Maybe this will help clear things up.
bunkermundo.wordpress.com
Value theory is and always has been a theory of price, but its a theory of the "natural price", the long term average equilibrium. The neoclassical model can predict short term price well, that's basically a tautology, but its not good at predicting the equilibrium, the ratio between prices created when supply moves to meet demand. this is when price becomes totally determined by social relations of production.
This. Neo-classical economics isn't used for actual capitalist decision making, it's just ideology.
so capitalism was created using the LTV yet we use a pure ideological framework (STV) today to analyze it?
I live near George Mason University in Fairfax Virginia. I'm pretty sure it's a hyper capitalist College.
Shaikh makes a very good point about this kind of thing in one of his lectures on international trade. He points out that the European economies got rich during CENTURIES of protectionism, and then embraced Ricardo's (completely disproven) theory that trade deficits and surpluses would naturally balance out through trade. Then they pressure all 3rd world countries to stop protectionist policies, using comparative advantage as a justification! So these countries didn't practice what they preach of course, but the ideology is useful to them.
Even though Smith and Ricardo were the leading theorists of political economy, even before Marx, capitalists saw the danger of economic science (such as LTV, LTRPF, etc). Worker's movements had already caught on. That's why Marx spends so much of Capital Volume 1 attacking the "vulgar economists" who have wildly distorted and covered up classical econ even in his time. It's wrong to say that either LTV or STV actually informs the practice of investors/businessmen very much, since they just focus on costs and profits and other basics like that (Marx gets into this in Vol 3). Their practical viewpoint results in a loose theory that is not wrong, but is really narrow and limited. It could be viewed as a subset of classical econ, but classical econ is really based on scientific investigation of this practice.
Tell me more, now you got my full attention
Can you expand on this? I also want some info to rub into neolibs faces when they get cocky about muh basic econ and muh marginalism.
I feel like the reason why marginalism is taught is because its a pretty vague concept that allows for people to worm their way out of the tougher questions like "where does value actually come from?" or "even if supply and demand was a thing, how can you get a starting price to base your equation off of?".
You could just read Capital Vol 1 to know what I'm talking about, but here's a bit from, I think, the Soviet encyclopedia:
"The first industrial crisis (1825) and the first few armed uprisings of the proletariat during the 1830’s revealed the contradictory, transitory character of bourgeois relations. As a result, the tasks which bourgeois political economy had set itself were radically altered. “It was henceforth,” wrote K. Marx, “no longer a question whether this theorem or that was true, but whether it was useful to capital or harmful, expedient or inexpedient, politically dangerous or not. Pure, selfless research gave way to battles between hired scribblers, and genuine scientific research was replaced by the bad conscience and the evil intent of apologetic” (K. Marx and F. Engels, Soch., 2nd ed., vol. 23, p. 17).
"Vulgar political economy replaced classical bourgeois political economy, which within certain bounds had provided scientific analysis of capitalism but which by virtue of its class-based bourgeois narrow-mindedness was not able to overcome the vulgarizing element in its theories, an element which was later used by the vulgarizing theoreticians. The establishment of the dominance of vulgar political economy marked the beginning of the crisis in bourgeois political economy.
"The development of vulgar political economy is characterized by four basic stages: its origin in the form of a separate trend at the turn of the 19th century (T. R. Malthus and J. B. Say); its conquest of the dominant positions in bourgeois political economy and evolution during the period of free competition from the 1830’s to the 1870’s (J. Mill, N. W. Senior, F. Bastiat, W. Roscher, B. Hildebrand, and H. C. Carey); its continuation during the period of imperialism, from the 1870’s to the 1920’s (the subjective-psychological school including E. Boehm-Bawerk of Austria, A. Marshall of Great Britain, and J. B. Clark of the USA); the Newer (Younger) Historical School of K. Bücher and G. Schmoller of Germany; and the legal school represented by R. Stolzmann of Germany; and finally its development during the period of the general crisis of capitalism (J. Schumpeter, F. Hayek, L. Mises, W. Rostow, P. Samuelson, and others)."
encyclopedia2.thefreedictionary.com
As for the worker's movements, I don't have a citation or anything, but the LTV was regularly used by them to argue for workers getting the "full value of their labor," prior to Marx's writing. He was deliberately trying to revive that kind of agitation and also enhance it with his own theory and more rigor.
Businesses don't obey mainstream econ theory at all. Shaikh talks at length about this, but Wolf (a much weaker theorist) also mentions this a lot. What they teach in business school is directly contradictory to what's taught in the econ departments! For example:
- businesses compete with each other by reducing their costs and then cutting prices to beat the competition. neo-classical theory says that the markets GIVE businesses their prices, and then they just optimize costs and output to make the most profit at the given price.
- businesses do not include PROFIT as a COST, as they understand that it is possible to make no profits and go out of business. On the other hand, the neo-classical model holds that a standard rate of profit (opportunity cost) is actually part of the costs!
- businesses do not have U-shaped cost curves. I honestly do not really know or care why the neo-classical cost curve model is U-shaped, but the important thing is that real cost curves are based on actual working conditions, shifts specifically. Costs per unit output are higher at the beginning of a shift (warmup), lower in the middle, lower near the end, and then approach infinity (theoretically) during the chaos of shift change or shutdown. The costs may also be higher depending on time of day and things like that.
all these things you responed with to >>Can you expand on this? I also want some info to rub into neolibs faces when they get cocky about muh basic econ and muh marginalism.
are actually fully helping me understand my confusion. I never really thought about why there was different classes for business and economics. That fact has really been on my nerves for a while. Also, can you link me some of Shaikhs lectures?
Marx was one of the most based people in existence, hopefully with the coming capitalist bubble, we can see the law of value actually being used in the mainstream again
A+ thread, good shit /leftypol
Suppose a fixed ratio of inputs to make a unit of whatever thing you want to produce. Suppose you don't have perfect knowledge of how many units you will try to produce at this or that time in the future. Some inputs are easy to get on short notice, some are hard or impossible to get quickly. Some costs you have like renting a place are decisions that tie you up in long-term contracts, others are more ad hoc. So you have big fixed costs just for renting the place and so on, and you have variable costs that rise proportionally with how frequently you put out a unit of the thing you make, together that makes falling per-unit costs, but that only works within some range, increasing the frequency more and more above that makes you run into spatial etc. issues, so beyond some point you have rising costs per unit. U-curve.
That's describing a U-shaped cost curve, it just isn't symmetric and looks more like the Nike swoosh.