Source: (consider it)
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Thread: Tea, scones and weapons: Economic morality
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lilBuddha
Shipmate
# 14333
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Posted
quote: Originally posted by Russ: It means there are system-behaviour outcomes when different people's willingness-to-pay values interact.
Not exactly. Markets don't simply exist, they are created. Housing prices rose because sections of the financial market became based on real estate and its continued rise in value. When the natural* market forces could no longer support this rise, it was artificially modified to allow the participation of those who could not naturally participate. The bubble this created was beyond the simple willingness to sell/pay. This is true of times of need, such as housing, even without market complications.
*For certain definitions of natural, of course.
-------------------- I put on my rockin' shoes in the morning Hallellou, hallellou
Posts: 17627 | From: the round earth's imagined corners | Registered: Dec 2008
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Russ
Old salt
# 120
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Posted
quote: Originally posted by lilBuddha: it was artificially modified to allow the participation of those who could not naturally participate. The bubble this created was beyond the simple willingness to sell/pay.
Agree that governments can act to make things worse.
-------------------- Wish everyone well; the enemy is not people, the enemy is wrong ideas
Posts: 3169 | From: rural Ireland | Registered: May 2001
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Dafyd
Shipmate
# 5549
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Posted
quote: Originally posted by sharkshooter: Secondly, it is not necessarily true that the profit is entirely attributable to labour. Surely there are other factors, such as the use of technology, intellectual property, capital, etc. Many concepts which might not have been known, understood, or relevant in the 1700s.
Technology, intellectual property, and capital don't spring out of nowhere. They are themselves the results of labour. (Not necessarily the labour of the person who owns them.) In addition, they don't produce any wealth or profit by themselves. It's only when somebody does some work and puts in the hours that they start producing things.
I'm not an economist. I suspect that a strong version of the labour theory has too many problems. At the same time, it seems to me that the rejection of even weaker versions of the theory by mainstream economists has more to do with the use Marx makes of it than to do with the problems with the strong theory.
There's a strong tension in conservative thought between the idea that you ought to work hard to deserve to get ahead and the idea that even if you work hard you don't deserve any share in the products of your work. [ 23. April 2017, 12:45: Message edited by: Dafyd ]
-------------------- we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams
Posts: 10567 | From: Edinburgh | Registered: Feb 2004
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Dafyd
Shipmate
# 5549
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Posted
quote: Originally posted by Russ: If there are only producers and final consumers, there are no bubbles.
Bubbles happen when consumption isn't final. When for example I want to live in a house for 5 years and then sell it on, the price I'm prepared to pay depends not only on the value to me but also my expectation of the value to other people in 5 years time. A rising price then increases the desirability of the good, leading to a bubble.
That doesn't mean there's some mythical "real value" that is independent of anyone's willingness-to-pay. It means there are system-behaviour outcomes when different people's willingness-to-pay values interact.
This is I think irrelevant to the precise point, but modern economics largely works on the basis that markets are rational. That is, actors in the market on average accurately estimate the expected value of people down the line.
More relevantly, I don't think the concept of use value is sufficiently defined in modern economics to distinguish between the cases. If value is subjectively defined there's no difference that registers in the market between value assigned by use and value assigned by the expectation of future profit.
-------------------- we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams
Posts: 10567 | From: Edinburgh | Registered: Feb 2004
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