[robbo203]

Steve-SanFrancisco-UserExperienceResearchSpecialist wrote:

Robbo203,my 2 cents, feel free to ignore since you were asking michel and if you think it matters who answers instead of the quality of the answer.

robbo203 wrote:

…If gold were to regularly fall from the skies then its value would drop to what is needed to collect it”.

Water regularly falls from the sky. So then bottled water which cost $2-$5 each should not exist by your theory.  Doesn't the existence of a robust market for bottled water kind of disprove your theory. 

No – why should it? I live near a spa town which manufactures bottled mineral water.  Quite apart from the extraction process there is the purification process that figures in the costs of production.  This is not to mention the cost of the bottles themselves and transportation costs

Steve-SanFrancisco-UserExperienceResearchSpecialist wrote:

robbo203 wrote:

…3)           You failed to respond to my point that “If capitalists can just arbitrarily raise their prices or keep their prices high in the face of declining unit production costs then why don’t those capitalists that provide the inputs upon which other capitalists depend to manufacture their commodities, likewise raise the prices of THEIR commodities so that the unit costs of production of those other capitalists, instead of falling will be rising”.  If all capitalists, including those who produce intermediate goods as well as those who produce final goods, are able to just arbitrarily raise their prices, then this obviously negates the claim you make about prices in general steadily rising despite the falling costs of production (which would not be falling after all, in relative terms, since the prices of inputs would also be rising!)  

They do, but what happens is someone in the supply chain buys out the full supply chain.  Nike pretty much owns and controlls the entire supply chain for their shoes and invests (owns stock in ) the rubber companies for the shoe rubber, the textile companies for the shoe canvas, etc. in modern capitalism, the manufacturer is easily replaced and easily owned, but the customers are a finite limited resource.  If a rubber company asks for too much then nike just starts a new rubber company that it owns to compete with the old rubber compay.  Nike can not start a new customer base easily because of brand loyalty and fights for its customers.  other times the consolidation of supply chains is done by some middle agent in the supply chain like two companies own 95% of the soft drink market in the USA and just have different labels on different soft drinks that pretend to compete in the market place. 

 I dont  believe this is correct.   I stand to be corrected but I believe that Nike outsourced shoe production a long time ago .  I recall reading something about this in Naomi Kleins book,  No Logo.  In any event strictly speaking no single  business can possibily own its "full supply chain" given the integrated complexity of modern day production.  Even with the very largest business you can think of there comes a cut off point beyond which it is dependent on inputs that  derive from beyond its domain of ownership and control Quite apart from anything else this does still does not get round the problem Ive raised.  If producers of final goods can just arbitrarily raise their price then why cannot producers of intermediate goods also do that? Insofar as they can also do that then this invalidates Michel's argument  about falling production costs because the production costs would be rising in this case , not falling  

Steve-SanFrancisco-UserExperienceResearchSpecialist wrote:

robbo203 wrote:

… 5)           Relatedly I have asked you several times to explain what would be the point in a business raising its prices so high that it will deter customers from buying its product and encourage them to look to other suppliers.  Businesses will tend to pitch their prices at a level at which which they can feel reasonably confident that their product will be sold and that places a very significant limit on how much they can raise their prices.  Your response to this is to suggest that capitalists will tend to resort to price fixing, limiting competition between themselves whereby they seek to undercut each other in a price war.  But even if this were the case – and there are all sorts of barriers that make this difficult, though not impossibile, to achieve – this would still not get round the basic problem.  If some companies raised their prices then consumers, if they continued to purchase those commodities at the same level as before, would have less money available to spend on other commodities.  In other words, the market demand for those other commodities would fall and so the companies producing these commodities would be obliged to reduce prices to attract more custom.  Its a case of swings and roundabouts

NO those companies would NOT be oblidged to reduce prices to attract more customers. YES, those companies would be obliged to invest money in an advertising campaign. I know. I've worked for those companies on advertising campaigns and as a consultant.  A new media campaign is the last and final gasp before a company finally goes bankrupt and gets bought and consolidated by it's competitors. they also routinely hire more new employees before they get bought out or go bankrupt.  It's something we in america learn to look for in applying for a job to try and guess how solvent the company is and if our boss is going to pay our salary or not.  

 If a company X prices a good at twice the level that company Y prices more or the less the same good then its fairly obvious that customers are going to switch loyalty from X to Y.  Of course , X is not "obliged" in some legalistic sense to reduce its prices.  It is quite at liberty to continue to pigheadedly charge above the going market rate but then customers too are not obliged to contnue loyally buying from X.  The likelihood is that they will forsake X for Y in their droves You then assert that a company like X, though it is not obliged to reduce its price, is neverthelss obliged to  "invest money in an advertising campaign" – presumably to convince custuomers that while they are paying above the going rate for more or less the same prpduct they are still getting value for money.  Again, they are not "obliged" to engage in advertising.  You might say instead it would help their cause if they did advertise .  But advertising costs money and the higher you want to raise the price of your commodity above the going market rate the more money you are going to have to splash out on advertising to convince people that they are getting "value for money".  This  puts a rather different complexion on Michels claim that capitalists can just arbitrarily raise prices to whatever they want in the face of falling production costs. He overlooks the hidden costs  and risks of raising your prices in a competitive market I would also add that advertising is a zero sum game.   To simply retain their same market share,  businesses have to spend more on advertising because other businesses are spending more on advertising.  .  They have to run faster and faster simply to stand still to coin an expression

Steve-SanFrancisco-UserExperienceResearchSpecialist wrote:

Advertising didn't really exist in Marx time the same way it does today.  But your making another argument about swings and round abouts and it's maybe similar to the argument about leaches draining a person dry.  if one leach sucks all the blood out of a person then the other leaches have less?  isn't the total number of leaches limited by the total blood capacity of a town?  Well yes, that's true but all the leaches still try to suck the person as hard as they can anyway.  

 Whether or advertising existed in Marx's time is irrelevant to the point being made.  If  a company X puts up the price of its commodity and its customers continue to loyally buy this commdity from C to the same extent as before then the opportunity costs of their decision to do so is that they will have less money to spend on other commodities.  Meaning the market demand for other commodities will diminish to that extent.  This reduction in market demand means that the businesses supplying these commodities wil have to adjust prices downwards accordingly

[robbo203]

LBird wrote:

Alan Kerr wrote:

@ LBird,“Let us now picture to ourselves, by way of change, a community of free individuals, carrying on their work with the means of production in common, in which the labour power of all the different individuals is consciously applied as the combined labour power of the community. All the characteristics of Robinson’s labour are here repeated, but with this difference, that they are social, instead of individual.”(Marx)

Yes, Alan, I know Marx's views about 'the democratic control of production by the direct producers' quite well.But I'm asking you about your views.Or are you interpreting Marx to be arguing for a 'Robinson Crusoe' society?It's an easy question to answer, really. Do you think that there is a fourth alternative, 'democratic socialism', to the three that you outlined earlier – individualism, elitism or chaos?If you are arguing for individualism, and calling it 'Robinson Crusoe socialism', that's fine by me – I just disagree with you politically, if that's the case, because I'm a 'democratic socialist', as I think Marx was. If you disagree, too, about Marx and democracy, that's OK by me.

Once again – this seems off topic as far as thsi thead is concerned.  Try another thread or start up a new one

[robbo203]

Michel,   With all due respect, I dont think you have really addressed the points I raised. Let me try to summarise the argument I presented earlier in opposition to your basic thesis that the labour theory of value has been marginalised because there is a growing divergence between, on the one hand, value  – and the falling costs of production – and, on the other, prices which have steadily risen as a consequence of this “creative power” you refer to that the capitalists wield in their lust to “accumulate profit”. (Incidentally, since capitalists have always and everywhere striven after increased profits, it is not clear to me why this particular approach of arbitrarily raising your prices away above the falling costs of production should have only come into fashion now in this “post industrial, post modern society” we are supposed to be living in) 1)            With regard to the empirical data to support your case, I am not asking for detailed evidence. Something as simple as a large scale study comparing wage rates and prices over a fairly long period of time, will do. The sole piece of evidence that Steve San Francisco presented in support of your argument is not really satisfactory since the firms engaging in price mark ups that the study refers to covered only 40% of all sales. What about the other 60%? I have never denied that some commodities could sell at prices above their notional value but the corrollary of that is that other commodities must sell below their value.  Moreover, I presented other evidence pointing to“seven categories of goods and services that are comparatively cheaper today than they were 10 years ago. All figures are based on a BLS comparison of like products and services from August 1998 and August 2008.”   These include phones, electronics, footwear, new vehicles, toys, apparel, watches” (http://www.bankrate.com/finance/personal-finance/7-falling-price-tags-1.aspx) 2)           You state that there is “no governing law that says the sum total of prices must equal the sum total of values”.  Indeed, you state that since some prices have no value in them at all it cannot possibly be true the total sum of prices must equate to the sum total of values. But this is based on a misunderstanding of the labour theory of value.  I will simply quote here from the SPGB’s pamphlet on Marxian economics which deals with this very point:  Under capitalism nearly everything is a commodity, or takes the form of a commodity, is bought and sold. This qualification is necessary to counter the argument often advanced against the Labour Theory of Value that some things that are bought and sold either are not products of labour or sell at prices quite out of proportion to the amount of labour embodied in them, e.g. land and objects of art. Land, under capitalism, has a price which, in its pure form, is merely the capitalisation of its rent. Land has no value as it is not the product of human labour. Paintings and antiques are indeed products of human labour but are not really commodities because they cannot be reproduced; the concept of "socially necessary labour" therefore has no meaning with reference to such articles. One silly objection is: why is a lump of gold from a meteorite valuable, when there is no labour embodied in it? Actually, this is a confirmation of the Labour Theory of Value since its value is the same as that of gold produced under normal conditions. If gold were to regularly fall from the skies then its value would drop to what is needed to collect it”. 3)           You failed to respond to my point that “If capitalists can just arbitrarily raise their prices or keep their prices high in the face of declining unit production costs then why don’t those capitalists that provide the inputs upon which other capitalists depend to manufacture their commodities, likewise raise the prices of THEIR commodities so that the unit costs of production of those other capitalists, instead of falling will be rising”.  If all capitalists, including those who produce intermediate goods as well as those who produce final goods, are able to just arbitrarily raise their prices, then this obviously negates the claim you make about prices in general steadily rising despite the falling costs of production (which would not be falling after all, in relative terms, since the prices of inputs would also be rising!)   4)           Since the costs of production include the wages bill that employers face, this would suggest a fall in the cost of production in the face of steadily rising commodity prices would translate into a steady fall in the pruchasing power of the working class.  In other words that the workers would be gettting poorer and poorer.   But this is not the case – at least not over the long run.  Over the long run workers’ living standards have generally risen.  Growth in living standards at the moment may be sluggish and even negative but this is less to do with capitalists arbitrarily raising prices in the face of falling production costs, than with the weak position of workers in today’s economic climate 5)           Relatedly I have asked you several times to explain what would be the point in a business raising its prices so high that it will deter customers from buying its product and encourage them to look to other suppliers.  Businesses will tend to pitch their prices at a level at which which they can feel reasonably confident that their product will be sold and that places a very significant limit on how much they can raise their prices.  Your response to this is to suggest that capitalists will tend to resort to price fixing, limiting competition between themselves whereby they seek to undercut each other in a price war.  But even if this were the case – and there are all sorts of barriers that make this difficult, though not impossibile, to achieve – this would still not get round the basic problem.  If some companies raised their prices then consumers, if they continued to purchase those commodities at the same level as before, would have less money available to spend on other commodities.  In other words, the market demand for those other commodities would fall and so the companies producing these commodities would be obliged to reduce prices to attract more custom.  Its a case of swings and roundabouts There are a number of additional points I could make but I think this will suffice for the moment.  I would greatly appreciate it if you could deal with what I have presented here on a point by point basis

[robbo203]

LBird wrote:

ALB wrote:

Alan Kerr wrote:

@ LBird,No the alternative is not just democracy as such. The alternative to the market is in Marx’ Capital here.http://www.econlib.org/library/YPDBooks/Marx/mrxCpA1.html#I.I.133

As elaborated on in this article "A World Without Commodities" in this month's Socialist Standard:http://www.worldsocialism.org/spgb/socialist-standard/2010s/2017/no-1357-september-2017/world-without-commodities

Thanks for the link, ALB,I can find mention of 'everything is social instead of individual', 'members', 'common holders of the wealth and resources of society', 'social relations', and,

SPGB article wrote:

This is what Marx sketches in his next example, where he describes an ‘association of free men’ who are ‘carrying on their work with the means of production in common’ so that the ‘labour-power of all the different individuals is consciously applied as the combined labour-power of the community’.

Yeah, 'association', 'production in common', 'combined' and 'community'… all fine.The only thing that I can't find is the word 'democracy'. Going by Alan's definition, these words and terms are just paying lip-service to 'social' concepts, because without the inclusion of Marx's democratic political underpinnings, the words are politically meaningless.Without any mention of democratic socialism, as the politically-binding method for all these social concepts, we're left, indeed, with Alan's trio of individualism, elitism or chaos, as our political choice of organising 'social', 'community', 'members', 'production in common', etc.That's my point. Alan seems to have confirmed what I thought that he meant, and you appear to be also confirming this lack of 'democratic socialism'. Unless you don't agree with the article, of course.Am I missing something?

 Can this be moved to another as it seems to be off topic here

[robbo203]

robbo203 wrote:

Let’s remind ourselves what the nub of this interesting debate is about.  The Marxist view is that increasing productivity, resulting from technological innovation, means a decline in unit costs and in the value content of individual commodities themselves.  This is because only living labour can create new values; machines only transfer the value already contained in them.  So as machines increasingly replace human labour, the effect should be a reduction in the value content of these commodities. That in turn should result in a lowering of prices since on average, over the long run, commodity prices broadly reflect their values  – the amount of socially necessary abstract labour required to produce them. That isnt happening, according to Michel so there must be some flaw in Marx's theory: " In fact, increasingly post-industrial, post-modern bourgeois-state-capitalism is abandoning, with the advent of ever-increasing automation, the limited parameters manufactured by socially necessary labor-time in favor of the unlimited parameters manufactured by conceptual-commodity-value-management, namely, arbitrary, socially constructed value, price and wage-determinations. "  According to Michel, the long run determination of market prices by labour values no longer really applies. It has been marginalised, rendered irrelevant and finally transcended by a mysterious new factor – namely the “creative power” of capitalists to arbitrarily assign prices to commodities just as they chose in their relentess desire to “accumulate profit, ad infinitum” (when did capitalists not desire to “accumulate profit, ad infinitum”, you might well ask!) .  So contrary to the expectation that increased productivity by increasing output should cause prices to fall, the opposite is true, he claims.  Prices are actually rising despite production costs falling (and I assume he is talking here of both prices and costs of production being adjusted for inflation).  As he puts it: “Marx was wrong to think that capitalists would lower prices when production costs went down. To circumvent this faulty Marxist logic, capitalists simply made deals among themselves within their specific industries to limit competition among themselves so as to keep profits high and ever-increasing”.  I have asked Michel for large-scale economy-wide data to back up this claim but he has yet to provide this data.  It’s easy enough to provide anecdotal evidence of individual prices outstripping their costs of production which may indeed be falling.  I have given examples of this myself in the case of certain branded “status goods”.  Their prices have risen sharply thanks in part to the aggressive marketing of such goods while the costs of producing them have fallen as result of outsourcing to various Third world countries where labour is much cheaper.  But in no way does this contradict the Marxian view that increasing productivity tends to cheapen the commodities being produced.  Nor does the fact the wage increases may temporally dip below price increases from time to time – causing living standards to drop – prove Michel’s basic point that the capitalists can just arbitrarily raise prices by exerting their “creative power”.  They can’t. Rather what this shows instead is the weakened bargaining position of workers vis-à-vis the capitalists – for example, at a time of economic recession.  In other words that would be misinterpreting what is happening as evidence to support his central argument. It doesn’t demonstrate the freedom of the capitalists to just arbitrarily raise prices to whatever they want but rather the relative lack of freedom of workers to resist the downward pressure on wages in an economic recession.   Not only that, there is a huge problem with his whole argument which Michel does not appear to see.  If capitalists can just arbitrarily raise their prices or keep their prices high in the face of declining unit production costs then why don’t those capitalists that provide the inputs upon which other capitalists depend to manufacture their commodities, likewise raise the prices of THEIR commodities so that the unit costs of production of those other capitalists, instead of falling will be rising? Why is it assumed that only the producers of final goods are able to circumvent the need to undercut their rivals by limiting competition between themselves but not the producers of intermediate goods – that is, the goods that constitute the inputs needed to make other goods? This makes no sense.  Are not the producers of intermediate goods also driven by the need to “accumulate profit, ad infinitum” ? So what is so special about the producers of final goods that enables them to hold down their costs of production but increase the price of the commodities they sell to whatever they want, which the producers of intermediate goods cannot do? Michel does not explain.  There is a further point to consider and I have pressed Michel on this but have yet to receive a satisfactory answer. The costs of production, include crucially, labour costs – the wages bill.  If these latter are slipping further and further behind rising prices (which have supposedly been arbitrarily raised by the capitalists whose “greed continually short-circuits Marx's elegant, scientifically quantifiable labor-time analysis” – at least in the advanced capitalist countries) then this begs all sorts of questions  – not the least of which is why have these capitalists chosen now in this supposed post-modern era we are living in, to assert their “greed” in this way and only in the advanced capitalist economies, not the third world economies where Michel concedes Marx’s theory is “still valid” Let’s look at this claim more closely.  The point of a business producing a commodity is to sell it and to realise a profit by doing so.  So what is the point of pitching the price of a commodity so high that it cannot be sold and particularly when all that will do is force consumers to turn to some other, cheaper, supplier?  If real wages are declining as part of the general decline in the costs of production then this would be even truer – workers would have even more reason to look around for the best possible bargain in the market.  As a capitalist you would need to reduce your prices accordingly so that the good in question is not beyond the pocket of your potential customer – if you are to attract their custom.  Otherwise you will just be left with a whole bunch of unsold goods and there is no point in that – is there?  If capitalists are truly motivated by the desire to accumulate profit as Michel says then it is absolutely essential that they sell their commodities in the first place and that means selling them at a price that is not going to encourage their customers to look elsewhere.  It seems to me that the only way in which he can sustain his argument and make it sound remotely plausible is if he were to argue that there are certain kinds of commodities that are simply indispensable to workers such that they cannot do without them and that the capitalists supplying these commodities can somehow conspire together with their commercial rivals to agree to push up the price of these commodities and not to break rank with each other – in other words to suspend the normal struggle between themselves over the size of the market share they command. In an increasingly globalised economy that seems even less unlikely but even if such a price fixing conspiracy could be organised and adhered to, this does not get round another very basic problem which Michel completely neglects to address.  The problem is this.   The opportunity costs of consumers having to pay more for these particular commodities means EITHER that they will have to buy less of these (now more expensive) commodities OR if they continue to purchase these commodities at the same volume as before, that these consumers will then have less money to  spend on other commodities.  That is to say, the market demand for these other commodities will fall and so the capitalists supplying these other commodities will be obliged to reduce their prices accordingly if they are not to be left with huge stockpiles of unsold goods at the end of the day.  Either way the outcome will be the same – namely to validate the basic point that you cannot just arbitrarily raise prices beyond what the market can sustain from the standpoint of the economy as a whole.  Certainly you can modify the pattern of demand but there is a zero sum game at work here to which Michel seems quite oblivious  To fill in the huge gaping holes in his argument, Michel introduces another factor – debtOf course, the working population is seemingly making more money, today, but this is not true, as prices have been increasing at a faster rate then wages/salaries, and compounded with an ever-increasing ability to BORROW, means that an illusion of wealth grounded in debt is enveloping and masking the true nature of living in post-industrial, post-modern capitalist society, opulent poverty. This illusion of wealth is masking a fundamental contradiction, a poverty clothed in opulence, where the majority of the working population are inundated with commodities and luxury goods, goods that they do not really own outright, but make monthly or bi-weekly payments upon, debt peonage/Debt slavery masked in seeming opulence.  Unless I have misunderstood him here, what he seems to saying is that the growing gap between falling wages and rising prices is something that is increasingly being filled by workers taking out loans and falling into debt.  Ironically, Michel himself talks of this development as signifying simply an “illusion of wealth” and, in so doing, unwittingly confirms the validity of the Marxian theory rather than repudiates it.  All debt does is delay the inevitable rather than banish it.  You can’t just conjure market demand out of thin air.  You can’t just spend your way out of a crisis as the Keynesians would have it with their talk of “demand management” and pump priming.  There remains still the key point about the labour theory of value which Michel simply skirts over but which is fatally damaging to his whole argument – namely that at the end of the day, the sum total of prices in a capitalist economy must equate with the sum total of values generated in that economy.  This is because value, as a magnitude signifying socially necessary abstract labour, only reveals itself in exchange – in exchange value or the proportions in which commodities exchange.  Some goods can indeed sell at a price above their notional value but the necessary corollary of this is that other goods must sell at a price below their notional value.  That means it is literally impossible that goods in general or in the  aggregate can sell at a price above their value.  Of course, it is quite true that the relative share of the social product that the workers receive in the form of their wages can vary upwards or downwards.  For instance, according to the Economic Policy Institute, between 1979 and 2009 U.S. productivity increased by 80 percent, while the hourly wage of the median American worker went up by only 10.1 percent.  ("The Sad But True Story of Wages in America", Lawrence Mishel and Heidi Shierholz, Economic Policy Institute, Issue Brief no.297, March 14, 2011).  In other words most of the gains in productivity went to the super rich – the top 1%.  While the real wages of workers grew by very little they nevertheless grew- thus disproving the suggestion that living standards have declined because capitalists can arbitrarily or permanently raise the prices that workers have to pay for goods above what workers are themselves paid in the form of wages.  The mistake that Michel makes is to assume that the capitalists have increased their wealth in the form of profits simply by putting up prices.  But profit is not made at the point of sale.  Rather, it is made at the point of production and is only realised at the point of sale.   In other words he is   misinterpreting the growing share of social product going to the capitalists as evidence for saying the labour theory of value is no longer relevant when what it is really signifying is an increase in the rate of exploitation which is precisely what the theory seeks to demonstrate.  The increased debt that workers are saddled with these days is simply a reflection of the increased share of the economic surplus appropriated by the financial capitalists and banking sector at the expense of the traditional industrial capitalists.  It is not a magic money tree that allows the system to bridge the gap between falling costs of production and the ever rising price of commodities brought about by the capitalists suddenly deciding to become terribly greedy in the last two or three decades or so.

 There is a usful link here which might throw more light on some of the  arguments presented above  https://libcom.org/library/marxian-economics-curriculum-1935-iww-work-peoples-college

[robbo203]

Let’s remind ourselves what the nub of this interesting debate is about.  The Marxist view is that increasing productivity, resulting from technological innovation, means a decline in unit costs and in the value content of individual commodities themselves.  This is because only living labour can create new values; machines only transfer the value already contained in them.  So as machines increasingly replace human labour, the effect should be a reduction in the value content of these commodities. That in turn should result in a lowering of prices since on average, over the long run, commodity prices broadly reflect their values  – the amount of socially necessary abstract labour required to produce them. That isnt happening, according to Michel so there must be some flaw in Marx's theory: " In fact, increasingly post-industrial, post-modern bourgeois-state-capitalism is abandoning, with the advent of ever-increasing automation, the limited parameters manufactured by socially necessary labor-time in favor of the unlimited parameters manufactured by conceptual-commodity-value-management, namely, arbitrary, socially constructed value, price and wage-determinations. "  According to Michel, the long run determination of market prices by labour values no longer really applies. It has been marginalised, rendered irrelevant and finally transcended by a mysterious new factor – namely the “creative power” of capitalists to arbitrarily assign prices to commodities just as they chose in their relentess desire to “accumulate profit, ad infinitum” (when did capitalists not desire to “accumulate profit, ad infinitum”, you might well ask!) .  So contrary to the expectation that increased productivity by increasing output should cause prices to fall, the opposite is true, he claims.  Prices are actually rising despite production costs falling (and I assume he is talking here of both prices and costs of production being adjusted for inflation).  As he puts it: “Marx was wrong to think that capitalists would lower prices when production costs went down. To circumvent this faulty Marxist logic, capitalists simply made deals among themselves within their specific industries to limit competition among themselves so as to keep profits high and ever-increasing”.  I have asked Michel for large-scale economy-wide data to back up this claim but he has yet to provide this data.  It’s easy enough to provide anecdotal evidence of individual prices outstripping their costs of production which may indeed be falling.  I have given examples of this myself in the case of certain branded “status goods”.  Their prices have risen sharply thanks in part to the aggressive marketing of such goods while the costs of producing them have fallen as result of outsourcing to various Third world countries where labour is much cheaper.  But in no way does this contradict the Marxian view that increasing productivity tends to cheapen the commodities being produced.  Nor does the fact the wage increases may temporally dip below price increases from time to time – causing living standards to drop – prove Michel’s basic point that the capitalists can just arbitrarily raise prices by exerting their “creative power”.  They can’t. Rather what this shows instead is the weakened bargaining position of workers vis-à-vis the capitalists – for example, at a time of economic recession.  In other words that would be misinterpreting what is happening as evidence to support his central argument. It doesn’t demonstrate the freedom of the capitalists to just arbitrarily raise prices to whatever they want but rather the relative lack of freedom of workers to resist the downward pressure on wages in an economic recession.   Not only that, there is a huge problem with his whole argument which Michel does not appear to see.  If capitalists can just arbitrarily raise their prices or keep their prices high in the face of declining unit production costs then why don’t those capitalists that provide the inputs upon which other capitalists depend to manufacture their commodities, likewise raise the prices of THEIR commodities so that the unit costs of production of those other capitalists, instead of falling will be rising? Why is it assumed that only the producers of final goods are able to circumvent the need to undercut their rivals by limiting competition between themselves but not the producers of intermediate goods – that is, the goods that constitute the inputs needed to make other goods? This makes no sense.  Are not the producers of intermediate goods also driven by the need to “accumulate profit, ad infinitum” ? So what is so special about the producers of final goods that enables them to hold down their costs of production but increase the price of the commodities they sell to whatever they want, which the producers of intermediate goods cannot do? Michel does not explain.  There is a further point to consider and I have pressed Michel on this but have yet to receive a satisfactory answer. The costs of production, include crucially, labour costs – the wages bill.  If these latter are slipping further and further behind rising prices (which have supposedly been arbitrarily raised by the capitalists whose “greed continually short-circuits Marx's elegant, scientifically quantifiable labor-time analysis” – at least in the advanced capitalist countries) then this begs all sorts of questions  – not the least of which is why have these capitalists chosen now in this supposed post-modern era we are living in, to assert their “greed” in this way and only in the advanced capitalist economies, not the third world economies where Michel concedes Marx’s theory is “still valid” Let’s look at this claim more closely.  The point of a business producing a commodity is to sell it and to realise a profit by doing so.  So what is the point of pitching the price of a commodity so high that it cannot be sold and particularly when all that will do is force consumers to turn to some other, cheaper, supplier?  If real wages are declining as part of the general decline in the costs of production then this would be even truer – workers would have even more reason to look around for the best possible bargain in the market.  As a capitalist you would need to reduce your prices accordingly so that the good in question is not beyond the pocket of your potential customer – if you are to attract their custom.  Otherwise you will just be left with a whole bunch of unsold goods and there is no point in that – is there?  If capitalists are truly motivated by the desire to accumulate profit as Michel says then it is absolutely essential that they sell their commodities in the first place and that means selling them at a price that is not going to encourage their customers to look elsewhere.  It seems to me that the only way in which he can sustain his argument and make it sound remotely plausible is if he were to argue that there are certain kinds of commodities that are simply indispensable to workers such that they cannot do without them and that the capitalists supplying these commodities can somehow conspire together with their commercial rivals to agree to push up the price of these commodities and not to break rank with each other – in other words to suspend the normal struggle between themselves over the size of the market share they command. In an increasingly globalised economy that seems even less unlikely but even if such a price fixing conspiracy could be organised and adhered to, this does not get round another very basic problem which Michel completely neglects to address.  The problem is this.   The opportunity costs of consumers having to pay more for these particular commodities means EITHER that they will have to buy less of these (now more expensive) commodities OR if they continue to purchase these commodities at the same volume as before, that these consumers will then have less money to  spend on other commodities.  That is to say, the market demand for these other commodities will fall and so the capitalists supplying these other commodities will be obliged to reduce their prices accordingly if they are not to be left with huge stockpiles of unsold goods at the end of the day.  Either way the outcome will be the same – namely to validate the basic point that you cannot just arbitrarily raise prices beyond what the market can sustain from the standpoint of the economy as a whole.  Certainly you can modify the pattern of demand but there is a zero sum game at work here to which Michel seems quite oblivious  To fill in the huge gaping holes in his argument, Michel introduces another factor – debtOf course, the working population is seemingly making more money, today, but this is not true, as prices have been increasing at a faster rate then wages/salaries, and compounded with an ever-increasing ability to BORROW, means that an illusion of wealth grounded in debt is enveloping and masking the true nature of living in post-industrial, post-modern capitalist society, opulent poverty. This illusion of wealth is masking a fundamental contradiction, a poverty clothed in opulence, where the majority of the working population are inundated with commodities and luxury goods, goods that they do not really own outright, but make monthly or bi-weekly payments upon, debt peonage/Debt slavery masked in seeming opulence.  Unless I have misunderstood him here, what he seems to saying is that the growing gap between falling wages and rising prices is something that is increasingly being filled by workers taking out loans and falling into debt.  Ironically, Michel himself talks of this development as signifying simply an “illusion of wealth” and, in so doing, unwittingly confirms the validity of the Marxian theory rather than repudiates it.  All debt does is delay the inevitable rather than banish it.  You can’t just conjure market demand out of thin air.  You can’t just spend your way out of a crisis as the Keynesians would have it with their talk of “demand management” and pump priming.  There remains still the key point about the labour theory of value which Michel simply skirts over but which is fatally damaging to his whole argument – namely that at the end of the day, the sum total of prices in a capitalist economy must equate with the sum total of values generated in that economy.  This is because value, as a magnitude signifying socially necessary abstract labour, only reveals itself in exchange – in exchange value or the proportions in which commodities exchange.  Some goods can indeed sell at a price above their notional value but the necessary corollary of this is that other goods must sell at a price below their notional value.  That means it is literally impossible that goods in general or in the  aggregate can sell at a price above their value.  Of course, it is quite true that the relative share of the social product that the workers receive in the form of their wages can vary upwards or downwards.  For instance, according to the Economic Policy Institute, between 1979 and 2009 U.S. productivity increased by 80 percent, while the hourly wage of the median American worker went up by only 10.1 percent.  ("The Sad But True Story of Wages in America", Lawrence Mishel and Heidi Shierholz, Economic Policy Institute, Issue Brief no.297, March 14, 2011).  In other words most of the gains in productivity went to the super rich – the top 1%.  While the real wages of workers grew by very little they nevertheless grew- thus disproving the suggestion that living standards have declined because capitalists can arbitrarily or permanently raise the prices that workers have to pay for goods above what workers are themselves paid in the form of wages.  The mistake that Michel makes is to assume that the capitalists have increased their wealth in the form of profits simply by putting up prices.  But profit is not made at the point of sale.  Rather, it is made at the point of production and is only realised at the point of sale.   In other words he is   misinterpreting the growing share of social product going to the capitalists as evidence for saying the labour theory of value is no longer relevant when what it is really signifying is an increase in the rate of exploitation which is precisely what the theory seeks to demonstrate.  The increased debt that workers are saddled with these days is simply a reflection of the increased share of the economic surplus appropriated by the financial capitalists and banking sector at the expense of the traditional industrial capitalists.  It is not a magic money tree that allows the system to bridge the gap between falling costs of production and the ever rising price of commodities brought about by the capitalists suddenly deciding to become terribly greedy in the last two or three decades or so.

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Steve-SanFrancisco-UserExperienceResearchSpecialist wrote:

,If everybody paid at the cash register a price that was wage normalized, than would that not be a wageless society in that everyone effectively has the same buying power regardliess of their wage? 

No. Obviously.  Socialism does not mean "everybody gets paid the same".  Socialism is a society in which "payment " ( i.e. economic exchange, market transactions, buying and sellinng , money , barter etc etc) ceases to exist.  Period.  This has been said to you many times. Why do you continue to ask questions that presuppose something else?

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Marcos wrote:

 In regard to price, there are many commodities that their prices have been decreased like in the case of electronics, a few months ago the price for a 4k television was over 5,000.00. and right now some 4k tv cost around $500.00,  

 Yes,  this is why I think Michel's whole argument is highly dubious.  He talks  of prices steadily rising , boosted by the "creative power" of the capitalists (meaning, marketing or branding) to revalue commodities upwards, while the costs of production have been steadily declining.  That just doesnt make any sense.  The figures dont add up.  Since the wages of workers are a signifcant component of these costs of production that would suggest workers' earnings are dropping (which is not true – they have actually slightly increased in recent decades).  But if the purchasing power of workers is diminishing how are those commodities going to be sold if businesses insist on steadily raising their prices? The reality is  more complex.  Some prices have been rising in relative terms – particularly for status goods – but other prices have been falling in these terms due to falling unit production costs and the competitive need for busineses to attract more customers by undercutting each other pricewise.  The rise in prices of status or Veblen goods is a reflection of a secular trend in contemporary capitalism towards increasing inequality in the distribution of wealth and income,  Veblen goods (which is really what Michel is talking about) are different from ordinary commodities in that increased prices (which the rich can afford anyway) is precisely what induces them to buy more of these goods,  Its a way of differentiating them from the riff raff – us workers – who cannot afford such things. Marx's labour theory has not been marginalised as Michel claims.  It is the circumstances that have changed but the theory allows us to understand what is going on behind these changes.  The rate of profit – not the the same thing as the mass of profit which can increase with increased output despite a fall in the rate of profit  – has been declining in the long run but at the same time the share of social wealth appropriated by the capitalists has been increasing.  Most of the value of productivity gains over the last few decades has gone to the top 1 per cent.  There is a lot of money swilling around in their hands but they find it increasingly difficult (relatively speaking) to productively reinvest it.  Which is why some big corporations are sitting on big piles of the stuff and  why you find an increasing tendency for the super rich to splash out on the unproductive consumption of status goods like posh houses and fancy yachts

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Vin wrote:

Came across this left forum – http://hollaforums.com/section/activism. Dicussions about Labour time vouchers and 'value'. Thought some members might be interested. 

 Vin,  I tried joining it but repeatedly found the sign-in facility temporarily disabled.  Did you have any luck joining it?

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MBellemare wrote:

 An ideologue, is one who, with tooth and nail, defends his or her own ideology by professing all other forms of thought as totally false, misunderstood and lacking in comprehension.   Marx is still valuable, I never said he wasn't. Much of what I say is grounded in Marx. I simply think that what Marx saw as an exception in 1867, is now paramount in post-industrial, post-modern society.  His law of value, and the fundamental basis of his whole theoretical apparatus as being founded on quantifiable labor-time is now marginal. It is has been pushed to the capitalist periphery such as India and China, while American Capitalism, functions increasingly on a post-industrial, post-modern basis, i.e., arbitrary/artificial constructions of value, price and wage.  This is why Bernie Sanders states, without fully knowing why, capitalism is rigged, the whole system is rigged where the same people lose all the time or most of the time, while the same select few always win. It is rigged because even if workers get higher wages, capitalists can recoup their loses by arbitrarily raising prices a few percentage points above any wage increase. And presto! the workers lose again, even while, superficially winning a pay raise. As a result, capitalists appease workers by giving them pay raises (they are happy) and appease their capitalists stock holders by increasing profits, via a slight price increase that off-sets any pay raise, slightly increasing profits via small increments.  Of course, this sort of system cannot continue indefinately, hence, the ever-increasing debt-load workers have to carry. But hey! capitalism is still intact! To quote Guy Debord " society has gone from being, to having, to appearing".Two good examples are the automobile industry and the North American Housing Industry:  Today, no-one can truly afford a new car, in North America, but everyone can LEASE a new car, making it look as if one owns what one does not actually own. Moreover, one can LEASE a luxury car, a Mercedes, a BMW, a JAGUAR etc., via reasonable inflated monthly payments, making it look as if one is a massive success, despite the fact that, in reality, one, at best, only owns the steering wheel, or the key-chain.  I ask how did this happen, when production costs for automobiles, have been steadily decreasing for roughly a century. And according to Marx, price should be decreasing as well, accordingly. The only plausible answer is that price have not been decreasing but increasing. But the opposite APPEARS to be the case because of all sorts of creative financings and leasing going on (A different type of mortgage). So yes! more people are driving and seemingly "buying" cars (The American Dream is Still IN TACT) , but they, in reality, own less and less of the cars they seemingly "buy" and drive because, in truth, the majority of North Americans citizens, do not in fact "buy"  brand-new-automobiles anymore, they RENT/LEASE them. The majority of North Americans cannot afford new Cars, because prices are outlandish and out of whack, out of the realm of their real salaries, but they drive new cars because of creative financings. The truth is that behind it all, the majority of these new cars, with "SOLD" written on them, still belong to the car-companies and their dealerships.     So leasing a new car, looks like real ownership, feels like real ownership, looks like real ownership to others, eventhough in reality it is not! In a world of arbitrarily-constructed values, prices and wages, debt-management is key. its all about managing debt, i.e., different types of mortgages, and one's ability to unleash capital, i.e., borrow.  The same logic applies to the North American Housing Market. No one actually owns a house anymore, because, housing prices are out of whack and outlandish, despite building costs for new homes steadily decreasing over the last 50 years.  And according to Marx, prices should as well have decreased in the housing market in the last 50 years, but they have not. In truth, WE PAY MORE FOR LESS. And this applies across many spheres of production. But via creative financing, more people than ever can seemingly borrow, thus more people then ever can seemingly "buy" a house, a MCMANSION in fact. However, how much of that MCMANSION do most people actually own, maybe, if thing are slightly good for a few years, the FRONT DOOR. A house mortgage is a fancy term for a rent-to-own scheme. Thus, North Americans rent from the BANKS the houses they seemingly appear to OWN and hope to eventually own outright on fine day, but they do not in truth currently own. (The American Dream is DEBT-RIDDEN). Moreover, add property taxes onto this and we, in fact, rent the land from the city and the house from the banks.   Why is this? because values, prices and wages are no longer founded in production, i.e., real expenditures of quantifiable labor-power within the production sphere, but upon ideological nonsense, unfounded capitalists desires and network-power.  What I am describing as post-industrial, post-modern capitalism, is far-more dangerous, far-more crazy, than Marx ever concieved. At least, Marx had sound economic laws to corral capitalists and explain values and prices. For Marx, everyone was subject to such economic laws, which limited behavior and instilled a sense of fairness across the sum of social reality.  In constrast, Post-Industrial, Post-Modern capitalism is in effect lawless, extreme and fundamentally unfair. And even worst, for those who lack power and network-support.         Its scary because when values, prices and wages are arbitrarily-determined, the working population, can theoretically lose everytime and indefinately, the game called post-industrial, post-modern capitalism. In fact, its not even a game, as games have set rules, which every player, regardless of social standing, must follow. Post-industrial, post-modern capitalism, is theoretically a free-for-all, where "whatever one can get away with in the market-place" is valid and legitimate, once normalized. And things can get very chaotic, alienated and violent, because it is a lawless free-for-all.     The truth is that I wish Marx was completely right, because, what he described in DAS CAPITAL was an ordered economic universe, understandable, rational and scientifically sound. The Capitalism we live in now is opaque, confusing, odd, seemingly irrational and unscientific, without order and sound judgements.  And the only logical principle I have been able to extract from this nonsensical capitalism is the logical principle: "To maximize profit by any means necessary, at the lowest financial cost, as soon as possible".  From this logical principle, stems all the nonsense the post-industrial, post-modern capitalism generates. In post-industrial, post-modern capitalism, there are even super-profits to be extracted from all sorts of human suffering and disasters!                       

 This is all very impressionistic, Michel , but can you give any hard emprical evidence to back up what you are saying? For example , you talk about automobiles and say "production costs for automobiles, have been steadily decreasing for roughly a century. And according to Marx, price should be decreasing as well, accordingly".  You say on the contary that the prices have been increasing and are now "outlandish".  But according to the evidence I presented earlier the prices of new automobiles  ARE decreasing in relative terms (allowing for inflation) along with a number of other categories of goods,  due to increasing producitivty.  True, there are some goods where the prices have gone up relatively speaking  for various reasons – like branded goods .  The direct  costs of producing these goods may have fallen due the production being relocated to low wage economies in the Third World but,  I suspect, you neglect take into account the increased costs of marketing these goods in an increasingly competitive global market Then you talk about the North American Housing Market. "No one actually owns a house anymore, because, housing prices are out of whack and outlandish".  I am not too familiar with the US figures  but what is the differnece between now and, say, fifty years or 100 years ago?  You make it sound like there was some golden age of working class housing in the past when everyone owned their own home and things have just deteriorated since then.  In continental Europe for example there has long been a tradition of renting accommodation and the greater emphasis on purchasing a home is a relatively new development Finally you go on about that these super profits that the capitalists procure  today in our so called post-industrial postmodern world due to the outrageous price mark ups and price gouging  they engage in today though you dont quite explain what stopped them from engaging in mark ups on the same scale in the past.  It seems to me your basic mistake is to assume that profits are made at the point  of sale rather than at the point of production (the Marxian explanation) and again you dont explain where all this additonal purchasing power is supposed to come from to afford these outlandish price increases.  If the answer is workers getting more into debt then all this really boils down is a redistribution of surplus value from the industrial capitalists to the financial capitalists.  It doesnt in itself neceesarily mean an increase the total amount of surplus value generated in the economy As I said before the long term evidence seem to point to the rate of profit gradually declining, not rising .  See the link I posted earlier http://weeklyworker.co.uk/worker/1126/rate-of-profit-continues-to-fall/..  How would you respond  to this point?

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J P Morgan wrote:

Can you recommend an article, or provide a link, that gives the Marxian explanation of the bank rate. I'd be obliged.

 Came across this   http://www.worldsocialism.org/spgb/socialist-standard/1960s/1967/no-751-march-1967/money-nothing

[robbo203]

J P Morgan wrote:

Can you recommend an article, or provide a link, that gives the Marxian explanation of the bank rate. I'd be obliged.

 Try the search facility at the top right hand corner. It comes up with some stuff but I am not sure if that is what you are looking for.  Good luck 

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MBellemare wrote:

     Yes, Steve San Francisco, you are banging your head against a wall, a certain wall of ideologues, trapped in the past. Semantics and the ignoring of concrete facts as somehow illigitimate, is the last resort of an outdated argument backed-up against the wall, a dying argument. So don't fret too much about it, this is how new paradigms come to the foreground. To be positive and optimistic, one can only hope on this forum, that some, who are truly interested in furthering knowledge, will examine the evidence objectively.     The fact is that Marx's analysis cannot fully explain the post-industrial condition. He is helpful in pointing in the right direction and offers good insights, but cannot explain a litany of post-modern, socio-economic phenomena, which are out of reach of Das Capital. So let me quote, the American, philosopher of science, Thomas Kuhn, who can incapsulate how these issues with Marx and his ideologues will be resolved:    

 Michel I hope this is not an endorsement on your part, as an anarchist, of Steve San Francisco's ludicrous statement:Capitalist call that a store and it fits the definition of "an immense accumulation of commodities".  Socialist call it a store and it fits the definition of "an immense accumulation of commodities".   As an anarchist, I take it you would agree that the kind of society we are all looking toward – socialsm – would indeed entail the complete disappearance of all commodity production – of buying and seling – however much we might disagree on how to get there On the question of  examining the evidence objectively I am very keen  to do precisely that.  Ive cited some evidence already that seems to call into question your central thesis that Marx.'s  Labour Theory of Value has been effectively marginalied by modern or, should I say, post modern developments.  I am not convinced by your argument but I am open to persuasion.  I think the argument you have presented thus far is too one sided and fails to see the wood for the trees, In relative tems, though some prices have risen sharply, for reasons such as branding (although I think you overlook the costs of marketing which have also to be factored into the equation), others have fallen as you would expect with rising industrial productivity and declining unit costs (adjusted for inflation) Could you perhaps address some of the concerns that I raised in post 129?

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Steve-SanFrancisco-UserExperienceResearchSpecialist wrote:

robbo203 wrote:

robbo203 wrote:

MBellemare wrote:

   I never said Marx's critique is no longer valid, I said it is marginalized, i.e., that capitalism functions according to a different, post-modern, post-industrial logic, that no longer holds scientific quantification of labor-power as first and foremost, but merely as a secondary minor consideration. What was in Marx's time an exception, i.e., the arbitrary construction of values, prices, and wages, where no labor-power is found, is now primary. That is all I've said. Marx readily admits that value and price can be dreamed-up and applied to thing. I merely state that now this sort of thing is primary to any quantifiable theory/law of value.    By doing this, I can rightly explain from a post-industrial, post-modern point of view, why prices are rising as production costs drop, why there is ever-increasing financial inequality, why there is an ever-increasing debt load dropped upon the working population. Mr. San Francisco, supplied some excellent statistics, which prove my thesis, concerning arbitrary, artificial mark-ups, that continually rise, over the last 40 years.    

  Michel Something does not quite add up in this argument you present of steadily rising prices and falling costs of production.   Another forum user here, Steve San Francisco, comes to your aid by presenting the following evidence:   “According to economists Jan De Loecker of Princteon University and Jan Eeckhout of the University College London, this basically describes the US economy since 1980. In a recently released paper, De Loecker and Eeckhout analyzed the balance sheets of listed companies from 1950 to 2014. (In 2014, these firms accounted for around 40% of all sales.) They found that average markups, defined as the amount above cost at which a product is sold, have shot up since 1980. The average markup was 18% in 1980, but by 2014 it was nearly 70%."  However such evidence hardly clinches the argument for the obvious reason provided in the quote itself – that the firms concerned account for only 40% of all sales.  We do not know what the situation is regarding firms accounting for the other 60% of all sales.  It is quite conceivable that the former have been able to substantially raise their prices because of the changing pattern of supply and demand but at the expense of the latter, perhaps because relatively greater productivity in the latter sector has greatly increased the output of goods there bringing about a fall in their relative prices.   In fact, according to this article I came across, there are “seven categories of goods and services that are comparatively cheaper today than they were 10 years ago. All figures are based on a BLS comparison of like products and services from August 1998 and August 2008.”   These include phones, electronics, footwear, new vehicles, toys, apparel, watches” (http://www.bankrate.com/finance/personal-finance/7-falling-price-tags-1.aspx)  So the picture you present is somewhat misleading – some businesses or industries may have been able make substantial mark-ups but only because other businesses of industries have not been able to do so.  So what you have in fact is a shift in the overall pattern of demand from the latter to the former, relatively speaking.

Can anyone provide some data concerning the average mark up for industry as a whole not just a select number of businesses, as in the above quote, that account for only 40 per cent of total sales?

Gee, those are some pretty well funded researchers that came up with the 40% figure.  I don't think any data that comprehensive and consolidated exists outside of deep capitalist HQ information vaults.  

 So essentially what this boils down to saying is that there is no hard emprical eviidence to back up the claim that businesses across the board can just arbitrarily mark up their prices in the face of (allegedly) falling production costs and  this rather calls into question Michel's whole thesis that Marx's theory has been "marginalised" by the supposed ability of modern day businesses, using their "creative power"  to enhance the value of commodities, in general, way above their abstract labour content.  Some commodities may well sell above their value in the Marxian sense but the logical corrollary of this is that others sell below their value since the total sum of values must in the end equate with the total sum of prices

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Steve-SanFrancisco-UserExperienceResearchSpecialist wrote:

 No. That's not what Marx or I meant in every case that we use the phrase "immense accumulation of commodities".  I'm refering to a region of space like a store where an immense collection of things like toasters and blenders (aka commodities) are accumulated.  You could define "an immense accumulation of commodities" with geography and a map in the lexicon of discusstion that's relevant and I'm using.  Capitalist call that a store and it fits the definition of "an immense accumulation of commodities".  Socialist call it a store and it fits the definition of "an immense accumulation of commodities".  

 I feel like I am banging my head against a brick wall here.  You clearly dont understand what a "commodity" is if you think a  non market socialist system of production is one in which there will be "an immense accumulation of commodities".  Everyone, apart from you, seems to understand that socialism in the Marxian senses entails the abolition of commodity production.  Your eccentric interpretation is something that is unique to you alone, dont  bring Marx into the picture.  He would have guffawed  heartily at such an example of profound ignorance on the subject Incidentally "toasters and blenders" are emphaticaly  NOT "aka" commodities.  They only become commoditiies when they are produced for the express purpose of being sold.  This is so basic and elementray I have no idea why you can't seem to get your head around it

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