howdy folks
for your consideration, here is a debate begun with a marxist fellow tht asked if id debate him in chat online.
i have changed his name to a pseudonym.
i would appreciate if you fellas could help me catch any howlers i might have made, let alone his. as i would like to be better educated in economic matters.
Nir says:
hello
KnowsMoreThanMe says:
are you familiar with sraffa?
7:57pmNir
i dont know him beyond what ive read on wikipedia and from casual mentions on forums similar to ours.
7:58pmNir
shall we pause talking about the marginal revolution, and maybe have that more general discussion on value first ?
the problem is that subjective value theories fail because of the reswitching paradox discovered by sraffa
please share
there's no way to measure the marginal productivity of capital, sraffa showed
is there a way to measure how much i like my friends, and how much i dislike my enemies (i dont have many). does this mean i have neither friends nor enemies?
I'm not talking about that
sorry
I am talking about commodity values
so am i
I am talking about the cambridge capital critique
alright
so, my question is, if you subscribe to a subjective value theory, how do you evade the cambridge capital critique and the paradox of reswitching in the measurement of the marginal productivity of capital?
is the cambridge capital critique distinct from the paradox ?
no
not in essence
i suppose i would have to understand the criticism well before i could dare to respond to it.
in the cambridge capital critique, were cambridgites critiqueing various mainstream concepts, or was it cambridge types who were finding themselves critiqued?
the cambridge school was critiquing the neoclassical mainstream
oh well, i think the neoclassical mainstream is closer to the truth than the multivarious marxist schools, however i find it problematic, and my intellectual allegiance as it were is with austrian economics a la Ludwig von mises, Rothbard, reisman et al. who find much to critque in neoclassical theory
so perhaps i needn't sweat too much joke
well, there is a different flaw in the austrian school
there can't be forward markets in human labor in capitalist societies
so austrian assumptions can only describe slave societies, societies where the only workers are horses, robot economies, etc
i dont believe that for a second. what makes you think austrians are against people entering into contacts which determine future behaviours?
it's not an ethical issue
it's an analytical one
why so
it's not normative but descriptive
it's a methodological assumption
in what description of economics do you find it, what methodological assumption entails it?
it's fundamental to austrian economics
that there can be forward markets in human labor
no its not
it is the explanation of the origin of interest
what are you trying to tell me about the austrian theory of interest?
that it assumes that there can be forward markets in human labor
i thought you said it denies that possibility. make your mind up
no, reality denies that possibility
what evidence can you provide for that?
well, it's obvious that under capitalism laborers are free to seek another labor contract
consider possible terms (and commonly actually existing terms ) of the kind of contracts that would (and do arise) in capitalist societies
when i purchased my contract to rent my flat (which i share with my brother). i was asked how long i wanted my contract to run, if i wish to exit the term early, i will have to pay penalty.
my current employer requests i work a notice period
you are free to close your bank account and seek banking elsewhere, with another bank, yet if you owe your previous bank money, you cant wipe your hands of it.
capitalism, private property rights, liberty, grant individuals the freedom to enter into contracts, and secure promises, and negotiate penalties for breaking of set promises.
i think i shall pause here now
I am talking about the wage rate
the future price of labor
have you heard of temporary employment contracts, (6 month say). wage of such an individual can thereby by periodically renegotiated
perhaps your criticisms are meant in a different way to how they are coming across, but they seem trivial. perhaps because you have favoured short phrases. what am i to make of "the future price of labor". i ask who's labor?
you'll have to forgive me
I thought you were well-versed in the theory
"the theory" , WHAT theory?
if you can name it, i cant try to tell you if i know it
austrian economics, neoclassical economics
i know austrian economics, perhpas you dont.
what assumption does REALITY make that does not allow for forward looking contracts to have any meaning ?
i meant to say, why do you believe austrians are thwarted by reality, in that their theories involve consider how human individuals form agreements with each other. do you deny that individuals enter into agreements?
because workers are free to leave their jobs under capitalism
no they arent
if they have no obligations then they are free to do so. but if they have obligations then they have obligations.
do you deny individuals enter into agreements ?
that has nothing to do with it
it has everything to do with it. i thought you were familiar with what a contract is
you'll just have to forgive me
I have never denied that there are labor contracts
you did say that reality denies the possibility of their being forward markets in human labour
yes, forward markets
not labor contracts
lets see if you can describe in a few lines what a forward market is
am talking about future prices versus present prices
future values discounted by the interest rate
A forward contract is an agreement between two parties to buy or sell an asset at a specified point of time in the future
a forward market would be the forum in which such agreements are formed and dissolved.
i see nothing in this that is stumped by reality
if i tell you i am willing to sell you my computer a week from now for 5 of your homemade cakes. and you agree. then we have a futures contract. and it is one of many in the futures market.... reality seems to tolerate this fairly well
I am talking about investment
i dont think you know what you are talking about
as production in exchange with nature
productive investment treated as forward exchange with nature
are you saying that nature is so unpredictable a farmer cant possibly know what to expect the earth to give it when he puts a seed in the earth and tends it regular? is that what you are 'hinting' at with ambiguous terminology?
I am using the austrians own terminology
what is the meaning "forwad exchange with nature" , hello mr nature id like to exchange this with you... can you think of another way to say it ?
production is exchange with nature
capital is then the present value of all future consumption goods
thats nonsense after nonsense
ive never read anyone but you say this
I am citing Hirshleifer
you can go read it yourself
is he an austrian economist?
"Investment, Interest, and Capital"
yes
page 2
and page 12
would you happen to know his first name perchance?
jack
what makes you think he is austrian, perhaps he is... but ive not heard if him
?
he uses fisherian assumptions
these are the same as in the austrian school
I can give you some texts to look at if you like
ive certainly heard of fisher
ok, well i'm talking about fisherian interest theories
as used by the austrian school
but I thought you were more well-versed in these, I'm sorry
if you'd like to learn more about these issues I can direct you to some readings
dont worry about it, lets pick at what he is saying then. you may have been unfortunate and found qoutes from an offshoot that you are taking as austrian canon, or i may have misunderstood the meaning of those short qoutes. cant we discuss the?m
you first said the you consider it a fisherian principle that production is exchange with nature. please expland on that, so that i might try to agree with you
it's not my theory
i know you said it was fisherian
I'm only describing the methodology of the modern approach
if someone asks me what production is , i say that transformation of materials/goods into materials/goods with higher subjective valuation, as measured from the standpoint of the producer
austrian theory had to be revised because of the failure of bohm-bawerk's theory of interest
yes, great austrians have certainly contributed much and developed on from what bohm-bawerk discovered, as eocnomics didnt finish with him.
but I'm talking about the theory of interest
are you talking about it from a macro or micro perspective?
it was actually sraffa who showed that bohm-bawerk's theory of interest was untenable
I'm talking about marginal productivity theory
no you were talking about the theory of interest
bohm-bawerk's approach couldn't provide an index common to heterogeneous capital goods
i assume when you say "theory of interest", you refer to theories as to why there is a prevailing market rate of interest, (thats macro)?
the rate of interest has to be known in order to determine the marginal productivity of the capital good
thats not true
this was bohm-bawerk's theory
so you want me to talk about theories that have been since revised, and agree with you about those?
wouldnt you rather discuss the 'cutting edge' ?
it's a two-stage critique
What is a two stage critique?
the orthodox austrian theory relied on bohm-bawerk's theory of interest
but sraffa showed that this led to the reswitching paradox
you seem to be predominantly interested in economic history, and in who said what, and when, and what school they werein. but i thought we were going to discuss ideas themselves. but you awlays shy away and tell me that some person already answered this. when you could do much better simply by saying what they said in response, if it is the case that you agree with them, and in that way we could
argue
no, you keep interrupting
ok, if you like we can have a signal , when youve said you piece, i wont interject until you write the word END in bold. then i'll know its my turn.
what I'm saying is that austrian theory had to be revised because of sraffa's critique
that is when fisherian interest theory displaced the orthodox theory
and it is fisherian theory which now underwrites the austrian theory of interest
but I had assumed that you were very well-versed in these issue, I'm sorry
so I'm not sure how to proceed now
*issues
(say END?)
yes, ok
ok so lets back up please.
i want to make sense of you saying that austrian economics is flawed. you said one of the many reasons its flawed, is that to be understood it requires that forward contracts be possible, specifically there must be a forward market in human labour. this assumption is a downfall, as reality simply will not allow this. i must say this confuses me. and if you could help me understand this point,
i would appreciate that. END
yes, I'd like to -- this is a critique of Fisherian interest theories
I can try to explain it as best as I can
pause,wait
does the possibility of forward market in human labour in reality, rely on any one particular interest theory?
please forgive my early interjection but i want to make sure this will be worthwhile
forward markets in labor are theoretically possible, just not forward markets in free human labor
because workers are free to leave their jobs
but this presupposes an understanding of what is meant by a forward market in fisherian theory
why does it presuppose it? what is the connection between workers leaving their jobs have with competing interest theories of which fishers theories are one?
well, either I can try to explain the background, or I can give you some readings
maybe give a line or two, the flavour of it?
it has to do with the idea of future prices determining present prices
because of discounting by the rate of interest
it's related to the notion of roundaboutness of production in bohm-bawerk
so let me know how you'd like to proceed
because I have to go offline in a minute or two
I can suggest some stuff to read or we can talk about what would be best to read or I can try to go into the background more next time
ok, before you go, can you just give me your impression, in this world, in reality, outside of the theories which we will explore later. do you see that there are individuals now who do form forward contracts? and then more specifically that a subset of these contracts involve trading of labour services?
yes, but that's not the issue
I'm not disputing that
were you yessing to both or just the first?
I am not disputing the existence of labor contracts
in these markets where these contracts exist, can the markets best be described as socialist markets, or capitalist markets, or what?
I am talking about capitalist labor markets
markets in human labor power
the critique has nothing to do with socialist relations of production
so here you say they cant exist, and also that they do exist. that seems like a contradiction to me
forward markets
not labor markets
perhaps you were imprecise how you answered before lets try again
in reality, outside of the theories which we will explore later. do you see that there are individuals now who do form forward contracts? and then more specifically that a subset of these contracts involve trading of labour services?
the answer to this question will depend on what you mean by a 'forward contract" as opposed to a 'contract'
A forward contract is an agreement between two parties to buy or sell an asset at a specified point of time in the future.
perhaps the buying and selling of labour such as i agree to hire you next week to wash my windows, and i will pay you then. example one of a futures contract in labour
that's a totally separate issue
no, its the issue in question.
if that's what you mean by "forward contracts", obviously such contracts exist
I don't see what that has to do with anything
there cant be and yet there are. contradiction
not, that's not what I mean by a forward market
oh................
so it's a straw man
but never mind
im not sure what meaning of forward market your giving up, or what youd give it up in favour of. perhaps you will know next time we talk
I know now
I thought you were familiar with the theory
I apologize
well, it took you 3 attempts to answer the question beore you diagnosed it as strawmen. what does that tell you?
if you want to have your own personal meaning of forward market that i cant access like wittgensteins beetle then your entitled
I am talking about the fisherian meaning
not my meaning
are you adamant the fisher had his own distinct meaning to forward market than for example what wikipedia has written as an entry on 'forward market' ?
I will have to look at the wikipedia entry
but I can't do it now
fair enough
we can talk about it more next time
if you'd like
or i can tell you some stuff to read about it
if its available online then perhaps
no, I don't think so unless I scan in some stuff
im suprised it will take that much effort just to determine whether or not future markets CAN exist, and therefore that if they cant austrian economics is a failure
how many scholarly hours of research have you spent determining this, that i would need to budget for to catch up with you?
hundreds of hours, surely
but I could save you some time, probably
the critique is fairly simple
i shall have hope of understanding it then
yes, I'm sure you can understand it
fine
I have to go now
I'll be back later
bye then
bye
/////what japes!
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
That took some time to read :P
The guy is coming off as talking complete nonsense to me. He claims a load of fallacies, and then when shown the contradiction decides to change the definition of otherwise unambiguous words.
I think you may be wasting your time with him.
Edit: I looked up Hirshleifer. I don't think he was an Austrian economist at all (though I didn't look him up in much detail). He looks more like a neoclassical one to me. And Fisher is also from the mathematical school, known well for such enduring fallacies as the Equation of Exchange. So what that has to do with Austrian economics I don't know about either.
I think he's the one strawmaning you, and doing so on purpose...
ha, well, i hope you dont regret having invested the time reading it ex-post ;-)
is there such a thing as an orthodox position on austrian interest theory?
I'm not reading that crap. I saw the word Sraffa, and that alerted me to the fact that he's probably a troll or someone who knows little economics but thinks he's found the ultimate solution to the Austrian School. In reality, Sraffa came at a time when the Austrian School was somewhat disoriented, and in retrospect, he left it mostly unscathed. Lachmann has a good article on the exchange between him and Hayek, and Robert Murphy has a couple of articles on the vicious little man.
-Jon
Freedom of markets is positively correlated with the degree of evolution in any society...
Funny, I am going to be having this discussion with a Marxist in a couple weeks.
One way to attack this would be via finding out what the Marxist position is, which wasn't too clear/explicit in the digression. Compare the two theories, in this example, it would be Subjective Theory of Value vs. Labor Theory of Value.
Fred Furash: The guy is coming off as talking complete nonsense to me.
The guy is coming off as talking complete nonsense to me.
I agree. It sounds like he doesn't know what he's talking about, and if he does, he's a piss-poor communicator.
But anyways, when he says, "because workers are free to leave their jobs under capitalism"And you say, "No they aren't. if they have no obligations then they are free to do so. but if they have obligations then they have obligations"I fear you're talking past one another, that you both have different assumptions about what is entailed by the term "capitalism." In the interest of not starting this particular discussion/debate again on this forum, let's leave it at that. I think it's important to hash out these assumptions before-hand, otherwise you'll never have any idea what one another is talking about.I also fear you're not thinking about a free enough market, if you say that workers can be obligated to remain in a particular job. The current market tolerates such things as "non-compete" agreements, and for instance my job made me sign a waiver of claim to any intellectual property I might develop working in a market-research capacity: any white papers to which I contribute, any algorithms I assist in developing, any insights at which I arrive, are the sole property of my employer. A free market doesn't tolerate these things..
============================
David Z
"The issue is always the same, the government or the market. There is no third solution."
You may want to read Murphy's critique of Carson's argument for the LTV. (sorry, no link)
In a nutshell, I think it says something like, "Look, in a free market the wages paid to labor tend (very closely) to approximate the value of goods produced. However, subjective valuation of final goods and services, coupled with a truly free market would tend towards this sort of equilibrium, and it's mistaken to assume that wages are the determinant of value and not vice versa."
i appreciate the response, im getting some good hints here, thanks guys
i want to pick up on this bit
"I also fear you're not thinking about a free enough market, if you say that workers can be obligated to remain in a particular job. The current market tolerates such things as "non-compete" agreements, and for instance my job made me sign a waiver of claim to any intellectual property I might develop working in a market-research capacity: any white papers to which I contribute, any algorithms I assist in developing, any insights at which I arrive, are the sole property of my employer. A free market doesn't tolerate these things"
i just want to clarify that i meant if a worker has been paid in advance to do a job of work , then he is olbiged to fulfil his half of the bargain.
in the sense that, if i turn up for work, and my boss says, heres 10£, your the guard of the front door for the next hour, and i said , sure cool, and took his 10£, and after 5minutes wondered off, i would be breaching my obligation.
this is in contrast to, my being offered 10£ to guard the door, with his promise to pay me contingent on my doing the guarding, whereby the end of the day rolls around and we just find out if i did the door guarding or not, and that determines if he is obliged to give me the cash or not.
am i making any sense? or am i way off? i might be way off.
nirgrahamUK: i just want to clarify that i meant if a worker has been paid in advance to do a job of work , then he is olbiged to fulfil his half of the bargain. in the sense that, if i turn up for work, and my boss says, heres 10£, your the guard of the front door for the next hour, and i said , sure cool, and took his 10£, and after 5minutes wondered off, i would be breaching my obligation.
Gotcha. That's a different story then. The worker's desire to be paid in advance would of course be discounted by a number of factors including opportunity cost (interest/time value) and default risk (the risk that the worker decides not to show up). The extent of such a futures market would be limited by (at least) these two constraints. I have a hard time imagining, for instance, that one might receive a year's salary in advance - the moral hazard risk is probably just too high. On the other hand, ostracism can go a long way to right these wrongs...
If Paul default on an agreement to work for Peter, and Peter already paid him, he might have a hard time collecting from Paul, but his friends down at the farmers' market might be inclined to tack on an "a$$hole tax" to anything Paul wanted to buy. In close-knit communities, it's not at all hard to imagine this sort of "justice" being meted out. One's reputation can carry a long way...
So, I read it anyway... knew I shouldn't have. This guy is evasive as hell, and cryptic. I think he's touching upon a criticism Lachmann documented, that has been disposed of.