Why has Capitalism failed to produce optimal value everywhere?

[Kidlicious]

Originally posted by Drogue

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

who will produce?

what will be produced?

who will consume?

I don't remember the actual questions but basically it deals with organizing labor and deciding who will get what.

[Kidlicious]

I think you are thinking about the difference between economic and normal profit. Producer surplus is something different.

[Drogue]

Originally posted by Kidicious
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, perfect competition is an assumption, as I stated, perfect competition reacts in the way economists say it will. And in PC, there isn't a marginal firm, as all firms have the same supply curve. There is no producer surplus in PC.

Originally posted by Kidicious
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.

The more relative value, yes. The more absolute value, no. You get more utility per good, due to diminishing marginal utility, but since you can afford less, you would not pay as much as before. It still holds that if I had less money, I'd be prepared to pay less for something, thus it's value to me is lower.

[Kidlicious]

Originally posted by 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.

That's what choice is for, but inevitably if you need something that most others don't you will have to pay more for it, depending on the cost structure.

[Drogue]

Originally posted by Kidicious
I think you are thinking about the difference between economic and normal profit. Producer surplus is something different.

Nope, it just so happens under PC, there is no economic profit and no producer surplus, in the long run. The supply curve is the marginal cost curve when it's above the average variable cost curve. In the long run under perfect competition, with normal profits, the firm must produce where price = marginal cost = average cost, the point where average cost is minimised. There is no area where the firm is get's more than the minimum they are willing to sell it for, thus there is no producer surplus either.

[Kidlicious]

Originally posted by Drogue

Yes, perfect competition is an assumption, as I stated, perfect competition reacts in the way economists say it will. And in PC, there isn't a marginal firm, as all firms have the same supply curve. There is no producer surplus in PC.

Again, you are confusing producer surplus with economic profit. Buyers get a surplus in a market because they don't have to pay as mush as they are willing to. That's pretty straight forward.

No comment on PC.

I'd be prepared to pay less for something, thus it's value to me is lower.

Thus nothing. I thought we were getting somewhere. Price has very little to do with value.

[Drogue]

Originally posted by Kidicious
Again, you are confusing producer surplus with economic profit. Buyers get a surplus in a market because they don't have to pay as mush as they are willing to. That's pretty straight forward.

As said in the next post, no I'm not. Yes, you are right on the buyers. However there is no producer surplus under perfect competition.

Originally posted by Kidicious
Price has very little to do with value.

Exactly, price has nothing to do with value to a person (well, psychologically it may have some). However it does have a lot to do with how an economy values something. Value = willingness to pay, which is independant of price. Price in a competative market is the willingness-to-pay of the marginal consumer. SO the phrase "the economy values suchandsuch a good at £5" means that's the price of it, that's what you'd have to give up to obtain it. You're personal value may be higher, which is when you buy it, and if it isn't, then you don't.

[Kidlicious]

Originally posted by Drogue

As said in the next post, no I'm not. Yes, you are right on the buyers. However there is no producer surplus under perfect competition.

Producers aren't buyers under perfect competition?

[Kidlicious]

Sorry for the short replies. I'll be able to post in about a half an hour or so.

[Drogue]

Originally posted by Kidicious
Producers aren't buyers under perfect competition?

No. Producers are the sellers, and consumers the buyers, when it comes to a product. When that produce is labour, producers are the workers, and consumers are the firms.

[Drogue]

Originally posted by Kidicious
Sorry for the short replies. I'll be able to post in about a half and hour or so.

No worries It's 12:40 inn the morning here, and I have an essay due in before I sleep, so I'd probably better stop. I'll probably reply tomorrow, or maybe tonight if I feel like I need a break.

[Whaleboy]

Ah it's all been said before on the other thread, Kid it was a poor call to start a new thread just to get the last word, nothing new has been said, except by Drogue for the most part.

[Kidlicious]

Originally posted by Drogue

No. Producers are the sellers, and consumers the buyers, when it comes to a product. When that produce is labour, producers are the workers, and consumers are the firms.

I'm suppose to be listening to my instructor, but you are saying that producers don't buy things.

[Whaleboy]

I think he's talking about a particular instance of a commodity

or something

I'm old and miserable

[Drogue]

Of course not. We're looking at the market for one good, that good has a buyer and a seller. The seller buys other goods, yes, but it doesn't by that good.