My condolences to you, filipeffv. Good luck with your de facto math studies. At least the math you have to learn might be useful in real life.I study economics in university, philosophy is just part of my free time. — filipeffv
With value I would add also the term "utility" to this philosophical debate as value and utility have a lot in common whereas "price" is a totally different thing related to the market mechanism. Value and utility aren't exactly synonyms, but they come close. So you could also ask, what is "utility"?So, in economic thought, the value discussion ends here; I would say, not because the discussion is really ended: no, there's too much to discuss; but economics became less philosophical with Keynesianism and modern theories. Actually, a fun fact, economics was called Political Economy; the econometricians and positivists economists were who changed the name to Economics, to make it more scientific. — filipeffv
Actually, I kind of like maths, and philosophy of math... hahahahaMy condolences to you, filipeffv. Good luck with your de facto math studies. At least the math you have to learn might be useful in real life. — ssu
That's is really sad... Notwithstanding social sciences evolved to a academic assumption concern to its epistemological nature, it is weird to think people want to reduce human action and social interaction to predictable rules...Economist try to remove this obvious link to politics and ideology by focusing on mathematical models and the obstinate aspiration or desire to make economics "scientific" as umm...physics — ssu
So, what is it?So you could also ask, what is "utility"? — ssu
It's something I want to see social sciences getting over and understanding that social sciences cannot be reduced to that. And "reducing to" here is a good way to say it!it is weird to think people want to reduce human action and social interaction to predictable rules... — filipeffv
I guess you wouldn't be happy with a dictionary definition, but they are handy. In economics I remember it was Daniel Bernoulli that made use of the term (utility) and applied it to be the satisfaction received from consuming a good or service. That satisfaction is measurable by choices that people make (just like the marginal utility of a cup of water goes down... once you have had enough water not to be thirsty, the next cup likely won't be so enjoyable anymore as the first cup).So, what is it? — filipeffv
(Wikipedia)value is a measure of the benefit provided by a good or service to an economic agent. It is generally measured relative to units of currency, and the interpretation is therefore "what is the maximum amount of money a specific actor is willing and able to pay for the good or service?"
(Investopedia)In economics, value describes the merit of the benefits of ownership. The benefits of ownership include utility, the pleasure or satisfaction gained by consumption of a particular good or service; and power, the ability of a good or service to be exchanged for other goods, services or money.
(Merriam Webster)Definition of value
1 : the monetary worth of something : market price
2 : a fair return or equivalent in goods, services, or money for something exchanged
3 : relative worth, utility, or importance ·a good value at the price
·the value of base stealing in baseball
·had nothing of value to say
4 : something (such as a principle or quality) intrinsically valuable or desirable ·sought material values instead of human values
—W. H. Jones
"The value of any commodity, therefore, to the person who possess it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labor which it enables him to purchase or command".(SMITH, 2003, The Wealth of Nations, p. 43)did Adam Smith say that value was determined by Labour? I thoughttween that was a specifically Marxist idea... — bloodninja
because in this theory is grounded the exploitation of capitalism — filipeffv
Why not? What's so bad about it?But "utility" is not a good definition. I could value useless things... — filipeffv
But "utility" is not a good definition. I could value useless things...
but today only marxists support this theory, because in this theory is grounded the exploitation of capitalism — filipeffv
Political Economy — filipeffv
work — filipeffv
value is subjective — filipeffv
utility — ssu
things they think will be worth more in the future — Posty McPostface
the satisfaction received from consuming a good or service — ssu
Are all bullshit. These are vague and empty nonsense so long as it cannot be quantified scientifically.Value is a reflection of beauty. — MysticMonist
Which ones? >:)per certain august philosophers here. — Bitter Crank
Yes and no. This is a speculative way to determine value, and isn't of much interest. What is of interest is the underlying value. We know that the market can undervalue or overvalue services or goods. What is of real interest is the real value of a service since over time the market will be approaching it. So how is that calculated?
It's calculated by trying to convert the activity to monetary value. Marketing is very simple to convert to monetary value. If I do a Google Adwords campaign for you, then the value it has brought you is whatever sales it has generated for you. If it has generated $1,000,000 in sales for you, then that's the value added. Now the value of my services ought to be a certain percentage of the value added. Probably around 10% is fair, so $100,000 for me.
If you design and develop a website for someone, the value of it is in the traffic it can generate and how well it converts. So how well does it rank on Google? (that determines organic traffic) and what percentage of those visitors get converted to clients? and how much is one client, on average, worth?
So if I make a website for an oil tank producer, where one sale is worth $1,000,000 on average, that is entirely different than if I make a website for a local coffee shop, where one sale is worth $5. I will charge the oil tank producer a lot more, even though it's about the same amount of work for me.
So this talk about the market deciding this and that is actually bullshit. When you start pricing stuff, you will see that you price them mainly based on the value added - that also allows you to justify the price. In some rare cases, when there is a craze on the market for example, and everyone wants a certain type of website, nobody can keep up with demand, etc. then, of course, you will raise prices above whatever is supposed to be the real price.
And this differentiated pricing is called market segmentation (or "some things are more valueable to some people"). You can make basic packages for all the low-value clients, which are a lot. They all get the same relatively low price. But you'll make special deals for the high-value clients. That's why in football matches there are cheap tickets, and expensive tickets too. And the expensive ones are many many many times more expensive than the cheap ones. On airlines, there is economy class, business class, and sometimes first class too. Same idea.
The value workers produce must be determined in the same manner. — Agustino
This Marxist framework doesn't portray the full complexities right. There was something that Karl Marx didn't realise, which represents the value of the entrepreneur, which isn't tied solely to owning the means of production. In other words, economies of scale do not result from the simple ownership of the means of production.
So say in my case, the product is a website, let's say a very simple one for now. It costs basically nothing in terms of raw material costs - people I employ would be people who own computers at home too, so they don't need me to access the means of production.
So all these people can basically produce and sell websites by themselves. I do not own the means of production as such - at least not in a way that they cannot individually access because of lack of capital.
Now the theory of surplus value has it that the worker is exploited because he doesn't have access to the means of production (the assembly line for example) himself. So he cannot, by himself, produce in as short a time as much as he can produce by working under the capitalist, having access to the capitalist's assembly line. So his labour under the capitalist produces a lot more value than he is given.
In my case, the advantage comes from specialization. The entrepreneur also creates something useful - he creates a system which employs specialised people and out of that individual specialization and the internal processes which ensure the smoothest flow possible, the time it takes to finish one website minimises. Let's say that this procedure minimizes the time it takes to finish one website individually by 70%.
The entrepreneur also ensures that there is continuous work. Now that production is 70% faster, there needs to be a bigger pipeline of willing buyers lined up outside. Who maintains that pipeline? Who works to bring the buyers in? The entrepreneur, of course. Without the pipleline, the other people have nobody to sell to (or at least not enough).
So suppose each person can produce 10 websites by himself in a month, and each website costs $200. So that means, if they were to work individually, they would make $2000 assuming they could source the work themselves.
Now, when they work in my team, they will produce faster due to their individual specializations and the team I have formed as entrepreneur AND also because they no longer have to market and look for business by themselves - the entrepreneur takes care of that. We'll quantify this time as 20% decrease in working time compared to working by themselves (meaning they will produce 20% more assuming they will work all that time). So, let's say I am employing 5 people.
5*(1+0.7)*(1+0.2)*10*200 = $20,400/month in revenue or total value produced.
So I will pay them what they can earn individually which is $2,000/month. For 5 people that is $10,000. But the benefits from increased production is due to my work as entrepreneur - I brought them together, arranged them in a team, and setup the whole marketing pipeline to get sufficient work so that we can achieve those numbers. So I pocket the other $10,400.
I make $10,400 and they make $2,000. Is that unfair? You could argue no. I pay them exactly what they would earn working by themselves for the same time, and I pocket what is the difference from bringing them together, arranging them by specialization, and organising the sales and marketing required to sell all the production - since I myself am not actually producing the products sold (websites).
And this remains true even if it would be a worker's collective. There would still need to be someone who does the entrepreneur's job. How much should that someone be paid, since he doesn't actually produce any of the products himself, all he does is make production faster and more efficient through his work. That person would effectively be responsible for the growth in numbers that are achieved, so it's fair that he pockets all of it.
But, let's say now that I want them to love their job and prefer working for me than working for themselves. So then I will share some of what I earn with them, so that we're both better off.
So I pay them $2,600 each, and I pocket $7,400. Now they make 30% more than they would have made working by themselves, without the risk of bad months (not finding work, etc.). It's a fixed wage, which wasn't the case if they would work for themselves. You think that's fair? — Agustino
Agustino,Are all bullshit. These are vague and empty nonsense so long as it cannot be quantified scientifically. — Agustino
Yes, that's why they're all going to go bankrupt, because they're idiots. This is a textbook example of economics which actually doesn't reflect reality at all, and I've seen many small business owners make precisely this mistake. I actually don't understand why this idiocy was ever taught in textbooks (and actually continues to be taught), it has cost me many thousands of hours lost, not to mention money.Now one of them uses some of that profit to reduce its prices. The others have no choice but to follow suit. — Inter Alia
They're not necessarily bad or invincible for that matter. They just require a different strategy to combat - and usually that strategy is not competing with them, until you grow to a sufficient size.monopolies — Inter Alia
What difference does it make?the interaction of service industries (which don't own the means of production) with manufacturing industries (which do) — Inter Alia
:s - what's that got to do with value?the effect of futures trading on investments — Inter Alia
Oh too bad, I'm not a capitalist.I'm afraid it's not as tidy as your capitalist fantasy might like it to be. — Inter Alia
The difference with Marx is that he looks at value from his own theory, the labour theory of value. The idea is that the value of a good or service is defined by the work put into it. Notice the value isn't defined by the person willing to buy the good or service and the whole thing an interaction between supply and demand. Hence there's the fundamental difference between Marxism and mainstream economics.How is what you're calling utility different to what Karl Marx called use value? Is it that use value relates to commodities but utility does not? — bloodninja
Not necessarily - workers who pray more, meditate more, are more spiritual, etc. may be more productive. Why do you think Google, Facebook, etc. are investing so much in mindfulness retreats, etc.? So the worth of these services could be measured in economic terms.all religious items and services are worthless — MysticMonist
Right, but their special value is not economic value - there's a big difference there.Because they have special value. — MysticMonist
You know why? Because they are important spiritually, not economically. So I give money to the church without seeking an economic return from it, because the Church is spiritually valuable to me. But it's not a business - it doesn't provide economic value, for the most part.Why donate to churches or charities if they have no economic value? — MysticMonist
This is true, but in order for people like you to have the time to spend on things of value (spirituality, art, etc.) there must be businessmen who make sure you get all your needs taken care of. That's why I like the Renessaince model - rich families sponsored artists and basically ensured that all their needs were met so they could do what they loved and what was so extremely valuable. I think it's the businessman who makes the poet & philosopher possible, and not the other way around. Philosophy is hard to do properly, and it's best done when all your worldly needs are already taken care of. So quite the contrary, we must invest those limited resources in economic production, so that we can sustain our poets, our musicians, our artists, etc.Second, due to opportunity cost and limited resources of time and energy, we need to spend our time and effort only on things of value. So if good and truth have no value then none of us should be on this forum, except if it's only because they like to argue. Oh wait... That is this forum. — MysticMonist
And how is that above scientific?Are all bullshit. These are vague and empty nonsense so long as it cannot be quantified scientifically.
Value is equivalent to production & means of distribution. So if machines produce, they are valuable. If workers produce, they too are valuable, etc. — Agustino
I think both systems are stupid. Defining value merely in terms of work makes no sense, since machines can also do useful work, and obviously, in Marxist terms, you ought not pay them a wage for it. Also some may do work faster than others.Notice the value isn't defined by the person willing to buy the good or service. — ssu
If you read my longer posts you will see that this is not the case. A website isn't a production tool. Its value can be calculated. Marketing and sales services aren't production tools - their value can be scientifically calculated. And so on so forth.And your definition btw. ignores the value of things produced and basically anything else than production tools. — ssu
Same idea with stocks - why do you bother to do a DCF analysis if all that matters is the price people are willing to pay for it?! Clearly, when you do that, you're trying to determine what it's REALLY worth, regardless of what people are willing (right now) to pay for it.Notice the value isn't defined by the person willing to buy the good or service. — ssu
Well,I think both systems are stupid. Defining value merely in terms of work makes no sense, since machines can also do useful work, and obviously, in Marxist terms, you ought not pay them a wage for it. Also some may do work faster than others.
Defining value in terms of the willingness of people to spend is also stupid. That's why we say that the market overvalues or undervalues things - because we have a real value in mind. You say Bitcoin is a bubble. Why? Because you have some idea of the price it ought to have in mind. That real value obviously cannot be calculated by the willingness of people to spend - people can be idiots. — Agustino
Oh actually they are. Just look at how economically important they are. If your neck of the woods would have great art museums with World renown art, famous Theaters and a Disney World, I would suspect that the masses of tourists visiting your place would be extremely important economically for the local economy. After all, tourists are only tolerated because they bring money to the local economy.This means that some things are not valuable. Poetry, art, etc. Of course, they matter to us and are important, but they're not valuable in an economic sense - they're not productive. — Agustino
Why do you think Google, Facebook, etc. are investing so much in mindfulness retreats — Agustino
Okay, obviously in some cases, their value can be economically quantified. My main point was that in many cases this cannot be done. If I start writing poetry, those poems have no economic value, and may never have any economic value (or they may indeed have it - depends how well they do). My point isn't that these distinctions are clear-cut. Just that in some cases, it's very easy to quantify value, and in other cases not so easy. Very easy case are marketing and sales services - whatever extra revenue they generate, that is their value.Oh actually they are. Just look at how economically important they are. If your neck of the woods would have great art museums with World renown art, famous Theaters and a Disney World, I would suspect that the masses of tourists visiting your Place would be extremely important economically for the local economy. — ssu
Supply and demand are empty abstractions to me. When I've helped a client modify his prices, or when I set my own prices for my services, I don't consider supply and demand at all :s . I never need to.price depends both on demand and supply — ssu
Why?As value is different from price, I would say that the defining value should take into consideration these both sides of the coin too. — ssu
I am aware of that, and I agree. The way mindfulness is taught to employees is different to the way it's learned and practiced by the likes of Steve Jobs, Zuckerberg, etc.You know what Buddhists think of corporate mindfulness? Its a massive threat to real meditative practice. — MysticMonist
Yes! Excellent point.Mindfulness can be improperly used as sedative to make people more complacent to the unjust status quo and to detach and thus enable continued corrupt social structures. — MysticMonist
And what do we do once liberated?But I do think spirtual practice exists to liberate us from the world not be more productive in it. — MysticMonist
Actually your example is a great one for the thread.My main point was that in many cases this cannot be done. If I start writing poetry, those poems have no economic value, and may never have any economic value (or they may indeed have it - depends how well they do). — Agustino
Well, you'll see the price mechanism work on the demand side if you tommorrow multiply the price of your services by 100. I presume you won't find any customers.Supply and demand are empty abstractions to me. When I've helped a client modify his prices, or when I set my own prices for my services, I don't consider supply and demand at all :s . I never need to. — Agustino
Ok.Can you quantify supply and demand? I've seen some people draw some charts based on some usually extrapolated data, but the whole procedure seems so unscientific — Agustino
I agree, that's why I also mention that not all things have ECONOMIC value. But I thought we're meant to discuss economic value in this thread, not other kinds of value (and I admit they do exist).Yes, you might think your poetry has no economic value, but if write a poem to let's say your mother, for her it can have a lot of value. — ssu
How do I go out to sell my poem? To sell it, I must figure out a way to get clients - a distribution channel. So will I print my poem? Put it in a nice letter? Make a website where it can be accessed provided the customer pays a fee? That must be decided - all these things can be value-adds, changing the price. Then I actually must decide a price for it. How can I sell it if I don't pick a price? So how will I go about picking this first price? You can't be selling something without a price - customer will ask you what it's worth.Now if you go an try to sell your peoms, then you obviously get the price to the poem (assuming you can sell one). — ssu
No, that doesn't work. I set my prices based on the value that I create for my customers. I refer you to this previous post of mine:Well, you'll see the price mechanism work on the demand side if you tommorrow multiply the price of your services by 100. I presume you won't find any customers. — ssu
So to raise my price 100 times, I must produce 100 times as much value for that customer. If I can do that, I'm 100% sure I will be able to sell at x100 the price - why would anyone refuse? Figuring out how to do that though, isn't very easy.If you design and develop a website for someone, the value of it is in the traffic it can generate and how well it converts. So how well does it rank on Google? (that determines organic traffic) and what percentage of those visitors get converted to clients? and how much is one client, on average, worth?
So if I make a website for an oil tank producer, where one sale is worth $1,000,000 on average, that is entirely different than if I make a website for a local coffee shop, where one sale is worth $5. I will charge the oil tank producer a lot more, even though it's about the same amount of work for me.
So this talk about the market deciding this and that is actually bullshit. When you start pricing stuff, you will see that you price them mainly based on the value added - that also allows you to justify the price. In some rare cases, when there is a craze on the market for example, and everyone wants a certain type of website, nobody can keep up with demand, etc. then, of course, you will raise prices above whatever is supposed to be the real price.
So what exactly am I supposed to do? Read the volume of all asks at $90, $95, etc. and then all the bids at $85, $80, etc. and draw two curves through them?Easy example: any individual stock in the stock market. There you will see the prices and the quantities that market participants are willing to buy and sell a stock. Aggregate of all those buy offers are the demand of the stock and the all those sell offers are the supply at the present moment. — ssu
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