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Why are these forums dead?
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Author Topic: Why are these forums dead?  (Read 21002 times)
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« Reply #60 on: July 18, 2009, 11:32:11 EDT »

Quote from: Psy
But consumers try to maximize utility and to some extent succeed, that must mean consumers have a value system that is simple enough for a human to maximize utility to some extent.
Indeed.  However prioritizing spending is not difficult to understand.  I expect you do it yourself.

Also, it is not a criticism of marginalism to say that people use cost in their decisions.  Bohm-Bawerk wrote:
Quote from: Bohm-Bawerk
In practice, we stop innumerable times with a valuation based on costs. If one asks me how highly I value a winter coat, that I can buy at any moment at a cost of 40 florins, I will answer without hesitation and without further speculation: at 40 florins. If it were to cost only 35 florins, so I would decide just as quickly, and just as decisively answer: at 35 florins. From this indisputable fact, Dietzel has apparently gotten the impression that the explanation of the marginal-value theorists, which even in these cases comes back to some marginal utility, is not natural or true to nature, but makes “terrible” detours by means of a truly superfluous “jeu d’esprit spirituel” [“game of intellectual solitaire”]. What justification does this impression have?
    It has no justification. It stems from a confusion between that which individuals do or have to do, if they want to estimate the value of a good in practice, and that which science has to do if it wants to explain the practical valuations themselves.
However costs do not tell a person how useful a good is to them.  A person buys a house near to where they work.  They do so clearly because that is more useful than a house very far away.

For example consider a set of cakes for sale in a shop.  I wish to buy a good cake.  I could look at the cost of each of the cakes and estimate that the quality is proportional to the cost.  "You get what you pay for" as they say.  I may then consider how much I would like a cake compared to money in my pocket and therefore decide on how much I want to spend.

It must be recognized though that if I do this I am relying on marginal decisions made by others.  If the expensive cakes are indeed better than the cheaper cakes then it is because other customers have acted differently to myself.  They have compared the quality and price of the cakes and bought on that basis rather than estimating.  If this competition did not occur then the makers of poor cakes could charge the same price for them as the makes of good cakes charge regardless of labour expended in either case.
Yet consumers go farther then that and value money based on their wages which means they value cost based on labor. 

Quote from: Current
Quote from: Psy
No engineer in the world decides on what material to use based on marginal decisions, they once again use LTV to balance utility with cost.
I am an engineer, I work for a very large company that you have probably heard of.  I certainly do use marginal decisions.
Doubt it, most likely you just think you do yet still simply problem solve to come up with a solution to having a certain utility at a certain cost else you not a very good engineer since a main task of engineers is maximizing utility at a certain cost.  A engineer doesn't decide if functionality gets implemented into the produce based on marginal value but based on LTV (roughly how much labor would be required to implement the function over what the estimated utility of the function).

For example if you were designing a digital stereo system deciding the level of distortion in the system wouldn't be decided by personal preference or marginal comparison but simple LTV maximization of utility, engineers would analyze labor cost and find when they start getting diminishing returns (when distortion starts going down less compared to the increased labor value that would be invested) then engineer various models of the stereo for various price points.  Hell most business simulators follow LTV maximization as most business text books use LTV maximization of utility rather then marginal comparison (meaning managers are thought to use LTV).

Quote from: Current
Quote from: Psy
The value of the commodity is known before the consumer buys it as it has been engineered just like the values of fictional goods in games.
No it isn't.  When myself and my colleague make a new product our employer has a target price.  However the business cannot force customers to buy at that price.  If customers don't pay it we must reduce it or cancel the product.  If customers buy large quantities we may increase the price.
LTV covers that, the product has the value that was engineered into it, when it fails the value wasn't wrong it is devalued due to over-production localized to that product.   

Quote from: Current
Quote from: Psy
Quote from: Current
Now, as you have said before, in Marxist theories the labour value "inhered" in a product is proportional to the exchange value of that product, the price.  A capitalist adds his "surplus" on top of that labour value.
No in LTV the capitalist subtracts surplus value, the difference from what workers produce and what they are paid.
That is what I mean.  I was describing your position here.
Marxist theory doesn't have capitalists adding surplus value onto of labor value and capitalist theory doesn't consider labor value to be linked to commodity values (as that would still mean lay-offs and wage cuts devalues commodities which capitalists deny)

Quote from: Current
Quote from: Psy
Quote from: Current
You claim that administrative tasks managing the process do not add value but that tasks within the process do.  According to Marxist theory that implies that administrative tasks don't have an impact on exchange value, i.e. price.

But, how can that be.  In any sort of society administration of production processes is necessary, even in a Marxist one.  In a capitalist society the cost of administration must be born by the business.  If it cannot make enough profit to pay for administration then it will go bankrupt.  The cost of administration must be charged in the cost of products.  Competition comes into play in administration too.  If a business can achieve lower administration costs while keeping other factors similar then it can make higher profits, or charge lower prices and expand it's market share.  So, how can you say that only the process of production affects price?
Because it is not utility the consumer cares about
That has to be the stupidest thing I've ever heard anyone say about economics.  Of course the customer cares about utility.  He buys a good because it is useful.
I meant that the utility created by administration is not something consumers care about.  This is why when people research products they rarely investigate the administration.

Quote from: Current
Quote from: Psy
for example a person buying a TV doesn't care about the administration of the factory to produced it.
Of course not.  That doesn't mean that the administration of the factory doesn't play a part in the cost.  If the TV manufacturing business cannot charge a high enough price to cover it's administration cost then it will go bankrupt.
But administration doesn't add value to the commodity.  Lets take another example lets say you want someone to pave your driveway you wouldn't value the pavers with more overhead more then the pavers with no overhead as the workers self-manage.

Quote from: Current
Quote from: Psy
It is also not utility that is very labor intensive, it really doesn't take much effort to maintain organization of production once workers understand the process.
I see you know little about this.  It takes a massive amount of effort to do this.  For large businesses it costs billions and requires thousands of staff.  The same is true of cooperative businesses.

Quote from: Psy
I don't see managers on the floor exerting energy, the farmer does so the farmers is doing much more then organizing nature.
Physical effort or mental effort?  Perhaps not the former, but certainly the later.  If those who only expend mental effort are not really "creating value" then how are engineers creating value?  They only exert mental effort most of the time.  Weeks go by inbetween times I build prototypes, does this mean I'm not working in the interim?
Mangers rarely exert much mental effort that is valuable, many of the utility they create is counter-productive and workers waste mental effort finding ways around the bureaucracy managed by managers to meet their quota.  Even when managers do their job they don't increase the value of the community but lower it as they would have lowered the labor value inherited in it, for example if a manager make a factory produce the same commodity with 1 less worker then the value of the commodities would devalue the amount that worker produced.

Quote from: Current
Quote from: Psy
The paper doesn't create new value it doesn't exert energy,
Certainly not.  However, accord to LTV value is "inherred" in it.  So, what happens to that inherred value when it is used by an engineer compared to a manager?
That inherited value doesn't change even it is not used at all, the difference is new value created.

Quote from: Current
Quote from: Psy
the act of a engineer using the paper create value to what the engineer is designing, while a manager using the paper just to manage production is simply overhead.
Overhead must still be paid for.  Good management will produce good results and bad management bad results, the same is true of engineering.  So, where is the difference?

Also, engineering is often accounted for as "overhead".  Accounting differentiations such as what "overhead" is don't necessarily reflect economic differences.
Engineering through mental efforts created utility through designing the product and the means of its production.  The utility of good engineering is passed onto the consumer, good management devalues the commodity due to lowering the effort required to produce the commodity.  Meaning the better a engineer is the more valuable the commodity becomes, the better management is the less valuable the commodity becomes.
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« Reply #61 on: August 23, 2009, 13:49:51 EDT »

I can't believe I'm doing this. Guess I was bored. I mean, really bored.

This thread is a perfect example of one of the reasons I stopped posting here. How almost every single discussion inevitably gets derailed into an endless debate over the virtues of left-wing over right-wing economic theories and vice versa. I simply lost interest in liberals constantly arguing against libertarians without anything really being accomplished. I especially lost interest in constantly being accused of being a socialist because I don't hold to right-wing, free enterprise economic values.

The other reason, honestly, I grew to seriously dislike too many people here. Staying would've just caused me unnecessary stress I could've avoided and used up too much of my time, something I wasn't willing to do, not in my final year of university and when I had studies, a real social life, and a webcomic to stay on top of.

So, there's my reasons. Boring, repetitive topics and too much enmity between forumers. Also, the scant few religious debates weren't quite as fun once Darkeforce got banned.
« Last Edit: August 23, 2009, 13:56:56 EDT by Eon » Logged

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