Okay, after processing everything over the past few days, I think I understand how to shift my understanding of supply and demand. Previously I had thought of supply as “there is this much stuff to sell.” It would be better to view as “it costs X per unit to produce Y units at market.” So increased productivity can means producing more Y for the same X, or in the case of reducing labor like you said producing the same Y for a lower X. Demand can be thought of as “N units can be sold for Z currency each.”
Unless you are in a monopoly, Y will always be a fraction of the N units actually sold, so as long as the Z of the total market is higher than your X to produce a profit is made. This is complicated by scenarios where company A sells their product at a different Z than company B, but this model allows for the changes to the supply side that don’t actually affect the total market Y.
The liberal idea is that supply and demand meet at price, and they try to obfuscate value by wrapping it up into supply. However, Marxist economics provides a more grounded and coherent answer, that value is the real center and that fluctuations in supply and demand merely bring price above or below value. Value is best represented as the socially necessary labor time to produce a commodity, and is what forms the basis of price.
Okay, after processing everything over the past few days, I think I understand how to shift my understanding of supply and demand. Previously I had thought of supply as “there is this much stuff to sell.” It would be better to view as “it costs X per unit to produce Y units at market.” So increased productivity can means producing more Y for the same X, or in the case of reducing labor like you said producing the same Y for a lower X. Demand can be thought of as “N units can be sold for Z currency each.”
Unless you are in a monopoly, Y will always be a fraction of the N units actually sold, so as long as the Z of the total market is higher than your X to produce a profit is made. This is complicated by scenarios where company A sells their product at a different Z than company B, but this model allows for the changes to the supply side that don’t actually affect the total market Y.
Does that make sense to you?
Kinda!
The liberal idea is that supply and demand meet at price, and they try to obfuscate value by wrapping it up into supply. However, Marxist economics provides a more grounded and coherent answer, that value is the real center and that fluctuations in supply and demand merely bring price above or below value. Value is best represented as the socially necessary labor time to produce a commodity, and is what forms the basis of price.