• huge_clock@lemmy.world
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    1 year ago

    Well let’s say you and I start off on a new planet and we both have $10,000 to spend and the aliens of this planet will buy whatever we produce. You and I decide to compete with each other for business in the hole-digging business. You buy a new spade, and also some furnishings for your house and a new TV. I on the other hand stretch my budget and buy a backho and sacrifice some personal luxuries at home.

    The going rate for a new hole is $100. We get down to business but despite you working 15 hour days, you’re only able to dig one hole but I am able to produce 4 holes in one day while only working 8 hours. This means I make $100,000 a year while you only make $25,000 a year.

    In this hypothetical scenario why am I making more money than you? What is the source of the inequality?

    It can’t be that i am exploiting people because we are individual workers in business for ourselves. What’s happening is that some of my profits are yes a result of my labour, but part of the profits that I receive are a return on the capital that i invested in the back-ho.

    Listen, i am not trying to say the world is a fair place. There’s a whole colonial system that was set up and abused, inherited wealth and a history of real legal oppression that still persists today. I’d even say that the rich don’t pay enough in taxes and we should push up the capital gains tax rate and close loopholes. But what I won’t say is that the labour theory of value makes any sense at all. It’s pretty discredited among economists and only exists in Marxist literature (which predates the marginal revolution where a lot of our understanding about economics comes from).

    Even developing countries or even communist countries need to throw out the labour theory of value in order to maximize their economic output. For example in the Solow-Swan growth model, one of the predictions is that capital is more effectively utilized with labour that doesn’t currently have a lot of capital. Think about this, all output is a mix of capital and labour. If you are a person without a shovel the small amount of money that a shovel costs would make a huge difference in your output. Think about that! Using a neoclassical model you can demonstrate value in redistribution of wealth. Why would you cling to old outdated economics models when the new ones can still prove your point?

    • irmoz@reddthat.com
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      1 year ago

      I didn’t say anything about labour theory of value. That’s a whole other discussion. And why in that scenario did we not just work together? Why compete?

      • huge_clock@lemmy.world
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        1 year ago

        Well the labour theory of value is where ‘surplus value’ comes from and is the theoretical underpinning of a lot of your argument.

        Why didn’t we work together? Maybe we were on different sides of the planet or didn’t enjoy working together for many reasons. The point wasn’t that we weren’t working together. This was a hypothetical scenario to demonstrate that in this specific scenario the excess profits were the result of deploying capital. Even in communist societies part of the output that is generated is not wholly due to labour but due to the allocation of capital by the communist regime. For example in the USSR the mechanization of labour resulted in standard of living increases because labour without capital is of very low value. Capital without labour is also of very low value. A factory without workers would not work very well at all either. It’s the combined utilization of all the factors of production (Total factor productivity) that determines how much income can be generated in the economy. The larger the TFP the higher the wages. Economies with free markets have higher total favor productivity as the individual production decisions are dispersed among many business owners and workers rather than centralized in the hands of a bureaucratic elite.

        • irmoz@reddthat.com
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          1 year ago

          Well the labour theory of value is where ‘surplus value’ comes from and is the theoretical underpinning of a lot of your argument.

          LTV attacks pricing. Surplus value attacks wages. These are different discussions, dude.

          Maybe we were on different sides of the planet or didn’t enjoy working together for many reasons.

          You just keep having to fudge this hypothetical to make it make sense, eh?

          This was a hypothetical scenario to demonstrate that in this specific scenario the excess profits were the result of deploying capital.

          Bruh. Workers working by themselves to earn money for themselves isn’t capitalist exploitation. Who is being employed, here? Wtf are you saying? This isn’t wage labour.

          Even in communist societies part of the output that is generated is not wholly due to labour but due to the allocation of capital by the communist regime.

          If there is capital, it isn’t communism. If there is a regime, it isn’t communism. Please learn what communism is.

          For example in the USSR

          This is just too perfect.

          Not communism.

          the mechanization of labour resulted in standard of living increases because labour without capital is of very low value.

          Labour without use is of no value. Did you not know that, and yet you have been talking about the LTV?

          Are you about to make a “mud pie” argument?

          Capital without labour is also of very low value.

          Obviously. It is labour that creates value.

          A factory without workers would not work very well at all either.

          It wouldn’t work whatsoever.

          It’s the combined utilization of all the factors of production (Total factor productivity) that determines how much income can be generated in the economy.

          Don’t move the goalposts. I thought we were discussing value, not income?

          Do you not know the difference? Is that why you think LTV is relevant to wages, rather than products?

          The larger the TFP the higher the wages.

          This is not a 1:1 correlation. The wages are determined by the whims of the owner, market forces, and any laws regarding minimums, overtime etc, not any rational calculation.

          Economies with free markets have higher total favor productivity as the individual production decisions are dispersed among many business owners and workers rather than centralized in the hands of a bureaucratic elite.

          Decisions in fact are managed by a bureaucratic elite. Capitalists. And productivity is a misleading figure, as the vast majority of the wealth created by it is siphoned by those very same capitalists.