[p2p-research] excellent contribution on flow money by Martien van Steenbergen

[Dmytri Kleiner]

On Mon, 1 Jun 2009, Martien van Steenbergen wrote:

There is only 1 definition, however it has hard to understand ad
purposely misrepresented by neoclassical economics, which continue to
dominate mainstream sources, and who's main purpose is to justify
propertarian exploitation.

>       RENT
>
>       Confusingly, rent has two different meanings for economists. The first is
>       the commonplace definition: the INCOME from hiring out LAND or other durable

This is misleading, the income from hiring out land is a price, and
all prices are composed of rent, interest and wages, in most cases the
main component of this price of land would be Rent, regardless of
whether it was bought or hired.


>       goods. The second, also known as economic rent, is a measure of MARKET
>       POWER: the difference between what a FACTOR OF PRODUCTION is paid and how
>       much it would need to be paid to remain in its current use. A soccer star
>       may be paid $50,000 a week to play for his team when he would be willing to
>       turn out for only $10,000, so his economic rent is $40,000 a week.

This is such garbage I have no idea where to begin. At the very least, it's
a lousy example of rent. Not to mention that if he would be willing to
play for 10K, why on earth is the team paying him 50?

The quoted paragraph is gibberish from start to finish. As the old
saying goes, "that's not right, that's not even wrong."

The factors of production are Land, Labour, and Capital, and once again
the price of a soccer player (like all prices) includes all three
components Rent, Interest and Wages. In this case, being a person, is
particularly difficult to divide between the three. The difference
between the price of simple labour (wages) and that of skilled labour,
imo, is better viewed as Interest, i.e. "Human Capital," than Rent in
the case of Athlete. The example would have been slightly less
ridiculous of they use a celebrity, who's income above simple wages can
better be argued as rent (coming mostly from licencing). If you really 
would discuss this, we can, but it seems like the Georgist cartoon I 
linked provides a much better starting point. This is well into 
counting angels-dancing on the head of a pin territory, IMO.

>       In PERFECT COMPETITION, there are no economic rents, as new FIRMS enter a
>       market and compete until PRICES fall and all rent is eliminated. Reducing
>       rent does not change production decisions, so economic rent can be taxed
>       without any adverse impact on the real economy, assuming that it really is
>       rent.

Rent is the economic return to productive inputs when their supply can not be
be increased by the application labour and capital, so the above is highly 
confused. New firms can not create Land. They can create Capital though, 
and so what is said above is true of Interest. However that's what 
the "Economist" does not want you to understand, in perfect competition, 
there can be no Interest. Capital can not capture any more that it's own 
reproduction costs, and so can not provide an income for a class of Capitalists, 
this Capitalism depends on restricting competition and rent-seeking.

(yes Alfred, I'm ignoring quasi-rents for the moment),


Kind Regards,



-- 
Dmytri Kleiner, aspiring crank

http://www.telekommunisten.net