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Summarising just a smidge, Marx's theory described a system in which the difference between the labour value of a good and the price at which a worker can sell

Summarising just a smidge, Marx's theory described a system in which the difference between the labour value of a good and the price at which a worker can sell the labour power required to make the good accrues to the capitalist -- ie the person controlling the non-labour means of production. Putting aside the labour value of theory (it has some minor problems, like being wrong), you'll note that Marx was talking mostly about actual factors of production. Labour is one of these, the other traditionally-named factors are land and capital (ie, factories, machines etc). But most of the increase in the wealth of the wealthiest of the past 20 years has occurred almost entirely in the sharemarket, in which prices have run far ahead of net profits. Shares aren't, in themselves, factors of production. It might be argued that the extraction of surplus value is represented by the share price, except that the share price is set by shareholders or would-be shareholders trading with each other. It's hard to see the link as clearly as it existed back when "capitalist" meant "a man who owns the factory".

cutler 7y ago
Shares are a factor in production albeit indirectly. Stock markets were alive and well during the era described in Marx's works so his theories are still valid. Capital is more than just raw machinery and factories. Money and shares are abstract capital. If shares aren't a factor in production why does a company usually go bust when its share price crashes? What about the Great Depression? Share prices and speculation played a massive role in the 1930s crash. Marx spent most of Das Kapital differentiating market value and essential value and so it is with shares. A company has an essential value and a market-traded value. How closely these correspond varies. When the two diverge we have a bubble like the one around 2000.
- jacques_chester 7y ago
  > If shares aren't a factor in production why does a company usually go bust when its share price crashes? You have causality backwards. > What about the Great Depression? Marx didn't predict it. He predicted a very different phenomenon based on the long rate returns to capital leading to periodic crises, which would end in a revolution and after that he gets a little bit vague. The Great Depression was an asset bubble that burst with no fiscal or monetary mechanisms available to cushion its effects. It was the most spectacular in a long line of crises exactly like it. > Marx spent most of Das Kapital differentiating market value and essential value and so it is with shares. Marx made the same error you're making; which is believing that there is a "true" or "essential" value for anything. His economics was based on the economics of the time, which had not yet solved the diamond-water paradox with the subjective theory of value.
  - cutler 7y ago
    What you call an error is a matter of opinion. Marx was well aware that it served the capitalist class's interests to deny the existence of essential value. The Labour Theory of Value is more relevant today than it has ever been with labour's share of GDP declining decade on decade: https://www.futurework.org.au/exploring_the_decline_in_the_labour_share_of_gdp https://www.futurework.org.au/exploring_the_decline_in_the_l..., https://faculty.chicagobooth.edu/brent.neiman/research/KN.pdf https://faculty.chicagobooth.edu/brent.neiman/research/KN.pd...
    - jacques_chester 7y ago
      Marx predated the marginal revolution, dying two years before Marshall published Principles of Economics. Marx was trying to make steel from clay. He was a brilliant and original thinker, but his theories didn't pan out. The crises he predicted do not follow the form he described, the revolutions which succeeded were not in the countries he predicted, the inexorable laws of history turned out to be very exorable after all. His main contribution since the late 19th century has been as an anchor to progressive economic thinking.

cutler 7y ago

Shares are a factor in production albeit indirectly. Stock markets were alive and well during the era described in Marx's works so his theories are still valid. Capital is more than just raw machinery and factories. Money and shares are abstract capital. If shares aren't a factor in production why does a company usually go bust when its share price crashes? What about the Great Depression? Share prices and speculation played a massive role in the 1930s crash. Marx spent most of Das Kapital differentiating market value and essential value and so it is with shares. A company has an essential value and a market-traded value. How closely these correspond varies. When the two diverge we have a bubble like the one around 2000.

jacques_chester 7y ago
> If shares aren't a factor in production why does a company usually go bust when its share price crashes? You have causality backwards. > What about the Great Depression? Marx didn't predict it. He predicted a very different phenomenon based on the long rate returns to capital leading to periodic crises, which would end in a revolution and after that he gets a little bit vague. The Great Depression was an asset bubble that burst with no fiscal or monetary mechanisms available to cushion its effects. It was the most spectacular in a long line of crises exactly like it. > Marx spent most of Das Kapital differentiating market value and essential value and so it is with shares. Marx made the same error you're making; which is believing that there is a "true" or "essential" value for anything. His economics was based on the economics of the time, which had not yet solved the diamond-water paradox with the subjective theory of value.
- cutler 7y ago
  What you call an error is a matter of opinion. Marx was well aware that it served the capitalist class's interests to deny the existence of essential value. The Labour Theory of Value is more relevant today than it has ever been with labour's share of GDP declining decade on decade: https://www.futurework.org.au/exploring_the_decline_in_the_labour_share_of_gdp https://www.futurework.org.au/exploring_the_decline_in_the_l..., https://faculty.chicagobooth.edu/brent.neiman/research/KN.pdf https://faculty.chicagobooth.edu/brent.neiman/research/KN.pd...
  - jacques_chester 7y ago
    Marx predated the marginal revolution, dying two years before Marshall published Principles of Economics. Marx was trying to make steel from clay. He was a brilliant and original thinker, but his theories didn't pan out. The crises he predicted do not follow the form he described, the revolutions which succeeded were not in the countries he predicted, the inexorable laws of history turned out to be very exorable after all. His main contribution since the late 19th century has been as an anchor to progressive economic thinking.