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The LTV and marginalsm compatible?

socialpinko
Posts: 10,458
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9/2/2012 10:57:18 AM
Posted: 4 years ago
I've been reading "Studies in Mutualist Political Economy" by Kevin Carson (definitely recommended). One of the main objectives of the book is to defend a recasting of the labor theory of value in light of the marginalist revolution and taking into account Bohm-Bawerk's polemical criticism of it.

In the book Carson makes the claim that marginalism doesn't actually refute the LTV as most economists think, but actually complements it by providing the mechanism by which one observes labor costs in value (prices).

Chapter 2 of the book is pretty long and not entirely theoretical (he mostly just attacks Bohm-Bawerk's various refutations). But he does eventually recast the LTV in marginalist context. For the sake of not forcing readers to read the entire chapter to formulate the theory, I'll just post a quote below by Carson in an interview explaining it.

"I think the Austrians also, for the most part, exaggerate the extent to which marginalism/subjectivism is a radical departure from classical labor and cost theories. It's closer to the truth to say that marginalism provides a mechanism for explaining the tendency that Ricardo et al described. The marginalist/subjectivist claim that "utility determines value" is true in a technical sense, if you add the qualification "at any point in time given the snapshot of supply and demand in the spot market." But it's not true in the ordinary way we use those words. If you allow changes in supply over time to enter the picture, then supply alters until the utility of the marginal unit reflects the cost of producing it--i.e., exactly what Ricardo said.

It makes far more sense to treat marginalism as a complement or fulfillment to classical political economy, rather than as supplanting it."


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Thoughts? Criticisms? I already posted this in the philosophy section to no avail so perhaps the perusers of the economics section will respond better.
: At 9/29/2014 10:55:59 AM, imabench wrote:
: : At 9/29/2014 9:43:46 AM, kbub wrote:
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: : DDO should discredit support of sexual violence at any time and in every way.
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darkkermit
Posts: 11,204
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9/2/2012 11:38:13 AM
Posted: 4 years ago
In order to say that LTV = value, it must qualify for one of the three things:

a) its deductively true
b) it has usefulness.
c) its empirically (or inductively) true

It doesn't satisfy any of these qualifications. A definition can just be asserted as true, which is why the "b" qualification comes in. However, if the definition is completely worthless in terms of future analysis, why use the definition at all? The marginal definition is useful in terms of analyzing the markets.
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socialpinko
Posts: 10,458
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9/2/2012 11:42:47 AM
Posted: 4 years ago
My post had nothing to do with the truth value of the LTV. It's only purpose was to bring to light Carson's assertion that it isn't refuted by marginalism. You know, since that's a rather contrarian opinion I thought it might be interesting to discuss.
: At 9/29/2014 10:55:59 AM, imabench wrote:
: : At 9/29/2014 9:43:46 AM, kbub wrote:
: :
: : DDO should discredit support of sexual violence at any time and in every way.
:
: I disagree.
darkkermit
Posts: 11,204
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9/2/2012 12:16:27 PM
Posted: 4 years ago
At 9/2/2012 10:57:18 AM, socialpinko wrote:
I've been reading "Studies in Mutualist Political Economy" by Kevin Carson (definitely recommended). One of the main objectives of the book is to defend a recasting of the labor theory of value in light of the marginalist revolution and taking into account Bohm-Bawerk's polemical criticism of it.

In the book Carson makes the claim that marginalism doesn't actually refute the LTV as most economists think, but actually complements it by providing the mechanism by which one observes labor costs in value (prices).

Chapter 2 of the book is pretty long and not entirely theoretical (he mostly just attacks Bohm-Bawerk's various refutations). But he does eventually recast the LTV in marginalist context. For the sake of not forcing readers to read the entire chapter to formulate the theory, I'll just post a quote below by Carson in an interview explaining it.

"I think the Austrians also, for the most part, exaggerate the extent to which marginalism/subjectivism is a radical departure from classical labor and cost theories. It's closer to the truth to say that marginalism provides a mechanism for explaining the tendency that Ricardo et al described. The marginalist/subjectivist claim that "utility determines value" is true in a technical sense, if you add the qualification "at any point in time given the snapshot of supply and demand in the spot market." But it's not true in the ordinary way we use those words. If you allow changes in supply over time to enter the picture, then supply alters until the utility of the marginal unit reflects the cost of producing it--i.e., exactly what Ricardo said.

It makes far more sense to treat marginalism as a complement or fulfillment to classical political economy, rather than as supplanting it."


http://isocracy.org......

Thoughts? Criticisms? I already posted this in the philosophy section to no avail so perhaps the perusers of the economics section will respond better.

a) The utility of the marginal unit isn't equal to the cost of supply since people have different wages and preferences, have much marginal utility they get from a good/service is different.
b)Only under perfect competition conditions in which markets don't necessarily converge to it.
c) Still doesn't explain the "costs of production". Why there are certain costs associated with it.
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NixonianVolkswagen
Posts: 481
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9/2/2012 3:30:44 PM
Posted: 4 years ago
So, utility determines value at any given point in time, but as utility is influenced by scarcity (ie: supply and demand affects our appraisals), over a given period of time, utility will be equivalent to labor inputs?
"There is an almost universal tendency, perhaps an inborn tendency, to suspect the good faith of a man who holds opinions that differ from our own opinions."

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