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In my last diary I discussed what capitalists and workers are, the basic outlines of Marx's economic theory of society, and why capitalism is necessarily prone to crisis and inequality.  In this diary, I'll discuss some more specific Marxist concepts such as the labor theory of value and surplus-value.  These concepts sound pretty intimidating, but they're really fairly simple.  Why should you care about them?  You should care about them because they will help you understand the world around you, where you are in that world, what is going on with your labor, and why businesses and governments pursue certain policies.  

As I remarked before, this diary is intended for a non-academic, popular audience, so I'm intentionally dumbing things down.  I think us Marxists often shoot ourselves in the foot by insisting on embracing Marx's own dialectical way of speaking, thereby rendering ourselves incomprehensible to any but other academics.

Economic Justice

Before getting to those more specific concepts, it's important to first talk a bit about economic justice.  What constitutes justice in exchange or a what is a just exchange?  In raising this question, I'm not asking the question of what a just economy would look like, nor am I proposing or defending any particular sort of economic system (gift economy, feudalism, capitalism, socialism, communism, etc).  No, I'm just asking what we all assume when we say that economic exchanges are just and fair.  Whether you're a capitalist, an advocate of a barter or gift economy, a communist, or a socialist, I wager that lurking deep down in your thought is this particular assumption as what constitutes fair exchange.  One of the great merits of Marx's economic theory is that he never resorts to easy answers such as suggesting that capitalists cheat or steal in order to attain their profits.  Rather he attempts to show how injustice is inherently built into the capitalist economic system.

I'd like to suggest that all economic systems, no matter how disparate, assume the following:  an exchange is just and fair when the commodities exchanged are of equivalent value.  Conversely, an exchange will be unjust and unfair when the person trading the commodity gets less in return than the value of the commodity.  In other words, the idea of just exchange is based on the very simple principle that A = B.  If I get such and such a wage for a day's labor, then that wage will be just if its value is equivalent to the value of my labor for the person that bought my labor.  Likewise, if I trade a pound of corn for a few yards of linen, that exchange will be fair if the linen and corn are of equal value.  When someone gets something of more value than what they gave in an exchange, we don't say that this is fair or just, but that they deceived or swindled the other person.  Understanding this point is tremendously important to understanding the ethical dimension of Marx's critique of capitalism.  It is also important to notice that this principle of just exchange is non-controversial within economic theory.

Where Do Value and Property Come From?

Speaking of which, where does value come from anyway?  Here, of course, I'm not talking about things like moral values, but rather economic values.  What makes a particular commodity worth something?  Where does it get its worth from?  How do we come to place a value on something like linens, gold, a plot of land, food, and so on?  How are we able to say that two things that are so different in terms of their qualities-- say corn and tea --are of equivalent value?  Moreover, how do we come to own things at all?  What is it that makes something property?  It's not self-evident that property should exist, nor that things-- even gold --have value.

Marx's theory of value is pretty complicated, so here I'll only discuss some of the high points.  With respect to how things come to have value, the first obvious response is that they are useful.  We value a thing because it feeds us, shelters us, clothes us, or gives us some sort of pleasure.  This kind of value is what Marx calls "use-value".  

This sort of value isn't all that mysterious.  What's mysterious is how one thing can come to have equivalent value to another value.  In other words, where does what Marx calls exchange-value come from?  How can a diamond come to be equivalent in value to thousands of pounds of corn when their qualities and their uses are so different?

From capitalist economic theory, we're accustomed to saying that things get their exchange-value from "supply and demand".  The value of a commodity fluctuates as a function of how much it is in demand and how great a supply of that thing is available.  Under this theory, diamonds thus have the value they have because there's great demand for them, yet very few of them.  Marx doesn't entirely reject this thesis as exchange-values do fluctuate, however he thinks that this theory is incapable of completely accounting for value because regardless of how great the supply of something is, its value never goes to zero.  In other words, despite the fact that there are fluctuations in the value of things due to supply and demand, there's nonetheless an average constant that remains the same across these fluctuations.  We need a theory capable of accounting for this constant value.

Enter Marx's highly controversial labor theory of value.  Marx draws the seeds of the labor theory of value from John Locke (upon whom capitalist economists such as Ricardo and Smith based their economic theories).  Locke argues that our first private property consists of our bodies.  Through laboring on other things, our body, as it were, mingles with those material things, making the things upon which we labor our property.  For example, a bit of land becomes my property because I constantly tend to it and cultivate it, thereby mingling my body with that of the land.  The case is similar if I take a piece of wood and carve it into a beautiful sculpture.  According to Locke, this is how property arises.  I "make" things my own by working on them.

Marx, along with other economists of the period, extrapolated from this idea and argued that labor is also the origin of value.  Suppose we have two pieces of wood, one simply picked up from a forest floor, and another picked up from the forest floor and then carved into the figure of a graceful eagle.  Why is the latter worth more than the former, despite the fact that it came from the same place and weighs less?  Marx argues that the latter is worth more because of the labor that went into it.  It only takes a small amount of labor to gather wood from a forest floor, while it takes a great deal of labor to turn a piece of wood into a beautiful sculpture.  The case is no different with diamonds and gold.  They have the value that they have because it requires a great deal of labor to extract and refine these minerals and metals.

Exchange-value thus arises from labor.  When we say that a particular diamond is worth a thousand pounds of corn, what we're saying is that equivalent labor goes into extracting and refining a diamond and cultivating a thousand pounds of corn.  If the exchange is just, it is because the same amount of labor goes into the production of these two commodities.  The question of just how we're supposed to calculate value based on this principle is a difficult one, but Marx argues that it is a function of what it costs to sustain a worker (in terms of food, water, shelter, and clothing) and the time and effort it takes to produce the commodity.

Important Caveat

Capitalist economic theory portrays value and wealth as arising from capitalists.  The story runs that capitalists invest their capital in production to create goods and commodities.  This, in turn, creates jobs which creates wealth for everyone.  For Marx the situation is precisely the reverse.  Wealth and value come from workers because those are the ones that labor.  Capitalists get their wealth from workers, not the reverse.  As a result, workers are the foundation of a society's wealth.


So let's go back to the beginning and the assumption of just exchange.  If it is true that exchanges are only just when the commodities exchanged are of equal value, how do capitalists make a profit through their exchanges?  Capitalists pay workers for their labor.  Workers create commodities through their labor.  Capitalists then sell these commodities and make a profit.  But where is that profit coming from?  Somehow, through some strange alchemy or magic, capitalists are getting more out of their investment than they put into their investment.  This would seem to suggest that there is some sort of injustice at work in capitalism, yet Marx does not say so.

For the sake of this post, we can say that profit is what Marx calls "surplus-value".  Through an investment of his money in labor, apartment buildings, etc., the capitalist gets more out of his investment than he put into it.  He gets a surplus of value from his investment or a profit.  Yet how does this magically happen when just or fair exchange requires that there be an equitable exchange between commodities (in this case, the commodity of labor that the worker sells to the capitalist and the money the worker receives in the capitalist).

In a nutshell, Marx argues that surplus-value arises from the difference between "labor value" and "labor power" under wage labor.  That's a mouthful.  "Labor value" is the value of a workers labor for a particular amount of time.  This is calculated as a function of how much time it takes to train the worker, coupled with the amount it costs for the worker to clothe, shelter, and feed himself.  "Labor power" consists of what a worker can produce in a given amount of time.  Capitalists work the difference between labor value and labor power to create surplus-value.

This is all abstract, so let's take a concrete example.  Suppose that you're paid 5 dollars an hour to produce bricks.  Your labor is a commodity that the capitalist has bought.  Because he has bought your labor for that one hour time period, he owns whatever commodities you produce during this hour.  By structuring how you produce bricks during this hour through the use of machines and things such as assembly lines, the capitalist is able to create a circumstance in which you create more value than he paid you.  For example, you produce 15 bricks each worth $2 dollars in an hour by working on an assembly line, thereby producing $30 dollars worth of value.  As a consequence, $25 dollars worth of surplus-value has been created through your labor ($30 - $5 = $25).  It is through working the difference between the value of your labor and the value your labor is able to produce that the capitalist is able to create more value than he originally invested.

Important Caveat

So why is this a just or equitable exchange?  Capitalist economic theory argues that this arrangement is just because the capitalist provides the means by which the worker produces commodities and therefore deserves the fruits of that investment.  The capitalist provides the factory where the worker produces, the materials transformed into commodities, the machines and tools by which these materials are transformed, as well as the energy required to produce these economies.  The worker cannot afford these things, so it is the capitalist ought to reap the benefits from investing in all this infrastructure.

This is a just arrangement, right?  It certainly is, for a time.  Remember Locke, we make something our property by laboring on it or intermingling our body with it.  Notice that at a certain point the workers, through the production of surplus-value, will completely repay capitalists for their investment in materials, tools, machines, and factories.  They will generate enough surplus-value to pay back all these things.  If this is true, we can ask "why don't the means of production come to be owned by the workers rather than the capitalists that initially invested in them?"  It seems there is an injustice here.  Ordinarily when we borrow money we own the thing that we borrowed the money for once we've paid all that money back.  Yet in capitalist systems, the debt of workers to capitalists is never erased.  Why is this?  If you think this is just and equitable, then you must give an alternative account of how something comes to be property.

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Comment Preferences

  •  Nicely done. You took very complex (4+ / 0-)
    Recommended by:
    Mary Mike, annieli, Rogneid, Orinoco

    matters and made them understandable.

    Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

    by TomP on Mon Apr 15, 2013 at 02:08:38 PM PDT

  •  Correct me if I'm wrong...(Capitalist assumptions) (1+ / 0-)
    Recommended by:

    But doesn't capitalism in theory rely on the idea that a capitalist initially does work for no value?

    According to the theory,

    If you are a capitalist, you must under consume in order to create capital.  Therefore you are taking a risk, and may lose your investment.

    The creation of infrastructure is done through the capitalist's investment, and therefore the capitalist alone deserves the reward.

    If those that work for the capitalist wish to get full value for their labor, they too must underconsume in order to create infrastructure.  

    Therefore, according to Capitalism, Labor alone has no value, except what it can be sold for, only the infrastructure and the capital that created it is of any intrinsic value.

    (Please let me be wrong on this...)

    I don't blame Christians. I blame Stupid. Which sadly is a much more popular religion these days.

    by detroitmechworks on Mon Apr 15, 2013 at 02:10:31 PM PDT

    •  That's what I claim (3+ / 0-)
      Recommended by:
      detroitmechworks, Orinoco, TomP

      in this diary.  Labor in its most basic form is without value.  It is only once exchange begins that value comes into existence.  That said, the origin of value is not the investment of the capitalist, but labor.  That capitalist first had to labor to create that excess value that he could then invest.  The Usual Suspects says the greatest trick the devil ever did was to convince us he doesn't exist.  Well the greatest trick of the capitalist lies in convincing us-- despite all evidence to the contrary --that wealth arises from his investment of capital rather than from labor.

      •  Labor always has value, use-value if nothing else. (1+ / 0-)
        Recommended by:

        So I think you were bit simplistic there Jo.  Exchange-value is also a product of use-value, bc different laborers have different skills, access to material etc. so that, even with a single capitalist, what I make may have more use-value to you than me, and I reap the difference as profit.  (But this is one time profit, directly traceable to the labor value of each worker in the exchange, unlike the capitalist's.)

        Now, to Mech's question: yes, but only at the begining of the chain and that is why those are almost always a government fuction.  Thus, the gov/tribalcouncil/whatever forces underconsumption to pay for road construction.  But, bc the users of the road do not pay a use-rate truly equivalent to the benefit they derive from using them, some users derive a profit from use of this common resource.  That profit in turn is then invested into a factory, etc., until we get to Exxon.

        But, the critical point is that the original profit exceeded and so was not entirely a product of the original capitalist's underconsumption.  Rather, he was thru wahtever means appropriating the labor-value of others who the gov. forced like underconsumption at the begining.

        Hence, all (non-personal private) property is theft.

        NB: as in J's diary this is a simplified example.

    •  I suspect that whole risky investment (1+ / 0-)
      Recommended by:

      argument is overstated. Yes, I know most workers who try to become capitalists lose their shirt, but that is because in a mature market, there is only room for so many capitalists, and the niches are full. New entrants either have to operate on very thin margins, or try to knock an existing business out and take its place. Capitalists become so by not taking risks and losing their investments.

      For example: I live in an apartment and pay rent. My landlord bought the apartment years ago, when it was built, and the rentals have not only paid the mortgage and upkeep all those years, that rent money has also provided a nice cash return on investment for his down payment. At the time the building was built, the population was growing leaps and bounds, there was no risk that he would not be able to find renters, and insurance took care of any physical risks that might be encountered. The place is a cash cow, and always has been.

      So why is that particular gentleman my landlord, and not someone else? Well, there are only so many pieces of property here, and he was in the right place at the right time to get one of them. Luck, mostly. A bit of planning, but mostly happenstance.

      So our brick making capitalist takes no risk. If the market isn't there for $2.00 bricks, or the brick making facilities are too expensive, the capitalist does not invest in brick making, and buys a herd of goats, instead. If not goats, then something where there is surplus value to be created so he profits rather than loses capital. The whole point of investment is to avoid risk.

      "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

      by Orinoco on Mon Apr 15, 2013 at 08:51:04 PM PDT

      [ Parent ]

      •  And this does not even begin to consider how the (2+ / 0-)
        Recommended by:
        Orinoco, JosephK74

        lucky (or most murderous :) ) firsts then rig the system for them and thiers.  I.e., banks owned/controlled by them give preferential terms to them, buy the government, red-line their areas to ensure property values rise (or better yet, dump 'undesriables' in areas that will be unloaded on government before the next flood - and they own the banks and insurance companies who hold the paper for those areas and who get bought or bailed out - at an additional profit (hel-lo NOLA!)

        Yes, that's the Shock Doctrine.

        As inevitable a result of capitalism as Bernie Madoff.

        •  True, but that's a second order effect (2+ / 0-)
          Recommended by:
          JosephK74, TomP

          Capital apologists argue that the capitalist deserves all surplus value because he takes such tremendous risks by investing his capital. "He could lose his investment!" A capitalist is depicted as lying awake at night, concerned whether the money he has sent out into the world will send home sufficient remittances to support him in the style to which he has become accustomed, or some such shit.

          It's an argument that is supposed to give the capitalist the moral high ground, since the capitalist has both deferred gratification by saving rather than consuming some of his property, and has risked losing those savings by investing in a business that might lose money.

          So when the question comes up of "who owns the means of production when the investment has been repaid" and "who owns the surplus value created by assembling resources and labor in such a way that the value produced is greater than the sum of the costs" the capitalist claims all that surplus value because he deserves it. And, since the surplus value never applies to paying off the initial investment, the capitalist claims continued ownership of the means of production.

          The follow up arguement (the 'lazy worker' meme) is also illustrated by detroitmechworks

          If those that work for the capitalist wish to get full value for their labor, they too must underconsume in order to create infrastructure.  
          which is a fancy way of saying if workers want some of that surplus value, they should just become capitalists themselves.

          This arguement for giving capitalists all surplus value is disingenuous, since there are a limited number of opportunities to create surplus value by investing. When those niches are full, the opportunity is gone. Any brickworker attempting to start a new brickworks alongside the old one will be put out of business by the original brickworks owner's predatory, protective business practices. In effect, the capitalist arguement is that he needs all the surplus value to prevent further competition in his chosen industry.

          "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

          by Orinoco on Tue Apr 16, 2013 at 05:49:16 AM PDT

          [ Parent ]

          •  Of course it is. I addresses the 1st order in prio (1+ / 0-)
            Recommended by:

            r comment answering Mech's misguided pt.  

            This was intended as an addendum and extension of your comment it responded to, hence beginning with: "And this does not..." :)

            •  So who owns the infrastructure? (0+ / 0-)

              It sounds like a delayed gratification arguement. The budding capitalist, rather than enjoy his leisure, or gather enough veggies to properly feed himself, spends his time building brick molds and chopping straw, things that are of no immediate use to him. He lives in a lean-to, and delays building a nice wattle and daub cottage like his neighbors, so eventually he can produce enough bricks to build himself a brick house, and as a by product, create a market for more bricks.

              So you are saying that the original brickyard, road, salt mine, whatever, was a product of government forcing delayed gratification on some of its members, and appropriated their effort in building infrastructure that was owned by... ? the community? the king? a favored crony?

              To return to our artisinal brickmaker. He spends his leisure time up front, making bricks, but his brick house needs significantly less maintenance than his neighbors' mud huts, so he recovers that leisure time in the long run. As the benefits of his brick house become known to his neighbors, a demand for more bricks arises. He hires additional people to help make bricks and additional molds, gather firewood for the kiln, build a bigger kiln, and so on. He becomes a capitalist and is now in the business of hiring and training labor, buying materials and selling bricks.

              So who owns the brickyard? It seems to me the government need not be involved in this, since it could have grown organically from an individual brickmaker, or the brickmaker and his family. In expanding the yard, the brickmaker/capitalist paid up front for his material and paid wages to his labor. Doesn't he own that brickyard, in spite of the fact that working the brickyard produces a lot more value than it took to build it?

              "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

              by Orinoco on Tue Apr 16, 2013 at 03:56:25 PM PDT

              [ Parent ]

              •  Well, du-uh, ya the king or other community ruler (0+ / 0-)

                , until they sell it - at a loss - to some capitalist (who made it necessary by not paying his fiar share, let alone actual costs, i..e, look at all the states selling public infrastructure so the rich won't have to pay for what they didn't build - regardless of Thug propaganda to the contrary - but extract most of the value of same).

                You've fallen victim to a common mistake: you've chosen an example/starting point that leads to the conclusion you are pushing, rather than the real, historical starting point.  In short, the brick factory was not the 'first infrastructre', the proto-state was.  And the first capitalists-like actors were either the rulers thereof or thier cronies.  They - or more ruthless folks who stole from them - then compounded it thru the ages by 'investing' and appropriating some of the memebers of subsequent generations labor-value until you get to Exxon and Citi.

                And yes, this means that all investment is ultimately the product of stealing the coerced 'savings' of the labor-value of everyone else. IOW, all private non-personal property is theft.  Just bc (some of) the victims are long dead doesn't change that.

                This is not a difficult pt.  It is evident from even cursory review of anthropological and historical evidence.  I don't see why you seem to have such a problem understanding it.

                •  In the first place, chrismorgan (0+ / 0-)

                  I am not pushing a conclusion. If there is anthropological or historical evidence for your conclusion that all property is theft, point me to it. I am continuing this conversation because I would like an explanation, not mere assertions of a point of view with a dash of sarcasm.

                  My example is based on what I saw with my own eyes when I was in Guatamala. Two ladies living in the countryside manufactured clay pots in the front yard of their wattle and daub cottage using materials they gathered from the local commons. Given that I observed this years ago, it is an actual historical fact, rather than a disingenuous fiction designed to lead to some conclusion. I sincerely do not understand who these ladies stole their pottery factory from.

                  So, rather than dismissing my example as an historical impossiblility, can you explain to me why the king owns the brickyard?

                  "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

                  by Orinoco on Wed Apr 17, 2013 at 12:01:38 PM PDT

                  [ Parent ]

                  •  ::sigh:: Neither of them is a capitalist. They ar (0+ / 0-)

                    e boutique manufacuters.  But, assuming they sell their goods down the - government built - road, using trucks that burn -government subsidized - oil and gasoline, etc., and continue to own it after thier initial investment (including labor) is repaid, then they will be capitalists (tho very small and ver recent, and thus not very far down the line towards showing the ills of concentration of wealth, exploitation, etc.)  IOW, your concept of captialist is too broad: there is a line when the artisan's workshop becomes so big he is only contributing his money, but that does not seem to be the case here.

                    Further, I did not say "anthropological or historical evidence for [my] conclusion that all property is theft". That 'conclusion' is in fact a moral judgment, not a statement of fact (as I would think using 'theft' rather than the neutral 'appropriation' made clear).  Further, I thought it clear that what I said there was "anthropological or historical evidence for" was the process by which certain elites got rich off the (for most the West) earlier coerced communal savings (non-consumption of labor-value) that was used to make the infrastructure whereby succeeding generations of elites (or expropriators and thier 'new elites' succeeding generations, as the case may be), and then continued to add to that wealth by expropriating to themselves a part of further communal enforced non-consumption of labor-values for additional infrastructure or other capitalists transfering to them the expropriated surplus-value of thier laborers thru 'investment', etc.

                    As for whether you were 'pushing a conclusion', I accept your claim otherwise, but since you used the same 'brick factory' example to try and argue that all capitalists were somehow making additional value with just thier magic money (without asking what the original source of the value of that money was), it looked to me like that is what you were doing.

                    •  So it is possible (0+ / 0-)

                      that my actual boutique clay pot makers could become small scale recently minted capitalists, by dint of expanding their production, hiring workers, buying materials, etc, so that at some point they are divorced from actually handling clay and deal only in money.

                      Fine. This is why I used a brickyard example. This is the pottery shed grown to the point where it is a business rather than a boutique. I am tryiing to understand the idea of property the original diarist proposed.

                      JosephK74 says

                      The point is that at a certain point, the capitalist has been fully compensated for the money he invested in the infrastructure that allows this production.  That opens the question of why he continues to own it.
                      and I wondered who would own it, if not the original owner turned capitalist. You proposed that the king would own it (using 'king' as a proxy for whatever local elite is in charge). So are you arguing that the original capitalist became the king? Or the king became the capitalist? Or that they are somehow inextricably intertwined?

                      I also don't understand the jibe about 'magic money.' Isn't surplus value the result of combining labor with means of production to produce more value than the sum of the inputs?

                      "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

                      by Orinoco on Wed Apr 17, 2013 at 02:39:51 PM PDT

                      [ Parent ]

                    •  Also (0+ / 0-)

                      The ladies in question carried most of their pots to a local market on their backs, along paths that had been worn into the soil through use. No trucks, no roads, no gasoline. I did mention these ladies lived in the countryside in a hand built cottage. There were very few trappings of Western Civilization.

                      There were only two obvious involvements of government: first, they took currency in trade rather than barter; second, the local government set times for the market, and administered it.

                      "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

                      by Orinoco on Wed Apr 17, 2013 at 02:56:59 PM PDT

                      [ Parent ]

                      •  Which is why they aren't really capitalists in the (1+ / 0-)
                        Recommended by:

                        relevant sense.  Marx saw capitalsim as a necessary step in history.  It was better than what came before, but all prior economic systems had capitalists but weren't capital*ism*.
                        A degree of industrialization is required for that - not just a single factory but in the society as a whole.

                        As for the individuals, the very primativeness of thier cricumstances measn they are outliers, primative crafts-people and merchants, albeit with aspects of industrial organization.  You yourself show thier industry is not a product merely of investing thier money but rather was and has not ceased to be created by thier labor (walking the pots, etc.).  So, in JK's terms, they are no where near having been re-inbursed for the labor (and labor-value) they invested.  

                        What I added to JKs is different: it is my contention that the capitalist is entitled to nothing for investing his money beyond the value of whatever labor he actually does, bc the money above that value is actually expropriated from others, both in the present (or future if they can e.g. get the government to put future generations in hock just to give them $ ala the rich today) and past.

                        If that difference was confusing or added to your confusion I apologize for not being clearer.

                        •  Ok, I think I get your point (0+ / 0-)

                          the capitalist stole his stash of capital, so he is entitled to nothing for investing said capital. The capitalist is only entitled to whatever value is created by his actual labor, just as a worker would be. I assume you would give all surplus value to the workers, according to some equitable distribution formula based on their contribution in labor.

                          What I am not getting is my questions addressed. As I said earlier, I am trying to understand this way of looking at economics, but you prefer to talk about how my examples are irrelevant, addressing a post that had no questions in it, avoiding addressing what I think are perfectly valid questions in the post preceding it.

                          So I guess we are done. Thanks for your time.

                          "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

                          by Orinoco on Wed Apr 17, 2013 at 10:52:39 PM PDT

                          [ Parent ]

                          •  IMO bc you choose not to understand. Just as you (0+ / 0-)

                            choose an example that you then made irrelevant by putting into a context that was completely irrelevant to that at issue: industrial captialism.

                            I will repeat again: there are no capitalists in the stone age, which might as well be the context of your ladies 'example'.  Your example is in short a straw-man.

                            So yes we are done.

                          •  The ladies are not my example (0+ / 0-)

                            my example is the brickyard, which is not a straw man, but a 'toy economy' used for illustrative purposes. I am under the impression that using 'toy economies' as examples are fairly widespread in introductions to a subject, which this diary is supposed to be.

                            A straw man would be a mischaracterization of your arguement which I then proceded to easily knock down.  

                            You are, by the way, the one who brought up

                            at the begining of the chain and that is why those are almost always a government fuction.  Thus, the gov/tribalcouncil/whatever forces underconsumption
                            and when my example addresses the begining of the chain you then say
                            you choose an example that you then made irrelevant by putting into a context that was completely irrelevant to that at issue: industrial captialism
                            If I don't understand, then explain what in this
                            the capitalist stole his stash of capital, so he is entitled to nothing for investing said capital. The capitalist is only entitled to whatever value is created by his actual labor, just as a worker would be.
                            which I think is the core of your arguement, is an incorrect characterization of your point.  

                            I am not erecting straw men to mischaracterize and knock down this argument, I am simply wondering why you think this assertion or moral judgement is correct.

                            "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

                            by Orinoco on Thu Apr 18, 2013 at 03:01:08 PM PDT

                            [ Parent ]

                          •  Bc difference bt actual history and 'toy' and btw (0+ / 0-)

                            You replied to my post addressing your 'brick factory toy' in actual history by saying the following:

                            "The ladies in question carried most of their pots to a local market on their backs, along paths that had been worn into the soil through use. No trucks, no roads, no gasoline. I did mention these ladies lived in the countryside in a hand built cottage. There were very few trappings of Western Civilization."

                            Which make the ladies your example.  It the post my comment replied directly to no less.

                            And yes, the 'toy' is a strawman or irrelevant bc either 1) you put it into real world context and the heroic HoritioAlgier bs evaporates or 2) you keep it in an artifical primitive context cut off from any other whiich makes it as relevant to the real world as putting it on the Moon.

                            Frankly, that you call it a 'toy'
                            pretty much proves my point imo.

                            Respond if you wish.  I'm done and won't.

  •  Great diary. (1+ / 0-)
    Recommended by:

    I've hotlisted this, and your other.

  •  Let's see (0+ / 0-)

    So, I, a primitive worker, plant corn on a plot of land, and by dint of my labor in plowing, planting, weeding and harvesting, now own some bushels of corn, which have a labor value based on the time and effort I invested in producing that corn. The land itself is 'mine' based on the fact that I occupy it and work it.

    My neighbor, a primitive capitalist, builds some brick molds and a kiln, digs a well and gathers a supply of clay and straw, and hires me to make bricks. He offers to pay me in corn, and I figure that if I spend the same time and effort making bricks that I previously spent working on my plot of land, I'd end up with more corn, so I agree.

    I spend my time drawing water, mixing clay and water and straw, filling molds, collecting firewood for the kiln, and baking bricks. Since I am being paid for this effort, the bricks I make belong to my neighbor. My wages are the labor value invested in the bricks I produce.

    My neighbor then sells 'his' bricks to a farmer who wants to live in a brick house instead of a wattle and daub cottage, and that farmer pays him three times as much corn for those bricks as I got in wages. That larger amount of corn is the 'labor power' and the corn left over once I've been paid is the 'surplus value.'

    Now, lets go back to when my neighbor built the brick molds and kiln, dug the well and rounded up the raw materials. Let's suppose that if he bought those things in exchange for corn, he would have paid all the surplus value from one season's worth of brickmaking. The brick factory is now 'paid off.'

    So, who owns the factory? I worked it. I can argue that Locke says since I intermingled my labor with the brick works, and repaid any investment with surplus value, that I own it. He can argue that, since I worked for wages, I really didn't work the factory, he did, since he purchased my labor.

    I can then argue that he really doesn't know how to make bricks, but I do, having a year's experience, and I can always go back to my farm. If I can convince my fellow brick makers to go back to their farms, too, my capitalist neighbor is left with a wet hole in the ground, some mud, a stack of fire bricks, some possibly decorative wooden thingies and a compost heap. This might lead to some sharing of that surplus value between the capitalist and the workers in subsequent brick making seasons.

    Here's what I don't get: I am not borrowing the cost of the brick yard in order to buy it from the capitalist. So I am not paying him back with the surplus value. If anything, I am renting a space in the brick yard, and the rent I am charged is that surplus value.

    Is there a justification for being charged such high rent?

    "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

    by Orinoco on Mon Apr 15, 2013 at 04:06:50 PM PDT

    •  I don't follow. (1+ / 0-)
      Recommended by:

      The point is that at a certain point, the capitalist has been fully compensated for the money he invested in the infrastructure that allows this production.  That opens the question of why he continues to own it.

      •  Who would if not him? (0+ / 0-)

        If our primitive worker takes ownership of his work product by virtue of his having worked on it, and trade is allowed, then the primitive worker is allowed to sell that work product to another, who becomes the new owner.

        If the primitive worker has no work product handy, he sells his labor. His labor is then owned by the capitalist, and the work product of that labor would belong to its new owner, the capitalist. It wouldn't be a matter of the capitalist being compensated for the other resources he has purchased, the labor becomes just another resource in the mix.

        It seems to me to be difficult to distinguish between tangible goods or intangible services produced by labor, and actual laboring itself. But I think you would have to have that kind of distinction between labor and goods/services in order to argue that the worker's labor for a capitalist is payment for the capitalist's investment rather than a resource sold by the worker and purchased by the capitalist.  

        One way to look at it is the capitalist does not sell the factory, merely rents it to the employees, and the surplus value is what he charges for rent. Once the rental term is over, the laborer leaves, and the capitalist retains ownership and rents it out again.

        The capitalist continues to own it because he has never offered it for sale, and has no agreement with anyone to purchase it.

        Am I missing something?

        "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

        by Orinoco on Mon Apr 15, 2013 at 08:22:19 PM PDT

        [ Parent ]

  •  Over-simplified (2+ / 0-)
    Recommended by:
    Orinoco, melo

    A fair exchange must first be one in which both sides make a profit, because what they get has a greater use-value to them than what they give up. Even money has a different marginal value to different people, or to the same person under different circumstances.

    If you are starving to death,  the first bite of food you can get is of incalculable value: one life. If you have nearly enough food, the next bite is worth some measure of health. If you have enough to eat, the next bite may only have the value of enjoyment. If you are obese the next bite may have negative value, and you would do better to go on a diet. If you see things that way, you might turn down food as a gift, or even (if you can afford it) pay to go to a fat farm and have food kept away from you.

    Similarly, the first dollar that you can spend on food is worth much more to you than a dollar that you might spend on food you don't need, or another MP3 music track.

    It is common to illustrate this principle with toy economies, say a family running a bakery and a family running a  dairy living side by side. If they do not trade, one family has only bread to eat, and the other only butter, milk, and cheese. If they trade, they both have a more diverse, more healthful, and more enjoyable diet. So the last loaf of bread baked has a relatively low marginal value to the bakers, but if it is the first loaf the dairy family gets, it has a high value to them. The reverse is true for the last or first bottle of milk, pound of butter, or block of cheese.

    A toy economy like this would not work in reality. But the principle applies in any real economy, that you make something or do some work that is not of direct value to you, because you can exchange it for the things that are of value to you. Even under conditions of maximal oppression, such as slavery, death camps, or countries such as Pol Pot's Cambodia at its worst, one generally exchanges what one has to give for life as long as possible, and for as much else as is on offer within the limits in effect. In exceptional cases, some give what they can in exchange for other people's lives. That does not contradict the fundamental principle.

    So this minimal level of fairness is not enough. To be truly fair, the exchange must also be free from force or fraud. This is a very wide-ranging set of conditions.

    One could argue, and Marx along with many other economists did argue, that fairness requires that every member of society have other fundamental economic rights, such as the right to education, the right to some level of health care (depending on what medicine is capable of and the economy can bear), and the right to a job with a living wage, for starters.

    In every large-scale economic system so far tried, capitalist, communist, socialist, or any other, this fails to be the case, because the rich and powerful can bend the system to act in their financial interests, among other things, and against the interests of everybody else. Too Big to Jail is clearly such a failure.

    But it is not always entirely so. Not to the extent that people who can vote demand that governments exercise prudent regulation of business. Not entirely when there were serious trust-busters; not entirely during the New Deal; and not entirely on many issues due to several other forces. We have not won, but neither have we lost, and it appears that demographic and generational shifts in the US will permit us some more victories in the next few election cycles.

    Ceterem censeo, gerrymandra delenda est

    by Mokurai on Mon Apr 15, 2013 at 07:58:22 PM PDT

    •  Sure there has to be (0+ / 0-)

      a desire for the commodity for one to "value" it.  Nonetheless, commodities have values over and above whatever personal value we might attribute to them.  In a lot of ways, this is an effect of the rise of money as a commodity that comes to represent all other commodities.  In barter systems two people had to meet whose goods fulfilled each other needs.  For example, I would have to find someone that needs or desires corn and they, in turn, would have to have some good that I want or desire such as a new pair of shoes.

      With the rise of money, everything changes.  Value becomes something abstract, rather than something that revolves around use-values and personal desires.  I might buy $1000 worth of beanie babies not because I want them, because they serve any use for me, nor because they have any sort of sentimental value, but merely because I can sell them elsewhere for a profit.  Here value has become abstract and is no longer attached to the qualities of the thing.

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