innumerable individual units. Each of these units is the same as any other, so far as it has the character of the average labour power of society, and takes effect as such; that is, so far as it requires for producing a commodity, no more time than is needed on an average, no more than is socially necessary. 

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

... We see then that that which determines the magnitude of the value of any article is the amount of labour socially necessary, or the labour time socially necessary for its production."

 

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

 

So Marx differentiates between 3 different types of value: 'use-value' (a subjective thing that is dependent on the evaluation of the user), 'exchange-value' (the same as what we would call price), and 'value' (the amount of 'socially-necessary' labour-time required to re-produce that commodity). It is also worth nothing that Marx distinguishes between 'concrete' labour, 'abstract' labour, 'complex' labour, and 'simple' labour.

It is perfectly valid and fine to call Marx's LTV bunk, but at least read the book to know what it is he says.

 

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