Capitalism v Communism
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Capitalism regards useless stuff like diamond, pearls, gold, etc. as invaluable while communism treats valueless things or things of nominal value as invaluable.
Yes! Strange though it sounds, it’s True absolutely. Capitalism rewards CEOs, Pop stars, Legendary athletes, Movie stars, Possessors of Useless antiques, etc. lavishly. But, these people are like diamond, pearls, and gold. They do Not create any wealth needed to keep civilisations moving or Advancing. They really do nothing to deserve to be reckoned indispensable to life or society.Nevertheless, communism regards the work of ordinary workers, researchers, teachers, discoverers, inventors, innovators, environment activists, human-rights activists, journalists, etc. as invaluable. But, these people are like oxygen in free air, snow on mountain peaks, rain water, underground water, bottled water, trees & animals in woods, etc. These are things that are either absolutely valueless ( such as oxygen in free air ) or not valueless but free ( e.g. free school education & healthcare in hospitals, etc. ) or nominally valued ( such as bottled water, medicine, physio-therapy, etc. ).
An example of such a piece of diamond is Lionel Messi, the soccer legend, who was promised last year an annual payment of $108 million ( ‘ $75 million in salary ‘ plus ‘ $33 million in … endorsement ‘ ) by the PSG, his new club. (Lionel Messi’s Deal With Paris Saint-Germain Will Keep Him Among Soccer’s Top Three Earners @ https://www.forbes.com/sites/justinbirnbaum/2021/08/10/lionel-messis-deal-with-paris-saint-germain-will-keep-him-among-soccers-top-three-earners/?sh=17b1da655b70) This dream money is over 100 times the Nobel-Prize money (10.0 Million Swedish kronor = around $ 1.064 Million @ https://www.nobelprize.org/prizes/about/the-nobel-prize-amounts/). And according to the Forbes mag, the net worth of Jeff Bezos, the founder-chairman of Amazon, is $ 190.7 Billion (as of March 23, 2022). The term ‘ worth ‘ does not stand for the use-value but for the amount of wealth someone possesses. Thus, this business tycoon’s net worth amounts to almost 190 000 times the full amount of the Nobel-Prize money. Could you state what this guy has achieved in his life to deserve this much wealth?
In a worldly socialist/communist society gold, silver, money, and diamond can be used to make cooking pots, decorations, and toilet paper. The Caribbean native did not give gold and silver as presents to the Spaniards because they were a bunch of fools, the reason is that those so-called precious metals did not have any value of exchange within their society
Right! In the communist world, stuff like diamond, gold, antiques, etc. won’t be counted more precious than oxygen, water, nutrients, therapeutics, etc.
Prakash RP – Volume one of Marx’s Capital gives a fascinating history of what societies considered to represent value and how that has changed.
The reason why gold, diamonds, pearls etc are more “valuable” than more useful things like water and air is that, in an exchange (trading, buying and selling) economy such capitalism is, the “value” of anything is determined by how much work has on average to be put in to produce it. And more work has to be put into first finding gold and diamonds and then extracting them than has to be put into finding and extracting water. Air has no “value” because no work is needed to find it.
In a socialist/communist society where things will be produced to be used rather than to be sold this contradiction between use-value (usefulness) and “value” (exchange-value, price) won’t exist, if only because nothing will have an exchange-value as nothing will be produced with a view to being exchanged for something else. Everything will be being produced and distributed simply to be used.
Yes, of course, the production of a piece of diamond requires a lot more labour than that of a bottle of water. But, does this fact really explain the huge cost of a piece of diamond compared with the cost of a therapeutic or a vaccine?
Does the production of a piece of diamond really require more labour than the invention & production of the stuff like a therapeutic or a vial of the COVID-19 vaccine does?
And is Lionel Messi’s labour behind his annual income really over 100 times the labour of a Nobel laureate?Actually, the production of a diamond might well cost as much in terms of needed labour (prospecting, finding, extracting, polishing, etc) as the development of a vaccine.
As to Messi, his income is a rent and so not dependent on how much he works. He has the monopoly of a unique skill (his prowess as a soccer player) and so the price of which depends entirely on the demand for it. The more he is in demand, the higher he can charge, just as the monopolist of some natural resource (such as a Gulf Sheik) can.
Is his work more “valuable” than than that of a Nobel Prize winner? Probably not, at least not for prize-winners for physical or medical science (though it will be more than that of most of those winning a prize for economics). But that’s the way of the capitalist world where everything has a price.
In a socialist/communist society a good soccer player or a good scientists will be in the same position as everybody else — they will have free access to what they need to live and to enjoy life. That’s what “from each according to their ability, to each according to their needs” means in practice.
‘the production of a diamond might well cost as much in terms of needed labour (prospecting, finding, extracting, polishing, etc) as the development of a vaccine.’ You believe so! But, have you taken account of the huge amount of funds (as all the funds are the product of hard labour of the multitude) spent on the worldwide research works dedicated to the invention of the COVID-19 vaccine?
‘The more he is in demand, the higher he can charge,…’ This is the main point. The market-price of a commodity is wholly determined by market forces (i.e. the laws of supply & demand). In the case of a high-demand commodity (a piece of diamond or the performance of a sports legend), its market-price happens to be disproportionately higher than its price (value expressed in money) based on the quantity of the socially-necessary labour required to produce it. This is ‘the way of the capitalist world’.
In the communist order, the production & exchange of commodities, hence markets, will be done away with, and so since the use-value of a thing cannot have any price, none deserve to be richer or poorer than others. Everyone will have equal share in social wealth according to the socially accepted standard of living. I agree with you on this point too.
Nevertheless, I’ve got reservations about the correctness of the principle of “from each according to their ability, to each according to their needs”. Since overwork and idleness are inseparable opposites, the overworking lot must be exploited by the idlers as all in the communist order are entitled to enjoy an equal standard of living. Evidently, this principle seems irreconcilable with very basics of communism, the way I see it.
Adam Smith invoked the famous water-diamond paradox in this way:
“The things which have the greatest value in use have frequently little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any use-value; but a very great quantity of other goods may frequently be had in exchange for it” (Adam Smith, 1776, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, Chapter IV, “Of the Origin and Use of Money”)
He seemed to be suggesting that it was the exchangeability of diamonds that at least in part (he was also an advocate of the labour theory of value) contributed to its high price. This might be connected with the explanation as to why “status goods” or “Veblen goods” (named after the social critic Thorstein Veblen) are so expensive, It is to price other people out of the market who cannot afford to buy these goods and so becomes a means of asserting the high status of those who can afford these things
Conventional mainstream economists will of course argue that the reason why diamonds cost so much is that their marginal utility is extremely high compared to water. Normally the marginal utility of a good is supposed to diminish with every additional unit of the good in question being consumed. The rarity of natural diamonds prevents this from happening. Hence the high price of diamonds is determined by their high marginal utility. That however does not in itself explain why the demand for diamonds is so high
Normally, if demand exceeds supply the competitive nature of capitalism means that output will be stepped up with existing businesses and new entrants being attracted by the high prices and profits (although that is not so easy with natural as opposed to artificial diamonds). There is thus a tendency for supply and demand to equilibrate in the long run. That being the case, supply and demand cannot be invoked as an explanation for the differences in prices over the long run since these things cancel each other out. Only differences in production costs (which boils down to labour costs) can adequately explain this
This is why the labour theory of value is the only one that really holds water
Robbo – wasn’t diamond production and sale controlled by a monopoly cartel? Is it still? If so doesn’t this explain the price of diamonds?
You say that “… the principle of ‘from each according to their ability, to each according to their needs‘ … seems irreconcilable with very basics of communism …”
But why? The case for communism (or socialism, the same thing) is that today the actual process of production — a vast network of interdependent production units spanning the world — is already “socialised” in the sense that it is already a collective work effort. The contradiction is that, despite this, the products are owned individually (either by individuals or artificial individuals called companies or corporations or states).
Socialism removes this contradiction by “socialising” also the ownership not just of the products but also of the means and instruments for producing them. This means that what is produced is also socially or commonly owned and the question that arises is how to distribute this to people or to give them access to it.
Since work is a collective effort it is not possible to attribute to individuals any particular part, “from each according to their ability, to each according to their needs” seems the most logically communistic way. All the more so, since the existing productive forces are capable of producing enough, even plenty, of what people need.
If you think this won’t work because there would be a large number of idlers, it is up to you to demonstrate why this should be. You won’t be arguing, I hope, that it is because it is “human nature” for people to be lazy?
You think’today the actual process of production — a vast network of interdependent production units spanning the world — is already “socialised” in the sense that it is already a collective work effort.’
But, I think the capitalist mode of production is in itself ‘collective’, but it’s always the production for profit, and so it’s meant to serve the interest of an insignificant few, the capitalist class, at the expense of practically the 99% of humanity, the hard-working millions, who sweat blood to produce all wealth, discover laws, find answers to unanswered questions regarding life & the universe, make inventions & innovations, etc. but have to undergo horrendous deprivation throughout their life. Nevertheless, as I see it, the socialisation of production is aimed at the production for the use of the entire humanity, and so it must begin with the social ownership of the means of production & all the products.My main point against the principle of ‘ “from each according to their ability, …” ‘, is Not anything like the silly assertion that ‘ “human nature” for people [is] to be lazy ‘. It’s as simple as the arithmetic logic that two and two makes four, namely, the fact that overwork and idleness are inseparable opposites. Therefore, if some people are allowed to overwork (i.e. to work more hours than the length of the social working day), it’s bound to lead to the lack of a full social working day’s work for some others. Consequently, the overworking lot must be exploited by the idlers as all in the communist order are entitled to enjoy an equal standard of living. Evidently, this principle seems irreconcilable with very basics of communism, the way I see it.
A humble request:
Would you do me a favour and ask Binay Sarkar, a member of the SPGB, to contact me at prakashrp54@gmail.com ? I’v got something important to communicate to him.I don’t think it matters much whether the ‘diamond production and sale [is] controlled by a monopoly cartel’ or not. The fact of the matter is in a market economy, market-prices of a commodity are determined by laws of supply & demand.
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