Economics Discussion Thread

[Orostan]

But there can be no product without labor. What is gold worth if you can't take it from the ground? What is a car worth if you can't build it? What is anything worth without labor?

Can you take gold out from the ground with your bare hands? Can you build a car?

Capital (both in the sense of "money" and "machine tools") is a requirement to produce anything but the most basic of goods through the simplest organizations. People who provide them (provide ideas for production, mediate between resource-owners, manage and maintain capital) add value on their own. If they did not then everyone who isn't an unskilled laborer is part of a conspiracy so large it beggars the mind, especially when there is so much to be gained by defecting and cutting out the freeloaders in capitalist rationalization.

People who produce capital do generate value, yes. Machines mechanize labor and make it more and more efficient. Theoretically i could build a car with my hands, but it would take so much time it just doesn't compare to doing it on a mechanized assembly line. Human labor is what turns natural resources into more valuable products. People who manage the means of production do generate value, and i never said they do not. Human labor is prior to and independent to capital, and as such human labor is the source of all capital, as capital contained in raw resources is not worth anything without the promise that human labor can be used to process them into a usable product.

[Taihei Tengoku]

Can you take gold out from the ground with your bare hands? Can you build a car?

Capital (both in the sense of "money" and "machine tools") is a requirement to produce anything but the most basic of goods through the simplest organizations. People who provide them (provide ideas for production, mediate between resource-owners, manage and maintain capital) add value on their own. If they did not then everyone who isn't an unskilled laborer is part of a conspiracy so large it beggars the mind, especially when there is so much to be gained by defecting and cutting out the freeloaders in capitalist rationalization.

Anyway, do you learn this from Adam Smith's Wealth of Nations

Adam Smith actually espouses a form of labor theory in Wealth of Nations.

Marginalism and subjective value come from the first Austrian School (early neoclassicals) while game theory only became a distinct discipline in the 20th century.

[Taihei Tengoku]

Can you take gold out from the ground with your bare hands? Can you build a car?

Capital (both in the sense of "money" and "machine tools") is a requirement to produce anything but the most basic of goods through the simplest organizations. People who provide them (provide ideas for production, mediate between resource-owners, manage and maintain capital) add value on their own. If they did not then everyone who isn't an unskilled laborer is part of a conspiracy so large it beggars the mind, especially when there is so much to be gained by defecting and cutting out the freeloaders in capitalist rationalization.

People who produce capital do generate value, yes. Machines mechanize labor and make it more and more efficient. Theoretically i could build a car with my hands, but it would take so much time it just doesn't compare to doing it on a mechanized assembly line.

Which means it won't be done, simple as that. The invention of certain forms of capital and their organizations are themselves useful as it enables activities that were impossible before (any anyways requires some labor of its own on the part of the capitalists).

[Orostan]

People who produce capital do generate value, yes. Machines mechanize labor and make it more and more efficient. Theoretically i could build a car with my hands, but it would take so much time it just doesn't compare to doing it on a mechanized assembly line.

Which means it won't be done, simple as that. The invention of certain forms of capital and their organizations are themselves useful as it enables activities that were impossible before (any anyways requires some labor of its own on the part of the capitalists).

The Capitalist, who owns the means of production, does not need to labor. They hire people to do that for them in most cases. The stock holders of Apple do not generate any value for the company, instead they are a net loss to the company and only remain because they own the company.

If we say for example that there will be no more mining on Earth, than that means that all the land holding raw minerals yet to be mined will decrease in value because there is no promise that those minerals can be turned into a product.

[Taihei Tengoku]

Like labor unions

I mean, certainly some labor unions act like such cartels, but that's actually a form of MAD. Businesses made cartels, so labor made cartels to challenge them.

Unionization has no relation to the level of cartelization of an industry. SEIU is working to create a cartel in markets reaching near-perfect competition (chain restaurants). UAW unionizes a competitive industry--Ford never colluded with GM which competes with Chrysler which competes with the American arms of Toyota and VW.

[Taihei Tengoku]

Which means it won't be done, simple as that. The invention of certain forms of capital and their organizations are themselves useful as it enables activities that were impossible before (any anyways requires some labor of its own on the part of the capitalists).

The Capitalist, who owns the means of production, does not need to labor. They hire people to do that for them in most cases. The stock holders of Apple do not generate any value for the company, instead they are a net loss to the company and only remain because they own the company.

The owner needs to mediate between his firm and other factors, such as financiers and (yes) labor. Because mediation (and mediation to hire mediators) takes effort, he also labors. Even just providing money exposes it to risk, which people are compensated by through interest.

The stock holders of Apple give Apple hard currency in exchange for a claim on its profits. They are not a net anything to Apple because they absorb the net anything that happens to Apple.

[Orostan]

I mean, certainly some labor unions act like such cartels, but that's actually a form of MAD. Businesses made cartels, so labor made cartels to challenge them.

Unionization has no relation to the level of cartelization of an industry. SEIU is working to create a cartel in markets reaching near-perfect competition (chain restaurants). UAW unionizes a competitive industry--Ford never colluded with GM which competes with Chrysler which competes with the American arms of Toyota and VW.

The UAW is notorious for colluding with companies and acting against the workers it is supposed to be representing. It's not a good example of a union.

[Taihei Tengoku]

Unionization has no relation to the level of cartelization of an industry. SEIU is working to create a cartel in markets reaching near-perfect competition (chain restaurants). UAW unionizes a competitive industry--Ford never colluded with GM which competes with Chrysler which competes with the American arms of Toyota and VW.

The UAW is notorious for colluding with companies and acting against the workers it is supposed to be representing. It's not a good example of a union.

Just because you don't like the results doesn't stop it from being a labor union.

[Orostan]

The UAW is notorious for colluding with companies and acting against the workers it is supposed to be representing. It's not a good example of a union.

Just because you don't like the results doesn't stop it from being a labor union.

That's true, but it stops the UAW from being what a labor union is supposed to be; an organization which helps workers to defend their rights and make sure they get their fair share under capitalism.

[Taihei Tengoku]

Just because you don't like the results doesn't stop it from being a labor union.

That's true, but it stops the UAW from being what a labor union is supposed to be; an organization which helps workers to defend their rights and make sure they get their fair share under capitalism.

It does not stop it from being a labor union and doing labor union things, like cartelizing the labor supply.

[Galloism]

I mean, certainly some labor unions act like such cartels, but that's actually a form of MAD. Businesses made cartels, so labor made cartels to challenge them.

Unionization has no relation to the level of cartelization of an industry. SEIU is working to create a cartel in markets reaching near-perfect competition (chain restaurants). UAW unionizes a competitive industry--Ford never colluded with GM which competes with Chrysler which competes with the American arms of Toyota and VW.

I'm not sure if GM ever colluded with Ford or not. Those are very old companies. "Ever" is a long time in those terms.

Regarding chain restaurants, wage fixing is a hard sell. Most are franchises and so overt collusion is basically impossible. However, it is industry for them to start at minimum wage, regardless of labor pool, as they know they can. That's not wage fixing exactly, but we know they'd race harder to the bottom if they could, because they start at the legal bottom now (and sometimes engage in wage theft besides).

[Taihei Tengoku]

Unionization has no relation to the level of cartelization of an industry. SEIU is working to create a cartel in markets reaching near-perfect competition (chain restaurants). UAW unionizes a competitive industry--Ford never colluded with GM which competes with Chrysler which competes with the American arms of Toyota and VW.

I'm not sure if GM ever colluded with Ford or not. Those are very old companies. "Ever" is a long time in those terms.

Regarding chain restaurants, wage fixing is a hard sell. Most are franchises and so overt collusion is basically impossible. However, it is industry for them to start at minimum wage, regardless of labor pool, as they know they can. That's not wage fixing exactly, but we know they'd race harder to the bottom if they could, because they start at the legal bottom now (and sometimes engage in wage theft besides).

Uncoordinated wage theft isn't cartelization, which by definition requires coordination. Minimum wage isn't, but it is a price floor which creates a labor surplus or in other words unemployment.

[Galloism]

I'm not sure if GM ever colluded with Ford or not. Those are very old companies. "Ever" is a long time in those terms.

Regarding chain restaurants, wage fixing is a hard sell. Most are franchises and so overt collusion is basically impossible. However, it is industry for them to start at minimum wage, regardless of labor pool, as they know they can. That's not wage fixing exactly, but we know they'd race harder to the bottom if they could, because they start at the legal bottom now (and sometimes engage in wage theft besides).

Uncoordinated wage theft isn't cartelization, which by definition requires coordination. Minimum wage isn't, but it is a price floor which creates a labor surplus or in other words unemployment.

Having some unemployment is not a bad thing though. Full employment would be terrible for firms seeking to expand, as they could only do so by taking from others.

Having 2-3% unemployment is a good thing as it gives us an available labor force for expansion.

[Sanctissima]

Uncoordinated wage theft isn't cartelization, which by definition requires coordination. Minimum wage isn't, but it is a price floor which creates a labor surplus or in other words unemployment.

Having some unemployment is not a bad thing though. Full employment would be terrible for firms seeking to expand, as they could only do so by taking from others.

Having 2-3% unemployment is a good thing as it gives us an available labor force for expansion.

That is true, as there's considerable evidence pointing to the existence of a natural rate of unemployment, but let's not pretend that most unions didn't start off as obstructionist cesspools of Socialism that gradually became easy gigs for union organizers who pay lip service to social democracy.

[Diyaristan]

A comment on the subject.

I've seen social organizations in action, and what happens to them when they become leaderless. There is definitely a premium people are willing to pay when there is a shortage of "economic leaders", so to speak.

By economic leaders, I mean those sorts of people who can fix their own car when it breaks down, or understands the inner workings of a hard disk, or knows the rules of psychology to advertise just the right way to get a small enterprise to grow. This is just as true of privately-owned business as it is of cooperatives owned by their workers, or of state-dominated economies. Black markets tend to spring up in economies that are too permission-bound to meet the needs of the people.

One reason I believe in the Austrian School, personally, is because it has the least issue with permission problems. But my Marxist past bids me tell this: if you're going to plan an economy even locally, you'd better be sure you can make a small enterprise, maybe a co-owned one, profitable first before trying to plan an entire economy.

Bureaucratism is a serious problem that loads expenses on workers, I should know, I was one. It is especially bad in the construction industry where rules are policed in such a way as to make a $500 structure cost $75,000. Not only that, but it goes against the principles of workers' power and prison abolition to have outside bureaucrats bossing ("regulating") how people who are actually doing the job have to do it.

[Taihei Tengoku]

Having some unemployment is not a bad thing though. Full employment would be terrible for firms seeking to expand, as they could only do so by taking from others.

Having 2-3% unemployment is a good thing as it gives us an available labor force for expansion.

That is true, as there's considerable evidence pointing to the existence of a natural rate of unemployment, but let's not pretend that most unions didn't start off as obstructionist cesspools of Socialism that gradually became easy gigs for union organizers who pay lip service to social democracy.

Full employment is unemployment at the natural rate, and is actually a mobile equilibrium based on aggregate supply.

e: furthermore consider capable adults outside the labor force.

[Sanctissima]

That is true, as there's considerable evidence pointing to the existence of a natural rate of unemployment, but let's not pretend that most unions didn't start off as obstructionist cesspools of Socialism that gradually became easy gigs for union organizers who pay lip service to social democracy.

Full employment is unemployment at the natural rate, and is actually a mobile equilibrium based on aggregate supply.

e: furthermore consider capable adults outside the labor force.

>mobile equilibrium

Keynes, go away. Even New Keynesians recognize the flaws of full employment to a certain extent.

There needs to be a somewhat sizable (as Gallo said, somewhere hovering around 2-3%) amount of the unemployed so that gaps can be filled and new positions occupied as necessary, so as to avoid economic stagnation, and keep the wheels rolling.

[Taihei Tengoku]

Full employment is unemployment at the natural rate, and is actually a mobile equilibrium based on aggregate supply.

e: furthermore consider capable adults outside the labor force.

>mobile equilibrium

Keynes, go away. Even New Keynesians recognize the flaws of full employment to a certain extent.

There needs to be a somewhat sizable (as Gallo said, somewhere hovering around 2-3%) amount of the unemployed so that gaps can be filled and new positions occupied as necessary, so as to avoid economic stagnation, and keep the wheels rolling.

Yes, that's frictional unemployment. Full employment is everyone but frictional jobless in jobs. The minimum wage creates structural unemployment.

[Sanctissima]

Yes, that's frictional unemployment. Full employment is everyone but frictional jobless in jobs.

Which is inherently bad. You need a reserve labour pool.

The minimum wage creates structural unemployment.

Which isn't all that bad a phenomenon, at least not for a healthy macroeconomic model. Admittedly, there are changes we could probably make to minimum wage laws to make them more efficient (options for small businesses to negotiate a lower wage with their employees, and maybe even doing it as a percentage of company profits rather than a set wage would be good ideas), but structural unemployment isn't inherently bad.

[Taihei Tengoku]

The reserve labor pool is the frictionally unemployed. What you are suggesting is that economic growth slows during periods of high employment because companies "run out" of jobless to hire.

[Sanctissima]

The reserve labor pool is the frictionally unemployed. What you are suggesting is that economic growth slows during periods of high employment because companies "run out" of jobless to hire.

Keynes, stagflation is a thing. Your contractions and expansion view of market economics has been debunked. Please go to bed, nobody wants your bancors.

*ahem*

That out of the way, no, reserve labour is not the frictionally unemployed. Or rather, it should not be, since the structurally unemployed are a far more reliable labour pool. Having full employment contributes to economic instability.

[Taihei Tengoku]

The reserve labor pool is the frictionally unemployed. What you are suggesting is that economic growth slows during periods of high employment because companies "run out" of jobless to hire.

Keynes, stagflation is a thing. Your contractions and expansion view of market economics has been debunked. Please go to bed, nobody wants your bancors.

? this is standard neoclassical economics. Stagflation has to do with the remedy to excess unemployment rather than the description of unemployment itself. Monetarists would not deny anything I have said prior.

[Nakena]

Corporatist here, getting recently close to thrid positionism.

I have also some sympathies for the methology and views of the Austrian School, but I disagree with their conclusions especially the political appendix.

[Free Missouri]

I'm mostly distributist, with a bit of monetarism and Hayekian Austrianism mixed in.

Ultimately a decentralized capitalism with strong antitrusts, guild systems built on class collaboration instead of class struggle, and the reforming of the private banking system to make it more compassionate on the personal and small-scale level, would provide a system in line with my beliefs.

[Orostan]

Corporatist here, getting recently close to thrid positionism.

I have also some sympathies for the methology and views of the Austrian School, but I disagree with their conclusions especially the political appendix.

Are you being serious?

I'm mostly distributist, with a bit of monetarism and Hayekian Austrianism mixed in.

Ultimately a decentralized capitalism with strong antitrusts, guild systems built on class collaboration instead of class struggle, and the reforming of the private banking system to make it more compassionate on the personal and small-scale level, would provide a system in line with my beliefs.

Capitalism trends towards monopoly, and as the rate of profit declines banks will grow more hesitant to give out loans. Your view of capitalism does not reflect reality.