| This question <51|50> overall <54|56> Hans: <54|64>. |
| Question 81: How is the value of raw materials determined in Marx's theory? How does the scarcity of these materials influence their value? Is Marx's argument still valid in the case of an exhaustible resource, which is present only in finite supply? |
| [55] Hans: The irrelevance of scarcity. According to Marx's theory, the prices of raw materials are determined by labor content, just as the prices of most other commodities. Scarcity affects prices only to the extent that it increases the labor time necessary to produce these materials. Scarcity by itself is therefore irrelevant. |
| Marx shows this irrelevance by his diamond example: since diamonds are scarce, someone who thinks scarcity affects prices directly, and not merely through the detour of increased labor content, should expect that their value is relatively high. But Marx shows that their value is actually lower than the value of acricultural produce which contains much less labor. This is a strong evidence that scarcity as such does not increase prices. |
| Stonewall [50] does not quite understand this point. He stresses that diamonds contain much more labor than certain agricultural goods, but he omits the clincher, namely, that nevertheless agricultural goods command a higher market price than the diamonds. If it were true that scarcity would determine the exchange-value, one should expect the exact opposite: one should expect diamonds to be more expensive than agricultural goods containing the same amount of labor. |
| Konnen [51] says that the Marxian theory fails to predict the price increases of finite resources as they are nearing exhaustion (so that their consumption is discouraged and substitutes can be found). Here I can only ask: what increases? Markets are not intelligent enough for this. Even a part of neoclassical economics knows this. My colleague Gabriel Lozada can tell you many reasons why markets cannot allocate scarce resources rationally. It is fascinating to hear him speak about these things; you should attend his classes on environmental and natural resource economics. |
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