Well, yeah, basically. If you lower the cost of either labor or materials, the Mv goes down. Industrialization does that, too (more reliably than finding hidden caches in the woods).
As to the short-sightedness of Marx, remember, he was from the 19th century, and he was an economist, so he’s got that bias that people are rational.
However, assumptions like that can be found in most economic models. I still remember my college “Intro to Economics” class. “Now we turn to free market competition. Lets start by assuming that all sellers produce goods of identical quality, no seller seeks to advertise his or her product, and all buyers know how much each seller will sell his or her product for…”
But that’s exactly why I think establishing value through S/D works better than Mv. It requires no ‘rational’ decision on the part of either the producer or the consumer. The S/Dv (Supply/Demand value) is determined by all forces, both rational and quantifiable and otherwise. I think that gives a truer picture of ‘worth’ than Mv does.
I admit, I have a bias towards systems that take the inherent irrationality of humans (the perversity, for lack of a better word) into account.
It’s simply wrong to say that Marx was referring to ‘cost’ when he said ‘value’.
Marx used his interpretation of the labor theory of value to justify public ownership of the means of production. His logic went something like this: If a laborer spends $100 in labor to build something, that’s what that thing’s value is. But if a capitalist then turns around and sells that thing for $150, he is ‘exploiting’ the worker by earning something for nothing. He defined this extra money as a ‘social surplus’, and saw it as belonging to all of society instead of the people who own the means of production.
By trying to re-define the labor theory of value to include things like intellectual capital, intelligent design, providing of infrastructure, etc., then you invalidate the entire theory for the purposes of Marxism, because you recognize that the capitalist is bringing equal ‘value’ to the party.
Schnitte: Read my message describing comparative advantage again. It’s one reason why ‘replacement cost’ is not a good determinant of value. Now if you want to include opportunity cost, then you’d be closer. But then all you’d be describing is the motivation people have for paying the prices they do for products, and you wind up deriving the same definition of value as I have, which is whatever someone is willing to pay for it.
After all, even if I can build a chair for less than what you want to sell it for me, it means that while I’m building it I can’t be doing something else that may be of even more value to me. It also means that I have to wait to use the chair until I build it. It also means that now I have to build a chair, which may be something that I don’t enjoy doing. If you add up all the various costs involved, then what you’ll wind up with is a pretty good approximation of what someone is willing to pay for the product.
But notice that a lot of those ‘costs’ are ephemeral. A chair may be worth more to me before a party than after, because the cost of not having a place for guests to sit is higher during a party than it is on an average day. It may be worth more to me at a time when I’m feeling to lazy to seek out or build a replacement. This is why commodity prices fluctuate daily, why gas goes up in price before long weekends, and why tickets to see the Eagles cost $225 while tickets to see Bon Jovi are a tenth of that amount, even though the labor to produce the two concerts is equal.
With all due respect, it’s not simply wrong to say that Marx was referring to “cost” when he said “value” Value for Marx refers to one of two things…either the time and material used to produce an object, or its “use-value”, which is the ability of that object to fill the need of the owner. It’s “use-value” that Marx uses to mean what most people use “value” to mean, and that’s what an determines an object’s price, according to Marx…I’m willing to pay $8 for a book because I think reading that book would satisfy me more than keeping the $8. However, usually, when Marx refers to “value” alone, he means cost of production.
“Social surplus” is more of a Leninist term than a Marxist one. Marx would have referred to “surplus value”, which does take into account the value of machinery and organization.
I admit I’m at a loss. I’ve explained what Marx means by “value” in “Capital” as well as I’m able. I’m not trying to pass judgement on the correctness of Marx’s ideas here, merely to present them, and I’m sorry if I don’t seem to be doing it satisfactorally. It just seems that a lot of people think they know what Marx said, and pass judgement on their beliefs of Marx, instead of what he actually said. I urge anyone who’s interested and hasn’t yet to read “Capital”…you might think it absolute rubbish, but at least that way, if you get through it (it’s long), you can criticize it intelligently, instead of having preconceived notions about it and criticizing straw men.
I accept that, but you can’t get too far away from the production costs. If you do, people will stop buying from your company because you overprice your products; so you have to take the costs into account. That’s where labor and S/D match - the market will bear the production costs.
Companies lose money on products all the time. Some times it is involuntary but sometimes it is part of their marketing strategy. The big stores routinely lose money on certain products just to get you in the door.
The cost of an airline seat from A to B is a certain number but the “value” of that seat varies tremendously with season, day of the weeek, time of day and type of passenger. many seats are sold at a loss because otherwise they would go empty which is a bigger loss since the seat is flying anyway.