The Great Fallacy of Marxism

[Edric O]

Well, I think that Edric's example leaves out a key component of the whole "creation of wealth" notion. What about new technologies?

Let us say in your village example that, instead of there being more gold nuggets, the villagers discover how to mine Wolfwizonium. Wolfwizonium is just the hottest stuff since sliced gold nuggets, and now, with this new material, people learn how to construct new devices, new appliances, and how to improve on past inventions. Does all of society benefit from this discovery? And, what if the man who discovered said metal (Wiz, Fourth Earl of Wolf) was not among the "rich"? Would he prosper, and then join the class of the rich?

It would seem to me, that, in a capitalist system, if the new technologies created by this metal had to be bought and sold for anyone to make any sort of profit, the standards of living of all the people would improve, because the expensive cost of the Wolfwizonium replaces the costs of older, more cumbersome, and unreliable gold-nugget-powered technology, and everyone would purchase it. Is this a correct analogy, or did I miss a key step somewhere?

Yes, new technologies help increase the "wealth" of everyone - the rich as well as the poor. But this is nothing new, and it's not restricted to capitalism. It has been going on since the dawn of human civilization. And it doesn't change anything.

Obviously, most of the poor people today are not nearly as poor and destitute as the poor people in the 19th century. Does that mean we should stop worrying about poverty altogether?

At any given moment in time, the "poor" will be somewhat more wealthy than the "poor" at an earlier moment in time. This is natural, since Humanity as a whole has been getting more wealthy (inventing new technologies, etc.) for the past 5000 years. But "rich" and "poor" are relative terms. There is no universal, objective standard for determining who is "rich" and who is "poor".

To be rich means to have more wealth than the average man. To be poor means to have less wealth than the average man. And it's a simple mathematical fact that in order for some people to have more than average, others must have less than average.

[GUNWOUNDS]

Yes, new technologies help increase the "wealth" of everyone - the rich as well as the poor. But this is nothing new, and it's not restricted to capitalism. It has been going on since the dawn of human civilization. And it doesn't change anything.

Obviously, most of the poor people today are not nearly as poor and destitute as the poor people in the 19th century. Does that mean we should stop worrying about poverty altogether?

At any given moment in time, the "poor" will be somewhat more wealthy than the "poor" at an earlier moment in time. This is natural, since Humanity as a whole has been getting more wealthy (inventing new technologies, etc.) for the past 5000 years. But "rich" and "poor" are relative terms. There is no universal, objective standard for determining who is "rich" and who is "poor".

To be rich means to have more wealth than the average man. To be poor means to have less wealth than the average man. And it's a simple mathematical fact that in order for some people to have more than average, others must have less than average.

so much talk about the "poor" and the "rich" man... not enough people discuss the "average" man from which all of this is "based"

who is this mysterious average man?  :)

;)

[Edric O]

And in reply to Zamboe:

"wealth is created, ,but value (money) is not".

When I read statments like this, I just can't help to feel insulted by Edric0.

Can you tell difference (do you know) between wealth, value and money?

The difference depends on your definition of those terms. In my statement (which you've quoted), I considered "wealth" to be an absolute term and "value" to be a relative one. As for money, we already know that their worth is relative. Have you ever heard about inflation and deflation?

Your example is one of many examples out there that intends to confuse people. I will now answer with another twisted example like yours (in fact your example is not even valid in a closed economy case)

My example aims to point out that the value of money is relative (which is a well-established economic fact), and that simply throwing more wealth into the system won't do anything to close the gap between rich and poor. If you are confused in any way, please explain your confusion and I will give you a better example.

In the past 10-15 years countries such as South Korea, Irland, Finland have created more wealth than in their previous 50 years, and their buying power - MONEY - have increased significantly for their population.

You mean the value of their money has increased, which means they've experinced deflation. The buying power of their people has also increased - so what? Buying power has been increasing more or less steadily for the past 1000 years. Long before anyone even had any idea of the concept of "buying power" in fact. As I've explained to Wolfwiz, the poor of today are usually less poor than the poor of yesterday. But that changes nothing, as long as the rich of today are also richer than the rich of yesterday. The relative difference between rich and poor stays the same.

I pressume you will answer with a statment indicating that some other people in the world have lost money because of them...... then feel free to go and accuse them for the poverty in Africa. LOL.

Lost money? No. Lost buying power? Most likely. For the millionth time, I must point out to you that THE VALUE OF MONEY CHANGES.

Oh, and by the way, we live in a global economy. What happens in Ireland or Finland or South Korea has an impact on what happens in Africa, and vice versa.

And as a final note, I re-state a simple mathematical truth which forms the core of this issue:

IN ORDER FOR SOME TO HAVE MORE THAN AVERAGE, OTHERS MUST HAVE LESS THAN AVERAGE.

[Mahdi]

"Jonny wishes he was famous, spends his time alone in the basement, with Lenin, Cobain, and a guitar and a stereo."

10 points to whoever figures out what that's from.

[Wolf]

I understand, Edric. And I did not mean to imply that new technology was unique to capitalism. I was simply using it as a framework for my example since it is the system of economics I am most familiar with.

Also, Edric, I understand the proof that if there is such a thing as a standard deviation it exists in both ways, however, I am then unsure of what do you mean by that quote. Are you saying that ALL people must then have the AVERAGE amount of wealth with absolutely no standard deviation in order for the system of economics to be fair? If so, my question is what about individuals who work harder than others? Do they deserve the average amount of wealth?

[zamboe]

And in reply to Zamboe:

The difference depends on your definition of those terms. In my statement (which you've quoted), I considered "wealth" to be an absolute term and "value" to be a relative one. As for money, we already know that their worth is relative. Have you ever heard about inflation and deflation?

There is no such thing as YOUR definition or MINE definition. When it comes economics there is just ONE definition.

Wealth is not an absolute term, by definition it is not.

Inflation and deflation are concepts that we might use in this topic, but to be more accurate we should also use ( i hope you know the meaning ) of interest rates, exchange rates, taxes, etc.

My example aims to point out that the value of money is relative (which is a well-established economic fact), and that simply throwing more wealth into the system won't do anything to close the gap between rich and poor. If you are confused in any way, please explain your confusion and I will give you a better example.

Nice try, but won't work.

Throwing more wealth into the system WILL DO CLOSE the gap between rich and poor.

In fact that is the main objective of a rational government, as a part of their social policy is TO DO that. By puting the money on better access to education to poor people, to better social security and so on, those things in the short and long run have a positive impact in the gap.

You mean the value of their money has increased, which means they've experinced deflation.

I should remember that quote. WOW.

Just check the inflation that those countries have experienced in the same period, not a single year of any of them have eved had negative inflation.

I wonder if you know what it really means, and if you know who in the bottom line is responsable of the inflation control.

IN ORDER FOR SOME TO HAVE MORE THAN AVERAGE, OTHERS MUST HAVE LESS THAN AVERAGE.

A communist statment that I will argue no more.

To put in simple terms for you EdricO:

WEALTH IS CREATED AND IT'S VALUE IS MEASURED IN MONEY.

Nothing else.

[Edric O]

Zamboe:

There is no such thing as YOUR definition or MINE definition. When it comes economics there is just ONE definition.

Wealth is not an absolute term, by definition it is not.

Well, in that case, Emprworm's whole argument crumbles into dust. If wealth is not an absolute term, then wealth can't be "created".

But that's arguing semantics. Emprworm was talking about an absolute value he called "wealth", so I continued my argument using that definition. In the end, it doesn't really matter what name you give to this concept, as long as everyone understands what you're talking about - so I might as well be "wealth".

Inflation and deflation are concepts that we might use in this topic, but to be more accurate we should also use ( i hope you know the meaning ) of interest rates, exchange rates, taxes, etc.

Are you here to boast about your vocabulary, or do you have an actual point to make? I know very well what those economic terms mean, and I also know that throwing them around to make you look "smart" is just plain silly. So let's get to the real arguments, shall we?

Throwing more wealth into the system WILL DO CLOSE the gap between rich and poor.

In fact that is the main objective of a rational government, as a part of their social policy is TO DO that. By puting the money on better access to education to poor people, to better social security and so on, those things in the short and long run have a positive impact in the gap.

You're saying that throwing more money at a democratic, mixed-economy government will help close the gap between rich and poor. And that's perfectly true. In fact, you've just made a leftist argument, by pointing out that government intervention is necessary in order to fix the injustice caused by the capitalist market economy. Uh, thank you. :)

But there's a difference between throwing money into the system and giving money to the poor (through government programs and the like). Obviously, if you have something that benefits ONLY the poor, then the gap between rich and poor will close. But if you have something that benefits EVERYONE (such as a new technology, or the "created wealth" Emprworm was talking about), then the relative gap between rich and poor will stay the same.

I should remember that quote. WOW.

Just check the inflation that those countries have experienced in the same period, not a single year of any of them have eved had negative inflation.

I wonder if you know what it really means, and if you know who in the bottom line is responsable of the inflation control.

Listen, I know very well that the government is ultimately responsible for controlling inflation, by printing and withdrawing money. And if those countries didn't experience deflation, that's because their governments printed more money in that time period.

But if the amount of money in circulation stays the same, while the total "wealth" (or whatever you wish to call it) of the country increases, then you will experience deflation - the value of that country's currency will increase. This is what happened in the mining village from my example. $1 was worth 0.5 gold nuggets at first, then it was worth 1 gold nugget.

Of course, if the amount of money in circulation does NOT stay the same, you can avoid deflation; but that's besides the point.

A communist statment that I will argue no more.

No, a mathematical statement. Just what is so hard to understand? IF ONE ELEMENT OF A GROUP HAS ONE SPECIFIC QUALITY ABOVE AVERAGE, THEN OTHER ELEMENTS MUST HAVE THAT QUALITY BELOW AVERAGE.

Having more than 50% of elements with a specific quality above average is a logical impossibility.

To put in simple terms for you EdricO:

WEALTH IS CREATED AND IT'S VALUE IS MEASURED IN MONEY.

Nothing else.

That implies that money is created along with wealth, and that the value of money stays the same. Utterly false.

And besides, I don't see the connection between this statement of yours and the fact that some people must be poor in order for others to be rich.

[Edric O]

Wolfwiz:

I understand, Edric. And I did not mean to imply that new technology was unique to capitalism. I was simply using it as a framework for my example since it is the system of economics I am most familiar with.

Also, Edric, I understand the proof that if there is such a thing as a standard deviation it exists in both ways, however, I am then unsure of what do you mean by that quote. Are you saying that ALL people must then have the AVERAGE amount of wealth with absolutely no standard deviation in order for the system of economics to be fair? If so, my question is what about individuals who work harder than others? Do they deserve the average amount of wealth?

Notice that I wasn't discussing what is fair and what isn't. I only explained the reasons why some people must be poor in order for others to be rich, without passing any moral judgement. So I'm afraid you rushed to conclusions.

Given the fact that I've explained socialism and communism in quite a lot of detail in recent months (so much so that some people are getting fed up with it ;) ), you should know that I do NOT want a system in which every individual has an average amount of wealth, and I certainly don't believe such a system would be fair. As long as personal wealth exists, there must be some deviation from the average in order to reward those who work more, or who work better. That's what socialism does. There are rich and poor in socialism, but the difference between them is extremely small compared to the vast gap that exists under capitalism. As for communism, that's a whole different story, since personal wealth no longer exists (as a result of the abolition of private property).

[Wolf]

Oh, no, that's exactly what I thought you meant, Edric. And, as you noticed in my post, I asked what you did mean in your statement. I did not rush to a conclusion by stating that you said that such a system was fair, I simply asked you if this was so, because it could be easily construed from your words that this was what you said.

Mainly, I was trying to keep you on your toes. I think, as I'm sure you do, that the most equitable system is the system in which each individual receives proportionately to what they labor.

Besides, its good that you have such friends who won't let you get away with things unscathed...  ;D

[SurlyPIG]

"Jonny wishes he was famous, spends his time alone in the basement, with Lenin, Cobain, and a guitar and a stereo."

10 points to whoever figures out what that's from.

Our Lady Peace - Innocent

Excellent song.  What's the relevance?

[Mahdi]

Our Lady Peace - Innocent

Excellent song.

[SurlyPIG]

Well I'm listening to it right now and the very first line is exactly as quoted except for accentuating words to make the lyrics match the rhythm.

[Mahdi]

Darn.  Can't sneak one past you, can I?

[SurlyPIG]

Nope. ;)  It's my favourite of theirs so don't feel bad.

Was the quote originally from somewhere else, though?  Or were you just messin' with me? ;D

[Mahdi]

Havin a little fun.

Was listening to the song when I opened this thread.  Thought the line was applicale, this being a thread about communism and all.

[SurlyPIG]

What does Innocent have to do with Communism?  Surely you realise that the name in the lyrics was probably (John) Lennon and not (Vladamir) Lenin.

[Mahdi]

Sigh.  Some people....

[SurlyPIG]

Well if that wasn't the connection, what is?  I'm not saying there isn't one but I just don't see similarities between Communism and this:

Oh, Johnny wishes he was famous

Spends his time alone in the basement

With Lennon and Cobain and A guitar and a stereo

while he wishes he could escape this

but it all seems so contagious

Not to be yourself and faceless

In a song that has no soul

I remember feeling low

I remember losing hope

And I remember all the feelings and the day they stopped

We are, we are all innocent

We are all innocent

We are, we are...

We are, we are all innocent

We are all innocent

We are, we are...

Tina's losing faith in what she knows

Hates her music hates all of her clothes

Thinks of surgery and a new nose

Every calorie is a war

And while she wishes she was a dancer

And that she

[emprworm]

none of you have been able to refute that which is irrefutable.

Quick responses:

[Dante]

An ounce of gold now and an ounce of gold a thousand years ago would not buy the same things.

Gold can be 'created' (so to speak, see argument below) when it is mined but the value drops to balance this. The value does not change, and thus the gold has not changed anything, as per Edric's example.

As for the historical argument, this is only the case because when there was no wealth (say the stone age) there was no value in gold. Gold only assumed value when it became a useful currency. On it's own it is worth no more than a shiney sparkle.

"The total sum of wealth is so much greater now than before"

This is because we have ascribed value to things which are valueless, among other reasons. Besides which we are in fact shifting value from one place to another when we mine gold. It is being moved from the earth to our coffers. Nothing is created, it is just moved.

[Dante]

Prove it.

[emprworm]

An ounce of gold now and an ounce of gold a thousand years ago would not buy the same things.

Gold can be 'created' (so to speak, see argument below) when it is mined but the value drops to balance this. The value does not change, and thus the gold has not changed anything, as per Edric's example.

As for the historical argument, this is only the case because when there was no wealth (say the stone age) there was no value in gold. Gold only assumed value when it became a useful currency. On it's own it is worth no more than a shiney sparkle.

"The total sum of wealth is so much greater now than before"

yes it does, Dustscout.

[Dante]

You obviously don't because that's not what I'm saying.  :P

You want to prove Edric wrong? Get a measurement for gold value now and then. I really doubt that a gold piece will buy the same ammount of bread in obth times.

The wealth of humans then and now is not the same, because the gold has been moved from the earth to us. Humans who have more things that equal gold (money) will be richer because they moved it from the ground, or got someone to do it for them. Of course poverty exists, the point is that for poor people to recieve something of value, that value has to be detracted from elsewhere.

[emprworm]

You obviously don't because that's not what I'm saying.

[emprworm]

I'm just shocked that all the teenagers in here aren't being taught about the history of Gold.

I'm sorry everyone- i just assumed that you all knew what I thought was common knowledge.

The term "gold standard" came about because of the historical stability of the buying power of gold.