| This question <28|28> overall <28|30> Hans: <26|34>. |
| Question 63: Is the magnitude of value of a commodity determined by the quantity of abstract labor necessary to produce it, or by the quantity of other commodities against which it can be exchanged? |
| [29] Hans: Marx and Demand and Supply MIKE's [28] argues a third position, not mentioned in the Question: the magnitude of value is determined by demand and supply (he calls it “availability”). If there is excess demand, the value rises, and if there is excess supply, it falls. Marx agrees, but he considers this only a short run adjustment. In the long run, those goods whose price is below their labor content will be supplied less, and those which can fetch a price above their labor content will be supplied more, because labor will be switched from producing the former to the latter. (Of course, with sports cards it is a different matter, but let's first understand typical commodities.) In the long run, therefore, Marx works with horizontal supply curves (constant returns to scale), and the level of the supply curve is determined by labor content. |
| MIKE has a lively colloquial style, but [28] is simply too sloppily written. Already the first sentence is mis-formulated, literally it says: “the magnitude of value determines the value of the commodity.” There are many other places where the argument is unclear or the presentation is lacking. Please formulate your answers carefully since they must be read by almost 80 other class participants. |
| MIKE also makes leaps in his argument which he does not seem aware of. The formulation in the Question “by the quantity of other commodities against which it can be exchanged” is taken by him to be equivalent to: “by what the traders wish to give for it.” But the market forces are recalcitrant: competition often forces traders to make trades at prices which they do not like. Of course, this kind of flawed thinking is part of economic orthodoxy, therefore I cannot really blame you for it. Just be aware that you are on slippery ice. Some things which you take for granted are part of pro-capitalist ideology slipped into your minds by those incredibly smooth Economics Principles texts. |
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