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PaperclipPerfector  1yr ago (text post)   26881 thread views

Culture War Roundup for the week of September 4, 2023

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I think it's like half of the puzzle. Or maybe slightly less. It's almost equivalent to the "Supply" half of "Supply and Demand". Which means that it's ignoring demand. A pizza rotting in a warehouse takes the same amount of labor/talent/capital/ingredients to produce as a pizza in a highly popular restaurant. Lots of Soviet failure stories involve factories producing tons of unnecessary items that ended up unused because they were being measured according to oversimplified metrics. Tiny nails when measured by quantity produced, gigantic nails when measured by gross weight. Food rotting in warehouses instead of being distributed because someone forgot to care. You can make two products with nearly identical amounts of labor, skill, and ingredients, and have wildly different output value based on which of them is actually needed by the people around.

In a sufficiently competitive market where there are lots of fungible inputs, lots of people who could perform the same tasks, lots of customers who want whatever is produced, and the outputs themselves are mostly fungible, then yeah, the price of goods will drop down to approximately the price of its inputs, which can convert to labor. Which basically says that if you simplify and fix Demand as a constant, and fix all of the non-labor parts of Supply, then labor is all that's left. It's an important component, and certainly better than having no economic theory whatsoever, but you need to actually satisfy customer desires if you want to actually create value.

I think that's only because you're only focused on Marx's side of theory.

Smith's theory is about the labor the buyer is willing to expend to obtain something. To quote the wealth of nations:

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.

Which, I think is the other half that you're missing.

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