brad clips GT keynes and bashes the Moor

"I agree with [Silvio] Gesell that the result of [our] filling in the gaps in the classical theory [with our approaches] is not to dispose of the [free-market] ‘Manchester System’,"


" but to indicate the nature of the environment which the free play of economic forces requires if it is to realise the full potentialities of production. The central controls necessary to ensure full employment will, of course, involve a large extension of the traditional functions of government…. "


"But there will still remain a wide field for the exercise of private initiative and responsibility. Within this field the traditional advantages of individualism will still hold good."


"Let us stop for a moment to remind ourselves what these advantages are."


" They are partly advantages of efficiency
 — the advantages of decentralisation and of the play of self-interest."

" The advantage to efficiency of the decentralisation of decisions and of individual responsibility is even greater, perhaps, than the nineteenth century supposed; and the reaction against the appeal to self-interest may have gone too far. "



"But, above all,"

here it comes sports fans


"  if it can be purged of its defects and its abuses,"

the good old angelization assumption


 " individualism  is the best safeguard of personal liberty in the sense that, compared with any other system, it greatly widens the field for the exercise of personal choice"

"It is also the best safeguard of the variety of life, which emerges precisely from this extended field of personal choice,"

 the loss of  personal choice  is the greatest of all the losses of the homogeneous or totalitarian state."

" For this variety preserves the traditions which embody the most secure and successful choices of former generations; it colours the present with the diversification of its fancy; and, being the handmaid of experiment as well as of tradition and of fancy, it is the most powerful instrument to better the future…."

personal choice "the hand maiden of experiment "!!!!!

-------------------

back to reality

"[I]f… demand is deficient, not only is the public scandal of wasted resources intolerable, but the individual enterpriser who seeks to bring these resources into action is operating with the odds loaded against him. "


"The game of hazard which he plays is furnished with many zeros, so that the players as a whole will lose if they have the energy and hope to deal all the cards."


" Hitherto the increment of the world’s wealth has fallen short of the aggregate of positive individual savings; and the difference has been made up by the losses of those whose courage and initiative have not been supplemented by exceptional skill or unusual good fortune."


" But if effective demand is adequate, average skill and average good fortune will be enough."
--------------------------------

back to liberal dog  barking


"The authoritarian state systems ...solve the problem of unemployment at the expense of efficiency and of freedom. "

-----------------------------

punch drunk sum up:
\
"It is certain"

" the world will not much longer tolerate the unemployment…."

" But it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom…"

the ghost of  future '78
              rises to laff

=================================================


brad bashing:


"Let's run through Marx's labor-theory-of-value argument in a simple finger-exercise model:
Start with 100 identical farm families on 100 identical farms, each of which produces 3000 pounds of wheat (and other crops, but let's assimilate them all into wheat) each year.

Now suppose that ten of these families starve themselves for a decade--living on little more than half-rations--to raise the cash to buy farm machinery, irrigation systems, fruit trees, et cetera from the cities.

 As a result of their sacrifice, saving, and investment, thereafter their farms require four times as much labor each year to operate, but also produce crops worth eight times as much because of the capital investment.


 They then hire thirty additional families' worth of workers, leaving the remaining ninety original farmsteads to be worked by sixty families.


If diminishing returns do not set in and if the sixty families that remain in the family-farm sector expand their crops to take over the now-idle land, each of them can now produce 4500 wheat-pound equivalents of product each year: their standard of living has gone up by 50%.


 The owners of the capital-intensive farms have to pay each of the 30 families they hire 4500 wheat-pound equivalents to get them to work in the capital-intensive farm sector. "


"Each of the proprietor families is then left with 24000 - 13500 = 10500 wheat-pound equivalents in income--4500 wheat-pound equivalents of which is the "wages" of the proprietor family, and 6000 wheat-pound equivalents is profit."



Now in Marx's schema, the first situation--where average labor productivity is 3000 pounds of wheat per family, and each family receives 3000 pounds of wheat in income--is one of no exploitation: labor is paid its average product:

---

Average Labor Product:	3000
Real Wage:	3000
_____	_____
Surplus Value per Worker:	0
Total Exploitation:	0

---

And in Marx's schema, the second situation--where average labor productivity is 5100 wheat-pound equivalents, and each non-proprietor family earns or is paid 4500 wheat-pound equivalents--is a situation of exploitation in which the proprietor class extracts surplus value from the workers by using their market position to pay those that they hire less than the true value of their labor.

---

Average Labor Product:	5100
Real Wage:	4500
_____	_____
Surplus Value per Worker:	600
Total Exploitation:	60000

---

"Now it should be clear that this labor-theory-of-value-based analysis makes no sense at all. "

"The proprietor families starve themselves for a decade, and yet Marx views them as exploiters?"


" The heavy investments of the proprietor class and their resulting demand for labor raises the real wage by 50%, and yet the working class is oppressed?"


 "Something is very wrong here."


"Now at this point the standard response is that the example is rigged: that in the real world those who own property and hire labor and live richly gained their wealth not through sacrifice but through a combination of luck and theft and having chosen the right parents. Thus it is unfair to set forth an example in which the proprietors' moral claim to their higher income is so clear and strong"


no draw your chair up close

here comes the crusher.


"And the rebuttal is :


"yes, this example is rigged: that's the point."

" The aim is to construct useful analytical categories that will help one identify and assess injustice."

"The aim is not to construct analytical categories--like the labor theory of value--that claim to find injustice whether there is in fact injustice or not. The fact that the labor theory of value finds injustice whether it is there or not is a sign that it is not the brightest light on the tree of good ideas."


"Marx's labor-theory-of-value-schema makes no distinctions between profits on capital that have their origins in luck, theft, and choosing the right parents on the one hand; and profits on capital that have their origins in sacrifice, industriousness, or flashes of genius on the other."


" They are all, to Marx, "exploitation," "unjust enrichment," "extraction of surplus value." They are all, to Marx, signs of evil."


" But in this particular example the proprietors are, in reality, not evil. The proprietors are, in reality, public benefactors. The effect of their savings and investment is to raise not just their own incomes (after an extended period of sacrifice) but everyone else's incomes as well."


"Thus the labor theory of value category of "exploitation" does not map onto what either ordinary language or our moral intuitions call "exploitation." "

"There are social and economic changes that are good that are, in Marx's schema, increases in the rate of exploitation."

" There are social and economic changes that are bad that are, in Marx's schema, increases in the rate of exploitation."

" It's simply not a useful tool for either moral philosophy or political action."


"Moreover, the labor theory of value is of little help in predicting
 what average market prices will be."

 "It's not a useful tool for economic analysis either. In my view, the labor theory of value is pretty much useless. "


"If you want to make a compelling criticism of economic and social relationships, you cannot do so by saying that there is Marxian "exploitation"--which exists wherever workers are paid less than the average product of labor. "

"You have to, instead, inquire into the origins of the wealth and property rights on which the proprietor class's income is based. The labor theory of value is simply a red herring."

---

"this is my point: The labor-theory-of-value model is simply not a good or useful model. "

"Marx's measures of "exploitation" and "rates of surplus value" don't tell you
 very much about what is really going on."

" It's a swamp you really don't want to enter. "

April 05, 2005

-----------------------------------------

for the record parable 2.0
from
 capitalist primal accuulation

to
socialist primal accumulation

continue to assume terms of trade between farm wheat and mechanization products
remains un changed
and there is no improvement in mechanized technique

THE  farmers form a co op
and  set up a members dues pool
    placed proprtionally on all farmers  out put

the proceeds are again used to buy machines etc from the city
and step by step the co op converts community production
 from hand farming to mechanized farming

along the way
taking the added productivity  partly in higher co op wheat wages
and partly in  a  higher rate of buying new machines etc from the city

this continues till the system is fully  up dated

------------------------------------

 

now we move from morals to market science

 

"Moreover, the labor theory of value is of little help in predicting
what average market prices will be."

sooooooo

"It's not a useful tool for economic analysis either."

hmmmm:

the law of value common to all classical political economists:


 the relative exchange rates of two products
 will tend to  move thru time expansion and innovations
 roughly in proprtion to the changes in their relative  average  labor content

this is indeed very loose

it makes no clarification about marginal versus average
it has no model of short term demand etc etc

the question becomes
 can this dynamic thesis be extended to cover
the same ground as covered by other theories of exchange value ?

answer

yes



 ---------------------------------------------------

" In my view, the labor theory of value is pretty much useless. "