The Communist Manifesto

[cybercoma]

Welcome to the forum dalitis. You've clearly studied Marx and know what you're talking about.

[August1991]

The concept of exchange value, and labor value does not belong to Marx at all. It was David Ricardo's innovation. Marx though, took one step further, and explained the source profit, through the theory of "surplus value"

So? Marx, Smith, Ricardo didn't understand "value" either.

I wonder how you can claim with such certainty that Marx got the theory of value wrong.

Marx never applied mathematics to economic questions.

Marshall and Walras, for example, did.

Your allegory with Aristotle, Newton and quantum physics sounds quite bizarre to me. Would you be willing to develop it?

Have you ever heard of a Lorentz transformation? How about F=ma?

Karl Marx knew nothing about a Lagrangian multiplier - but John Maynard Keynes certainly did, and Paul Krugman even knows about differential equations.

You claim that language such as that employed by Karl Marx himself is typical of the early 19th century. If that is the case not many people seem to have noticed. Would you be so kind as to re-produce the texts where Charles Dickens and Victor Hugo speak in the dialectical manner of Marx and Engels regarding the capitalist mode of production?

In fact I would heavily disagree with you about modern Leftists. In fact the vast majority of Leftists, has long ago abandoned Marxism. That was the case in the period right before the Great War, and even more so, during the neo-liberal period, where all the Social-Democratic parties in Europe were desperate to distance themselves from the working-class and the like. They were arguing that they were for the so-called New Economy and blah, blah, blah.

Modern leftists use the language of the Communist Manifesto, which is a "sophisticated" version of Charles Dickens/Victor Hugo.

And I do not see how the invention and existence of the Boeing 747 absolves, capitalism, the free market and free trade from all the horrors they inflict upon humanity every passing day.

"... invention and existence of the Boeing 747... "

747?

dalitis, I suppose that you would say the same about penicillin and insulin. According to you, penicillin/insulin show that capitalism, free market prices, are a terrible scourge.

Edited May 22, 2012 by August1991

[Pliny]

Interesting thread.

To say that Capitalism is "a producer of unimaginable misery and barbarism" is to not understand life. All things die and Marx's greatest failure was implying Communism would save the world from "unimaginable misery and barbarism".

Of course Communism brings it's own flavour to the table.

And what of value? What is "surplus value" other than "profit".

"Value" is set by the individual. Marx, like most Economists of today, thought of value in the aggregate. He thought labour, as an aggregate, should have a value higher than the individual demand for wages. AS much as I hate washing dishes I would do a good job of it if there were people vying for my position as dishwasher. If no one were vying for my position I would be asking for a raise.

From my understanding, Marx thought all labour should have an equal value, unless it was valueless altogether, such as digging ditches and filling them in again. What better way to achieve social equality than determine all labour of any value equal?

Edited June 2, 2012 by Pliny

[August1991]

And what of value? What is "surplus value" other than "profit".

"Value" is set by the individual.

What you call "surplus value", most economists today would call "consumer's surplus", or "rent".

Pliny, when you refer to "value", and I try to correct you, I feel that I am explaining the logic of a fixed speed of light to a medieval monk.

Marx, like most Economists of today, thought of value in the aggregate. He thought labour, as an aggregate, should have a value higher than the individual demand for wages.

....

From my understanding, Marx thought all labour should have an equal value...

And from my understanding, in the aggregate, Che Guevara is a cool guy.

Marx and Fidel, like that British rock star, care about poor people.

Marx not only sees the immense productive capacity inherent in capitalist social relations, but at the same time, sees the destructive potential as well. Marx, understands that capitalism is heroically progressive, but at the same time a producer of unimaginable misery and barbarism. The triumph of Marx over other thinkers is that he manages to capture the dualism that is inseparable from capitalism.

Ah yes, the West is so good, but we are so destructive too.

In a nutshell, one can see the the basis of our self-loathing.

Edited June 2, 2012 by August1991

[August1991]

The concept of exchange value, and labor value does not belong to Marx at all. It was David Ricardo's innovation. Marx though, took one step further, and explained the source profit, through the theory of "surplus value".

Precisely. Marx couldn't do calculus, and had no understanding of, say, marginal cost. Marx added nothing to the understanding of "value".

In the case of Ricardo, at least we still have the concept of "opportunity cost".

Marxist concepts (dialectics from Hegel, Logic from Aristotle, English political economy, French political theory, Feurbach's critique of ideology) are not original in themselves, what is original, is the way they are brought together in a systematic tour de force that forever changed the course of human history.

IOW, revolutionaries the world over still appeal to Marx to justify radical change. Marx is the intellectual's Robespierre.

Your allegory with Aristotle, Newton and quantum physics sounds quite bizarre to me. Would you be willing to develop it?

Around 1870, it was discovered that the speed of light was constant - regardless of the position, movement of the observor.

Galileo tried to measure the speed of light but gave up and determined that it was too fast to measure. Marx should have done the same with "value". Unfortunately, Marx then went on to develop an entire social theory based on his inaccurate measure of "value".

You claim that language such as that employed by Karl Marx himself is typical of the early 19th century. If that is the case not many people seem to have noticed. Would you be so kind as to re-produce the texts where Charles Dickens and Victor Hugo speak in the dialectical manner of Marx and Engels regarding the capitalist mode of production?

In fact I would heavily disagree with you about modern Leftists.

As economists, Marx and Engels are no longer cited. But as sociologists, they live on.

Marx first espoused the idea, using the language of Smith, that the rich get richer and the poor get poorer.

In fact the vast majority of Leftists, has long ago abandoned Marxism. That was the case in the period right before the Great War, and even more so, during the neo-liberal period, where all the Social-Democratic parties in Europe were desperate to distance themselves from the working-class and the like. They were arguing that they were for the so-called New Economy and blah, blah, blah.

On the contrary. Modern leftists are typically a boring Marxist refrain.

And I do not see how the invention and existence of the Boeing 747 absolves, capitalism, the free market and free trade from all the horrors they inflict upon humanity every passing day. The Marxist hypothesis against capitalism, is not based on the assumption that it cannot carry technology forward (in fact Lenin himself says: "There is no technical challenge that capitalism cannot deal with) it is in fact based on the expectation that it cannot deal with the social problems that simply arise from its mere functioning.

Yeah, right. A 747 (or penicillin) poses "social problems".

----

Let me be explicit dalitis: Markets fail. Markets don't always work right. Sometimes, markets dn't even exist.

Modern economists know about this. Adam Smith vaguely understood the problem. Karl Marx completely missed the point.

If I were to criticize modern capitalism, I would focus on where/why markets don't work/don't exist.

---

Modern GPS rely on relativity to work. (The GPS satellites travel fast enough, and are subject to gravity, so that their time signal is altered. Our car GPS receptors are designed to correct for these differences.)

Trying to use Karl Marx to understand how a society/economy works is like trying to use Aristotle to understand how a GPS system works.

Edited June 2, 2012 by August1991

[Michael Hardner]

On the contrary. Modern leftists are typically a boring Marxist refrain.

You have identified a large portion of the board, including me, as leftists. How many of us repeat Marxist sayings or ideas ? If pointing out problems with capitalism makes one Marxist then you yourself are a Marxist.

Yeah, right. A 747 (or penicillin) poses "social problems".

No, D said that the existence of the 747 doesn't absolve capitalism of its problems.

If I were to criticize modern capitalism, I would focus on where/why markets don't work/don't exist.

Trying to use Karl Marx to understand how a society/economy works is like trying to use Aristotle to understand how a GPS system works.

How many thinkers of that era are even remotely relevant ? Marx framed history as a class struggle, and that idea resonated enough to shake the earth. Scoffing at it hundreds of years later, when so-called capitalism has adopted reforms and socialist mechanisms anyway denies the impact that it had.

dalitis has shown themselves to possess a deep academic understanding of Marxism. You should recognize the limits of your own ideas, Auguste (i.e. "leftists are against change" and so on...) and take advantage of the fact that you have someone here who can test and thereby help improve your ideas... if you only acknowledge that you have something to learn here.

[Pliny]

Pliny, when you refer to "value", and I try to correct you, I feel that I am explaining the logic of a fixed speed of light to a medieval monk.

When did you try and correct me?

I have held your concept of value which is quite common but we progress or we don't.

"Value" is entirely subjective and has its basis in utility to the individual.

Money, as an example of some confusions on the subject, is not a measure of value as it still takes the individual to subjectively determine whether or not he will trade a specified amount of money for a commodity.

[cybercoma]

"Value" is entirely subjective and has its basis in utility to the individual.

Money, as an example of some confusions on the subject, is not a measure of value as it still takes the individual to subjectively determine whether or not he will trade a specified amount of money for a commodity.

If you guys were familiar with Marx, you wouldn't be talking past each other like this.

Exchange-value is the cost of a commodity (typically in dollars and cents, but could be compared to other commodities in a barter system).

Use-value refers to the utility of a good.

[August1991]

If you guys were familiar with Marx, you wouldn't be talking past each other like this.

Exchange-value is the cost of a commodity (typically in dollars and cents, but could be compared to other commodities in a barter system).

Use-value refers to the utility of a good.

Use value, labour value, exchange value, value.

I prefer the term "price".

"Value" is entirely subjective and has its basis in utility to the individual.

That's wrong. "Value" is simply a number, a term of trade. It's the price.

Ideally, it is the number where marginal utility (benefit) to the individual meets marginal cost to the producer, and this "value", number or term of trade, is known to all.

Edited June 4, 2012 by August1991

[dre]

Use value, labour value, exchange value, value.

I prefer the term "price".

That's wrong. "Value" is simply a number, a term of trade. It's the price.

Ideally, it is the number where marginal utility (benefit) to the individual meets marginal cost to the producer, and this "value", number or term of trade, is known to all.

No that is absolutely wrong. In economics price and value are two different things. Price is determined by the intersection between supply and demand. Value is taken into account on the demand side but it is absolutely not the same as price. This has been batted around by economists for centuries and theres tons of examples out there that show why these are two completely different, yet related concepts.

COST = WHat it costs the seller to produce a widget.

PRICE = The financial reward exchanged for the widget by the buyer.

VALUE = The most a buyer will pay for a widget.

Cost just is what it is based on your production model.

Value is totally subjective and is different for every consumer and every product. No matter what you are selling and what the prices is people will only buy it if they value the money less than the widget. Thats why no matter what product you are selling at any given price some people will be your customers and some wont.

PRICE is determined by your business and marketing strategy, and will be somewhere between cost and value, based on what percentage of consumers you want to sell to. You might decide to only sell to consumers that place a very high value on your products, in which case you will have a high profit margin (large gap between cost and price), but not very many customers. Or you might decide to discount your product and sell it at barely above cost, in this case your profit margin will be low but you will sell way more widgets.

Edited June 4, 2012 by dre

[August1991]

No that is absolutely wrong. In economics price and value are two different things.

Really? "Price" is different from "value"?

And "worth" is something else, I suppose. Or how about "willingness to pay"? And how would you define an "interest rate".

-----

Dre, Karl Marx was confused with these questions too. Modern economists are not.

Edited June 4, 2012 by August1991

[dre]

Really?

And "worth" is something else. Or how about "willingness to pay"?

-----

Dre, Karl Marx was confused with these questions too. Modern economists are not.

No thats true... modern economists understand that price and value are two totally different things. I edited my post to explain it to you better.

Price is determined by the intersection between supply and demand. Value is taken into account on the demand side but it is absolutely not the same as price. This has been batted around by economists for centuries and theres tons of examples out there that show why these are two completely different, yet related concepts.

COST = WHat it costs the seller to produce a widget.

PRICE = The financial reward exchanged for the widget by the buyer.

VALUE = The most a buyer will pay for a widget.

Cost just is what it is based on your production model.

Value is totally subjective and is different for every consumer and every product. No matter what you are selling and what the prices is people will only buy it if they value the money less than the widget. Thats why no matter what product you are selling at any given price some people will be your customers and some wont.

PRICE is determined by your business and marketing strategy, and will be somewhere between cost and value, based on what percentage of consumers you want to sell to. You might decide to only sell to consumers that place a very high value on your products, in which case you will have a high profit margin (large gap between cost and price), but not very many customers. Or you might decide to discount your product and sell it at barely above cost, in this case your profit margin will be low but you will sell way more widgets.

Edited June 4, 2012 by dre

[August1991]

dre, each language struggles to understand terms such as : price, worth, value, cost.

Often, such words defy translation. They are a product of the "modern" world.

But dre, the French word - concurrence - of Latin origin intrigues me. It has no easy English translation, and I still wonder why.

[Peter F]

Really? "Price" is different from "value"?

And "worth" is something else, I suppose. Or how about "willingness to pay"? And how would you define an "interest rate".

-----

Dre, Karl Marx was confused with these questions too. Modern economists are not.

post stating the obvious removed

Edited June 4, 2012 by Peter F

[cybercoma]

Use value, labour value, exchange value, value.

I prefer the term "price".

Price (in dollars and cents, I presume) is only exchange value. This is why I can only take what you say about Marx with a grain of salt. You claim he doesn't understand value, then you yourself take only the most limited scope of value.

[Michael Hardner]

I like the feature of forums where amateurs throw stones at orthodoxy and accepted wisdom, and experts defend the status quo. The problem happens when it's not clear who's who, and when amateurs fancy themselves as experts: it's very confusing.

I'm learning about economics here, and would appreciate it if those with formal training on the subject identify themselves, thanks.

[dre]

I like the feature of forums where amateurs throw stones at orthodoxy and accepted wisdom, and experts defend the status quo. The problem happens when it's not clear who's who, and when amateurs fancy themselves as experts: it's very confusing.

I'm learning about economics here, and would appreciate it if those with formal training on the subject identify themselves, thanks.

I have very little "formal" training... about 4 months on macro-economics in a business management course that I eventually dropped out of. I HAVE however put many hundreds of hours of self study in over the last few years but I dont expect you to accept that as some kind of credential.

In any case no matter what any poster tells you about their credentials, you need to do a little bit of your own research. At best the threads on here can peak your interest and give you an entry point to do your own investigation.

You can also learn a lot from the flow of the threads... for example see above where I explain in pretty damn clear terms the relationship between price, cost, and value in an attempt to dispute another posters claim that price and value are the same thing... then read the response to it.

But just to put the question of formal training to bed for good where Im concerned: I am a highschool dropout. I dont even have the formal qualifications to vacuum the floor of your automobile.

[Michael Hardner]

To be clear: I think that identifying your background in these terms establishes expertise, but not necessarily authority. Any good expert will concede that they can't know everything on the topic, and in fact there are points of disagreement that divide experts right down the middle.

[cybercoma]

If I discuss my professional qualifications, it will be too easy to figure out who I am and what I do. No thanks.

[Michael Hardner]

Intriguing...

However, if we're talking about economics, for example, you could say something like:

Doctorate, publishes regularly, called upon to comment by national media.

Note, though, what I said above. I would say that authority perhaps even makes it more incumbent on you to be patient, forgiving and open minded in such discussions. Care to elaborate a little then ?

[Canuckistani]

Boy, if there are experts on this forum, or even just people who think they understand it, I would like them to explain to me where all that money went in the last crash? The money seems to have just evaporated into thin air, yet the debt the US govt, for instance, had to take on seems very real, with real effects. Bottom line, seems to me, that our use of money is some kind of confidence game (both meanings intended) that can have devastating consequences.

I will admit that I like tweaking the "experts" who didn't seem to see the last crash coming, never seem to, and yet expound on their theories as if you can take them to the bank.

Edited June 4, 2012 by Canuckistani

[Pliny]

Well, I haven't agreed with dre on much but he has a better grasp of terms than you seem to August.

Value is entirely subjective. Trade occurs when two persons agree they will benefit from the trade.

One of the central bank's raison d'etre is "price stability". The means they use to attempt to achieve price stability or even attempting to achieve it creates market distortions.

It happens that I am posting on this thread because I just finished reading The Communist Manifesto.

I am reading selected sections of "Capital" and have read "Wages, Price and Profit" and "Socialism: Scientific and Utopian".

Marx seems to take an external view of society as though he is detached and above it and describing how things haven't changed much throughout history, what he sees and what he deems is necessary to make corrections.

Financially, I think he had a hard time and if not for the support of his good friend Fredrich Engels would have probably wound up destitute, in my view. So what he understood of economics and his theories about it shouldn't be considered too correct. It seems his idea of value was that it was not subjective at all but set by the Capitalist to the detriment of the working class.

He does talk about exchange-value and use-value and discovered "surplus-value" - apparently one of his great economic contributions.

Marx seems to lack any liking of mankind which means in my mind that his observations are sullied and his theories will be flawed.

Michael, why would you want to learn about economics here? If you need to know, I don't have any credentials in the field whatsoever. I am entirely self taught on the subject.

Canuckistani said:

Bottom line, seems to me, that our use of money is some kind of confidence game (both meanings intended) that can have devastating consequences.

Yes. The degradation of our money will have devastating consequences.

I will admit that I like tweaking the "experts" who didn't seem to see the last crash coming, never seem to, and yet expound on their theories as if you can take them to the bank.

Austrian Economists did see the crash coming. Peter Schiff was the most visible Austrian economist that warned of the crash. No one, in Government or on Wall Street, heeded that warning and it wound up running it's course.

Edited June 6, 2012 by Pliny

[bleeding heart]

Financially, I think he had a hard time and if not for the support of his good friend Fredrich Engels would have probably wound up destitute, in my view. So what he understood of economics and his theories about it shouldn't be considered too correct.

Really? So a person of means, who writes about the excellence of, say, free market ideology, should not be taken seriously, either?

What are the financial credentials one needs to write about political economy and economic theory and philosophy?

Marx seems to lack any liking of mankind which means in my mind that his observations are sullied and his theories will be flawed.

Am I mistaken in remembering your defense of the ideas of Ayn Rand? She was famously misanthropic, and proudly elitist.

[cybercoma]

Marx seems to take an external view of society as though he is detached and above it and describing how things haven't changed much throughout history, what he sees and what he deems is necessary to make corrections.

Not to be condescending, but if this is what you think Marx wrote, then you either haven't read Marx at all or you have a fundamental misunderstanding of what you read. The entire point Marx was making is about how and why things change throughout history the way they do. He turned Hegelian dialectics on its head, as they always say. Taking the engine of history out of the clouds of ideas and ideologies and grounding it in the material relationships between people. His work is far from a prescription. Marx didn't prescribe anything and that's the problem scholars have with his work. He simply described things, as he believed they were. He was more a historian than anything.

Edited June 7, 2012 by cybercoma

[Pliny]

Really? So a person of means, who writes about the excellence of, say, free market ideology, should not be taken seriously, either?

A person of free market ideology would probably make recommendations concerning how he lives his life, probably as independently as possible,just as Marx recommended people live their lives as he did - as dependent as possible. You can follow whomever's advice you prefer.

What are the financial credentials one needs to write about political economy and economic theory and philosophy?

Writing about political economy or economic theory takes no credentials, formulating it does. Marx was a political ideologist and not an economist first. In my opinion, I don't think he ever observed how an economy works but he knew how he thought it should work.

Am I mistaken in remembering your defense of the ideas of Ayn Rand? She was famously misanthropic, and proudly elitist.

I don't know if you are mistaken or not. I have enjoyed some of her works, as they warn of the oppressive State. Her opponents may describe her as "famously" misanthropic and proudly elitist and I would probably agree with proudly elitist. She abhorred the State more than mankind though or she couldn't have written what she wrote. Marx was, by his writings, more misanthropic than Rand.