Lemonade by Karl Marx

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fauxlaw
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In 1848, Karl Marx, with sidekick Friedrich Engels, wrote and published the Communist Manifesto, the users’ manual of Socialists & Communists. In 173 years, we have never seen a successful use of the manual, yet it is embraced as the best combination of bread and butter since… well, bread and butter. 
 
But, let’s switch out the materials, and let’s watch Karl set up a lemonade stand; something he never actually did, by the way, but which is far easier to make than either bread or butter. In the process, you will understand the reason why in 173 years, the manual has failed to produce an enduring model. By comparison, the American free-market economy has been around since… well, when did the first immigrants come to these shores as colonists? Late 16th century? Early 17th century? That’s 400 and more years. Socialism’s best performance: USSR; 75 years. You socialists have a bit of time to go to compete.
 
First, it is necessary to understand the manual’s economic players, and their process. It’s pretty easy: you have your players: a Bourgeois, the business owner, and you have the Proletariat, the workers. 
 
So: Karl Marx and his Lemonade Stand: 
 
You have a process: the Proletariat make the lemonade, and the Bourgeois sells it for $1 per 10 oz. glass. He sells 500 glasses per day: $500 gross revenue [not profit], though preofit is what Karl calls it. Fine, we'll see. The Bourgeois pays the workers, who equally share 40% of the $500; $200. The Bourgeois keeps the remaining $300 as net revenue [Karl does not consider as that; he does not entertain gross v. net. The 40% to the Proletariat, according to Marx, is unfair, because the Proletariat do all the work. That’s it; end of manual, other than some propaganda for the Proletariat to rise up in protest because they are getting the short end of the stick. 
 
How many workers are needed? Well, daily production is 5,000 ounces of lemonade; 39 gallons. One gallon of lemonade can be made in 5 minutes. 39 gallons are made in 3 hours. One worker will suffice in Karl’s stand. So, one worker is paid $200 per day; $1,000 per week? And the Proletariat complain about that? Something is going on…
 
What will raw materials cost? Lemons, sugar, water. Simple formula of ingredients. Wait! Did we mention, or rather, did Karl mention anything about raw materials and their cost? No, he did not. Magic makes them appear.
 
But, no raw materials, no lemonade, so… Each lemon yields 3 Tbs of juice, sufficient for a 10 oz glass. Therefore, 500 lemons are needed. Average lemon is 3 oz; 5 lemons per pound. 1 lb of lemons is about $2; 40¢/ea. 500 x 40¢ = $200.
 
Sugar: about $40 for 30 lbs. 3 oz. per glass = 5 glasses per pound. We need 100 lbs of sugar = $120.
 
Water: Karl will give it away. His raw material expense, per day, is $320.
 
Wait, we did not account for a mixing container; a pitcher. A mixing spoon, a lemon squeezer, a measuring spoon for sugar, and a measuring cup for water. Nor did we account for paper/plastic cups. These are added, unjustified expenses.
 
What will the stand cost, a one-time cost, but it must come from Karl’s profit, and, as you see, after paying the Proletariat, Karl’s budget is blown just with Purchasing of two raw materials, let alone the cost of the unaccounted mixing materials, the stand, and ongoing expenses for Marketing, Material Handling, Sales, Customer Service, Warranty…
 
Did Karl’s manual speak to any of these Bourgeois expenses? No, it did not account for them at all in Karl’s model of Bourgeois taking all the profit after paying the Proletariat their 40%, which now looks very generous, all things considered. Have you read Karl’s 173-year-old manual? 
 
Karl will be out of business within a month; maybe less. Such is the result of the Manifesto in the real world. Karl is going to need that entitlement that comes after the Proletariat is fired. Burning his manual for heat will last about 3 minutes.
 
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What will the stand cost, a one-time cost, but it must come from Karl’s profit, and, as you see, after paying the Proletariat, Karl’s budget is blown just with Purchasing of two raw materials, let alone the cost of the unaccounted mixing materials, the stand, and ongoing expenses for Marketing, Material Handling, Sales, Customer Service, Warranty…
If it comes from a society in which helping Marx is agreed upon, then everything is public and there is no problem now...until there is one.

It is incredibly hard to start socialism in a capitalist society, and even if the group of people IS socialist, it would still be difficult to maintain.

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--> @fauxlaw
Marx's theory was that profit is derived from the surplus value of the necessary labor required to make a product. Look up "Robert Paul Wolff 'marx'", he has some good lectures, and shows the algebraic proofs of the theory.

Funnily enough however, we don't even know who cut Marx's firewood.
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There's more than labor required to make a product, as I've noted. Labor was all Marx accounted for; only direct labor, that is.
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That is incorrect. Marx built on the labor theory of value, and he included the cumulative labor value instilled in a product, which includes the capital investment. That instilled value goes into calculating the amount of necessary labor to match the market value of a product, and he derived profit from the surplus labor value.
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Sorry, but Marx was wrong; ergo, so are you. Cumulative labor value =/= capital investment, or, more properly called capital expenditure [CapEx], because, well, it’s an expense. CapEx comes out of gross revenue to acquire, maintain, and improve the fixed assets of an enterprise, the building, equipment, tools, furnishings, etc. It has naught to do with labor, which is a separate expense entirely. Process of any enterprise is divided into 5 categories: Method [the process, itself, including design and layout of all the following], Equipment, [tooling, tech, etc], Manpower [labor, direct and indirect], Environment [the physical space], and Materials. CapEx deals with two of these: Equipment and Environment. Labor deals with only one: Manpower. Both the Process and Materials are added expenses, and all expenses are derived from Gross revenue. What’s left over after these expenses is net profit. As I laid out, since Marx ignored method, environment, and materials, and indirect labor, his budget went south, as does Socialism.
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Marx was a hypocrite and full of BS anyway.

Wouldn't catch Marx selling lemonade.

Too busy hyperbolising.


Was he the moustache and cigar one?
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Yeah, I always saw him as Bad Santa.
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  The only way to generate novel value is through labor. If I have $100, and I pay you to paint my wall, that value is transferred to my house, via your labor. The surplus value that has been created through you painting my house is the profit derision, and is therefore what makes the investment worthwhile.

  Capital expenditure is calculated as a part of socially necessary labor value in the labor theory of value.
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You have not defined your terms well enough, and neither did Marx. Is your $100 paying just for my labor, or did you expect that I would provide the paint, the application of the necessary tools for the painting, the drop cloth, ladder, taping, etc, which must also come out of the $100 [then, I would not accept your job in the first place]? Sorry, but I used to do exactly that, earlier in my youth while going to college. I painted super graphics on people's walls. I provided all paint and tools needed, and, even then, fifty years ago, my bill was far more than $100. Labor, alone, does not cover all these expenses to complete the job, even if it is known up front that I will provide the tools and the materials, none of which Marx considers in his theory.
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Yes, in the example, you are assuming that the full cost necessary for the labor involved in painting the walls, including capital expenditure is covered by the $100. It's the act of painting the actual wall that changes the value of the house.

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Yes, by upgrade, the house does increase in value, but how does that equate to the lemonade stand Marx set-up? Because his expenses exceed his budget, how is value added to the business?By your model of transfer of value, it is the lemonade customers whose value is increasing, but that is merely a brief infusion of value because consumption of consumables does have a limited, but ending valuation. One must keep consuming for value to be maintained. If the lemonade stand fails, the continued valuation of the customers must be obtained from some other enterprise. The valuation of the consumer does nothing for the lemonade stand. Under the current circumstances, Marx's stand will still fail.
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Certainly over here, a lick of paint might make a property more saleable, but won't add any significant value to a property.

Yeah...I know that's not the point.

State provision of lemons is the key... And why would Marx need to profit, when all that he needs is a loaf of bread and a warm bed in return for his lemonade.

Well yes....Marx would actually expect more than that....Such is the hypocrisy of Marx, and the unworkability of an inevitably hierarchical system.

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The lick of paint.... never thought of using my tongue instead of a brush. Did I miss something?
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A lick of paint.

A very British expression then?
fauxlaw
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Don't know. You said it. Although, it is an uncommon Yank expression. Might have come from your lot.
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The money a laborer loses from capitalism purchases the security of not having to pay the consequences of a failed product of said labor.

That's the ONLY reason people accept jobs and wages instead of taking on the responsibility of a small business loan. There is a cost and a very real risk to owning the products of your labor. You also own the consequences.
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That may be the best justification for minimum wage I've ever heard; a concept I oppose but for workers just entering the working world with no experience or marketable skills; therefore, for youth. It makes no sense that minimum wage ought to support a family. The Fair Labor Act of 1938, on which min wage is based, never said it was for more than a single, unskilled worker. That definition has not changed in the nearly 100 years since.