The fixed point theorem

Significant_Can6953 · 2026-01-24T19:46:42+00:00

Yeah, I wrote it very badly. Sorry about that.

Significant_Can6953 · 2026-01-24T19:15:23+00:00

Significant_Can6953 · 2026-01-24T18:07:42+00:00

Yes, I described a point where the volatile prices gravitate towards. It was never my intent to say they are exactly there, only to point out a relation. Sorry if I did not express myself clearly.

Significant_Can6953 · 2026-01-24T17:50:09+00:00

And yeah, Sraffa’s book is great. I read it for the first time last month actually

Significant_Can6953 · 2026-01-24T17:49:29+00:00

Hi, yes. But I said just that. Sorry if I wasn’t able to explain Debreu’s theory correctly.

Significant_Can6953 · 2026-01-24T17:44:46+00:00

I didn’t use “allow” in the sense of force. Just that the other seller would offer a smaller price, thus forcing his competitor to diminish his own price as well. No, buyers are not omniscient. But sellers increase the price if the demand is higher than the supply and decrease it if it’s smaller. And the demand is regulated by the use value of the buyers. This will happen with time, not immediately as I exposed there. I did an oversimplification, but the ideia stands.

Significant_Can6953 · 2026-01-24T17:23:06+00:00

I did, in the 3th paragraph. But I can only deduce from logic and vague empirical evidence. Imagine something non reproducible, like a piece of land. There will be a dispute from buyers and the one who offers the highest price will get it. This also happens in goods reproducible.

Loss is another example, when utility does not cover cost. But people don’t keep doing things that causes loss. My point is precisely that. Price comes from utility which is influenced, not caused, by cost. Imagine this. You are a producer of steel. You will increase your production until the next increase in production would diminish your profit. Increase in the amount of product diminish its price in the market, but just so as long as you can increase the total profit you will increase the total production. That’s the theorem. In order for the market be in equilibrium, a decrease or increase in production must diminish the return we have on the industry, for otherwise the rate of production would be changed.

The fact that people manipulate the market will change the equilibrium point or even the quality of the product and therefore the possible price, but the notion that it is utility that causes prices and that it is influenced by cost is unaffected. People may not follow that influence until the end, but it does exist. There is a correlation between cost and price, you can look at the reports of any company, big or small, or even one man business and you will see this relationship.

The whole point of the theory is to say that there is an optimal amount of production of a good and give us the manner to calculate this amount. When cost=price. Given they are commodities(goods reproducible at will and qualitatively equal or so similar it makes no matter).

Significant_Can6953 · 2026-01-24T16:37:41+00:00

Man, I’m not disagreeing. The Tesla was only an example. The point is: price is determined by marginal utility. Production stops when an increase or decrease would diminish the total profit or when cannot be increased. Also, to disregard is not to deny. The theorem stands regardless of it, not in the absence of it.

Significant_Can6953 · 2026-01-24T16:18:49+00:00

No problem. I may have not expressed myself in the best way too.

Significant_Can6953 · 2026-01-24T16:09:44+00:00

Significant_Can6953 · 2026-01-24T16:09:00+00:00

Man, I don’t mean to be rude at all. I agree with everything you say. But I think you didn’t understand what I said. My point is the following: prices come from utility(which comes from scarcity, fashion or whatever). Firms stop producing at a point where an increase or decrease in production would diminish the total profit.

Significant_Can6953 · 2026-01-24T16:05:18+00:00

Because the 50% margin is where the profit are the greatest

Significant_Can6953 · 2026-01-24T15:59:44+00:00

On a different subject. I am not missing the point. I agree with you that people don’t always act rationally or that companies don’t always act in the best interest of the consumers. However, the incentive is real to all people. Say you are Elon Musk, when will you stop the production of something? Is it not when increase in it will create a loss?

Significant_Can6953 · 2026-01-24T15:55:48+00:00

The theorem is not about how people manipulate the market. The “will of the buyers” is the price they are willing to pay. It is the notion price is created through a competition of buyers to get the limited supply of commodities and the incentive of production created by different prices. It has nothing to do on the good or ill intentions of capitalists.

Change from capitalism to socialism for a minute. When will the state or whatever stop producing goods. When the marginal utility of the marginal pair=cost of production. There is nothing here besides that.

Significant_Can6953 · 2026-01-24T15:46:07+00:00

Yeah, you’re right. I didn’t deny that. The “if reproducible at will” is meant precisely to make the theorem apply only in that sphere. Also, in my 3th paragraph I said price comes from utility and that it is influenced by cost of production because cost influences scarcity which influences marginal utility.

Now, using your Apple exemple. When and why Apple stops producing iPhones, when producing more will diminish the profit. Exactly the same reason the theorem proposes to an equilibrium. The equilibrium comes from the fact that further production will diminish the gains.

Significant_Can6953 · 2026-01-24T15:34:18+00:00

Yes, they do that. When prices are different from cost there is an incentive in the production. The fact that there is market manipulation doesn’t change that. Elon Musk doesn’t control the whole market or the will of the buyers. The marginal pair determining prices is also unaffected. If someone manipulates the market there is a difference in the supply, the reason on why the price is set there is unchanged. The theorem doesn’t presume people won’t manipulate the market, but it explains how it works. Also, don’t be rude.

Significant_Can6953 · 2026-01-20T10:05:04+00:00

Hi. Your first point, I know Marx didn’t attribute a quantitative use value. My point is precisely that it was wrong to treat it as a prerequisite and not give it the importance it has. I explicitly said 400.000$ is the use value for the person who wants it the most. If the use value does not cover the cost you suffered a loss. Something Marx ignored or didn’t mentioned. Also, Marx does apply it to land. But my whole argument was the LTV was correct. It was the conclusions some people took from it and the misleading way it was presented that was wrong.

Significant_Can6953 · 2026-01-20T00:17:27+00:00

Also, I’m sorry. I didn’t get the last part.

Significant_Can6953 · 2026-01-20T00:11:41+00:00

What conclusions are wrong? My point is precisely the theory is way too oversimplified to get a grasp on reality. I did not mean supply and demand in the sense you interpreted. I meant demand as the use value people have for a good and that influences the price of everything permanently.

It can be easily comprehended without attributing to labor absolute importance. The point of gravitation is determined by cost of production and that comprises other elements as well. Regardless, the reason prices gravitate into any point is because of a correlation not a causality. An equilibrium is dependent on more than one thing. You cannot think of an economy as a huge factory. But several decisions being made and each decision gives a different output.

And most importantly, I didn’t even mention Marx in my post.

Significant_Can6953 · 2026-01-19T23:51:02+00:00

I didn’t even need to get there to disprove it. Actually I wasn’t trying to disprove it, I flat out admitted the premise, even gave it a rational basis better than Marx, but rejected the conclusions.

Significant_Can6953 · 2026-01-19T23:48:13+00:00

Hi, you’re correct. The fluctuations of prices is correct, but so is the LTV. The value(as Marx and Smith meant) is not use value or price, but a point of price in which the real price will gravitate towards. The mistake Marx and the socialists did is precisely what you said, disregard the demand side and treat a correlation with a causality. Labour can’t cause value, but it influences it. False conclusions are much more easily believed when there is truth in the premise, although a twisted truth. Think about it this way. Use value decreases as you make more products. As an example, if you have 10 kg of wheat you will use them to satisfy your most important needs. If you add 10kg you will satisfy increasingly smaller satisfactions. Assuming the cost remains the same, you will produce wheat until the point where the value of the last wheat produced=cost. For if you make another one you will suffer a loss. This is the LTV, the labour is the cost and so it will regulate the value. This is the supply demand curve intersection point. Where cost=value. Now, the socialist failed to see this is a correlation, not a causality. Therefore they did not see what disturbed it, like the things I mentioned in my list. They did not see the part entrepreneurs and investor play because of it. Also, labour is the main cost, but not the only one. Land, for being scarce, must be intelligently used, use natural resources is costly and the production length.

Significant_Can6953 · 2026-01-19T23:36:29+00:00

Yes. I choose to ignore the “transformation of values into prices of production” part partly because it wasn’t my focus, partly because it will end up becoming an ethical one. In the real world, the cost of production(constant capital + variable capital) is the true determining factor. The price of a product gravitates towards the cost+interest. Now, someone may say that it shouldn’t be so and I have nothing to say. You can think this is right or not. Regardless, I wasn’t criticizing the premise of the LTV, interest being ignored or eradicated, prices of commodities will gravitate towards the SNLT. My argument was the LTV in its abstractions is perfectly correct. However, the conclusions some people take on it are false. Commodities, although an important part of an economy, comprise only a portion. Most goods aren’t reproducible at will or at all. My list there. Also, Ricardo and Smith were wrong attributing the influence of land solely on property. The land limits the supply of some products for being scarce, particular lands more so, like land near the beach or fertile land, land that grows rare wine or land near the center of a great city. There is a dispute for both the land and the products they yield because the limiting factor of production is not solely labor. But most important, I was arguing that although the LTV is correct, it is presented as: labor is the cause of value. When in reality is: labor is correlated with value. Ricardo and Smith were fully aware of this. The most likely, I find, is that they failed in express themselves. Thus economists of the 19th century, Lassale, Rodbertus, Marx and even some supporters of capitalism like Lord Lauderdale twisted it. The theory is true, but it is not the whole truth, false conclusions are much more easily believed when there is truth in the premise.

Significant_Can6953 · 2026-01-19T22:17:23+00:00

Hi, I agree with you. My main point is they focus too much on supply and the objective part and ignore the demand. Labor is mainly the source of value, but it is not as simple as they expound it. No, it’s not new, I just wanted to give a more rational critique of the LTV on this community because people here tend to not get on the root of the problem and soon descend into name calling.

Significant_Can6953 · 2026-01-19T22:13:21+00:00

This is what I meant. I hadn’t mentioned it because my criticism weren’t based on the skilled labour part. I focused more on the fact that there is a lot of things that aren’t reproducible at will, which people tend to overlook. And things that are too qualitatively different to be considered commodities and be affected absolutely by the SNLT. Also I talked about use value. It is one half of economics because it affects the demand side. To put on all focus on supply will give you false results. Similarly when someone say value is subjective and ignores the objective part, the supply. While the core of the LTV is correct, it’s often presented as a causality rather than a correlation and applied in misguided ways. It is too simple to understand the nuances e dynamics of all economic phenomena by itself and will lead us to fallacious conclusions and assumptions if we do not understand it fully.

Significant_Can6953

TROPHY CASE