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RE: The Economic Calculation Problem and Libertarian Socialism

in #politics7 years ago

I readily accept that the odds of me swaying the author in his beliefs are negligible. However, any online argument has the benefit that it has not two but many judges, and I hope to provide some insight for those critical thinkers who happen on this post.

The author is clearly an intelligent person, which is why it is dissapointing to see the economic calculation problem (ECP) misrepresented by him. Wether this is done purposely or not I do not know. The ECP is not that there can be no unit of measurement, but that a value cannot be logically given to this unit. This is a very different argument that requires a different refutation.

Next the author uses the labour theory of value to support his argument. He states the theory as follows

Under the labor theory of value the value of objects are the amount of human labor it takes to produce them.
A theory of value as such cannot hold as can be readily observed by opening a window and looking outside. Surely labour is a variable in the equation that determines value, but not the only variable. This theory could only work if we had constant returns to scale, that is, if every unit produced would be worth as much as the last. Clearly we cannot produce chairs indefinitely as at some point everyone will be seated. Moreover, not only quantity of labor but quality of labor is important. If I make a chair in 8 hours but my brother makes one in 1 hour, his chair is not worth less. Lastly, direction of labour is important. If I spend 8 hours building a chair or 8 hours grinding planks into dust I did not create the same amount of value. Clearly usefulness of a product comes into the equation, but under the labour theory of value we then arrive at a circular argument! Namely, the value of a product is determined by the value of the labour, but also the value of labour is determined by the value of the product, which is determined by the value of the labour. Clearly the labour theory of value does not provide us with the full picture, and should be abandoned.

In conclusion the ECP was not disproven in this post. Better attempts than this have been made and have failed. the ECP remains and is real and any attempt to trivialize such a problem should be approached with scepticism.

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