This perception of inadequacy of the Labor Theory of Value was partially because of the embarrassment of the financial, landlord, and mercantile interests, which the LTV rightfully identified as rentier or quasi-rentier sectors; it could not be allowed to survive lest the Usury of the economic system was excised with the official sanction of economic orthodoxy.
The Subjective Theory of Value collapses the vital distinctions between economic sectors. On the other hand, the Labor Theory Of Value gives way to an economics which, even if it is narrowly and perhaps imperfectly defined, can offer meaningful information about the state of economy as it exists: as a complex of productive forces generating the means of sustenance (housing, clothing, food & drink, transport, etc.). Subjective Theory of Value-based economics can observe an economy undergoing the process of deindustrialization, with all the necessaries of life becoming dearer and dearer as measured in terms of labor-hours, and conclude that the economy is growing, as long as the economic spheres facilitating said deindustrialization are making profits high enough to compensate for the collapse in production. Labor Theory of Value based economics cannot bring itself, nor anyone else, to this delusion.
https://exiledjargon.blogspot.com/2020/11/review-of-othmar-spanns-true-state.html
The Neo-Liberals of Silicon Valley have already made American economic conservatism, of whatever variety, utterly obsolete.
Bitcoin gets the attention, and it should, but Facebook showed that the only thing keeping Silicon Valley from retiring the Federal Reserve and simply issuing its own currency is the state, the Big Government. Hence Facebook’s attempt at their own cryptocurrency, the “Libra.”
Facebook proved it was quite serious by inviting all of the other Silicon Valley companies to join: Facebook had no illusions of being the new Money Monopoly, but did have illusions of itself being the “First of Equals” President of the new Money Monopoly.
When Bill Gates was still running Microsoft, in an interview he explained that he did not see Microsoft as competing with Apple or some other computer company.
Microsoft’s real competitor, Gates explained, was Goldman Sachs, and that competition was first and foremost over “talent.” “Talent” meaning the next generation of extremely smart people coming out of the elite universities.
Indeed, Silicon Valley, Wall Street – and the National Security Administration – all compete for a relatively small pool of very smart people.
Goldman Sachs, as a specific company itself but more as a human-centric network, has always been able to recruit the “Best and Brightest” because spending five years at Goldman Sachs is how you “make your nut.” A 25 year old from a modest background can jump from university to Goldman Sachs at 25, spend five years there and earn a fortune, and go on to greater fortunes by unofficially representing that human-centric network of Goldman Sachs in both the private and public sectors, at home and abroad, in the Empire’s satellites and on its borders.
Especially in the last 20 years, this increasingly goes for Silicon Valley technology companies. California doesn’t need Wall Street. Companies like Google can already do everything a bank can do virtually for free with the exception of interfacing with the government, and especially the court system.
There is no “technology” that a bank has that a Silicon Valley Social Media can’t clone, and trivially.
Exiled Jargon does an excellent job going over the awful bait-and-switch of American conservatism post-war:
https://exiledjargon.blogspot.com/2020/04/the-cold-warriors-and-transformation-of.html
https://exiledjargon.blogspot.com/2020/04/bircherism-and-subversion-of-money.html
This also solves the left-populist problem What’s The Matter With Kanasas? Fundamentally, why is it that American conservative right-wingers, primarily indebted wage labor take the opposite side of their own economic interests by advocating a hard money policy unfavorable to net debtors as well as a policy of low taxes on unearned wealth and high taxes on earned wealth?
The American conservative movement has long displaced the objection to the totalitarianism of the historical “Communist” regimes with an economic attack on social welfare, the welfare state, and in extreme cases even private non-profit collectives.
Because Americans are not allowed the freedom of association to define the in group and the out group they revert to a knee-jerk individualist libertarianism that denies the legitimacy of any collective action at all … except when that collectivism is a for-profit corporation, for some reason.
This results in American right-wing conservatism adopting the worst of totalitarianism – getting worse in the era of Technocracy – and the worst of “individualism” – unable to form a proper in group, Americans attempt individual defense against the highly collective forces of finance capitalism, the state, and supra-state globalism.
The Conservative American Right thus promotes the worst of all worlds.
Banned Hipster 
test
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Ok… sorry for the test… thought I was blocked
well… bannedh… for some reason, you don´t like me… but let me say: this article, I find extremely, extremely, good.
The discussion of the sectors finance versus silicon valley tech; the idiocy of US conservatism. These are extremely important, and intelligent, considerations; hardly heard anywhere else. Most important.
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“Technology”, itself, can’t create scarcity, and it is scarcity that creates value.
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“it is scarcity that creates value.”
My six year old’s artistic masterpiece, “Mom and Our Dog” – currently displayed on the refrigerator – is extremely rare. In fact, it is one-of-a-kind.
Therefore, because it is scarce it has value and I can sell it for millions, right?
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Rarity and scarcity are distinct concepts. Rarity makes no implication of value; scarcity implies value and consequent demand. It makes no sense to speak of a “rarity” of food, water, air, clothing, housing, hotties, or privacy; it makes perfect sense to speak of a “scarcity” of those things.
Value is in the eye of the beholder. Air is immensely important to us but we appraise it no value until it is scarce, when it becomes infinitely valuable. Yet in our daily lives we treat the abundance of air with contempt. And it is the same for everything else. Were money, houses, or hotties abundant, we would appraise them but little value.
Thus, scarcity creates value.
P.S. Abundance is caused by oversupply, and oversupply is caused by overproduction. Who spoke out against this “overproduction”, and when?
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@Hot Ford
Good point, but the Labor Theory of Value never had any pretensions of putting a price on Art, or Hotties, or Air.
The Labor Theory of Value was created to describe the price of commodities in a market driven by supply and demand.
It was the opponents of the Labor Theory of Value that wanted to put a price on things that are not commodities, thus defining the Universal Economy of all Things.
This had the effect of mystifying the economic rents that certain economic actors were extracting, and these economic actors “just happened” to be those with the most to lose in the new Industrialism.
Someone said that the entirety of neo-classical economics was invented to make Henry Georgism non-standard.
Water isn’t scarce or rare. Plastic bottles of water and the convenience store are a commodity like any other.
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Thank you.
With apologies to Voltaire, if scarcity did not exist, it would be necessary to invent it.
The economy exists in order to produce returns. That is just how it works. And in order to produce returns, the economy must create value, and in order to create value, the economy must facilitate scarcity.
If the economy created abundance, value would be destroyed.
Consider that technology facilitates production, and technology has reached such sophistication that productive capacity is virtually infinite. An ordinary worker could have a mansion, a ski shack, three supercars, and an aeroplane.
The only problem is that he would stop working. His employer would lose him as an employee, and be unable to replace him; work would pile up, and the company would collapse.
Value destruction.
By the way, anything that can be bought or sold is a “commodity”. Otherwise, accounting wouldn’t “work”.
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“The economy exists in order to produce returns.”
Well no that is the crux of the argument. “Returns” implies interest which implies usury. This is not the same as profit. The problem with usury is that it is pure rent-seeking on money – a proper monetary accounting system would have no need for usury – no one would need usury because no one needs rent-seekers, they are parasitical by definition.
Yes, of course, I’m aware of the complexities here but fortunately a usury-free economy is possible, already exists, and I don’t think it’s a coincidence that they are literally suggesting “negative interest rates.” This is a GOOD development of modern technology – rent-seeking on money is simply not efficient. Usury is going the way of buggy whip manufacturing.
“The only problem is that he would stop working. ”
This is what I so hate about libertarianism, capitalism, and the right. The entire economic ideology is based around disciplining workers. It’s all very “What’s the Matter with Kansas.”
I’m all for Fully Automated Luxury Space Communism myself – of course I am, I grew up on Star Trek.
“anything that can be bought or sold is a “commodity”.
No, that is not how the term “commodity” is used in economics – a commodity implies an “unspecialized” product, something mass produced. A banana is a commodity, as is a ton of wheat.
A painting by Michelangelo can be bought and sold but it is in no way a “commodity.”
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No, you are thinking of something else. Even the most uncharitable person will tell you that “usury” is when money creates money. In other words, when there is no business, no labor, in the loop.
But returns themselves don’t necessitate usury, and in fact most returns are probably not usurious. (I haven’t done the math and I don’t intend to.) The point is that although interest (from “usury”) creates value, it is but a subset of returns.
When you use loaded words like “rent-seekers” you muddy the conceptual waters, obfuscating the central point. The central point is that the economy exists in order to generate returns, full stop. “The economy” doesn’t mean consumers, it doesn’t mean citizens, and it certainly doesn’t mean workers. The economy means equity.
Technology has nothing to do with negative interest rates. The cause of negative interest rates is too much capital chasing too little returns. Think very carefully about this.
You might hate the notion of disciplining workers, but it is necessary in order to stave off Fully Automated Luxury Space Communism, which would create abundance, collapsing the economy, and annihilating investors.
All things bought and sold are commodities by virtue of the transitive property. Economics is invited to blow me.
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I prefer to use the dictionary definitions. So “economic rent” as in “rent-seeking” is a well defined economic concept. Interest is not the same as returns.
Negative interest rates very much do have something to do with technology. Economic rents are considered an inefficiency.
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If the dictionary definitions clarified the fundamental precepts of the system, they would be edited or replaced.
With few exceptions, the words I use are compatible with their financial accounting definitions. The difference between the two disciplines is that economics is the exoteric presentation of the economy as financial accounting is its esoteric representation.
In other words, if you read an economics treatise, you are learning the form of the game as it is presented to a spectator; if you read an academic textbook of financial accounting, you are learning how the game is communicated to and between players.
In every meaningful way, interest are a subset of returns. That is, not all returns are interest, but all interest are returns. (Strictly speaking, interest are a precursor to returns.) Interest payable, interest receivable, one an asset, the other a liability, the difference equity, equity the difference.
Negative interest rates have absolutely nothing — n-o-t-h-i-n-g — to do with technology, except to the extent that “technology” enable the production of infinite money à la Modern Monetary Theory.
Investment is the point of the economy. It is a virtuous cycle. Without investment, the economy would not exist. Without the economy, investment would not be possible. Without investment, the economy would not exist.
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“Negative interest rates have absolutely nothing — n-o-t-h-i-n-g — to do with technology, except …”
Nothing, spell it out, nothing … except for this one big major thing.
“Investment is the point of the economy. It is a virtuous cycle. Without investment, the economy would not exist. Without the economy, investment would not be possible. Without investment, the economy would not exist.”
Neo-liberalism is an ideology. We used to discuss “political economy” but the Neo-Liberal ideology pretends that “the economy” is merely a technocratic thing, it isn’t political, it’s a neutral, even mathematical, system.
Obviously, this is not the case. In fact – it’s absurd.
This is how wrapped up in ideology you are:
“the production of infinite money”
Are you under the impression that numbers are finite? This isn’t a trick question, this is basic arithmetic.
Negative interest rates have EVERYTHING to do with technology, specifically, how technology is replacing the information property of money.
You are desperate to keep the conversation in the realm of neo-liberal ideology, because that is all you know, and you falsely believe it to be some sort of neutral, technocratic system. Which is obviously is not.
I’d suggest reading the articles linked in the post.
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Do you really need me to connect every dot? OK.
From: “Negative interest rates have absolutely nothing — n-o-t-h-i-n-g — to do with technology, except to the extent that “technology” enable the production of infinite money à la Modern Monetary Theory.”
To: “Negative interest rates have absolutely nothing — n-o-t-h-i-n-g — to do with technology, except to the extent that “technology” allow the power structure to increase its strength to the degree that the unruly workers don’t rise up in indignant fury when infinite money à la Modern Monetary Theory is created.”
Your welcome.
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Frankly, I have no idea what “neo-liberal ideology” is, if you think I am “desperate” to keep a conversation in its “realm” you are delusional, and the notion that “neutral” and “technocratic” abut each other makes me chuckle.
Look: I have comprehended the economic system like no one has comprehended the economic system in the entire history of the world. I can explain everything. I have wrapped my mind around the whole enchilada.
If you don’t understand something, you’re welcome to ask for clarification. It helps to understand double-entry accounting, of course, as double-entry accounting is the mechanical process according to which value is created, and the creation of value is how people get rich.
People get rich through equity. How is equity computed?
Assets – Liabilities = Owners’ Equity
If people get rich through equity, and the creation of value is how people get rich, then value is identified with equity. If value is identified with equity, and wages payable is a liability, then according to this incredibly simple and straightforward formula, wages destroy value.
Otherwise, I will now fuck off.
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One more thing: an elaboration of the economics/financial-accounting distinction.
The big reason that economics theory is an airy-fairy farce is that it misinterprets — intentionally, in my opinion — the nature of money under the capitalist order. Specifically, it presumes that money is principally a medium of exchange and incidentally a medium of accounting, as opposed to principally a medium of accounting and incidentally a medium of exchange.
In the former case, the principal utility of money is to lubricate the wheels of trade, solving the problem of barter; in the latter, the principal utility of money is that you have to work for it.
Follow the money.
If the dollar were primarily a unit of exchange and incidentally a unit of accounting, you would expect most people to be buying and selling goods and services from each other; if the dollar were primarily a unit of accounting and incidentally a unit of exchange, you would expect most people to be selling precursors to goods and services (viz. labor) to others (viz. corporations) and buying finished goods and services from corporations.
Corporations are double-entry economic entities, so you can see how naturally financial accounting enters the picture.
This is a total paradigm shift. It’s okay if it takes you a while to wrap your head around. Just think about it.
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