Value is subjective. If I value my free time at $20 an hour, and you value my labor at $40 an hour, we will be able to come to an agreement where you pay me $30 an hour, and we will both benefit according to our subjective perception of value.
Profit is compensation for investors that drives, sustains and incentivizes the work of acting as a responsible steward of capital.
This is the price, not value. Value is the benefit provided to an economic agent from a good or service, whereas price is the exchange value for a good or service.
There is no grand con in the free market exchange process. No exploitation that Marxists uncovered that condemns all employers as exploiters who deserve to have their property seized.
This is demonstrably untrue. Your employer almost necessarily needs to profit from hiring you. If they hire you at 30$, they may make 40$. So, the value they are provided in hiring you is roughly 40$. The price they pay is 30$.
Edit: this was likely a bad example because people are going to fly off the rails thinking I'm advocating for the LTV, but the point I'm trying to show is this: the employer is willing to pay the price of 30$ because they value the employee's work higher than the cost of the currency. So, to state it again, the price is 30$, but the value is > 30$.
This isn't even a marxist critique. This is mainstream economics saying that value and price are distinct.
> There is no grand con in the free market exchange process. No exploitation that Marxists uncovered that condemns all employers as exploiters who deserve to have their property seized.
I don't care. I'm just hoping that you can use basic economic terminology correct before calling others quacks.
OP was talking about the value for the worker in taking a wage from an employer in the part you quoted. Clearly the employer wants to make a profit from hiring employees - I don't see how you can think OP would think otherwise based on what they wrote.
An employer who hires people who only cost money will soon be out of capital, and same with an employer who just breaks even(since there is uncertainty in any forecast, and you can't go below $0)
This might be a dialectual/regional difference, but the word, at least to me, means something along the lines of "gain access to." If a value is a perceived benefit of a good or service, then "gaining access to a resource through hiring" is semantically the same as "the value they are provided in hiring you."
This really isn't an ideological argument I'm providing, the guy just isn't using the two words correctly in the context that he's speaking.
> I don't see how you can think OP would think otherwise based on what they wrote.
It's just incredibly confusing when he's mixing terminology that has standard definitions within economics.
>Value is subjective. If I value my free time at $20 an hour, and you value my labor at $40 an hour, we will be able to come to an agreement where you pay me $30 an hour, and we will both benefit according to our subjective perception of value.
You responded with:
>This is the price, not value. Value is the benefit provided to an economic agent from a good or service, whereas price is the exchange value for a good or service.
What exactly are you referring to here? I stated that "if I value my free time at $20", and then proferred a situation where we agree to a labor agreement where I am paid $30, and suggested that I would be profiting according to my subjective valuation of said trade of time for money.
I didn't equate the price I got for my labor with how much I value it at. Likewise, I didn't say that the employer who values my labor at $40 is getting $30 of value as a result of that being the price they paid for it. I was actually extremely clear on both points which makes your misunderstanding frustrating in how inconsiderate it is.
So how about we start our discussion over again instead of you strawmanning me from the very beginning and then lecturing me on economic terminology.
>This might be a dialectual/regional difference, but the word, at least to me, means something along the lines of "gain access to." If a value is a perceived benefit of a good or service, then "gaining access to a resource through hiring" is semantically the same as "the value they are provided in hiring you."
You're lecturing on using precise economic terminology and are now using this vague and informal connotation based definition of value?
Anyway, you're totally missing the point. The point your interlocutor made is that the profit they earn from selling the product of the labor is not solely from the value contributed by the labor they bought, as you implied in your previous commenting where you equated price the employer sells the labor at as the value they get from it. The product of the labor that the employer is selling is actually a product of a combination of the labor they bought plus the capital they own and utilized (mixed) with the labor.
The overlooking of the value that their capital contributed to the production of the good/service is a classic oversight of Marxists.
this fundamental concept is called constant capital and it is of course introduced in the opening chapters of capital vol 1
https://en.wikipedia.org/wiki/Constant_capital#Why_%22consta...?
So no, Marx did NOT recognize "the value that [the investors'] capital provided" in the production of goods/services. His silly theory put the net value contributed by the capital at zero. Apparently working for years to create a machine that can automate berry picking is identical in value to picking berries every day for years - the long-term investment of time into a project to raise productivity added no value according to him.
The man and his economic theories are absurd. In one sense, they are exactly what they claim to be: anti-capitalist. They are hostile to the processes that build capital.
But real markets tend to be far from perfectly competitive. Depending on how hard it is to switch jobs, which is affected by factors like the level of demand by other employers for the same type of work, and the difficulty of retraining for other types of work, the employer may have a semi-monopsony status, in which case the wage may be far below the value the employer derives. The employee still works voluntarily, because they are still gaining value compared to not working, but they don't gain nearly as much value as they would in a competitive market.
For that reason, unions and minimum wage laws, among other things, can often create higher wages without driving employers out of business (though not always).
I don't know very much about Marxism, so I can't judge how well it addresses this problem; it admittedly doesn't seem to have worked out well in practice. But your libertarian fundamentalism hardly seems like an improvement!
Of course real-world economies are highly chaotic/complex and are going to deviate from simple economic models, with numerous outliers that don't adhere to what would be seen in the assumptions of a perfectly efficient/competitive market that exists in economic model, but that is no justification for crude cookie cutter interventions that introduce systemtic distortions.
There is no reason to assume the distortions that exist in an ostensibly free market will generally push wages to below their market rate. They are just as likely to push it above. The most reasonable assumption that the distortions that push it above market wages balance the ones that push it below, resulting in average mostly aligning with the true market wage.
In the absence of definitive evidence either way, we should opt to trust basic economic theories and respect free market rules, and not actively intoduce laws that blatantly restrict contracting rights in the hope that these new distortions will counter-act some hypothesized imbalance of distortion that exists at labor's expense. These remediative rules are just as likely to exasperate existing distortions as they are to counter them, while introducing a host of new distortions that would otherwise not be present.
>>For that reason, unions and minimum wage laws, among other things, can often create higher wages without driving employers out of business (though not always).
The wage gains are not a free lunch. It comes at some cost. And that cost can include more than employers being driven out of business, though as we saw in the 50s through 70s in the US, that was often the outcome of unions getting a strangehold over major industries.
The fact is, it's impossible to measure the impact of every intervention in a large economy, whether it be rent control, minimum wage, or giving unions a monopoly over a company's negotiation and hiring decisions. In the absence of definitive evidence of the impact of any given proposed intervention, we should opt to trust economic theories that say price floors/caps create and obstructions of contracting rights create economic deadweight losses.
i thought there might be something particular about your intense reaction to trotsky's name, but your account of marx's political economy is so broken (e.g. for marx profit and surplus value are two very separate categories, and in marx's analysis employers indeed do not attain labor power below its true value) that there can't be any foundation on which you could legitimately criticize trotsky's intellectual work. this makes sense because you also just admitted to not actually knowing anything about what trotsky might have written.
For Marx, the employer's profit was solely expropriated surplus value generated by workers:
https://en.wikipedia.org/wiki/Surplus_value
>>Marx uses the term Mehrwert to describe the yield, profit or return on production capital invested, i.e. the amount of the increase in the value of capital. Hence, Marx's use of Mehrwert has always been translated as "surplus value", distinguishing it from "value-added". According to Marx's theory, surplus value is equal to the new value created by workers in excess of their own labor-cost, which is appropriated by the capitalist as profit when products are sold.
Read his own words:
https://www.marxists.org/archive/marx/works/1847/wage-labour...
>>We have said: "Wages are not a share of the worker in the commodities produced by him. Wages are that part of already existing commodities with which the capitalist buys a certain amount of productive labor-power." But the capitalist must replace these wages out of the price for which he sells the product made by the worker; he must so replace it that, as a rule, there remains to him a surplus above the cost of production expended by him, that is, he must get a profit.
The man also believed that automation would reduce the demand for labor, and with it, wages:
https://www.marxists.org/archive/marx/works/1847/wage-labour...
>>But even if we assume that all who are directly forced out of employment by machinery, as well as all of the rising generation who were waiting for a chance of employment in the same branch of industry, do actually find some new employment – are we to believe that this new employment will pay as high wages as did the one they have lost? If it did, it would be in contradiction to the laws of political economy. We have seen how modern industry always tends to the substitution of the simpler and more subordinate employments for the higher and more complex ones. How, then, could a mass of workers thrown out of one branch of industry by machinery find refuge in another branch, unless they were to be paid more poorly? and
>>To sum up: the more productive capital grows, the more it extends the division of labour and the application of machinery; the more the division of labour and the application of machinery extend, the more does competition extend among the workers, the more do their wages shrink together.
This was proven wrong in his own lifetime as factory worker wages rapidly grew in industrializing Britain.
He was an economically illiterate quack promoting basic fallacies like Ludditism that are popular with laymen.
Regardless of what you think of Marx's economics (and it seems you haven't thought much about it, since modern Marxist economists have improved some of ideas and rejected others), it is totally incorrect to say he was economically illiterate. Marx had an encyclopedic knowledge of political economy, and all his predecessors, including Smith, Ricardo, Say, Bailey, J.S. Mill, etc. - that much is visible through his notes and published works.
>This was proven wrong in his own lifetime as factory worker wages rapidly grew in industrializing Britain.
Marx effectively writes about this in Capital.
e: as far as the increasing wages of english workers towards the end of the 19th century, you would have to look at engels' criticism of the bourgeois labour party (written to marx) and the continuation of that work by lenin (imperialism, etc). i don't think you actually care about any of this. the mere indication of a historical difficulty within the field of political economy is good enough for you to call marx an illiterate quack (not even the grimiest neoclassical economist would go this far). whatever helps you feel good about your brain i guess
>>the mere indication of a historical difficulty within the field of political economy is good enough for you to call marx an illiterate quack
Claiming automation would reduce wages is a basic fallacy that economic laymen believe in. No one with even a moderate grasp of economics would believe this. He was a quack.
>>whatever helps you feel good about your brain i guess
You are promoting a man who had an amateur understanding of economics, and whose doctrines wherever they came to be adopted led to tyrannies the likes of which the world had never seen before.
You do have to read about modern Marxist economic replies to objections over a century old. The likes of Guglielmo Carcheidi, Kliman and Freeman, and even non-Marxist economists sympathetic to Marx answer many of these problems.
>Claiming automation would reduce wages is a basic fallacy that economic laymen believe in.
This is not strictly the claim that Marx makes, and this claim you attribute to him only comes from a particular logical view of Marx rather than his own logic.
Huh? I quoted him asserting that mechanization would reduce wages.
Marx only identifies the introduction of machinery lowering the wage rate on the idea that with such machinery, workers are more substitutable - but as far as I know he did not account for the rising proportion of people taking up what he described as a "numerically unimportant class", "engineers, mechanics, joiners". In fact, this class of workers has not seen the same reduction or stagnation in the wage rate that Marx saw would happen with low skill workers.
"And precisely taking into account the forms of technical progress which Marx considered - that is the division of labour, capital saving, the mechanization of production and innovations - a fall in the maximum rate of profit can happen only in very particular cases, and no need arises to keep wages at a minimum in order to avoid a fall in the rate of profit."[0]
[0] https://mpra.ub.uni-muenchen.de/20976/1/MPRA_paper_20976.pdf