LTV FAQ (Part 1 of 6)
Robert Vienneau
The LTV is the theory that market prices are attracted by prices proportional
to the labor time embodied in commodities. In other words, relative prices
tend towards relative labor values. The LTV is restricted to the analysis
of reproducable commodities that have a use value in a capitalist society.
Although the LTV is commonly associated with Classical economics, arguably
neither Marx nor any first tier Classical economist accepted the LTV as a
valid theory for capitalist economies.
Much of the controversy about the LTV deals with associated doctrines,
particularly the doctrine that exploitation of the worker is the ultimate
source of profits in a capitalist economy. David Ricardo, one of the
greatest Classical economists, and Karl Marx thought that their analyses
had greater applicability than the special cases in which the LTV is valid
as a theory of price. Marx seemed to think that abstract labor time is a
common substance in all commodities, while denying that prices tended to
be proportional to labor values.
This FAQ is an introduction to the LTV. It's perspective is mainly that of
a "Dual System" approach that has dominated Western academic economists'
discussion of the LTV for the last century (when they have noticed the LTV
at all). Recent developments, such as Duncan Foley's and Gerard Dumenil's
"New Interpretation" and the "Single System" approach of Alan Freeman and
others, are, at most, treated cursorily.
--
Robert Vienneau
r
v
i
e m
n o Whether strength of body or of mind, or wisdom,
@ c or virtue, are always found...in proportion to
d . the power or wealth of a man [is] a question
r e fit perhaps to be discussed by slaves in the
e p hearing of their masters, but highly unbecoming
a a to reasonable and free men in search of the
m c truth.
s -- Rousseau
Shawn A. Wilson
>
> 1.0 Introduction: What is the Labor Theory of Value (LTV)?
>
> The LTV is the theory that market prices are attracted by prices proportional
> to the labor time embodied in commodities.
As is usual for Robert's posts, he can't get thrugh his first sentence
without making a major mistake. Robert, instead of spending all this
time studying failed nineteenth century ideas, why don't you bone up on
state of the art economic theory? You're just going to look like a fool
'till you do.
BTW, in reference to your first sentence there, you might want to read
Gary Becker's 'Human Capital' so as to understand why all labor isn't
equally valuable. You also might want to read Hal Varian's
'Microeconomic Analysis' to get an idea of how physical capital affects
the value of labor.
Robert Vienneau
wrote:
> Robert Vienneau wrote:
> > 1.0 Introduction: What is the Labor Theory of Value (LTV)?
> > The LTV is the theory that market prices are attracted by prices
> > proportional
> > to the labor time embodied in commodities.
> As is usual for Robert's posts, he can't get thrugh his first sentence
> without making a major mistake.
Of course, Shawn does not specify what the mistake is. Apparently
Shawn thinks the above statement does not adequately summarize what
the labor theory of value is. Perhaps he can tell us what he thinks
the LTV is instead.
> Robert, instead of spending all this
> time studying failed nineteenth century ideas, why don't you bone up on
> state of the art economic theory?
How can Shawn tell if the statement he thinks mistaken accurately
states a common understanding of the LTV without having studied
some nineteenth century ideas, including secondary literature? Strangely
enough, my FAQ quite explicitly described some ideas of some contemporary
economists.
> You're just going to look like a fool
> 'till you do.
It never ceases to amaze me that Shawn doesn't perceive how silly he
comes across.
> BTW, in reference to your first sentence there, you might want to read
> Gary Becker's 'Human Capital' so as to understand why all labor isn't
> equally valuable.
Shawn might want to read all of a post before criticizing it. E.g.:
3.8 Not all workers have the same abilities. How can labor values be
meaningful?
...
But though labour be the real measure of the exchangeable value of
all commodities, it is not that by which their value is commonly
estimated. It is often difficult to ascertain the proportion between
two different quantities of labour. The time spent in two different
sorts of work will not alone determine this proportion. The different
degrees of hardship endured, and of ingenuity exercised, must likewise
be taken into account. There may be more labour in an hour's hard work,
than in two hours easy business; or, an hour's application to a trade
which it costs ten years' labour to learn, than in a month's industry
at an ordinary and obvious employment. But it is not easy to find any
accurate measure, either of hardship or ingenuity. In exchanging,
indeed, the different productions of different sorts of labour for one
another, some allowance is commonly made for both. It is adjusted,
however, not by any accurate measure, but by the higgling and
bargaining of the market, according to that sort of rough equality,
which though not exact, is sufficient for carrying on the business of
common life.
(Smith 1776, Book I, Chapter V)
So I understand that all labor is not equally valuable through reading
an 18th century author.
> You also might want to read Hal Varian's
> 'Microeconomic Analysis' to get an idea of how physical capital affects
> the value of labor.
Of course I've read Varian. It's not clear what Shawn thinks Varian can
add to my analysis, what he means by "physical capital", or if he even
distinguishes between labor values and the "value of labor". On the
latter distinction, I wrote:
3.10 The cost of a good includes more than the cost of labor. Doesn't this
observation invalidate the LTV?
The labor value of a commodity is not the exchange value of the labor that
is used to produce that commodity. Rather, the labor value of a commodity is
the time required to produce a commodity, including the labor time needed to
produce the capital goods with which that commodity is produced...
Aaron M. Renn
>> 1.0 Introduction: What is the Labor Theory of Value (LTV)?
>>
>> The LTV is the theory that market prices are attracted by prices
proportional
>> to the labor time embodied in commodities.
>
>As is usual for Robert's posts, he can't get thrugh his first sentence
>time studying failed nineteenth century ideas, why don't you bone up on
>'till you do.
Actually, while this would not be Marx's LTV, that first sentence is
reasonably close to my impression of what Smith and Ricardo believed. What
exactly is wrong with it? And why not point out the truth instead of just
flaming?
--
Aaron M. Renn (ar...@urbanophile.com) http://www.urbanophile.com/arenn/
Shawn A. Wilson
> > > The LTV is the theory that market prices are attracted by prices
> > > proportional
> > > to the labor time embodied in commodities.
>
> > As is usual for Robert's posts, he can't get thrugh his first sentence
> > without making a major mistake.
>
> Of course, Shawn does not specify what the mistake is.
Get real, you quoted it yourself later on. Is your attention span so
short that one intervening paragraph between question and explanation is
too much?
Apparently
> Shawn thinks the above statement does not adequately summarize what
> the labor theory of value is. Perhaps he can tell us what he thinks
> the LTV is instead.
It is a theory wherein all value is presumed to arise from labor.
Anyone who ever owned a farm or a mine or a tool can tell you
differently.
> How can Shawn tell if the statement he thinks mistaken accurately
> states a common understanding of the LTV without having studied
> some nineteenth century ideas, including secondary literature? Strangely
> enough, my FAQ quite explicitly described some ideas of some contemporary
> economists.
Robert, you are the one notorious for his lack of understanding on this
board. BTW, have you given up trying to express that most notorious
post in a way that can be understood?
>
> > You're just going to look like a fool
> > 'till you do.
>
> It never ceases to amaze me that Shawn doesn't perceive how silly he
> comes across.
At least I don't post arguments that readers can't understand and then
refuse to explain them.
>
> > BTW, in reference to your first sentence there, you might want to read
> > Gary Becker's 'Human Capital' so as to understand why all labor isn't
> > equally valuable.
>
> Shawn might want to read all of a post before criticizing it. E.g.:
>
> 3.8 Not all workers have the same abilities. How can labor values be
> meaningful?
Robert, why should I waste my valuable time reading an incredibly
lengthy, six-part post from someone notorious for error and lack of
comprehension? Your first sentence was wrong on its face, if you backed
away from it later you shouldn't have used it in the first place.
> So I understand that all labor is not equally valuable through reading
> an 18th century author.
And if you'd bothered reading any of the twentieth century authors I'd
recommended you would understand much more than just some labor is more
valuable than others.
>
> > You also might want to read Hal Varian's
> > 'Microeconomic Analysis' to get an idea of how physical capital affects
> > the value of labor.
>
> Of course I've read Varian. It's not clear what Shawn thinks Varian can
> add to my analysis, what he means by "physical capital",
C'mon Robert, you just come off like a fool when you say things like
that. Capital is a basic definition. Why don't you try refering to a
principles textbook before I have to embarrass you further by quoting
one for you.
Shawn A. Wilson
>
> Shawn A. Wilson wrote in message <3640DBAC...@uic.edu>...
> >> 1.0 Introduction: What is the Labor Theory of Value (LTV)?
> >>
> proportional
> >> to the labor time embodied in commodities.
> >
> >As is usual for Robert's posts, he can't get thrugh his first sentence
> >time studying failed nineteenth century ideas, why don't you bone up on
> >'till you do.
>
> reasonably close to my impression of what Smith and Ricardo believed. What
> exactly is wrong with it? And why not point out the truth instead of just
> flaming?
As a statement of what Smith and Ricardo believed, nothing. As an
expression of what drives market prices, lots.
First of all, market prices are determined by the interaction of supply
and demand curves. The time quantity of labor incorporated in a good
doesn't affect demand at all.
Secondly, it isn't the time quantity of labor that affects supply
curves, it's the value of labor incorporated in a good that will affect
supply curves. I can presumably spend as much time on a painting as Da
Vinci did, my work will not be as valuable as the Mona Lisa regardless
of how much time I spend. There's a reason why some athletes, actors,
CEOs are paid more than others.
Thirdly, it completely ignores the effects of capital on labor output.
Say there's a market for holes in the ground, and one man can dig one
hole in one 10 hour day. If holes are worth $1 to me I will presumably
be willing to pay this man $1 per day. Now a man offers to rent me a
shovel that will allow a person to dig 10 holes in the time it used to
take to dig 1. How much is that shovel worth? The correct answer is $9
per day. Presumably our ditch digger will rent the shovel for himself
to increase his productivity. If there were nine other ditch diggers
before the shovel, and a market for only 10 holes per day, the other
ditch diggers will be out of work and ours will be the only one left.
The labor time embedded in the commoditiy of the hole has gone from ten
hours to one hour, the price will remain at $1 per hole since the shovel
has to be paid for too. The labor embedded has changed, but the price
has not. It sure doesn't sound like "market prices are attracted by
prices proportional to the labor time embodied in commodities" to me.
SUSUPPLY
>Thirdly, it [LTV] completely ignores the effects of capital on labor output.
Yes, what Robert is missing is that while the productive process produces
"surplus value", it is merely an assumption that that is due to labor. We
could just as easily call it the Capital Theory of Value--though that would not
be accurate either, a fact that even Marx seemed to understand.
Far more instructive is the balance of Shawn's explanation (which I snip for
brevity), for its comparison to "The Vienneau Method".
Shawn is able, in one paragraph(!), to explode six complete posts of Robert.
Shawn writes in clear English, with only the most elementary math. Shawn is
direct, the logic straightforward. Shawn does not rely on insults (even though
Robert is deserving of such). Shawn's purpose is to explain.
Contrast that with Vienneau and his deliberately obscure language and math.
Vienneau has another purpose altogether; to parade (what he mistakenly thinks
is) his knowledge. English is a second language to Robert--as a well-known
mid-western economist once said to me: "Smart-talking guys are some of the
dumbest people you'll ever meet"). Robert's analytic method (if it can be
called that) is designed to obfuscate, so that Robert can later leap out and
shout: "Gotcha! See, I know more that you do."
That is why Robert envelops himself in useless arcana such as the Cambridge
Capital Controversy. He knows that no rational person will bother being as
up-to- speed on it as he is. Thus, Robert can quickly produce lengthy
quotations and footnotes--which are no doubt lovingly hoarded in his word
processor--with which to vanquish his foes.
My experience with Robert is that his responses are vitriolic and obscure in
(over) proportion to the clarity of his opponent's ideas. So, I predict that
Shawn is in for more than a normal share of Vienneauian opprobrium.
Such is the price of glory, Shawn.
Patrick
Robert Vienneau
<swi...@uic.edu> wrote:
> Robert Vienneau wrote:
> > > > The LTV is the theory that market prices are attracted by prices
> > > > proportional
> > > > to the labor time embodied in commodities.
> > > As is usual for Robert's posts, he can't get thrugh his first sentence
> > > without making a major mistake.
> > Of course, Shawn does not specify what the mistake is.
> Get real, you quoted it yourself later on.
Nope. I quoted a confused and mistaken objection to applying the LTV to
actual economies. I did not quote any objection to the above summary
of what the LTV is. In fact, Shawn now acknowledges in another post
that he thinks the statement above is correct. Those who have actually
read my FAQ know valid theoretical objections to one interpretation
of the LTV and where to find empirical evidence supporting some
interpretation. Apparently, Shawn cannot even conceive of presenting a
tutorial introduction to a theory without insisting the reader recite
some catechism about its acceptability.
> Is your attention span so
> short that one intervening paragraph between question and explanation is
> too much?
One wonders if Shawn even noticed that I explained how heterogeneous
"concrete" labor activities are not necessarily a fatal objection to
the applicability of the LTV.
> > Apparently
> > Shawn thinks the above statement does not adequately summarize what
> > the labor theory of value is. Perhaps he can tell us what he thinks
> > the LTV is instead.
> It is a theory wherein all value is presumed to arise from labor.
> Anyone who ever owned a farm or a mine or a tool can tell you
> differently.
They cannot tell one differently without argument, assuming they
accurately understood what is being claimed. I doubt Shawn does.
The above comment seems to allow one to infer as much.
One might infer from my FAQ that it is easier to argue for the
applicability of the LTV as summarized here by Shawn than as
defined by me.
[...]
> At least I don't post arguments that readers can't understand and then
> refuse to explain them.
Shawn's incomprehension does not constitute an argument. Since Shawn
admits he doesn't read my explanations, his objection seems weak.
> > > BTW, in reference to your first sentence there, you might want to read
> > > Gary Becker's 'Human Capital' so as to understand why all labor isn't
> > > equally valuable.
> > Shawn might want to read all of a post before criticizing it. E.g.:
> > 3.8 Not all workers have the same abilities. How can labor values be
> > meaningful?
> Robert, why should I waste my valuable time reading an incredibly
> lengthy, six-part post from someone notorious for error and lack of
> comprehension? Your first sentence was wrong on its face, if you backed
> away from it later you shouldn't have used it in the first place.
But Shawn has now stated he accepts that first statement as valid.
I'm supposed to post on the assumption that I am "notorious for
error and lack of comprehension"?
Nobody mandated that Shawn react to my post. Why might he want to read
it? So he has some idea what he's talking about. I even provided a
Web address and a Table of Contents. I think the Web format is better
for reading.
Section 3.8 does not "back away" from my description of what the LTV
is. Nor does it accept that heterogeneous labor necessarily invalidates
the theory. To emphasize this, let me comment on two quotes not in my FAQ:
"Let us suppose for a moment that a jeweller's day is equivalent to
three days of a weaver; the fact remains that any change in the value
of jewels relative to that of woven materials, unless it be the
transitory result of the fluctuations of demand and supply, must have
as its cause a reduction or an increase in the labour time expended
in the production of one or the other. If three working days of
different workers be related to one another in the ratio of 1:2:3,
then every change in the relative value of their products will be
a change in this same proportion of 1:2:3. Thus values can be
measured by labour time, in spite of the inequality of value of
different working days; but to apply such a measure we must have a
comparative scale of the different working days; it is competition
that sets up this scale."
-- Karl Marx, _The Poverty of Philosophy_, Chapter 1, Section 2.
"The quantity of labor employed in each industry has now to be
represented explicitly, taking the place of the corresponding
quantities of subsistence. We suppose labour to be uniform in
quality, or what amounts to the same thing, we assume any differences
in quality to have been previously reduced to equivalent differences
in quantity so that each unit of labour receives the same wage."
-- Piero Sraffa, _Production of Commodities by Means of Commodities:
Prelude to a Critique of Economic Theory_, Cambridge University
Press, 1960, Chapter II, Section 10.
Suppose Ann is paid to unload trucks at a warehouse, and Bobby is
paid to program computers. Further, suppose B is paid three times as
much as A per hour. Let's take a Bobby-hour as the common unit in
calculating labor-values. Then Ann adds three hours of Bobby-hours
to the software she produces for every hour she works.
One might think for the LTV to be applicable, relative wages must
be stable across jobs. I'm not sure whether I accept or reject this
claim. If one accepts it, the LTV is potentially empirically
falsifiable on this point. (It's also potentially empirically
falsifiable at other points.)
> > So I understand that all labor is not equally valuable through reading
> > an 18th century author.
> And if you'd bothered reading any of the twentieth century authors I'd
> recommended you would understand much more than just some labor is more
> valuable than others.
One wonders if Shawn notices he has not actually given any ghost of a
hint of why Becker's explanations of differences in wages are better
than Smith's explanations. One also wonders about the motivations of
his editing. The Smith quote which he deleted explains "much more than
just some labor is more valuable than others." I haven't read Becker.
> > > You also might want to read Hal Varian's
> > > 'Microeconomic Analysis' to get an idea of how physical capital affects
> > > the value of labor.
> > Of course I've read Varian. It's not clear what Shawn thinks Varian can
> > add to my analysis, what he means by "physical capital",
> C'mon Robert, you just come off like a fool when you say things like
> that. Capital is a basic definition.
Maybe Shawn is just posturing. He certainly seems to have a great deal
of difficulty in formulating an argument.
> Why don't you try refering to a
> principles textbook before I have to embarrass you further by quoting
> one for you.
"There is perhaps, as yet, no well-rounded view to be had. To reverse
Mill's assessment of a different but related area of economics, the
theory of capital is not yet complete; happily there is a great deal
for the future writers, if not the present one, to clear up!"
-- Syed Ahmad, _Capital in Economic Theory: Neo-classical, Cambridge,
and Chaos_, Edward Elgar, 1991, p. 449
Let's turn to another post of Shawn's, where he actually attempts to
formulate an argument:
> "Aaron M. Renn" wrote:
> > >> The LTV is the theory that market prices are attracted by prices
> > >> proportional
> > >> to the labor time embodied in commodities.
[...]
> > Actually, while this would not be Marx's LTV, that first sentence is
> > reasonably close to my impression of what Smith and Ricardo believed. What
> > exactly is wrong with it? And why not point out the truth instead of just
> > flaming?
> As a statement of what Smith and Ricardo believed, nothing. As an
> expression of what drives market prices, lots.
Since the statement is a statement of what the LTV is, not a statement
of "what drives market prices," Shawn here admits that he accepts my
statement as correct.
> First of all, market prices are determined by the interaction of supply
> and demand curves. The time quantity of labor incorporated in a good
> doesn't affect demand at all.
The LTV is a claim about "prices of production". Prices of production
prevail when all commodities supplied (except, perhaps, for labor-power)
are demanded. Adam Smith talked about "natural prices" prevailing when
the supply matches the level of "effectual demand." I don't know that
I fully understand Smith here, but I see that Shawn hasn't grappled
with this aspect of the theory here at all.
By the way, effectual demand is a point, not a schedule relating
quantities and prices. Given effectual demands and what Smith called
the "natural level" of wages, one does not need supply and demand
curves in calculating prices of production. This has been formally
demonstrated.
> Secondly, it isn't the time quantity of labor that affects supply
> curves, it's the value of labor incorporated in a good that will affect
> supply curves. I can presumably spend as much time on a painting as Da
> Vinci did, my work will not be as valuable as the Mona Lisa regardless
> of how much time I spend. There's a reason why some athletes, actors,
> CEOs are paid more than others.
I've already indicated above why workers being paid different wages may
not be a valid objection to the LTV above. Shawn ought to consider whether
the LTV is supposed to be applicable to paintings of "old masters" (that's
a reference to the literature). Shawn also ought to consider if a
discussion of self-employed artists is a good way of objecting to
the applicability of a theory to a capitalist economy.
> Thirdly, it completely ignores the effects of capital on labor output.
As I explained in my FAQ, the LTV does not ignore the effects of
capital goods on output. In fact, Ricardo and Marx tried to develop
the LTV by explicitly discussing capital. Whether their theories
are successful is another question.
> Say there's a market for holes in the ground, and one man can dig one
> hole in one 10 hour day. If holes are worth $1 to me I will presumably
> be willing to pay this man $1 per day. Now a man offers to rent me a
> shovel that will allow a person to dig 10 holes in the time it used to
> take to dig 1. How much is that shovel worth? The correct answer is $9
> per day. Presumably our ditch digger will rent the shovel for himself
> to increase his productivity. If there were nine other ditch diggers
> before the shovel, and a market for only 10 holes per day, the other
> ditch diggers will be out of work and ours will be the only one left.
> The labor time embedded in the commoditiy of the hole has gone from ten
> hours to one hour, the price will remain at $1 per hole since the shovel
> has to be paid for too. The labor embedded has changed, but the price
> has not.
Before the shovel is discovered to be useful, the labor value of a
dug hole is 10 hours. After the shovel is discovered to be useful,
the labor value of a dug hole is the sum of one hour and the labor-value
embodied in the wear and tear of the use of a shovel to dig one hole,
so to speak. Since Shawn does not provide enough data to determine the
labor value of a shovel, the reasoning that would allow one to correctly
conclude the labor embodied in a dug hole has changed is not fully
specified above.
Apparently, Shawn does not distinguish between direct labor inputs and
labor values. Part of the point, as I understand it, of one empirical
defense of the LTV is that labor values provide better approximations
to prices of production than direct labor inputs do. Interestingly
enough, the above demonstration that Shawn's objection is not
well-founded is merely a trivial ramification of a quote from my FAQ:
Rather, the labor value of a commodity is the time required to
produce a commodity, including the labor time needed to produce the
capital goods with which that commodity is produced...
I had provided this quote in a post to which Shawn supposedly responded.
As usual, he edits my points out while demonstrating he does not
understand them.
> It sure doesn't sound like "market prices are attracted by
> prices proportional to the labor time embodied in commodities" to me.
I'm not dogmatic on the applicability of the LTV. However, all of
Shawn's comments in this thread so far have been confused or unsupported.
In the last go-around Shawn confused labor values with wages. Here
he confuses labor values with direct labor inputs. In both cases, he
does not understand how economists have articulated the LTV and related
theories to handle heterogeneous labor. What confusion dealt with in
my FAQ will he exhibit next?
Shawn A. Wilson
>
> In article <3642C9BC...@uic.edu>, "Shawn A. Wilson"
> <swi...@uic.edu> wrote:
>
> > Robert Vienneau wrote:
>
> > > > > The LTV is the theory that market prices are attracted by prices
> > > > > proportional
> > > > > to the labor time embodied in commodities.
>
> > > > As is usual for Robert's posts, he can't get thrugh his first sentence
> > > > without making a major mistake.
>
> > > Of course, Shawn does not specify what the mistake is.
>
> > Get real, you quoted it yourself later on.
>
> Nope. I quoted a confused and mistaken objection to applying the LTV to
> actual economies. I did not quote any objection to the above summary
> of what the LTV is. In fact, Shawn now acknowledges in another post
> that he thinks the statement above is correct.
Your comprehension has hit an all time low.
Those who have actually
> read my FAQ know valid theoretical objections to one interpretation
> of the LTV and where to find empirical evidence supporting some
> interpretation. Apparently, Shawn cannot even conceive of presenting a
> tutorial introduction to a theory without insisting the reader recite
> some catechism about its acceptability.
How long are you going to pester us with dead nineteenth century
economic ideas? Are you incapable of understanding modern econoic
ideas?
>
> > Is your attention span so
> > short that one intervening paragraph between question and explanation is
> > too much?
>
> One wonders if Shawn even noticed that I explained how heterogeneous
> "concrete" labor activities are not necessarily a fatal objection to
> the applicability of the LTV.
I'll take that as a yes.
> > At least I don't post arguments that readers can't understand and then
> > refuse to explain them.
>
> Shawn's incomprehension does not constitute an argument. Since Shawn
> admits he doesn't read my explanations, his objection seems weak.
Boy, you ARE dim. I was referring to that other post of yours.
> > > > BTW, in reference to your first sentence there, you might want to read
> > > > Gary Becker's 'Human Capital' so as to understand why all labor isn't
> > > > equally valuable.
>
> > > Shawn might want to read all of a post before criticizing it. E.g.:
>
> > > 3.8 Not all workers have the same abilities. How can labor values be
> > > meaningful?
>
> > Robert, why should I waste my valuable time reading an incredibly
> > lengthy, six-part post from someone notorious for error and lack of
> > comprehension? Your first sentence was wrong on its face, if you backed
> > away from it later you shouldn't have used it in the first place.
>
> But Shawn has now stated he accepts that first statement as valid.
No, I don't.
> I'm supposed to post on the assumption that I am "notorious for
> error and lack of comprehension"?
Well, many of us have been trying tom explain this to you.
> > > So I understand that all labor is not equally valuable through reading
> > > an 18th century author.
>
> > And if you'd bothered reading any of the twentieth century authors I'd
> > recommended you would understand much more than just some labor is more
> > valuable than others.
>
> One wonders if Shawn notices he has not actually given any ghost of a
> hint of why Becker's explanations of differences in wages are better
> than Smith's explanations. One also wonders about the motivations of
> his editing. The Smith quote which he deleted explains "much more than
> just some labor is more valuable than others." I haven't read Becker.
You don't seem to have read ANY modern economists. Funny how you keep
wasting bandwidth regardless.
> > > Of course I've read Varian. It's not clear what Shawn thinks Varian can
> > > add to my analysis, what he means by "physical capital",
>
> > C'mon Robert, you just come off like a fool when you say things like
> > that. Capital is a basic definition.
(snip)
From Mcconnell:
capital: man-made resources used to produce goods and services; goods
which do not directly satisfy human wants.
Take a principles course and stop wasting our time.
> Since the statement is a statement of what the LTV is, not a statement
> of "what drives market prices," Shawn here admits that he accepts my
> statement as correct.
In your dreams.
>
> > First of all, market prices are determined by the interaction of supply
> > and demand curves. The time quantity of labor incorporated in a good
> > doesn't affect demand at all.
>
> The LTV is a claim about "prices of production".
Ah, so there's ANOTHER basic error in the entire concept. Value is
determined by the user, not the producer. Apparently the very name
'labor theory of value' is erroneous.
> Before the shovel is discovered to be useful, the labor value of a
> dug hole is 10 hours. After the shovel is discovered to be useful,
> the labor value of a dug hole is the sum of one hour and the labor-value
> embodied in the wear and tear of the use of a shovel to dig one hole,
> so to speak. Since Shawn does not provide enough data to determine the
> labor value of a shovel, the reasoning that would allow one to correctly
> conclude the labor embodied in a dug hole has changed is not fully
> specified above.
The shovel is a found piece of wood. It's labor content is zero.
(Yawn, snip)
Robert Vienneau
<swi...@uic.edu> wrote ( not in order):
[ Some of Shawn's inability to say anything of substance - deleted ]
> > > First of all, market prices are determined by the interaction of supply
> > > and demand curves. The time quantity of labor incorporated in a good
> > > doesn't affect demand at all.
> > The LTV is a claim about "prices of production".
> Ah, so there's ANOTHER basic error in the entire concept. Value is
> determined by the user, not the producer. Apparently the very name
> 'labor theory of value' is erroneous.
That's just silly. Shawn, apparently, has never heard the label "prices
of production" before (even though it is explained in my FAQ). So
he deletes my explanation from the post to which he is supposedly
responding and jumps to some silly conclusion which he cannot
articulate clearly.
> > > > Of course I've read Varian. It's not clear what Shawn thinks Varian can
> > > > add to my analysis, what he means by "physical capital",
> >
> > > C'mon Robert, you just come off like a fool when you say things like
> > > that. Capital is a basic definition.
> (snip)
>
> From Mcconnell:
>
> capital: man-made resources used to produce goods and services; goods
^^^^^^^^
> which do not directly satisfy human wants.
>
> Take a principles course and stop wasting our time.
Shawn is just too ignorant to know how little this definition addresses
the problems of capital.
Does the next line in this text say that the returns to capital are
know as interest? In the U.S. economy, the price of a ton of steel is
something different from interest. Many economists, of course, are
modeling an economy of self-employed artisans renting equipment to
one another, not currently existing industrial economies.
> > Before the shovel is discovered to be useful, the labor value of a
> > dug hole is 10 hours. After the shovel is discovered to be useful,
> > the labor value of a dug hole is the sum of one hour and the labor-value
> > embodied in the wear and tear of the use of a shovel to dig one hole,
> > so to speak. Since Shawn does not provide enough data to determine the
> > labor value of a shovel, the reasoning that would allow one to correctly
> > conclude the labor embodied in a dug hole has changed is not fully
> > specified above.
> The shovel is a found piece of wood. It's labor content is zero.
Then, by the definition Shawn quoted, the shovel is not capital. It's
fairly stupid to think those who have been exploring the LTV have never
noticed that it is easier to dig holes with tools than with one's bare
hands.
Suppose after allocating all "found pieces of wood" to their best
uses, all holes that anybody wanted to dig could be dug with shovels,
and that some shovels were left over. Then the equilibrium price
of shovels would be zero. Shovels would be a free good, and
Shawn's example would not work. If there were not enough shovels to
go around, they might command a positive rent. Any additional holes
that anybody wanted dug would be done with unassisted labor. Some
would say the labor value of a dug hole in this case has not changed.
It is still 10 hours per hole. At least that's how I think Ricardo's
theory of rent would apply here.
So much for Shawn's uninformed attempt to refute the LTV.
Imagine how stupid one would seem in objecting in an introductory
Physics class that one did not want to learn Newtonian mechanics
because they were 17th century ideas. Or, in a philosophy class,
refusing to read Plato because Socrates lived more than a millenium
ago. At this point certain economists that sometimes post here
traditionally object that the ideas upon which I draw are not of
contemporary interest, despite the dates of my references,
because - well, um, - because we like to pretend that those works
don't exist. And, besides, Paul Samuelson and Edwin Burmeister are
heterodox, uninfluential, and something other than modern economists.
(I haven't yet cited on this thread Samuelson's and Burmeister's
respective treatments of the LTV.)
Ignorance and stupidity I can understand. It's the pride in it that
needs to be explained.
Shawn A. Wilson
I was going to respond to Robert's post, but I'm tired of dealing with
him.
Aaron M. Renn
first sentence was an apt description of some classical economists view of
it. For the record, I don't believe in the LTV.
Robert Vienneau
<ar...@urbanophile.com> wrote:
> Shawn, dude, I wasn't defending the LTV, just pointing out that Robert's
> first sentence was an apt description of some classical economists view of
> it. For the record, I don't believe in the LTV.
Yeah, but what's wrong with the LTV, if anything, is not that some
workers perform different tasks, that the cost of producing a
commodity typically includes more than wages, or that tools are useful.