Tuesday, July 24, 2007
Surplus Value
Every now and then I can't resist commenting on a blog, and I often reproduce those comments here. This was in reply to a criticism on a comment by Adam Smith on the contribution to price, of labor. Note that the labor that goes into creating machinery and finding, extracting and refining the fuel to run machinery counts here too, not just direct manual labor per se:
And what adjusts supply and demand? Usually labor. If a meteorite lands in your backyard and you decide to sell it, your labor hasn't determined its price.
But there is a market in meteorites, and its prices are determined by the efforts of those who scour their favorite windblown desert sites in dune buggies (with half their finds going to universities if they are searching on Federal Lands.)Markets not determined by labor at one moment usually become so.
Of course, Smith uttered an overgeneralization. But over time where labor is applied is the factor that can be most easily changed, so it ends up determining prices rather closely, even with commodities - but of course it is the marginal labor, of getting the most labor-intensive last part of the supply to market that determines price, often leaving much "economic profit."
It's not impossible that Marx was groping for this last concept, ineptly, with his lamentable theory of "surplus value" (which Bertrand Russell excuses as an emotional outburst due to reading to much about child labor)although this interpretation of mine may be much too kind. In transitional (or subtly corrupt) economies such profits can be very wide spread amongst the rich.
submitted to
http://adamsmithslostlegacy.com/ASLLBlog.htm
And what adjusts supply and demand? Usually labor. If a meteorite lands in your backyard and you decide to sell it, your labor hasn't determined its price.
But there is a market in meteorites, and its prices are determined by the efforts of those who scour their favorite windblown desert sites in dune buggies (with half their finds going to universities if they are searching on Federal Lands.)Markets not determined by labor at one moment usually become so.
Of course, Smith uttered an overgeneralization. But over time where labor is applied is the factor that can be most easily changed, so it ends up determining prices rather closely, even with commodities - but of course it is the marginal labor, of getting the most labor-intensive last part of the supply to market that determines price, often leaving much "economic profit."
It's not impossible that Marx was groping for this last concept, ineptly, with his lamentable theory of "surplus value" (which Bertrand Russell excuses as an emotional outburst due to reading to much about child labor)although this interpretation of mine may be much too kind. In transitional (or subtly corrupt) economies such profits can be very wide spread amongst the rich.
submitted to
http://adamsmithslostlegacy.com/ASLLBlog.htm
Labels: Adam Smith, economics, labor, Marx, meteorite, price, value
