Political Theory

Re: Marx's theory on value- a contradiction?

Cortes — Tue, 28 Aug 2012 04:42:06 GMT

"Yes, indeed, people have a free will and decide to buy and sell or not to. But that tells us nothing about the determination of value, what it is, or its quantity. People eat if they are hungry, and sleep if they are tired. Does this exhaustively explain nutrition and sleep? Hardly so. But the Austrians claim that their few sentences about free will explain the economy. That is laughable."

How do Marxists objectively quantify how much necessary nutrition and sleep is optimal for each individual, every day?

Re: Marx's theory on value- a contradiction?

cab21 — Tue, 28 Aug 2012 00:34:57 GMT

so still wondering about the exploitation factor here.

all sorts of situations in capitalism have the worker own the means of production and supply the capital in the business, is the owner/worker exploiting himself in capitalism?

capitalism can pay workers in ownership, the workers would then own means of production, is that still exploitation?

100 factory owners also work in the factory, they make products for 100 and sell products for 150 and each of the 100 owners takes 100.5 from the sale. this is a possible situation in capitalism, is this exploitation of labor?

i don't understand this thing that says labor gets less compensation than the amount of work done, as work done does not have set compensation. compensation for labor can happen before there is even a sale or compensation for the owner, and the owner can be a worker. if the worker is paid after the sale, then how is it determined how much work should have been done? if a machine does 95% of the labor, and 5 workers each do 1% of the labor, does the machine get 95% of the sale price and each worker get's 1%?

Re: Marx's theory on value- a contradiction?

David B — Mon, 27 Aug 2012 23:16:52 GMT

cab21:

so marx has a definition for value, yet also defines his theory by saying there is no such thing as value?

Amen, I'd reply, thus: Ok, I accept the rejection of the term value, instead can you give me a generic term for the drive within a man to do. The motive of action, the desire which must exist for a man to do a thing, to this thing in a man, what word will you let me have?

That word that you give me is what I will point to as the source of all action and therefore all social action, and therefore all economic action. If I cannot trace a price in some causal way to the motive to act, I don't know how to think about prices as a real and not completely arbitrary phenomena in reality.

If you point at labor, I say it's action and ask what the motive to act is, at which point you must give me a term. I used the word value. and that it's source is in the man, that he has "a motive to act" and that the action is the proof. That motive is for me a black box, and unquantifiable. I don't know how to measure it's strength, I only know when it's strong enough to override any other motivation to do any other thing. How do I know? Because I see you doing a specific thing.

Anyway, I can go on and on.

Re: Marx's theory on value- a contradiction?

cab21 — Mon, 27 Aug 2012 22:48:48 GMT

so marx has a definition for value, yet also defines his theory by saying there is no such thing as value?

how is it decided how food, water, and shelter will be produced and distributed? if none of that has value, are each equivalent? how do different types of food, water, and shelter get compared as to what will be produced and consumed?

so in marxism is seems value is in labor, or there is no value, and in capitalism value is in demand and what consumers are willing. in capitalism, people have to pay a profit to labor before they even can sell a product, and they may have to sell the product for a value less than they paid the labor. labor gets to pick the profit labor gets by deciding on a contract that pays labor a profit before a product goes to the market. labor gets the choice of all kinds of ways to make the profit, they can get salary, wage, commission, stock, ownership, barter, some self feeling. but the labor must see their labor as profitable to even begin working.

higher costs to produce will create higher selling costs, what people are willing to pay and willing to be paid determines prices and which items will sell higher.

does marx value two art peices that took the same time to produce at the same value no matter how skilled each artist was, what the art piece was about, and how people even valued the art in capitalism?

if two orchrestras play the same song, are they to be paid the same no matter what the quality of the performance, how many people say them, and what people thought of the performance?

what do foreign exchange rates have to do with melt and people within the melt system , currency itself can be free market, although we do have communist countries and Keynesian countries the manipulate currency and don't allow for a free market for currency. purchasing power is what matters, not the number attached. do the doctor and janitor get the same purchasing power under melt? with to each according to needs, is everyone supposed to need the same, or does the doctor need more than the janitor? if everyone needs the same, why do the communist dictators receive and spend the most on lavish material items and reward themselves with riches the people not in the dictatorship class don't receive?

Re: Marx's theory on value- a contradiction?

Autolykos — Mon, 27 Aug 2012 16:16:02 GMT

LibertarianMarxist:
First, I am writing about capitalism. In communism there is no value by definition.

That completely contradicts Marx's definition of "value", which is "the average socially necessary labor time to produce something". What wouldn't exist in communism is market exchange, and since Marx's definition of "commodity" is "something produced for market exchange", commodities wouldn't exist in communism either. But the absence of market exchange in no way means that there's no longer any average socially necessary labor times to produce things (i.e. values).

LibertarianMarxist:
Second, according to Austrian "economics" - not Marxian Theory - value seems to be quite arbitrary, which completely contradicts even the most basic experience when one visits a store. The Austrians explain nothing, neither prices nor values. They can't explain why some goods are more expensive than others. Marx's theory can.

Austrian-school economics certainly can and does explain why some goods are more expensive than others. The Austrian-school economics definition of "value" is simply different from Marx's. Here's the definition used by Austrian-school economics: "what one is willing to do in order to gain and/or keep something". Notice that this definition is wholly different from "the average socially necessary labor time to produce something". Also notice the implication with the Austrian-school economics definition of "value" that value is necessarily subjective. If one person's willing to give three chickens for a bushel of wheat, and another's willing to give five chickens for the same bushel, who's correct? Austrian-school economics' answer is that neither is correct and the question itself is malformed.

According to Austrian-school economics, an exchange occurs when there's a meeting of the minds between the transactors about what each of them is willing to do to gain what the other has. The price of that exchange simply represents the monetary side of the exchange (if there is one). Now some people may be willing to do more to gain what the other person has than others are willing to do. Generally speaking, the interplay of people's subjective valuations of things is what gives rise to prices.

Re: Marx's theory on value- a contradiction?

David B — Mon, 27 Aug 2012 16:01:37 GMT

LM : First, I am writing about capitalism. In communism there is no value by definition.

I don't think you realize just how funny this is as a statement. Theory that doesn't match reality can be good theory, and useless. As soon as you say "there is no value by definition" the rest of your conclusions, statements, theorems, etc. are irrelevant to the real world. People do in fact value things.

LM : Second, according to Austrian "economics" - not Marxian Theory - value seems to be quite arbitrary, which completely contradicts even the most basic experience when one visits a store. The Austrians explain nothing, neither prices nor values. They can't explain why some goods are more expensive than others. Marx's theory can.

Ummm, I don't think "seems to be arbitrary" is grounds for rejecting it. Subjective values are not actually arbitrary, they simply cannot be quantified. There is regularity to the actions of people, which indicates there is some level of regularity to the valuation of the individual exhibiting the actions. Instead the actions of people are chaotic but not arbitrary. Meaning that while I can know you will eat today, I cannot with certainty know where you will eat or what you will eat. Our behaviors are regulated to an extent by certain conditions of reality and by certain physical needs, and certain emotional needs. The variety of ways in which we can satisfy these different ends is the "arbitrariness" of which you speak. The capacity of the human mind to order hierarchically these needs in ways that vary form person to person is another source of this "arbitrariness". The true word however is chaotic, not arbitrary.

Processes in reality that are chaotic, can produce results that are extremely ordered even if the inputs seem to be arbitrary. If any of the input conditions are ordered (including the fundamental laws that govern the system), then it is not only possible, but likely for an ordered phenomena to arise. The only type of systems that don't achieve some type of stability or exhibit ordered regular phenomena are systems with positive feedback loops that don't have a negative feedback loop regulating them (an explosion is an example of that type of dynamical system). An example of a chaotic system that generates an ordered outcome is: give me a tray with a mesh bottom for sifting. Dump in a bunch of varied sized rocks. I can guarantee you that I can shake it in a very arbitrary manner for a period of time and a very high percentage of particles smaller than the mesh holes will be gone from the tray. I can also guarantee you that NO particles larger than the holes will be on the other side. All of reality works this way, where the conditions of the environment, the "rules" so to speak, dictate that ordered results appear out of chaotic inputs.

Austraian economics explains something, both prices and values. They do explain why some goods are more expensive than others. Labor is in fact a significant aspect, but it's not the causal source of value. It is not labor that is spent that determines the value of a good, it's the value of a good that dictates where labor is spent. The problem is all misallocated labor gets rapidly removed from the system. People stop putting labor in places where it's not meeting demand (the source of value). This is really quite frustrating, it's so clear and so obvious, I don't see how Marxists/Socialists continue to spout this crap in the face of the real world evidence that they must be wrong.

LM : Third, the MELT is arbitrary set as evidenced by the foreign exchange rates. Only an uneducated person thinks if she changes her $ to Yen (at a rate of 79 Yen/1 $), that she is 79 times as rich as before the change. (In fact, many people (the majority?) are that economically illiterate. When the Euro was introduced, millions of people thought all their money would shrink just because they did not understand that one Euro is worth more than one unit of their national currency. Those are the same people who think they get rich in an inflation.)

This isn't interesting... or relevant. People's stupidity doesn't have anything to do with the correctness of an economic theory.

Re: Marx's theory on value- a contradiction?

LibertarianMarxist — Mon, 27 Aug 2012 14:31:32 GMT

cab21:

so under marxism, surplus value is not allowed and value is a random arbitrary number with no logic to it?

First, I am writing about capitalism. In communism there is no value by definition.

Second, according to Austrian "economics" - not Marxian Theory - value seems to be quite arbitrary, which completely contradicts even the most basic experience when one visits a store. The Austrians explain nothing, neither prices nor values. They can't explain why some goods are more expensive than others. Marx's theory can.

Third, the MELT is arbitrary set as evidenced by the foreign exchange rates. Only an uneducated person thinks if she changes her $ to Yen (at a rate of 79 Yen/1 $), that she is 79 times as rich as before the change. (In fact, many people (the majority?) are that economically illiterate. When the Euro was introduced, millions of people thought all their money would shrink just because they did not understand that one Euro is worth more than one unit of their national currency. Those are the same people who think they get rich in an inflation.)

Re: Marx's theory on value- a contradiction?

cab21 — Sun, 26 Aug 2012 22:55:39 GMT

so under marxism, surplus value is not allowed and value is a random arbitrary number with no logic to it?

a person cant's pay 100 dollars for something they would sell at 100 dollars or less for the long term.

workers can own the means of production under capitalism, many own the means. we have stocks where the workers can choose to own part of the company, people can be paid in stocks. the mcdonalds worker is not going to be able to personaly take the icecream machine home with him, but he can still be a partial owner of the company.

pay as willing tells everything about the determination of value. what does marxism have? it says value is a arbitrary number without logic to is as well with melt. supply and demand in capitalsim, verse a arbitrary central planner that decided what will be produced and what will be consumed, and oh well if there is a surplus or deficit in production that causes food to spoil or people to starve. oh well for choice of what people purchase and what people eat.

how is it the average time if the slower time values are dropped and only the time of the most efficiant worker counts? would that mean people would be charged less for products made by people that made them slower , the same, or more? would the worker be paid per widget and profit off of the time it takes, so the people that make more in less time profit more?

so does melt keep the same purchasing power no matter what the monitary exchange rate is so prices and wages rise and fall in real time? how on earth is that done? prices can change from the time a person gets paid to the time a person purchases the products they need.

people are not paid in labor hours, yet melt is a rate of money per time? how are those different?

since hot dog vendors take different times to deliver each hot dog, does the production time of each hotdog get recorded and the price change according the the time it took to produce the hotdog?does that mean the worker must apply the condiments or are people allowed to produce their own condiments, and they have to pay for the time and amount of condiments they use?

does the doctor receive the same melt as the food distributer? does the central planning dictator receive the same melt as the janiter?

so far in marxism i have seen rich central planners starve the people and kill millions of them while the people don't get paid near what the central planners get.

Re: Marx's theory on value- a contradiction?

Fool on the Hill — Sun, 26 Aug 2012 20:53:58 GMT

I disagree with this. There are a vast number of people for whom the purpose of business is to make money for it's own sake. That may not be 'rational' from your perspective, but you cannot deny that often people subjectively value the process of earning profit above all else.

Agreed. As I've argued in my thread, the idea of an "ultimate end" doesn't make much sense when applied in this context. I was told that "ultimate end" refers to the satisfaction (the removal of "uneasiness") brought by action. Mises also says provisioning for the future is itself satisfying. Thus, consumption isn't anymore of an ultimate end than making profits.

Re: Marx's theory on value- a contradiction?

David B — Sun, 26 Aug 2012 20:52:26 GMT

Consumariat:

Even the profit made by a specific business is not an end in and of itself. The goal of a business is to make money. But not to make money as an ultimate end. A human being (or multiple human beings) wants the money to some other personal end.

I disagree with this. There are a vast number of people for whom the purpose of business is to make money for it's own sake. That may not be 'rational' from your perspective, but you cannot deny that often people subjectively value the process of earning profit above all else.

Disagreeing doesn't make you right. Show me such a person, and I'll show you a person that uses the money he makes to do things other than make money. It may be true that at specific times and places, every person on earth has pursued profit as the primary focus of a specific action. Meaning that he wasn't actually thinking about how to use the money that he earned. It may even be true that this happens for most men for most of their labors for wages or in running a business. I'll be surprised, in fact would argue it's not possible, for there to exist a human being whose ultimate end, the one beyond which we cannot look is actually and only the making of money. There's not a human being on earth that doesn't consume. A person cannot actually value the process of earning profit above all else. If a man ever eats, he has chosen eating food OVER earning profit through a direct action in reality. To eat he must necessarily be converting productive effort into a consumer good and he must then consume it.

The seeking of profit is a necessary consequence of running a business. One must have accumulated wealth to invest in the materials used in production. One must at some point either generate a profit, or run out of wealth to invest. By necessity unprofitable efforts will disappear.

But this explains why profit is a necessary consequence of running a successful business. It is not a logical conclusion that therefore the man's desire to generate a profit is in fact the ultimate end of his effort. In fact, in direct opposition to that logically fallacious inference is the evidence that every man not only works to generate a profit, but also engages in behaviors that consume wealth. So, I can in fact say that no man can value generating a profit above all other ends.

Re: Marx's theory on value- a contradiction?

Consumariat — Sun, 26 Aug 2012 20:19:27 GMT

Even the profit made by a specific business is not an end in and of itself. The goal of a business is to make money. But not to make money as an ultimate end. A human being (or multiple human beings) wants the money to some other personal end.

I disagree with this. There are a vast number of people for whom the purpose of business is to make money for it's own sake. That may not be 'rational' from your perspective, but you cannot deny that often people subjectively value the process of earning profit above all else.

Re: Marx's theory on value- a contradiction?

David B — Sun, 26 Aug 2012 19:51:43 GMT

gotlucky:

David B:

When a person asks about the value of a good in the market, they are asking about a quantitative measurement the market provides. What price can I sell or buy this good for in the market right now. That is a quantitative use of the word value. But now the person must decide whether to buy or sell the good at that price. This involves the other meaning for the word value. Now the person must compare the two goods and decide which one he prefers, which one he values more.

QFT.

The price system is a mechanism that allows for a quick comparison of values. The price tells you how much the seller values his own product and how much he anticipates buyers might value it. Buyers can either purchase it or not. If they do, then they necessarily valued having the product at that price more than not having it.

It's really easy for people to look at prices and think they are objective facts of reality, but what prices really show are the cumulative knowlegde of people's values regarding goods and services.

Amen, I think the issue Marx and modern socialists have is seeing the phenomena and interpreting it as a necessary existent in and of itself. Instead of understanding it as an emergent phenomena explained by another mechanism. Prices emerge from social action and all action assumes preference for one thing over another. Prices are not value. Prices emerge because of valuation and evaluation.

If I were to divide those terms and understand them as slightly different it would look like this. Valuation might be the consideration I perform as a mental activity of how I might use some "thing" in reality as a means to an end. The value of the thing would be in some way (not quantifiable in scientific terms) related to my desire for that specific end which I'm considering it for. Evaluation would be the comparison of two valuation results.

So, with money prices within the context of a business or a family budget, or any other "accounting/budgeting" process. We would perform valuation and evaluation processes by using prices as a means of comparing the relative costs of differnt goods, services, etc. However, the pure numbers in the accounting unit aren't sufficient to produce a decision on action.

Just because it might be cheaper to go on one vacation experience than another isn't a reason to forego the trip to Aruba, in favor of the trip to the local campground with a tent. The budget might inform me of how much money, I've chosen to set aside for such an activity. I can arrange for the trip to Aruba, but I have to decide how to pay for it, and in looking for additional money to pay for it, I have to decide if my desire for the trip to Aruba is sufficiently high to warrant giving up other activities I've budgeted : dinners, movies, fast food, saving for college, the new car, etc.

It's not money to money. It's money to money in the pursuit of end vs. end.

Even the profit made by a specific business is not an end in and of itself. The goal of a business is to make money. But not to make money as an ultimate end. A human being (or multiple human beings) wants the money to some other personal end.

Re: Marx's theory on value- a contradiction?

Autolykos — Sun, 26 Aug 2012 18:08:29 GMT

Libertarian Marxist:
You got here many things wrong. I try to clarify and show what an elegant and explanatory powerful theory the labor theory of value is.

"Marx states that the value of a commodity is equal to the socially acceptable labour time necessary to produce that commodity."

No, he does not state this. The value of a commodity is equal to the average socially necessary labor time to produce it. (I have no idea what you may mean by "acceptable".) This is the exchange value. It has nothing to do with the use value. Use value is not even quantifiable! Money is the universal commodity for exchange (in the case of gold) or the universal bearer of exchange value (in the case of some numbers in a computer, i.e. electronic money, e.g., which is no commodity). (Today, I would consider gold only marginally as money because it is not widely accepted nor convenient.)

My understanding is that the average socially necessary labor time to produce a commodity is not the same as the commodity's exchange value. As Marx wrote, "... exchange value is the only form in which the value of commodities can manifest itself or be expressed" (Capital, Vol. I, Ch. 1, Sec. 1). In other words, exchange value is just a form in which value can be expressed. The average socially necessary labor time to produce a commodity is actually the same as the commodity's value. Indeed, the labor theory of value is, at heart, just a particular definition of the word "value", namely "the average socially necessary labor time to produce something".

Libertarian Marxist:
"How would Marx explain the heterogeous price of the same commodity? … Is this a contradiction to his theory on value?"

There is no contradiction since the labor theory of value deals – as the name suggests – with values, not prices. The value of the same commodity is the same, no matter who sells it, no matter at what price. Value is created in the production process. Price, however, sometimes goes in Marxian Theory by the name of "value received" in contrast to the exchange value, the "value produced". Of course, Marx saw this difference and incorporated it in his theory.

From what I understand, the labor theory of value deals with both values and prices. It attempts to explain how the prices of commodities relate to their values. Indeed, that's the whole point behind Marx's law of value. But the law of value isn't a mechanistic law like Newton's law of universal gravitation is. Marx makes clear that a commodity's value only serves as the "center of gravity" for its price.

It follows then that exchange value is not necessarily an expression of only value and nothing more. Wheat can be more expensive than corn, for example, even if it takes less socially necessary labor time to produce on average.

Re: Marx's theory on value- a contradiction?

gotlucky — Sun, 26 Aug 2012 15:26:44 GMT

David B:

When a person asks about the value of a good in the market, they are asking about a quantitative measurement the market provides. What price can I sell or buy this good for in the market right now. That is a quantitative use of the word value. But now the person must decide whether to buy or sell the good at that price. This involves the other meaning for the word value. Now the person must compare the two goods and decide which one he prefers, which one he values more.

QFT.

The price system is a mechanism that allows for a quick comparison of values. The price tells you how much the seller values his own product and how much he anticipates buyers might value it. Buyers can either purchase it or not. If they do, then they necessarily valued having the product at that price more than not having it.

It's really easy for people to look at prices and think they are objective facts of reality, but what prices really show are the cumulative knowlegde of people's values regarding goods and services.

Re: Marx's theory on value- a contradiction?

LibertarianMarxist — Sun, 26 Aug 2012 15:07:22 GMT

cab21:

value is subjective to the seller and the buyer of a product. if labor feels they are not receiving the value they should receive, then they simply don't contract with the owner to work at a price they see and undervaluing their service.

Workers don't have this option because the capitalists own the means of production. They will let workers use them only if they produce surplus value. Exploitation is inevitable under capitalism.

cab21:
the same commody sold at different places is a different commody that took different labor times to produce. it takes time to ship a product from one factory to another, so that is in the production time. a product shipped houndreds of miles in the middle of nowhere would take more labor than the same product delivered to a nearby store. so i don't see the same commody really as being the same, when there were separate production methods.

You are right about the value. Shipping and storage, provided they are necessary, add value to products. But prices of the same product with the same value can and do differ at different locations.

cab21:
The value of a commodity is equal to the average socially necessary labor time to produce it

what does that even mean?

the value of a commodity is worth whatever people are willing to pay for it in capitalism, makes more sense to me . labor gets the profit they want in the contract they sign, or it;s the fault of the labor for agreeing to something the labor feels as unfair. people can't be exploited into signing voluntary contracts of their own free will.

Marx would agree. People pay what they are willing to pay. This sentence is so devoid of insight and meaning that it is embarrassing that those Austrian self-proclaimed "economists" even dare to state it. Yes, indeed, people have a free will and decide to buy and sell or not to. But that tells us nothing about the determination of value, what it is, or its quantity. People eat if they are hungry, and sleep if they are tired. Does this exhaustively explain nutrition and sleep? Hardly so. But the Austrians claim that their few sentences about free will explain the economy. That is laughable.

Besides, a blackmailed person like a worker in capitalism has no free will. If someone threatens you and demands of you to work or else you get killed, would you say it is a free choice to decide to work?

cab21:
at what price is "the average socially necessary labor time to produce " set at and how is it set?

A market is a process of information exchange. It will be decided at the market what labor time is socially necessary. For example, if one producer needs 2 hours to make a good and another producer needs 1 hour to produce the same good, 1 hour is socially necessary. A producer does not get rewarded for being lazy or less productive.

But we don't pay in labor hours. Money is the means of exchange. How a hour of socially necessary labor is evaluated is determined by the monetary expression of labor time (MELT), a rate of money per time. Roughly, if the MELT rises there is inflation, if it falls, there is deflation. The MELT is arbitrary set when a currency is established and the particular number does not matter at all.