Marxism, good, bad, both?

Harvey is a Marxist himself.

He also, on closer look, is a geographer not an economist.


I feel like if you want to defend Marxism against all the tenets of modern scientific economics it would help to first understand those.

I don't feel like I have to defend Marxism against all the tenets of "modern scientific economics" (lol! ). What I've mostly been doing here is correcting yours and rambo's misunderstandings.

If you would like to provide a summary of Menger/Walras, I'm all ears.

What do you see in Marxism, is it a good or bad idea? What advantages and disadvantages do you see in this theory?

I have not read much on marxism, I just want to get a light overview of this theory before diving deep in it so don't go too harshly on me. ^_^

By choosing to believe Marxist economists over the mainstream you are implicitly doing so.

I would recommend this book to catch up on some of the exciting things that have been discovered in the past 150 years.

If you could summarise the marginal utility theory of value for me, that would be helpful.

My admittedly limited understanding is that it basically states that commodity values are purely determined by the consumer. That it postulates that consumers judge how much more utility they can get by consuming more units? That the less utility, the less value? Is this correct? If so, then it seems a little circular, because consumers have only prices to evaluate by in the first place. It also appears to ignore production completely. I'm guessing my understanding is incorrect. Could you correct me where I've gone wrong?

I don't feel too inclined when every other post you have made is "Read the damn book!". I linked to a damn book.

Consumers evaluate how much they want the product versus how much they want all the other things they could spend money on, on the basis of how useful it would be to them. The market rate value is then whatever they are willing to pay for a good or service.

Production doesn't determine value - that is a key point. If people spend a lot of time and money to produce something that's useless then they end up with less value than they put in. That is entirely possible.

Not really a fair comparison is it. You were pretending to have read Marx and have understood his LTV. I'm not pretending to have read Menger/Walras and understood them.

I don't understand this. We all need certain things, like food, warmth, shelter. We don't have a choice over how much we pay for these things.

If production doesn't determine value in any way, then why are things that are complicated more expensive?

I have read Marx.

Either way, I feel no need to explain a damn thing to you. Buy a textbook if you want to critique orthodox economics!

That just means food, fuel and shelter is at the top of the list of wants. Remember it's marginal utility. Food is very valuable if the choice is between having some and having none, but I have a huge amount of choice at the margin. It makes no difference to me whether I buy a loaf of bread from Sainsbury's or Asda, and since there are so many loaves of bread about (in free market countries at least), the price of bread is very low.

They're not necessarily. Rather, things that are expensive to produce and not valuable enough to cover those costs are not produced at all. At least in free markets - in command economies plenty of expensive stuff was produced that cost more than it was worth.

Suppose I am a metalworker and earn £10/hour in my job. Working at home, it would take me 1,000 hours to build a car out of lead. Does it follow then that the lead car, which is less useful in every way than a normal car, is worth £10,000 in addition to materials costs? No, of course not, and the fact that I know this is is well know is why people don't build cars out of lead!

It's not always so obvious, which is one of the biggest strengths of the market system: filtering out the small number of good new ideas from the dross, and then funneling enough investment capital into them to roll them out on a large scale.

I'm being honest here and stating that I don't fully understand marginal value theory. You pretended to understand Marx's LTV, but clearly didn't. Hopefully my explanations have made things a little clearer.

What do you mean by "at the margin"? I thought the theory was about people subjectively valuing some things over others. Yet food, shelter etc is an objective need. This is why I think I don't understand the theory. It doesn't make any sense to me.

This doesn't answer my question. Computers are more expensive than bread. Yet to me, bread is worth more. That doesn't make sense.

I don't understand what this is supposed to be in answer too.

nor this. It appears to be completely disconnected from my question.

Let me see if I understand this. A car is more expensive than bread because one more car is worth more to people than one more loaf of bread. Am I right so far? Yet actually, most people only use one car at a time, yet always need bread. I don't get it.

I don't remember any explanations LL.

I'm sorry, that is indeed jargon. At the margin means how much the value changes when you add or subtract one more unit of the good. In general food is more valuable than computers, but one apple is not as valuable as one computer, because there are lots more apples about.

It's an illustration that value doesn't derive from how costly or complicated something is to produce.

People only make things if they can be sold for more than their cost of production.

We see a correlation between the cost to produce something and its value, but this isn't because increased cost of production causes greater value. It's because more valuable things can cost more to produce and still be worth making.

The set of "complicated" things we could produce is extremely large. Most of them are not valuable. A strength of the market is that it quickly identifies which ones are valuable. Your view seems to assume that this function of the market happens automatically, but it doesn't. In a command economy it's likely that a lot of complicated/expensive to produce things would be produced that aren't very valuable.

Right, which is why not many single people own 2 or more cars. They'd value an additional car at less than it costs to buy.

I did try and put you straight. You assumed that making wonky chairs would have value under Marx's LTV merely due to making them. This is a misunderstanding. Marx states that value is socially necessary abstract labour time. not concrete individual labour, i.e. it is labour taken across all of society at a given technological level, that can also be exchanged at market. Hope this helps.

Oh. It doesn't make sense though, as its purely focusing on one individual making something. It doesn't take into account the social character of labour, nor the utility of the product.

But this can only be determined at the point of exchange. So how does it explain the prices of things that come to the market but don't sell?

There are lots more apples about, yes. So production does come into it then?

That's a circular argument. You're saying that more expensive things are more expensive because they're worth more. What?

Yet the value is set by the producer, and the desirability of items is manipulated by advertising.

Right, I already knew about "socially necessary" labour. The problem for the Marxist camp is that this fudge completely guts the theory. What determines value? Not labour time, in fact, but how socially necessary the produce is. How do we determine how socially necessary the produce is? The marginal utility theory! So let's just ditch the now content-free LTV and just use marginal utility.

For the first, why does that matter? Suppose I set up a factory making lead cars - what changes? It's just a way of making the example simpler. For the latter, it does take into account the utility of the product: its utility is very low. The existence of products with low utility and high labour requirement disproves the LTV.

Those prices are "wrong". If there were perfect information, they would never have been set, but the world is imperfect.

The producer does come into it, but doesn't determine the value. There are two key figures:

1. How much a thing costs to produce.

2. Value of the thing to the consumer, ie. the most he would be able to pay for it and still consider himself better off.

Things that are produced are those where the value is greater than the production cost. So the production cost matters, but the production cost doesn't determine the value. Plenty of things that would be expensive to produce have very little value, like a car made of lead.

You've misunderstood again. Marx's LTV does not say that the marginal utility theory determines how socially necessary something is. All it says is that a commodity only has value if the exchange value can be realised. This is due to the two fold nature of value in Marx's analysis. Value is made of exchange value and use value. For something to have "value" in a capitalist economy, it must be exchangeable because someone wants it.

If you set up a factory making lead cars, then no one would buy them and the value would not be realised, so would not actually be value.

Eh? What a fudge! Something doesn't fit into the theory, so its just declared as wrong? This is a massive flaw, surely? The theory doesn't describe reality at all. In fact, according to you, it is reality that is wrong 'cos the theory must be right! Utterly bizarre.

You're going round in circles. You're saying that production costs matters, but then that it doesn't because the consumer determines the price, except for when they don't and this is because the price is wrong? Its just a bizarre argument, like your lead car. Why the **** would anyone make a lead car? Can we have actual real world examples, not fantasy ones?

He doesn't say that, of course, because he didn't know about marginal utility. But if that isn't the method you would use, what method would you use instead? "Exchange value" is set by marginal utility!

I actually think this is one of Marx's real achievements - he almost got to marginal utility. But he was really only a mediocre economist, and didn't realise the implications of what was to him just a fudge to ward off damaging reductios.

Right, that's the whole point.

No, I mean the prices were not set optimally. A factory owner gets nothing for a good that he can't sell. If he knew exactly what every customer would be willing to pay, he would set every price to the maximum and no higher. But in reality he doesn't, so sometimes he will set the prices too high, and be left with excess stock.

The production cost only sets a cap below which the good will no longer be produced if customers judge it less valuable than that.

Increasing production cost doesn't make a good with low marginal utility more valuable.

Here is a similar example from real life: the Sinclair C5. Sinclair thought this machine would revolutionise transport, but the public disagreed, and he eventually closed down production because he couldn't sell Sinclair C5s for more than the production cost.