There was talk about renaming the Krugman thread for this purpose, but that seems to be going nowhere. Besides which, I feel the Krugman thread should be left to discuss Krugman while this thread can be used for more general economic discussion.
Discuss:
- The merits of competing theories.
- The role of the government in managing the economy.
- The causes of and solutions to our current economic woes.
- Comparisons between the economic systems of different countries.
- Theoretical and existing alternatives to our current market system.
edited 17th Dec '12 10:58:52 AM by Topazan
Uh, see Silas post again? It's the difference between the capitalist view of the value of labour and the communist view.
Or rather, it's the difference between valuing labour by its cost (and thus a "fair market wage" reflecting that) and valuing labour by its economic output (which is closer to GDP per capita than anything).
Nothing I've said has anything to do with my views, nor am I inclined to say what they are just because you ask.
Edited by RainehDaze on May 19th 2020 at 12:34:43 PM
Hmm, on very shaky ground there, Raineh. I know of no way to put a number on the value of anything outside of a market. The value of a thing is what other people are willing to exchange for it, no more, no less. It was the Soviets ignoring this that arguably led to their demise.
As for the philosophical debate on the relative merits of the contributions of labor and capital—it's not really. It's a conflict of interest. It is in the interest of labor to cut out the middleman, were that possible. It is in the interest of capitalists to be the middleman, if they can.
I'm done trying to sound smart. "Clear" is the new smart.I've been following this thread for a bit. A few pages ago you said "All active components like brokering agreements etc. are jobs that could be done without individually owning any of the items involved—ergo, the capitalist is still just extracting wealth from labourers (even if what they're doing might not be viewed directly as labourer)."
This doesn't sound like a "Some people think..." thing. This sounds like something you're presenting as an objective fact.
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I suppose the easier way to put it is valuing labour based on competition in the labour market vs valuing labour based on productivity. In most occasions in society, the amount people get paid is based on the first one and whether someone else could be paid less to do the same, but it can be argued that this is an inaccurate way to assess the value of the labour itself—and therefore we get back to extorting workers.
I'm terribly sorry, I'll try to screen everything I say to be as vague and academic as possible in case some random lurker decides to start playing 20 questions with my motivations.
Edited by RainehDaze on May 19th 2020 at 12:40:49 PM
Beyond economic output there also comes the question fo societal output. There’s probably not a ton of economic value in teaching someone to be kind and to care for others, but dam if it isn’t important for society.
If labour compensation was based on economic output there’s a strong case for teachers being the most productive people around, because there’s an awful lot of economic output in teaching people numeracy and literacy.
If you go beyond that and look and societal benefit, then you’re probably looking at parental labour being the most important, probably followed by moral teachings around thighs like consent and kindness, then I’d guess civics?
Happiness generated? Lives saved?
You’re not wrong that it’s a huge problem, determining the value of labour gets bonkers the moment you go beyond direct “I made a thing for my boss, he then sold it for 50 times what I make in a month”, but there are other available benchmarks beyond “what can I sell this for?”
Edited by Silasw on May 19th 2020 at 11:47:13 AM
“And the Bunny nails it!” ~ Gabrael “If the UN can get through a day without everyone strangling everyone else so can we.” ~ Cyran
Uh, who's 'he'?
Well, we don't measure productivity by the amount workers are being paid, so I think it's self-evident that the labour market isn't an accurate reflection of productivity however you're choosing to determine it—goods produced, export/import balances, whatever.
Edited by RainehDaze on May 19th 2020 at 12:43:56 PM
@Silas: The problem is how to put a numerical value on it. Because that's the only way people can engage in a transactional exchange. That's the reason why housework and emotional support is conducted within a family, and not a market, and why nearly all primary education is conducted by employees of the state. How do you measure that stuff?
@Raineh: "Well, we don't measure productivity by the amount workers are being paid" True—we measure it by how much people are willing to pay for the output. How does this help us determine what the relative value of the labor vs. the initial capital investment is?
Edited by DeMarquis on May 19th 2020 at 7:45:52 AM
I'm done trying to sound smart. "Clear" is the new smart.![]()
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How do you determine it? It's probably impossible. You could probably make guesses based on how much investment is needed to do [X] and the expected returns, but there's no simple way to then work out how much is going to be the human element rather than what's essentially raw materials. But you can reflect it by having a change in output (hopefully an increase, as everyone would prefer) explicitly tied to the amount that labourers are receiving rather than accumulating as dividends and bonuses for select employees.
Edited by RainehDaze on May 19th 2020 at 12:50:09 PM
Absolutely not. They are fundamentally very different concepts which play very different roles and must be recognized as such. The wealth, (or more properly, objective value) of a gallon of water is the exact same for a man sitting in his house and a man walking in the desert. The value is extremely different.
This is not some little quibble of nomenclature. It's a fundamental and material difference that must be recognized.
Edited by David7204 on May 19th 2020 at 6:56:30 AM
@Raineh: Unfortunately I think the research shows that individual employee productivity is only loosely tied to financial compensation. You can't motivate most employees to work harder or better simply by paying them more. Human irrationality.
@David: You can't just assert these things. According to whom? By what logic? What do you think the terms "wealth" and "value" mean? Also, why is it "fundamental"? fundamental to what?
Edited by DeMarquis on May 19th 2020 at 7:58:44 AM
I'm done trying to sound smart. "Clear" is the new smart.In simple terms: Profit.
Let's say I own a carpenter's store where I sell wooden chairs for $65 (because I've determined that's the maximum people will pay for them). And let's say I give someone batches of $25 worth of raw materials and tools to make chairs with and pay them $25 per chair they make. The cost of their labour per chair to me ($25) is less than the true value of their labour per chair ($65 - $25 for the raw materials and tools = $40).
Edited by Robrecht on May 19th 2020 at 1:55:29 PM
Angry gets shit done.Oh that’s very much the problem, like some of it you could measure very long-term, but then your compensation is insanely delayed.
You could tie some of it in though, take civil participation as an example, that’s a societal gain, but because it’s hard to make transactional we don’t reward it and as such it gets a lot less focus.
For economic gain/value this is why there’s the ever present lure of the command economy, because leaders fool themselves into thinking that if they control everything they will have perfect information and can measure things properly. That road always leads to disaster, but dam if it isn’t alluring when you’re trying to measure true value.
There are some measures, crime rates, election participation, acts of heroism. We could do more even within a capitalist society, financial bonuses to parents if their kid carries out an act of heroism (or even simply doesn’t commit any crimes), extra money for school if a certain percentage of their graduates vote in an election?
Edited by Silasw on May 19th 2020 at 11:59:52 AM
“And the Bunny nails it!” ~ Gabrael “If the UN can get through a day without everyone strangling everyone else so can we.” ~ Cyran@Rob: What makes one of those things the "true" value, and the other somehow less true? The chair is worth $25 to the store owner. The same chair is worth $65 to a customer. There is no "true".
@Silas: Some of those things you mention are a type of "externality" in that costs to society would go up if, say, we didn't have very many effective parents. It isn't impossible to measure those costs, but as a practical matter it's too hard to base individual transactions on them. The only alternative I know of is for the state to collect taxes in order to support such activities, but this policy is always open to attack by those who demand that government spending demonstrate a positive return on investment.
Edited by DeMarquis on May 19th 2020 at 8:00:58 AM
I'm done trying to sound smart. "Clear" is the new smart.The point isn't that you should motivate people to be more productive by paying them more (if nothing else this would require that every employee be unmotivated enough for it to matter). The point is that the productivity they do have, as one multiplier in the chain, should be reflected in their compensation.
Value (or subjective value) is the importance of an asset to a person (or group of people's) economic condition. It is the benefit that a person receives from gaining the asset, or equivalently, the loss they suffer from losing the asset. (Or at least, the benefit they think they will receive, and vice-versa.)
I think my example should be self-evident. A bottle of water has tremendous importance to a man walking in the desert. It has near zero importance to a man sitting comfortably at home.
Objective value ("wealth") is the capacity of an asset to achieve a result. If you have $1,000,000, you can buy 200,000 hamburgers that cost $5 each. Objectively.
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You might not be able to measure the exact amount, but you can probably work out the if your company's profit doubles, then everyone should have a wage rise of some amount, and for sanity's sake probably in proportion. The gist of suggestions that CEO's pay should be fixed to a certain ratio of their lowest-paid employee.
An example of exactly how it shouldn't work is automation. You have an employee, who makes you X items. You introduce a machine for the employee to operate, which makes you 2X items. Now, if this is your one change, then you know the employee is now twice as valuable to you—if you were paying based on the value of their work, their pay should double. Instead, most of the time, you get rid of the skilled employee and pay the replacement less, whilst also pocketing the increased money.
Your objective value is determined, obviously, by it's subjective value. People at home will pay less for the water than someone in the desert, which means they could also sell it for less, so it represents less wealth to them.
Anyway, what is this distinction fundamental to? Why do you think it matters?
I'm done trying to sound smart. "Clear" is the new smart.Because there's no way in hell that the wages paid for creating a factory would be equivalent to the wages you paid for its construction. To feed a man for a day, give him a fish. To feed a man for the rest of his life, teach him how to fish. All you've done is give them their ration of cash so they can survive temporarily, while you get the means of production which allows you much longer time-scale prosperity.
Both parties knew this when they agreed to the terms of the money-for-factory deal. How is this exploitation of the workers?
The fact that something was mutually agreed doesn't mean there was no element of coercion. Workers often have to work to live. They usually don't have the liberty to choose what work they do and on what terms. This is a common flaw in the right-wing libertarian position, they like to pretend society would work perfectly as a series of people coming together of their own volition to form equally mutually beneficial agreements without government stepping in - except systemic inequalities mean that those agreements will never be on equal terms, and will often be coercive and/or exploitative.
@De Marquis, I wasn't confused earlier - I just wish more of y'all would watch Richard Wolff every now and again before talking about Marxian economics. That was the headache.
"...in the end the Shadow was only a small and passing thing: there was light and high beauty for ever beyond its reach."Again, absolutely not. The objective value is the same. It's the same gallon of water. It has the exact same capacity to satisfy thirst, water plants, or clean dishes.
Wealth is objective. $20 is $20. It doesn't matter if it's owned by you or Jeff Bezos.
You're using these terms very sloppily, and the point of this is to avoid that. If we want to talk about value and say anything sensible, we have to understand what it actually is.
Edited by David7204 on May 19th 2020 at 7:17:59 AM

It doesn't matter what I think because that's not the reason we're talking about this.