Why isnt currency based on labour

I have a question, I don't know much about economics, but as far as I understand it, currency value is based on resources.
To me this doesn't make sense as resources can fluctuate in availability thus causing currency to fluctuate?
Why isn't the value of currency based on the labour put into earning it? For example one hours work is worth a dollar, so I'd it takes three hours to bake a loaf of bread, the bread is worth three dollars.
Again I don't know much about economics so feel free to pike holes in my theory

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Labor is not fungible.

What do you mean fungible?

OK I just looked up what that means, but the value for a resource is defined by the amount of it vs the demand for it, so couldn't it work the same for labor?

A doctor's labour is worth more than a shop assistant's

why?

Requires more training, higher cognitive ability, more responsibility, et cetera

Yeah but that is defined by the number of people qualified to be doctors vs the number of people who are qualified to be shopkeepers. So you could work out a value based on that the same way you'd work out the value of a resource

GPs here literally stare at a PC and Google shit. Not even joking, its happened to me a few times. Almost burst out laughing in their faces.

And you'd do that for every single profession? What if one doctor was really good at their job and another kept killing their patients? Pay them both the same?

Welcome to communism, we've been here before, it doesn't work.

It worked for nazi germany

And besides in an ideal society you'd have safeguards and procedues in place to deal with people who weren't capable of doing their job properly.
Shit we even have one nowadays, it's called getting fired.

People are willing to sacrifice during war if they think it's for the greater good, but it doesn't last indefinitely, self-interest takes over after a while

What does your ideal society look like? Everybody gets paid the same unless they are incompetent, in which case they get fired?

But they were doing their best before the war. The war is when everything started going bad for them.
All the social reforms and massive civil projects like the autobahn were pre-war

I'd just like to note that your post is incredibly retarded, but since you admitted to not knowing much about the topic, I'll explain. At least you're one level higher than commies who think they do

>For example one hours work is worth a dollar, so I'd it takes three hours to bake a loaf of bread, the bread is worth three dollars.
Alright, how much should the construction worker working on 23rd of July on a rooftop earn? Why he should even bother doing such hard work in the heat when he can bake fucking bread for the same money?

And then you have an entire country that refuses to work anything else than bake bread. So you pass laws to enforce people to work the shit-tier jobs, masked under the pretense of laws that aid employment. You then create an entire specialized government unit to keep people from deviating from that, and before you realize what's happening, you're a literal communist government

Some are. Look up labour notes and Josiah Warren

How is that not fair?

But the dangerous jobs would go up in value because there would be less people willing to do them, just like doctors or other educated professionals would get paid more because there are less of them

Exactly, you get it!

And what you just wrote is how capitalism works

how is it?

are you saying flipping burgers at mcdonalds requires the same amount of skill a welder has?

Because it disincentivizes working harder than the bare minimum required. If there's no way to reward you for doing better work than someone else in your field, there's no reason to work harder.

It might be fair, but it destroys the incentive to do well and work hard if all you have to do is meet a minimum standard. Why would anybody bother trying anything new or trying to get better at their job?

Congratulations, you've discovered free markets

Ok this thread has gone in a different direction than what I intended. I'm asking about the actual value of the money, not how much people are getting paid for their work.
For example (I could be completely wrong as like I said I know next to nothing about economics) isn't the value of the US dollar and the pouND based off the amount of gold in reserve or something like that?

Agan, more people are qualified to flip burgers than weld, so welding is worth more

There are other ways than money to incentivise employees

No, the value of the currencies are set by the markets. The pound is worth what it is because people are willing to exchange dollars for pounds at that rate.

For example, after the referendum vote, people decided that the pound wasn't worth as much as it had been so the market rate dropped.

No it's not based on gold reserves. But I suck at explaining why.
Currency is one big joke anyways, I wonder when it will all collapse. Gold reserves are intended for exactly that: a reserve of something of actual value instead of just worthless banknotes.

no. unless its backed by a precious metal which most are not its not "based" on resources. most the value is determined by maths based on cash flow (gdp growth)

as long as money changes hands in a legit transaction involving a company it is counted. the simplified reduction from that is that national debt incurred in the same quarter is subtracted from gdp growth in the same quarter

so you cant mint your way out of problems when your government doesnt have the money it will reduce value per unit. the united states has in the past been allowed some extra wiggle room but many countries are deciding to not use the dollar for international commerce so the volume of the currency america is allowed to produce without question is reduced.

america needed to in the past mint a lot of money so others could buy it so they could buy other things. this is done in advance on a nation by nation basis nobody wants to use currency exchanges year round for this kind of activity. they have fees

any ways the amount of gdp growth determines how many new units can be made without damaging the value of the currency per unit. anything after that can cause problems and market evaluations of the currency are not honored just because. the fed and wallstreet have a bloated dollar value. the real value would be like a canadian dollar "lite". about 70 cents american

also the trade deficit affects this as well as the previously stated volume of the currency on the market (not just the wiggle room. you bdont want your country buying its own stuff back in bulk its like dividing by zero and regulators have to watch as you convert your currency to another to buy yours back its like a audit time 100) and faith in the currency value which is where the markets come in but what they say its worth is questionable since not every country is going to honor it. this can be determined by pricing when shipping is removed between different countries

The value of money, as in currency right now is fiat.
Essentially that means the value of the currency is based on the strength of the economy to which it belongs.

It isn't based on resources either. That implies value is an inherent property of matter...

The value of everything is subjective. Economics is more a psychological study of human decision making.

We never left the barter system we just barter with a more fluid intermediary now instead of directly. Money is just used to trade for anything.

Prices are set by silent auction and subjective valuation.

It's really all just a competition for energy. Jobs exist so we can spend energy on one thing that we are really good at comparatively and yet still fulfill our needs because people will trade universal mediums (cash money) for it. You could also think of money as tradeable potential energy.

Instead of spending the time and energy growing your own food or making your own clothes you trade monies for it.

Following your post:

The value per hour of doing X jobs starts to differentiate from Y job, until that filter intensifies to levels where CEOs are making millions more than their employees because its far harder to found a successful company than work in one.

Now, if you're talking about general functionality of money and why is it bound to physical resources, because that's what it actually is in reality - a paper signifying that the holder has access to X amount of gold. However, a while ago, humanity learned that we can be more flexible by having paper directly be exchanged for other resources (of equal value) as well, and so modern currency was born

it's worth more but they get paid the same? im not following you. you literally asked why it wouldnt be fair for everyone to get paid the same amount

Labor doesn't equal value. Go dig a giant hole in your back yard and lets see how much money you make by doing it.

Dollar's value was detached from the gold standard in '73, although the gold trade in dollars has basically been nonexistant since the end of WW2.
Read up on Bretton-Woods system for some perspective on the topic.

Such as? There has to be some type of reward, and if it's not increased salary, it can only be extended work leave, which butchers productivity per worker employed.

Then how did nazi Germany manage to have next to zero unemployment and poverty when no-one was willing to trade with them?
As far as I understand it the nazis took control of the currency away from the bank and based it's value on the value of labour

Also think I isn't just labor it is the value and productivity of the labor that matters.

For example poor rice farmers work longer and harder than industrialized farmers with giant combines but who produces greater yield in the shortest time with the least amount of energy expenditure?

I would say though, that currency is a measure of resources or assets, as it is exchangeable.
So while the value of an individual paper note isnt really based on much, money certainly is a measure of asset ownership

Coercion by force

Labour theory of value results in people doing pointless work. you could dig a hole, fill it in and claim what you have done is valuable.

Then you ignore the service industry.

It also can't be a measure of asset ownership if all you have is money and no tangible assets. Perhaps a measure of potential assets. But it is the raw goods and services that we are actually interested in. We are only interested in money because of the ability to easily acquire those with little energy expenditure.

Listen OP, stop for an hour or two, lay on your bed and think this through

You're currently going in circles

That didn't happen. They had a short burst of a good economy, followed by a full collapse masked by wars. It's equal to drawing a $50k loan, buying a car and going on a vacation like you're finally successful, then having to pay for it later. But hey, you got a car so that means you're an investment genius!

Hitler tried doing this.


Jews said no.

Thank you this answers my question

Yes, but who wouldnt take your money and sell you suff?
You could also describe services as an immediately depreciating assrt

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The answers you are looking for are here.

Mike Maloney does a really good job of explaining what currency is...and what it isn't.

Left-wing romantics often cite Spain during the period of the Civil War (1936-39) as an example of anarcho-socialism in action and it’s worth pausing to look at that short-lived political experiment in more detail. Does it provide any evidence that socialism and anarchism can be successfully combined?

In the Spanish cities, unionized workers seized control of capitalist businesses, but ran them on much the same lines as before, with different pay scales for different workers depending on the rarity of their skills. Where the business were profitable, the “worker-managers” soon started awarding themselves the same perks the owners had enjoyed, including fat bonuses. Capitalism hadn’t been overthrown, as the leaders of the anarcho-socialist movement claimed. On the contrary, all the hallmarks of the old system remained. The only thing that changed were the men in top hats.

The anarchists who took over the land in rural areas were more circumspect about not allowing the experiment to be derailed by narrow self-interest. All farmers and smallholders were forced to turn over their livestock and supplies to “the pile” and anyone who refused had to answer to the anarchists’ military wing. These were the Spanish equivalent of Stalin’s “collective farms”, only instead of being run by Communist Party apparatchiks they were overseen by “the committee”. This body styled itself a workers’ council and told the newly-impoverished labourers that they shouldn’t grumble – they all had an equal stake in the enterprise. But from their point of view, it was no different to being bossed around by the state.

Because trade with other countries is technically redundant when you are a large first world nation. Germany proved that with the plethora of ersatz products they produced during their decade of isolation. Trade generates value, and it can be good, but no common sense solutions to internal division can be produced unless one first considers trade to be dispensable, calculates trade deal feasibility based on actual utility to the nation, and not based on some intangible "free trade principles" that can neither be pinned down nor quantified but are instead something of a religion, and proceed on that footing.

Happens here as well. Most of the time GPs are glorified medicine dispensaries that google the exact same shit the patients do.

>equating price with value
While i concede value is subjective, this really isnt a good foundation for any economic thinking.
I mean if youre going to base the entire economy on subjective value, everything after that just ends up being bullshit

Nothing is inherently valuable, the only value that anything has is what people are willing to exchange for it in a given circumstance.

So we go by labour of set worth? Like the Nazis did.

i think Nazi Germany did this, actually.

WAIT A MOMENT
>takes pipe out of mouth
WHAT IF WE
>strokes mustache
DUG A HOLE
>picks up self written economics book
THEN PAID PEOPLE
>brushes comb over
TO PUR DIRT BACK IN
>thinks in terms of economic retardedness
THEN REPEAT THE PROCESS

WAIT A MOMENT
>takes pipe out of mouth
WHAT IF WE
>strokes mustache
DUG A HOLE
>picks up self written economics book
THEN PAID PEOPLE
>brushes comb over
TO PUT DIRT BACK IN
>thinks in terms of economic retardedness
THEN REPEAT THE PROCESS

Let's assume we did, how would we gauge labor?
One hour's hard labor get you a certificate for any goods produced by that same amount of labor? Seems cool enough, but

Surely a hamplanet would be more winded in 30 seconds than a Chad in 2 hours of strenuous exercise, yet produce different amounts of product.
Ex:
On a generator bike, Hamplanet produces one watt/volt (idk) while Chad, many more. Hamplanet's heart is racing, Chad is okay. So... who worked harder?

contrary to what communists believe, an hours worth of everyone's labor is not worth the same amount

the time of someone with valuable skills like a doctor, a CEO, or a banker is worth a fucking shitload more than the time of an unskilled manual laborer

If i dig holes and fill them up again for an hour, it's not worth shit

Infinite money!

No, you see. If we bury $10,000,000 in a mountain. Then charge people $500,000 for a license to dig up that money, we'd have made tons of money!

But what about the ingredients to make that bread?
If the loaf costs 3 dollars cause it takes 3 hours to bake, would the flour cost 2000 dollars cause it took 3 months to grow? Would that cost be passed on to the consumer?
What about the gas it took to ship the flour? Would that cost 3000 dollars cause thats how long they built the oil rig? Would you include how long the rig has been in operation to the cost?

I'm sure people have already pointed out the different values of different labor, i.e doctor versus ditch digger. Literally any able bodied person can dig a ditch, but it takes long years of education in order to become a doctor.

>a CEO, or a banker is worth a fucking shitload more than the time of an unskilled manual laborer

having someone elses money working for you is not worth more time than an unskilled worker. That unskilled worker can do the job of a CEO or Banker pretty easy. IDK about doctor never worked in that field though.

>That unskilled worker can do the job of a CEO or Banker pretty easy.

The mind of a 12 year old.


I bet you think he just sits there all day in his office dont you.

So I just got done reading this book by this fine member of the tribe.

It was okay. What should I read next to learn about economics?

...

Food is inherently valuable id say

Youd be surprised at the "value" of what a lot of highly paid people actually do.
Most of the value comes from them being at the top, as in there is only one of them. Qualifications are a big part here... x years experience, y years schooling, know the owners son etc etc.
But actually they dont do that much, seeing as they have departments doing all the actual work. What bosses do is keep an eye on the guys below them for the guys above them. Its politics more than anything.

happens here in usa as well. my dad changed heart dr's after his had to google drug interactions/side effects

>be me
>go to doctor
>explain exactly what's wrong with me and what I need
>he nods and googles it
>writes me prescription
>insurance doesn't pay for it
>still not well

I can't fucking wait for the day that doctors are completely replaced by AI

Only to a person who is hungry. Pork isn't valuable to Muslims, cheese isn't valuable to vegans, potatoes aren't valuable if they are mouldy. Et cetera, value is completely subjective.

Why do you think when a country goes commie or socialist and introduced these price floors and ceilings, they have a exodus of business, workers etc?

Currency has no value. Goods and services have value and that value is subjective and based on marginal utility. If you're dying of thirst then you might pay £1000 for a litre of water, if you're thirsty and you have access to water then it's worthless.