tag:blogger.com,1999:blog-6245381193993153721.post2766449510929649030..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: More Mystical Labour Theory of Value NonsenseLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger45125tag:blogger.com,1999:blog-6245381193993153721.post-15494724977105183362015-03-30T06:18:50.470-07:002015-03-30T06:18:50.470-07:00LK, just to be clear. The situation that I think w...LK, just to be clear. The situation that I think we're discussing is this:<br /><br />1. All cotton producers are affected by crop failure. Say, half of the total labor (not just direct labor) expended on grwoing cotton has gone to waste. There is now half as much cotton than the year before.<br /><br />2. The cotton producers would really need to get a higher price to cover the wasted costs. Whether they can get it depends on many things. Their position is perhaps slightly improved by the fact that the crop failure affects everyone.<br /><br />3. If however, no such price offers come, or if the cotton is requisitioned at gunpoint for old prices, then (at least a part of) the labor expended on cotton is not validated as social. The producers go bankrupt and the farms are sold off. This creates potential issues with future cotton production, not to mention the reproduction of cotton producers (capitalists and their employees alike).<br /><br />4. If the price rises (to which the buyers are motivated by the lack of cotton on the market), then at least a part of the wasted labor is validated as social. Depending on the extent, this makes future production of cotton, as well as the reproduction of cotton producers, their payment of loans etc., possible.<br /><br />Now, whether 3. or 4. occurs, and what exactly happens, is difficult to tell. It depends on a host of other conditions apart from the fact that a huge amount of labor had already been spent on growing cotton. Marx gives the example of cotton to illustrate a general point, not as part of a study of commodity markets. (To see Marx's approach to empirical studies, you can take a look at Part V of Capital Vol. III where Marx studies crises).<br /><br />However, the general point, which I think stands no matter what, is this: the conditions of social labor, i.e., the conditions of the reproduction of a society, present certain constraints within which prices and all the other "empirical forms" can move. True, these constraints are flexible, and are made even more flexible by things like credit. But the world of prices can never completely detach itself from these conditions. In our case, the producers go bankrupt, which causes an array of problems in reproduction (and perhaps also creates opportunities for buying land and farm equipment on the cheap). Or they don't and reproduction is possible at least on some scale. In other words, in the long term, relations of social labor regulate what goes on on the visible level. This is what Marx thought counts as a scientific discovery and this is what he'd been primarily interested in -- NOT a theory of relative prices.<br /><br />J.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-51535265762403938702015-03-30T05:31:00.914-07:002015-03-30T05:31:00.914-07:00Interesting link, i think i will read it. I don...Interesting link, i think i will read it. I don't deny the real economy is a dynamical system and there are always new surprises for people within it. The point is, the classical economists just didn't want to deal with all these complications, and therefore invented this equilibrium method of analysis. Marx followed them and adopted their method.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-48133641059688159792015-03-30T05:14:43.821-07:002015-03-30T05:14:43.821-07:00Aggregate Demand (AD) = C + I + G + (X-M).Aggregate Demand (AD) = C + I + G + (X-M).Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-24164285159072865422015-03-30T05:08:10.625-07:002015-03-30T05:08:10.625-07:00I've heard of GDP and its components. How is t...I've heard of GDP and its components. How is this related to AD?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-11510861856616227732015-03-30T04:35:59.906-07:002015-03-30T04:35:59.906-07:00I agree that "value is equilibrium price, ful...I agree that "value is equilibrium price, full stop." is an analytic tautology. I repeat it because some people want to hijack the word value to mean something else.<br /><br />There is no single rate on barter loans, we all know this, so no need to discuss. And that's not even definition of natural rate, which requires some kind of averaging between different kind of loans, and i agree it's a flawed concept.<br /><br />Note i'm not saying Marxian LVT has any truth. I'm just saying it should be interpreted using the classical terminology, and then tested. And i don't expect it to perform well at all, to be honest.<br /><br />And let me repeat previous argument. If the bad harvest causes relocation of labor away from harvesting, and then prices have time to update, then it looks to me that it's very well possible that prices will lower.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-42900508994679274532015-03-30T04:04:08.864-07:002015-03-30T04:04:08.864-07:00It is just like saying: the natural rate of intere...It is just like saying: the natural rate of interest is the uniform rate of return on barter loans in equilibrium!! Full stop. That's fine as long as you acknowledge that is true only in a totally fictitious imaginary world in your head, with zero relevance to the real world.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-57916011702105314122015-03-30T04:01:40.781-07:002015-03-30T04:01:40.781-07:00"value is equilibrium price, full stop."...<i>"value is equilibrium price, full stop."</i><br /><br />That is nothing but an empty assertion. An analytic tautology. First you define value in a way that has no convincing empirical support. <br /><br />Then say equilibrium price (cost of production price?) is equal to it. Unprovable, metaphysical, worthless, useless, and it adds nothing to economic science, except religious dogma.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-23313835228739463232015-03-30T03:54:26.283-07:002015-03-30T03:54:26.283-07:00LK, value is equilibrium price, full stop.
If the...LK, value is equilibrium price, full stop.<br /><br />If the bad harvest is "permanent enough", all prices (and quantities and methods of production) will change and it's very well possible that they'll be LOWER than before. Neoclassical supply and demand analysis is simply wrong.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-71751999921210677502015-03-30T03:32:58.705-07:002015-03-30T03:32:58.705-07:00Surely pollution and climate change came as a shoc...Surely pollution and climate change came as a shock or surprise to those who observed it/ recognized it.<br />Here's a critical paper by Ernst R. Berndt 1982<br />FROM TECHNOCRACY TO NET ENERGY ANALYSIS: ENGINEERS,<br />ECONOMISTS AND RECURRING ENERGY THEORIES OF VALUE<br />http://dspace.mit.edu/bitstream/handle/1721.1/2023/SWP-1353-09057784.pdf<br />It criticizes both LTV and Energy Theory of Value (Howard Scott and the other Technocrats) and it's a great read. Mayhaps Lord Keynes will even quote this paper in his future post about this topic.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-65916356704980951692015-03-30T03:08:47.302-07:002015-03-30T03:08:47.302-07:00Thank you, will read. I asked a marxist who said t...Thank you, will read. I asked a marxist who said that he wished to end wage labor - with what are you going to replace wages with? And his answer was "with planning in general". I told him that no matter the socio-economic system in place, you've got to have an accounting system that facilitates economic activity. I explained of course that money is just records and that even the Technocracy movement of the '30s who wanted to abolish the price system - they wanted to replace it with a system of energy accounting (energy certificates). His reply was "Why does anyone have to issue these records?" I felt that was a troll question...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-88320095573256253692015-03-30T03:05:13.330-07:002015-03-30T03:05:13.330-07:00So after all your statements above trying to prove...So after all your statements above trying to prove that rising market prices of cotton after a bad harvest are actually caused by rising unit labour value of the diminished output (and trying bizarrely to argue that farmers are price-makers when they are blatantly not), you're now saying that market prices aren't in fact caused by SNLT?Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-58873210904263452082015-03-30T02:30:13.414-07:002015-03-30T02:30:13.414-07:00Well, the fact that they go bankrupt means that a ...Well, the fact that they go bankrupt means that a huge part of their labor was not validated as part of social labor. In other words, they weren't able to sell for a price that would be an adequate expression of the value of (or the amount of social labor expended on) the cotton. This is exactly what the theory is about.<br /><br />In your reply to the quote, it seem that you're confusing market price with (market) value.<br /><br />J.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-16861564452348045882015-03-30T02:21:22.947-07:002015-03-30T02:21:22.947-07:00"They can't (and won't) take just any...<i>"They can't (and won't) take just any price."</i><br /><br />You should tell that to thousands of farmers every year who go bankrupt because they are forced to accept prices that cause losses.<br /><br />Also, the Marx quote you cite is just as mystical as the one above: now labour value is destroyed even when it has clearly been used to bring goods to markets that won't sell, so that the unit labour of value of goods sold falls.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-23720753716361319582015-03-30T01:32:30.947-07:002015-03-30T01:32:30.947-07:00The "law of value" (an expression Marx t...The "law of value" (an expression Marx took from Proudhon, like so much else) simply says that market prices oscillate around their price of production.<br /><br />In the example of a bad harvest, it means that the commodity's market price would increase due to less supply. This would mean that compared to the costs of production, there would be a higher profit -- which would draw in competitors, so increasing supply until the price drops back down to the production price.<br /><br />Marx, it is far to say, made what is a relatively sensible analytical tool much more complicated and obscure. Thus while Smith, Ricardo and Proudhon were pretty clear on what they meant, Marx invoked labour, abstract labour, value, exchange value, market value, prices of production, etc., etc., etc.<br /><br />Still, it keeps Marxist academics in a job...<br /><br />Why? Partly to counteract perceived threats from other socialists (misnamed "Ricardian" socialists who advocated Labour-Notes -- please note, regardless of Marx's claims Proudhon did not). Partly because the labour theory of value does not work directly under capitalism (as can be seen from the existence of non-labour income).<br /><br />So always remember -- even if Marx did not make it clear! -- volume 1 of Capital abstracts from reality by assuming an equal level of capital investment (i.e., one industry) and that demand equals supply (i.e., one consumer). He does this to show that labour is the source of increased value and is exploited in production due to wage-labour (Proudhon does the same thing in "System of Economic Contradictions")<br /><br />Anyway, you may find this of interest -- an uncompleted appendix to "An Anarchist FAQ" on the labour theory of value which seeks to explain it in simple terms:<br /><br />http://anarchism.pageabode.com/blogs/afaq/secCapp.html<br /><br />I wrote this a while ago, so I may phrase things a bit different now...<br /><br />While, say, Proudhon used the labour theory of value to show how prices were regulated, that non-income labour is exploitation, and that the worker was entitled to the full product of their labour, other anarchists argued for all these without accepting it. Kropotkin, for example, considered wage-labour as exploitative and oppressive just as much as Proudhon did but rejected the labour theory of value.<br /><br />Iain<br />http://www.anarchistfaq.org.ukAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-18928593195217809232015-03-30T00:58:54.874-07:002015-03-30T00:58:54.874-07:00LK, I agree this has nothing to do with equilibriu...LK, I agree this has nothing to do with equilibrium prices.<br /><br />To go back to the point, you seem to accuse Marx of metaphysics, yet you talk about "supply" and "demand" as if they were some forces completely independent of the fact that if the cotton producers can't sell for a price which will at least cover their costs, they won't be able to produce in the next period (disregarding credit and other complicating conditions, of which Marx was aware, but does not discuss them at the point at which he gives the example of cotton). They can't (and won't) take just any price.<br /><br />Note that none of this precludes the additional influence of supply and demand on the price at which the cotton will sell:<br /><br />"Every individual article, or every definite quantity of a commodity may, indeed, contain no more than the social labour required for its production, and from this point of view the market-value of this entire commodity represents only necessary labour, but if this commodity has been produced in excess of the existing social needs, then so much of the social labour-time is squandered and the mass of the commodity comes to represent a much smaller quantity of social labour in the market than is actually incorporated in it. (It is only where production is under the actual, predetermining control of society that the latter establishes a relation between the volume of social labour-time applied in producing definite articles, and the volume of the social want to be satisfied by these articles.) For this reason, these commodities must be sold below their market-value, and a portion of them may even be altogether unsaleable. The reverse applies if the quantity of social labour employed in the production of a certain kind of commodity is too small to meet the social demand for that commodity." (Ch10, <i>Capital</i> vol. III)<br /><br />However, for Marx, both supply and demand are magnitudes that are ultimately determined by relations of social labor. The extent of supply depends on the volume, productivity and intensity of social labor expended. The extent of (effective) demand is ultimately also determined by value relatione, not least because demand is only effective when it's backed with money, and that money must derive from one of the forms of income (in Volume 1, Marx narrows this down to profits and wages).<br /><br />J.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-24984137312821019162015-03-30T00:36:56.495-07:002015-03-30T00:36:56.495-07:00No, I will not explain anything "magical"...No, I will not explain anything "magical"; that's on you. Similarly, the quote you've provided makes no mention of dead crops -- that was <i>your</i> insertion. <br /><br />Go look at chapter 2 of <a href="http://digamo.free.fr/kliman2007.pdf" rel="nofollow">the book I linked the other day</a>, since it expresses all of these same concepts in a different writing style, since Marx's doesn't seem to be a match for you. I believe you'll find fewer places to read "magic" into it.Hedlundnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-50328298658827807552015-03-30T00:15:41.048-07:002015-03-30T00:15:41.048-07:00Keen's reading of it is frankly terrible. He ...Keen's reading of it is frankly terrible. He draws upon Arun Bose and makes the mistake of conflating "commodity" (a specific social form) with any material good, and then draws a bizarre conclusion about "commodity residue." He also uses a sloppy reading of the Grundrisse to argue that use-value is somehow numerically comparable with value. <br /><br />I enjoy a fair bit of Prof. Keen's work, and the time I met him he was extremely friendly and gracious, but his work on value theory should be approached with a critical eye. <a href="http://mccaine.org/2012/07/04/steve-keens-critique-of-marxs-theory-of-value-a-rejoinder/" rel="nofollow">Here's</a> an article that goes into more depth on it.<br /><br /><i>What does LTV tell us?</i><br /><br />Basically, "how capitalism works." Over the years I've gradually come to view it as half accounting system, half realist retroductive analysis of structural mechanisms.<br /><br /><i>It simply allows marxists to invoke "the breakdown of capitalism" every time there's a private debt deflation cycle made worse by incompetent - pro-cyclical government fiscal policy.</i><br /><br />Well, the value theory had already determined that said cycles are endogenously generated by the workings of the system. Not to knock subsequent PK work delving into the credit system at all (quite a lot of it is splendid, and wholly compatible!), but Marxists argue they stop their analysis too soon. The growth of debt is an important thing to watch, but even more fundamental are movements in the general rate of profit.<br /><br /><i>Can LTV tell us something of antiquity? If not, then at what arbitrary point in time can we all decide that capitalism started?</i><br /><br />1) Not really, no. Materialist analysis can in general, but you'd be studying a completely different social organism, so to speak.<br /><br />2) The capitalist mode of production can be seen through quite a lot of history, but it only became the dominant mode of production over the last few centuries. The enclosure and game laws are generally seen as some of the key devices, for example, that led to the solidification of mobile wage labor as a distinct class in England. M. Perelman wrote a book called The Invention of Capitalism that goes into greater depth.<br /><br /><i>I don't know, to me LTV is like trying to apply a 6 physical dimensions mathematical model to the real world - an exercise in futility.</i><br /><br />Well, to me this is a very odd thing to say. To each his own.Hedlundnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-16154914059542814492015-03-29T23:51:19.904-07:002015-03-29T23:51:19.904-07:00"What matters here is how much product comes ...<i>"What matters here is how much product comes from X hours of SNLT. That's all.</i><br /><br />Including -- in Marx's example -- WASTED hours on crops that died. Explain how wasted hours magically flow into unit labour value of reduced output.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-78782752134929433682015-03-29T23:45:30.380-07:002015-03-29T23:45:30.380-07:00Most helpful clarification.
The question you aske...Most helpful clarification.<br /><br />The question you asked didn't make a whole lot of sense to me, so I tried to get down to the bare bones of it, but apparently it was always boneless. <br /><br />More specifically: You asked me to explain how a quote does not say a thing that I can't find anywhere in it. I guess the simple answer is "use <i>reading</i>." Of course, that approach doesn't work so well if one goes into it determined to find patently ridiculous things. It's an exercise in eisegesis.<br /><br />One last try: The thing he's claiming is not the thing you highlighted, but occurs right after: "their value at any given time is measured by the labour socially necessary to produce them." If the conditions change such that less labor is needed to produce them, then their value (remember: not necessarily price!) is lessened. This says nothing about grain dying. If grain is left to die but is no more costly or difficult to produce than normal otherwise, its value has not changed, though some of said value has been destroyed. <br /><br />What matters here is how much product comes from X hours of SNLT. That's all.<br /><br />I feel pretty good about the thoroughness of this answer, but I'll nevertheless brace for another vague rejection.Hedlundnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-62491022761869752132015-03-29T22:40:16.070-07:002015-03-29T22:40:16.070-07:00Clearly you never heard of GDP. Or its components....Clearly you never heard of GDP. Or its components. Or the way this AD spending drives production and employment. A slight oversight?Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-26590711310532528592015-03-29T22:38:47.597-07:002015-03-29T22:38:47.597-07:00But Marx is not referring to equilibrium prices he...But Marx is not referring to equilibrium prices here at all: he is quite clearly trying to explain the *visible market prices* of agricultural goods after natural disasters in terms of abstract labour values.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-17266322150112060132015-03-29T22:34:25.642-07:002015-03-29T22:34:25.642-07:00"Let me make sure I understand your objection...<i>"Let me make sure I understand your objection: You're asking why, if cotton one year costs five times as much to produce per unit as the year before, the price would rise on existing stocks as well as on new stocks, instead of presenting as two different market prices for cotton?"</i><br /><br />That is not the question I asked you.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-24665699097526087522015-03-29T18:34:01.826-07:002015-03-29T18:34:01.826-07:00I for one would argue aggregate demand is another ...I for one would argue aggregate demand is another mystical and too vague to be useful concept. What's it useful for?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-91844106620138550912015-03-29T18:23:01.273-07:002015-03-29T18:23:01.273-07:00Your example is wrong because LVT applies only at ...Your example is wrong because LVT applies only at *equilibrium*. There are no shocks or surprises in equilibrium. And yes, obviously it's a simplification.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-74260549491632937592015-03-29T18:21:11.263-07:002015-03-29T18:21:11.263-07:00"Value" = "equilibrium/natural pric..."Value" = "equilibrium/natural price". There are no shocks or surprises in determination of value.Anonymousnoreply@blogger.com