A few questions regarding economics

[Sympo]

I have a few possibly silly questions to ask about marxian economics.

Does supply and demand affect the value of a commodity? For example, if there are only ten apples for sale, is the value of the apples higher than they would be if there was a greater supply of apples?

Is food a commodity or is it several commodites(apples, corn, potatoes etc)?

Are all types of cars the same commodity or should they count as different commodities? For example, is a new toyota the same commodity as a new testarossa?

[DJP]

Sympo wrote:

I have a few possibly silly questions to ask about marxian economics.Does supply and demand affect the value of a commodity? For example, if there are only ten apples for sale, is the value of the apples higher than they would be if there was a greater supply of apples?Is food a commodity or is it several commodites(apples, corn, potatoes etc)?Are all types of cars the same commodity or should they count as different commodities? For example, is a new toyota the same commodity as a new testarossa?

I think you're equating "value" with "price", these are not the same thing. (Exchange value is also another thing). "Value" refers to the amount of socially necessary labour time needed to reproduce a commodity, what that level of SNLT is, is regulated by market exchange.Food is a commodity if it is produced with a view for sale on the market. If I grow food in my garden without the intent on selling, it is not a commodity.How much you need to differentiate between different types of commodity would depend on what you were trying to do. I suppose.You might like to watch these videos:https://kapitalism101.wordpress.com/

[Anonymous]

Sympo wrote:

I have a few possibly silly questions to ask about marxian economics.Does supply and demand affect the value of a commodity? For example, if there are only ten apples for sale, is the value of the apples higher than they would be if there was a greater supply of apples?Is food a commodity or is it several commodites(apples, corn, potatoes etc)?Are all types of cars the same commodity or should they count as different commodities? For example, is a new toyota the same commodity as a new testarossa?

 http://www.worldsocialism.org/spgb/education/depth-articles/economics/introduction-marxian-economics-1-labour-theory-value

[Sympo]

DJP wrote:

I think you're equating "value" with "price", these are not the same thing. (Exchange value is also another thing). "Value" refers to the amount of socially necessary labour time needed to reproduce a commodity, what that level of SNLT is, is regulated by market exchange.Food is a commodity if it is produced with a view for sale on the market. If I grow food in my garden without the intent on selling, it is not a commodity.How much you need to differentiate between different types of commodity would depend on what you were trying to do. I suppose.You might like to watch these videos:https://kapitalism101.wordpress.com/

I am aware that value and price are different things in marxian economics(I'm not trying to be aggressive).So is the answer to my first question "no"?Why is it necessary to separate value from price? Is it so that one may explain why a commodity has a certain price when it's supply and demand are equal?Also, what is the difference with exchange value and value? I thought there were two types of value according to Marx, exchange-value and use-value, and that he often refers to exchange-value as just "value"?I already know that it is only a commodity if it is for sale on the market.I have actually seen all of the videos by that guy(i think), they are pretty good and helpful but sometimes it is a little too much information to handle. One of his videos actually drove me to start this thread. 

[Young Master Smeet]

Value and price are different, the concepts of bargain and rip-off occur when you pay above and below the value of a good.  You can buy something that has no value.  A work of art is unique, it cannot be reproduced, so it has no value (you can't buy another Mona Lisa), value only matters for reproducable goods.Value is not the same as exchange value: exchange value is when you express the relative value of a good by comparison to another.  By analogy, the length of any object is its length, it's relative length in centimetres is a relative expression of its length compared to light waves.  So when we say something is 10 centimetres long, we are saying it is one tenth of the distance that light trabvels in a certain measure of time.

[ALB]

Sympo wrote:

Also, what is the difference with exchange value and value? I thought there were two types of value according to Marx, exchange-value and use-value, and that he often refers to exchange-value as just "value"?

Yes, in some of his earlier writings on economics (his A Contribution to the Critique of Political Economy that came out in 1859, for instance), Marx did not make a distinction between "exchange value" and "value" but in the various editions of Capital (from 1867 on) he did. As YMS has just pointed out, "exchange value" is the expression of "value" in exchange, i.e is the two are not the same. As we said in this Education Document, dating from 1973:

Quote:

Wealth, we know, only takes the form of commodities under certain social conditions, specifically when it is produced for sale. Similarly with labour (used-up human energy. Cf. “work“ in engineering); under the same social conditions it becomes “value”. Thus value is not something you can find in the physical or chemical properties of a commodity, for it is a social property, a social relation. However, as value only expresses itself in exchange, as exchange-value, this social relation appears as a relation between things. This is what is behind Marx’s writing about the “fetishism of commodities”. Price is the monetary expression of value.

So, value is a social relationship (between commodity producers as producers producing something for sale) while "exchange value" is a relationship between things.When money has evolved "exchange value" is the same as "price". So, if you don't distinguish between "value" and "exchange value", you end up with only use value (utility) and price, like modern academic economics which preaches that you don't need the concept of "value".It also leads to misunderstanding the Marxian Labour Theory of Value as a a Labour Theory of Exchange Value (or Price) as it was for Adam Smith and David Ricardo.  Which leads to all sorts of complications and contradictions.As a matter of fact, Marx did not think that under capitalism, where there is not just production for exchange (the market) but there is also production for profit (surplus value), commodities were priced at their (exchange) value. Due to the tendency for the rate of profit to be the same in all fields of capitalist investment, commodities were priced at what he called their "price of production", which was cost price + average rate of profit. Only accidentally would this be the same as the amount of socially necessary labour needed to produce them from start to finish.  But, as items of wealth produced for sale, they were still expressions of the underlying social relationship of "value".

[Sympo]

ALB wrote:

"When money has evolved "exchange value" is the same as "price". So, if you don't distinguish between "value" and "exchange value", you end up with only use value (utility) and price, like modern academic economics which preaches that you don't need the concept of 'value'."This may be a dumb question, but why exactly do we need the concept of "value" if by value we mean the average amount of labour put in a certain commodity(if this definition is incorrect please correct me)?"As a matter of fact, Marx did not think that under capitalism(…)commodities were priced at their (exchange) value. Due to the tendency for the rate of profit to be the same in all fields of capitalist investment, commodities were priced at what he called their "price of production", which was cost price + average rate of profit. Only accidentally would this be the same as the amount of socially necessary labour needed to produce them from start to finish.  But, as items of wealth produced for sale, they were still expressions of the underlying social relationship of 'value'."Labour power is a commodity, right? So is labour power priced according to the "price of production"? Also, what is the point of having the concept of exchange-value if it does not have anything to do with the price of a commodity?

[Dave B]

I am linking two seminal passages from Karl below. I think the general idea is that prices do vary according to supply and demand, but as our marketers are always telling us they are always gravitating towards an ‘equilibrium’. But how and why by what force? The answer using the labour theory of value is not only simple but it is also an answer. When demand exceeds supply you can sell it at above its labour time value and make a bigger than average profit. And when supply exceeds demand you have sell it at below its labour time value and make a below the average rate of profit. It is simpler to see directly and first in simple commodity production as Rubin laid out somewhere but I will use my own example. If I am a artisan in a village making new fangled and popular  blue suede shoes I can sell the product of my 20 hours of labour for what most people have to work 40 hours for [making their own commodities and selling it] The goose egg market in the same village for example might be over supplied and the goose herders have to work 60 hours. Some goose herders change profession and turn their hand to blue suede shoe making driving down the remuneration for blue suede shoe making; and increasing the remuneration for goose egg production for the ones that stick with it. Until a price equilibrium is reached until what can be got for 40 hours worth of blue suede shoes is the same as what can be got for 40 hours worth of goose eggs. The same thing works in capitalism except all capitalist insist on getting on getting 50 hours worth of stuff for 40 hours of paid labour or whatever.  And as far as workers are concerned selling their own only commodity, labour power, lorry drivers become computer programmers etc.   Value, Price and ProfitVI. Value and Labour  So far the market price of a commodity coincides with its value. On the other hand, the oscillations of market prices, rising now over, sinking now under the value or natural price, depend upon the fluctuations of supply and demand. The deviations of market prices from values are continual, but as Adam Smith says: “The natural price is the central price to which the prices of commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this center of repose and continuance, they are constantly tending towards it.” I cannot now sift this matter. It suffices to say the if supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, that is to say with their values, as determined by the respective quantities of labour required for their production. But supply and demand must constantly tend to equilibrate each other, although they do so only by compensating one fluctuation by another, a rise by a fall, and vice versa. https://www.marxists.org/archive/marx/works/1865/value-price-profit/ch02.htm    Capital Vol. III Part IIConversion of Profit into Average ProfitChapter 10. Equalisation of the General Rate of Profit Through Competition.Market-Prices and Market-Values. Surplus-Profit  https://www.marxists.org/archive/marx/works/1894-c3/ch10.htm  Actually in capitalism it can get even more complicated as what happens when a new fangled labour saving method of making something springs into existence. If 5% of the stuff is being made by the new method and 95% by the old what is the real socially necessary labour time to make something in the inevitably slow transition period from one general method to the other? He dealt with that elsewhere in Volume III as the market [labour time] value I think. 

[ALB]

Sympo wrote:

This may be a dumb question, but why exactly do we need the concept of "value" if by value we mean the average amount of labour put in a certain commodity(if this definition is incorrect please correct me)?

Value (in the Marxian sense) is not the same as "the average amount of labour put into a certain commodity" (from start to finish). We will still be able to calculate this average amount in a socialist society (if we wanted to) but it wouldn't be value. This labour takes the form of "value" only when the product has been produced as a commodity, i.e for sale. Value and value production are features only of a society that produces for sale. Value is a description of the form wealth takes in such a society. In socialism wealth will not take this form but will simply be a use-value.

Sympo wrote:

Labour power is a commodity, right? So is labour power priced according to the "price of production"?

Labour-power is indeed a commodity but its price is its "cost of production" (which might not be the same as the sum of the values of the commodities involved), i.e "price of production" less the element of "average profit" which is obviously not applicable in this case.

Sympo wrote:

Also, what is the point of having the concept of exchange-value if it does not have anything to do with the price of a commodity?

It does have something to do with the price of a commodity, but only indirectly. In principle, "total price" = "total exchange value".We're using the definitions of Marxian economics here, which is not the only way of describing things. It is quite possible to describe the exploitation of workers without having recourse to Marx's economic concepts such as "value", e.g work on materials that originally came from nature is the only source of wealth (goods and services useful in a given society), so if there's a class of people who live off a non-work income that income must derive from the work of those who do or have worked.The case for saying that capitalism is based on the exploitation of the producers and that socialism will end this does not rest on Marxian economics. It's just that, in our view, Marx elaborated the best explanation of how capitalism works.

[Sympo]

ALB wrote:

"Value (in the Marxian sense) is not the same as 'the average amount of labour put into a certain commodity' (from start to finish)."So what is value?"In principle, 'total price' = 'total exchange value'."What does this mean exactly?"The case for saying that capitalism is based on the exploitation of the producers and that socialism will end this does not rest on Marxian economics. It's just that, in our view, Marx elaborated the best explanation of how capitalism works."I tend to explain my simplistic view of exploitation in Capitalism by saying:"Human labour is the only thing that can create social value. For example, a leather shoe can only exist because someone spent labour time getting all the materials, sewing the shoe so that all the parts stay together(I'm not a shoe expert) and so on.Because human labour is the only thing that can create social value, the only way for the Capitalist to make a profit is by giving his employee less value than what the employee is creating. This is economic exploitation."Is this an incorrect view on exploitation during Capitalism?

[DJP]

Young Master Smeet wrote:

Value and price are different, the concepts of bargain and rip-off occur when you pay above and below the value of a good.  

This isn't what "Value" means in Marxian economics. Value and price never converge, or if they do it's by accident.

[DJP]

Sympo wrote:

So what is value?

Value is the form of wealth under capitalism, or exchange economies based around socially necessary labour time.

Sympo wrote:

"Human labour is the only thing that can create social value. For example, a leather shoe can only exist because someone spent labour time getting all the materials, sewing the shoe so that all the parts stay together(I'm not a shoe expert) and so on.Because human labour is the only thing that can create social value, the only way for the Capitalist to make a profit is by giving his employee less value than what the employee is creating. This is economic exploitation."Is this an incorrect view on exploitation during Capitalism?

Not bad. This would be a bit better:"Human labour, applied to materials provided by nature, is the only thing that can create wealth (in capitalism this takes the form of "value"). For example, a leather shoe can only exist because someone spent labour time getting all the materials, sewing the shoe so that all the parts stay together."And just to complicate things, not all labour in capitalism produces "value". Some sectors just redistribute value that has already been created in other sectors of the economy. See the thing and productive and non-productive labour.

[ALB]

Sympo wrote:

ALB wrote:

"Value (in the Marxian sense) is not the same as 'the average amount of labour put into a certain commodity' (from start to finish)."So what is value?

Value is the form wealth takes in a society where goods and services are produced for sale on a market. It's what lies behind exchange value and is expressed, in exchange, as the amount of socially necessary labour that has to be expended to produce a commodity from start to finish.  Wealth in socialism will still be the product of so many hours work but, socialism being a non-market society, will not take the form of value. So the same product of labour will be value in capitalism but not in socialism, i.e. labour content and value are not the same as the former can exist without being the latter..

Sympo wrote:

"In principle, 'total price' = 'total exchange value'."What does this mean exactly?

That the sum total of the prices all the goods and services on sale is the same as the sum total of their exchange-values. But don't forget the words "in principle" as this assumes that capitalism is a static economy whereas it is not. As productivity increases, the exchange value of the commodities concerned diminishes (because the amount of socially necessary labour to reproduce them does) so that in practice total prices won't always equal total exchange values even if this will be the tendency. In fact, capitalist being a dynamic economy, it is unlikely that the equilibrium is ever reached.The point is that you can't adequately explain prices without recourse to exchange-value (and value). Modern academic bourgeois economists think they can but that's because they are only interested in the surface appearance of things, and the business managers, whose approach they reflect, can work very well without the concepts of value and exchange value.No objection to your explanation of how the producers are exploited under capitalism.

[Anonymous]

The best way to learn 'Marxian economic is by reading the proper sources and bourgoise economists are not able to explain how the capitalist economic operates.During the crisis of the 2008, many academic economists ( econometrists ) had to go to the libraries or the bookstores to get Marx's Capital because using their own academic knowledge they  were not able to explain or understand what was happening around the world.The Socialist Party of Great Britain have written many articles that explain and answer all the questions and issues that have indicated in this thread, and also the Socialist Party of Canada have a pamphlet that explains in details all this questions.  PD More tha 75% of the work that we are doing at the present time is unproductive

[Young Master Smeet]

DJP wrote:

This isn't what "Value" means in Marxian economics. Value and price never converge, or if they do it's by accident.

Quite right, but we still have a notion of worth behind the price, so, yes, price and value will (usually) not be equal: if you buy a rolls royce for a penny you know that someone has undervalue it (or you have overvalued a crock).

[Author]

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