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This might also be wrong, but I'm taking a stab at it (going off the previous 2 responses): I'm assuming labor cost is the actual "mediator" to the exchange cost, and raw material cost would be considered a "use" value since it is the physical usefulness needed for labor to create the product. So if that's the case, it seems like the Marxist criticism of surplus would be that it's impossible because the exchange value (ie: labor) should be equal for both buyer and seller. If there's a delta, then someone is getting screwed; in pretty much all cases, that would be labor and would be labor exploitation. However, this doesn't seem to hold for secondary markets (used cars where things like subjectivity seem to be a prime price determinator).
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May 9, 2017 00:07
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| # ¿ May 5, 2024 23:52 |
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DISCLAIMER -- I took my last economics classes years and years ago, this could all be wrong. Read at your own risk. My understanding is surplus COULD be a net benefit to both consumer and producer. As an example: I would like to purchase a car. From my research, the car I want is $20,000. Thus, I am willing to spend $20,000. For the sake of this example, let's simplify it and cut out any channels and markups that may occur - I go straight to the manufacturer themselves to buy the car. In order to incentivize me further, the manufacturer gives me $1000 off. Now, the COGS on this MUST be less than $19,000 otherwise there is no profit motive. For this example, let's say it's $17,000. Thus, the consumer surplus is $1000 because I was willing to spend $20,000 but saved $1000, and the producer surplus is $2000 because seller made a profit for an aggregate of $3000. I believe the above example is the mainstream view of surplus that is taught in universities. So here are my rambling thoughts: 1) The concept of "willing to spend" itself may be flawed. For the most part, as a laborer, I am not aware of macro trends to supply and demand. A Marxist could say that the rise and fall of commodity prices (from raw materials to finished goods) are largely driven from speculation about the future. If that's the case, what I'm "willing to spend" is always at a disadvantage to what the manufacturer sets their price as due to asymmetry of information. and speculation. A speculation based economy is not tied to anything intrinsic at all, and is thus an illusion. If speculation didn't exist, then there would be no surplus period - buyers and sellers would have the exact same information and could price the good accordingly to the labor input that was required to produce it. 2) Ruzihm's idea of secondary markets - I brought up the used car market because it's a really fascinating area. Let's take the phenomenon of the "Classic" car. These cars are old, they do not have modern safety equipment, nor are they road-worthy as a modern car is. Yet they can command prices excess of over 30,000+ even in bad condition. Why is this? These prices seem arbitrary and seem relative not to the the process of manufacturing it, but to the price of other cars within the market. An 1965 Mustang was not a very well built car in the first place - it isn't a luxury good like a Ferrari. It was and is a "blue-collar" good, originally priced less than the modern adjusted for inflation value they command. I'm still not sure if you can categorize what the "use value" of something like a classic car even is because it ends up taking some sort of Bentham-esque concept of utility - I am "happy" to send that much, even though I realize the classic car itself is inferior in objective ways to modern cars. Perhaps there is some distinction here between "essential" goods like food/water/shelter and "accessory" goods like a classic car. 3) Surplus itself is indirect. Who benefits from surplus? How does money translate from surplus into an economy? As Electric Owl pointed out, business interact on a micro level - income statements and balance sheets point to the structural integrity of the firm itself. Indeed, surplus at a firm level can be interpreted as the cash flow after ops and investment. Taking total net income and adjusting for non-cash activities like depreciation as well as accounting for cash equivalents like liquid securities allow the firm to redirect funds into growing organically via R&D or increasing shareholder value through buybacks. Either way - the surplus that a buyer and seller have apparently generated is just kind of floating somewhere arbitrarily. There is no way to quantitatively associate it with a firm, other than calling it revenue gained (at the margin) or revenue lost (again, at the margin). But this is hilariously flawed - nowhere in the transaction level was this information even recorded. dk2m has issued a correction as of 15:54 on May 10, 2017 |
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May 10, 2017 15:32
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