| This question <22|22> overall <30|32> Hans: <30|32>. |
| Question 27: How does Marx's starting point differ from usual approaches to economics? |
| [31] Hans: Future returns versus cost of the assets. Kibosh [22] explains the difference between Marx and modern economics as follows: modern economics values capital by future expected returns, while Marx looks at the value of the assets in the ground. |
| This is a good observation. In order to place it into context, I'd like to spin on the thread started in [29]. Given what I wrote there, the question arises: how can the capitalists get away with paying the workers a wage that is below the value the workers create? Answer: because the capitalists own the means of production. |
| In a rational, non-exploitative society, the means of production should be owned and controlled by those who work them and those who consume the things produced. This is not the case in capitalism. One of the most important decisions in an economy is the investment decision, the decision which production facilities should be expanded by how much. This decision should be under democratic control, but in capitalism it is made in private board rooms behind closed doors. The means of production are in control of a separate elite layer of society, which benefits handsomely from their monopoly of an important resource needed by society. |
| Means of production, in capitalism, therefore have a second function, an additional social power on top of their natural powers to serve as instruments in a production process: they are also the means by which their owners appropriate the labor of others. If you value means of production by their expected future returns, you are putting a pricetag on this additional social power which means of production only have in capitalism. |
| This is Marx's explanation of the valuation by expected returns. I.e., expected returns do have a room in his theory. But the cost of the facilities on the ground is primary, because this is the barrier which separates the workers from the means of production. Means of production are necessary for everybody and should not be monopolized by a subset of the population as their private property. |
| I.e., if you are asking about Marx's ideas about how capital should be valued, the most concise answer would probably be: Marx does not think means of production should be private property of anybody other than the producer. |
| But Marx's Capital is not his blueprint for a better society. It is his analysis of present-day capitalism. |
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