tag:blogger.com,1999:blog-2761684730989137546.post610455604019303555..comments2024-03-29T07:30:30.121-04:00Comments on Mike Norman Economics: Barkley Rosser — Comments on Profit and Capitalmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger45125tag:blogger.com,1999:blog-2761684730989137546.post-91340891974569872632018-07-11T19:26:57.930-04:002018-07-11T19:26:57.930-04:00BTW, I agree that "modern" was not a goo...BTW, I agree that "modern" was not a good choice of terms, along with "theory" when naming MMT. Unhelpful and potentially confusing. It was also a poor choice strategically, You don't want to start off having to defend your name. But that is water over the bridge now.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-6140937632859053002018-07-11T19:20:09.108-04:002018-07-11T19:20:09.108-04:00See L. Randall Wray, From the State Theory of Mone...See L. Randall Wray, <a href="http://www.levyinstitute.org/pubs/wp_792.pdf" rel="nofollow">From the State Theory of Money to Modern Money Theory: An Alternative to Economic Orthodoxy (Levy, 2014)</a> for the MMT POV.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-72835823822738407862018-07-11T19:17:57.913-04:002018-07-11T19:17:57.913-04:00You have basically repeated everything I said. Alt...<i> You have basically repeated everything I said. Although I don't accept that money is modern in any sense of the word. Money is and always has been a record of account.</i> <br /><br />That is the MMT position, and evidence of accounting extends back to Sumer, the earliest known civilization, which flourished in Mesopotamia, lying between the Tigris-Euphrates rivers (ironically, in an area where war is now raging). Mesopotamia is known as "the cradle of civilization," although there is also evidence of ancient cites that were located in what is now Iran, India and China.<br /><br />I am a legalist and institutionalist regarding money and I don't think it makes sense to talk about "money," other than its photo-history, without reference to a relative formal institutional structure to support it. But it is difficult to pin point when custom becomes sufficiently formalized to mark the transition from "primitive" to "modern," which is a different distinction from ancient-medieval-modern.<br /><br />Money, law, property, contract and other such notions did not appear out of nowhere but developed over a lengthy period historically. What may have been tally sticks date back 30,000 years.<br /><br />There was a hugely significant pivot point in history in around 600 BCE, called the Axial Age. This is around the time that coinage began to proliferate. 'Money" was already a developed concept by then. <a href="https://en.wikipedia.org/wiki/History_of_money#Standardized_coinage" rel="nofollow">See the Wikipedia summary of the history of money</a>. "State money" was formalized around this time. <br /><br /><br />Significantly, the Axial Age marked the transition from mythological account to rational explanation in terms of conceptual models instead of narratives.This made institutionalization more coherent. Concepts that were previously inchoate began to be specified explicitly in relation to systems at this time. Money was not an isolated concept but part of a cultural system, hence socially embedded.<br /><br />While money undoubtedly had long a history of development before institutional arrangements were formalized enough to provide historical evidence, what led up to such arrangements is a matter of speculation and the subject of just-so stories. Once money was institutionalized this became a matter of evidence rather than speculation. Same with related issues and concepts like property, transfer of title, contract and enforcement.<br /><br />The institutionalization is now so highly refined that it has become sufficiently complicated to generate debates over what money is and how it works. MMT seems to me to have the clearest and most grounded account of this, but it is based on a lot of work by a range of scholars and thinkers rather than being entirely original.<br /><br />But I also think that claiming that money is only a unit of account or chiefly a unit of account would be insufficient. Meaning depends on context, and "unit of account" is too non-specific if taken independently of context.<br /><br />A big issue is whether money plays a role in a circular system that is constructed on a pragmatic basis, or is founded on and grounded in something real, like gold or bimetallism, or labor time, as a real "anchor." Another why to put this is in terms of the hierarchy of money. It is the top tier a construct like state money or is it something real, like gold.<br /><br />According to MMT, that would depend on the choice of monetary system as a construct rather than "nature," gold being "natural money," for instance.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-25435623721120032202018-07-11T17:39:33.463-04:002018-07-11T17:39:33.463-04:00Other than simple credit based on trust, e. g. som...<i> Other than simple credit based on trust, e. g. someone lends a tool and expects to get it back in the same condition within a specified period or at least a reasonable one, there is no credit without a corresponding debt, since credit creates an asset and a corresponding liability in the same unit of account. This also assumes some accounting records and a designated unit of account in order to keep score.<br /><br />I would say that it is not possible to have modern money without formal institutional arrangements including a law of title and contract, which implies a developed notion of property, ownership rights and transfer procedures. </i><br /><br />You have basically repeated everything I said. Although I don't accept that money is modern in any sense of the word. Money is and always has been a record of account.<br /><br />Deanhttps://www.blogger.com/profile/17395348035867237331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-45247196063215651412018-07-11T17:30:10.256-04:002018-07-11T17:30:10.256-04:00Because gold from the earliest times had a "m...<i>Because gold from the earliest times had a "magical" quality to it that made it desirable in itself over other real goods. In fact, some primitive people believed it to be divine. Silver, too. Thus, bimetallism. </i><br /><br />In my studies of the early history and formation of the Roman republic it was suggested that precious metals were seen back then as having very potent healing properties and hence the reason they were so sought after. Deanhttps://www.blogger.com/profile/17395348035867237331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-92230598275133478682018-07-11T11:15:57.668-04:002018-07-11T11:15:57.668-04:00Other than simple credit based on trust, e. g. som...Other than simple credit based on trust, e. g. someone lends a tool and expects to get it back in the same condition within a specified period or at least a reasonable one, there is no credit without a corresponding debt, since credit creates an asset and a corresponding liability in the same unit of account. This also assumes some accounting records and a designated unit of account in order to keep score.<br /><br />According to Graeber, the first exchange was in terms of gift rather than barter of real goods or use of either a standard commodity like bullion, or else credit as currently understood. At this stage there was no formal notion of property, although gifting included a notion of reciprocity. This was likely the way the subsequent idea of credit began as a tacitly understood responsibility to reciprocate rather than an explicit promise or contract.<br /><br />Property ownership requires an explicitly acknowledged system of rights that implies some kind of institutional arrangements. This began with customs and was later formalized in laws and contract.<br /><br />I would say that it is not possible to have modern money without formal institutional arrangements including a law of title and contract, which implies a developed notion of property, ownership rights and transfer procedures. This would be a necessary condition to create trust among parties that are not otherwise socially interdependent, or an extra-judicial system like Mafia "credit."<br /><br />MMT economists hold that imposition of taxation which implies law, enforcement and penalty, a sufficient condition for creating demand for a currency. They do not hold it is a necessary condition. But historically modern money has generally been correlated with imposition of levies such as taxes, fees and fines payable only in the designated unit of account that the issuer controls as the sovereign.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-85479315375628990862018-07-11T10:15:35.659-04:002018-07-11T10:15:35.659-04:00I assume the bullion only has value if it can be u...<i> I assume the bullion only has value if it can be used to pay taxes, can be lent and borrowed at interest, and can be sought as damages for default of contract or breaking of laws, all of which are legally binding relations. Unless it fits these three then why would anyone exchange anything for it, let alone accumulate it unless they had no taxes to pay, never had to borrow, and never had to enter into any legally binding agreements, which is impossible? I certainly wouldn't exchange anything for it.</i> <br /><br />Because gold from the earliest times had a "magical" quality to it that made it desirable in itself over other real goods. In fact, some primitive people believed it to be divine. Silver, too. Thus, bimetallism. <br /><br />Gold ornaments were a symbol of wealth as they are today, especially in some countries like India. Therefore, gold attracted beautiful women to the possessor.<br /><br />Intergroup trade was often conducted in the metals, and later became the basis of international trade. This only ended in 1971, when Nixon shut the gold window. Central banks still hold it however, since is still considered a money equivalent, or even the at the apex of the hierarchy of money although no longer officially.<br /><br />While the example I gave above was idealized in terms of the initial assumptions, it did apply in a way to mercantilism, imperialism, and colonialism. Columbus's ships and voyage were finance on the expectation of obtaining gold.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-78956248869783313202018-07-11T02:57:20.366-04:002018-07-11T02:57:20.366-04:00"It's also possible to conceive of a scen...<i>"It's also possible to conceive of a scenario with no credit and yet some profit in a system based on real exchange, although I am not aware of any historical examples since credit has been pretty universal.<br /><br />Assume that some workers are self-employed in prospecting for bullion.<br /><br />They exchange bullion for goods made by other workers employed by owners of the means of production.<br /><br />All goods sold are owned by the owners of the means of production for bullion, who get bullion in exchange for goods and pay their workers in bullion for producing all the goods for sale.<br /><br />The owners of the means of production, having a monopoly on production, adjust price and quantity so that after all goods are exchanged for bullion, there is bullion left over as profit."</i><br /><br />I assume the bullion only has value if it can be used to pay taxes, can be lent and borrowed at interest, and can be sought as damages for default of contract or breaking of laws, all of which are legally binding relations. Unless it fits these three then why would anyone exchange anything for it, let alone accumulate it unless they had no taxes to pay, never had to borrow, and never had to enter into any legally binding agreements, which is impossible? I certainly wouldn't exchange anything for it.Deanhttps://www.blogger.com/profile/17395348035867237331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-51375640480958679912018-07-11T01:34:39.743-04:002018-07-11T01:34:39.743-04:00"Credit extension is based on some collateral...<i>"Credit extension is based on some collateral so eventfully workers taking on debt may be forced to give up whatever they own, e.g., land, or even sell themselves or family into slavery....Where there is no collateral for credit, then the alternative is some variation of slavery, which is being forced to work for subsistence, or perish.<br /><br />Credit of some sort appears to be as ancient as exchange."</i><br /><br />Yes, but one must clearly distinguish between credit and exchanges which are intended to be enforced, and those that are not.<br /><br />I often read of proponents of a credit system over a debt based system, and yet I have not seen any evidence which differentiates the two. Extending credit is still based on the fact that the contract is legally or physically enforceable, otherwise it is not credit, it is mutual trust and mutual trusts are not enforced like legally binding agreements are for the simple reason that neither party wants to enforce it because it goes against their culture or principles (for instance the Eskimo episode in Graeber's Debt: The First 5000 Years was based on mutual trust, not some enforceable agreement), or because there is no property ownership and hence no legal enforcement is possible (only physical). In a nutshell, any form of credit which is intended to be enforced creates property. I am not sure how a socialist model is able to get away with operating without enforcement, particularly when it is obvious even now many people wont want to be a part of it.<br /><br />This is in the 'sources' section of the Bank of Englands 2014 paper 'Introduction to Money' pg 4, note (4):<br /><br />The importance of a lack of trust as a necessary condition for the existence of money<br />is emphasised in papers by Kiyotaki and Moore (2001, 2002), who famously argue<br />that ‘evil is the root of all money’. Kocherlakota (1998) points out that a lack of a<br />record of all transactions is another necessary condition. Earlier work by Brunner and<br />Meltzer (1971) and King and Plosser (1986) also argues that there must be some<br />impediment to stop a credit system being used instead of money.<br /><br />What this demonstrates is that there is a clear distinction between enforcing agreements and operating under mutual trusts. I cannot see how the term 'credit' can fit into the latter unless the intent is not to enforce the debt when credit when is extended, which then renders it not as creditor/debtor relation (nor as property) but as trust relation; and as I said before, any form of credit which is intended to be enforced creates property, not trust.<br /><br />Is it possible to see the existence of monetary profits outside of debtor/creditor relations? I can'tDeanhttps://www.blogger.com/profile/17395348035867237331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-30087944977824336942018-07-10T23:16:57.447-04:002018-07-10T23:16:57.447-04:00It's also possible to conceive of a scenario w...It's also possible to conceive of a scenario with no credit and yet some profit in a system based on real exchange, although I am not aware of any historical examples since credit has been pretty universal.<br /><br />Assume that some workers are self-employed in prospecting for bullion.<br /><br />They exchange bullion for goods made by other workers employed by owners of the means of production.<br /><br />All goods sold are owned by the owners of the means of production for bullion, who get bullion in exchange for goods and pay their workers in bullion for producing all the goods for sale.<br /><br />The owners of the means of production, having a monopoly on production, adjust price and quantity so that after all goods are exchanged for bullion, there is bullion left over as profit.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-78427888192001021152018-07-10T22:55:54.079-04:002018-07-10T22:55:54.079-04:00If we assume only one business sector in the econo...<i>If we assume only one business sector in the economy which produces all the needs of the population, is owned by say 1% of the population and where the other 99% work for that business sector</i> <br /><br />That is either feudalism or capitalism by definition.<br /><br />By definition, socialism is based on the commons, with no private ownership of the means of production.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-20833985986538653442018-07-10T22:50:57.098-04:002018-07-10T22:50:57.098-04:00With no government, assume that the medium of exch...With no government, assume that the medium of exchange is real like bullion. Obviously, workers cannot exchange more than they receive so there is no profit unless there is credit extension, either by banks if they exist or sellers of goods. <br /><br />If nothing real is the basis of the medium of exchange, then the other option is credit. Credit extension is based on some collateral so eventfully workers taking on debt may be forced to give up whatever they own, e.g., land, or even sell themselves or family into slavery. <br /><br />And this is what happened historically under those conditions. <br /><br />Credit of some sort appears to be as ancient as exchange.<br /><br />Where there is no collateral for credit, then the alternative is some variation of slavery, which is being forced to work for subsistence, or perish.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-68728963981147609932018-07-10T22:29:24.535-04:002018-07-10T22:29:24.535-04:00Tom Hickey said:
" "Capital" comes...Tom Hickey said:<br /><br /><i>" "Capital" comes from the Latin word of head, meaning head of livestock. In pastoral communities wealth was based on head of livestock. In farming communities wealth was based on stocks of produce, mostly grain, that were stored up for future use."<br /><br />"In a monetary economy, there is a monetary surplus also, which accrues from exchange of commodities (surplus over subsistence) for money."<br /><br />"Workers create more goods than needed for their subsistence using skill and technology. This is the real surplus (over subsistence). The monetary surplus is the difference between monetary cost of production (wage bill) and sales revenue. Monetary surplus accrues from exchange of real surplus for money. "<br /><br />"Workers earn money as wages from work. Capitalists extract rent based on ownership, without work."<br /><br />"In a socialist monetary economy, the monetary surplus is divided among workers and they are able to mutually purchase the real surplus (commodities produce for sale) in excess of provisioning for subsistence fairly equally based on income from their work.<br /><br />In a capitalism monetary economy, the monetary surplus goes to owners of "capital" (land, technology, accumulated financial resources) and they are able to command more of the real surplus with it as well as invest to increase their real capital and thereby also their financial capital. "</i><br /><br />The key difference between 'livestock, grain, etc', and 'money', is that the former is self-reproducing, whereas the latter are always claims against other people. A surplus in self-reproducing things can occur without another being in debt, whereas monetary profits cannot.<br /><br />In your examples of monetary surplus, it would make sense from a micro-perspective, but not a macro-perspective, which makes any supposed difference between a socialist and capitalist monetary economy as unfathomable from a macro-perspective. <br /><br />If someone could demonstrate to me, the following:<br /><br />If we assume only one business sector in the economy which produces all the needs of the population, is owned by say 1% of the population and where the other 99% work for that business sector (excluding children, elderly, incapacitated, disabled, economists, politicians etc); can you first show me where the business sector gets its money to pay the workers, and then second, how those same workers are able to spend more than they earn so the business sector generates a profit, assuming there is no government spending and no foreign trade, and assuming the business sector clears their whole inventory?Deanhttps://www.blogger.com/profile/17395348035867237331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-18159196332884515062018-07-10T02:54:16.411-04:002018-07-10T02:54:16.411-04:00Excellent discussion between Bob and Egmont - than...Excellent discussion between Bob and Egmont - thank you both! I wish there were more willing to do thisDeanhttps://www.blogger.com/profile/17395348035867237331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-11276345850233906892017-07-09T11:02:37.369-04:002017-07-09T11:02:37.369-04:00Part 2
So, where does profit come from? Not from ...Part 2<br /><br />So, where does profit come from? Not from a longer labor time L, not from higher productivity R, not from a lower wage rate W, not from more greed, not from monopoly power, not from risk taking, not from wishful thinking or any other subjective factor.<br /><br />It was Marx who asked the right question: “How can they continually draw 600 p. st. out of circulation, when they continually throw only 500 p. st. into it? From nothing comes nothing. The capitalist class as a whole cannot draw out of circulation what was not previously in it.”<br /><br />Trivially true. As long as the budget is balanced, i.e. C=Yw, total monetary profit/loss Qm is zero. Because we know already that the Profit Law states Qm=-Sm it is quite obvious that the business sector as a whole can only draw more out of the circulation, i.e. C greater Yw, if the household sector throws more into the circulation, in other words if the household sector dissaves, i.e. if Sm≡Yw-C is negative, i.e. if C is greater than Yw.<br /><br />From nothing comes nothing, even economists understand this.#3<br /><br />Egmont Kakarot-Handtke<br /><br />#1 For details see ‘Economics and the Fallacy of Insufficient Abstraction’<br />https://axecorg.blogspot.de/2017/06/economics-and-fallacy-of-insufficient.html<br /><br />#2 For the detailed verbal description see ‘How the intelligent non-economist can refute every economist hands down’<br />http://axecorg.blogspot.de/2015/12/how-intelligent-non-economist-can.html<br /><br />#3 For more details see ‘The Emergence of Profit and Interest in the Monetary Circuit’<br />https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1973952AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-26315406449623945462017-07-09T11:01:50.457-04:002017-07-09T11:01:50.457-04:00Bob, Tom Hickey
Everybody who has ever used knife...Bob, Tom Hickey<br /><br />Everybody who has ever used knife and fork or a wheelbarrow or a cooking spoon somehow understands the concept of lever and can apply it successfully in everyday situations. Science, though, goes beyond the endless multitude of concrete instantiations of the lever and tries to figure out the common denominator of ALL variants of levers past, present, and future. Science abstracts from the superficial reality of the Here and Now and tries to figure out the underlying fundamental reality, which has been found to be Fb/Fa=a/b: “This is the law of the lever, which was proven by Archimedes using geometric reasoning.” (Wikipedia)<br /><br />The failure of economics is mainly due to the Fallacy of Insufficient Abstraction.#1 In other words, economists cannot rise above the level of storytelling. One story line is that of supply-demand-equilibrium and the wonderful feats of the Invisible Hand, the other story line is that of the struggle between the good guys=workers and the bad guys=capitalists. Storytelling is scientific rubbish but people like it.<br /><br />Economics, understood as science, must go beyond common sense, plain description, and storytelling: “The highest ambition an economist can entertain who believes in the scientific character of economics would be fulfilled as soon as he succeeded in constructing a simple model displaying all the essential features of the economic process by means of a reasonably small number of equations connecting a reasonably small number of variables. Work on this line is laying the foundations of the economics of the future . . . (Schumpeter)<br /><br />So the first thing to do is to formulate ‘a simple model’ of the abstract entity economy, more precisely, the simplest possible model. The objectively given and most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm.<br /><br />The most elementary economy is given with three equations Yw=WL, O=RL, C=PX, two conditions X=O, C=Yw and the definition of total monetary profit Qm≡C-Yw.#2 This yields P=W/R (1), i.e. the market clearing price P is equal to unit wage costs W/R. This is equivalent to W/P=R (2), i.e. the real wage W/P is equal to the productivity R. This holds, no matter how the wage rate W is set. A wage reduction leads to a proportional fall of the market clearing price P. Profit Qm does NOT change because the budget is balanced, i.e. C=Yw, and from this follows Qm=0, i.e. profit is zero.<br /><br />In the elementary monetary economy, workers always get the whole output O, the real wage W/P is equal to the productivity R. If productivity increases over time the real wage rises, if productivity falls over time then at some point the real wage hits the subsistence level. This, though, has NOTHING to do with exploitation or surplus or profit. So, as a matter of principle, the elementary consumption economy can reproduce itself at any level of employment L for an indefinite time as long as there are no external limits. It is impossible for the business sector as a whole to make a profit.<br /><br />See part 2AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24862965000328518962017-07-08T16:43:16.031-04:002017-07-08T16:43:16.031-04:00"Surplus" doesn't have a single mean..."Surplus" doesn't have a single meaning that denotes the "essence" of surplus. Generically, it means "more."<br /><br />For Marx, there was no "economics" as such in subsistence societies. There were no goods produced for exchange (commodities), no wages, and no unemployment. Everything was used up by producers that produced "on time." Or they didn't and died. There was no inventory either. <br /><br />Goods produced for exchange are commodities. They are surplus over subsistence, what a worker can produce in addition to meeting subsistence needs. Then the question becomes one of mode of production, which is institutional. Historically it was imposed through class structure and class power according to Marx and based more on evidence than the competing just-so stories.<br /><br />There really was no surplus before agriculture during the hunter-gathers stage of development in which subsistence living was the rule. <br /><br />Agriculture was divided into farming and pastoralism. "Capital" comes from the Latin word of head, meaning head of livestock. In pastoral communities wealth was based on head of livestock. In farming communities wealth was based on stocks of produce, mostly grain, that were stored up for future use.<br /><br />In a monetary economy, there is a monetary surplus also, which accrues from exchange of commodities (surplus over subsistence) for money. In urban environments arts, crafts and trades were also practiced but initially their contribution was less than farming and pastoralism and most of the population was engaged in agriculture. This remained largely true until modern times and the development of technology.<br /><br />Workers create more goods than needed for their subsistence using skill and technology. This is the real surplus (over subsistence). The monetary surplus is the difference between monetary cost of production (wage bill) and sales revenue. Monetary surplus accrues from exchange of real surplus for money. <br /><br />Workers earn money as wages from work. Capitalists extract rent based on ownership, without work.<br /><br />In a socialist monetary economy, the monetary surplus is divided among workers and they are able to mutually purchase the real surplus (commodities produce for sale) in excess of provisioning for subsistence fairly equally based on income from their work.<br /><br />In a capitalism monetary economy, the monetary surplus goes to owners of "capital" (land, technology, accumulated financial resources) and they are able to command more of the real surplus with it as well as invest to increase their real capital and thereby also their financial capital. This is expropriation according to Marx and it was initiated by primitive accumulation through class power and developed through class structure and class power.<br /><br />Admittedly this is a somewhat crude summary of Marx's thinking, but I think it captures the line of argument.<br /><br />Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-33424504504836191312017-07-08T15:30:51.108-04:002017-07-08T15:30:51.108-04:00100 bicycles are produced. Shipment of 100 bicycle...100 bicycles are produced. Shipment of 100 bicycles is stolen and cannot be recovered. Nominal profit representing the market value of the bicycles is lost, while the surplus (the bicycles) remain.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-29340518896189501882017-07-08T15:26:05.375-04:002017-07-08T15:26:05.375-04:00Ok, so the diagram is one where the origin (0,0) i...Ok, so the diagram is one where the origin (0,0) is at the center and the 4 axis represent equal periods of time. Each axis is labeled according to the variable to be plotted, in relation to another variable.<br /><br /><i>(ii) Productivity is a real magnitude with the dimension quantity per hour.</i><br /><br />Then e.g. 10 units/hr produced x 40 hours = 400 units of output.<br /><br />Thus Qm expressed as O is expressed as a quantity. Sm expressed as X is a quantity.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-58319924080876170452017-07-08T15:14:04.959-04:002017-07-08T15:14:04.959-04:00AXEC provided a quote that may indicate how far Ma...AXEC provided a quote that may indicate how far Marx went in developing a macro version of profit. In other words, not far enough.<br /><br />According to Marx, labour surplus is what allows human beings to survive. We might say the same is true for bumblebees. It's not specific to capitalism or feudalism, it's a necessity.<br /><br />The 1930s Technocracy movement described it as the process of obtaining extraneous energy from the environment. At first, this was limited to human brawn. Over time, tools were developed, animals were employed to do work, and then more concentrated forms of energy were harnessed. Our standard of living and our very lives depend on this process.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-27052085037405546852017-07-08T12:38:31.360-04:002017-07-08T12:38:31.360-04:00But surplus is not synonymous with profit.
It is ...<i>But surplus is not synonymous with profit.</i><br /><br />It is a matter of definitions, and definitions are not necessarily as positive as they may appear to be. There is also a normative (ideological) aspect to them too.<br /><br />Surplus as profit implies profit is rent.<br /><br />Marginalism implies that profit is the marginal product of capital, therefore, just deserts.<br /><br />There is no "natural" state of either society or an economy. Calling one version "natural" doesn't make it so, and usually the use of "natural" is a tip off that ideology is being introduced in by the back door.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10855993653853515142017-07-08T12:10:19.724-04:002017-07-08T12:10:19.724-04:00Bob
You say: “But surplus is not synonymous with ...Bob<br /><br />You say: “But surplus is not synonymous with profit.”<br /><br />No, surplus is a real magnitude and profit is a nominal magnitude. For the relationship between the two see Section 4 ‘Profit, surplus, real shares’ in ‘Profit for Marxists’<br />https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2414301.<br /><br />Egmont Kakarot-HandtkeAXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-4534069656404259322017-07-08T11:54:23.353-04:002017-07-08T11:54:23.353-04:00Okay, more to digest. Until later.Okay, more to digest. Until later.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-74104854834393367532017-07-08T11:52:09.882-04:002017-07-08T11:52:09.882-04:00But surplus is not synonymous with profit. The ser...But surplus is not synonymous with profit. The serf produced a surplus that was appropriated by the lord. Gnerally speaking, the labour force does not consume all that it produces - a portion has to be set aside to support everyone who is not in the labour force.<br /><br />At the level of the firm, surplus is synonymous with profits.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-45729529336603744892017-07-08T11:51:04.950-04:002017-07-08T11:51:04.950-04:00Bob
(i) You say: “I do not understand that type o...Bob<br /><br />(i) You say: “I do not understand that type of diagram.”<br /><br />Think of a Cartesian coordinate system#1. Take the first quadrant = north east and throw the other three quadrants away. The first quadrant has only positive values on the axes. Make this four times. Now, put the four first quadrants together, then you get a new coordinate system with ALL axes positive. Thus you can easily walk from one quadrant to the next because the axes have the same dimension, e.g. L = hours per year, or C = dollar per year, or O, X quantity per year. Negative axes are not needed in economics because output O or working hours L are always greater or at least equal zero.<br /><br />(ii) Productivity is a real magnitude with the dimension quantity per hour.<br /><br />(iii) The Marxian definition of profit is ultimately based on the labour theory of value which does not relate to the economy as a whole. But Marx applied also macro reasoning, for example: “How can they continually draw 600 p. st. out of circulation, when they continually throw only 500 p. st. into it? From nothing comes nothing. The capitalist class as a whole cannot draw out of circulation what was not previously in it.” This question is answered by the Profit Law Qm=-Sm (see above).#2<br /><br />Egmont Kakarot-Handtke<br /><br />#1 Wikipedia Cartesian coordinate system<br />https://en.wikipedia.org/wiki/Cartesian_coordinate_system<br /><br />#2 For more details see ‘Marx, the moron’<br />https://axecorg.blogspot.de/2017/06/marx-moron.html<br />and ‘Profit for Marxists’<br />https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2414301AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.com