From: Dan Fabulich (daniel.fabulich@yale.edu)
Date: Tue Nov 16 1999 - 11:02:39 MST
'What is your name?' 'Billy Brown.' 'IT DOESN'T MATTER WHAT YOUR NAME IS!!!'
> A not-completely-insignificant quibble: I would say "The cost of a product
> depends on the total quantity of human effort (direct and indirect) required
> to make it." Energy and material costs are really just indirect human labor
> costs.
Hmmm. Actually, this theory is lacking, too, unless you're merely
asserting that total quantity of human effort is just ONE of the things on
which the cost of a product depends. Indeed, your theory reminds me of
Marx's "labor theory" of value, which leads one into serious problems,
IMO.
At any rate, there's at least two more factors at work which you don't
take into account here. The first one is (surprise!) demand. If demand
is low, or even better, if you've got a monopsony on the market under
consideration, the cost of the product will be lower, despite the fact
that the total labor required to create the good is the same.
The second factor is capital. Suppose I've got a goose who lays a special
kind of egg that nobody else anywhere in the whole world can make (unless
they buy my goose). Clearly, the total quantity of effort required to
acquire these eggs is very low: I merely need to feed the goose daily;
feed is cheap. But, nonetheless, it would be very reasonable for me to
charge a LOT MORE for those eggs than the cost of the feed and my trivial
labor feeding the goose, especially if demand for these eggs are high.
The goose, in this case, is a special kind of capital, which, due to its
rarity, is quite expensive, thus increasing the cost of the egg beyond
that which would be expected based on human labor alone.
The cost of the product is determined by demand and supply; the supply is
determined both by human labor AND the capital required to create the
product.
Automation thus has economic potential only if it's *cheaper* than human
labor (which we can only say once we've taken capital into account re:
cost of products). Note also that nuclear electricity need not save us
any human labor at all in order to yield cost benefits... it only needs
to be the case that the cost of nuclear energy (labor + capital) is less
than the cost of, say, coal energy (labor + capital).
-Dan
-unless you love someone-
-nothing else makes any sense-
e.e. cummings
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