[p2p-research] Profit Measures the Payer's lack of Physical Source Ownership

[Kevin Carson]

On 2/16/10, Ryan Lanham <rlanham1963 at gmail.com> wrote:

> I personally don't see where you derive that Smith had a labor theory of
> value.  He clearly understood markets.  I've meandered through Wealth of
> Nations more than once...but I'll put the question to Gavin who is certainly
> the authority...and a decently trained economist as well as historian.
> http://adamsmithslostlegacy.com/

Smith had a labor/cost theory of value insofar as he held that the
natural price toward which market prices were always tending, through
the process of supply and demand, reflected embodied labor or the cost
of production.

And he saw this as a logical deduction from individual utility
maximization.  If price exceeded cost, competing producers would enter
the market and drive price down; if price was less than cost,
producers would drop out of the market.  And to take his
beaver-vs-deer illustration, if a day's labor on average can either
kill a deer or trap two beaver, then the natural rate of exchange will
be a deer for two beaver.  If the price of a deer rises to three
beaver, it will become a better return on labor to hunt than to trap,
and labor will shift until the ratio reflects respective labor time.

> As to profit, the big boogeyman of this list, I'd love to see someone define
> it and categorize it without a cost theory or labor theory of value.  I'd
> also love for someone to advance a moral theory as to why profit is
> definitively inefficient, immoral or otherwise detrimental or when and under
> what conditions it might be so.

I believe in the classical labor/cost theory of value, and I don't
have a problem with entrepreneurial profit (as opposed to artificial
scarcity rents) at all.  Entrepreneurial profit, to those who are
first and best at recognizing and meeting needs, is part of the
discovery mechanism by which resources are moved to their best use.

-- 
Kevin Carson
Center for a Stateless Society http://c4ss.org
Mutualist Blog:  Free Market Anti-Capitalism
http://mutualist.blogspot.com
The Homebrew Industrial Revolution:  A Low-Overhead Manifesto
http://homebrewindustrialrevolution.wordpress.com
Organization Theory:  A Libertarian Perspective
http://mutualist.blogspot.com/2005/12/studies-in-anarchist-theory-of.html