What do Marxist economists say about the role of supply and demand? : theory

[-] [email protected] 17 points 6 days ago* (last edited 6 days ago)

Supply and demand are important for the law of value to operate dynamically. We can make a distinction between the actual prices in a market, the market prices, which fluctuate due to supply and demand, and the prices which allow for an economic system to reproduce itself. The latter are called prices of production or natural prices. The market prices fluctuate around the prices of production, there is a gravitation of market prices toward the prices of production as others have mentioned. Or, in other words, the prices if production serve as the attractor.

The prices of production are given by values (and there is a whole question of the transformation problem on how to go from values to prices of production - this is a topic worth its own post).

In Capital Marx studies a capitalist system where the prices are given by their values. There is no price fluctuation due to supply and demand and the prices are at their natural price. Remember that the natural price, or the price of production, are those prices that allow for an economic system to reproduce itself (or if we want to extend it, expand with some given growth rate). These natural prices can be seen as structural.

Even without introducing fluctuations due to supply and demand, and by using natural prices, Marx showed that surplus value (think profit) exist even when capitalists buy and sell commodities at their value. Aggregate profit doesn't derive from arbitrage nor have its source in temporary price fluctuations. It is because labor creates more value than it is worth, or bought for at its value. Surplus value has its source in production.

That there is a transformation from value to these natural prices or prices of production is one aspect of the law of value. I'll call it the "static" aspect of the law of value.

The above is shown without introducing supply and demand. But supply and demand, and hence the fluctuating market prices, does have a role in the "dynamic" aspect of the law of value assuming that capital and labor are mobile and can be reallocated to different economic sectors and there is sufficient competition. This dynamic aspect of the law of value explains how price fluctuations around natural prices can serve as signals which reallocate our social labor to meet (or get closer to) demand.

Supply and demand comes in to play in the following way: if a commodity is underproduced (not enough labor is allocated to produce that commodity) then its demand outstrips its supply. Its market price then rises above its natural price (or value) as bidders compete. The rise in the commodity's actual market price vs its cost to produce means that there is a temporary increase in profits to be made by producing and selling this underproduced, and hence "overpriced" commodity. This increase in profits is like arbitrage. It is temporary and caused by a market fluctuation in the price. The increased profits that can be made leads to an increase of investment, or capital, by others in producing this commodity. This also means an increase in the labor that is reallocated to produce this commodity. Fluctuations in marker prices impact temporary profits, which impacts investment, which reallocateds labor. This is the dynamic part of the law of value.

The opposite scenario also reallocates labor. An overproduced commodity (one where too much labor is allocated toward producing it) causes supply to outstip demand. This leads to a fall in prices, hence a fall in those temporary profits, and hence a flight of investment/capital from the production of thay commodity. And a flight of investment means that labor is reallocated away from that sector.

And notice these two scenarios work together. An underproduced commodity can become overproduced as more capital (and hence labor) is allocated toward sectors that produce it. And vice versa. They create a feedback system that causes the turbulent gravitation of market prices around their values.

So supply and demand impact market prices, which lead to a reallocation of human labor so that supply can meet demand. And that is accompanied by market prices gravitating around the natural prices, or prices of production, which can be given by (a transformation of) values.

This is a "dynamic" and "static" aspect of the law of value.

[-] [email protected] 6 points 6 days ago* (last edited 6 days ago)

Thanks for this response

The dynamic aspect makes sense, but I'm confused by the static part. Naively, someone might interpret the phrase "prices that allow an economy to reproduce itself" to mean "prices that cover production cost plus owner spending habits," because then everyone in the economy breaks even in their expenses and earnings over time, and the economy remains static. But that naive interpretation must be wrong because, mathematically, the problem would have no unique solution—there are infinitely many ways to assign arbitrary wages and prices in an economy such that everyone breaks even—so we don't learn anything that way. But, I'm not sure how else to interpret the phrase.

Possibly a non sequitur: is it Marxist to view profit as a consequence of bargaining power? I.e., the capitalist owns the means of production, which the workers need access to, so they essentially pay the capitalist a toll to use the equipment? The capitalist can withhold access to the means of production, and the worker can in theory withhold labor.

[-] [email protected] 5 points 5 days ago* (last edited 5 days ago)

Are you okay with a mathematical example? I can go into one using input output tables to show how prices are found in a static toy economy. Note, that the example I could provide wouldn't be the only mathematical interprtation of Marxism. There are different schools that attempt to build this mathematical framework. I am familiar with a framework that uses input output tables and is inspired by Sraffa's The Production of Commodities by Means of Commodities with modifications. There are other schools, such as the temporal single-system interpretation (TSSI).

I don't mind giving a more detailed example in the school that I'm most familiar with. Familiarity with linear algebra helps, but even if one doesn't know linear algebra, it can be written out in such a way that you dont have to know how vectors and matrices multiply (and you may find yourself intuitively understanding the math). I can start writing it up if interested!

But, you are right in that in this framework there is an extra peice of info to know. We must say something about the wage rate and/or profit rate. This approach can also be adjusted alightly to show us that if we know how much the working class consumes (or we know the minimum consumption required by the working class) then the profit rate is constrained to have some particular value (given by an eigenvalue) and the (natural) prices are given by an eigenvector. Something about (natural) prices in this framework is that if given by a eigenvector, then we only know the relative prices of all commodities. We can say what p~i~ is vs p~j~, for example.

The "absolute" natural prices can then be given by choosing a (hopefully meaningful) way to normalize, or scale, those prices. The equation of exchange, Mv = pq, could give one such meaningful way for scale prices.

For your last point, I think most Marxists would avoid this type of interprtation as if accepts the bourgeoisie's own ideology of individual property rights. I mean the bourgeoisie would certainly love to see things the way you spelled out. Tit for tat transactions and what not. The bourgeoisie is a class that has monopolized control over the means of production and because of this the proletariat is a class that has nothing to sell but its labor. If we don’t then we die. This creates a bourgeoisie ideology that private property (that the bourgeoisie just happened fo control) is sacred and almost god given. And part of this ideology is that the exchange is free and fair (we are free to starve). Marxists would focus more on the class struggle and how the ideological statement you repeated is as product of this class struggle.

This takes the focus away from individuals and toward emergent structures which historicaly evolve, and the focus is social relations. Individuals are discussed in that they are representatives or bearers of these social relations.

The capital worker social relation is one where capitalists have, through the process of history, taken control of means of production and workers have become dispossesed of them. The capitalists are able to control the production process, how many hours are worked, the speed and conditions.

If you want to see it as a "toll" we workers pay, then it would be a payment we give to capitalists for their brutal conquest of colonies, their genocide of whole peoples, and their power to extract surplus labor from us. That sounds less and less like a toll.

In fact, if we start to view this through the lens of value production, there is no toll at all. It's just pure stealing.

For capitalists as a class to exist they must consume. These consumed items must be produced by workers, and that means workers must be producing values that are consumed by capitalists. Capitalists can buy the labor required to produce all value, and they only have to pay workers an amount that allows them to consume only the value they need to consume.

The above doew relate back to the natural prices we discussed. What are the prices that allow for the capitalists (as a class) to recreate this level of surplus value, and also don't allow the workers (as a class) to buy back the products given their wage. (Note that some dependence on either the wage or profit rate comes back into play as discussed above).

I.e. imagine it takes 6 hours for workers, collectively, to produce the values (products) they need to survive. What happens if capitalists make workers work for 12 hours total? In the first six hours they produce value for themselves, in the second six hours the workers produce value beyond what they need for their own survival. When workers get paid their wages they get paid enough to buy and consume their first six hours of value. What happens to that second six hours of value? Well it is consumed by the capitalists. It is the surplus labor we workers produce that gets consumed by an exploitative and non laboring class whom control the labor process.. The most essential process of social metabolism!

So if profit is a toll, it is a toll that we reward the capitalists for the blood they've spilled in grabbing the means of production, and the blood they spill daily in holding on to that control. Capitalists would certainly love to see it as some type of fair bargaining position, but that's just an ideological statement. Workers give everything and the only thing they get from the capitalists is the ability to not starve (sometimes).

It's the modern day version of Plato telling us that slaves are naturally disposed to follow orders and the slave master arrangement is part of natural law.

This isn't to put any heat on you for asking, its difficult to tell tone in our internet discussions. So I definitely want to apologize if any part of the above sounded like an attack on you for asking.

But the question is a subtle acceptance of bourgoise ideology. A Marxist approach would look at

A.) Where is value being produced, by who, and under what conditions?

B.) Let's take social relations as primary. Individuals come into the picture as bearers of social relations. This is an approach that looks at the emergent structure of a society. Classes, and the struggle between them, are primary over individuals.

C.) We must always historicize our analysis. How did the bourgeoisie get into the position where they control the means of production. How did the working class get in the position that it has nothing to sell but its labor.

D.) When using the above points to analyze the workings of a social system, we can then ask how certain ideas or consciousness came into being. And are these ideas serving as a justification, or a way to naturalize or eternalize, exploitative relations. This means criticizing even basic notions of "rights", "private property", "wages", "profits". The rights we know of are products of an historical class struggle.

My apologies for talking too much. I'm very long winded. Again, I can give some examples for your first question if still interested!

[-] [email protected] 2 points 5 days ago* (last edited 5 days ago)

Familiarity with linear algebra helps

Hell yeah, lay it on me.

For your last point, I think most Marxists would avoid this type of interpretation as it accepts the bourgeoisie's own ideology of individual property rights.

When I say "bargain" I don't mean a civilized transaction. I get the systemic violence. But isn't it a kind of bargain? Isn't that the whole point of a union? The individual worker has little or no bargaining power, because we are easily replaced, which is why we band together and threaten to withhold labor as a group.

In the early days of industrial wage labor, we had no unions or legislation to protect us. Our wages were individual bargains — and yes, our main leverage was that that we needed to stay alive to work. Our main threat was, "If you pay me any less, or work me any harder, I may starve and be too weak to work." That continued until the labor movement had sufficiently demonstrated the power of organized labor, forcing capital to grant concessions to stop us from radicalizing and militarizing any further.

But capitalists also depend on bargaining power — they just have a lot more of it than we do. If tomorrow the cops and the feds suddenly stopped protecting private property, and announced, "workers, you now have the choice to commandeer your boss's business and run it however you want," profits would vanish. The owners would no longer have the leverage to pay themselves millions of dollars a year, because we would just take over the business and keep the profits ourselves.

My apologies for talking too much. I'm very long winded. Again, I can give some examples for your first question if still interested!

Not at all! Thanks for taking the time. And yeah, I am interested.

[-] [email protected] 2 points 5 days ago

Give me a bit to write it up and I'll send you what I got!

But, I wanted comment on something you mentioned before I go.

... but I'm confused by the static part. Naively, someone might interpret the phrase "prices that allow an economy to reproduce itself" to mean "prices that cover production cost plus owner spending habits," because then everyone in the economy breaks even in their expenses and earnings over time, and the economy remains static.

I don't think that's a naïve interpretation, and in fact I think the insight there is spot on! When I say that natural prices are those prices that allow for the system to reproduce itself, I do mean the capitalist system. So natural prices under a capitalist formation must be able to reproduce the class exploitation of the capitalists (and hence their consumption), else it isn’t capitalism that is being reproduced.

In fact, bringing this insight into a definition of value is something that Ian Wright has done, and is part of his solution to the transformation problem, i.e. how to get natural prices from value. Essentially, his argument as I understand it is that one can create an extended measure of value that includes the labor required to cover products made for the owner’s consumption (surplus value), and that this extended measure of value is still a measure of value, just through lens of your insight. This extended measure of value is still measured in labor-hours, and is commensurate with prices under capitalism because while the surplus labor is not necessary for the workers, it is necessary for the system of capitalism to reproduce itself.

Though, like I mentioned before the transformation problem is worth its own post. And this is one solution, of many proposed, for the transformation problem.

The rest of your question was on the uniqueness of the solution

the problem would have no unique solution—there are infinitely many ways to assign arbitrary wages and prices in an economy

and I'll respond with a write up on solving for natural prices with the framework I'm most familiar with.

[-] [email protected] 2 points 4 days ago* (last edited 4 days ago)

Just want to let you know that I'm still very much interested (and I won't lose interest so there's no rush), but also, no pressure! if life gets in the way or you run out of steam it's all good! Thanks either way. It's a potentially laborious effortpost, on a niche forum, in a small thread where I might be the only person who reads it. Stoked if you do but 110% understand if you don't.

[-] [email protected] 2 points 3 days ago

I'm in the process of writing it up. I'm starting with a pure labor economy (simplest model and lays the foundation) and building it up from there. Not yet, finished but I am working on it.

And you may be the only one who reads it susie-laugh

but I've been wanting to write something like this up for a while anyways shrug-outta-hecks

Hopefully I dont get back to you within a year with some massive tome

[-] [email protected] 1 points 3 days ago

Hell yeah rat-salute-2 godspeed

[-] [email protected] 20 points 6 days ago

In Marx it's gravitational, supply and demand are part of large cohort of turbulent regulators, constantly undershooting and overshooting each other while achieving turbulent equalization of profit rates, but NEVER sustained equilibrium like liberal economics asserts

The "gravitational bodies" that supply and demand "orbit" are the leading regulating capitals in any given sector, who are leading because they establish the lowest unit cost-price of production that other firms "gravitate" around......."Wal-Mart in a small town" being a common textbook example

Liberal economics doesn't believe regulating capitals exist and that supply and demand orbit each other in a perfect eclipse and if they don't it's because the government and workers are "cheating"

[-] [email protected] 3 points 6 days ago* (last edited 6 days ago)

This makes sense, but then what determines the profits of the regulating capitals?

Maybe I'm asking the wrong question, but: assuming every firm faces similar costs (within a short, representative time window, meaning no one has just come up with some huge cost-saving mechanism that has yet to propagate), and assuming profit is therefore a question of raising prices more than lowering costs, is profit mainly limited by the wiggle room of imperfect competition (e.g., with perfect competition there would be 0 profit), or by consumer willingness to pay within that window, or does it depend on the industry—or is my framing wrong, and/or I'm asking the wrong question entirely? Am I looking in the right direction or missing the point?

[-] [email protected] 3 points 6 days ago* (last edited 5 days ago)

Lower costs, undercutting, technical development, patent hoarding, scalability, and bought government patronage are how regulating capitals generate the "gravitational profits" other firms in their sector orbit, including other regulating capitals, because leading capitals also regulate each other, even across sectors

Creating not sustained perfect or even imperfect equilibrium, but instead turbulent equalization of prices, equalization is the reason you can ask the average Joe on the street what the price of milk is and they'll give you a rough and accurate estimation of the price, even if milk prices turbulently rise and fall over the long years, even though milk prices are equalized across the country around an average: $3-5 in this case

And like perfect competition is fiction, there's also no such thing as "imperfect competition" because that idea also arises right out of the liberal whine about workers, firms and governments "cheating" the market of it's "rightful" returns. No, there's only competition-as-war, that's what defines capital accumulation; profits arise from those firms that can cut costs and undercut their competitors, raising prices is only a secondary bonus if you can get away with it before bumping into another regulator, what's important is lowering costs which is why I placed it first amongst the list of profit generators and also why the wage vs profit contradiction is always the most important aspect of the system in general

From those two simple ideas (low costs and undercutting) arise everything we see under capitalism; the regulation of supply and demand by profitability, the everlasting desire to suppress wages that cut into profits, the drive toward technical developments to make production easier and cheaper, the cowardly need of all capitalists to run away from competition and toward rent-seeking behaviors etc.

Regulating capitals are large armies trying to keep at bay a 100 smaller armies from eating their lunch, and the 100 smaller armies are also competing amongst each other, one year a mid sized army may discover how to make a better cannon and they supplant a leading regulator and take its place, another year a small army figures out how to conscript more soldiers and they overwhelm a dozen other smaller competitors, putting themselves one step closer to becoming the regulator instead of the regulated

Profits comes from firms picking the right combinations at the right time from these options: Lower costs, technical development, undercutting, patent hoarding, scalability, and government patronage but lower costs is typically the primary, go-to solution

[-] [email protected] 3 points 5 days ago

Are you familiar with Shaikh's Capitalism: Competition, Conflict, and Crisis? I've been slowly going through the book for some time and these descriptions are also explained there. Its one of sources I pull from in my own understanding

[-] [email protected] 4 points 5 days ago

I sure do, he's one of my primary sources alongside Stafford Beer

[-] [email protected] 2 points 5 days ago

Do you have any good recommendations for understanding the Viable Systems Model? Something more formal than the descriptions one can easily find on YouTube or wikipedia? I am acquainted with some modern complexity science, and have wanted to find where complexity science meets old school cybernetics.

[-] [email protected] 2 points 5 days ago

Beer's book Platform for Change is my go to resource, but if you want more technical stuff his book Diagnosing the System for Organizations is interesting, because you literally see him describing how the system forces the choices I illustrated in my previous comment that capitalists face every day

[-] [email protected] 1 points 5 days ago

What stuff by Stafford Beer have you enjoyed the most?

[-] [email protected] 2 points 5 days ago

Platform for Change and Diagnosing the System for Organizations are my main resources from Beer

[-] [email protected] 1 points 5 days ago* (last edited 5 days ago)

Yeah, I guess "perfect" and "imperfect" are probably not how I should talk about this lol

By "imperfect competition" I just meant that the lowest production cost doesn't always win among similar products, due to factors like

transport costs — either moving product to consumer, or consumer to product — which can give companies a local pricing advantage over more distant competition
consumer inability to compare products in a consistent way — whether comparing use-values of products at a given price, or comparing prices at a given use-value
marketing, branding, packaging, and other appeals to consumer psychology

Profits comes from firms picking the right combinations at the right time from these options: Lower costs, technical development, undercutting, patent hoarding, scalability, and government patronage but lower costs is typically the primary, go-to solution

So everyone's racing to automate, exploit, and cut corners ahead of the others. What happens when they run out of room? Do they just start buying each other?

[-] [email protected] 2 points 5 days ago

By "imperfect competition" I just meant that the lowest production cost doesn't always win among similar products, due to factors like

True, it's not always the path to success, but it typically is and that's what matters on the macro scale across sectors and national economies

transport costs — either moving product to consumer, or consumer to product — which can give companies a local pricing advantage over more distant competition

That still falls under the overarching cost structure that firms need to lower

consumer inability to compare products in a consistent way — whether comparing use values of products at a given price, or comparing prices at a given use value

That forms part of the bedrock of the turbulent regulation of demand, that capitalists are constantly overshooting or undershooting as they try to continually adjust

marketing, branding, packaging, and other appeals to consumer psychology

Attempts at scalability that may or may not work, an attempt by firms to regulate demand as it's regulating them, leads right back to the overshooting and undershooting problem which has enormous implications for future investments, or more importantly the potential lack thereof

So everyone's racing to automate, exploit, and cut corners ahead of the others. What happens when they run out of room? Do they just start buying each other?

Capitalists stop investing, begin layoffs and a depression ensues, no room for profits and growth means no investments

[-] [email protected] 2 points 5 days ago* (last edited 4 days ago)

By the way, I always worry that I seem argumentative when I ask a lot of questions, but to be clear, that's not the intent! I'm just laying out my current mental picture so people can see where it's wrong and help me update it. I had some existing notions in my head, but they didn't all seem to add up.

That still falls under the overarching cost structure that firms need to lower

of course, but it'll always cost something, right? Which means that, if you have a region in which you're the only supplier, and your competitors are outside that region, everyone in your region basically has to pay a transport tariff if they want to buy from your competitors. That "tariff" gives you more wiggle room to charge above cost.

I don't know how important this is though. I assume it matters for unprocessed raw goods, like minerals or crops, where everyone's product is basically identical, and production is often constrained to certain locations where mines or farms can be developed. I assume it also matters somewhat for brick and mortar stores — a consumer isn't going to drive to the next town just to pay slightly less for bread. But I don't know how big a chunk of profit can be blamed on this. Is it more of a footnote or is it a big deal?

Capitalists stop investing, begin layoffs and a depression ensues, no room for profits and growth means no investments

Ahh okay that makes sense.

[-] [email protected] 2 points 4 days ago

By the way, I always worry that I seem argumentative when I ask a lot of questions, but to be clear, that's not the intent! I'm just laying out my current mental picture so people can see where it's wrong and help me update it. I had some existing notions in my head, but they didn't all seem to add up.

No worries, I didn't take it that way, I'm more than happy to answer questions and help comrades flesh out their understanding stalin-approval

That "tariff" gives you more wiggle room to charge above cost.

That's the thing, it's not above cost, it is simply the cost, production and transport are under the same cost structure, got to pay to make it and pay to move it, wages, material and energy are the main costs. In competition-as-war an army with an advantageous position is fair policy

It's not a guarantee of victory, but it's certainly not a war crime, profitability is defined by what you can get away with

I assume it also matters somewhat for brick and mortar stores — a consumer isn't going to drive to the next town just to pay slightly less for bread. But I don't know how big a chunk of profit can be blamed on this. Is it more of a footnote or is it a big deal?

"location, location, location" is a saying in business for a reason, again it's not a guarantee for success, firms that have overwhelming technical development, enormous scale or juicy patents can still overwhelm your location advantage and kick you out of the leading regulator game, but it depends on the sector and frankly energy costs in the wider economy

[-] [email protected] 11 points 6 days ago* (last edited 6 days ago)

Commodities generally sell at their value, which is the sum of the value of all the input commodities (which I'm pretty sure Marx calls raw materials) and the final input of labor power needed to make those raw materials into a new product. Demand adjusts according to the price (people may want something, but not at the price offered). What's important is that the seller makes a profit selling the commodity at its value, not by doing a markup of any sort. This is because the wage paid to the worker is less than the value they create. The worker is not compensated for all of the value they create. This is where profit comes from.

Read Value, Price, and Profit for a synopsis of some ideas provided in Capital.

[-] [email protected] 10 points 6 days ago

Supply and demand are of secondary concern to production in Marx's analysis. They can explain why something could be bought or sold for a different amount than it's actual value, but if you reach equilibrium between them they vanish and you are left with the actual value of the commodity in question. Although I may be being too flippant with commodity as a term here, one of the smarter bears might be able to correct me if so.

[-] [email protected] 4 points 6 days ago* (last edited 6 days ago)

My understanding is that, in the LTV, labor input determines the equilibrium about which prices fluctuate, while supply and demand dynamics drive the fluctuation.

But those fluctuations aren’t net-zero; companies profit on average. Why? I assume it’s some combination of 1) imperfect competition and 2) supply and demand, but I don’t know the details because I’m a huge ignoramus about economics. So I’m curious how Marxist theorists talk about this.

[-] [email protected] 8 points 6 days ago

Supply and demand are irrelevant to marxist framing (it's all hidden in phrase "socially necessary labor time" - aggregate bag of everything society needs) of profit. Capitalist arrives at the scene, looks at the cost of inputs and workers and decides whether its profitable to do stuff. Because the only thing he can vary on production stage is price paid per labor (after all, cnc machine costs more or less the same - it's fixed expense (constant capital or capex in modern lingo). if he cannot find a way to couple variable expense (price of labor) to the fixed expense to average expected profit rate, he just won't start producing stuff. N.B. - that they are irrelevant doesn't mean they aren't real. Cute curves of demand mean jack shit for price of food, it's inelastic or whatever. By marxist logic, porkies would produce food until they find acceptable return on investment, not until demand is satiated (which is why in imperial core everyone subsidizes agriculture, but that's whatever). if the standard of roi was 50% you better believe they would watch you starve instead of expanding (see rents in usa)

Now, modern porky fights a lot of fights: can he remove regulations via lobbying? (e.g. chemical industry) can she lower wage, say by importing immigrant workers? (e.g. farms) can they ship out the production to other country? (e.g. mining) can they feasibly induce demand (create societal necessity of something)? (e.g. iphones) can they protect market share by paying off ad agencies? (e.g. coke) (most of the stories of modern daring capitalists are induced demand btw, nobody sings the praises of 3M ceo, before the 70s, it was more about reducing downtime (ford, mcdonalds etc)

but every single one of them wouldn't get profit if they've paid the workers 100% profits back (obviously). after all, capitalist holds some pieces of electronic data that says they are obliged to part of profit and decision making, they can do jack shit all the time and still gets some proceeds from labor of 1000s people employed)

[-] [email protected] 3 points 5 days ago

But those fluctuations aren’t net-zero; companies profit on average. Why?

You're getting very good answers on supply and demand from the other bears so I'll leave that to them. But I do want to catch this part.

Marx observed that the movement of productive economies can be simplified to Money→Commodities→More Money in a cycle. Why is there more money each cycle? Where is the new value being generated?

A big part of Capital is just him breaking down the process of commodity production to illustrate that there's no new value being introduced in any way except through labor. Labor is unique in that a laborer can produce more value than it costs to reproduce (feed, clothe, shelter) them.

A company is getting a bunch of workers to produce more value than they have to pay them, a surplus value is produced that can be divided up rather than pocketed by the laborer. That's where profit comes from and that's why they always profit. Supply and demand are subordinate conditions on this basic reality.

[-] [email protected] 2 points 5 days ago* (last edited 5 days ago)

Labor is unique in that a laborer can produce more value than it costs to reproduce (feed, clothe, shelter) them.

ahhhhh, okay.

Does "the cost of reproducing labor" strictly refer to the cost to keep workers alive, or is it more the cost to sustain their expected standard of living?

Although employers pay more than the bare minimum to keep us alive, because we have a little more leverage than that, it's true that they pay the bare minimum they can get away with, as determined by their leverage as employers and our leverage as workers who may or may not be organized. And that minimum is not related to the value produced by our labor — for example, if one low-skill worker operating a machine can spit out $1 million worth of goods in a day, that value does not give the worker any leverage to ask for more pay, because the worker is still replaceable and does not have very much leverage.

[-] [email protected] 2 points 5 days ago

I really recommend reading Capital, the theory comm has a book club on it and it's super helpful.

I don't have my copy on me but he does go into this topic at some length, the quick and dirty summary off the top of my head is that the cost of reproduction entails educating a worker enough to do a technical job, enough free time to literally reproduce, recuperate from the wear and tear of work etc. So yes the short answer is that reproducing labor means maintaining a certain standard of living.

However in your example, he would point out several things: the value being added by labor isn't the entire value of the end product. If you make a million dollars in clothing, in the process you use hundreds of thousands of dollars of cloth, the machinery that produces it also requires thousands of dollars in maintenance, the product requires expenditures to physically move it from the factory to the user, etc. So that million dollars of product is not all the work of the laborer in question.

Capital, as a cycle of reinvestment of surplus, also grows in magnitude with each cycle. Labor is contributing proportionally less and less value as time goes on because it's a smaller fraction of the process; this is one of the reasons the rate of profit tends to fall over time. You can compensate for this by reducing the prices of the things it takes to reproduce labor (which conveniently happens with economies of scale) and by increasing the degree of exploitation of labor- longer days, more intense work, etc. as well as lowering wages, but that can only go so far before you're using up workers in a way that is unsustainable.

That's where things like wrangling about hours and compensation, and the leverage of the respective parties, become more relevant. Ideally, from the pov of the capitalist, you break the job down into less and less complex functions that are easier to train people to do, and keep them in conditions where they will agree to increasing intensity and hours worked.

[-] [email protected] 2 points 5 days ago

I really recommend reading Capital, the theory comm has a book club on it and it's super helpful.

it's looking like I really should, not only to understand the world but also to understand the Marxist perspective on it more deeply, since I call myself one

and by increasing the degree of exploitation of labor- longer days, more intense work, etc. as well as lowering wages, but that can only go so far

makes me wonder what will happen when the repression of the global south begins to crack

[-] [email protected] 6 points 6 days ago

idk shit on how to answer this question but thanks for asking it. it's been stuck in the back of my mind for god knows how long but someone finally got around to asking it for me, thanks!

[-] [email protected] 5 points 6 days ago

Supply is the quantity and quality of a commodity. Demand is the want or need of a commodity. Demand is easy to increase or decrease, it's just how many people are asking for the thing. Supply can be increased through increasing quantity or quality, both of which require labor to be performed on raw materials or commodities to turn them into commodities in demand.

This is where Marx comes in. There is a discrepancy in capitalism between supply and demand, because prices should change based on where they intersect. This doesn't happen, which caused Marx and Engles to ask "why?" The conclusion is the labor done to increase supply isn't being compensated correctly. This missing piece for when demand goes up while supply goes down but the price doesn't change is profit. That's where profits are coming from.

What capitalist and their economists don't like is disregarded. They say Marxist analysis is wrong because of the claim profit is the stolen intersection between supply and demand. This doesn't solve the contradiction, however, so they come up with "models" and woo-woo mysticism to try and explain the discrepancy. These models and predictions aren't accurate because if they were, they could predict what happens in the stock market, making a lot of money.

Marx correctly identified the underlying problem why supply & demand don't line up like they should, but this means capitalists are stealing from their workers. Capitalists don't want to admit this, so you'll see them making all kinds of wild claims to explain away the contradictions.