April 23, 2022 at 7:38 pm #228956
Adam Smith was certainly right to point to the diamond-water paradox. Nevertheless, I cannot see eye to eye with him on what truly lies behind the high market-price of diamond. Water, potatos, paper, pens, etc. are all exchangeable. Therefore, mere exchangeability cannot make the price of a thing skyrocket.
And as I see it, the concept of marginal utility is flawed in itself. By definition, marginal utility is ‘the value to the consumer of an additional unit of some commodity.’
(marginal utility @ https://www.britannica.com/topic/marginal-utility)
Thus, from its very definition, it follows that the stuff called marginal utility is in essence the market-value, i.e. the exchange-value of a commodity as it appears to a consumer of an additional unit of it. Nevertheless, the term ‘utility’ means use-value or usefulness which is fundamentally different from the exchange-value, we know. Evidently, the stuff called ‘marginal utility’ is a contradiction in terms, hence a load of rubbish, the way I see it.
And further, from the very definition of ‘marginal utility’, it also seems obvious that the ‘marginal utility’ of a commodity comes into being after the first unit of a certain group of commodities has been consumed, and hence it follows that the first unit of every group of commodities can’t have any ‘marginal utility’. However, by the marginal-utility theory of value, no ‘marginal utility’ means no value or market-value, hence no market-price. Evidently, it’s outright opposite to the reality. Nowhere in the world, the first unit of a group of commodities is gratuitous really.April 23, 2022 at 9:14 pm #228958ALBKeymaster
H. M. Hyndman, the leader of the Social Democratic Federation in Britain, gave a lecture in 1894 with expressive title of “The Final Futiity of Final Utility”:April 24, 2022 at 3:06 am #228960
How? Monopoly can reduce supply to enhance demand to some extent and thus charge a higher price for a certain commodity. This will certainly enhance profit, but it’ll also add to the impoverishment of the buyers and thus drastically reduce their purchasing power. Fall in the purchasing power of buyers means a demand crunch with which the sounding of the death knell of monopoly is certain to begin.April 24, 2022 at 4:03 am #228962
I don’t think there’s any flaw in the Marxian labour theory of value (the law of value). Nevertheless, to explain the high price (market-price) of the stuff like a piece of diamond or an antique, you have to grasp the distinction between value & market-value. The market-value of a commodity does not equal the quantity of the socially-necessary labour expended on it. In fact there exists a huge gap between the value and the market-value of such stuff, which can only be explained with the help of the laws of supply & demand, as I see it.
Capitalist economists may claim that laws of supply & demand determine both the value & the market-value and thus try to refute the law of value. They can be silenced by pointing to the fact that there exists No valueless stuff that possesses market-value.April 24, 2022 at 7:19 am #228963robbo203Participant
As you say, the prices of commodities don’t equate with their labour values and it is only in the long run that you find a tendency for these things to equilibrate. This is brought about by the self-correcting nature of market competition itself. Higher than usual prices attract businesses (existing ones and new entrants) to step up output lured by the prospect of higher profits. As supply increases so does this begin to affect a commodity’s price. At some point, supply may come to exceed market demand and the price begins to fall
Marx fully acknowledged the influence of supply and demand on price in the short term but in the long run, he noted, these two things cancel each other out. What we then need to explain is the long-run differences in price and it seems to me that only the LTV enables us to do that
As an aside you mention that utility means use-value. Pedantically speaking I don’t think these terms have quite the same meaning though they are obviously linked. Utility is quantitative – or should I say pseudo-quantitative – attempt to gauge the strength or intensity of one’s desire for a particular commodity based on its perceived use-value. The early Marginalists like William Stanley Jevons even went so far as to attempt to come up with some unit of measurement by which utility could be quantified = “utils”
Thus in neoclassical economics everything is reduced to utility which reflects the market’s need for commensurability between commodities in order to effect a market exchange based on equivalence. The problem is that use values in themselves are incommensurable. Utility is an attempt to render them commensurable
April 24, 2022 at 5:35 pm #228967MovimientoSocialistaParticipant
- This reply was modified 2 months ago by robbo203.
In this book written by Andrew Kilman: Reclaiming Marx-capital, he explains, discuss and analysis many of the so called flaws on Marx Capital, which has been distorted by many economists, specially on the law of value, and pricesApril 25, 2022 at 6:50 am #228970
Hi robbo203, I don’t question Marx’s thesis that in the long run, the market-value of a commodity equals its labour-value, and I don’t think I’ve said anything to suggest that I contradict Marx’s law of value. Have I really passed any such remark?
Utility defined as the use-value may be quantifiable. Examples: 1. we can compare the utility of two LED bulbs in terms of the luminous flux and the total number of hours they’re expected to glow; 2. we can measure the efficacy of a COVID-19 vaccine in percentage and thus compare its utility with the efficacy of any other COVID-19 vaccine. What’s wrong with it?April 25, 2022 at 8:26 am #228974ALBKeymaster
Yes of course. But how can you compare the usefulness of a bulb to, say, a clock or the usefulness of either of these to different people? How can you compare apples and oranges?
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