3 ms·
> 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 Grea
by 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 agoWhat 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 agoMarx 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.