Shadow Minister:

You say labour is nothing without capital; Capital serves a particular function as 'oiling the wheels of investment' under capitalism. A legitimate function. But then the question is "who creates capital?", and "who owns and controls capital"? Borrowing and investment aren't a problem - but a Capitalist ruling class IS.

My response would be state aid for credit unions to play a much larger role in the economy - as well as democratic collective capital formation. Point being to pursue the practical functions of investment and credit - but to take steps to democratise these. (again: think credit unions, but also a state owned savings and investments bank; deployment of pension funds etc) The aim would be an economy with capital - but without capitalists - without a rentier class that enjoys grossly disproportionate power as a consequence of its wealth.

You also say there is need for entrepreneurship. But initiative and imagination can work in a collective context as well with producers' co-operatives. And 'entrepreneurs' could enter into business arrangements with co-operative and other democratic bodies - while maintaining intellectual property rights and benefiting thus.

Finally on this theme: Arguably labour can do without capital - but it does not apply vice-versa. That said - savings, borrowing, investment - all 'grease the wheels' of the economy. There is a legitimate place for all this therefore - but co-operative bodies and poorer innovators should also have access to capital. And that's where state-aid could factor in.

AND re: Austro-Marxism - yes they were very diverse in theory. But they were largely unified in seeking a practical 'Third Way' between Bolshevism and opportunist Right Social Democracy. Also they were unified in PRACTICAL efforts through the Social Democratic Workers' Party - and I ask you to look at their specific achievements in Vienna before making the judgement that 'all Marxism and socialism has been a failure'. Again look to my article in the paragraph where I list all their achievements. After you've done that get back to me and we'll see what you say...

Rhian

The so-called labour theory of value (LTV) was refuted by Marx. He proposed instead that exchange value of a commodity equaled the socially necessary labour necessary for its reproduction (ie to produce the next item). Marx's theory of value is actually a sophisticated, developed form of an earlier LTV.

So when most people criticise the LTV, they usually engage in refuting the LTV of Adam Smith and confuse this with Marx's. Paul Samuelson was a past master at spreading such confusion.

Tristan

The decline in wage share across the developed world began in the late 1980s after a period of decades when it had been so stable (apart from cyclical variations) that fairly constant shares to labour and capital were taken for granted as a normal feature of the economy (Kaldor in 1957 included it as one of the “stylized facts” about the economy in the long term: http://en.wikipedia.org/wiki/Kaldor's_facts ).

In Australia, the pattern was somewhat different, with a rising labour share from the 1950s, to the 1970s, falling to the early 2000s, and fairly stable thereafter.

The evidence actually shows for the very long term a trend to rising wage shares in industrialising economies from the mid nineteenth to mid 20th century:

http://books.google.com.au/books?id=VFo-VYNURaoC&printsec=frontcover&dq=income+distribution+in+historical+perspective&hl=en&sa=X&ei=cCsQU6vJD4LtkAXI54CgBQ&ved=0CDkQ6AEwAA#v=onepage&q=income%20distribution%20in%20historical%20perspective&f=false
(p.35 and table on p.36)

So there is no evidence of systemic or inevitable decline in the labour share; quite the reverse. It is the more recent trends that appear anomalous. But I do agree they are troubling from a welfare and equity perspective, especially if they continue.

You pick up on one concern in the Labour Theory of Value (not all labour is equal). Even assuming an additive approach to value is correct, others are treating natural resources as essentially valueless until improved by labour, assuming capital adds nothing to value beyond its embedded labour and fixed capital, blurring of capital as a stock or a flow, and inadequate treatment of intellectual capital. Then of course is the question of the value to the consumer of what is produced – though Marx recognised “use-value”, he treated utility as of secondary importance, whereas later the marginalists came to a far more comprehensive and (in my view) plausible explanation of price and value.

To say that profit equates to unpaid labour and is therefore exploitation is more to propound a definition than to provide an explanation.

As I understand Marx's theory is as follows; First there is a tendency towards a falling rate of profit; largely because competition drives constant modernisation of the means of production and more and more labour must go into this modernisation; and while innovation is a good thing the cost of this constant modernisation is passed on to workers and consumers. Many smaller businesses cannot keep up either - and this drives monopolism.

Though this was always understood as a *tendency* and not an absolute. And it was also considered to be ameliorated/offset because innovation can also improve productivity radically. Anyway, though - as far as the tendency does apply - bosses respond by increasing the intensity of exploitation. ie: The wage share of the economy falls;

This can result in under-consumption, and the response of hyper-exploitation of and dumping on to the market of - the Third World. Here improved technology also means some of these Third World countries have improving material living standards even amdist the hyper-exploitation... But the relatively drastic fall of wages since the 1970s can also be traced to the Oil Shocks - which drastically affected cost structures.

Also - I find it interesting - arguments that the wage share didn't fall in Australia until the late 80s - because the Accord saw falling real wages from the early to mid 80s....

Re: the wage share of the economy from the 19th century to 1945 - I tried following the link you provided but could not get access to page 35....

Chris Warren - If you read this; You're probably better read re: Marxism than I am; Do you know of any statistics backing the case that wage share fell during this earlier period? (say 1850 to 1945)

Now we all need a good laugh.

Here is our struggling Rhian, having to now rely on blatant falsification, given that opportunist arguments have failed and baiting has not worked.

According to Rhian's falsification, I claimed that if:

"the poor also lose their extra bowl, falling from 2 bowls to 1 bowl of rice a day. IAccording to my logic)this would be a victory for poverty reduction."

This is false and Rhian knew it was false when he constructed this lie.

If anyone's wealth falls from 2 bowls to 1 bowl, this is always and only, represents the opposite of poverty reduction.

The reduction in income increases poverty. There is no so-called "victory for poverty reduction"

The stupidity of Rhian's statement is only equaled by cohenite who argued that the GFC was caused by Marxism.

Two peas in a pod here. And they both want champion redneck capitalism.

They really are laughing stocks.

Old zygote
All I did was point out the internal inconsistency of your argument. Neither of us believes that halving the income of the poor Is good for them. But you definition of poverty implies it's ok.
How's the Andrew Leigh reference going ?