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Psy
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« Reply #45 on: December 19, 2008, 11:56:58 EST »

*adjusts glasses*

Actually that was exactly what undid the last of the Marxist holdouts at universities.

Karl Popper made a very good argument that while Marxism used to be scientific, anyone who holds it at this point cannot be considered scientifica, and the current theory is not scientific.  Science requires predictions of occurrances should bear out, and early marxism made such predictions, however, few of the predictions bore out and thus the theory needs to be either modified or abandoned.  Instead, excuses were made.

Given that the predictions of Marxism have not come to pass, and the theory cannot account for these occurances, it is a failed theory.

Marxist theories has accrued within tolerable limits.  Marx said there was a tenancy for the rate of profit to fall and that is pretty much what has happened.  Marxism is mostly still seen as a scientific theory thus why there is still scientific debates for and against that accrue in academic writings.
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Andrei
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« Reply #46 on: December 19, 2008, 12:17:54 EST »

Quote from: Current
Many people think about the car industry in terms of what F. A. Hayek called Scottish or British rationalism.  They see that it is an industry that has grown up over time.

(...)

One of those principles being that bad companies should be allowed to fail and go bankrupt.

People think of the financial sector differently.
And so they should. There are a number of differences between banking and other industries:

1) You are forced to use it.
Litterally. Many employers won't pay you otherwise. Even if you don't have a bank account, cashing a paycheck depends on the solvency of banks. Telephony and electricity are the only other industries that are similar, and they are often state monopolies.

2) If it craps out, the effect on customers is greater than in other industries.
Self-explanatory. There is no greater commitment to a company than to entrust it a good part of your life savings.

3)There are relatively few ways to protect yourself.

Correct me if I'm wrong, but I think you've never been affected, or known anyone who was affected, by a bank crapping out. I think the question is purely theoretical to you, so you don't mind dogmatically applying ideology.

I've never been affected directly, but I know people who have. There was a time when banks popped up and down in Romania. It sucked. Most people decided to keep money at home in foreign currency, or to put it in the state bank which was kept afloat by the government directly. Anything else was just dumb.

So, no, you're wrong on this. Banking isn't an industry like any other anymore. It used to be, it no longer is. This is a fallacy you often commit, the "it worked in the early 19th century so it can work now because nothing has changed since" fallacy.

Back when you could get paid directly. Back when keeping money at home was a good option. Back when you could buy property without needing direct credit.

Nowadays, banking is so vital to day to day life, and its failure is so serious, that it can't be considered "an industry like any other". I'd say it's more like firefighting, or prevention of epidemics. It has the potential to do so much damage to society that it can't be allowed to fail, at least not to a serious extent.
_______________________________________

Quote from: Psy
Well for starters Austrain economics lectures in Universities are usually laughably small, there is little point in Universities holding courses for a theory that is highly unpopular.  In contrast lectures on classical and Marxist economic theories can pack a lecture hall (...)
God, I so hate that argument.

If a professor proposes to give a special topics cours in, say "Combinatorial Lie groups and algebras"*, the administrator you'll talk to will think "He'd get paid for teaching a class that maybe 5 or 6 grad students will pay tuition money for.", and unless he's very lucky, the answer will be "If you want to hold a grad seminar, be my guest, but I don't think there will be enough interest for a course..."

If, on the other hand, he volunteers to teach something along the lines of "Introduction to basic linear algebra"**, the administrator will almost wet himself thinking of all the complacent pseudo-students willing to spend their parent's money on a course they couldn't possibly fail.

And thus do undergrads learn less and less while grads learn narrower and narrowe subjects as they are only exposed to high-level topics via their advisor.

*:The topic that led (more or less) to the last Fields medal in algebra. Also the topic my advisor wanted to present in a special topics course next semester.
**:A good description of what my advisor will be teaching next semester.
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He looked severely at me for awhile, then, grabbing his moustaches, he said:
- Boss, with all due respect, you are naive and pedant.

"Alexis Zorba", by Nikos Kazantzakis (translation mine)
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« Reply #47 on: December 19, 2008, 12:19:00 EST »

What specific classical theory are you using here?
The main crisis theory of classical economics is that of underconsumption.  This is the theory that crisis accrue when a growing amount of value in the system can't be consumed that disrupts the capitalist cycle.  Marx didn't dismiss this theory and instead expanded upon it.
Please tell me what part of classical economics you are talking about.  Are you talking about the "Great Glut" controversy?

Quote from: Current
The Marxist crisis theory is slightly different, that value gets stuck in the from of commodites causing a falling rate of profit, again if we look we also notice this is true, capitalists faced with sudden drops in their returns and nowhere to invest hoard their money, causing smaller capitalists to run out of credit causing them to go belly up causing underconsumption.
What you describe here is simply what Austrians call "misallocation" or what Monetarists/Neo-Keynesians call "disacallocation".  The wrong things are made and people don't want them.  This is obviously not a fatal situation.  The solution is simply to look at what people do want and make it.
This is different in both LTV crisis theories it is not that people don't want the commodities it is that people can't afford to consume the commodites.  For example right now across the board consumption is down, there is not a single industry that is not currently contracting, thus looking at what people want is not a solution since the problem is that people can't afford to consume the products of society.
What though pays for products?  Marxists claim to be able to see through the illusions of money.  I'm not sure though that you are doing so in this case.

Goods and services are paid for with money.  Money itself is bought with other goods and services.  No situation where people "cannot afford to consume" can exist for long.  All of those who sell products must, if they are to sell at all, sell at market prices.  If their prices are so high that no-one is buying them they must reduce those prices.  The same applies to companies selling products as workers selling labour.

The amount of hours of "dead labour" supposedly inhered in existing goods and capital does not matter.

Quote from: Current
As for Austrian economics, they blame all capitalist crisis on contraction of the money supply
No they don't.  Austrian blame crises on the Federal Reserve control of money supply disrupting the structure of production.  It is quite a complicated theory, I can't really summarize it easily.  You can read about it on the internet.
I have and they totally ignore realities, even with record low interest rates we are facing major deflation of the money supply, your money is going farther today then it did in June as fictional capital evaporates and value gets frozen in the form of unsold commodities.  The Federal Reserve is failing so you can't blame the crisis on them, the world is still facing huge deflation as value freezes up more.  Austrian economic theory predicted inflation not deflation and they still are predicting inflation while commodity prices are dropping like a rock, their theory can't come to terms that we are facing deflation and not inflation.  You have deflation because consumers can't consume and capitalists can't accumulate more capital so both hoard their money causing a reduction of money in circulation.
You don't understand Austrian economic theory.  In a situation like this it holds the both the possibility of deflation or inflation open.

The case Austrian economists make for blaming the Federal Reserve is that their past actions, particularly the very low interest rates of recent years, brought about the crisis.  What the Fed can or cannot do now has nothing to do with the causes of the crisis.

Also, it is not true that Austrian economists predict inflation as the outcome of crises like this.  They hold both the possibilities of inflation and deflation open.  F.A. Hayek pointed out that the central bank does not control the amount of current account money ("M1") but controls the amount of reserves.  Therefore central bank attempts to increase the money supply may fail if the commercial banks are not willing to use their reserves to create more loans.  This is the situation we are in now.

You have deflation because consumers can't consume and capitalists can't accumulate more capital so both hoard their money causing a reduction of money in circulation.
Yes.  Such a situation is only temporary though.  Consumers still need to eat and do other things.  Capitalists are in a similar position.  It may be wise for an investor to dissolve his lowest-performing investments in a crisis like this.  It makes no sense though to dissolve those which are continuing to perform.

Come on Austrian economics is not taken seriously by any reputable University in the world, most economists treat Austrian economists as religious freaks that deal in blind faith rather then science.  They don't back any of their theories with mathematical models, they reject the scientific method and instead totally rely on axioms.   Austrian economics is creationism of economists, it can't back up its theory with a shred of science and throws out any science that contradicts their beliefs.
Well, I'd agree with some of your criticisms of Austrian economics.  However....  Austrian economics certainly is treated seriously by other Universities and by many economists.  George Mason University and Auburn University both employ professors who profess to be Austrian economists and teach course in the subject.

Certainly some Austrian economist do take the view of Ludvig von Mises that all important economics can be derived from simple almost axiomatic rules of human behaviour.  However, these Miseans are only one group within Austrian economics.  I certainly don't agree with them.

You are correct that most Austrian economics does not involve mathematical models, some though does.  Having a mathematical model though does not necessarily make a theory correct a bad theory may still have a mathematical model.  Also, a theory that has a mathematical model is not more defensible than one that doesn't.

Well for starters Austrain economics lectures in Universities are usually laughably small, there is little point in Universities holding courses for a theory that is highly unpopular.  In contrast lectures on classical and Marxist economic theories can pack a lecture hall and there is far more subject matter to cover in classical and Marxist economic theory compared to Austrain economics since Austrain economic theory is no where as dense as other economic theories.
Hmm, I'm not sure what you mean by "dense".

...
Classical economic theory and Marxist economic theory has mathematical modes and adheres to the scientific method, there are reputable Universities that teach both as sciences.  
Yes, there are Universities that teach both as scientific theories certainly.  That doesn't though mean that they are correct.

By the gods! My irony cortex! Now I need aspirin.
The intellectual criticism of Marxism is never it being unscientific, it is the opposite that Marx's capital is far too dense.
The criticisms leveled at Marxism are that its underlying axioms are flawed.  Massive, dense and apparently precise theories can be constructed on the basis of these axioms.  Leontief matrices, input-output diagrams and so on are all very nice, and I'm sure undergraduates love them.  However the axioms they are based on are clearly false and they have failed to describe what has happened in history.  Were the "Tendency for profits to fall" to be a reality they would have fallen to zero more than a century ago.

Marxist theories has accrued within tolerable limits.  Marx said there was a tenancy for the rate of profit to fall and that is pretty much what has happened.  Marxism is mostly still seen as a scientific theory thus why there is still scientific debates for and against that accrue in academic writings.
Really.  Please provide some evidence for this "Tendency of Profits to fall" then.

Of course this view ignores LTV,
Indeed.  I always ignore LTV, because it is rubbish.  I have explained why many times in other threads.

that the more productive autoworkers are the less exchange value they produce since there is a finite demand for cars and it is shrinking, thus increased productively would only result in cars having less exchange value that would mean increased productively would only lead to less profits.
Now that's interesting reasoning.... Let us say auto workers are more productive.  If they were what would that mean?  Costs to produce a car may be lower.  In this case the price to the consumer may fall due to competition, if the methods of increasing productivity were known to all manufacturers.

This though tells us nothing about profits.  An investor or entrepreneur does not make profits by taxing his workforce.  He or she makes high-level decisions about where investment funds are to go, which projects and ventures are likely to be profitable and which aren't.  Profits and losses depend on how good these decisions are.

What you mean is level of exploitation, that UAW workers are not as exploited as their non-union counterparts, meaning more exchange value goes to UAW workers then goes to non-union workers.
Exploitation in the Marxist sense is a creature spawned from LTV.  It only makes sense in that context.  Since LTV does not make sense the Marxist concept of exploitation does not either.
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Psy
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« Reply #48 on: December 19, 2008, 13:16:48 EST »

What specific classical theory are you using here?
The main crisis theory of classical economics is that of underconsumption.  This is the theory that crisis accrue when a growing amount of value in the system can't be consumed that disrupts the capitalist cycle.  Marx didn't dismiss this theory and instead expanded upon it.
Please tell me what part of classical economics you are talking about.  Are you talking about the "Great Glut" controversy?
The theory of underconsumption.

Quote from: Current
Quote from: Current
The Marxist crisis theory is slightly different, that value gets stuck in the from of commodites causing a falling rate of profit, again if we look we also notice this is true, capitalists faced with sudden drops in their returns and nowhere to invest hoard their money, causing smaller capitalists to run out of credit causing them to go belly up causing underconsumption.
What you describe here is simply what Austrians call "misallocation" or what Monetarists/Neo-Keynesians call "disacallocation".  The wrong things are made and people don't want them.  This is obviously not a fatal situation.  The solution is simply to look at what people do want and make it.
This is different in both LTV crisis theories it is not that people don't want the commodities it is that people can't afford to consume the commodites.  For example right now across the board consumption is down, there is not a single industry that is not currently contracting, thus looking at what people want is not a solution since the problem is that people can't afford to consume the products of society.
What though pays for products?  Marxists claim to be able to see through the illusions of money.  I'm not sure though that you are doing so in this case.

Goods and services are paid for with money.  Money itself is bought with other goods and services.  No situation where people "cannot afford to consume" can exist for long.  All of those who sell products must, if they are to sell at all, sell at market prices.  If their prices are so high that no-one is buying them they must reduce those prices.  The same applies to companies selling products as workers selling labour.

The amount of hours of "dead labour" supposedly inhered in existing goods and capital does not matter.
That assumes C-M-C or M-C-M yet not M-C-M1.

As soon as you add profits into the system you have a demand gap where there is more exchange value in the system then ability to consume.  This is solved by expansion, the greater inputs for the next production cycle mops of the excess exchange value in the current production cycle (meaning a significant chunk of profits are re-invested into expanding production) , the problem is if you don't have expansion this excess exchange value becomes unconsumed and you have underconsumption (in Classical economic theory) or overproduction (in Marxist economic theory)

Quote from: Current
Quote from: Current
As for Austrian economics, they blame all capitalist crisis on contraction of the money supply
No they don't.  Austrian blame crises on the Federal Reserve control of money supply disrupting the structure of production.  It is quite a complicated theory, I can't really summarize it easily.  You can read about it on the internet.
I have and they totally ignore realities, even with record low interest rates we are facing major deflation of the money supply, your money is going farther today then it did in June as fictional capital evaporates and value gets frozen in the form of unsold commodities.  The Federal Reserve is failing so you can't blame the crisis on them, the world is still facing huge deflation as value freezes up more.  Austrian economic theory predicted inflation not deflation and they still are predicting inflation while commodity prices are dropping like a rock, their theory can't come to terms that we are facing deflation and not inflation.  You have deflation because consumers can't consume and capitalists can't accumulate more capital so both hoard their money causing a reduction of money in circulation.
You don't understand Austrian economic theory.  In a situation like this it holds the both the possibility of deflation or inflation open.

The case Austrian economists make for blaming the Federal Reserve is that their past actions, particularly the very low interest rates of recent years, brought about the crisis.  What the Fed can or cannot do now has nothing to do with the causes of the crisis.

Also, it is not true that Austrian economists predict inflation as the outcome of crises like this.  They hold both the possibilities of inflation and deflation open.  F.A. Hayek pointed out that the central bank does not control the amount of current account money ("M1") but controls the amount of reserves.  Therefore central bank attempts to increase the money supply may fail if the commercial banks are not willing to use their reserves to create more loans.  This is the situation we are in now.
That ignores the stagnation of the 1970's, and the continued fall in the rate of profit since the 1970's in production.  You can't blame the Federal Reserve for saving capitalism from stagnation by beefing up financial capital.

Quote from: Current
You have deflation because consumers can't consume and capitalists can't accumulate more capital so both hoard their money causing a reduction of money in circulation.
Yes.  Such a situation is only temporary though.  Consumers still need to eat and do other things.  Capitalists are in a similar position.  It may be wise for an investor to dissolve his lowest-performing investments in a crisis like this.  It makes no sense though to dissolve those which are continuing to perform.
Japan went through deflation for a decade so no it is not a temporary condition since stagnation naturally causes the conditions for deflation.

Quote from: Current
Come on Austrian economics is not taken seriously by any reputable University in the world, most economists treat Austrian economists as religious freaks that deal in blind faith rather then science.  They don't back any of their theories with mathematical models, they reject the scientific method and instead totally rely on axioms.   Austrian economics is creationism of economists, it can't back up its theory with a shred of science and throws out any science that contradicts their beliefs.
Well, I'd agree with some of your criticisms of Austrian economics.  However....  Austrian economics certainly is treated seriously by other Universities and by many economists.  George Mason University and Auburn University both employ professors who profess to be Austrian economists and teach course in the subject.

Certainly some Austrian economist do take the view of Ludvig von Mises that all important economics can be derived from simple almost axiomatic rules of human behaviour.  However, these Miseans are only one group within Austrian economics.  I certainly don't agree with them.

You are correct that most Austrian economics does not involve mathematical models, some though does.  Having a mathematical model though does not necessarily make a theory correct a bad theory may still have a mathematical model.  Also, a theory that has a mathematical model is not more defensible than one that doesn't.
Mathematical models even abstract ones like those in Marxist economic theory show people what you are talking about.

Quote from: Current
Well for starters Austrain economics lectures in Universities are usually laughably small, there is little point in Universities holding courses for a theory that is highly unpopular.  In contrast lectures on classical and Marxist economic theories can pack a lecture hall and there is far more subject matter to cover in classical and Marxist economic theory compared to Austrain economics since Austrain economic theory is no where as dense as other economic theories.
Hmm, I'm not sure what you mean by "dense".
Classical and Marxist economy theory explains the difference between a individual relationship to a commodity through use-value and a social relationship through buying/selling a commodity via its exchange vale, Austrain economic theory pretty much doesn't go into political economy.


Quote from: Current
...
Classical economic theory and Marxist economic theory has mathematical modes and adheres to the scientific method, there are reputable Universities that teach both as sciences. 
Yes, there are Universities that teach both as scientific theories certainly.  That doesn't though mean that they are correct.
It does make both respectable theories.

Quote from: Medivh
By the gods! My irony cortex! Now I need aspirin.
The intellectual criticism of Marxism is never it being unscientific, it is the opposite that Marx's capital is far too dense.
The criticisms leveled at Marxism are that its underlying axioms are flawed.  Massive, dense and apparently precise theories can be constructed on the basis of these axioms.  Leontief matrices, input-output diagrams and so on are all very nice, and I'm sure undergraduates love them.  However the axioms they are based on are clearly false and they have failed to describe what has happened in history.  Were the "Tendency for profits to fall" to be a reality they would have fallen to zero more than a century ago.

Marxist theories has accrued within tolerable limits.  Marx said there was a tenancy for the rate of profit to fall and that is pretty much what has happened.  Marxism is mostly still seen as a scientific theory thus why there is still scientific debates for and against that accrue in academic writings.
Really.  Please provide some evidence for this "Tendency of Profits to fall" then.
You seem to not understand what Marx meant by tendency of profits to fall.  First it does not mean profits fall, profits can rise while the rate of profit falls.

The rate of profit is (surplus-value)/(capital invested), meaning a falling rate of profit means diminishing rate of returns on investments.   So what did Marx mean by this?  He was saying as constant capital grows the rate of profit tends to fall. 

So what happened?  In the 1970's a high concentrated of constant capital caused a fall in the rate of profit in the west, this was solved by moving production to where capital was not concentrated, and the result was it only delayed the fall in the rate of profit.

Quote from: Medivh
Of course this view ignores LTV,
Indeed.  I always ignore LTV, because it is rubbish.  I have explained why many times in other threads.
Yet LTV is best measure of exchange value. 

Quote from: Medivh
that the more productive autoworkers are the less exchange value they produce since there is a finite demand for cars and it is shrinking, thus increased productively would only result in cars having less exchange value that would mean increased productively would only lead to less profits.
Now that's interesting reasoning.... Let us say auto workers are more productive.  If they were what would that mean?  Costs to produce a car may be lower.  In this case the price to the consumer may fall due to competition, if the methods of increasing productivity were known to all manufacturers.

This though tells us nothing about profits.  An investor or entrepreneur does not make profits by taxing his workforce.  He or she makes high-level decisions about where investment funds are to go, which projects and ventures are likely to be profitable and which aren't.  Profits and losses depend on how good these decisions are.
If the capitalists can't expand demand through lower prices then the overall exchange value produced by the automaker is lower.

Quote from: Medivh
What you mean is level of exploitation, that UAW workers are not as exploited as their non-union counterparts, meaning more exchange value goes to UAW workers then goes to non-union workers.
Exploitation in the Marxist sense is a creature spawned from LTV.  It only makes sense in that context.  Since LTV does not make sense the Marxist concept of exploitation does not either.
Not everyone thinks LTV is senseless.
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boring7
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« Reply #49 on: December 21, 2008, 00:29:38 EST »

I find most economists are religious freaks that deal in blind faith rather than science. 
Please note what you said above...
Don't get me wrong, the Union is getting a lot of disingenuous or dishonest mud slung at it, but when the average quoted by Seagull is still 255% of what I (a "mind" worker) am making, I think that perhaps their wages are a bit over-inflated.
That is a little bit of economic theorizing.  What evidence or logic do you have for it?  You claim most economists are "religious freaks that deal in blind faith rather than science".  What evidence or logic would you give for this statement?
As Tom Cruise might say, "you're being glib." 

I'm a "mind" working, according to Writey McLinked the prejudice (in America) is to pay me more because of that.  He asserted this prejudice was wrong, and I am going out on a limb and assuming he feels I am of equal value rather than a worthless schlub who shouldn't be paid anything.  That's fine, I'm not making a value judgment on that stance, but by that standard I'm getting paid less at my job than an auto worker at an equal level.  Clearly this is full of vagaries and assumptions, but then I also used terms like "I think," and "even if that's false," because it is NOT a particularly scientific study, just an idea.  I happen to think my job requires comparable work and training, but I get paid far less, what does that mean economically?  Part-and-parcel is the fact that wages HAVE to be higher in a part of the country where the cost-of-living is higher or the workers cannot afford to work there. 

You are stretching this into some sort of belief that I made an assertion about economics and economic theory and are attacking and insulting me over it.  This really goes hand-in-hand with my assertion that economists in general (and now YOU in particular) are religious freaks who argue against straw-men and are constantly on the attack like fundamentalist believers are constantly "defending god" by trying to outlaw gay marriage or protest soldier's funeralsyeahIwentthere. 

You're also a great big-THAT'S ALL THE TIME WE HAVE FOR TONIGHT FOLKS!  SEE YOU LATER! 
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Current
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« Reply #50 on: December 22, 2008, 20:12:52 EST »

What specific classical theory are you using here?
The main crisis theory of classical economics is that of underconsumption.  This is the theory that crisis accrue when a growing amount of value in the system can't be consumed that disrupts the capitalist cycle.  Marx didn't dismiss this theory and instead expanded upon it.
Please tell me what part of classical economics you are talking about.  Are you talking about the "Great Glut" controversy?
The theory of underconsumption.
OK.  That is part of the "Great Glut" controversy.

Quote from: Current
Quote from: Current
The Marxist crisis theory is slightly different, that value gets stuck in the from of commodites causing a falling rate of profit, again if we look we also notice this is true, capitalists faced with sudden drops in their returns and nowhere to invest hoard their money, causing smaller capitalists to run out of credit causing them to go belly up causing underconsumption.
What you describe here is simply what Austrians call "misallocation" or what Monetarists/Neo-Keynesians call "disacallocation".  The wrong things are made and people don't want them.  This is obviously not a fatal situation.  The solution is simply to look at what people do want and make it.
This is different in both LTV crisis theories it is not that people don't want the commodities it is that people can't afford to consume the commodites.  For example right now across the board consumption is down, there is not a single industry that is not currently contracting, thus looking at what people want is not a solution since the problem is that people can't afford to consume the products of society.
What though pays for products?  Marxists claim to be able to see through the illusions of money.  I'm not sure though that you are doing so in this case.

Goods and services are paid for with money.  Money itself is bought with other goods and services.  No situation where people "cannot afford to consume" can exist for long.  All of those who sell products must, if they are to sell at all, sell at market prices.  If their prices are so high that no-one is buying them they must reduce those prices.  The same applies to companies selling products as workers selling labour.

The amount of hours of "dead labour" supposedly inhered in existing goods and capital does not matter.
That assumes C-M-C or M-C-M yet not M-C-M1.
No.  I take the position of all modern marginalist economists, which is that all three of those sorts of transactions occur.

For those following this discussion who aren't familiar with it I'll explain what those mean....

All of these are trading activities.  C-M means to exchange goods for money, M-C to exchange money for goods.  C-M-C means to exchange goods for money then to exchange that money for different goods.  M-C-M1 means to exchange money for goods then to trade those for a larger quantity of money.  M-C-M means to do the same but for the same quantity of money.

In Marxism a C-M-C transaction is one that occurs in a pre-capitalist society.  The baker exchanges his bread for money then buys cutlery with his money from the blacksmith.  A M-C-M1 transaction is what a capitalist attempts.  He or she invests money in capital, stock, and labour and tries to produce a product that has a higher exchange value than the inputs.  M-C-M is to break even.

As soon as you add profits into the system you have a demand gap where there is more exchange value in the system then ability to consume.
You don't simply "add profits into the system".  A market economy is not something constructed by design.  Profit is not a tax that is taken by businesses.  Rather a business is able to charge a profit because the market for its outputs yields a higher price than the market for its inputs.

Let's say that the price of a good does not necessarily have any relation to the labour that went into producing it.  This is the reality of the matter.  If a producer is selling a product what does he do if he can't sell it for a profit?  Does he hold on to it?  Obviously not forever, he must cut the price and sell at break-even or for a loss.  Once that happens where is the demand gap?

This is solved by expansion,
By whom?  This is a strange line of reasoning.  Are we to believe that some capitalist thought of expansion as a means of preventing the problem you see and secretly told all other capitalists?

the greater inputs for the next production cycle mops of the excess exchange value in the current production cycle (meaning a significant chunk of profits are re-invested into expanding production) , the problem is if you don't have expansion this excess exchange value becomes unconsumed and you have underconsumption (in Classical economic theory) or overproduction (in Marxist economic theory)
It does not simply happen by accident that expansion and profit occur at the same time.  They are inter-related.

The entrepreneur finds an amount of money, M.  He or she then buys capital, stock, labour etc with that, with the intention of making a prifit, by selling the results for more than M.  This is not something anyone can do.  A person cannot take M buy with it any old bunch of stuff to make up C and be sure that they can sell the output of that for more than M.  Doing it requires knowledge and intelligence.  If anyone could do it then managing a portfolio of investments would earn minimum wage.

As I said earlier, a successful business is one where the market value of the outputs exceeds that of the inputs.  Broadly speaking this occurs because the use-value of the outputs exceeds the inputs.  Hence expansion and profits are often associated.

Which brings me to the main point... In Classical or Marxist theory we are talking about underconsumption or overproduction of what?  This is matter for what is called "Say's law", a piece of Classical economics.  What consitutes "demand" for goods?  In economics it is just ability to pay, ability to pay either with other goods or with money.  If we discount money then goods and services are demanded using other goods and services and supplied using other goods and services.  In this case there can be no underconsumption or overproduction in any economic sense.  The situation in a crisis is not "overproduction" or "underconsumption" in a general sense rather the wrong things have being produced.  Trade descreases because of misallocation.

Once a crisis has begun though it may lead to an increase in demand for money rather than goods and services, and/or a decreasing demand for labour.

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As for Austrian economics, they blame all capitalist crisis on contraction of the money supply
No they don't.  Austrian blame crises on the Federal Reserve control of money supply disrupting the structure of production.  It is quite a complicated theory, I can't really summarize it easily.  You can read about it on the internet.
I have and they totally ignore realities, even with record low interest rates we are facing major deflation of the money supply, your money is going farther today then it did in June as fictional capital evaporates and value gets frozen in the form of unsold commodities.  The Federal Reserve is failing so you can't blame the crisis on them, the world is still facing huge deflation as value freezes up more.  Austrian economic theory predicted inflation not deflation and they still are predicting inflation while commodity prices are dropping like a rock, their theory can't come to terms that we are facing deflation and not inflation.  You have deflation because consumers can't consume and capitalists can't accumulate more capital so both hoard their money causing a reduction of money in circulation.
You don't understand Austrian economic theory.  In a situation like this it holds the both the possibility of deflation or inflation open.

The case Austrian economists make for blaming the Federal Reserve is that their past actions, particularly the very low interest rates of recent years, brought about the crisis.  What the Fed can or cannot do now has nothing to do with the causes of the crisis.

Also, it is not true that Austrian economists predict inflation as the outcome of crises like this.  They hold both the possibilities of inflation and deflation open.  F.A. Hayek pointed out that the central bank does not control the amount of current account money ("M1") but controls the amount of reserves.  Therefore central bank attempts to increase the money supply may fail if the commercial banks are not willing to use their reserves to create more loans.  This is the situation we are in now.
That ignores the stagnation of the 1970's, and the continued fall in the rate of profit since the 1970's in production.  You can't blame the Federal Reserve for saving capitalism from stagnation by beefing up financial capital.
Austrian theory does not preclude "stagnation" happening whether or not there is a crisis.  If entrepreneurial decisions are bad or there is much misguided government interference then it indicates that there may be stagnation or recession.

Nor does Austrian theory preclude falling rates of profit in production.  To begin with I have seen no evidence that such a falling rate of profit has occurred.  However even if it has it is not really very relevant.  Production of physical goods is not the only productive economic act.

I don't really know what you mean by the last sentence.

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You have deflation because consumers can't consume and capitalists can't accumulate more capital so both hoard their money causing a reduction of money in circulation.
Yes.  Such a situation is only temporary though.  Consumers still need to eat and do other things.  Capitalists are in a similar position.  It may be wise for an investor to dissolve his lowest-performing investments in a crisis like this.  It makes no sense though to dissolve those which are continuing to perform.
Japan went through deflation for a decade so no it is not a temporary condition since stagnation naturally causes the conditions for deflation.
Japan went through deflation for a decade, the UK went through it for nearly all of the 19th century.  Deflation itself is not particularlybad or particularly interesting.

What I was talking about here is your statement about the liquidity trap "both hoard their money causing a reduction of money in circulation."  As I said above such a liquidity trap is only temporary.  A person may put more of their wealth in money, but they are not going to put it all in money.

In an economy with flexible prices the liquidity trap is temporary.  Once vendors realise they cannot sell for a profit they are forced to sell for a loss.  Japan in it's "lost decade" was not such an economy.  The government intervened to prevent prices from being flexible.

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Come on Austrian economics is not taken seriously by any reputable University in the world, most economists treat Austrian economists as religious freaks that deal in blind faith rather then science.  They don't back any of their theories with mathematical models, they reject the scientific method and instead totally rely on axioms.   Austrian economics is creationism of economists, it can't back up its theory with a shred of science and throws out any science that contradicts their beliefs.
Well, I'd agree with some of your criticisms of Austrian economics.  However....  Austrian economics certainly is treated seriously by other Universities and by many economists.  George Mason University and Auburn University both employ professors who profess to be Austrian economists and teach course in the subject.

Certainly some Austrian economist do take the view of Ludvig von Mises that all important economics can be derived from simple almost axiomatic rules of human behaviour.  However, these Miseans are only one group within Austrian economics.  I certainly don't agree with them.

You are correct that most Austrian economics does not involve mathematical models, some though does.  Having a mathematical model though does not necessarily make a theory correct a bad theory may still have a mathematical model.  Also, a theory that has a mathematical model is not more defensible than one that doesn't.
Mathematical models even abstract ones like those in Marxist economic theory show people what you are talking about.
But you don't necessarily have to use mathematical models.  In this discussion so far we have not done so yet I think it's still clear what we are talking about.  Mathematics is appropriate in some cases and inappropriate in others.

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Well for starters Austrain economics lectures in Universities are usually laughably small, there is little point in Universities holding courses for a theory that is highly unpopular.  In contrast lectures on classical and Marxist economic theories can pack a lecture hall and there is far more subject matter to cover in classical and Marxist economic theory compared to Austrain economics since Austrain economic theory is no where as dense as other economic theories.
Hmm, I'm not sure what you mean by "dense".
Classical and Marxist economy theory explains the difference between a individual relationship to a commodity through use-value and a social relationship through buying/selling a commodity via its exchange vale,
Afraid not.  The Austrians talk about that all the time.  See "Human Action" by Ludvig Von Mises or the books about capital by Bohm-Bawerk.

Austrain economic theory pretty much doesn't go into political economy.
That's an interesting criticism.  Mostly economists say that Austrian economics is obsessed by it.  Everything by Ludvig Von Mises is full of Political economy.

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...
Classical economic theory and Marxist economic theory has mathematical modes and adheres to the scientific method, there are reputable Universities that teach both as sciences. 
Yes, there are Universities that teach both as scientific theories certainly.  That doesn't though mean that they are correct.
It does make both respectable theories.
Well, what is respectable or not is all a matter of opinion.  I certainly agree that some academics consider them respectable theories.

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By the gods! My irony cortex! Now I need aspirin.
The intellectual criticism of Marxism is never it being unscientific, it is the opposite that Marx's capital is far too dense.
The criticisms leveled at Marxism are that its underlying axioms are flawed.  Massive, dense and apparently precise theories can be constructed on the basis of these axioms.  Leontief matrices, input-output diagrams and so on are all very nice, and I'm sure undergraduates love them.  However the axioms they are based on are clearly false and they have failed to describe what has happened in history.  Were the "Tendency for profits to fall" to be a reality they would have fallen to zero more than a century ago.

Marxist theories has accrued within tolerable limits.  Marx said there was a tenancy for the rate of profit to fall and that is pretty much what has happened.  Marxism is mostly still seen as a scientific theory thus why there is still scientific debates for and against that accrue in academic writings.
Really.  Please provide some evidence for this "Tendency of Profits to fall" then.
You seem to not understand what Marx meant by tendency of profits to fall.  First it does not mean profits fall, profits can rise while the rate of profit falls.
I know that.

The rate of profit is (surplus-value)/(capital invested), meaning a falling rate of profit means diminishing rate of returns on investments.   So what did Marx mean by this?  He was saying as constant capital grows the rate of profit tends to fall. 

So what happened?  In the 1970's a high concentrated of constant capital caused a fall in the rate of profit in the west, this was solved by moving production to where capital was not concentrated, and the result was it only delayed the fall in the rate of profit.
Can you show this?  Do you have any charts of rate or profit to back up your statements?

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Of course this view ignores LTV,
Indeed.  I always ignore LTV, because it is rubbish.  I have explained why many times in other threads.
Yet LTV is best measure of exchange value.
Can you show this?  Could you for example show a measurement of the price of some goods and the amount of labour it took to make them?

Quote from: Medivh
that the more productive autoworkers are the less exchange value they produce since there is a finite demand for cars and it is shrinking, thus increased productively would only result in cars having less exchange value that would mean increased productively would only lead to less profits.
Now that's interesting reasoning.... Let us say auto workers are more productive.  If they were what would that mean?  Costs to produce a car may be lower.  In this case the price to the consumer may fall due to competition, if the methods of increasing productivity were known to all manufacturers.

This though tells us nothing about profits.  An investor or entrepreneur does not make profits by taxing his workforce.  He or she makes high-level decisions about where investment funds are to go, which projects and ventures are likely to be profitable and which aren't.  Profits and losses depend on how good these decisions are.
If the capitalists can't expand demand through lower prices then the overall exchange value produced by the automaker is lower.
Yep.  I fail to see how this is an argument against what I have said.

Quote from: Medivh
What you mean is level of exploitation, that UAW workers are not as exploited as their non-union counterparts, meaning more exchange value goes to UAW workers then goes to non-union workers.
Exploitation in the Marxist sense is a creature spawned from LTV.  It only makes sense in that context.  Since LTV does not make sense the Marxist concept of exploitation does not either.
Not everyone thinks LTV is senseless.
No.  In my view though to argue for "exploitation" in the Marxist sense first you must produce a solid argument for LTV.
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« Reply #51 on: December 22, 2008, 20:28:27 EST »

I find most economists are religious freaks that deal in blind faith rather than science. 
Please note what you said above...
Don't get me wrong, the Union is getting a lot of disingenuous or dishonest mud slung at it, but when the average quoted by Seagull is still 255% of what I (a "mind" worker) am making, I think that perhaps their wages are a bit over-inflated.
That is a little bit of economic theorizing.  What evidence or logic do you have for it?  You claim most economists are "religious freaks that deal in blind faith rather than science".  What evidence or logic would you give for this statement?
As Tom Cruise might say, "you're being glib." 

I'm a "mind" working, according to Writey McLinked the prejudice (in America) is to pay me more because of that.
Really?  Who is Writey McLinked?  Do I have to take special drugs to understand this post?

He asserted this prejudice was wrong, and I am going out on a limb and assuming he feels I am of equal value rather than a worthless schlub who shouldn't be paid anything.  That's fine, I'm not making a value judgment on that stance, but by that standard I'm getting paid less at my job than an auto worker at an equal level.  Clearly this is full of vagaries and assumptions, but then I also used terms like "I think," and "even if that's false," because it is NOT a particularly scientific study, just an idea.  I happen to think my job requires comparable work and training, but I get paid far less,
What I mean is, you are making an economic theory here.  Certainly not a particularly scientific study as you say.  Why then do you condemn those who try to make a more scientific study?

what does that mean economically?  Part-and-parcel is the fact that wages HAVE to be higher in a part of the country where the cost-of-living is higher or the workers cannot afford to work there. 
Well yes. (Note this is another economic theory).

You are stretching this into some sort of belief that I made an assertion about economics and economic theory and are attacking and insulting me over it.
You have.  You are talking about how much various people get paid.  It is called Labour Economics.

This really goes hand-in-hand with my assertion that economists in general (and now YOU in particular) are religious freaks who argue against straw-men and are constantly on the attack like fundamentalist believers are constantly "defending god" by trying to outlaw gay marriage or protest soldier's funeralsyeahIwentthere. 

You're also a great big-THAT'S ALL THE TIME WE HAVE FOR TONIGHT FOLKS!  SEE YOU LATER! 
Economics is not just the high level business of predicting how many trillions US consumption will be next quarter according to some set of equations.  That sort of thing, predictive macroeconomics is only a part of it (and a part with a reputation for dubiousness).  Economics deals with all transactions.

When I talk about economics I am usually talking about the same sorts of things as those you were theorising about.
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« Reply #52 on: December 22, 2008, 22:12:47 EST »

Economics isn't really a science.  Science requires you to make hypotheses, than test them in peer reviewed double blind studies and the like, before coming to a conclusion.  Economics loves to make nice big theories and only bothers to test them after the fact, if at all.  In regards to scientific rigor, that approach is is equivalent to Historical Analysis on a good day and Creationism on a bad one.
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« Reply #53 on: December 22, 2008, 22:23:42 EST »

It's not justified to say all of economics is unscientific.  Economics is like physics, really covers a lot of ground, and most people are more interested in reading about the wierd theoretical bits then the boring ground-pounding bits.

Most econ folks like to show how much they know by going on about big ass theories based on kinda fishy evidence, this is what may be referred to as "Being in academia", or "Ivory Tower syndrom", because you're playing the game for the OMGWTFBBQ U R SOOOO SMRT!!!!1! moments.  To be fair they are not the dominant force in economics, just the loud, bellicose folks everyone tends to notice.

Which makes sense, as the vast majority of stuff in economics there really is no heavy debate on.  There are few, if any, serious marxists, and even people (like myself) who may say fractional backing is evil admit there is little we can do about it now.  Once you get to deal with the "okay, let's make real estimations for use inside a group" it's actually pretty dull.  I suspect Current and I could scoff up about Japan for a bit, but if you took us and said "Draw up a budget, accepting current political leaders" we'd be pretty close.  I might think that I could convince my leadership to never put in another Olympic bid, but beyond that *shrugs* it's accounting made big.
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« Reply #54 on: December 22, 2008, 22:31:24 EST »

What specific classical theory are you using here?
The main crisis theory of classical economics is that of underconsumption.  This is the theory that crisis accrue when a growing amount of value in the system can't be consumed that disrupts the capitalist cycle.  Marx didn't dismiss this theory and instead expanded upon it.
Please tell me what part of classical economics you are talking about.  Are you talking about the "Great Glut" controversy?
The theory of underconsumption.
OK.  That is part of the "Great Glut" controversy.
Okay.

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The Marxist crisis theory is slightly different, that value gets stuck in the from of commodites causing a falling rate of profit, again if we look we also notice this is true, capitalists faced with sudden drops in their returns and nowhere to invest hoard their money, causing smaller capitalists to run out of credit causing them to go belly up causing underconsumption.
What you describe here is simply what Austrians call "misallocation" or what Monetarists/Neo-Keynesians call "disacallocation".  The wrong things are made and people don't want them.  This is obviously not a fatal situation.  The solution is simply to look at what people do want and make it.
This is different in both LTV crisis theories it is not that people don't want the commodities it is that people can't afford to consume the commodites.  For example right now across the board consumption is down, there is not a single industry that is not currently contracting, thus looking at what people want is not a solution since the problem is that people can't afford to consume the products of society.
What though pays for products?  Marxists claim to be able to see through the illusions of money.  I'm not sure though that you are doing so in this case.

Goods and services are paid for with money.  Money itself is bought with other goods and services.  No situation where people "cannot afford to consume" can exist for long.  All of those who sell products must, if they are to sell at all, sell at market prices.  If their prices are so high that no-one is buying them they must reduce those prices.  The same applies to companies selling products as workers selling labour.

The amount of hours of "dead labour" supposedly inhered in existing goods and capital does not matter.
That assumes C-M-C or M-C-M yet not M-C-M1.
No.  I take the position of all modern marginalist economists, which is that all three of those sorts of transactions occur.

For those following this discussion who aren't familiar with it I'll explain what those mean....

All of these are trading activities.  C-M means to exchange goods for money, M-C to exchange money for goods.  C-M-C means to exchange goods for money then to exchange that money for different goods.  M-C-M1 means to exchange money for goods then to trade those for a larger quantity of money.  M-C-M means to do the same but for the same quantity of money.

In Marxism a C-M-C transaction is one that occurs in a pre-capitalist society.  The baker exchanges his bread for money then buys cutlery with his money from the blacksmith.  A M-C-M1 transaction is what a capitalist attempts.  He or she invests money in capital, stock, and labour and tries to produce a product that has a higher exchange value than the inputs.  M-C-M is to break even.

As soon as you add profits into the system you have a demand gap where there is more exchange value in the system then ability to consume.
You don't simply "add profits into the system".  A market economy is not something constructed by design.  Profit is not a tax that is taken by businesses.  Rather a business is able to charge a profit because the market for its outputs yields a higher price than the market for its inputs.

Let's say that the price of a good does not necessarily have any relation to the labour that went into producing it.  This is the reality of the matter.  If a producer is selling a product what does he do if he can't sell it for a profit?  Does he hold on to it?  Obviously not forever, he must cut the price and sell at break-even or for a loss.  Once that happens where is the demand gap?

This is solved by expansion,
By whom?  This is a strange line of reasoning.  Are we to believe that some capitalist thought of expansion as a means of preventing the problem you see and secretly told all other capitalists?

the greater inputs for the next production cycle mops of the excess exchange value in the current production cycle (meaning a significant chunk of profits are re-invested into expanding production) , the problem is if you don't have expansion this excess exchange value becomes unconsumed and you have underconsumption (in Classical economic theory) or overproduction (in Marxist economic theory)
It does not simply happen by accident that expansion and profit occur at the same time.  They are inter-related.

The entrepreneur finds an amount of money, M.  He or she then buys capital, stock, labour etc with that, with the intention of making a prifit, by selling the results for more than M.  This is not something anyone can do.  A person cannot take M buy with it any old bunch of stuff to make up C and be sure that they can sell the output of that for more than M.  Doing it requires knowledge and intelligence.  If anyone could do it then managing a portfolio of investments would earn minimum wage.

As I said earlier, a successful business is one where the market value of the outputs exceeds that of the inputs.  Broadly speaking this occurs because the use-value of the outputs exceeds the inputs.  Hence expansion and profits are often associated.

Which brings me to the main point... In Classical or Marxist theory we are talking about underconsumption or overproduction of what?  This is matter for what is called "Say's law", a piece of Classical economics.  What consitutes "demand" for goods?  In economics it is just ability to pay, ability to pay either with other goods or with money.  If we discount money then goods and services are demanded using other goods and services and supplied using other goods and services.  In this case there can be no underconsumption or overproduction in any economic sense.  The situation in a crisis is not "overproduction" or "underconsumption" in a general sense rather the wrong things have being produced.  Trade descreases because of misallocation.

Once a crisis has begun though it may lead to an increase in demand for money rather than goods and services, and/or a decreasing demand for labour.
Here is the problem, profit means there has to growth, if revenues are stagnant then you just have M-C-M.  Meaning in the next production period you are also going to have more commodities (thus it is really M-C-M1-C1-M2).  Now since every period the output of the last period become input of the next it means when you a fall in demand in consumer goods it ripples causing a fall in the demand for expanding the means of production causing a feed back loop.

As for the idea of misallocation, it doesn't work, if there was profitable investment investors would find it, the problem is that there is not enough profitable investment in the system to consume all investment money in the system.

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As for Austrian economics, they blame all capitalist crisis on contraction of the money supply
No they don't.  Austrian blame crises on the Federal Reserve control of money supply disrupting the structure of production.  It is quite a complicated theory, I can't really summarize it easily.  You can read about it on the internet.
I have and they totally ignore realities, even with record low interest rates we are facing major deflation of the money supply, your money is going farther today then it did in June as fictional capital evaporates and value gets frozen in the form of unsold commodities.  The Federal Reserve is failing so you can't blame the crisis on them, the world is still facing huge deflation as value freezes up more.  Austrian economic theory predicted inflation not deflation and they still are predicting inflation while commodity prices are dropping like a rock, their theory can't come to terms that we are facing deflation and not inflation.  You have deflation because consumers can't consume and capitalists can't accumulate more capital so both hoard their money causing a reduction of money in circulation.
You don't understand Austrian economic theory.  In a situation like this it holds the both the possibility of deflation or inflation open.

The case Austrian economists make for blaming the Federal Reserve is that their past actions, particularly the very low interest rates of recent years, brought about the crisis.  What the Fed can or cannot do now has nothing to do with the causes of the crisis.

Also, it is not true that Austrian economists predict inflation as the outcome of crises like this.  They hold both the possibilities of inflation and deflation open.  F.A. Hayek pointed out that the central bank does not control the amount of current account money ("M1") but controls the amount of reserves.  Therefore central bank attempts to increase the money supply may fail if the commercial banks are not willing to use their reserves to create more loans.  This is the situation we are in now.
That ignores the stagnation of the 1970's, and the continued fall in the rate of profit since the 1970's in production.  You can't blame the Federal Reserve for saving capitalism from stagnation by beefing up financial capital.
Austrian theory does not preclude "stagnation" happening whether or not there is a crisis.  If entrepreneurial decisions are bad or there is much misguided government interference then it indicates that there may be stagnation or recession.

Nor does Austrian theory preclude falling rates of profit in production.  To begin with I have seen no evidence that such a falling rate of profit has occurred.  However even if it has it is not really very relevant.  Production of physical goods is not the only productive economic act.

I don't really know what you mean by the last sentence.
The highest rate of profit was during the long boom, the world has never recovered to the rate of returns that existed during that period.  This stagnation is not just with physical goods but the entire productive sectors of the world economy.  My last sentence means was that the Federal Reserve faced with stagnation of the productive sectors of the economy shifted focus to growing speculation.

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You have deflation because consumers can't consume and capitalists can't accumulate more capital so both hoard their money causing a reduction of money in circulation.
Yes.  Such a situation is only temporary though.  Consumers still need to eat and do other things.  Capitalists are in a similar position.  It may be wise for an investor to dissolve his lowest-performing investments in a crisis like this.  It makes no sense though to dissolve those which are continuing to perform.
Japan went through deflation for a decade so no it is not a temporary condition since stagnation naturally causes the conditions for deflation.
Japan went through deflation for a decade, the UK went through it for nearly all of the 19th century.  Deflation itself is not particularlybad or particularly interesting.

What I was talking about here is your statement about the liquidity trap "both hoard their money causing a reduction of money in circulation."  As I said above such a liquidity trap is only temporary.  A person may put more of their wealth in money, but they are not going to put it all in money.

In an economy with flexible prices the liquidity trap is temporary.  Once vendors realise they cannot sell for a profit they are forced to sell for a loss.  Japan in it's "lost decade" was not such an economy.  The government intervened to prevent prices from being flexible.
Once capitalist realize they cannot sell for a profit they invest elsewhere, if they can't invest elsewhere they go belly up.

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Come on Austrian economics is not taken seriously by any reputable University in the world, most economists treat Austrian economists as religious freaks that deal in blind faith rather then science.  They don't back any of their theories with mathematical models, they reject the scientific method and instead totally rely on axioms.   Austrian economics is creationism of economists, it can't back up its theory with a shred of science and throws out any science that contradicts their beliefs.
Well, I'd agree with some of your criticisms of Austrian economics.  However....  Austrian economics certainly is treated seriously by other Universities and by many economists.  George Mason University and Auburn University both employ professors who profess to be Austrian economists and teach course in the subject.

Certainly some Austrian economist do take the view of Ludvig von Mises that all important economics can be derived from simple almost axiomatic rules of human behaviour.  However, these Miseans are only one group within Austrian economics.  I certainly don't agree with them.

You are correct that most Austrian economics does not involve mathematical models, some though does.  Having a mathematical model though does not necessarily make a theory correct a bad theory may still have a mathematical model.  Also, a theory that has a mathematical model is not more defensible than one that doesn't.
Mathematical models even abstract ones like those in Marxist economic theory show people what you are talking about.
But you don't necessarily have to use mathematical models.  In this discussion so far we have not done so yet I think it's still clear what we are talking about.  Mathematics is appropriate in some cases and inappropriate in others.
The math allows for economics to plug in numbers to show what is going on.

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Well for starters Austrain economics lectures in Universities are usually laughably small, there is little point in Universities holding courses for a theory that is highly unpopular.  In contrast lectures on classical and Marxist economic theories can pack a lecture hall and there is far more subject matter to cover in classical and Marxist economic theory compared to Austrain economics since Austrain economic theory is no where as dense as other economic theories.
Hmm, I'm not sure what you mean by "dense".
Classical and Marxist economy theory explains the difference between a individual relationship to a commodity through use-value and a social relationship through buying/selling a commodity via its exchange vale,
Afraid not.  The Austrians talk about that all the time.  See "Human Action" by Ludvig Von Mises or the books about capital by Bohm-Bawerk.
I meant the clear distinction between use-value, exchange value and the act of using a commodity and buying/selling a commodity.  When you use a watch you are not changing its exchange value, if you use a watch that belongs to a store you are not stealing value as the watch has the same exchange value.

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Austrain economic theory pretty much doesn't go into political economy.
That's an interesting criticism.  Mostly economists say that Austrian economics is obsessed by it.  Everything by Ludvig Von Mises is full of Political economy.
Actually no, they pretend class doesn't exist as so the political relationship between worker and owner doesn't exist. 

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...
Classical economic theory and Marxist economic theory has mathematical modes and adheres to the scientific method, there are reputable Universities that teach both as sciences. 
Yes, there are Universities that teach both as scientific theories certainly.  That doesn't though mean that they are correct.
It does make both respectable theories.
Well, what is respectable or not is all a matter of opinion.  I certainly agree that some academics consider them respectable theories.
Right.

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The rate of profit is (surplus-value)/(capital invested), meaning a falling rate of profit means diminishing rate of returns on investments.   So what did Marx mean by this?  He was saying as constant capital grows the rate of profit tends to fall. 

So what happened?  In the 1970's a high concentrated of constant capital caused a fall in the rate of profit in the west, this was solved by moving production to where capital was not concentrated, and the result was it only delayed the fall in the rate of profit.
Can you show this?  Do you have any charts of rate or profit to back up your statements?
In Wiki
"There is also some statistical evidence that, as a broad historical trend, average profitability in industry has fallen through the 20th century (see, for instance, Robert Brenner and the research of Dumenil & Levy for the time after the second world war)."

Also in the notes of David McNally annalist on the recent crisis he cites works of other economists that have analyzed the falling rate of profit. 

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Of course this view ignores LTV,
Indeed.  I always ignore LTV, because it is rubbish.  I have explained why many times in other threads.
Yet LTV is best measure of exchange value.
Can you show this?  Could you for example show a measurement of the price of some goods and the amount of labour it took to make them?
Can you show use-value is a better measurement of exchange value? 

Quote from: Medivh
Quote from: Medivh
that the more productive autoworkers are the less exchange value they produce since there is a finite demand for cars and it is shrinking, thus increased productively would only result in cars having less exchange value that would mean increased productively would only lead to less profits.
Now that's interesting reasoning.... Let us say auto workers are more productive.  If they were what would that mean?  Costs to produce a car may be lower.  In this case the price to the consumer may fall due to competition, if the methods of increasing productivity were known to all manufacturers.

This though tells us nothing about profits.  An investor or entrepreneur does not make profits by taxing his workforce.  He or she makes high-level decisions about where investment funds are to go, which projects and ventures are likely to be profitable and which aren't.  Profits and losses depend on how good these decisions are.
If the capitalists can't expand demand through lower prices then the overall exchange value produced by the automaker is lower.
Yep.  I fail to see how this is an argument against what I have said.
The more productive the factory is at making cars the less value the factory makes if demand is fixed.  This is the paradox of capitalism were progress means less exchange value when the driving force of the system is to maximum exchange value. 

Quote from: Medivh
Quote from: Medivh
What you mean is level of exploitation, that UAW workers are not as exploited as their non-union counterparts, meaning more exchange value goes to UAW workers then goes to non-union workers.
Exploitation in the Marxist sense is a creature spawned from LTV.  It only makes sense in that context.  Since LTV does not make sense the Marxist concept of exploitation does not either.
Not everyone thinks LTV is senseless.
No.  In my view though to argue for "exploitation" in the Marxist sense first you must produce a solid argument for LTV.
Value is created in the production process, labor is key to the production process.
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« Reply #55 on: December 22, 2008, 22:43:28 EST »

Your wiki doesn't mention the key reason for the rejection.

On average, given a stagnant technology -it may be the case that- capital increases yeild fewer returns, but technology is not stagnant, and increase capital causes increase in tech-trends which normally should kick you back increased returns.

There are examples where it doesn't, but the whole article feels very old.  The language there is clunky, but we produce a great deal more -stuff- now then we did even 15 years ago.  Sure, the money value to the stuff is less, but most of us live in an opulance which the uber-elite of a century ago would find boggling.
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« Reply #56 on: December 23, 2008, 00:06:55 EST »

It's not justified to say all of economics is unscientific.  Economics is like physics, really covers a lot of ground, and most people are more interested in reading about the wierd theoretical bits then the boring ground-pounding bits.
Libertarians come across to me as insisting on the whole shebang, weird theoretical bits and all.  They also don't merely follow theories, but make wide-reaching assumptions from those theories about how to run societies.

Most econ folks like to show how much they know by going on about big ass theories based on kinda fishy evidence, this is what may be referred to as "Being in academia", or "Ivory Tower syndrom", because you're playing the game for the OMGWTFBBQ U R SOOOO SMRT!!!!1! moments.  To be fair they are not the dominant force in economics, just the loud, bellicose folks everyone tends to notice.
... aren't loud, bellicose, folks that everyone tend to notice the dominant force in most fields of argument, especially those where there severe shortages of rational foundations to build on?  Especially when those fields leak over into politics?

Which makes sense, as the vast majority of stuff in economics there really is no heavy debate on.  There are few, if any, serious marxists, and even people (like myself) who may say fractional backing is evil admit there is little we can do about it now.  Once you get to deal with the "okay, let's make real estimations for use inside a group" it's actually pretty dull.  I suspect Current and I could scoff up about Japan for a bit, but if you took us and said "Draw up a budget, accepting current political leaders" we'd be pretty close.  I might think that I could convince my leadership to never put in another Olympic bid, but beyond that *shrugs* it's accounting made big.
I think it has to do more with the mental contortions people have to undergo to fit the economist's model, assuming that people are this rational or that stupid in order for it to work.
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The plural of "anecdote" is "anecdotes". Not "data".
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« Reply #57 on: December 23, 2008, 01:33:20 EST »

Your wiki doesn't mention the key reason for the rejection.

On average, given a stagnant technology -it may be the case that- capital increases yeild fewer returns, but technology is not stagnant, and increase capital causes increase in tech-trends which normally should kick you back increased returns.

There are examples where it doesn't, but the whole article feels very old.  The language there is clunky, but we produce a great deal more -stuff- now then we did even 15 years ago.  Sure, the money value to the stuff is less, but most of us live in an opulance which the uber-elite of a century ago would find boggling.
It is not technology that brings stagnation by productivity, basically the more productive the less effort to produce thus the less exchange value produced if demand is constant. 
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« Reply #58 on: December 23, 2008, 02:18:40 EST »

Psy, yes but we all have more stuff!

It is better to have more then less, that is kind of the goal here.

Wodan, yeah, I just felt like my countrymen needed defending.  I disagree with some base assumptions of the big theories nowadays, but I suspect the real pill that no-one wants to fess up is that there is no such thing as a universal model in any field (any empirical field anyway), just general trends.  The early empiracists sort of said that, but we're a primate that really, really, really wants the universal to be rule-bound.
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« Reply #59 on: December 23, 2008, 10:10:25 EST »

Psy, yes but we all have more stuff!

It is better to have more then less, that is kind of the goal here.

Wodan, yeah, I just felt like my countrymen needed defending.  I disagree with some base assumptions of the big theories nowadays, but I suspect the real pill that no-one wants to fess up is that there is no such thing as a universal model in any field (any empirical field anyway), just general trends.  The early empiracists sort of said that, but we're a primate that really, really, really wants the universal to be rule-bound.
Yet the capitalists don't want the commodities, investors in GM don't care about the cars in GM inventory as they want those cars converted into money.  Since higher productive means each car is worth less that means when rate of growth of demand peaks so does the rate of return on their investment in GM.
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