Hello again, Billy Rojas, I am finding your views on economics important and would like to post it to my blog. Let me know if you have any concerns. Regards, Karthik Navayan
On Wed, 4 Apr 2018, 5:53 am Billy Rojas, <[email protected]> wrote: > *Ernie:* > > Marx stood Hegel on his head*; *it is only fair that we stand Marx on * > his* head. > > > What determines value in an economy? Whatever labor and goods that are > > required to win the favors of the opposite sex. Since this will vary from > > one man to the next, one woman to the next, the economic system will > > always be structurally irrational. Not totally crazy, but not at all > > wholly rational, indeed, far from it even if anyone can detect > > some modicum or order -which is dictated by the logic > > of production and exchange. Yet all the fuss is ever and always > > the result of desire for the services of the opposite sex. > > > Each sex has need of the other, like it or not, and love makes the economy > go 'round. > > > To say the same thing, this also means taking into account the needs of > families, > > of the kids involved, of any pets, of gardens that may be grown to > cultivate > > veggies for the household, and so forth even if, in our world, "gardening" > > is by proxy, in Iowa or the San Joaquin Valley or Mexico. > > > Throughout all of history wars have been fought for access to women > > and women have played the economic game to procure decent homes > > for themselves in which to raise children. > > > A man by himself, is satisfied with simple things, hell, next-to-nothing > will do just fine it it includes what he considers necessities, whether > > enough beer or enough smokes or enough gas money to run his jalopy. > > Add a woman to the equation and you get a man possessed. His needs > > now become gargantuan: A fine house that costs $350,000, a new car > > that costs $29,995, clothes for everyone concerned, only quality garments > > will do, not worn out jeans that had been good enough in an earlier time, > > and so forth, for computers, TV entertainment, discretionary money > > for restaurants or concerts, and so forth. This results in a lot of > concern > > about what government policies will facilitate one's new lifestyle > > and which political movements may threaten security or affluence. > > > It also means new priorities. A single man may not give a hoot about > > jewelry, and why should he? Why get hung up about glittering trinkets? > But with a woman in the picture, by God he had better buy her some > > diamonds or emeralds because gemstones are her insurance against > > his dying early, or his philandering, or his illness that ruins a family > > finances. And there had better be expenditures for status items > > more generally, so that the kiddies, when they grow up, > > can make their families proud and the best way to do that > > is to trade on status to get them admitted to a quality university > > or take vacations where they will meet other high-status young people, > > and so forth. It all hangs together. > > > > Take sex out of the equation and economics is a crap shoot > > with twenty different theories each making some sense but > > by no means are any of these theories the last word > > and to take any literally is to guarantee failure. > > The motor of economics is sex, plain and simple. > > Or plain and complex *s'il vous plait*, but you get the idea. > > > In other words there is a reason why prostitution is called > > the world's oldest profession. Sex has intrinsic value; > > as a rule it results in the perpetuation of the species, > > and what could be more valuable than that? > > > But it also means pride in self, hence all kinds of positive feelings > > that make life seem worthwhile and worth the trouble. Whether or not > > women value sex intrinsically you can decide for yourself, > > but for sure they value it for purposes of motherhood > > and if for no other reason it therefore has the highest > > possible value, worth any sacrifice. > > > This is the real foundation of economics. > > > > Billy > > Chicago School of New Economics > > > > _____________________________________________________________ > > > > > > > ------------------------------ > *From:* [email protected] <[email protected]> > on behalf of Centroids <[email protected]> > *Sent:* Tuesday, April 3, 2018 4:22 PM > *To:* Centroids Discussions > *Subject:* [RC] Why Marxists obsess over labor > > > *This was really helpful. I could never understand why Marxists obsessed > so much over labor, and utterly disregarded the multiplicative power of > capital investment* > > > *The Diamond-Water Paradox and the Subjective Theory of Value* > > http://partiallyexaminedlife.com/2018/04/03/the-diamond-water-paradox-and-the-subjective-theory-of-value/ > > <http://partiallyexaminedlife.com/2018/04/03/the-diamond-water-paradox-and-the-subjective-theory-of-value/> > The Diamond-Water Paradox and the Subjective Theory of Value | The > Partially Examined Life Philosophy Podcast | A Philosophy Podcast and Blog > <http://partiallyexaminedlife.com/2018/04/03/the-diamond-water-paradox-and-the-subjective-theory-of-value/> > partiallyexaminedlife.com > Why do diamonds cost more than water, when water is essential to life? The > answer eluded both Smith and Marx before its resolution arrived in the form > of the Marginal Revolution. > > (via Instapaper <http://www.instapaper.com/>) > > ------------------------------ > > In his famous work *The Wealth of Nations*, Adam Smith > <http://partiallyexaminedlife.com/2017/10/16/ep174-1-adam-smith/> > articulated a paradox that he could not resolve: water is essential to > life; diamonds a mere decoration. Yet for all that, we are willing to > lavish enormous sums on pretty rocks while taking clean water for granted. > What could explain this disconnect? > > Smith’s confusion stemmed from his understanding of the source of economic > value. The eighteenth century, while an age of enlightenment and > revolution, was still very much mired in the religious worldview of the > Medieval era, and many great thinkers believed that God imbued the world > with value. It must have been quite difficult to imagine any sort of value, > let alone that of economic goods, originating from some source other than > the Creator of all things. Indeed, Smith, like many of his contemporaries, > ascribed to an intrinsic understanding of value, one which saw prices as a > manifestation of some “objective” quality of the thing being sold. > > That quality was the amount of labor that went into the production of the > commodity in question. “The real price of everything, what everything > really costs to the man who wants to acquire it, is the toil and trouble of > acquiring it,” asserted Smith.[1] His view has a certain intuitive appeal > to it. Now known as the “labor theory of value,” this perspective holds > that the prices of goods on the market are ultimately determined by the > effort expended in their production. > > This, of course, begs the question: what determines the price of labor? On > Smith’s account, there is nothing else to turn to: > > Labor was the first price, the original purchase-money that was paid for > all things. It was not by gold or by silver, but by labor, that all the > wealth of the world was originally purchased; and its value, to those who > possess it, and who want to exchange it for some new productions, is > precisely equal to the quantity of labor which it can enable them to > purchase or command.[2] > > In this way, labor can be understood as the genesis of all value, the > first building block upon which all economic goods rest. It is easy to see > why this account took hold in the eighteenth and nineteenth centuries. It > seemed to explain the inflated prices of labor-intensive goods such as > cotton and saffron, which demanded hours of sweat from peasants (and > slaves) for a relatively small amount of raw material. It also entails that > an informed expert could, with the proper information, calculate the “true > price” of a good. Yet that’s not all: the labor theory of value instills a > sense of justice into market transactions. > > According to the labor theory of value, those goods that people must work > hard to produce are highly valued. On the other hand, those goods that are > produced with ease do not fetch an impressive price. This characterization > of market value has an obvious appeal, because it seems to reward human > effort. > > Many great thinkers followed Smith in ascribing to this view. David > Ricardo, the famous nineteenth-century defender of free trade, further > refined Smith’s position, which was taken up by another famous economist, Karl > Marx <http://partiallyexaminedlife.com/2013/01/30/ep70-marx/>. Marx was > careful to differentiate between what may be simply called “effort” and > “labor.” For example, he believed that there is a difference between > skilled and unskilled labor, so that one hour of skilled labor may be equal > to two hours of unskilled labor. > > Yet despite this differentiation, Marx was obsessed with aggregates, and > his formulation of *social necessity* is just one example. To a Marxist > proper, the amount of time actually expended in the production of a good > does not matter as much as the amount of time that it *should* take to > produce something. As Marx put it, “that which determines the magnitude of > the value of any article is the amount of labor socially necessary, or the > labor time socially necessary for its production.”[3] Social necessity is > derived from the average level of productivity in a given society, > regardless of the time spent on any item in particular. > > Marx wrote *Das Kapital* <https://amzn.to/2GmSvxd> nearly 100 years after > Smith’s *The Wealth of Nations* made its debut in 1776. The continuity of > the labor theory of value between these two otherwise diametrically opposed > works is remarkable, and speaks to its hegemony in classical economics. It > also gives evidence of the intractability of the diamond-water paradox: in > 1860, there was still no explanation for the fact that diamonds fetch a > higher price than water. Yet a few years before Marx published his magnum > opus, a new theory arrived on the scene, proposed by three thinkers almost > simultaneously. > > Three economists developed an alternative explanation of economic > phenomena in the 1860s and 1870s. While working independently, William > Stanley Jevons (British), Carl Menger (Austrian), and Marie-Esprit-Léon > Walras (Swiss) all proposed that economic value comes not from any quality > of the good in question, but from the human mind. > > Menger gives an unusually artistic description of this development in his > > If the locks between two still bodies of water at different levels are > opened, the surface will become ruffled with waves that will gradually > subside until the water is still once more. The waves are only symptoms of > the operation of the forces we call gravity and friction. The prices of > goods, which are symptoms of an economic equilibrium in the distribution of > possessions between the economies of individuals, resemble these waves. The > force that drives them to the surface is the ultimate and general cause of > all economic activity, the endeavor of men to satisfy their needs as > completely as possible, to better their economic positions. But since > prices are the only phenomena of the process that are directly perceptible, > since their magnitudes can be measured exactly, and since daily living > brings them unceasingly before our eyes, it was easy to commit the error of > regarding the magnitude of price as the essential feature of an exchange, > and as a result of this mistake, to commit the further error of regarding > the quantities of goods in an exchange as equivalents. The result was > incalculable damage to our science since writers in the field of price > theory lost themselves in attempts to solve the problem of discovering the > causes of an alleged equality between two quantities of goods. Some found > the cause in equal quantities of labor expended on the goods. Others found > it in equal costs of production. And a dispute even arose as to whether the > goods are given for each other because they are equivalents, or whether > they are equivalents because they are exchanged. But such an equality of > the values of two quantities of goods (an equality in the objective sense) > nowhere has any real existence. The error on which these theories were > based becomes immediately apparent as soon as we free ourselves from the > one-sidedness that previously prevailed in the observation of price > phenomena.[4] > > This theory of value thus focuses not on visible economic phenomena, but > on the forces that bring them into being: “the endeavors of men to satisfy > their needs as completely as possible.” Indeed, all three of the authors of > what is now known as the Marginal Revolution emphasize the role that an > individual’s mental states play in the creation of value. > > What explains economic value, in this new system? On Menger’s view, “value > is the importance that individual goods or quantities of goods attain for > us because we are conscious of being dependent on command of them for the > satisfaction of our needs” (115). This implies that goods that are always > and everywhere readily available do not attain an economic value—we are not > dependent on command for them for the satisfaction of our needs if we > already have them at hand. Only scarce goods can come into our > consciousness in this way. It also implies that “true prices” do not exist, > because prices are the result of subjective valuations. > > This focus on mental phenomena helps explain why certain goods that might > be seen as important resources today had no monetary value hundreds of > years ago. It is not any immutable and unchanging feature of an item that > gives it value. Rather, value comes from human perception. > > Yet how does the subjective theory of value resolve the diamond-water > paradox? Put another way, why do human subjects not recognize the greater > importance of water in their purchases? > > The answer lies in the crucial focus on *individual* goods and services. > Classical economists saw diamonds and water as aggregates, or categories. > However, Jevons, Menger, and Walras perceived that people interact only > with individual goods. In other words, no one chooses between “all of the > diamonds” and “all of the water.” Rather, people select discrete units of > water and discrete units of diamonds. Hence the “Marginal” Revolution. > > When people ascribe value to a good, they value each unit of each good > according to the least urgent need that can be satisfied by that good. Or > put another way, goods attain their value through their *marginal utility*. > As one classic example goes, a farmer who has five sacks of grain may > devote the first two to foodstuffs, then, one to feeding her animals, the > fourth to distilling hard liquor, and the final sack to feeding birds that > perch on her barn. If the farmer were to lose one sack of grain, she > wouldn’t reduce each of these activities by one-fifth. Instead, she would > stop the least valuable activity—that of feeding birds—and preserve the > most valuable activities intact. Thus, the value of one sack of grain to > the farmer is precisely the satisfaction she stands to lose if she is > unable to feed birds. This is the marginal utility of each sack.[5] > > In normal circumstances, people intent on buying diamonds have no further > need for any concrete quantity of drinking water. They don’t stand to lose > any amount of satisfaction if they pass up the chance to use more water. > Yet the same isn’t true of diamonds, which are typically scarce enough so > that, in Menger’s words, “even the least significant satisfactions assured > by the total quantity available still have a relatively high importance to > economizing men.”[6] This explains the higher price of a unit of diamonds > compared to a unit of water. It’s also worth noting that the marginal > approach also holds true in unusual circumstances. If someone on a desert > island must choose between a chest full of diamonds and a gallon of water, > chances are they’ll prefer the water. > > Jevons, Menger, and Walras succeeded in explaining diverse economic > phenomena, and resolved a paradox that had befuddled Adam Smith, Karl Marx, > and all who came between and before them. Their insistence on the > subjective nature of economic value, and the impossibility of calculating > the “true cost” of any good, continues to challenge many notions widely > held today. > > [1] Adam Smith, *An Inquiry into the Nature and Causes of the Wealth of > Nations* (MetaLibri, 2007), https://bit.ly/2fvwmCh (PDF). > > [2] Smith, *Wealth of* *Nations*, 28. > > [3] Karl Marx, *Capital, A Critique of Political Economy *(Marxists.org, > 2015), https://bit.ly/1qHtn3M (PDF). > > [4] Carl Menger, *Principles of Economics* (Mises Institute, 2007), > https://bit.ly/2urdKMA (PDF). > > [5] Eugen von Böhm-Bawerk, *The Positive Theory of Capital * > <https://amzn.to/2GUhI30>(G.E. Stechert & Co., 1930). > > [6] Menger, *Principles of Economics*, 40. > > *Adam De Gree is a freelance writer and homeschool history teacher based > in Prague. He studied Philosophy at UC Santa Barbara and can be reached by > email here <[email protected]>.* > > <http://www.facebook.com/sharer.php?u=http%3A%2F%2Fpartiallyexaminedlife.com%2F2018%2F04%2F03%2Fthe-diamond-water-paradox-and-the-subjective-theory-of-value%2F&t=The%20Diamond-Water%20Paradox%20and%20the%20Subjective%20Theory%20of%20Value&s=100&p%5Burl%5D=http%3A%2F%2Fpartiallyexaminedlife.com%2F2018%2F04%2F03%2Fthe-diamond-water-paradox-and-the-subjective-theory-of-value%2F&p%5Bimages%5D%5B0%5D=http%3A%2F%2Fpartiallyexaminedlife.com%2Fwp-content%2Fuploads%2FCarl-Menger.png&p%5Btitle%5D=The%20Diamond-Water%20Paradox%20and%20the%20Subjective%20Theory%20of%20Value> > <http://www.reddit.com/submit?url=http%3A%2F%2Fpartiallyexaminedlife.com%2F2018%2F04%2F03%2Fthe-diamond-water-paradox-and-the-subjective-theory-of-value%2F&title=The%20Diamond-Water%20Paradox%20and%20the%20Subjective%20Theory%20of%20Value> > <?subject=The%20Diamond-Water%20Paradox%20and%20the%20Subjective%20Theory%20of%20Value&body=via%20PEL%20blog:%20http%3A%2F%2Fpartiallyexaminedlife.com%2F2018%2F04%2F03%2Fthe-diamond-water-paradox-and-the-subjective-theory-of-value%2F>by > <http://synved.com/wordpress-social-media-feather/> > ------------------------------ > > > Sent from my iPhone > > -- > -- > Centroids: The Center of the Radical Centrist Community < > [email protected]> > Google Group: http://groups.google.com/group/RadicalCentrism > Radical Centrism website and blog: http://RadicalCentrism.org > > --- > You received this message because you are subscribed to the Google Groups > "Centroids: The Center of the Radical Centrist Community" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > For more options, visit https://groups.google.com/d/optout. > > -- > -- > Centroids: The Center of the Radical Centrist Community < > [email protected]> > Google Group: http://groups.google.com/group/RadicalCentrism > Radical Centrism website and blog: http://RadicalCentrism.org > > --- > You received this message because you are subscribed to the Google Groups > "Centroids: The Center of the Radical Centrist Community" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > For more options, visit https://groups.google.com/d/optout. > -- -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org --- You received this message because you are subscribed to the Google Groups "Centroids: The Center of the Radical Centrist Community" group. 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