Re: Wage not determine by Marginal Value Product (was Re: Interesting Economics Questions)


<royls@xxxxxxxxx> wrote in message news:4282525b.8640156@xxxxxxxxxxxxxxxxx
> On Wed, 11 May 2005 07:34:07 -0400, "Mark Monson" <m_monson@xxxxxxxxx>
> wrote:
>
> ><royls@xxxxxxxxx> wrote in message news:4280ff45.7701004@xxxxxxxxxxxxxxxxx
> >> On Mon, 9 May 2005 17:24:38 -0400, "Mark Monson" <m_monson@xxxxxxxxx>
> >> wrote:
> >>
> >> >"The Trucker" <mikcob@xxxxxxxxxxx> wrote in message
> >> >news:d5nvpv01a34@xxxxxxxxxxxxxxxxxxxx
> >> >>
> >
> >> >> Consider a utopian economy where all persons own robots
> >> >> that do all the labor. The robots are _capital_ and the return
> >> >> is interest and there are no wages at all.
> >> >
> >> >Error. That's now how interest works. The return to capital depends on the
> >supply
> >> >of and demand for capital, not on the marginal product of capital. It is
quite
> >> >possible for a system to have low or even zero interest rate in which case the
> >> >entire product (minus rent) goes to wages.
> >>
> >> IMO there is an equivocation here. The Trucker is talking about
> >> interest as the "return" to capital (tools) expressed as an amount of
> >> production, and you are talking about it as the return to investment
> >> of money in tools expressed as a rate. These are not at all the same
> >> thing.
> >
> >Without a zero rate of interest, there can be no return to capital.
>
> ?? How's that again?

Sorry. Coffee hadn't kicked in yet. That should read, With a zero rate of
interest, there can be no return to capital

>
> >Interest free
> >use of a tool means giving it back in the same shape it was in when you
> >started -replacement of capital.
>
> Right. And...?
>
> >The Trucker's example makes a fundamental error by assuming robots are not tools
> >wielded by labor.
>
> They aren't. That's the assumption. The robots are like slaves,
> except they're not human.

Robots are in the same economically conceptual class as pointed sticks.

>
> >Robots don't labor. Workers labor aided by tools.
>
> I agree that robots _technically_ do not labor. I assumed that by
> "robots do all the labor" he meant that they produce everything
> themselves, unaided by human labor. Please address that assumption,
> rather than the Trucker's misstatement of it.

It's a nonsensical assumption. Tools don't produce anything. Labor uses tools to
produce things.
>
> >> >This is because labor
> >> >employs capital, not the other way around. Labor will only use a new tool if
by
> >so
> >> >doing wages at least stay the same after payment of interest.
> >>
> >> ?? Huh? Labor is not a single undifferentiated mass that acts
> >> uniformly.
> >
> >No, but we assume that in a free system, each worker will pay only for those
tools
> >which pay for themselves. This means in the aggregate that interest volume can
> >never increase at the expense of wages volume.
>
> I don't see how that follows at all (though I agree that it is so if
> rents do not increase).

Interest is by definition return on a productive loan. If there is no increase
there is no return.

>
> > What is to stop one worker from employing capital in a way
> >> that doubles his own wages but halves everyone else's?
> >
> >How could that happen in a system free of unregulated monopolies?
>
> Consider a pianist who plays better than his competitors. The
> consumers prefer his music, and reduce their consumption of his
> competitors' output.

Somebody who is more productive will increase the general stock, not decrease it.
>
> > The economic
> >> mechanisms behind such possibilities were discussed in "Progress and
> >> Poverty." And in any case, if wages go up 1% and interest goes up
> >> 100%, has interest not outpaced wages?
> >
> >"Outpaced" was a poor word choice. What I meant to say is that interest can
> >increase as a quantity only by the increase of total wealth as a quantity, and
not
> >at the expense of wages as a quantity.
>
> I don't see any reason why the increase of aggregate interest and
> total wealth could not be accompanied by a decrease in aggregate
> wages, given the possibility of an increase in rents.

Everything is driven by labor's efforts at more wages. Workers seeking better
locations bid up rents. Workers employ better tools in order to increase wages.
In the land monopoly system we have, land owners are in position to devour the
increase in productivity. In the LVT system, they won't be. Rents will no longer
rise simply because workers can afford to pay more.

MM


.

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