What is economic growth?

[robbo203]

Interesting article here

https://mobile.nytimes.com/2017/02/06/business/economy/what-is-gdp-economy-alternative-measure.html

The key sentence: "The growing suspicion, however, is that in a digital world overflowing with free services like Facebook, Google and YouTube, price is an increasingly ill-suited proxy for value."

 

I can think of other reasons besides why market price is an "increasingly ill-suited proxy for value"

 

Was it Oscar Wilde who quipped about living in a society that knows the price of everything and the value of nothing?

 

 

[ALB]

Actually, the problem they have come across brings out the validity of the labour theory of value. They seem to want to include use-value whereas in fact GDP is based on and is a measure of exchange-value.  In Marxian terms GDP is the new  value added in a year, or rather Net Domestic Product is because the gross figure includes depreciation which is replacing used up value. Basically, it's surplus value (and its subdivisions) + labour income.  "Growth" is the amount by which this increases from one year to the next (not that it always does, of course, as the figure also "slumps" from time to time).One way they calculate GDP is, in fact,  capital income + labour income, This means that national product = national income. The other way is measuring the "value added" (their terminology) by adding this up for each industry and field of activity. So, If you try to add "added use-value" (as,eg. from what is freely available or housework) then this equation will no longer hold as national product will be greater than national income. In trying to combine exchange values and use values it's no wonder they get into difficulties.

[robbo203]

ALB wrote:

Actually, the problem they have come across brings out the validity of the labour theory of value. They seem to want to include use-value whereas in fact GDP is based on and is a measure of exchange-value.  In Marxian terms GDP is the new  value added in a year, or rather Net Domestic Product is because the gross figure includes depreciation which is replacing used up value. Basically, it's surplus value (and its subdivisions) + labour income.  "Growth" is the amount by which this increases from one year to the next (not that it always does, of course, as the figure also "slumps" from time to time).One way they calculate GDP is, in fact,  capital income + labour income, This means that national product = national income. The other way is measuring the "value added" (their terminology) by adding this up for each industry and field of activity. So, If you try to add "added use-value" (as,eg. from what is freely available or housework) then this equation will no longer hold as national product will be greater than national income. In trying to combine exchange values and use values it's no wonder they get into difficulties.

 GDP as the measure of all monetised activities within the economy… So if you paid a  bunch of workers to dig a big hole in the ground and then fill it in again, thereby achieving exactly nothing in  real terms,  the economy would have grown and we would all presumbly be that much richer!  LOL I liked this little snippet from the above article:  "(When the European Union decided to include recreational drugs and paid sex work in 2013, Britain’s G.D.P. grew by 0.7 percent.)" Do we not all have a patriotic duty to engage in these pastimes to help make Britain a stronger and more competitive economy?

[ALB]

robbo203 wrote:

So if you paid a  bunch of workers to dig a big hole in the ground and then fill it in again, thereby achieving exactly nothing in  real terms,  the economy would have grown and we would all presumbly be that much richer!  LOL

That's because they are measuring actual labour rather than socially necessary labour. Don't know how you would measure the latter. Not sure you can. In criticising various schemes for "labour money" in his day Marx suggested it couldn't be.

[robbo203]

ALB wrote:

robbo203 wrote:

So if you paid a  bunch of workers to dig a big hole in the ground and then fill it in again, thereby achieving exactly nothing in  real terms,  the economy would have grown and we would all presumbly be that much richer!  LOL

That's because they are measuring actual labour rather than socially necessary labour. Don't know how you would measure the latter. Not sure you can. In criticising various schemes for "labour money" in his day Marx suggested it couldn't be.

 I guess thats what the "heterogeneity of labour" argument is  about.  How do you measure one kind of labour against another in cardinal terms. Thats what critics of the labour theory of value raise as an objection to the theory, missing the point that you dont need to, and can't anyway (as you say), directly measure socially necessary labour time. The point about  the example of  workers digging a hole and filling it in again was to show the absurdity of the conventional metric of accounting.  According to this growth has occured yet self evidently we are no better off in real terms

[Young Master Smeet]

ALB wrote:

[That's because they are measuring actual labour rather than socially necessary labour. Don't know how you would measure the latter. Not sure you can. In criticising various schemes for "labour money" in his day Marx suggested it couldn't be.

I think Kautsky answered that that is precisely what money and market prices do: 

Kautsky wrote:

Such a system as this might assume the form that each worker would receive a token for every hour of labour which he performed, and this token would entitle him to the product of an hour’s labour. It would be necessary to calculate how much labour every product cost. For the wages of a working day the worker would always be able to buy products which required one day to produce.[…]This involves a two-fold calculation. The worker’s remuneration would be fixed according to the labour-time he actually expended, while the price of the product would be fixed according to the labour-time socially necessary for its production. The results of these calculations ought to be identical. But this would almost never be the case.How is the law of value discovered? By observing the movements and relations of prices. Ever since the mass production, of commodities for the market has been a systematic process, it has been noted that the prices of each commodity, in spite of all its fluctuations, continuously seek a certain level, however much they might at times be above or below it. On the other hand, it was found that the relations of the prices of each commodity to each other, amid all temporary fluctuations, showed a uniform tendency. Yet these relations and this level were not unalterable magnitudes; they did not follow the fluctuations in the state of the market; they altered only with changes in the conditions of production.

So, if hole digging and filling fulfilled some sort of demand (in the usual case, of the government relieving unemployment) then that would be a real addition of value.  Of course, the government has to get the wages to pay the workers from somewhere.I suppose it could be made productive, if the government paid people out of taxes to dig holes, and then charged householders and road users to fill them in again…

[LBird]

ALB wrote:

That's because they are measuring actual labour rather than socially necessary labour. Don't know how you would measure the latter. Not sure you can.

I know that you won't take kindly to my appearance on this thread, ALB, so I'll make it short and sweet.Since this form of 'labour' is 'socially necessary', only the society that determines its own necessities can 'measure' its labour; and furthermore, only it can determine its 'measures'.Within a democratic society, like socialism/communism, only the democratic producers can determine their own necessities and their own measures.I would suggest that 'voting' would be an appropriate method for 'measuring'.So, I think we can 'measure socially necessary labour', and indeed will do so within socialism. This social estimation will not, of course, involve 'money'.

ALB wrote:

In criticising various schemes for "labour money" in his day Marx suggested it couldn't be.

Do you have an information where Marx suggested it could be, where he wasn't talking about 'money' (or any of its supposed 'objective' forms)? I suspect that Marx didn't talk about the future social measures of 'necessity' which we might use, but you might know of some discussion which touches on this area.If you don't wish to reply to my question, just ignore this post, and I'll leave the thread alone.

[Bijou Drains]

LBird wrote:

ALB wrote:

That's because they are measuring actual labour rather than socially necessary labour. Don't know how you would measure the latter. Not sure you can.

I know that you won't take kindly to my appearance on this thread, ALB, so I'll make it short and sweet.Since this form of 'labour' is 'socially necessary', only the society that determines its own necessities can 'measure' its labour; and furthermore, only it can determine its 'measures'.Within a democratic society, like socialism/communism, only the democratic producers can determine their own necessities and their own measures.I would suggest that 'voting' would be an appropriate method for 'measuring'.So, I think we can 'measure socially necessary labour', and indeed will do so within socialism. This social estimation will not, of course, involve 'money'.

ALB wrote:

In criticising various schemes for "labour money" in his day Marx suggested it couldn't be.

Do you have an information where Marx suggested it could be, where he wasn't talking about 'money' (or any of its supposed 'objective' forms)? I suspect that Marx didn't talk about the future social measures of 'necessity' which we might use, but you might know of some discussion which touches on this area.If you don't wish to reply to my question, just ignore this post, and I'll leave the thread alone.

How about a trade. If ALB answers your question to him on this thread, then you agree to answer my question to you on the "good article" thread?

[LBird]

Tim Kilgallon wrote:

How about a trade. If ALB answers your question to him on this thread, then you agree to answer my question to you on the "good article" thread?

Since you appear to be incapable of reading what I write, and, through your own frustration at your own lack of comprehension, always turn to abuse, I think that I'll decline your 'trade', since I would be trading my valuable discussion for your childish taunts.

[Bijou Drains]

LBird wrote:

Tim Kilgallon wrote:

How about a trade. If ALB answers your question to him on this thread, then you agree to answer my question to you on the "good article" thread?

Since you appear to be incapable of reading what I write, and, through your own frustration at your own lack of comprehension, always turn to abuse, I think that I'll decline your 'trade', since I would be trading my valuable discussion for your childish taunts.

The only person on this borad that believes that this is the reason you refuse to answer my question is you (and I doubt you even believe it)I asked a straight question, putting a scenario that was basd on your crack pot idea of voting on every scientific theory, it was not abusive, it did not have reference to your previous replies to similar questions (because you haven't ever replied to a similar question).therefore my ability to understand what you write is irrelevant. You as usual resort to your elitist sterotyping of anyone who doesn't agree with your cockamamie ideas.So FOR ONCE, stop avoiding a straight question and explain to us all how the practical application of your proposal would work,

[LBird]

You're going to have to turn your well-known habit of 'psychologising' upon yourself, Tim, in your desperate search for an answer for your failure to engage in conversation with grown-ups.My comradely advice is to look at the content of your last post, and try to judge whether it's from someone genuinely interested in political discussion, or from someone who has 'issues' (to use the current pop-psychology term).And don't blame me, Tim – I'm only the messenger. If you must have a tantrum, smash your keyboard against the wall – you'll feel better, and I'll feel free from your 'issues'.

[Bijou Drains]

LBird wrote:

You're going to have to turn your well-known habit of 'psychologising' upon yourself, Tim, in your desperate search for an answer for your failure to engage in conversation with grown-ups.My comradely advice is to look at the content of your last post, and try to judge whether it's from someone genuinely interested in political discussion, or from someone who has 'issues' (to use the current pop-psychology term).And don't blame me, Tim – I'm only the messenger. If you must have a tantrum, smash your keyboard against the wall – you'll feel better, and I'll feel free from your 'issues'.

Just answer the question, or are you scared it will expose you and your stupid proposal. If I am the fool and you are the master, just sweep me away with one mighy thrust of your huge intellect! Or if you can't then let others on here be the judge.

[LBird]

If the proposal is 'stupid', in your judgement, Tim, just accept it.You don't need me to validate your judgement, do you, Tim?FWIW, I'm interested in discussing the political origins of 'your' judgement, but you're not.That's fine by me, Tim.Big breaths, now, slow and deep… a n d … 'accept'.I've done it, so can you, Tim! I have confidence in you!

[ALB]

I don't think socialist society would or could or should try to measure "socially necessary labour time". It doesn't make sense as this is a category of an exchange economy (established by the workings of that economy).Marx does seem to have favoured labour-time accounting but this wouldn't be trying to measure (the equivalent of) socially necessary labour-time. To be useful, it would have to be actual labour-time, i.e the actual use of the resource labour-power of various kinds.Attempts to reproduce "socially necessary labour" in a non-capitalist society (such as that of the Dutch Council Communists in the 1930s) have been internally inconsistent and have in effect re-introduced the sort of circulating labour-money that Marx criticised in John Gray, Proudhon, etc.It would be possible to fix some arbitary average labour (and vote on what it should be) and use this as a unit of account but this would take us to the nightmare society envisaged by Michael Albert and his "Parecon" where people get to vote even on precisely what an individual can consume (individuals have to submit a list of what they want to some committee). On the other hand, it might appeal to some as his blueprint involves virtually non-stop voting.

[Bijou Drains]

 No, unfortunately I don't just accept.Your oh so predictable attempt to divert from the point by bringing in other issues is in vain.You have stated frequently that any socialist society must involve votes on all scientific theories. (Or have I got that wrong?)You have attacked me specifically and the SPGB generally for not accepting your view of science.You have labelled those who dispute you're view as amongst other things, Leninists, Stalinists, elitists, etc.I have now put forward a question about the practical application of your proposal. As a matter of socialist principle you should be willing to defend your views, especially when you have made the above mentioned defamatory comments.Show the courage of your convictions for once and answer the question, or are you a coward?

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