How physics is validating the labour Theory of Value Found this interesting tidbit. Let's discuss. By Paul Cockshott
http://21stcenturysocialism.blogspot.com/ When I was a student my economics professor told us that whilst the labour theory of value had been an important historical stage in the development of economics, it was now known to be fatally flawed. 20th century economists such as Sraffa and Samuelson had shown that it was unnecessary to accord labour any special place in our understanding of prices. Instead, the structure of prices could be perfectly well understood as the result of the monetary costs faced by firms and the behaviour of profit maximising entrepreneurs. If there was in reality no such thing as labour value, it followed that Marx's theory of exploitation was an invalid incursion of moral prejudices into the 'positive science' of economics. The professor who taught us this, Ian Steedman, was actually quite left wing, an active member of the Communist Party. This is just an anecdote, but fact that even a prominent communist intellectual believed that the central component of Marx's theory was scientifically worthless is significant. In retrospect it gave an indication of how poorly prepared the intellectuals of the communist movement were to be, when faced with the very intense ideological attacks on socialism which unfolded in the 1980s and 1990s. But 25 years ago help came from an unexpected source. Two mathematicians Moshe Machover and Emanuel Farjoun, wrote a book called the Laws of Chaos. Their book gave a radically new way of looking at how capitalism worked as a chaotic and disorganised system. Farjoun and Machover had the the insight to see that physics had already developed theories to describe similar disorganised and chaotic systems. In a market economy, hundreds of thousands of firms and individuals interact, buying and selling goods and services. This is similar to a gas in which very large numbers of molecules interact, bouncing off one another. Physics speaks of such systems as having a 'high degree of freedom', by which it means that the movements of all individual molecules are 'free' or random. But despite the individual molecules being free to move, we can still say things about them in the aggregate. We can say what their average speed will be ( their temperature ) and what their likely distributions in space will be. The branch of physics which studies this is statistical mechanics or thermodynamics. Instead of making deterministic statements, it deals with probabilities and averages, but it still comes up with fundamental laws, the laws of thermodynamics, which have been found to govern the behaviour of our universe. Now here is the surprise! When they applied the method of statistical mechanics to the capitalist economy, they found that the predictions it made coincided almost exactly with the labour theory of value as set out in volume 1 of Marx's Kapital. Statistical mechanics showed that the selling prices of goods would vary in proportion to their labour content just as Marx had assumed. Because the market is chaotic, individual prices would not be exactly equal to labour values, but they would cluster very closely around labour values. Whilst in Kapital I the labour theory of value is just taken as an empirically valid rule of thumb. Marx knew it was right, but did not say why. Here at last was a sound physical theory explaining it. It is the job of science to uncover causal mechanisms. Once it has done this it can make predictions which can be tested. If two competing theories make different predictions about reality, we can by observation determine which theory is right. This is the normal scientific method. Farjoun and Machover's theory made certain predictions which went directly against the predictions made by critics of Marx such as Samuelson. In particular their theory predicts that industries with a high labour to capital ratio will be more profitable. Conventional economics predicts that there will be no such systematic difference between the profit rates in different industries. When put to the test it turned out that Farjoun and Machover were right. Industries with a high labour to capital ratio are more profitable. But this is exactly what we should expect if the source of profit was the exploitation of labour rather than capital. Their theory made predictions which not only turned out to be empirically spot on, but at the same time verified Marx's theory of the exploitation of the worker. The next big advance was made by the phsyicist Viktor Yakovenko, who showed in his paper 'the Statistical Mechanics of Money' that money in a market economy played the same role as energy in physics. Just as energy is conserved in collisions between molecules, so money is conserved in the acts of buying and selling. So far so obvious! What was not obvious was what this implies. Yakovenko showed that the laws of thermodynamics then imply that the distribution of money between people will follow the same form as the distribution of energy between molecules in a gas : the so called Gibbs-Boltzmann distribution. This sounds very scientific, but what does it actually mean? What the Gibbs-Boltzmann distribution of money says is that a few people with end up with a lot of money and a lot of people with end up with very little money. It says that the distribution of money will be very uneven, just as we see in capitalist society. In fact Yakovenko showed that the distribution of wealth in the USA fits the Gibbs-Boltzman distribution pretty closely. There is a tendancy to think that rich people owe their wealth to intelligence or effort, but physics tells us no. Given a market economy, then the laws of chance mean that a lot of money will end up in the hands of a few people. In fact when we look at the USA we find that the distribution of wealth is even more uneven that we would expect from the Gibbs-Boltzmann law. If the Gibbs Boltzman law held, there would be millionaires but no billionaires. Why the disparity? Yakovenkos original equations represented an economy that is rather like what Marx called simple commodity production. It assumed only buying and selling. More recent work by Yakovenko and Wright, has shown that if you modify these equations to allow either the earning of interest on money, or the hiring of wage labour, then the equations predict a polarisation of the population into two groups. The great bulk of the population, the working class and petty bourgeois, follow a Gibbs-Boltzmann income distribution. But there is a second class, those whose income derives from capital, whose wealth with follow a different law, what is called a power-law. Again, look in detail at the distribution of wealth in and you provide exactly the distribution predicted by Yakovenko's theory. This, says Yakovenko, proves that Marx was right when he said that modern society was comprised of two distinct and opposed classes : capitalists and workers. So modern physics has shown that not only was Marx right in his basic analysis, but he was right because his conclusions follow from the most basic laws of physics, the laws of thermodynamics. There is also a less obvious conclusion that we can draw from physics relating to the undesirablity of Market Socialism. We can see from Yakovenko's work that a market socialist economy would also have a very uneven distribution of money. There too the Gibbs-Boltzmann law would rule. A small number of people or co-operatives would end up with a lot of money, and many such people or co-operatives would end up poverty stricken. From this capitalism would be regenerated. As Lenin wrote : "small production engenders capitalism and the bourgeoisie continuously, daily, hourly, spontaneously, and on a mass scale". Also a good read: Farjoun & Machover - Laws of chaos:
http://207.45.187.42/%7Ewright/fm.pdf
All you have to do to disprove any objective theory of value is find two people that disagree on the value of objective theory of value. You just found that.
It made me laugh.
Freedom of markets is positively correlated with the degree of evolution in any society...
I will start with the assumptions made in the article:
1. Humans are all the same and under the same stimulations will act in exactly the same manner.
2. Humans can be given exactly the same stimulations that mimic reality.
3. The sum of the parts, individual experiments, is equal to the whole.
Neither of 1 or 2 are true. It is silly to think that two individuals much less millions would behave the same in the same situation like particles do. Then you have to also assume that you can break reality down into experiments that can be given to prove humans are the same when humans have wildly varying experiences. Then you have to prove 3 and that is not even true for physics itself. Organization matters especially in a living system.
In my opinion without these assumptions the whole logic applied to economics breaks down.
In a market economy, hundreds of thousands of firms and individuals interact, buying and selling goods and services. This is similar to a gas in which very large numbers of molecules interact, bouncing off one another
But despite the individual molecules being free to move, we can still say things about them in the aggregate. We can say what their average speed will be ( their temperature ) and what their likely distributions in space will be.
The branch of physics which studies this is statistical mechanics or thermodynamics. Instead of making deterministic statements, it deals with probabilities and averages, but it still comes up with fundamental laws, the laws of thermodynamics, which have been found to govern the behaviour of our universe.
Go write a program to model the pressue of an ideal gas at constant volume. Allow the particles to be positioned randomly at each timestep. Tell me there is an overall constant pressure. No there's not. 0 < P < Pmax.
Statistical mechanics showed that the selling prices of goods would vary in proportion to their labour content just as Marx had assumed.
But its heterogenous. And is not even the primary input in many goods. See diamonds...
Because the market is chaotic, individual prices would not be exactly equal to labour values, but they would cluster very closely around labour values. Whilst in Kapital I the labour theory of value is just taken as an empirically valid rule of thumb. Marx knew it was right, but did not say why. Here at last was a sound physical theory explaining it.
In particular their theory predicts that industries with a high labour to capital ratio will be more profitable.
Conventional economics predicts that there will be no such systematic difference between the profit rates in different industries.
But this is exactly what we should expect if the source of profit was the exploitation of labour rather than capital.
Just as energy is conserved in collisions between molecules, so money is conserved in the acts of buying and selling. So far so obvious!
What the Gibbs-Boltzmann distribution of money says is that a few people with end up with a lot of money and a lot of people with end up with very little money.
It also assumes that any gas particle can be anywhere on the x axis at any time. So a gas molecule could have super high energy one second and very low energy the next. So the prediction from this would be that we're all fabulously wealthy 1 day of the year and poor the rest of the time.
It says that the distribution of money will be very uneven, just as we see in capitalist society.
In fact Yakovenko showed that the distribution of wealth in the USA fits the Gibbs-Boltzman distribution pretty closely.
There is a tendancy to think that rich people owe their wealth to intelligence or effort, but physics tells us no. Given a market economy, then the laws of chance mean that a lot of money will end up in the hands of a few people.
In fact when we look at the USA we find that the distribution of wealth is even more uneven that we would expect from the Gibbs-Boltzmann law. If the Gibbs Boltzman law held, there would be millionaires but no billionaires. Why the disparity?
So modern physics has shown that not only was Marx right in his basic analysis, but he was right because his conclusions follow from the most basic laws of physics, the laws of thermodynamics.
We can see from Yakovenko's work that a market socialist economy would also have a very uneven distribution of money.
Seriously. Are marxists all a bunch of non-natural-science non-engineering bachelor degrees? Please respond to this post. Currently you are using the mises.org boards as kind of a personal blog. Stick with a thread. Participate intelligently in the discussion. Otherwise you're just trolling and wasting everyone's time.
1. I seem to remember that it didn't take statistical mechanics to realize that if you make your money by ripping people off, then the more people you rip off, the more money you make. Thus the more workers you have, the more profitable you will be. People grasped this over a hundred years ago.
Further, I remember that people looked into this and found out that it's NOT true. The profits are not proportional to the number of workers. In other words, there is an error of fact here.
2. I detect a flaw in the reasoning as well.
A. If we assume the laws of statistical mechanics are true in the economic universe, then the economic universe will behave as if the labor theory of value were true.
B. Therefore, the labor theory of value is true.
That's like saying:
A. If we assume the moon is made of green cheese, then it will rot and smell something awful
B. Therefore, the moon will rot and smell something awful.
3. Of course, the assumption that the economic universe is like the atomic universe is a big mistake, as pointed out very often on this site. As an example: If we assume people in cars drive by the laws of statistical mechanics, then they will wind up evenly [or at least randomly] distributed along the face of the globe. And yet, on a day when there is a football game, there seems to be a big clustering of cars near the stadium. And on days when the stadium is closed, the cluster of cars disappears. Why is that?
4. I'm not sure I get this bit of reasoning either:
A. The distribution of wealth in the USA follows a Gibbs Boltzman distribution pretty closely.
B. Therefore, modern society is composed of two distinct and opposed classes.
So we may also say that
A. The distribution of molecules in a gas follows the Gibbs Boltzman distribution very closely.
b. Therefore molecules in a gas are composed of two distinct and opposing classes.
"No, of course not. Only when there's hiring of wage labor."
"Oh."
5. This one is a real whopper: "So modern physics has shown that not only was Marx right in his basic analysis, but he was right because his conclusions follow from the most basic laws of physics, the laws of thermodynamics."
The laws of thermodynamics assume the molecules do not have free will. The laws do not apply to humans. I mean, really.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
Rob:If there was in reality no such thing as labour value, it followed that Marx's theory of exploitation was an invalid incursion of moral prejudices into the 'positive science' of economics.
The exploitation theory was destroyed by introducing a better understanding of what interest is, thanks Bohm Bawerk. It's demise had nothing to do with the destruction of the LTV, which also occured for other reasons. Mostly attributed to placing basic common sense and logic against LTV, at which time the LTV crumbles terribly.
Rob do you have a serious critique of Subjective Theory, and marginal value theory? I've not had one person explain LTV to me that didn't sound like a joke.
No one can explain to me why it takes 8-16 hours for me to produce a foot of poo in my toilet, yet it's worth essentially nothing. Sorry for the vulgarity but it's a hilarious point to make. According to your LTV there should be some objective value assigned to my poo.
I was reading through on the wikipedia page... Basically the LTV states that GIVEN a laborer is being employed to some end by a capitalist, the final price of that good is dependent only on the labor that went into it. So this formulation sneaks in a sort of market filter on "useless" labor, such as bowl movements.
What it also does is demonstrate that labor cannot have any known value outside of capitalism, since anyone outside of a capitalist's control no longer has the aforementioned filter. Also that the "labor" of capitalists themselves (in managing capital) is also of zero value because it does not show up in the price of goods. Oh wait it does its called "surplus".
Rob Heusdens:In particular their theory predicts that industries with a high labour to capital ratio will be more profitable.
Indeed. Goldman Sachs is barely profitable due to its abysmal labor/capital ratio. Perhaps Farjoun and Machover should advise GS laborers to increase their labor by doing push-ups on the trading floor.
Z.
I thought it was called overhead and/or interest...?
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
Sieben, I saw the same thing. That's an interesting paradox you pointed out. One other thing though. My question is, what determines the actual value, not the price, but value of goods. If it's labor then what, about labor, explains why I like the color blue more than pink?
filc:My question is, what determines the actual value, not the price, but value of goods. If it's labor then what, about labor, explains why I like the color blue more than pink?
filc:Sieben, I saw the same thing. That's an interesting paradox you pointed out. One other thing though. My question is, what determines the actual value, not the price, but value of goods. If it's labor then what, about labor, explains why I like the color blue more than pink?
You spend your labor potential on blue things. i.e. you like blue things. LTV or something associated with it in Marxism probably assumes you have psychological preferences and therefore, demand creates value psychologically. So you act on the demand by working towards producing your own blue thing. Or some other bull.
Right so then if labor != price, what is it? Well its labor. Its this metaphysical thing floating around attached to the good. Some marxists on the wiki article think that somethings labor content is a sort of magnent around which prices gravitate. I don't think they have any reason to believe this... nothing could falsify such a vague claim anyway.
I doubt they think about it this way but, if I understand the LTV'ers correctly, prices of goods should always be just slightly higher than the cost of employing someone to make it. Therefore prices cannot fall unless wages fall as well. Easily falsifiable and is dead wrong.
The labour theory of value is like a theory of gravity that says, "If you hold an apple and let go it falls to the ground." Wait. Nevermind. That makes more sense than LTV.
What about things with value that don't require any labor? Land (natural resources in their natural state) is valued differently by different people. Land does not require labor for its production. Doesn't the LTV imply that land should have zero value?
"I cannot prove, but am prepared to affirm, that if you take care of clarity in reasoning, most good causes will take care of themselves, while some bad ones are taken care of as a matter of course." -Anthony de Jasay
"The Labor theory of value arises from the fact that all value inherited in commodities stems from labor, as opposed to capital. i.e. if one were left to his whims in the wilderness with only his labor to live by, he would be able to forge tools to create capital with, and thus and endless supply of wealth. If this man were a capitalist on the other hand, and tried to survive without working, he would be dead in a matter of days. Because capital alone is not enough to create wealth, you can see that labor alone IS enough to create wealth."
I was just searchin around and found that. Idk the validity, or what it means in genreal tho.
I just realized that some Marxist think the LTV only applies to commodities. This would mean that my land example doesn't work, but it also means that the subjectivist theory is more general than the LTV.
Crank science. We can treat molecules as moving "randomly" simply because we have no reason to believe they move any other wise. But in the case of human beings, we know they do not act randomly. In fact, quite the opposite. Humans are notoriously bad at acting randomly, even when they try*. So, the assumptions of statistical mechanics simply do not apply. And Yankovenko's analogy between money and physics is pure voodoo... energy in the economy is the equivalent of energy in physics. As Eric Beinhoffer explains in his book, The Origin of Wealth, the human economy - like the entire biosphere - is a gigantic heat engine... it takes low entropy heat energy and converts it into work and high-entropy waste energy. The rules of thermodynamics directly apply to the economy, there is no need to convert them into voodoo monetary theory.
Clayton -
*You can write a very simple computer program that uses a Markov chain to guess a number you have in your mind between some min and max, and after a few learning trials, it will be right with high probability.
"If this man were a capitalist on the other hand, and tried to survive without working, he would be dead in a matter of days. Because capital alone is not enough to create wealth, you can see that labor alone IS enough to create wealth."
Hmm? This is all relative to the situation. Surely a person who is providing legitimate tokens of wealth in an economy (that normally they have accrued thanks to contributing to society in other forms) is providing a service (by taking a risk and putting people in places to profit themselves). Sure a person in the wilderness would benefit from labor, but that is, again, relative to the situation. It's like saying finding water at an oasis in the middle of the desert should therefore mean we price water the same as a television set because of its relative importance in an extreme situation. This is an absolutely nugatory argument.
So basically he is admiting the market works.
I dont think he realizes but, in between all the nonsense, he does admit the market works. Competition and consumer demand makes the companies lower their prices and their profits to near the labor cost. Then, why oppose the market?
Btw, this is relevant: http://www.thefreemanonline.org/columns/tgif/austrian-exploitation-theory/
That was hilarious. I guess the same people who wrote that must be baffled by the existence of showers since "clearly" rainfall produces a demand for umbrellas...
What's more they don't even understand statistical mechanics... Thermodynamics only allows you to make a limited set of conclusions concerning aggregate relationships, but does not allow one to represent their causes for which knowledge of what is inside the "black box"(e.g. the molecular structure and possible chemical reactions) is necessary to make reliable inferences.
"When the King is far the people are happy." Chinese proverb
For Alexander Zinoviev and the free market there is a shared delight:
"Where there are problems there is life."
The application of Physics & statistics explaining complex phenomena is wrong because it assumes away possible complex relations between variables. If the physisists had the same results as Marx it is only because they made the same mistakes.
See Hayek's work bellow
Degrees of Explanation
The Theory of Complex Phenomena
Rob Heusdens invites you to his fantasy island.
Solid_Choke:Land does not require labor for its production. Doesn't the LTV imply that land should have zero value?
Blasphemy! God worked his rear off for six days before he rested. Marxsists today are able to calculate the value of all the land in the universe based on God's hourly wage, though there are fierce debates about the latter due to the difficulty of calculating his sustenance wage. His food, shelter, and commuting costs are practically non-existent so some argue that his wages should be low enough (close to $0!?) to reflect that.
<<< Rob do you have a serious critique of Subjective Theory, and marginal value theory? I've not had one person explain LTV to me that didn't sound like a joke. No one can explain to me why it takes 8-16 hours for me to produce a foot of poo in my toilet, yet it's worth essentially nothing. Sorry for the vulgarity but it's a hilarious point to make. According to your LTV there should be some objective value assigned to my poo. >>>
I'm sure you never have read anything about the LTV, as otherwise you would have know that a pre-condition for anything to have value is that is has so-called 'use-value'. If I work no matter how long on something that has no appliance, the value of my work equals zero, because there is no use-value.
And another remark: poop still has some value as it can be used for producing bio-gas.
But, your remark in total is something non-sensical, cause the producing of 'poop' is just the outcome of your bodily functions (like sweetings, blood pressure, respiration), so you would not call that labor. Labor is always a dedicated task, not just the effect of your bodily functions. Labor is a conscious task.
<<< Land does not require labor for its production. Doesn't the LTV imply that land should have zero value?>>> Blasphemy! God worked his rear off for six days before he rested. Marxsists today are able to calculate the value of all the land in the universe based on God's hourly wage, though there are fierce debates about the latter due to the difficulty of calculating his sustenance wage. His food, shelter, and commuting costs are practically non-existent so some argue that his wages should be low enough (close to $0!?) to reflect that. >>>
Yeah, but unlike man, God did not have anyone to exchange the product of his labour with. Or did he? Maybe he sold us to the devil for profit!
LOL
<<< What about things with value that don't require any labor? Land (natural resources in their natural state) is valued differently by different people. Land does not require labor for its production. Doesn't the LTV imply that land should have zero value? >>>
If you look this up, you will find that Marx did discuss this issue of natural given commities, like land. Although land itself, at first, doesn't require labor (but in many cases this is not true, because mane parts of land have been cultivated throughout history, take for example Netherlands, most part of this land would have been sea if we did not convert it to land) there is still a price attached to it due to the fact that also land itself produces value, because you can grow crops on them.
<<< All you have to do to disprove any objective theory of value is find two people that disagree on the value of objective theory of value. You just found that. >>>
You have not understood one bit of what the article tries to explain, because we are not considering individual cases,. but the aggregate.
Like the temperature of a gas tells something about the average veocity of molecules, this does not imply we instantly know the velocity of an indiviual molecule.
<<< Right so then if labor != price, what is it? Well its labor. Its this metaphysical thing floating around attached to the good. Some marxists on the wiki article think that somethings labor content is a sort of magnent around which prices gravitate. I don't think they have any reason to believe this... nothing could falsify such a vague claim anyway. >>>
That's the whole point what the article is about, that it can be falsified at the basis of statistical economic analysis.
<<< 3. Of course, the assumption that the economic universe is like the atomic universe is a big mistake, as pointed out very often on this site. As an example: If we assume people in cars drive by the laws of statistical mechanics, then they will wind up evenly [or at least randomly] distributed along the face of the globe. And yet, on a day when there is a football game, there seems to be a big clustering of cars near the stadium. And on days when the stadium is closed, the cluster of cars disappears. Why is that? >>>
So, you assume because the physics laws of thermodynamics require that the molecules of a gas get evenly distributed, right?
Then explain to me, why does the wind blow if that were the case?
So, the fact that the wind blows means that thermodynamic behaviour of gas in the atmosphere is not even correct?
Rob: If I work no matter how long on something that has no appliance, the value of my work equals zero, because there is no use-value.
And what decides use-value?
Rob:And another remark: poop still has some value as it can be used for producing bio-gas.
In that case is my potential bio-gas poo worth more if it takes me longer to produce?
Rob:so you would not call that labor.
And what if I spent 8 hours shaping my poo into a glorious poo based statue in the shape of a female body.
FYI Pooing is a conscious task, where-as sweating or breathing is not.
<<< I doubt they think about it this way but, if I understand the LTV'ers correctly, prices of goods should always be just slightly higher than the cost of employing someone to make it. Therefore prices cannot fall unless wages fall as well. Easily falsifiable and is dead wrong. >>>
For sure it can happen that prices fall below the actual cost of producing them, and as a matter of fact, Marx explains just why that happens.
The only rule is however that on average prices can not be lower then the costs of producing them!
Again, you are using a false dichotomy, because the whole intent of the article was to explain something about aggregates, not abiut individual cases.
In a capitalist society, a produced/capitalist can not continously produce below the cost price. Sometimes they do, intentionally, for outcompeting the competition, and sometimes the are forced to do it because of overproduction in that market segment.
But as we know from the markets assuming perfect market conditions, if prices are significantly higher then cost price, the production will go up and more competition will come in while demand would sink, causing the prices to lower, and could cause prices to even fall below cost price, in which case some produces will get broke, production will decrease, while demand is growining, causing prices to go up again. So quite understandable, prices will be driven towards the equilibirum point of the cost price.
I dare you to go a week without pooping lol. You can decide when, but not if.
Also check this out
haha poop art. the link is long tho, Ill shorten it
Rob Heusdens: So modern physics has shown that not only was Marx right in his basic analysis, but he was right because his conclusions follow from the most basic laws of physics, the laws of thermodynamics.
The primary argument of LVM and other Austrian economists is that it is grave methodological error for economists to try to use the methods of the physical sciences for any economic analysis. In short, the laws of physics and physical sciences are simply not appropriate, nor applicable, for analyzing human actions- useless, in fact.
The best book on this, [to my mind] is LVM's "The Ultimate Foundation of Economic Science". It's fairly easy to understand[ much more so than "Human Action" for example] - why not give it a shot?
Regards, onebornfree.
For more information about onebornfree, please see profile.[ i.e. click on forum name "onebornfree"].
<<< The laws of thermodynamics assume the molecules do not have free will. The laws do not apply to humans. I mean, really. >>>
But as physics and confirmed by neuro-psychology, will explain to you, there isn't something like free-will. I mean, really.
<<< I dare you to go a week without pooping lol. You can decide when, but not if. Also check this out haha poop art. the link is long tho, Ill shorten it >>>
So?
It just explains then that is a necessary bodily function. Like we already stated.
Rob:I'm sure you never have read anything about the LTV
And I could say the same thing about you, since you seem to think the exploitation theory is entirely founded apon LTV. The Exploitation theory however was demolished outside of any criticism of LTV.
Rob:In a capitalist society, a produced/capitalist can not continously produce below the cost price. Sometimes they do, intentionally, for outcompeting the competition, and sometimes the are forced to do it because of overproduction in that market segment.
Or simply because consumers didn't want the good, causing a surplus.
Rob:But as we know from the markets assuming perfect market conditions, if prices are significantly higher then cost price, the production will go up and more competition will come in while demand would sink, causing the prices to lower, and could cause prices to even fall below cost price, in which case some produces will get broke, production will decrease, while demand is growining, causing prices to go up again. So quite understandable, prices will be driven towards the equilibirum point of the cost price.
Somewhat true. Prices always are aiming at an equilibrium but will never arrive there. They may bounce up and down around it, but will never arrive at an equilibrium. The concept of an equilibrium is purely conceptual, it's not something that can be argued as objectively observeable.
<<< And what if I spent 8 hours shaping my poo into a glorious poo based statue in the shape of a female body. >>>
You will end up having dirty hands!
<<< FYI Pooing is a conscious task, where-as sweating or breathing is not. >>>
The production of the faeces is not, but yes, you control your pooing-muscle.
It would otherwise be a dirty and stinky mess.......!!!