howdy folks
for your consideration, here is a debate begun with a marxist fellow tht asked if id debate him in chat online.
i have changed his name to a pseudonym.
i would appreciate if you fellas could help me catch any howlers i might have made, let alone his. as i would like to be better educated in economic matters.
Nir says:
hello
KnowsMoreThanMe says:
are you familiar with sraffa?
7:57pmNir
i dont know him beyond what ive read on wikipedia and from casual mentions on forums similar to ours.
7:58pmNir
shall we pause talking about the marginal revolution, and maybe have that more general discussion on value first ?
KnowsMoreThanMe says:
the problem is that subjective value theories fail because of the reswitching paradox discovered by sraffa
Nir says:
please share
KnowsMoreThanMe says:
there’s no way to measure the marginal productivity of capital, sraffa showed
Nir says:
is there a way to measure how much i like my friends, and how much i dislike my enemies (i dont have many). does this mean i have neither friends nor enemies?
KnowsMoreThanMe says:
I’m not talking about that
Nir says:
sorry
KnowsMoreThanMe says:
I am talking about commodity values
Nir says:
so am i
KnowsMoreThanMe says:
I am talking about the capital critique
Nir says:
alright
KnowsMoreThanMe says:
so, my question is, if you subscribe to a subjective value theory, how do you evade the capital critique and the paradox of reswitching in the measurement of the marginal productivity of capital?
Nir says:
is the capital critique distinct from the paradox ?
KnowsMoreThanMe says:
no
KnowsMoreThanMe says:
not in essence
Nir says:
i suppose i would have to understand the criticism well before i could dare to respond to it.
Nir says:
in the capital critique, were cambridgites critiqueing various mainstream concepts, or was it types who were finding themselves critiqued?
KnowsMoreThanMe says:
the school was critiquing the neoclassical mainstream
Nir says:
oh well, i think the neoclassical mainstream is closer to the truth than the multivarious marxist schools, however i find it problematic, and my intellectual allegiance as it were is with austrian economics a la Ludwig von mises, Rothbard, reisman et al. who find much to critque in neoclassical theory
Nir says:
so perhaps i needn’t sweat too much joke
KnowsMoreThanMe says:
well, there is a different flaw in the austrian school
KnowsMoreThanMe says:
there can’t be forward markets in human labor in capitalist societies
KnowsMoreThanMe says:
so austrian assumptions can only describe slave societies, societies where the only workers are horses, robot economies, etc
Nir says:
i dont believe that for a second. what makes you think austrians are against people entering into contacts which determine future behaviours?
KnowsMoreThanMe says:
it’s not an ethical issue
KnowsMoreThanMe says:
it’s an analytical one
Nir says:
why so
KnowsMoreThanMe says:
it’s not normative but descriptive
KnowsMoreThanMe says:
it’s a methodological assumption
Nir says:
in what description of economics do you find it, what methodological assumption entails it?
KnowsMoreThanMe says:
it’s fundamental to austrian economics
KnowsMoreThanMe says:
that there can be forward markets in human labor
Nir says:
no its not
KnowsMoreThanMe says:
it is the explanation of the origin of interest
Nir says:
what are you trying to tell me about the austrian theory of interest?
KnowsMoreThanMe says:
that it assumes that there can be forward markets in human labor
Nir says:
i thought you said it denies that possibility. make your mind up
KnowsMoreThanMe says:
no, reality denies that possibility
Nir says:
what evidence can you provide for that?
KnowsMoreThanMe says:
well, it’s obvious that under capitalism laborers are free to seek another labor contract
Nir says:
consider possible terms (and commonly actually existing terms ) of the kind of contracts that would (and do arise) in capitalist societies
Nir says:
when i purchased my contract to rent my flat (which i share with my brother). i was asked how long i wanted my contract to run, if i wish to exit the term early, i will have to pay penalty.
Nir says:
my current employer requests i work a notice period
Nir says:
you are free to close your bank account and seek banking elsewhere, with another bank, yet if you owe your previous bank money, you cant wipe your hands of it.
Nir says:
capitalism, private property rights, liberty, grant individuals the freedom to enter into contracts, and secure promises, and negotiate penalties for breaking of set promises.
Nir says:
i think i shall pause here now
KnowsMoreThanMe says:
I am talking about the wage rate
KnowsMoreThanMe says:
the future price of labor
Nir says:
have you heard of temporary employment contracts, (6 month say). wage of such an individual can thereby by periodically renegotiated
Nir says:
perhaps your criticisms are meant in a different way to how they are coming across, but they seem trivial. perhaps because you have favoured short phrases. what am i to make of “the future price of labor”. i ask who’s labor?
KnowsMoreThanMe says:
you’ll have to forgive me
KnowsMoreThanMe says:
I thought you were well-versed in the theory
Nir says:
“the theory” , WHAT theory?
Nir says:
if you can name it, i cant try to tell you if i know it
KnowsMoreThanMe says:
austrian economics, neoclassical economics
Nir says:
i know austrian economics, perhpas you dont.
Nir says:
what assumption does REALITY make that does not allow for forward looking contracts to have any meaning ?
Nir says:
i meant to say, why do you believe austrians are thwarted by reality, in that their theories involve consider how human individuals form agreements with each other. do you deny that individuals enter into agreements?
KnowsMoreThanMe says:
because workers are free to leave their jobs under capitalism
Nir says:
no they arent
Nir says:
if they have no obligations then they are free to do so. but if they have obligations then they have obligations.
Nir says:
do you deny individuals enter into agreements ?
KnowsMoreThanMe says:
that has nothing to do with it
Nir says:
it has everything to do with it. i thought you were familiar with what a contract is
Nir says:
you’ll just have to forgive me
KnowsMoreThanMe says:
I have never denied that there are labor contracts
Nir says:
you did say that reality denies the possibility of their being forward markets in human labour
KnowsMoreThanMe says:
yes, forward markets
KnowsMoreThanMe says:
not labor contracts
Nir says:
lets see if you can describe in a few lines what a forward market is
KnowsMoreThanMe says:
am talking about future prices versus present prices
KnowsMoreThanMe says:
future values discounted by the interest rate
Nir says:
A forward contract is an agreement between two parties to buy or sell an asset at a specified point of time in the future
Nir says:
a forward market would be the forum in which such agreements are formed and dissolved.
Nir says:
i see nothing in this that is stumped by reality
Nir says:
if i tell you i am willing to sell you my computer a week from now for 5 of your homemade cakes. and you agree. then we have a futures contract. and it is one of many in the futures market… reality seems to tolerate this fairly well
KnowsMoreThanMe says:
I am talking about investment
Nir says:
i dont think you know what you are talking about
KnowsMoreThanMe says:
as production in exchange with nature
KnowsMoreThanMe says:
productive investment treated as forward exchange with nature
Nir says:
are you saying that nature is so unpredictable a farmer cant possibly know what to expect the earth to give it when he puts a seed in the earth and tends it regular? is that what you are ‘hinting’ at with ambiguous terminology?
KnowsMoreThanMe says:
no
KnowsMoreThanMe says:
I am using the austrians own terminology
Nir says:
what is the meaning “forwad exchange with nature” , hello mr nature id like to exchange this with you… can you think of another way to say it ?
KnowsMoreThanMe says:
production is exchange with nature
KnowsMoreThanMe says:
capital is then the present value of all future consumption goods
Nir says:
thats nonsense after nonsense
Nir says:
ive never read anyone but you say this
KnowsMoreThanMe says:
I am citing Hirshleifer
KnowsMoreThanMe says:
you can go read it yourself
Nir says:
is he an austrian economist?
KnowsMoreThanMe says:
“Investment, Interest, and Capital”
KnowsMoreThanMe says:
yes
KnowsMoreThanMe says:
page 2
KnowsMoreThanMe says:
and page 12
Nir says:
would you happen to know his first name perchance?
KnowsMoreThanMe says:
jack
Nir says:
what makes you think he is austrian, perhaps he is… but ive not heard if him
Nir says:
?
KnowsMoreThanMe says:
he uses fisherian assumptions
KnowsMoreThanMe says:
these are the same as in the austrian school
KnowsMoreThanMe says:
I can give you some texts to look at if you like
Nir says:
ive certainly heard of fisher
KnowsMoreThanMe says:
ok, well i’m talking about fisherian interest theories
KnowsMoreThanMe says:
as used by the austrian school
KnowsMoreThanMe says:
but I thought you were more well-versed in these, I’m sorry
KnowsMoreThanMe says:
if you’d like to learn more about these issues I can direct you to some readings
Nir says:
dont worry about it, lets pick at what he is saying then. you may have been unfortunate and found qoutes from an offshoot that you are taking as austrian canon, or i may have misunderstood the meaning of those short qoutes. cant we discuss the?m
Nir says:
you first said the you consider it a fisherian principle that production is exchange with nature. please expland on that, so that i might try to agree with you
KnowsMoreThanMe says:
it’s not my theory
Nir says:
i know you said it was fisherian
KnowsMoreThanMe says:
I’m only describing the methodology of the modern approach
Nir says:
if someone asks me what production is , i say that transformation of materials/goods into materials/goods with higher subjective valuation, as measured from the standpoint of the producer
KnowsMoreThanMe says:
austrian theory had to be revised because of the failure of bohm-bawerk’s theory of interest
Nir says:
yes, great austrians have certainly contributed much and developed on from what bohm-bawerk discovered, as eocnomics didnt finish with him.
KnowsMoreThanMe says:
but I’m talking about the theory of interest
Nir says:
are you talking about it from a macro or micro perspective?
KnowsMoreThanMe says:
it was actually sraffa who showed that bohm-bawerk’s theory of interest was untenable
KnowsMoreThanMe says:
I’m talking about marginal productivity theory
Nir says:
no you were talking about the theory of interest
KnowsMoreThanMe says:
bohm-bawerk’s approach couldn’t provide an index common to heterogeneous capital goods
Nir says:
i assume when you say “theory of interest”, you refer to theories as to why there is a prevailing market rate of interest, (thats macro)?
KnowsMoreThanMe says:
the rate of interest has to be known in order to determine the marginal productivity of the capital good
Nir says:
thats not true
KnowsMoreThanMe says:
this was bohm-bawerk’s theory
Nir says:
so you want me to talk about theories that have been since revised, and agree with you about those?
Nir says:
wouldnt you rather discuss the ‘cutting edge’ ?
KnowsMoreThanMe says:
it’s a two-stage critique
Nir says:
What is a two stage critique?
KnowsMoreThanMe says:
the orthodox austrian theory relied on bohm-bawerk’s theory of interest
KnowsMoreThanMe says:
but sraffa showed that this led to the reswitching paradox
Nir says:
you seem to be predominantly interested in economic history, and in who said what, and when, and what school they werein. but i thought we were going to discuss ideas themselves. but you awlays shy away and tell me that some person already answered this. when you could do much better simply by saying what they said in response, if it is the case that you agree with them, and in that way we could
Nir says:
argue
KnowsMoreThanMe says:
no, you keep interrupting
Nir says:
ok, if you like we can have a signal , when youve said you piece, i wont interject until you write the word END in bold. then i’ll know its my turn.
KnowsMoreThanMe says:
what I’m saying is that austrian theory had to be revised because of sraffa’s critique
KnowsMoreThanMe says:
that is when fisherian interest theory displaced the orthodox theory
KnowsMoreThanMe says:
and it is fisherian theory which now underwrites the austrian theory of interest
KnowsMoreThanMe says:
but I had assumed that you were very well-versed in these issue, I’m sorry
KnowsMoreThanMe says:
so I’m not sure how to proceed now
KnowsMoreThanMe says:
*issues
Nir says:
(say END?)
KnowsMoreThanMe says:
yes, ok
Nir says:
ok so lets back up please.
Nir says:
i want to make sense of you saying that austrian economics is flawed. you said one of the many reasons its flawed, is that to be understood it requires that forward contracts be possible, specifically there must be a forward market in human labour. this assumption is a downfall, as reality simply will not allow this. i must say this confuses me. and if you could help me understand this point,
Nir says:
i would appreciate that. END
KnowsMoreThanMe says:
yes, I’d like to – this is a critique of Fisherian interest theories
KnowsMoreThanMe says:
I can try to explain it as best as I can
Nir says:
pause,wait
Nir says:
does the possibility of forward market in human labour in reality, rely on any one particular interest theory?
Nir says:
please forgive my early interjection but i want to make sure this will be worthwhile
KnowsMoreThanMe says:
forward markets in labor are theoretically possible, just not forward markets in free human labor
KnowsMoreThanMe says:
because workers are free to leave their jobs
KnowsMoreThanMe says:
but this presupposes an understanding of what is meant by a forward market in fisherian theory
Nir says:
why does it presuppose it? what is the connection between workers leaving their jobs have with competing interest theories of which fishers theories are one?
KnowsMoreThanMe says:
well, either I can try to explain the background, or I can give you some readings
Nir says:
maybe give a line or two, the flavour of it?
KnowsMoreThanMe says:
it has to do with the idea of future prices determining present prices
KnowsMoreThanMe says:
because of discounting by the rate of interest
KnowsMoreThanMe says:
it’s related to the notion of roundaboutness of production in bohm-bawerk
KnowsMoreThanMe says:
so let me know how you’d like to proceed
KnowsMoreThanMe says:
because I have to go offline in a minute or two
KnowsMoreThanMe says:
I can suggest some stuff to read or we can talk about what would be best to read or I can try to go into the background more next time
Nir says:
ok, before you go, can you just give me your impression, in this world, in reality, outside of the theories which we will explore later. do you see that there are individuals now who do form forward contracts? and then more specifically that a subset of these contracts involve trading of labour services?
KnowsMoreThanMe says:
yes, but that’s not the issue
KnowsMoreThanMe says:
I’m not disputing that
Nir says:
were you yessing to both or just the first?
KnowsMoreThanMe says:
I am not disputing the existence of labor contracts
Nir says:
in these markets where these contracts exist, can the markets best be described as socialist markets, or capitalist markets, or what?
KnowsMoreThanMe says:
I am talking about capitalist labor markets
KnowsMoreThanMe says:
markets in human labor power
Nir says:
well, there is a different flaw in the austrian school
KnowsMoreThanMe says:
there can’t be forward markets in human labor in capitalist societies
KnowsMoreThanMe says:
the critique has nothing to do with socialist relations of production
Nir says:
so here you say they cant exist, and also that they do exist. that seems like a contradiction to me
KnowsMoreThanMe says:
forward markets
KnowsMoreThanMe says:
not labor markets
Nir says:
perhaps you were imprecise how you answered before lets try again
Nir says:
in reality, outside of the theories which we will explore later. do you see that there are individuals now who do form forward contracts? and then more specifically that a subset of these contracts involve trading of labour services?
KnowsMoreThanMe says:
the answer to this question will depend on what you mean by a 'forward contract" as opposed to a ‘contract’
Nir says:
A forward contract is an agreement between two parties to buy or sell an asset at a specified point of time in the future.
Nir says:
perhaps the buying and selling of labour such as i agree to hire you next week to wash my windows, and i will pay you then. example one of a futures contract in labour
KnowsMoreThanMe says:
that’s a totally separate issue
Nir says:
no, its the issue in question.
Nir says:
in reality, outside of the theories which we will explore later. do you see that there are individuals now who do form forward contracts? and then more specifically that a subset of these contracts involve trading of labour services?
KnowsMoreThanMe says:
if that’s what you mean by “forward contracts”, obviously such contracts exist
KnowsMoreThanMe says:
I don’t see what that has to do with anything
Nir says:
well, there is a different flaw in the austrian school
KnowsMoreThanMe says:
there can’t be forward markets in human labor in capitalist societies
Nir says:
there cant be and yet there are. contradiction
KnowsMoreThanMe says:
not, that’s not what I mean by a forward market
Nir says:
oh…
KnowsMoreThanMe says:
so it’s a straw man
KnowsMoreThanMe says:
but never mind
Nir says:
im not sure what meaning of forward market your giving up, or what youd give it up in favour of. perhaps you will know next time we talk
KnowsMoreThanMe says:
I know now
Nir says:
please share
KnowsMoreThanMe says:
I thought you were familiar with the theory
KnowsMoreThanMe says:
I apologize
Nir says:
well, it took you 3 attempts to answer the question beore you diagnosed it as strawmen. what does that tell you?
Nir says:
if you want to have your own personal meaning of forward market that i cant access like wittgensteins beetle then your entitled
KnowsMoreThanMe says:
I am talking about the fisherian meaning
KnowsMoreThanMe says:
not my meaning
Nir says:
are you adamant the fisher had his own distinct meaning to forward market than for example what wikipedia has written as an entry on ‘forward market’ ?
KnowsMoreThanMe says:
I will have to look at the wikipedia entry
KnowsMoreThanMe says:
but I can’t do it now
Nir says:
fair enough
KnowsMoreThanMe says:
we can talk about it more next time
KnowsMoreThanMe says:
if you’d like
KnowsMoreThanMe says:
or i can tell you some stuff to read about it
Nir says:
if its available online then perhaps
KnowsMoreThanMe says:
no, I don’t think so unless I scan in some stuff
Nir says:
im suprised it will take that much effort just to determine whether or not future markets CAN exist, and therefore that if they cant austrian economics is a failure
Nir says:
how many scholarly hours of research have you spent determining this, that i would need to budget for to catch up with you?
KnowsMoreThanMe says:
hundreds of hours, surely
KnowsMoreThanMe says:
but I could save you some time, probably
KnowsMoreThanMe says:
the critique is fairly simple
Nir says:
i shall have hope of understanding it then
KnowsMoreThanMe says:
yes, I’m sure you can understand it
KnowsMoreThanMe says:
we can talk about it more next time
Nir says:
fine
KnowsMoreThanMe says:
I have to go now
KnowsMoreThanMe says:
I’ll be back later
Nir says:
bye then
KnowsMoreThanMe says:
bye
