Blog-Reference
Sandwichman asks: “In what passage of The Wealth of Nations did Adam Smith commit the lump-of-labor fallacy … and in what passage of Capital did Karl Marx disparage the assumption as dogma and prejudice?”
The Wealth of Nations passage is about the limitationality of the production factors labor and capital which was later on simply defined away with the well-behaved production function and full substitutionality.
The Marxian argument is inconsistent. The Labour Theory of Value says that the lengthening of labor time increases surplus value. By the same logic, it should be advantageous to employ workers to the point of full employment because maximum labor time = maximum exploitation = maximum surplus value.
Confronted with persistent unemployment in the capitalist economy, Marxians came up with the reserve army argument, that is, unemployment is necessary to prevent wages from rising and profits from falling.
This argument is false because the axiomatically correct Profit Theory tells everybody that macroeconomic profit is determined in the most elementary case by dissaving = growth of household sector debt and NOT by exploitation and that there is NO antagonism between wages and profits for the economy as a whole.#1, #2, #3
Because the Profit Theory is false, the whole analytical superstructure of Capital is false. Same for Smith’s Wealth of Nations. Economists in general and Marxians, in particular, did not realize this in the last 200+ years. Nothing to celebrate on Marx’s bicentennial but the persistence of economists’ stupidity and corruption.#4
Egmont Kakarot-Handtke
#1 Profit for Marxists
#2 Capitalism, poverty, exploitation, and cross-over exploitation
#3 Ricardo and the invention of class war
#4 Economists: political trolls for 200+ years
Related 'Karl Marx, fake scientist' and 'Marx and the curious coexistence of provably false economic theories' and 'Confounding sociology and economics' and 'Note on Amy Willis ‘Can majoring in philosophy make you a better person?’ and 'Note on ‘Duncan Foley On Socialist Alternatives to Capitalism’' and 'Marx’s bicentennial ― nothing to discuss, nothing to celebrate' and 'Links on Karl Marx'.
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REPLY to Sandwichman on May 10Both, Smith’s and Marx’s employment theories were false. To incessantly recycle this dead stuff#1 and to make a quiz show out of it is an act of anti-scientific disinformation a.k.a. political economics.
#1 End of the Lump-of-Labor sitcom
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Wikimedia AXEC143d Profit Law (with increasing complexity) and Balances Equation
