Why has Capitalism failed to produce optimal value everywhere?

[Kidlicious]

Re: Re: Re: Re: Re: Re: Re: Re: Why has Capitalism failed to produce optimal value everywhere?

Originally posted by Drogue
Price falls raise value, because they raise output. If there's more output in the economy, there's more value.

Exactly

Because Marx states that the value of a good is the value of the labour. He ignores the things needed to make labour effectual. If you have one worker producing 10 cans a day, and then he's given a new machine and can produce 20 cans a day, the value of his output will go up. He hasn't changed, however. That is why havign value equal to the labour input is wrong.

He doesn't ignore the facilities necessary for labor to work, or any increase in them. All of these things are produced by labor. The capitalist purchases the facilities (and 'generally' makes a nice surplus on it), and he hires the labor (and 'generally' makes a nice surplus on the workers).

[Drogue]

Originally posted by Kidicious
All economists are out to prove a point. That's why they became eocnomists, and yes neo-classical is the orthodox school.

Wrong on both. Most economists, indeed all "good" economists, are out to find out something, not to show something works. As in any profession, some are there to prove a point, like a scientist trying to find proof of God or evolution, but most economists, like most scientists, would be lookign to find out, not to prove what they want to believe.

Originally posted by Kidicious
Competitive markets have their place, but it certainly is no law that they always work the way most economists claim they do.

Yes they do. A perfectly competative market is a construct. It would work in that way, if it existed. Like a triangle behaves as a mathematician shows it would, if that traingle existed. It's a construct.

Originally posted by Kidicious
And whether or not you were taught that regulation is sometimes needed or not, depends on your teacher, course and textbook.

Well, any good economics course would, and all recognised textbooks teach that. We currently use a US micro textbook that's standard across the world (most used, IIRC).

It's like most biology courses teach evolution. Some will teach intelligent design, but they're generally not the good ones.

[Drogue]

Re: Re: Re: Re: Re: Re: Re: Re: Re: Why has Capitalism failed to produce optimal value everywhere?

Originally posted by Kidicious
He doesn't ignore the facilities necessary for labor to work, or any increase in them. All of these things are produced by labor. The capitalist purchases the facilities (and 'generally' makes a nice surplus on it), and he hires the labor (and 'generally' makes a nice surplus on the workers).

Then value of a good to a company is labour plus capital. To a consumer it's what they're willing to pay. When the latter is higher, a trade is made, in a competative market.

[Kidlicious]

Originally posted by Drogue
The study of how firms organize production, the methods of doing so, and the principles involved in it. It's generally considered a branch of management.

Ok. That's called Organizational Behavior at my college. It's a management class. That's has aspects of Microeconomics, but it isn't limited to it.

No, economics says nothing about how we organize production, that would be organization theory.

I can't believe you would say that. Of course economics is about organizing production, what do you think economists talk about all the time. What do you think the purpose is of these discussions that we have?

[Kidlicious]

Originally posted by Drogue

Wrong on both. Most economists, indeed all "good" economists, are out to find out something, not to show something works. As in any profession, some are there to prove a point, like a scientist trying to find proof of God or evolution, but most economists, like most scientists, would be lookign to find out, not to prove what they want to believe.

Your knowledge of econonics is good, but your understanding of human behavior is poor.

Yes they do. A perfectly competative market is a construct. It would work in that way, if it existed. Like a triangle behaves as a mathematician shows it would, if that traingle existed. It's a construct.

No it wouldn't all of the time. A lot of efficiency has to do with economies of scale and the limits that exist in the real world.

Well, any good economics course would, and all recognised textbooks teach that. We currently use a US micro textbook that's standard across the world (most used, IIRC).

You have to realize that some economists have been dragged by their teeth to come to the realization that some regulation is good, but generally they are still in their little idealistic world, and they stay there because it suits them personally, not because of some devotion to truth.

[Drogue]

Originally posted by Kidicious
No. You aren't paying attention to the Law of Diminishing Utility.

How does that come in to what I'm willing to pay for a roll? It's already taken into account of when I say I'm willing to pay $2, but not $3, for that particular roll.

[Kidlicious]

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Why has Capitalism failed to produce optimal value everywher

Originally posted by Drogue

Then value of a good to a company is labour plus capital. To a consumer it's what they're willing to pay. When the latter is higher, a trade is made, in a competative market.

No. The value of the labor to the company is what they would be willing to pay, not what they pay. They get surplus just like consumers.

[Kidlicious]

Originally posted by Drogue

How does that come in to what I'm willing to pay for a roll? It's already taken into account of when I say I'm willing to pay $2, but not $3, for that particular roll.

It will depend on your income. If you have less income each dollar is more valuable to you than if you had more income.

[Drogue]

Originally posted by Kidicious
Ok. That's called Organizational Behavior at my college. It's a management class. That's has aspects of Microeconomics, but it isn't limited to it.

Not quite, organizationa; behaviour is how firms behave in the market, not how they organize production.

Originally posted by Kidicious
I can't believe you would say that. Of course economics is about organizing production, what do you think economists talk about all the time. What do you think the purpose is of these discussions that we have?

The purpose is to decide how to distribute finite resources among people, and to predict the behaviour of consumers. Management covers the production side, and how those raw resources are turned into goods.

The question of how to build something is management. The question of whether to build something is part management, part economics. Management would tell you how much it would cost to build it, economics how it would affect profits and prices. Economics uses the calculations of management to show cost, but it doesn't decide how those costs should be incurred, what they should be, and how production should be organized to get to that.

[Kidlicious]

Originally posted by Drogue
The question of how to build something is management. The question of whether to build something is part management, part economics. Management would tell you how much it would cost to build it, economics how it would affect profits and prices. Economics uses the calculations of management to show cost, but it doesn't decide how those costs should be incurred, what they should be, and how production should be organized to get to that.

If I remember right from Intro to Econ, economics deals with WHO, WHAT, and FOR WHOM. Tell me if I'm wrong, but how is that not about how we organize labor?

[Drogue]

Originally posted by Kidicious
Your knowledge of econonics is good, but your understanding of human behavior is poor.

Actually it's not. Most academic scientists, and economists, look for answers, not proof, as the former leads to more accurate results and thus more research funding.

As for my knowledge of human behaviour, I'm a trained counsellor and most of my economics and management work revolves around how people behave given certain situations, and thus how a population as a whole behaves. This is what I'm studying.

Originally posted by Kidicious
No it wouldn't all of the time. A lot of efficiency has to do with economies of scale and the limits that exist in the real world.

Exactly. And in a competative industry, everyone is producing at the minimum efficient scale. If they're not, it's not a competative industry. I can prove that mathematically. There are economies and diseconomies of scale, and thus there is an efficient point. If there aren't diseconomies of scale, you have a natural monopoly.

Originally posted by Kidicious
You have to realize that some economists have been dragged by their teeth to come to the realization that some regulation is good, but generally they are still in their little idealistic world, and they stay there because it suits them personally, not because of some devotion to truth.

Yes, and they're the ones who are not well recognised, and are not good economists. A good scientist is someone who is impartial and seeks the truth, not someone trying to fulfill their own agenda. Likewise with economics. I'm not saying you're wrong, I'm sayign that's bad economics.

[Japher]

The problem is that the idea of value is not an intrinsic value and cannot be treated as though it were real. Value varies from person to person, place to place. We could restructure labor, we can give everyone the same thing, in the same amounts, at the same time, in the same place... Thing is, what is enough for some is too much for others and not enough for another.

It is not just limited to wants, but needs.

[Drogue]

Originally posted by Kidicious
No. The value of the labor to the company is what they would be willing to pay, not what they pay. They get surplus just like consumers.

In a competative labour market, the price they're willing to pay is the price they pay. Producer surplus comes only from having something other firms don't, thus making it a non-competative industry. In a competative industry, there is no producer surplus.

Originally posted by Kidicious
It will depend on your income. If you have less income each dollar is more valuable to you than if you had more income.

Yes. How and thus my valuation of that roll changes. If I have less money, the value things have to me changes downward, as I'm willing to pay less for them.

[Drogue]

Originally posted by Kidicious
If I remember right from Intro to Econ, economics deals with WHO, WHAT, and FOR WHOM. Tell me if I'm wrong, but how is that not about how we organize labor?

Who what and for whom to which question? On their own they're just philosophical.

[Kidlicious]

Originally posted by Drogue

In a competative labour market, the price they're willing to pay is the price they pay. Producer surplus comes only from having something other firms don't, thus making it a non-competative industry. In a competative industry, there is no producer surplus.

Perfect competition is merely an assumption, and a very poor one. Producer surplus has nothing to with having more resources. All firms, except the theoretical 'marginal firm' recieve producer profit in exactly the same way that consumers get consumer surplus.

Yes. How and thus my valuation of that roll changes. If I have less money, the value things have to me changes downward, as I'm willing to pay less for them.

It should be that the less money you have the more valuable the thing is that you purchase. You get diminishing utility from each dollar that you spend.