If the utility is abstract, then the good is not evaluated and its subjective value is zero.
More precisely, we say: values gain material goods when the real stock of material goods of this kind is so small that to meet the relevant needs they are either not enough at all, or they are so few that … a certain amount of needs must remain unsatisfied. Conversely, those material goods which are at our disposal in such quantity that with their help not only the corresponding needs can be completely satisfied, but also there is still on top of that a certain surplus which does not find itself apply have no value “.
In Bem-Bawerk, the concept of value is an expression of the connection between the social phenomenon of price and the individual psychological phenomenon of unit evaluation.
The basis of value in Bem-Bawerk is the usefulness of the good. He distinguished between two types of utility: simple (abstract) and skilled (concrete). The abstract was seen by him as a utility in general, which is inherent in material goods, which are in sufficient quantities. The usefulness of a unit of good in this case was not taken into account.
Qualified utility was given to goods, the stock of which is limited and its reduction by at least one unit immediately affects the welfare of the individual. This division of utility was associated with the formation of the value of material goods.
The process of value formation Bem-Bawerk divided into two stages.
The first he associated with the formation of subjective value, by which he meant the individual assessment of good by the subject. It depended on what role the good played in meeting his needs. If the utility is abstract, then the good is not evaluated and its subjective value is zero. Bem-Bawerk illustrated this with the example of a glass of water. When a person stands near a spring, a glass of water has no value, when a person falls into the desert, then this glass of water acquires a high subjective value. According to Bem-Bawerk, the magnitude of the usefulness that a person receives for the corresponding good is at the same time a measure of his value.
A new element that the Austrian school introduced into the theory of utility, as already mentioned, was that the value of the product was based not only on utility, but on marginal utility, which satisfies the minimum human need. As Bem-Bawerk defines, the value of a thing is measured by the value of marginal utility, which means the minimum utility that a person receives from a given type of material good,
Bem-Bawerk illustrates the effect of this law on the example of a one-man farm, in which the owner collected five bags of grain. In terms of weight and quality of grain, all bags are equal. But the subjective value of one bag of grain (according to Bem-Bawerk theory) will be determined by the principle of decreasing utility. Since the first bag of grain is intended to feed the owner, that is, it will meet the most important vital needs of the individual, this bag will have the maximum usefulness. The usefulness of each bag will decrease. The “ultimate utility” will have the last bag, the grain of which is intended for feeding the host parrot. This bag determines, according to Bem-Bawerk, the value of a unit of the corresponding material good.
The second stage in the formation of the value of the good Bem-Bawerk associated with the “objective” value, which, in his opinion, is formed in the market in the process of spontaneous detection of supply and demand. Through the alignment of subjective assessments, a new “average” value is created, which can be considered as objective. Thus, the objective value is formed under the influence of supply and demand, the proper ratio of which is provided in the market automatically – through free competition.
The theory of the division of the Austrian school is known as the “theory of attribution” (in Russian, the “theory of imputation”). It is based on the theory of three factors by J. Sey, although the factors of production were called production goods by the Austrians. Each productive good – land, labor and capital – according to Bem-Baverk, should be “attributed” (Russian “imputed”) the corresponding part of consumer goods produced by these factors. “Attribution” (Russian “vmenenie”) should be carried out taking into account the marginal utility of “production goods” defined by the marginal utility of goods produced with their help. The marginal utility of a loom, for example, will be determined by the marginal utility of the fabric woven on it, and so on.
As for the wage of a worker, it must be less than the value created by this worker. Bem-Bawerk explained this by the fact that a worker, receiving wages, can immediately acquire “material goods” and the entrepreneur must accumulate capital to produce “goods of the future” that requires “maintenance”. Therefore, the entrepreneur must receive a reward for refraining from spending capital on personal needs. Bam-Bawerk, comparing the immediate consumption of the worker and the deferred consumption of the entrepreneur, declared that the good which man enjoys today is not equivalent to the good which he will enjoy tomorrow, sinceand the value of present goods, other things being equal, is always greater than the value of the same goods in the future.
According to Bem-Bawerk, labor is the “good of the future” because it creates a product only after a certain time, and as a result the worker becomes the owner of the “future time”. Entrepreneur, hiring a worker, gives the latter a “present benefit” in the form of wages. So they share these benefits. Over time, labor creates certain benefits, and these benefits, due to the lower valuation of future benefits compared to current ones, will at some point exceed wages. This excess will be a percentage, or rather, the profit of the entrepreneur.
This led to the conclusion that interest (profit) arises as topics for narrative speech a result of the influence of time on the value of goods. Bem-Bawerk’s interest is the result of the entrepreneur’s “expectations”, and its source is the difference between the estimates of future and current economic benefits. Therefore, the percentage was considered as an “eternal” and “natural” category.
Bem-Bawerk proposed the theory that capital or the means of production are the result of bypass (indirect) methods in production, which inevitably cause consumption to be carried forward.
Direct production methods provide for the satisfaction of needs directly and immediately. The means of production do not provide for the immediate satisfaction of needs, and therefore they are a commodity of the future. Thus, Bem-Bawerk wrote, “goods that can be used in range and quantity immediately are usually more valuable than those that will be used in the future.” This assumption formed the basis of his theory of income from capital.
For example, he argued that flour is an object that cannot be used immediately for personal use because it is an object for future cooking. But bread can be used immediately as a food and as a result it has more value. According to Bem-Bawerk, the essence of the problem lies in the already known discrepancy between the assessment of current and future benefits.
With this law he substantiated the essence of interest. He argued that when someone borrows money, in the future they should return to him with interest, that is, with the difference between the value of present and future goods.
Thus we can name the three most characteristic methodological features of the Austrian school: first, the idealistic reflection of economic processes and phenomena; secondly, the use as the main object of study, not social production, and individual economy; third, the recognition of the primacy of consumption over production.
07/10/2011
Economy of Ukraine: Stalin’s industrialization, collectivization. Abstract
Stalin’s industrialization in Ukraine: course, features, consequences. Collectivization of agriculture and its consequences in Ukraine. Economic development of western Ukrainian lands in the 20-30s
Stalin’s industrialization in Ukraine: course, features, consequences
Despite the successes of the NEP, the USSR, including Ukraine, remained agro-industrial, their economy required technical and technological modernization. In the 1920s, there was a sharp party debate on how to achieve world-class economic development. The victorious line of Stalin and his associates, who were supporters of authoritarian forms of government and the implementation of industrialization at any cost and in the short term.
A strategy of accelerated development of heavy industry was chosen, the main stages of which were the Five-Year Plan. The first five-year plan of 1928-1933, according to Stalin, was completed in 4 years and 3 months. In fact, even the minimum five-year economic development plan was not fulfilled. Instead of the minimum 18% growth rate for the year, the real growth rate was about 16%.
Already the first five-year plan, which provided for the reconstruction and construction of industrial enterprises in Ukraine, was unacceptable to her. He put in a privileged position Russia’s central industrial area, Leningrad and the Urals. In Ukraine, on the other hand, those industries that provided fuel and metal to Russia’s industry were to develop at a slow pace. 61.6 billion rubles, allocated according to the plan of the first five-year plan for the national economy, Ukraine accounted for 11.3 billion rubles, ie 18.3%), which is less than any indicator of its share, while Russia was assigned 68%, much more than it should be.
Of the amount allocated to Ukraine, industry accounted for 4.2 rubles billion, of which only 1.2 billion rubles for new construction. The worst was that of the amount of 1.2 billion worst rubles. 78% was intended for the Donetsk-Kryvyi Rih district (6.5 million people), thus – to meet Russia’s needs in coal and metals. The rest of Ukraine (22.5 million people) accounted for only 22% of allocations for new industrial construction.
Thus, the development of industry in Ukraine had to continue to go in the old direction, which was formed in tsarist times. Both then and now, Ukraine’s role was to provide Russia with fuel, raw metal, and heavy rolled products. The following five years did not make significant changes – in the second five years Ukraine received even less money, only 16.7% of the total amount in the Union, and in the prewar years – 14.5%. The share of Russia increased to 71%.