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#15058536
Rancid wrote:Wages have always been government by supply/demand. Not productivity or anything else. Thus, the statement in this thread's title is obvious to anyone with basic economics knowledge.

Quite true, and one of the paradoxes is if you increase productivity, it is akin to increasing labor supply, and thus can drive down wages.

(Or I should say potentially drive down wages. Unless the surplus money from lower wages or increased productivity ends up shifting to create more demand elsewhere)
#15058589
Potemkin wrote:Capitalism does not function according to moralistic norms. Instead, it functions according to amoral market mechanisms. Employers will therefore pay their workers just enough money to ensure that they continue turning up for work every morning. Why would - or should - they pay them more than that?


The magic of capitalism is that the business owner is looking for his own interest.

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

Adam Smith


If the business benefits from happier hardworking employees the owner may provide higher salaries and benefits. However, the business is not a charity organization.
#15058593
Julian658 wrote:The magic of capitalism is that the business owner is looking for his own interest.

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

Adam Smith


If the business benefits from happier hardworking employees the owner may provide higher salaries and benefits. However, the business is not a charity organization.

The idea of shared/mutual interest of the capitalist class and working class is dubious especially in the work of Adam Smith. With the rise of socialism, was actually based in the weakness of such an asserted fact by the reality people live with, that one would have to entirely dismiss the appearance of things and take Adam SMith's assertion on faith as an expert. And the illusion that one's self-interest in the capitalist economy naturally overlaps with the overall society interest is based on ideological and one sided abstractions based on idealized abstractions which don't properly presuppose the essential relations of capitalist production. THe illusion that everyone is but a free and equal salesman on the market selling their commodity, a mass of individuals. Forgetting the structural relations that make a necessity that the worker must have a reduced substieence such that tehy are coerced to sell their labor.
http://libcom.org/files/marx,%20marginalism%20and%20modern%20sociology%20-%20clarke.pdf
Smith’s account of the component parts of the price of a commodity was notoriously ambiguous. On the one hand, he argued that profit and rent in some sense represented deductions from the product of labour: the labourer now had to share her product with the capitalist and landowner. If this were the case then the value of the commodity would be the amount of labour bestowed on it and it would not be self-evident that the interests of the labourer coincided with those of the capitalists and landowners, since profits and rent could increase, given the productivity of labour, only at the expense of wages. On the other hand, Smith argued that profit and rent did not represent deductions from the product of labour, but corresponded in some way to the original contributions made to the product by capital and land. Thus profit, rent and wages were independent component parts of the value of a commodity and there was no reason to conclude that increasing rents and profits were at the expense of wages. This latter is the argument that Smith typically adopted in The Wealth of Nations. Thus, for example, he tended to argue that an increase in money wages would not lead to a fall in profits but to an increase in prices. He then introduced the distinction between the producer and the consumer, so that price increases were passed on to the consumer, failing to recognise that the consumer could ultimately only be the wage-labourer, capitalist or landowner wearing another hat. The introduction of this device of the consumer frequently prevented Smith from following through the logic of his arguments in a systematic investigation of the social relations between the component classes of society
...
f we turn our attention from a society of independent commodity producers to a capitalist society in which labour-power has become a commodity there appear to be no significant changes in the exchange relation. The form of property remains apparently unchanged, exchange still appears to relate free and equal commodity-owners. Every exchange is voluntarily contracted and is, at least ideally, an exchange of equivalents. It would therefore seem to be legitimate to apply the liberal model of the free and equal society, based on the freedom and equality of exchange, to the capitalist society as much as to the society based on simple commodity production. The only difference now is that one more commodity has come onto the market, the worker selling not the products of her labour, but her labour-power, but this commodity, like any other, is exchanged freely and voluntarily.

However, if we look at the process of exchange not from the mythical point of view of the isolated individual, but in terms of the social relations that exchange articulates, matters appear very differently: ‘The illusion created by the money form vanishes immediately if, instead of taking a single capitalist and a single worker, we take the whole capitalist class and the whole working class’ (Capital, I, p. 713).

If we isolate distinct acts of production and exchange from one another we abstract them from the system of social production within which they take place. Such an abstraction would be forced, for to separate these acts from one another is to deprive them of any meaning. Each act of production or exchange only makes sense as a moment of the total process of social production, so the motive of each exchange can only be found in the process as a whole. The examination of the social form of capital has revealed the social foundations of capitalist production to lie in the class-relation between capital and wage-labour.

This class-relation is the presupposition of every individual act of production and exchange, and alone gives meaning to those acts. If the act of exchange is isolated from the reproduction of capitalist social relations of production of which it is but one moment, the act itself becomes irrational. Thus, for example, the capitalist, as a capitalist, does not purchase labour-power in order to enjoy the use-value of that commodity directly, for labour-power has a use-value for the capitalist only in the process of production of surplus-value. The capitalist does not produce commodities in order to satisfy his own consumption needs, but in order to expand his capital.

https://kapitalism101.wordpress.com/2011/09/30/marginal-futility-reflections-on-simon-clarkes-marx-marginalism-and-modern-sociology/
I like the way Clarke develop his proof this problem: Commodity exchange presupposes individuals with different needs and different resources because if everyone had the same stuff there would be no reason for exchange. Thus exchange presupposes differences. If exchange is systematic these differences must also be systematic. Thus the formal equality and freedom of exchange is founded on different resource endowments. This means that the content of exchange can’t be reduced to its form (free, juridically equal relations between people) but must be found outside of exchange in the realm of production and property.

carcity relates to the application of labor to produce for need. The basis of exchange is the sale of the products of this labor. Thus the need for a theory of value based on human labor, not subjective whims.Different types of exchange presuppose different production and property relations. The simple commodity exchange (independent producers exchanging the product of their labor in the market) is a popular image in marginalist accounts of exchange (as well as market-anarchism fantasies) yet such a system of exchange has only existed within larger societies dominated by other social relations (ie feudalism, capitalism, state-capitalism/20th century communism). Capitalist exchange presupposes social relations between two social classes, one owning the means of production, the other nothing. As we’ve seen, Marginalism tries to treat all factors of production with the same theoretical tools of subjective preference theory. But the division of the social product into rent, profit and wages actually presupposes antagonistic social relations between classes and thus requires different theoretical ideas.

Marginalists would like to treat the unequal resource endowments of individuals as due to extra-economic factors, consigning these concerns to the fields of history and sociology. But these inequalities don’t just proceed exchange historically. They are actually reproduced by exchange. Capitalism generates a world in which individuals must maintain a certain standard of living in order to survive (try paying the bills without a phone, house, car, work clothes, haircuts, health-care, etc.) and must engage in wage-labor. And wage-labor actively reproduced the two social classes of capitalist and worker and their violently divergent relationships to the means of production. Without scarcity we couldn’t have wage labor. There would be no reason to work. Thus capitalism must constantly reproduce scarcity.

Such a point is obvious to anyone who has ever considered the economies of colonies and how in the US they needed slave labor and in Australia convict labor. Because without the particular infrastructure and relations that can coerce workers because they absolutely need to sell their labour power for money, they simply don't work for a capitalist class.
https://www.marxists.org/archive/marx/works/1867-c1/ch33.htm
It is the great merit of E.G. Wakefield to have discovered, not anything new about the Colonies [2], but to have discovered in the Colonies the truth as to the conditions of capitalist production in the mother country. As the system of protection at its origin [3] attempted to manufacture capitalists artificially in the mother-country, so Wakefield’s colonisation theory, which England tried for a time to enforce by Acts of Parliament, attempted to effect the manufacture of wage-workers in the Colonies. This he calls “systematic colonisation.”

irst of all, Wakefield discovered that in the Colonies, property in money, means of subsistence, machines, and other means of production, does not as yet stamp a man as a capitalist if there be wanting the correlative — the wage-worker, the other man who is compelled to sell himself of his own free will. He discovered that capital is not a thing, but a social relation between persons, established by the instrumentality of things. [4] Mr. Peel, he moans, took with him from England to Swan River, West Australia, means of subsistence and of production to the amount of £50,000. Mr. Peel had the foresight to bring with him, besides, 300 persons of the working class, men, women, and children. Once arrived at his destination, “Mr. Peel was left without a servant to make his bed or fetch him water from the river.” [5] Unhappy Mr. Peel who provided for everything except the export of English modes of production to Swan River!

Here' a pivotal document from E. G. Wakefield from Sydney back to England.
http://gutenberg.net.au/ebooks13/1306631h.html
Disgusted with my convict servants, I sent to England for shepherds, ploughmen, carpenters, a blacksmith, a bricklayer, and other useful labourers. The men arrived in high spirits, having been hired from a part of the country where I was well known, and having, most of them, worked for me in England. They knew that they could depend on the high wages that my English agent had promised them; their passage had been paid for by me; and the sailors had told them that in New South Wales they would live like fighting cocks. Being in the desert when I received notice of their arrival, I hastened to Sydney, having first got rid of my convicts, for fear that they should contaminate the new-comers. The latter, who, my Sydney agent informed me, had, when they were put ashore, spoken in raptures of the 'Squire, received me with gloomy looks. They were already contaminated, notwithstanding my precaution. One of them, a harness-maker from Salisbury, acted as spokesman for the party, and told me flatly that they had been imposed on. I stared, and asked in what respect?—"They had not been told," he said, "what high wages a man could get in New South Wales—they were told now they could not live on the wages which had been promised them, and they hoped I should take their case into my consideration." I had not bound them by indentures, for I was weak enough to think that free agents would prove better servants than bondsmen. I desired them to "take into their consideration" the cost of their passage; but in the long discussion that ensued, they carefully avoided that point, and dwelt with dogged pertinacity on the wages which honest men, like them, could obtain at or near Sydney. I was completely in their power. By dint of flattery, appeals to their honour, and promises of comfort, I induced the mere peasants to observe their agreement and follow me to the wilds; but the mechanics were impracticable. They had already engaged with masters at Sydney and Parramatta, at double the high wages that I had promised; and I could make no impression on them. I retired to the woods with my clodhoppers, whom I found very serviceable during a whole year; but at the end of that time they began to grumble and fidget. Other persons had settled in my neighbourhood. Some of these had been convicts, and afterwards emancipated servants. They persuaded my men to become settlers also. In less than two years each of my servants saved wherewith to stock a small farm, and one by one they all left me. At last I was glad to obtain a fresh supply of convicts. Under these circumstances, my estate did not produce largely. My herds and flocks, however, had rapidly multiplied: and in the last year of which I speak, I reaped one hundred and forty acres of corn. This was thought immense doings; but as my free labourers were gone, I had no such prospect for the future; and as for the flocks, their increase in number was not a proportionate increase of property to me. The wool produced something; but the flesh was worth nothing, unless taken to market, and then it would scarcely repay the cost of the journey. Here, there are no drovers or jobbers in cattle to come between the farmer and the butcher. In short, there is little division of labour, and you may roll in plenty, without possessing any thing of exchangeable value. You must do almost every thing yourself; and flocks in the wilderness are not worth much more than the wilderness itself, of which you may obtain nearly any quantity for all but nothing. Under an idea that cheese would be easily transported, and would fetch a good price in Sydney, I thought at one time of establishing a dairy. But I ought to have known better. My cows were as wild as hyænas, and almost as wicked. I had no milkmaids, no dairy-women, no churns, no any thing that was wanted for the purpose; and, above all, I wanted industry, skill, economy, and taste, for any such pursuits, or, at least, a drudge of a wife to supply those wants. At length my impatience got the better of a certain stupid vanity that had led me to fancy myself qualified to become a settler. I wrote to my friends at Sydney acknowledging that I was sick of the bush, and that their prophecies of my ill success had been fulfilled to the letter. By their assistance I made over my estate for twenty years, with every thing upon it, to a tough Scotch farmer, on condition of receiving one-third of its produce. This third produces me less than 3 per cent. interest on what I have expended; but I am, comparatively speaking, a happy man, living upon my English income, in a place where at least books, and men and women, such as they are, are not quite wanting, and where money will supply the more pressing wants of civilized life.

The above summarizing a man is not simply a worker universally, but can only become as one within very specific relations of production. Hence why they're workers and not serfs, or slaves.

This illusion of the free and equal society based on exchange whilst ignoring the class relations of production which inform the very nature of such exchanges also tends towards an illusion to disregard the medium of money as a universal commodity for exchange, where many have historically treated trade as if it were no different than barter.

For classical political economy the exchange relation was essentially symmetrical. The two parties to an exchange each had commodities that were wanted by the other. Each could therefore satisfy his or her needs by exchanging commodities, and the rate at which they exchanged was determined by the amount of labour-time each had spent on acquiring the given commodities. Here a double exchange took place: on the one hand, one kind of use-value was exchanged for another, and this was the form of exchange; on the other hand, one private labour was exchanged for another, and this was the quantitative determination, the content, of exchange. Classical political economy was based on this picture of exchange as an essentially private relation of barter between individuals. The developed system of exchange found in a capitalist society is simply a generalisation of this elementary private barter, into which money has been introduced as a technical instrument to facilitate the coordination of needs.

For Marx this model of exchange was nonsense. Where isolated individuals made occasional exchanges, as in the parable of classical political economy, there was no reason why exchange ratios should correspond to the quantity of labour embodied in the particular commodities, for it was only within a competitive system of exchange that there was a tendency for exchange ratios to achieve such a quantitative determinacy. But within any system of exchange the

private interest is itself already a socially determined interest, which can be achieved only within the conditions laid down by society and with the means provided by society; hence it is bound to the reproduction of these conditions and means. It is the interest of private persons; but its content as well as the form and means of its realisation, is given by social conditions independently of all. (Grundrisse, p. 156, my emphasis)

In any developed system of exchange the exchange relation does not comprise two separate exchanges, of use-values, on the one hand, and of labour-time (values), on the other. Rather there is a single but asymmetrical exchange. If I bring a commodity to market I am not concerned with the use-value of the commodity, but only with its value: for me the commodity is a means of acquiring other commodities. On the other hand, in making an exchange I seek to trade my commodity, which has no use for me, for another commodity which I can use. The other commodity therefore exists for me as a potential use-value. Thus in the process of exchange I seek to realise my commodity as a value in order to acquire another commodity which can serve as a use-value for me. The whole point of the system of exchange is that it does not, as in the classical parable, co-ordinate needs with one another through the direct exchange of use-values. Needs are related in an alienated form, only through the mediation of value. Thus, even within the direct exchange of commodities there is a fundamental asymmetry that already contains the possibility that exchange will not prove as harmonious as the classical parable would lead us to believe.

As soon as we move away from the classical parable and consider exchange as a social process it becomes clear that the process of exchange, even in its simplest form, cannot be reduced to the isolated exchange of one commodity for another. When I take a commodity to market I take the product of a certain quantity of concrete labour which I want to exchange. I hope that in exchanging my commodity I will be compensated for the amount of labour that I have actually expended. In other words I seek to represent my commodity as the embodiment of abstract, socially necessary labour-time and not simply as the product of my particular concrete labour. This is the key to the understanding of money.

In seeking to make an exchange in which another commodity will serve as equivalent for my commodity, I will not consider the amount of concrete labour actually embodied in that commodity, I will consider that commodity as an embodiment of abstract labour, of socially necessary labour-time. I will not be swayed by the observation that the producer of the other commodity has in fact taken much longer than the time socially necessary, for on entering the market the equivalent is detached from its concrete conditions of production.
...
The implications for the marginalist analysis of exchange become clear as soon as we turn to the explanation of money. For the marginalists money is simply a means of avoiding the inconvenience of barter, which has no substantive implications. However, barter cannot be reduced to the elementary form of immediate exchange, for in barter the individual acquires things through exchange with a view to their subsequent exchange for other things. The ‘inconvenience of barter does not lie in the mediated character of the exchange relation, which requires the individual to enter two exchange relations instead of only one, for this is as much the case when money serves as the mediating term in the exchange as it is when any other commodity plays that role. The ‘inconvenience’ of barter lies in the fact that the first exchange is conditional on the outcome of the second, the results of which cannot be known with certainty. I may wish to exchange corn for meat, but the butcher may want not corn but cloth. The butcher may be willing to accept my corn in exchange for her meat, with a view to subsequently exchanging the corn for cloth with somebody else. In this event neither of us wants the corn in itself, but only as the means of exchange for something else: corn serves in this exchange not as a use-value, but as a value. However, in exchanging meat for corn the butcher runs the risk of not being able to make the subsequent exchange on the anticipated terms, and this is where the ‘inconvenience’ of barter lies.

http://college.holycross.edu/eej/Volume14/V14N4P299_318.pdf
So overall I believe anyone should be quite sceptical to this assertion as the grounds on which it is asserted is likely based in falsity in terms of generalizing a partial truth beyond its actual limits in which it is valid, turning it into absurdity.

But on the face of it there do wxist businesses like costco whose business model has them make revenue from member subscription as opposed to their low priced quality products, whilst giving decent wage and benefits to employees in contrast to a walmart or even Amazon which is quite successful in its patents to fund its expansions elsewhere yet employees are worked so hard that we hear horror stories of people pissing into bottles. The apparent success of the business not doing much for the employees.
#15058605
Wellsy wrote:The idea of shared/mutual interest of the capitalist class and working class is dubious especially in the work of Adam Smith. With the rise of socialism, was actually based in the weakness of such an asserted fact by the reality people live with, that one would have to entirely dismiss the appearance of things and take Adam SMith's assertion on faith as an expert. And the illusion that one's self-interest in the capitalist economy naturally overlaps with the overall society interest is based on ideological and one sided abstractions based on idealized abstractions which don't properly presuppose the essential relations of capitalist production. THe illusion that everyone is but a free and equal salesman on the market selling their commodity, a mass of individuals. Forgetting the structural relations that make a necessity that the worker must have a reduced substieence such that tehy are coerced to sell their labor.
http://libcom.org/files/marx,%20marginalism%20and%20modern%20sociology%20-%20clarke.pdf

https://kapitalism101.wordpress.com/2011/09/30/marginal-futility-reflections-on-simon-clarkes-marx-marginalism-and-modern-sociology/

Such a point is obvious to anyone who has ever considered the economies of colonies and how in the US they needed slave labor and in Australia convict labor. Because without the particular infrastructure and relations that can coerce workers because they absolutely need to sell their labour power for money, they simply don't work for a capitalist class.
https://www.marxists.org/archive/marx/works/1867-c1/ch33.htm

Here' a pivotal document from E. G. Wakefield from Sydney back to England.
http://gutenberg.net.au/ebooks13/1306631h.html

The above summarizing a man is not simply a worker universally, but can only become as one within very specific relations of production. Hence why they're workers and not serfs, or slaves.

This illusion of the free and equal society based on exchange whilst ignoring the class relations of production which inform the very nature of such exchanges also tends towards an illusion to disregard the medium of money as a universal commodity for exchange, where many have historically treated trade as if it were no different than barter.


http://college.holycross.edu/eej/Volume14/V14N4P299_318.pdf
So overall I believe anyone should be quite sceptical to this assertion as the grounds on which it is asserted is likely based in falsity in terms of generalizing a partial truth beyond its actual limits in which it is valid, turning it into absurdity.

But on the face of it there do wxist businesses like costco whose business model has them make revenue from member subscription as opposed to their low priced quality products, whilst giving decent wage and benefits to employees in contrast to a walmart or even Amazon which is quite successful in its patents to fund its expansions elsewhere yet employees are worked so hard that we hear horror stories of people pissing into bottles. The apparent success of the business not doing much for the employees.


Sure, capitalism is very flawed. IN fact Marx was 100% correct in pointing out the flaws of capitalism and hence remains very popular among the young in every generation. His ideas are incredibly appealing and attractive. The problem is that the prescription to fix capitalism has not worked. In other words the cure has been worse than the disease.

At some level the self interest of the business owner motivates him or her to provide a better product at a cheaper price. However, I will admit there is something called crony capitalism which is basically corruption. There is also marketing to the masses that spend money on items that are not needed. And lastly there is also exploitation of workers.

Slavey is not capitalism.
#15058772
Julian658 wrote:Sure, capitalism is very flawed. IN fact Marx was 100% correct in pointing out the flaws of capitalism and hence remains very popular among the young in every generation. His ideas are incredibly appealing and attractive. The problem is that the prescription to fix capitalism has not worked. In other words the cure has been worse than the disease.

At some level the self interest of the business owner motivates him or her to provide a better product at a cheaper price. However, I will admit there is something called crony capitalism which is basically corruption. There is also marketing to the masses that spend money on items that are not needed. And lastly there is also exploitation of workers.

Slavey is not capitalism.

Julian658 wrote:Sure, capitalism is very flawed. IN fact Marx was 100% correct in pointing out the flaws of capitalism and hence remains very popular among the young in every generation. His ideas are incredibly appealing and attractive. The problem is that the prescription to fix capitalism has not worked. In other words the cure has been worse than the disease.

At some level the self interest of the business owner motivates him or her to provide a better product at a cheaper price. However, I will admit there is something called crony capitalism which is basically corruption. There is also marketing to the masses that spend money on items that are not needed. And lastly there is also exploitation of workers.

Slavey is not capitalism.

This feels somewhat nonsequitor to the pursuit of one's narrow self interest overlaps with the overall good.

But I get the feeling this first paragraph is a rhetorical flourish to concede vaguely to Marx's criticism of capitalism but to reject the conclusion, because if one was so convinced then one would likely be a communist interest in the acutalization of the full potential of individuals by the overturn of capitalist production. Although the prescription he lays out is a very general and unfinished one that he wasn't going to imagine he could foresee but only posit the outlines of.
But on the face of it, I'm not convinced that the idea that communism as an end is dead in it's tracks because of the past failures in that such ideas are born from the same conditions of private property and that there are analogous similarities in the development of capitalism itself as it didn't emerge globally in one foul swoop. A lot of liberal revolutions had to go underway and get support, many attempts were crushed until the capitalist class was powerful and organized enough. We see in the 20th century some revolutions winning out in rather backwards countries that still had to go through industrialization and a right counter-revolution (Fascism) across Europe that largely doomed what was necessary for the backwards countries.

And the profit motive indeed is what leads to a drop in profit as one invests in more efficient means of production (machines.automation) but because of its efficiency, the average time to produce the same product is less and the value tends to drop. So in competition between one another, the capitalists rapidly develop products to the point that the commodity is no longer worth as much as it once was. The real scarcity isn't just in materials but in actual time able to devote to the many ends of labour/work.
There are many products now quite affordable because they can be produced on such as mass scale with greater ease than they ever once were.

And crony capitalism seems a weak qualifier to an ideal of what I was arguing earlier, is probably an illegitimate view of capitalist production based in abstract equality of individuals in a market but largely ignoring the structural relations of production that actually determine class. Although I would grant the issue of corruption is a problem for hierarchies and power in general but I don't see the basis for seeing a tendency away from virtue but in spite of the profit motive that objectively exists as part of capitalist production. Something which undermines the capacity against corruption as the interest is often quite counter to the human interest. Because exchange values do not perfectly coincide with use values such that there is great need and desire of things that aren't recognized by markets without adequate purchasing power.
But i'll leave this at an assertion, but one based in sceptism of the assertion or implicit view that capitalism is somehow different from what we simply recognize as capitalsm. It seems an abstract attempt to not explain the nature of capitalism but weakly distinguish it by a qualifier by suggesting that things can and often are better than we currently experience. But that requires an articulated defense as to how the lobbying we see in our countries from major business and even from foreign firms (china lobbies a lot of governments, both parties simultaneously in pursuit of economic interests) is somehow an oddity that exists in spite of the tendency against it. Seems practically legalized in many respects.
#15058796
Wellsy wrote:
But I get the feeling this first paragraph is a rhetorical flourish to concede vaguely to Marx's criticism of capitalism but to reject the conclusion, because if one was so convinced then one would likely be a communist interest in the acutalization of the full potential of individuals by the overturn of capitalist production. Although the prescription he lays out is a very general and unfinished one that he wasn't going to imagine he could foresee but only posit the outlines of.
But on the face of it, I'm not convinced that the idea that communism as an end is dead in it's tracks because of the past failures in that such ideas are born from the same conditions of private property and that there are analogous similarities in the development of capitalism itself as it didn't emerge globally in one foul swoop. A lot of liberal revolutions had to go underway and get support, many attempts were crushed until the capitalist class was powerful and organized enough. We see in the 20th century some revolutions winning out in rather backwards countries that still had to go through industrialization and a right counter-revolution (Fascism) across Europe that largely doomed what was necessary for the backwards countries.


Marxism is always attractive! I cannot overstate that anymore. In the end we will have socialism and the Utopia, however, the road to get there is not what you imagine. In a sense socialists are incredibly naive and cannot see how to achieve socialism.



And the profit motive indeed is what leads to a drop in profit as one invests in more efficient means of production (machines.automation) but because of its efficiency, the average time to produce the same product is less and the value tends to drop. So in competition between one another, the capitalists rapidly develop products to the point that the commodity is no longer worth as much as it once was. The real scarcity isn't just in materials but in actual time able to devote to the many ends of labour/work.
There are many products now quite affordable because they can be produced on such as mass scale with greater ease than they ever once were.


Exactly! and this is how we will have socialism. At some point the free enterprise system and technology will make almost anything you can imagine highly affordable or free. And the capitalists will reach a point of redundant wealth. We already see this in people like Bill Gates. And the end point of hyper-capitalism will be socialism.

And crony capitalism seems a weak qualifier to an ideal of what I was arguing earlier, is probably an illegitimate view of capitalist production based in abstract equality of individuals in a market but largely ignoring the structural relations of production that actually determine class. Although I would grant the issue of corruption is a problem for hierarchies and power in general but I don't see the basis for seeing a tendency away from virtue but in spite of the profit motive that objectively exists as part of capitalist production. Something which undermines the capacity against corruption as the interest is often quite counter to the human interest. Because exchange values do not perfectly coincide with use values such that there is great need and desire of things that aren't recognized by markets without adequate purchasing power.


Crony capitalism or any form of corruption is not true capitalism. In its essence capitalism is to allow talented individuals to achieve by providing goods and services that improve society at large. And they do this out of self interest to reach a higher economic status. There is such a thing as a natural hierarchy of talent among humans. Few are destined to reach incredible heights, many are highly competent, and the majority are average. Many are destined for the gutter no matter what. There is NO EQUALITY.

But i'll leave this at an assertion, but one based in sceptism of the assertion or implicit view that capitalism is somehow different from what we simply recognize as capitalsm. It seems an abstract attempt to not explain the nature of capitalism but weakly distinguish it by a qualifier by suggesting that things can and often are better than we currently experience. But that requires an articulated defense as to how the lobbying we see in our countries from major business and even from foreign firms (china lobbies a lot of governments, both parties simultaneously in pursuit of economic interests) is somehow an oddity that exists in spite of the tendency against it. Seems practically legalized in many respects.


Crony capitalism is not the real deal.
#15059229
Rancid wrote:Wages have always been governed by supply/demand. Not productivity or anything else. Thus, the statement in this thread's title is obvious to anyone with basic economics knowledge.

The Law of Rent shows that wages are determined by the productivity of labor, but ON MARGINAL LAND, as all production in excess of that is taken by the landowner in rent.
Puffer Fish wrote:Quite true, and one of the paradoxes is if you increase productivity, it is akin to increasing labor supply, and thus can drive down wages.

(Or I should say potentially drive down wages. Unless the surplus money from lower wages or increased productivity ends up shifting to create more demand elsewhere)

No, the reason increased productivity can drive down wages is that it tends to push the margin outward onto worse land. This implication of the Law of Rent was thoroughly and conclusively demonstrated by Henry George over 140 years ago in "Progress and Poverty."
#15059338
According to Greg Mankiw, economic theory says in plain English that

"the wage a worker earns, measured in units of output, equals the amount of output the worker can produce. Otherwise, competitive firms would have an incentive to alter the number of workers they hire, and these adjustments would bring wages and productivity in line. If the wage were below productivity, firms would find it profitable to hire more workers. This would put upward pressure on wages and, because of diminishing returns, downward pressure on productivity. Conversely, if the wage were above productivity, firms would find it profitable to shed labor, putting downward pressure on wages and upward pressure on productivity. The equilibrium requires the wage of a worker equaling what that worker can produce."

..which isn't wrong; just rarely applicable in the real world. That word "competitive" is doing a lot of work there, and concealing a lot of unrealistic assumption.

Most people think of competitive firms as undercutting each other for market share. Economists like Mankiw mean nearly the opposite. They mean so-called "price-taking" firms (and consumers), i.e. a market with very, very many producers who can sell as much as they can produce at a prevailing market price (equilibrium). In the real world, most firms report producing less than they could because they do not anticipate being able to sell additional output, or not without lowering prices.

In that case, firms would NOT "find it profitable to hire more workers". There will be no such "adjustments" to "bring wages and productivity in line". Instead, profits would be maximised by paying the worker as little as the most skilled replacement would accept - i.e. the labour market in the real world, which non-economists understand all too well.
#15059371
Donna wrote:"The Law of Rent"...what is this, the 18th century lmao

Do you also think the Law of Cosines is no longer true because it isn't the 3rd century BCE???

The Law of Rent -- which you could Google to advantage -- describes an immutable economic relationship. Maybe you don't want it to be true, but it is.
#15059372
SueDeNîmes wrote:
Most people think of competitive firms as undercutting each other for market share. Economists like Mankiw mean nearly the opposite. They mean so-called "price-taking" firms (and consumers), i.e. a market with very, very many producers who can sell as much as they can produce at a prevailing market price (equilibrium). In the real world, most firms report producing less than they could because they do not anticipate being able to sell additional output, or not without lowering prices.

In that case, firms would NOT "find it profitable to hire more workers". There will be no such "adjustments" to "bring wages and productivity in line". Instead, profits would be maximised by paying the worker as little as the most skilled replacement would accept - i.e. the labour market in the real world, which non-economists understand all too well.



"Another apparent culprit is what’s called “monopsony”. Monopoly occurs when sellers are so concentrated that they don’t really have to compete. Monopsony is when the buyers – in this case, employers – are concentrated.

A recent paper from the Roosevelt Institute found that the average level of concentration in labor markets is 45% higher than the threshold for “highly concentrated” markets used by antitrust regulators. If the government went after employer monopsony the way it does other kinds of markets, regulators might have their hands quite full.

What’s worse, as Alan Krueger and Eric Posner pointed out in the New York Times recently, one in five workers with a high school degree or less is subject to a non-compete clause – a tool for employers to push wages down by forbidding workers from getting jobs with their competitors."


https://www.theguardian.com/commentisfree/2018/apr/13/american-economy-wage-suppression-how-it-works

https://www.theguardian.com/commentisfr ... w-it-works
#15059375
Truth To Power wrote:Do you also think the Law of Cosines is no longer true because it isn't the 3rd century BCE???

The Law of Rent -- which you could Google to advantage -- describes an immutable economic relationship. Maybe you don't want it to be true, but it is.


:lol: It's a completely outmoded concept formulated during a time with agrarian landlords and common land in mind.
#15059397
Truth To Power wrote:So what? Pythagoras's Theorem was formulated during a time when flooded fields had to be re-surveyed every year. That doesn't make it any less true.


The difference is that the Pythagorean Theorem is always true while Ricardian rent theory was true only during a historical period in time when labour and production were disproportionately dependent on aristocratic landowners.
#15060531
Donna wrote:The difference is that the Pythagorean Theorem is always true while Ricardian rent theory was true only during a historical period in time when labour and production were disproportionately dependent on aristocratic landowners.

Wrong again. Production never depends on landowners, whose only economic function is to take a portion of production in return for no contribution to production. The Law of Rent is permanently true, and will be as long as production is more advantageous at one location than another. That difference in productive advantage determines land rent.
#15060617
Truth To Power wrote:Wrong again. Production never depends on landowners, whose only economic function is to take a portion of production in return for no contribution to production.


That isn't what happened though. Historically production was heavily dependent on wealthy aristocratic landowners who possessed the wealth to both invest in the productive improvement of the land as well as finance government debt through large bond purchases. This is also implicit in Ricardo's and Smith's ideas as well.

The Law of Rent is permanently true, and will be as long as production is more advantageous at one location than another. That difference in productive advantage determines land rent.


The Law of Rent basically describes a dynamic created by landowning monopolies, which have been disappearing or declining for quite some time now, gradually forcing landlords into the parasitic and non-productive situation they find themselves in today (ie because their profits became marginal with the rise of industrial capitalism, so did their propagation as a social class). It just seems you are ignoring this when you compare Ricardo's theory to the Pythagorean Theorem.
#15060620
Donna wrote:That isn't what happened though. Historically production was heavily dependent on wealthy aristocratic landowners who possessed the wealth to both invest in the productive improvement of the land as well as finance government debt through large bond purchases. This is also implicit in Ricardo's and Smith's ideas as well.

[...]

The Law of Rent basically describes a dynamic created by landowning monopolies, which have been disappearing or declining for quite some time now, gradually forcing landlords into the parasitic and non-productive situation they find themselves in today (ie because their profits became marginal with the rise of industrial capitalism, so did their propagation as a social class). It just seems you are ignoring this when you compare Ricardo's theory to the Pythagorean Theorem.

The fundamental problem seems to be that Truth to Power has no sense of history, of how things actually happened. Instead, he has only an abstract, one-sided view of economic production, which he seems to regard as a branch of pure mathematics. However, any theory of economic production must also be a theory of history and also a theory of politics, as Marx understood. Georgism flows from the same well of historical ignorance as libertarianism.
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