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Re: Surplus value or cost of capital?

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  • thekoba@aztec.asu.edu
    ... Actual values of the past can be used to predict expected values of the future (combined with other anticipated factors), and they are the only means by
    Message 1 of 26 , Jan 12 9:51 PM
      >Actual values are what you get when the period under consideration is
      >complete. However, only expected values can be used by real human
      >beings to make decisions, because it is impossible to know what the
      >actual values are until after a decision to produce has been made.
      >It is the decision to invest (or not) and produce (or not) which is
      >of consequence. The outcome of a particular decision is important
      >insofar as it may influence expected values for the future.

      Actual values of the past can be used to predict expected values of
      the future (combined with other anticipated factors), and they are the
      only means by which the performance of the economy can be evaluated.
      Expected values induce investment, but actual values show whether or
      not surplus value has accrued.

      >No, of course it doesn't disappear. But if $5000 was required to
      >induce the investor to invest, and the investment actually returned
      >$9000, then the value returned to the investor above and beyond what
      >which was required, "surplus" as most people would define it, was
      >only $4000.
      >"Surplus" is generally recognized as unnecessary, something that
      >doesn't have to be there to get the desired output.

      I differ with you on that point. The fact that it all comes back
      shows it to be surplus. To illustrate this point, consider the
      same greedy investor, only this time let's make him overly optimistic.
      He invested $1000 expecting $10,000 to come back, thus meeting his
      threshold of $5000. But let's say this time he was unjustified,
      and only $4000 came back. By Jasonian rules, he's lost $1000,
      but most people would say he made $3000. He may sell out and
      invest elsewhere, but he still accrued $3000 of surplus value.

      >You define any return to an investor above the amount originally
      >invested as "surplus". But to do so assumes a communist system. In
      >a capitalist system, a return on investment is NOT surplus, because
      >if the return is not there then the investment won't be made and the
      >product cannot be produced.
      >The same allegation can be made against me -- that I assume a
      >capitalist system by including returns to capital in the cost of
      >capital. This is also true, because under communism a return on
      >investment is ineed "surplus". But I'm not the one who chose to use
      >a term with implied conclusions like "surplus value" in the first
      >place. This is also why I proposed the accommodation that "returns
      >to capital" R be accepted as equivalent to "surplus value" sv[kevin].
      >If you'd like to argue the point that one of the _benefits_ of
      >communism is that under such a system returns to capital are surplus,
      >that is a reasonable approach and we can have a discussion of that
      >point. However, to use a term like "surplus value", define it in
      >such a way as to assume a communist system from the outset, as you
      >have done, and then presume to have a discussion about the merits of
      >communism vs. capitalism utilizing this definition of surplus value
      >is a faulty logical procedure. You have assumed your conclusion that
      >returns to capital are surplus in your definition of terms, which is
      >circular reasoning.

      In the first place, it is Karl Marx who deserves credit for this
      analysis, not I, though I have the privilege of defending it in this
      forum. Your use of the term R in the equation is nothing but double-
      dipping. Sure, the capitalist expects a return, but the return R
      is not consumed but goes as surplus value to the capitalist. It is
      this use of the term R to add a cost to the equation which does not
      in fact exist that is circular reasoning.

      >To make this more concrete, consider two factories each making
      >circular plastic parts (wheels for simple toy cars...whatever).
      >Factory A has a circular mold into which molten plastic is poured and
      >then the circular pieces are ejected after the plastic has
      >solidified. Factory B has a circular cutter which cuts out the
      >circular pieces from solid square sheets of plastic. Of course,
      >simple geometry dictates that circles do not cut from square sheets
      >of plastic without also leaving some plastic behind. From the
      >perspective of Factory A, the plastic left behind by Factory B's
      >cutting process would seem to be "surplus". After all, Factory A
      >leaves no such plastic and is able to produce the same circular parts
      >as Factory B. Yet from the perspective of Factory B, the plastic
      >left behind is not "surplus" at all -- it is an absolutely necessary
      >part of Factory B's production process even though it may simply be
      >discarded as waste once the circular pieces have been produced.
      >The manager of Factory A and the manager of Factory B cannot have a
      >productive discussion about the relative merits of their differing
      >production processes if they assume from the outset that any plastic
      >remnants are defined to be "surplus". The two managers need to
      >discuss matters such as total material input costs, capital costs,
      >labor costs, energy costs, maintenance costs, etc. in order to
      >determine which process is really more efficient. Certainly, the
      >manager of Factory A can cite as a benefit of his process that it
      >generates no plastic remnants, thus reducing the amount of plastic
      >required to produce a given number of circular plastic parts to its
      >absolute minimum. But it may well be that the energy costs of
      >melting the plastic, and the cleaning/maintenance costs of the molds
      >incurred by Factory A far exceed the costs of Factory B's process
      >even when the cost of the discarded plastic is included. The two
      >managers will never find out which process is superior if the
      >discussion starts out with the assumption that any plastic left
      >behind is "surplus" and thus any process which generates them is
      >definitionally inferior to any process that doesn't generate them.
      >I hope you can see how our situation mirrors that of the two factory
      >managers. To be useful, our discussion must utilize terms which do
      >not presume a conclusion to our disagreement from the outset.
      >If "returns to capital" still seems too presumptuous to you, perhaps
      >the term "value paid to investors beyond their original investment"
      >is acceptable to you? I'm open to suggestions, but we cannot simply
      >presume that such value is EITHER surplus OR necessary in our
      >definition of terms.
      >--Jason Auvenshine

      The analogy of the plastic parts is quite plainly inapplicable. Unlike
      the plastic of the analogy, the R term is not wasted. It goes back
      to the investor. As I have told you repeatedly, the cost of the
      initial investment is covered by the capital over useful life portion
      of the equation. Anything over and above that is surplus value,
      regardless of how little or great the threshold needed to induce
      investment. If it all comes back, it's all gain for the capitalist,
      wealth obtained without work, hence surplus value.

      --Kevin Walsh
    • thekoba@aztec.asu.edu
      ... That most people prefer to get sex in some other way than rape shows that this is not the case, but those who obtain economic success find class struggle
      Message 2 of 26 , Jan 13 12:25 AM
        >--- In azsecularhumanists@yahoogroups.com, thekoba@a... wrote:
        >> >> This is entirely true. Nonetheless the benefits or pursuing
        >> >aggressive
        >> >> class struggle ultimately outweigh the harm that aggression
        >> >
        >> >I do not see convincing evidence of that.
        >> That classes succeed in their aims by so doing is proof of that.
        >It proves no such thing. The fact that rapists succeed in their aims
        >by holding a knife to their victim's throat doesn't prove that the
        >benefits of doing so outweigh the harm that it causes. Success in
        >one's aims is entirely independant from whether or not those aims are
        >beneficial or harmful.

        That most people prefer to get sex in some other way than rape shows
        that this is not the case, but those who obtain economic success find
        class struggle useful, and it is backed by at least the threat of force.

        >The new owner is bound by a contractual obligation, and in that sense
        >is a "contractor for life". Many new homes are built with CC&R's
        >that require the owners to keep the property up to rather strict
        >aesthetic standards. The principle is the same. In this case, the
        >property owners served by the road bought their property with an
        >(admittedly implicit) contract with the government that they would
        >have access to their property via the road. It is the current
        >owner's (government's) responsibility to uphold that contract, and
        >insure that it is upheld by any successor owners.
        >That the existance of such implicit contracts makes unattractive the
        >purchase of many if not most existing government roads by entities
        >other than those directly benefitting from their existance and upkeep
        >is my whole point.
        >Your objection to private roads boils down to nothing more than an
        >assumption that the new property owner can violate at will the
        >implicit contract you made with the government when you bought your
        >property. Selling single-access roads without the contract would
        >amount to a breach by the current owner, which is not what
        >Libertarians such as myself advocate.
        >Thus "privatizing the roads" amounts in practice to transferring both
        >ownership and responsibility for most existing roads to entites owned
        >by those who benefit from the roads most directly -- those who rely
        >on the raod for access to their property. More importantly, it also
        >means that the government does not build any new roads.
        >I always find it curious how fixated people are on the topic of road
        >privatization. To my knowledge, no Libertarian ever ran for office
        >stating that the first thing he or she planned to do upon being
        >elected and assuming office is privatize all of the roads. Private
        >roads are indeed implied by libertarian principles, and I am
        >confident that the concept is workable. But it's something that
        >would be done later rather than sooner. We'd start privatization
        >with such obvious targets as the Post Office and Amtrak, move on to
        >Social Security, as well as the banking, health care, and insurance
        >activities currently engaged in by the government. If we got through
        >all of that and were still in office, then maybe roads would be on
        >the agenda.

        Maintaining contracts as a perpetual condition of property ownership
        does in fact transfer only part of the property. Just as the home
        owner's association retains part of the property and some control
        over it, so would such an agreement for road maintenance. Calling it
        private ownership with such severe restrictions would be disingenuous.

        >> In fact it is inevitable that military force is used on those who
        >> refuse to trade when the [economic] imperialist powers think it
        >> worthwhile. You may not approve of it, but it happens every time.
        >Because the initiation of military force has always been viewed as
        >acceptable, particularly by the politicians. That is precisely what
        >I am attempting to change.

        Lot's of luck, but I doubt you will be able to do so without yourself
        engaging in force.

        >You missed the forest for the trees. Taxes are both proportional and
        >predictable. Bribes are much less predictable -- they depend on the
        >daily whim of bureaucrats and politicans rather than a public
        >deliberative process like legislation. They are also much less
        >proportional -- often a flat "fee" is required to get something done
        >regardless of whether your income/investment is large or small.
        >It is reasonable to invest capital knowing that a certain percentage
        >will be confiscated by taxation. You simply figure it as a cost in
        >your decision making. It is much less reasonable to do so when
        >bribes are required, because you don't know what it will take in
        >advance, making it hard to determine whether or not the investment
        >will be profitable. Furthermore, it is much more likely that a large
        >investment will be profitable than a small one, simply because bribes
        >will take a smaller percentage.

        Bribes are, in fact, predictable, once you've gotten to know the
        country and the bureaucracy, and people do manage to do business and
        reap huge profits in such environments.

        >The "large petit-bourgeoisie" you speak of are not actually so. When
        >and if such people of average means acquire property that is of value
        >to the very wealthy/kleptocrats, it is simply taken, perhaps after a
        >small (proportional to wealth) bribe is paid by the person who wants
        >it. The petit-bourgeoisie "own" what they own only simply because it
        >is not of interest to the wealthy and powerful. There is little to
        >no upward mobility as a result. As I said, sadly this practice is
        >increasingly becoming the case in the first world capitalist
        >countries as well.

        That is quite simply false. The only block to upward mobility of
        the third world petit-bourgeoisie is competition from multinational

        >> The disappearance of the American "middle class" has a lot more to
        >> do with shipping jobs overseas for cheap labour than with any
        >> domestic tax policy or bribery problem. In other words it is
        >> [economic] imperialism that is destroying our own middle class.
        >Such is the leftist party line. Economic data do not appear to
        >support this contention. The median wage in this country has tracked
        >relatively close to inflation for decades. It outpaced inflation a
        >bit from WWII until the early 70's, then inflation outpaced it a bit
        >for a while in the late '70s and early '80s, but then it outpaced
        >inflation again throughout much of the '90s. Where we are now in
        >terms of gross earnings for the average worker is better in real
        >dollar terms than where we were several decades ago. Furthermore,
        >real household income has risen substantially over the same period
        >due to increasing numbers of dual income households. However, there
        >is a stark difference in the amount of taxes paid by the average
        >worker/household. The combined impact of payroll tax, sales taxes,
        >federal, state, and local income taxes, property taxes, and excise
        >taxes hit the average worker at combined rates exceeding 50%. Prior
        >to and shortly after WWII the combined rates were 25% or less.
        >Simultaneously with the tax increases on the middle class, the
        >government has subsidized both the poor and the very rich -- the poor
        >with increasing "free" services, direct and indirect cash payments,
        >and the very rich with corporate welfare and the ability to shut out
        >competition with burdensome red tape that constitutes barrier to
        >market entry.
        >It is an economic fact that taxing something results in less of it,
        >and subsidizing something results in more of it. Quite predictably,
        >we've seen a shrinkage of the middle class. Concurrently we've seen
        >a growth in the numbers of the poor, and in the magnitude (if not raw
        >numbers) of the very rich.
        >Certainly, some middle class folks such as factory workers lose their
        >jobs and become impoverished because it's cheaper to hire someone
        >overseas. On the other hand, our economy seems to keep producing
        >many jobs that replace ones which were lost, on pay scales that are
        >comparable. The key difference between the new jobs and the old ones
        >is that the new ones require increased skills. Most of the folks I
        >hear whining about losing their job to cheaper labor simply don't
        >want to invest the time and money to improve their own skills. In a
        >society which produces rapid technological progress (a very desirable
        >thing, I hope you agree) it is simply not reasonable to expect to go
        >to school, learn a job, and then do that job and be paid well at it
        >until you retire. Yesterday's skills simply aren't as economically
        >valuable as today's skills, whether those skills are found locally or
        >halfway around the world. Once you factor in relative skills, the
        >real results on middle class incomes from "globalization" are
        >--Jason Auvenshine

        The facts do not bear out your taxation hypothesis. The upper brackets
        of the income tax were reduced substantially 20 years ago. Any "shrinking"
        of the middle class since that time can't have been due to overtaxation.
        The real difference between old and new jobs is that the new jobs are
        parasitical, largely consisting of shuffling papers and herding electrons.
        They only manage the wealth of the transnationals, not creating any.
        Other new jobs are largely in the low-paid service sector.

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