Supply and Demand Theory

Anyone got books / research papers / ressources that btfo it ? Everytime I argue with a libertarian they keep spewing at me this high school tier bullshit
I've taken Economics as option for my High School years so I know all of the Liberals arguments, since economics are basically neo-lib indoctrination. In fact, I think I'd even make a better point of their arguments than them.
However I've still had to see someone destroy this S/D theory. I've heard about Labour Theory of value, is it related to how price are fixated on a market ? Anyone like me struggling to understand Marxist economics due to their literal indoctrination ?

Attached: supply_and_demand.gif (350x332, 11.95K)

Other urls found in this thread:

Cockshott BTFOs this retardation. tl,dr is that price and quantity are the only observable variables and that "demand" and "supply" are purely imaginary and can be drawn to fit any material reality. Saying that they determine the material is peak idealism.

Read introductions to marxist economics and then kapital, should go without saying

the curves were made up by Paul A. Samuelson

Look up this:

Now this is fairly technical, So if yo just want to have a talking point:

The only real data, is the point in the middle where you know the quantity of a good and the price, all the other points in this graph are imaginary.

Attached: muh-curves-bring-all-the-econs-to-the yrad.png (905x442, 128.42K)

While we're at this, anyone want to talk about how bullshit "subjective ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธtheory๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ of value" is?
This bullshit is the very fucking definition of "postmodernist subjectivity" designed to make everything literally incomprehensible

What is libertarian's answer for poverty, slavery and other usual suspects of ancap meme? Like how come they recognize profit motive as driving force of economics and sometimes wave it away and still wants to be taken seriously?

polite sage for failing to answer OP's question

What you see in the market is a quantity sold for a price. You only have the price-quantity point, the diagram around that is made up based on intuition, the intuition of people who haven't quit economics. There are many people who say the diagram gets the gist of what's going on, but these people are a self-selected group. They have honed their intuition by seeing many similar diagrams over the years, made up diagrams around a real price-quantity point; and often it is completely fictional, a just-so story about fictional companies and products, so not even the crossing point exists out there in the real world. Through repeated exercises about fictional objects and interaction with people in the same "learning" environment they come to see these diagrams as common sense.

There are millions of possibilities in how to draw two lines or curves that meet at one point. If price and quantity sold changes, this can be explained by a shift in the demand curve, the supply curve, or both. You can draw a lot of things here to illustrate what's "really going on" under the surface.

The standard assumption about demand, that people will be willing to buy a higher quantity at lower unit-price, only tells you that the demand curve goes down. Aside from that restriction, you can draw whatever. And even that restriction is only a rule of thumb. There are goods that people buy fewer units of when they have more money. How much money you have is not just an effect of your income, but also of how much stuff costs (duh). So if you are poor it can happen that the rising price of a low-quality good causes you to buy it more often as long as the higher-quality stuff is still more expensive (Giffen effect). That the demand curve goes down is just a rule of thumb, that this idea isn't illustrated with a big clumsy brush but a very fine line in a diagram is preposterous.

Supply is an ambiguous umbrella word and it should be replaced with several more specific terms. Marx mostly used Zufuhr in German, which means an actually occurring flow. In Kapital 1 and 2, he used that term more than four times as often as Angebot, which has become the usual word for talking about supply in economics today. Only in Kapital 3 does Angebot become roughly as common. Angebot means offer. I would further distinguish between offer-in-stock, when talking about a tangible thing that already exists stored somewhere offered for a price, and offer-of-action, the less certain offer about rendering a service or a tangible thing that is still in the process of getting finished. Supply in modern economics seems to mean willingness to do such and such for this or that price. I think looking at flows that are actually occurring is a better starting point for analysis.

The standard assumption in modern economics (not classical) about the supply side is that production cost per unit goes up when you produce more. As a rule of thumb, the opposite is true. If that is normal (and it is), it is also normal that there is a tendency towards oligopoly (and not some distortion from outside damaging our true free market or what have you).

Alright guys, thank you for showing me this video, it was very informative. I already knew about Paul Cockshott but these vids really made my respect for him go up.
I completely agree these curves are bullshit, however the underlying principles of S/D still were logical to me. I searched in the comments only to find a guy named "Jackie Chile" that perfectly summed up my view :

Cockshott's response that conviced me :

It's right that these economists can sometimes be really simple-minded, the whole S/D theory was derived from the generic "Glass of Water in the Desert" scenario. It can apply but it's so specific it's not even worth contemplating let alone form an entire theory or school of thought around it.

Thanks I'll take a look. I will take the time to study Das Kapital in the summer after my exams are done.

A typical extreme-liberal response to slavery is that at the time this kind of practice was in place, the amount of wealth and production in the given society wasn't "sufficient". Therefore the society had to use child labor and slavery to higher the production and the supply of goods in the market which would lower price and let more people consume these products (increase demand basically). This would lead to growth and eventually to a state were production is developed enough so that slave and child labor can be outlawed without much impact to economic growth. Althrough most liberals will pretend they don't support this, I'm pretty sure most of them secretly think this.
Also, even tho slavery helped to develop the US and part of Europe (the latter through trade), I'm pretty sure you can bypass it to reach "sufficient production level" since that's what Stalin did with the USSR.
Also Libtards will argue that poverty is either :
They will also argue that state intervention will lead to higher prices of goods because it will break "muh perfect competition"

Maybe it could work on a bargaining market but else its purpose completely fails.

Interesting, I'll take a look at it.

Imagine believing in the law of diminishing returns and at the same time believing in economies of scales. Neoclassical indoctrination leads to schizophrenia

Thank you for your superb response by the way.

It doesn't work inn any kind of market because it literally can not predict anything and has no explanatory capacity. It's entirely reactive inthat you can only determine prices under it after the transaction you're studying has happened and you can not predict future prices nor determine market forces from it. It's genuinely thought poison that is meant to make you stop thinking about how the market works.

While the replies ITT are good, it's important to keep in mind that Marx still believed (and was right) that supply and demand did influence prices and the social division of labor among industries. And on a macro level, it is feasible to quantify supply and demand (though not the kind shown in OP). On an individual commodity level, the combination of supply and demand, and competition, is what CAUSES prices to gravitate towards labor values.


That's not true though, you can witness demand at an auction or on ebay

Have you read Lenin's Materialism and Empirio-Criticism? You would like it. It's an attack on subjective relativism in his time.

Fun fact, that shitty graph is what killed the American car industry and moved it to Japan and Germany.

What's your question? Marx says that supply and demand plays a role in commodity price determination. He even has part of a transformation procedure in Vol 3 for it.
Supply/demand considerations are the whole motivation for price cutting and technological progress.
As for macro supply/demand, this is arrived at through income levels, total output, etc. It's a somewhat different issue.
Watch Shaikh's lectures, he discusses the issue at various points:

How do you mean?

The thing is that the LTV, prices of production, or even transformed prices, are all very good predictors of actual price. So there's really no question about it. The "bargaining" or "market" process that determines prices through S/D and competition forces prices towards the real value, the labor value.

Consider this: If I make a dollar an hour, and someone tries to sell me something for $2 that I know I could make in an hour, I will bargain them down, right? Or just bring my business somewhere else. Now what if a merchant comes from a foreign country selling one-labor-hour goods for $2? If we can't produce them locally (the supply is short in the region), then if we want them, I guess we have to pay $2. But after this, the other merchants notice the good business, and they all start importing it. Then the price will be forced down to the natural level. It may even temporarily go below the natural level if the merchants miscalculate and flood the region with the goods. But at that point there's negative profit, so they will adjust their supply (or go broke), bringing the price back in line.

This is why the LTV is correct. All S/D fluctuations are deviations from the labor values.

Read into what caused American cars to be full of shit and why people bought Japanese Cars

I don't know why people are saying supply and demand curves are fiction. If you go to the stock market, there are clearly bid and ask prices that trace out supply and demand curves that look like a Marshallian cross. This goes for many other capital markets.

Supply and demand curves are real for commodities. It's when this type of analysis is used for other economic measures that the theories fall apart. For example, using the Marshallian cross to "prove" that higher minimum wages lead to higher unemployment. (It's because income effects can outweigh costs.) Or capital-labour substitution and rates of profit (which falls apart when you learn of the Cambridge Capital Controversies.)


That supply and demand is somehow made-up or not real isn't a Marxist position. Supply and demand can't explain the value of a commodity but it does explain temporary fluctuations in price around the value. (Value itself is decided by labour time.)

Marxist economics isn't a sort of negation of all economics, there is nothing incorrect about supply and demand other than it wouldn't be applicable in a socialist society with so much supply

check out:

Watch the lectures this user linked, but before you do, watch his introductory course on the history of economic theories, where he goes through classical (and marxian), neoclassical & keynesian schools and how orthodox & heterodox blend them. This will give you a very solid background, and go well beyond supply & demand curves. He does cover them specifically in the first lecture set though, I just don't recall where. Cockshott is good too, at least in helping you to understand why curves are completely unscientific nonsense.

We're not talking about Supply & Demand though, we're talking about a specific Neoclassical Instrument of Supply & Demand curves. Obviously Supply & Demand exist, Smith, Ricardo, Marx and everyone in the Classical & Marxian tradition doesn't reject the concepts, they're pretty observably real, what we question is the scientific validity of the curves themselves.

Shouldn't it also decide on whether or not a product is worth making?

an iphone will have higher demand on ebay and at an auction, than a chair
more labour is required to make an iphone than a chair
case in point

Well, given that there's so much bullshit online, I'd like to hear your explanation instead of having to sift through nonsense.

Still on the first chapter but it's interesting, thanks for the read.
I guess I'd fall in with Hume as laid out in the introduction as an "agnostic" but I strongly defer to the materialist explanation of reality as being primarily objectiven because the idealist makes no sense as to where sensation comes from, i just have no evidence one way or the other so Occam's Razor axes idealism

To an extent it does, though there are clearly many things that are "worth making" for commodity exchange that aren't worth making in any serious evaluation.

No doubt, that's why it's an inefficient, blind system.

After a few chapters I honestly don't think I can keep going with this. It honestly seems to be nothing more than metaphysical kvetching that discusses the same things over and over and over.
If you're gonna stick me in a room and make me watch a video of someone doing things then ask me if this video is of something real or if the video is the only thing that is real, all I know is that I'm watching a video and genuinely can not say anything further on the subject in any particular way, but given that this is all I have to work with, I might as well work with it and forget the entire pointless question.

read capital volumes 1-3, read cockshott and read SHAIKH

DiaMat is not metaphysics, the whole point is that it doesn't get into "what is true reality" wank like idealism does. Lenin gets to that later in the book.

I guess. I just don't see what the point of hammering home how Mach is an idealist for this many paragraphs is useful.
It doesn't even seem like it'd strictly conflict with metaphysical idealism so long as you continue to work within the context of perceived reality.

Well, most of Lenin's important books have two parts to them. One part is where he argues for like 50 to 100 pages with people who are long dead and irrelevant now. WITBD starts out this way, for instance. These parts are always a slog, though they are still pretty important and give you an insight into the kinds of arguments people have to deal with in revolutionary movements. Then the other part is where he buckles down and focuses on more general theory, practice, etc. These are more fun to read. Materialism and Empirio-Criticism has a similar pattern to it. I found it pretty indispensable in helping me to identify the various cloaked forms of idealism that exist today.

What do you want specifically to blow out? I took three years of economics in college before switching majors (mainly due to disillusionment with macroeconomics as being extremely vague and worthless for describing the real world), so I would be well-equipped to argue with him.

Even in a freshman class you learn that there are situations where free markets fail to efficiently allocate resources. The two classic examples are distribution of non-excludable public goods, regulation of activity with negative externalities. The breakthrough comes when realizing that most things are public goods and most activities have externalities. A capitalist might say that healthcare is a personal good, but he depends on the existence of healthy people to work at his factory just like he depends on functioning roads and an educated workforce.

As a theory of price itself they commit circular reasoning, since you're defining prices with reference to prices themselves. It may be factually true that demand and supply behave accordingly to these changes in price, but this isn't a good theory of how prices come about

literally this
supply and demand/marginal utility/whatever you want to call it is a reasonable theory of how prices are formed *from an already existing set of prices* but as a theory of what value actually is, it's worthless.

Good thread. Bumping for the sake of education.

Don't know if someone mentioned this, but both supply and demand are controlled by the capitalist (demand through advertising, for example). So why focus on this?