Question 1 What did Marx mean with his formu - University of Utah

U of Utah Econ 5080 2005fa 63
not know countries or nations, it only knows exploitation. So, it is not the eternal tug-ofwar
between supply and demand over scarce raw materials, but the underlying response of
the further exploitation of the laborer by the capitalist to meet these demands that raises the
prices of oil.
Marx does note his own version of the “diamond paradox” in chapter 1 by saying that
situations like the diamond mines are exceptions to the rule. But, as we can see with the
example of oil, there are many more examples that hold true compared to the few exceptions.
Hans: Oil is a commodity, yes, but we need to know more about oil and modern capitalism in order to explain
what is happening in the Middle East. Don’t forget, we are just at the beginning of the book.
Message [155] referenced by [174] and [2008fa:161]. Next Message by Thugtorious is [157].
[170] Ash: content A form 95% Raw materials, according to Marx, are determined by
the labor used in extracting them. For example, wheat is a raw material for bread. Wheat
is much easier to extract (or grow and harvest) than gold, therefore, wheat would not be as
valuable as gold.
Marx takes scarcity into effect along the same reasoning. If it is more scarce then it must
take more labor to obtain it, and therefore, has greater value.
Marx’s theory on value does not seem to have merit in our economy today. Take the
victims of hurricane Katrina. How much would one person pay for a bottle of water if they
have not had it for two days? The labor invested in the water is the same, but the price would
go up dramatically because of the scarcity of drinkable water in the region. This contradicts
Marx’s labor theory of value.
Some students have argued oil as support to Marx’s theory. Yes, it is a non-replenishable
commodity, unlike wheat. However, until it is to the point where we have near to none left,
oil remains a poor example as even now we have enough to meet demand despite the gulf
crisis. What we are experiencing is exploitation of the crisis and pure capitalist greed.
Hans: Prices converge towards, or rotate around, labor-values only in the long run, when demand and supply have
had time to adjust. In a hurricane situation, there is excess demand for water, therefore prices will rise above labor
content.
Message [170] referenced by [176]. Next Message by Ash is [520].
[176] MK: In response to Ash [170]: I believe that you have answered correctly. But I
would like to make a few comments on your example of the hurricane. As I understand it, the
bottle of water may indeed have more labor involved. The water was not likely purchased
from a local market, nor was it pulled from a local well. Most likely it was shipped in
with urgency– perhaps in the middle of the night, perhaps the loading of trucks, trains and
airplanes for extended hours and in difficult conditions. The water was likely carried by
hand to many persons in need and delivered at any and all hours despite the obstacles of
sewage, water, electrical outage and danger. In the event that the person delivering the water
was in fact to charge a fee, it may be argued that they have grounds to ask a greater fee than
average.
However, in the case of an individual in urgent need of water after a natural disaster–
I don’t believe this example truly identifies the market as a whole. This seems to be an
exception as opposed to the rule.
Next Message by MK is [229].
64 2005fa Econ 5080 U of Utah
[180] Overlord: In response to [177]:
The bottle of water in a normal situation would have no more labor involved, therefore no
added value. In the hurricane situation the bottle of water would have many additional labor
steps added due to the urgency and immediate NEED for the water. Actually producing
the bottle of water would require no addition labor so the extra value would not come from
production. The extra value would come from higher demand and the extra labor required to
deliver the bottles of water to each individual. I don’t think it follows Marx’s theory exactly
but it does make some similarities.
Next Message by Overlord is [218].
[259] Ernesto: How the value of raw materials is determined. I agree with all of the
information that Picard uses in [151] to establish the foundation of answering question 90.
Picard elaborates on how the value is derived, however, I disagree with the comments made
with regard to finite materials. First we must define the words scarcity and finite. Scarcity
is not plentiful, deficient, rare, and uncommon. Finite is limited in quantity, measurable,
and countable. All resources are finite and scarce. The scarcity is relative one with another.
Water is less scarce than gold, nevertheless, their is a finite supply of both. The more finite
a material becomes the harder it is to extract from the earth. Hence the price will indicate
this. Oil is no different. The price of oil is based on how efficient it can be extracted from
the earth. The middle east can extract oil cheaper by the barrel than any other place on earth.
The only difference is OPEC meddling in the affairs of pricing. When these reserves are
exhausted other processes will be utilized to generate oil. One example would be the oil
shale of Alaska. Currently it isn’t that profitable because it is harder to extract, however,
the more scarce it becomes the more economical it becomes. I believe that oil is a prime
example of labor theory of value. The price of oil will continue to rise as supplies become
depleted. The cost of harvesting oil clearly demonstrates this phenomenon. At the point
of exhausting all oil supplies the market will vanish and labor will be dispersed to other
industries, and their services will be used to harvest other materials. Another issue is how
renewable these resources are and the labor used to renew such resources.
Hans: Everything is finite, but this does not explain the difference between oil and water. Water is constantly
recycled, while oil was deposited once by biological processes, and once these deposits are used up, that will be
it. Many people say (and I agree) that we are responsible for the kind of world which we are passing on to future
generations. Modern mainstream economics is blind about this problematics.
Next Message by Ernesto is [328].
Question 94 is 64 in 1997WI, 66 in 1997sp, 61 in 1997ut, 77 in 2001fa, and 85 in 2003fa:
Question 94 Give another example where the same thing has two different effects. Can you
identify, in your example, two different aspects of the thing which are responsible for these
different effects.
[130] Overlord: Marx gave the example of two aspects of labor having two different
effects. My example will show that a vehicle (simple passenger car) while having the main
purpose of transportation, simultaneously has a different effect on the environment. The two
aspects of the vehicle being the energy transfer from the motor to the wheels, and the exhaust
gases coming from the tail pipe. The first aspect moves the passengers from one point to
another while simultaneously the second aspect is emitting exhaust gases into the air.