5 ms·

Why shouldn’t the price of goods be the cost of producing them?

komali2 4y ago
Because that's labor theory of value which is Marxism and marx is just some guy. Arguments against will be that value "is" what people are willing to pay for them, which is some combination of supply and demand, but I find this just too simple. Technically it's true that the "value" of something is the price someone last paid for it, but then we get situations where we say a Bitcoin is worth 40k usd or whatever tf the price is right now. And then suddenly its value is 20k, and if you ask why you'll get thirty answers, all wrong. Maybe the price was 40k to someone and 20k to someone else, but the value? Nah. And the price alone tells us basically nothing. The interesting thing for me is the third person. Me, in this case, to whom Bitcoin is worth 0, or less than 0 because I would consider it a labor cost to own a Bitcoin (figuring out a wallet or whatever). How does someone to whom a Bitcoin is worth 40k then then around and say "Bitcoin is worth 40k" to someone like me? To capitalists trying to nod their heads and say ah the price is high, supply must be down or demand must be up, I say, good luck predicting human behavior, that usually goes great. For me though I agree with you, the value of goods is some combination of their production costs, in any meaning of the word "value" that matters. "But what if someone spends an entire lifetime of labor producing a single widget nobody wants? Clearly demand plays a part in value!" I don't know, go away. Why would that happen? Sure, ok, also include in value calculus that hopefully people only make things that people actually want. (the capitalist argument here is, the profit is to be found in the margin between cost to create and the price set by desirability - to which I say exactly, profit should be eliminated) Edit: someone else had a comment they deleted talking about how profit is necessary so as to have surplus to save in case of equipment failure, I'll paste my response here cause my thumbs put in the labor so by golly I'll get the Payout Traditionally, are profits sequestered to be used as savings like that? In my experience the equipment breaks and both companies go bankrupt because the executives in the c corp spent the profit on themselves already and are happy to just go find a new investment. Actually in my experience the other company, the co-op, doesn't go bankrupt, because the workers are smart enough to safeguard their well being with rainy day funds. This might be one of the reasons coops are repeatedly shown to be far more resilient than traditional companies.
- dontlaugh 4y ago
  Have you actually read Marx? If you haven't, I recommend you start with https://www.marxists.org/archive/marx/works/1865/value-price-profit/ https://www.marxists.org/archive/marx/works/1865/value-price.... It'll clarify much of your confusion on basic economics.
  - notahacker 4y ago
    I have read Marx, and he fails to satisfy his confusion on basic economics...
  - mejutoco 4y ago
    IMO OP is right on the money with the labor theory of value. If the value is what offer and demand agree on, exploitation disappears, in Marx's theoretical model. While I am not an expert, I remember reading about it on "The Classical School: The Turbulent Birth of Economics in Twenty Extraordinary Lives", by Callum Williams. It made sense to me. https://www.goodreads.com/en/book/show/49374783 https://www.goodreads.com/en/book/show/49374783 While linking to the sources is useful, I would appreciate any argument correcting the above since, as I said, I am not an expert and it makes perfect sense to me.
    - claudiawerner 4y ago
      >If the value is what offer and demand agree on, exploitation disappears, in Marx's theoretical model. This is not true; Marx's model of exploitation (known to modern economists as the Profit-Exploitation Correspondence Model (PECP)) does not concern itself with what demand and offer agree on within a labor negotiation. Marx says that workers do not sell their labor, they sell their labor-time (e.g. X units of time/goods) during which they exercise their labor-power. The discrepancy between the value of the time and the value produced during that time is where this 'exploitation' comes in. The idea that exploitation is a matter of opinion or agreement adds a moral or justicial spin to what Marx considered to be a fact of the capitalist economy. Whether the people involved are happy with the situation or agree to it does not change this discrepancy of value or its representation in money.
deleted 4y ago
[deleted]
randunel 4y ago
There's also risk in producing "them" (goods, services, research), not just cost. If you want the price of your producing work to be the price of goods derived from your work, then be a shareholder, not an employee.
- dontlaugh 4y ago
  Risk is also just a cost. Being a shareholder requires capital, which the vast majority of people don't have.
notahacker 4y ago
Because it's stupid to go to a huge amount of effort to figure out your exact unit cost to reduce prices to when customers are prepared to pay more, and cost structure usually isn't linear enough to make this practical anyway. It's like asking "why shouldn't workers work for subsistence income instead of asking for more money?": the obvious answer is "because the only reason they would consider doing so when they don't have a choice"
RHSeeger 4y ago
For the same reason that you don't want to earn the exact minimum you need to survive. You want more/better. So does the person selling the widget; so why charge the absolute minimum for their widget if they can get more for it? That extra money goes towards their "more/better".
eru 4y ago
In the long run, in a competitive market prices tend to move in that direction. But that tendency comes with a lot of asterisks.
Lio 4y ago
Because the value of a Picasso doodle on a napkin is not in the cost of the pen, ink and napkin used to produce it.
RestlessMind 4y ago
"your margin is my opportunity" - Jeff Bezos followed what you are suggesting and went on to become the richest man in the world. Not sure why you are getting downvoted though.
somsak2 4y ago
What's the incentive to invent any new goods if you can't profit off of them?

Because that's labor theory of value which is Marxism and marx is just some guy. Arguments against will be that value "is" what people are willing to pay for them, which is some combination of supply and demand, but I find this just too simple. Technically it's true that the "value" of something is the price someone last paid for it, but then we get situations where we say a Bitcoin is worth 40k usd or whatever tf the price is right now. And then suddenly its value is 20k, and if you ask why you'll get thirty answers, all wrong. Maybe the price was 40k to someone and 20k to someone else, but the value? Nah. And the price alone tells us basically nothing. The interesting thing for me is the third person. Me, in this case, to whom Bitcoin is worth 0, or less than 0 because I would consider it a labor cost to own a Bitcoin (figuring out a wallet or whatever). How does someone to whom a Bitcoin is worth 40k then then around and say "Bitcoin is worth 40k" to someone like me? To capitalists trying to nod their heads and say ah the price is high, supply must be down or demand must be up, I say, good luck predicting human behavior, that usually goes great. For me though I agree with you, the value of goods is some combination of their production costs, in any meaning of the word "value" that matters. "But what if someone spends an entire lifetime of labor producing a single widget nobody wants? Clearly demand plays a part in value!" I don't know, go away. Why would that happen? Sure, ok, also include in value calculus that hopefully people only make things that people actually want. (the capitalist argument here is, the profit is to be found in the margin between cost to create and the price set by desirability - to which I say exactly, profit should be eliminated) Edit: someone else had a comment they deleted talking about how profit is necessary so as to have surplus to save in case of equipment failure, I'll paste my response here cause my thumbs put in the labor so by golly I'll get the Payout Traditionally, are profits sequestered to be used as savings like that? In my experience the equipment breaks and both companies go bankrupt because the executives in the c corp spent the profit on themselves already and are happy to just go find a new investment. Actually in my experience the other company, the co-op, doesn't go bankrupt, because the workers are smart enough to safeguard their well being with rainy day funds. This might be one of the reasons coops are repeatedly shown to be far more resilient than traditional companies.

dontlaugh 4y ago
Have you actually read Marx? If you haven't, I recommend you start with https://www.marxists.org/archive/marx/works/1865/value-price-profit/ https://www.marxists.org/archive/marx/works/1865/value-price.... It'll clarify much of your confusion on basic economics.
- notahacker 4y ago
  I have read Marx, and he fails to satisfy his confusion on basic economics...
- mejutoco 4y ago
  IMO OP is right on the money with the labor theory of value. If the value is what offer and demand agree on, exploitation disappears, in Marx's theoretical model. While I am not an expert, I remember reading about it on "The Classical School: The Turbulent Birth of Economics in Twenty Extraordinary Lives", by Callum Williams. It made sense to me. https://www.goodreads.com/en/book/show/49374783 https://www.goodreads.com/en/book/show/49374783 While linking to the sources is useful, I would appreciate any argument correcting the above since, as I said, I am not an expert and it makes perfect sense to me.
  - claudiawerner 4y ago
    >If the value is what offer and demand agree on, exploitation disappears, in Marx's theoretical model. This is not true; Marx's model of exploitation (known to modern economists as the Profit-Exploitation Correspondence Model (PECP)) does not concern itself with what demand and offer agree on within a labor negotiation. Marx says that workers do not sell their labor, they sell their labor-time (e.g. X units of time/goods) during which they exercise their labor-power. The discrepancy between the value of the time and the value produced during that time is where this 'exploitation' comes in. The idea that exploitation is a matter of opinion or agreement adds a moral or justicial spin to what Marx considered to be a fact of the capitalist economy. Whether the people involved are happy with the situation or agree to it does not change this discrepancy of value or its representation in money.

deleted 4y ago

[deleted]

randunel 4y ago

There's also risk in producing "them" (goods, services, research), not just cost. If you want the price of your producing work to be the price of goods derived from your work, then be a shareholder, not an employee.

dontlaugh 4y ago
Risk is also just a cost. Being a shareholder requires capital, which the vast majority of people don't have.

notahacker 4y ago

Because it's stupid to go to a huge amount of effort to figure out your exact unit cost to reduce prices to when customers are prepared to pay more, and cost structure usually isn't linear enough to make this practical anyway. It's like asking "why shouldn't workers work for subsistence income instead of asking for more money?": the obvious answer is "because the only reason they would consider doing so when they don't have a choice"

RHSeeger 4y ago

For the same reason that you don't want to earn the exact minimum you need to survive. You want more/better. So does the person selling the widget; so why charge the absolute minimum for their widget if they can get more for it? That extra money goes towards their "more/better".

eru 4y ago

In the long run, in a competitive market prices tend to move in that direction. But that tendency comes with a lot of asterisks.

Lio 4y ago

Because the value of a Picasso doodle on a napkin is not in the cost of the pen, ink and napkin used to produce it.

RestlessMind 4y ago

"your margin is my opportunity" - Jeff Bezos followed what you are suggesting and went on to become the richest man in the world. Not sure why you are getting downvoted though.

somsak2 4y ago

What's the incentive to invent any new goods if you can't profit off of them?