#labortheoryofvalue

[magicarcherylessons]

I think this is my favourite tweet. I've definitely read funnier and cleverer tweets, but this one is my favourite.

for reasons i shall not discuss, a tweet

[markstahl]

Bitcoin Value == Energy Wasted

I once heard someone say that Bitcoins have value because they burn electricity to make them.  My immediate thought was this was an example of the well-known economic fallacy, The Labor Theory of Value. The Labor Theory of Value posits that the “fair price” of something is the labor that goes into its production. It is considered a fallacy in modern economics, where It has long been supplanted by The Subjective Theory of Value, which posits the “fair price” of something is whatever people are willing to pay for it.  As a simple example, imagine spending hundreds of hours  producing a pretty bauble that no one wants. The labor is not determinate of the value.  The desire of someone to own it is.  When someone first told me “Bitcoins have value because they burn electricity”, it sounded to me a lot like the same fallacy in new clothes.  The effort expended to make Bitcoins should not affect their value.  But on further reading, I realized there was a way to reconcile this idea with modern economics by appealing to the most basic of microeconomic principles, the law supply and demand.   Imagine you’re a Bitcoin miner.  You spend money on machines and electricity.  For your efforts, you get paid in Bitcoins, which you sell for a profit.  So why doesn’t everyone mine Bitcoins?  Because Bitcoins, by design, yield a natural limit on the profit you can make from mining. As more miners enter the market, two things happen.  First, Bitcoin adjusts the difficulty of mining upward, so that mining cycles stay pegged at around 10 minutes each.  This increases your electricity costs.  Second, the probability of you winning the “mining lottery” goes down, because you’re competing against more miners.  In other words, you use more electricity to earn less money.    Diminishing marginal returns.  This provides a natural limit on how many people become miners.  From the law of supply and demand, people enter the mining market whenever the marginal costs of production is less than the return. In the Bitcoin world, marginal cost is the cost of electricity burned, while the return is the amount of Bitcoins you get for wasting it.  So the number of miners in the Bitcoin network keeps expanding until the value of bitcoins earned by mining equals the value of electricity consumed by miners.  To a first approximation, every new bitcoin added to the network consumes electricity equal to the coin’s market value. 

That is, the value of bitcoins equals the value of the energy wasted to make them.

[raglanphd]

1847 #Lincoln #abrahamlincoln #lincolnquotes #labortheoryofvalue

[phungthaihy]

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[interpretationsofculture]

I found Marx’s language to be quite dense and difficult to get through. The first part of this article, entitled “Labor Theory of Value,” provides a concise explanation of Marx’s theory. In short, Marx argues that the value of a commodity can be expressed “by the average number of labor hours required to produce that commodity.” The labor theory of value can be used to “explain the value of all commodities,” including ‘labor power,’ or “the commodity that workers sell to capitalists for a wage.”

--ALS

#ioc2020 #labortheoryofvalue #marx

[raglanphd]

Lincoln Wisconsin speech 1859 where the "labor is prior to and independent of capital" is taken from, a bit misleadingly. He wasn't arguing the evil of capital but the need of both, and the possibility of free labor. "But Free Labor says "no!" Free Labor argues that, as the Author of man makes every individual with one head and one pair of hands, it was probably intended that heads and hands should cooperate as friends; and that that particular head, should direct and control that particular pair of hands. As each man has one mouth to be fed, and one pair of hands to furnish food, it was probably intended that that particular pair of hands should feed that particular mouth -- that each head is the natural guardian, director, and protector of the hands and mouth inseparably connected with it; and that being so, every head should be cultivated, and improved, by whatever will add to its capacity for performing its charge. In one word Free Labor insists on universal education." #lincoln #abrahamlincoln #lincolnquotes #ushistory #labortheoryofvalue