3 ms·

What you're describing might explain fluctuations, but it's inadequate and incomplete for the business cycle. Virtually no one, not even Keynesian or other lef

What you're describing might explain fluctuations, but it's inadequate and incomplete for the business cycle. Virtually no one, not even Keynesian or other left-economists support make-work. It's mostly an idea favorable to laymen, or often done for more nationalistic rather than economic reasons. FDR was inspired by William Trufant Foster's and Waddill Catchings' policy advice for instance, who had Keynesian-esque underconsumptionist views but did not derive these from any economic theory per se. Even ardent Keynesians will advocate a more sophisticated proposal of what amounts to government-owned employment agencies that combine private contract procurement with state investment projects, with the intention of having the unemployed serve as buffer stocks of labor to meet some form of output target. But not quite brute make-work. (Actually the "quantifying value" problem makes no sense. It's not as if there is some objective essence called "value" that people seek. Value is largely denominated in units of currency. I suppose what you're getting at is the importance of monetary policy?)

danharaj 11y ago
> It's not as if there is some objective essence called "value" that people seek. use-value? you know, people actually using the goods and services they acquire?
- vezzy-fnord 11y ago
  But use value cannot be quantified, since utility is not a mathematical scale, but a subjective feeling that varies from person to person and with time as preferences shift or swing. I'm also unaware of how you can explain diverse business cycles throughout history as emanating from it. Practically every economic theory that has tried to objectively quantify "value", i.e. those of Ricardo, Marx and Sraffa, relies on gigantic and complicated expositions involving leaps of abstraction and mathematical transformation problems that are completely detached from how real-world people actually think about or treat value. (Indeed, such exercises in value theory aren't so much about determining value as much as trying to work out given theories of income distribution and perceived exploitation.)
  - danharaj 11y ago
    I don't think our inability to quantify it means it's not objective. It means our mathematics is not advanced enough yet to capture use-value. Use-value is definitely objective as it is determined by nature. A screwdriver is useful because it screws screws. Use-value is definitely context dependent and agent dependent. This is fine. But we have to acknowledge that the reason why people assign exchange-value to goods is because they have actual use-value: economics describes physical, real world activities. I can agree that no one has presented a good dynamical theory of use-value. That's sensible: it would require at least a full description of reality, and a deep understanding of nonlinear mathematics. One quibble i have is i don't think Marx tried to establish such a theory: his observations about use-value and exchange-value can be made without a full theory of use-value or a full theory of exchange-value. The relationship between the two can be examined in the abstract and that is Marx's program. I can still perform calculations with use-value to derive exchange value: why is water worth so little in exchange-value even though it is so vital to life? The marginalist point of view says that the price of water is determined by equilibrium between marginal cost and utility. Why is the marginal utility of water so low? Well, if we're talking about people drinking water, then it is obvious, isn't it? You only have to drink so much water. When you're not thirsty, water has none of that use-value anymore. Ignoring the relationship between use-value and exchange-value is... weird. It's replacing the true and difficult reality with a nice fiction amenable to manipulation with our primitive mathematics. Do markets define exchange-value or do they compute exchange-value from the aggregate use-values of everyone participating? Edit: as for business cycles, i think they are caused by structural flaws in property rights and financial institutions, but if you asked 5 people why the business cycle occurs, you'll get 6 conjectures and 3.5 theories.
    - vezzy-fnord 11y ago
      The marginalist conception of value is indeed underwhelming, but it's also a compromise. Determining value through mathematical exercises using hypothetical n-commodity worlds with homogeneous factors and units is at best useful as an exposition for a theory of income distribution (as Sraffa tried to do) in that by assuming a labor or commodity theory of value you can attempt to argue for a rate of exploitation. Marxian economics has a whole lot of categories that are awkward, like "constant capital" being homogeneous and "variable capital" referencing wages of labor in producing commodities. There's barely any room for disequilibrium effects, complementarity, reserves and so forth. In turn, the organic composition of capital is held to be c/s+v, but empirical evidence on relation between OCC and crisis is scant and the concept of OCC is again completely foreign to uncertainty, disequilibrium and capital structure. It's just a ratio between two questionable taxonomies. Marxian economics has many similar failings as neoclassical economics, but because of its origins as a heterodox critique of Smith, Ricardo and Mill from a particular period, its evolution has been even more confusing. Marginalism is situated in a means-ends framework, which is the most one can really say about value without introspecting into personal intentions and valuations. It should be underlined that neoclassical production theory (MC=MR) is separate from the subjective theory of value proper, however. Menger, Jevons and Walras all had different takes on it. It's also worth noting that Marxian conceptions of use and exchange value have little to say about contemporary monetary and financial economies. Marxians still focus too much on issues like falling rate of profit, accumulation and OCC and often miss elephants in the room like financial fragility, or downplay them. It strikes me as archaic. Whether or not markets compute or define exchange value seems to me like a problem of overaggregation where the contemporary social institution of a "market economy" is conflated with a market in the abstract as a system of mutual exchange, as in Proudhon and others.
ericd 11y ago
My understanding is that FDR's "make-work" policies weren't only that - they were involved in massive infrastructure improvements which paid economic dividends, and building out parks, which provide cheap entertainment for the public. Perhaps there were others that were less useful, though?
- brc 11y ago
  FDRs policies included the Hoover dam, a massive productivity boost. The latest round of stimulus spending included cash for clunkers, lots of money for financial institutions and paybacks to teachers unions and other supporters. That's not a partisan criticism, an administration of the opposite party would have given to their supporters in equal measure. The rules of startups are about : make something that people want, and don't take money for the sake of it, your better of solving problems out of necessity. The truth is that, as a theory, the idea works. In practice, it doesn't because it relies on the idea that central planning can work at all, and that lots of productive projects are available but can't get started due to lack of capital and resources. If a dam or bridge makes sense, then build it the moment it makes sense.

danharaj 11y ago

> It's not as if there is some objective essence called "value" that people seek. use-value? you know, people actually using the goods and services they acquire?

vezzy-fnord 11y ago
But use value cannot be quantified, since utility is not a mathematical scale, but a subjective feeling that varies from person to person and with time as preferences shift or swing. I'm also unaware of how you can explain diverse business cycles throughout history as emanating from it. Practically every economic theory that has tried to objectively quantify "value", i.e. those of Ricardo, Marx and Sraffa, relies on gigantic and complicated expositions involving leaps of abstraction and mathematical transformation problems that are completely detached from how real-world people actually think about or treat value. (Indeed, such exercises in value theory aren't so much about determining value as much as trying to work out given theories of income distribution and perceived exploitation.)
- danharaj 11y ago
  I don't think our inability to quantify it means it's not objective. It means our mathematics is not advanced enough yet to capture use-value. Use-value is definitely objective as it is determined by nature. A screwdriver is useful because it screws screws. Use-value is definitely context dependent and agent dependent. This is fine. But we have to acknowledge that the reason why people assign exchange-value to goods is because they have actual use-value: economics describes physical, real world activities. I can agree that no one has presented a good dynamical theory of use-value. That's sensible: it would require at least a full description of reality, and a deep understanding of nonlinear mathematics. One quibble i have is i don't think Marx tried to establish such a theory: his observations about use-value and exchange-value can be made without a full theory of use-value or a full theory of exchange-value. The relationship between the two can be examined in the abstract and that is Marx's program. I can still perform calculations with use-value to derive exchange value: why is water worth so little in exchange-value even though it is so vital to life? The marginalist point of view says that the price of water is determined by equilibrium between marginal cost and utility. Why is the marginal utility of water so low? Well, if we're talking about people drinking water, then it is obvious, isn't it? You only have to drink so much water. When you're not thirsty, water has none of that use-value anymore. Ignoring the relationship between use-value and exchange-value is... weird. It's replacing the true and difficult reality with a nice fiction amenable to manipulation with our primitive mathematics. Do markets define exchange-value or do they compute exchange-value from the aggregate use-values of everyone participating? Edit: as for business cycles, i think they are caused by structural flaws in property rights and financial institutions, but if you asked 5 people why the business cycle occurs, you'll get 6 conjectures and 3.5 theories.
  - vezzy-fnord 11y ago
    The marginalist conception of value is indeed underwhelming, but it's also a compromise. Determining value through mathematical exercises using hypothetical n-commodity worlds with homogeneous factors and units is at best useful as an exposition for a theory of income distribution (as Sraffa tried to do) in that by assuming a labor or commodity theory of value you can attempt to argue for a rate of exploitation. Marxian economics has a whole lot of categories that are awkward, like "constant capital" being homogeneous and "variable capital" referencing wages of labor in producing commodities. There's barely any room for disequilibrium effects, complementarity, reserves and so forth. In turn, the organic composition of capital is held to be c/s+v, but empirical evidence on relation between OCC and crisis is scant and the concept of OCC is again completely foreign to uncertainty, disequilibrium and capital structure. It's just a ratio between two questionable taxonomies. Marxian economics has many similar failings as neoclassical economics, but because of its origins as a heterodox critique of Smith, Ricardo and Mill from a particular period, its evolution has been even more confusing. Marginalism is situated in a means-ends framework, which is the most one can really say about value without introspecting into personal intentions and valuations. It should be underlined that neoclassical production theory (MC=MR) is separate from the subjective theory of value proper, however. Menger, Jevons and Walras all had different takes on it. It's also worth noting that Marxian conceptions of use and exchange value have little to say about contemporary monetary and financial economies. Marxians still focus too much on issues like falling rate of profit, accumulation and OCC and often miss elephants in the room like financial fragility, or downplay them. It strikes me as archaic. Whether or not markets compute or define exchange value seems to me like a problem of overaggregation where the contemporary social institution of a "market economy" is conflated with a market in the abstract as a system of mutual exchange, as in Proudhon and others.

ericd 11y ago

My understanding is that FDR's "make-work" policies weren't only that - they were involved in massive infrastructure improvements which paid economic dividends, and building out parks, which provide cheap entertainment for the public. Perhaps there were others that were less useful, though?

brc 11y ago
FDRs policies included the Hoover dam, a massive productivity boost. The latest round of stimulus spending included cash for clunkers, lots of money for financial institutions and paybacks to teachers unions and other supporters. That's not a partisan criticism, an administration of the opposite party would have given to their supporters in equal measure. The rules of startups are about : make something that people want, and don't take money for the sake of it, your better of solving problems out of necessity. The truth is that, as a theory, the idea works. In practice, it doesn't because it relies on the idea that central planning can work at all, and that lots of productive projects are available but can't get started due to lack of capital and resources. If a dam or bridge makes sense, then build it the moment it makes sense.