Saturday, January 2, 2021

A Few More Questions

  1. What objections are there to the proposition that wealth consists of reserved surplus labour?
  2. How may one answer objections to the proposition that wealth consists of reserved surplus labour?
  3. What is the difference between value in use and value in exchange of goods?
  4. Why should calculation of the wealth of a nation exclude (or include) its usual and necessary consumption?

3 comments: said...

Well there is the problem of what Marx called "fictitious capital," that is assets with prices artificially elevated due to speculation. No reserved surplus labor there, which is why it is "fictious," although as long as the price holds it is certainly wealth to one who owns it.

Kaleberg said...

Wealth isn't exactly about surplus labor. It's about the ability to command goods and services. If you look at a society that just manages to provide for its own needs, you can see wealth rising and falling as available resources change, for example, seasonal availability of certain foods. Wealth might be some food put by or it might be the right to the fruit of a particular grove when it ripens. It might be the weight and physical state of a stock animal. Wealth doesn't always reflect past labor. It doesn't always involve the past as opposed to the future. A kinship relation, for example, can be a form of wealth in that it allows one to make demands on another.

I have a big problem with value, and I am not 100% sure that I believe in it. I do believe in prices, because prices are measurable ratios. Isn't the whole point of having stock markets for publicly traded corporations vested in their ability to provide prices. One might argue that, for small transactions in the near future, one can compute value by multiplying a recent price by the quantity, but that's just a useful approximation. It's like assumptions of local linearity which make it possible to compute usefully in quantum physics, but any real sense of value has to take into account possible market changes and elasticity.

What exactly is the "wealth of a nation"? The whole idea of a nation is so completely political that the wealth of a nation cannot be divorced from politics. Maybe I spent too much time hanging around with mathematicians, but whenever I hear "wealth of a nation", I start invoking the Axiom of Choice and wondering about the wealth of arbitrary subsets of humanity including subsets that it might not be possible to specifically define. Then, my political sense chimes in and suggests I evaluate some integral across individual lifespans. Since not consuming, and not eating particular, can lower the value of such integral rather severely, I'll vote for including ordinary consumption. Any idea of price or value will have to flow from biology, psychology and anthropology.

Those are definitely interesting questions. Joan Robinson often pointed out that economic analysis rarely strays from its societal framework, and in its accepted forms it is about maintaining the existing power structure, that is, the existing set of abilities to command goods and services.

P.S. If I seem stuck on the ability to command goods and services, it's because, like price as opposed to value, one can measure goods and services and note who commanded what from whom. Since I am able to command so many goods and services based on the alignment of certain magnetic domains on particular artifacts, I've become sensitive to just how strange the real world is.

Anonymous said...


If a capitalist forces a hundred workers to work ten hours a week unpaid for a year, and succeeds in selling the product of their labour at its value, then he has secured for himself a definite quantity of the product of their labour, in the form of capital. In the normal course of affairs, he would exchange his money-capital for commodities and restart the cycle of reproduction with the aim of accumulating more capital.

On the other hand though, let us suppose that he now wants to retire, and instead of putting his money-capital back into commodities, he invests it in the bank. He now holds in his hands a claim to capital, perhaps in the form of a bank-account, or a bond, shares or whatever, rather than capital as such.

Now if his money lies idle in the bank vault, just the same as if it lay in his own vault, his claim to money is secure. However neither his claim nor the money itself are capital as such and can earn no interest, because the money is not in circulation....