Money = labor

Economics Economics Questions
1

All,

What do you propose is the best way to refute people who claim that:

  • money is only a “receipt of carried out labor” - that essentially everything traded is derived from labor
  • state should regulate amount of money in the economy
  • single state bank should lend to businesses at 0%
  • no one can charge more than their expenses, i.e. no profit allowed
  • amount of money in circulation should correspond to GDP (monthly adjustments)

I do realise that the above is a lot of nonsense but some people are convinced that charging interest on money is usury, that money should be created because someone carried out labor and that savings lent at interest are bad because no one should be able to live without labor (well except their “basic income” which is a welfare payment to each citizen).

I have tried explaining the Austrian perspective, quoting Rothbard on money but they don’t seem to listen :slight_smile:

Cheers
Juraj

2

There are still people today that don’t believe in “usury”? I thought that mentally was shattered in the late Medieval period.

3

Wow, that’s not even the labor theory of value, which is itself a defunct theory. This is like a bastardization of a defunct theory. The answer is the subjective theory of value (the Wiki entry for this used to be stronger… oh well, that’s Wiki). LTV is simply nonsense. STV describes the real world in which we live.

The easiest way to see the absurdity of LTV is to ask yourself how many hours of brain surgery corresponds to how many hours of leaf-blowing. Now, if you say 1:1, then the simple result is that there will be no brain surgeons. Who would endure a torturous 12-year odyssey of undergrad, grad, doctorate, internship, externship and whatever else is involved in becoming a brain surgeon to earn hour-for-hour what could be earned blowing leaves? LTV treats all “labor” as if it were a homogeneous, amorphous mass where one “unit” of one individual’s labor is blindly interchangeable with another “unit” of another individual’s labor. Human labor is highly heterogeneous, it makes no sense to denominate value - let alone money - in “units” of labor.

No, I should! [:P]

This destroys all incentive for savers to save. The result is a pure-consumption economy, that is, ubiquitous capital destruction and depreciation. The long-run result is that the ecwonomy devolves into barter and primitivism as the time structure of the economy is reduced to 0 wait production. With no capital reserves, the economy is brittle and susceptible to complete collapse with the slightest perturbation (drought, large-scale flooding, etc.)

How can you even determine this in a world where money has no definite value beyond the amount of “labor” it corresponds to???

This is gibberish as far as I can tell.

Such arguments are populist appeals to the unwashed masses who aggrandize themselves into believing that they should be paid for an hour of blowing leaves on par with the brain surgeon who has invested a decade or so of his life and an astronomical sum of money learning and training to become a surgeon.

Yeah, people that can say the above with a straight face likely aren’t interested in reasoned argument.

Thanks,

Clayton -

4

There is still a fairly sizable contingent of Christian fundamentalists that takes the anti-usury interpretation of the relevant passages in the Bible.

Clayton -

5

Catholics too.

6

OK I’ll give it a shot.

7

The first premise is ignorant of marginalism. Without it the rest falls apart. It’s nonsense, because value derives from subjective appraisals of consumers. Rewards to labour are derivative from these, to the extent that they’re productive to satisfying it (i.e. the DMVP; capital, land, entrepreneurship also have their own MVPs.) Compensation is in terms of money because it is by definition the most marketable medium of exchange.

8

It’s difficult to infer from the above what the statement is alluding to. But it probably implies some variant of an objective theory of value. There is no such thing. Value of any commodity is derived from its utility, which is entirely subjective on the part of the individual. The value is then imputed backwards to all factors of production and ultimately to labor.

Ignores the necessity of savings in production and the fact that the interest rate is nothing more then the price of future goods vs. present goods.

Price will be below market price leading to shortages.

Also, this line of reasoning condemns and seeks to punish all those who are most efficient, and praises and seeks to reward all those who are more wasteful.

Two entrepreneurs can produce the same commodity of the same value. The one who has produced the commodity at less cost, so that he actually utilized less scarce resources to produce the same commodity, is condemned by the socialists, while the producer who was more wasteful is praised.

9

I pointed out the same. That someone can just “homestead” something without working for it. Or that borders of countries were determined by mutual agreements or conflicts-wars. One of them then claimed that wars are results of labor after all.

With regards to your example, I guess their response would be that finding those bananas is labor as bananas themselves mean nothing unless someone takes possession of them and do something with them - labor :slight_smile:

Claims such as: people are unemployed because there is not enough money or that money is lent at high interest. Therefore, otherwise willing workers cannot work. So the answer is to allow them to work and print money because of rendered labor. When I pointed out that with such logic digging holes will be sufficient to qualify for money, response was something like “the employer will asses whether it makes sense to hire people to dig holes”. Or some other gibberish. I have not yet understood their arguments how the price would be determined in such system without state enforcing it. Does not make sense at all.

Yes because according to such “theory”, everything is a result of labor - nothing on the planet can be used, consumed etc. without human labor.

With regards to the welfare payment - I gather it would be progressive taxing (of course), all people would receive the same amount whether they work or not, every child or elderly person. If they work and make something on top of it - they get to keep it.

The main reason why I posted such question(s) is because I’m trying to find out whether there is a more compelling argument that can be made which I have not thought of.

Thank you all for your responses so far :slight_smile: I shall keep explaining patiently even though some of them are very insulting.

J.

10

Ask them to describe the mechanism by which the structure of production will adjust to ever-changing consumer desires and supply conditions of the real world, in the absence of profits providing a signal.

Like, suppose I’ve just invented a wonderful new gadget that many people would love to have. It cost me $5 to make. On a free market, I can charge $100 for it. I will make as many as I can and reap huge profits. Seeing my superb profits, other firms start competing with me and soon the price is down to just $10. Trying to be as efficient as possible, some firms have brought the cost of making the gadget down to just $1. More and more investors and entrepreneurs are attracted to this market because of the high profits available.

Labor, land and capital is diverted from its present use, producing something that consumers want less of, to producing these wonderful gadgets that they want more of. We know they want more of these gadgets because of how much they are willing to pay for it. Competition brings down costs and prices so that millions of people can afford this great product.

In an incredibly short period of time, the market process has reallocated resources to best satisfy consumer demand. The market process works because of profit signals, and individuals being free to seek and make profits.

In a world of no profits, I can only charge $5 for my gadget. Well then how will millions of people be able to get hold of it? How will we know if this gadget is something people would want? How will they learn of its existence? Why should I bother expanding my production? Why should other firms start producing more of these gadgets, and improving manufacturing techniques? How will we know what particular labor, land and capital should be diverted from its present use into production of these gadgets?

11

I am not referring to value. I am referring to the first argument of the OP but framing it differently…

I want to play devils advocate. Please debunk this statement as if you are talking to a layman:

Currency is a transfer of energy. In order to accumulate wealth you must accumulate the energy of a lot of people.

12

If you’re going to say that you might as well acknowledge you’ll need to ‘give’ a lot of energy too…

13

Air = Dirt

14

Value = non-value.