Why has Capitalism failed to produce optimal value everywhere?

[Kidlicious]

Originally posted by Drogue
Yes, I've studied economic history, at least during the indistrial revolution and 20th century. Classical economic thought has generally been superceeded, including both Marx and Smith. A few theories still stand, but their definition of value isn't one of them. Value in economics is a monetary value.

Has it now?

Price is what you pay. Value is what you get.

-Warren Buffet

The idea that price = value is completely absurd. It's only purpose was to fool people. You see, as I said, economists do not care about truth, only saving capitalism.

Marshall could not say that value = utility, even though it is quite obvious. He didn't have a logical argument that price = value. The logical conclusion of his little graphs is the Marxist theory of labor value.

Pretend that price = value all you want, but labor creates all utility, which is all that Marx claimed. Marshall just played games with words.

[Flubber]

Originally posted by Kidicious


If a hurricane wipes out half of the orange crop you would say that it created value because the price of oranges is higher. Do you make such a claim with a straight face?

I'd say that the hurricane destroyed value. It reduced half the orange crop to a zero value

but you cannot deny that the price of the other half of the orange crop will increase somewhat and that some owners of oranges may make more money. You can say that the value of their oranges didn't increase or play any other theoretical or word games you choose BUT some orange owners might perhaps get richer. Although most larger owners would share in the hurricane damages and would likely make less profit even with a higher price ( for fewer oranges)

[Kidlicious]

Flubber,

Explain to me how philosophers from Locke up until Marshall realize that value is utility, and then Marshall comes and says that value is price without an argument at all, and I'm playing word games. Excuse me, but that's horse ****.

Price is commonly misunderstood for value. This is because of people like Marshall. I'm not playing word games. I'm just trying to explain what is going on.

[Kidlicious]

I know I'm spamming now, but no one really seems to want to give an argument that value is equal to price. I don't think anyone has ever really tried to.

But for those of you who blindly believe the horse ****, let me ask you something.

How much do you value seeing the valley from the mountain? Isn't it the amount of hiking you are willing to do to get to the top? Probably you won't have to hike that far, but the value of the view is not determined by how far you have to walk, but by how much you enjoy the view. This has nothing to do with exchange, and likewise value has nothing to do with exchange either.

[Drogue]

Originally posted by Kidicious
Absolutely not. The firm produces to a point where MC = MR. That's the point of profit maximization. That can be anywhere on the MC curve. Where the intersection occurs is at the price. MR = price for the competitive firm. If you assume that a firm will always produce where AC is lowest than you think a firm produces at the same level regardless of price, which is clearly wrong for obvious reasons.

Please read what I've written. I never said a firm would produce at the point where AC is lowest. I said the firm will not produce beneath that point in the long term, since if it does, it will lose money. This is clearly the case, and any decent micro course would go that far. The supply curve is the MC curve above the AC curve, in the long run (and the AVC curve in the short run).

Originally posted by Kidicious
Huh? How can you have producer surplus in the short run, but not in the long run? It accumulates obviously. You really are making less sense as we go forward. That's not good.

Please, learn some basic economics. In the short run some factors are fixed, such as plant size, thus not all firms can produce on the minimum efficient scale. This means firms can both make supernormal profit and gain a producer surplus in the short run.

You are not making any sense. Please learn some basic economics before trying to tell people what is and is not correct economics. You talk about reasonable people, read Varian, or Frank, or any standard undergrad micro textbook. It soon becomes obvious how astoundingly little you seem to know about basic economic concepts. These aren't differences of opinion, they're blatant falsehoods. A firm will not produce at a point where it's losing money in the long term, and is able to gain a producer surplus in the short term (but only in the short term) under perfect competition.

When you know some basic economics, feel free to debate the application and how it relates to different economic structures. But until then, please stick to arguments about things where you at least know the construct or the basis for the discussion.

[Last Conformist]

Again, what does it matter to anyone whether value is equal to price, or to the amount of labour put in, or the moon's angle above the horizon?

[Drogue]

Originally posted by Kidicious
You're just defining value as price, which is clearly wrong and doesn't make any sense. I think that I've shown that pretty well. If a hurricane wipes out half of the orange crop you would say that it created value because the price of oranges is higher. Do you make such a claim with a straight face?

Of course not. The value of each orange is higher, but the total value of oranges will drop. Similarly, price will do exactly the same.

If something is rare, people are willing to pay more for it. This raises price. The value is what someone is willing to pay for it, the price is what someone does pay for it. I never argued price = value, merely that it does for the marginal consumer, in a competative market. Price is how much someone is willing to pay, which is a function of utility, but is a monetary value. If something thas higher value, it has higher utility, as they are directly proportional. But something could rise in utility slightly a be a lot more valuable to the person, for example in a formula one team, having a part that is slightly better than the one they were using, and thus gives slightly better performance, is worth a huge amount, as the difference between 1st and last is not a huge amount of time, percentage wise.

Originally posted by Kidicious

Price is what you pay. Value is what you get.

Yes, and what you get is of a value that you are willing to pay. If I am willing to pay $4 for something, but not $5, it's value to me is between $4 and $5. if the value was above $5, I'd be willing to pay above $5 to get it.

I never argued price = value, except for the marginal consumer in a competative market. Value equals willingness to pay, the maximum someone would pay for a good. In the example of the formula 1 car above, utility is measured in how much faster the car would go, value in how much money it is worth for the car to go faster. The car going 5% faster would move up so many places it's worth far more than 5% more than the other part. Value isn't exactly the same as utility, but it is directly proportional. If utility rises, so does value, and vice versa. But the magnitude of that rise depends on other things than just the utility.

Value does not equal price, except that the nature of being a marginal consumer in a competative market is that willingness-to-pay = price. As I stated earlier, value does not depend (much - purely psychologically) on price. Value for a consumer is the maximum amount that consumer would pay for that good.

[Kidlicious]

Drogue,

Your microeconomics is poor. I can't pound something into your head, especially if you are just going to say that I don't know what I'm talking about. It's on the web. Look it up. Read the page. I encourage you to do that.

[Kidlicious]

Originally posted by Last Conformist
Again, what does it matter to anyone whether value is equal to price, or to the amount of labour put in, or the moon's angle above the horizon?

If you follow the concept of consumer surplus (the difference between the price and the demand curve for the quantity consumed) to it's logical conclussion you should have a surplus for workers. That's what people are saying here, is that wage labor is fair. However the surpluses don't add up to the total value, that is the use-value that pre-Marshallian economists and philosophers call value. Marshall and the neoclassicalists obviously know this, at least in their subconscious, so they don't talk about value as utility, only as price now, despite the historical meaning of the word.

[Flubber]

Originally posted by Kidicious


If you follow the concept of consumer surplus (the difference between the price and the demand curve for the quantity consumed) to it's logical conclussion you should have a surplus for workers. That's what people are saying here, is that wage labor is fair. However the surpluses don't add up to the total value, that is the use-value that pre-Marshallian economists and philosophers call value. Marshall and the neoclassicalists obviously know this, at least in their subconscious, so they don't talk about value as utility, only as price now, despite the historical meaning of the word.

I would agree that many workers make more money than the amount they would have been willing to accept to do the work.

But what's your point?

[Flubber]

Originally posted by Kidicious
Flubber,

Explain to me how philosophers from Locke up until Marshall realize that value is utility, and then Marshall comes and says that value is price without an argument at all, and I'm playing word games. Excuse me, but that's horse ****.

Price is commonly misunderstood for value. This is because of people like Marshall. I'm not playing word games. I'm just trying to explain what is going on.

My point is it doesn't matter what word you use for it, if a hurricane destroys half an orange crop it is pretty predictable that the price of a given orange will rise. The price or monetary worth of the available crop is higher.

[Drogue]

Originally posted by Kidicious
Your microeconomics is poor. I can't pound something into your head, especially if you are just going to say that I don't know what I'm talking about. It's on the web. Look it up. Read the page. I encourage you to do that.

I have. It's why I'm here, studying it, and doing quite well, even if I say so myself. Obviously my micro isn't poor, my marks would show that. You've taken basic econ, and missed all the intrinsities. I can't believe they wouldn't bother teaching the shutdown condition. I mean seriously, I have looked at the web, I have studied micro, and I have looked up things that are quite a bit more complicated than this. I'd love to know which school it was that managed to teach you the economics you know.

There's a reason you've strawmaned what I've said, and misrepresented bits in your answer. Either you haven't read what I've written, or it didn't you didn't understand it.

As we've said, no-one talks about value being price.

Let me ask you a question, what do you call value? Is it something measurable?

[Flubber]

Originally posted by Kidicious

How much do you value seeing the valley from the mountain? Isn't it the amount of hiking you are willing to do to get to the top? Probably you won't have to hike that far, but the value of the view is not determined by how far you have to walk, but by how much you enjoy the view. This has nothing to do with exchange, and likewise value has nothing to do with exchange either.

This sounds like my example of valuing the love of my parents which you dismissed as "different context". make up your mind.

There are many things which a given individual may "value" which has NO economic value. But I didn't think talking about those things added anything to the discussion. I thought that the whole point of your many tangents would be that there is "stuff" produced by a society and that an economic system must determine how to share the "value" of the "stuff" in some manner.


A mountain view is one of those things that you can obtain in a number of ways. One person walks up and feels the view was worth the walk. Another makes the walk and feels it was not worth it. A third decides the walk is too much and declines to go up. A fourth is driving the mountain highway, stops for a whiz and sees this view with no intention or effort.

If you wanted you could express these things in terms of exchange. Three of the people made decisions based on what they had or would expend in terms of effort versus the benefit they would derive . . . and I think you could possibly do that with all things that you value. I'm just not sure what the point would be.

I value my relationship with my sister and

1. if someone told me they would give me 500K never to speak to her again, I would turn it down

2. If I had to choose between never seeing my sister again and never seeing my son again, I would never see my sister.

So?? What does this do for us?

[Kidlicious]

Originally posted by Drogue

I have. It's why I'm here, studying it, and doing quite well, even if I say so myself. Obviously my micro isn't poor, my marks would show that. You've taken basic econ, and missed all the intrinsities. I can't believe they wouldn't bother teaching the shutdown condition. I mean seriously, I have looked at the web, I have studied micro, and I have looked up things that are quite a bit more complicated than this. I'd love to know which school it was that managed to teach you the economics you know.

Why are you talking about a shutdown situation? Because there is not producer surplus obviously in a sutdown situation. In a normal situation there is a demonstratable producer surplus.

There's a reason you've strawmaned what I've said, and misrepresented bits in your answer. Either you haven't read what I've written, or it didn't you didn't understand it.

You're the one with the strawman, which is why I didn't understand what you were saying. How could I be expected to understand what you are saying when it isn't relevant. It's human nature to ignore irrelevencies.

As we've said, no-one talks about value being price.

Let me ask you a question, what do you call value? Is it something measurable?

How could you not know the answer to this? Utility, and you know it's not measurable, but that's irrelevant. People had more sense about economics before they started measuring things. Economics is an art, not a science.

[Kidlicious]

Originally posted by Flubber
I would agree that many workers make more money than the amount they would have been willing to accept to do the work.

But what's your point?

My point is that Marx's theory is superior to Marshall's because it doesn't make any sense to say that workers get a surplus, because when you add it all up, it doesn't add up to the total use-value. Marx's theory has no such problems. It's coherent.