Nice blog, Merlin.  Keep it up.  I was not going to criticise it there; and I do not mean this as negative, only as my thoughts based on your work.

Reality being real, if something is true, it can be proved many ways; and if something is false, many disproofs exist.  

Ayn Rand emphasized the essential nature of human intelligence. Marx and those who followed only understand the physical actions of labor, not the mental skill that defines and directs it.  Even digging a ditch requires thought because otherwise pretty soon you are going to be standing in a trough no wider than your own feet, unable to move. (You can tell that I've been there...) 

Your example, Merlin, was a classic analogy in which you offered something from common experience - building a house - to explain what few of us actually know anything about, investment banking. And that much was fine, as offered.  

On the value of investment banking. -- One perception I learned about the labor theory of value came from a free market economist of our generation. (I do not recall this being in Rand or Mises.) Most of us know why an athlete or actor gets paid a lot of money because we all do sports and we all have been up on stage and we all are horrible at it and dislike it.  (I like being on stage. It is part of what I bring to a project as a technical writer: I am also a trainer.)  But few of us do much more with finance than balance our checking account - and most people seem to be bad at that, also. So, most people do not understand how investment bankers earn their money.  

I do not know much, either, but one of my hobbies is numismatics. As the art and science that studies the forms and uses of money, it informs us better than our daily experience.  More to the point, the hobby is all about buying and selling money.  It is investment banking written small and personal.  For the building of a house, the story gets complicated by the fact that some work cannot be done in the winter. Some construction materials may be seasonal; others, like copper wire, are cyclical. If you are going to build the house all in one day the costs will be different than it you have a longer timeline.  I see a lot of construction here in Austin. The town is booming.  A lot of this is wood framed.  However, I noticed one three-story commercial going up all steel. Someone is planning for the entire 21st century. 

When Marx told his story, he simplified it for common understanding. It is easy to "get." The failures, however, come from deeper thinking, and not much deeper at that.  For all the labor in a Ming vase, I could make a dozen things to hold water. Never having ever in my life thrown any clay, you can guess the outcome -- and the relative value of my dozen against the one.

But that is a common failure in the Marxist narrative: they deny the artistic value of the Ming vase and consider only its carrying capacity. We are all equal...

On the value of managment. - We run our homes - again, better or worse - but not much more. So, most people do not understand why the CEO is worth millions of dollars a year - or even for a small business many multiples of the wages that the owner pays to their employees. But that is a different story.

Merlin, I see that my error was in using a common term uncommonly.  I meant only the common meaning of "bank."  In referring to an "investment bank" I was just thinking of beyond our common sense that a banker takes in deposits and lends them to businesses.  By "investment bank" I mean an entity engaged in what we call "speculation."  I should have checked Wikipedia to make sure that I was using the phrase in an understandable context.  Thanks.

The following are two more of my blog posts, topics closely related to the above.

Who Owns The Product?

Passive Capitalists

re: Passive Capitalists

I'd say that the resentment socialists have towards capitalists who provide funding is more about property rights.  Imagine for a second a young child who is infuriated that he can't something that clearly doesn't belong to him.  That's what I see under all the elaborate, and illogical theories and emotional arguments.  Socialists hate property rights because they stand between them and what they want to take.

Mr. Harris,

Whose definition of capitalism?  Mine, Merlin's, his blog's?  What did you mean when you said that Rand was 'befuddled' by Hayek?  That makes no sense.  Those who know Rand and have command of their senses would not come up with that description.  And the title "Capitalism the Unknown Ideal" stands quite well on it's own.
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In an operative sense, socialism indicates that the ultimate arbiter of what can be called 'private property' in all societies has always been the society itself. In other words, what we know in human history is that what's deemed 'private' is a social decision.

Given that the quasi-religion called 'socialism' is really just an intellectual fraud acting as a front for taking property from others, that is an almost honest statement.  The elites holding sway in a socialist country decide what will be private since they don't recognize individual rights... actually any rights, only permissions. 

You didn't need to say "In an operative sense" or "the ultimate arbiter of what can be called private property" or "in human history" or "what's deemed 'private'" - you could have just said, "Socialists decide what people get to keep."  Same thing with communists, Nazis, petty dictators and so forth.  It is the totalitarian way.

All of the attempts to make collective decisions automatically moral are such a shallow mechanism, like the three wolves who sat down with a lamb and held a vote to see what's was for lunch.
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...our experience as social democrats indicates that the institution of private property has to be constantly monitored against the tendency of creating monopolies

What's with the "our" - very few people at this forum are 'social democrats.'  Nor do many people here buy into the false narrative of monopolies that socialists and progressives and populists use to attack capitalism.

Private property is far more than something we use here and there to gain favorable results.  It is the base of a moral principle that permits us to live together in a society where we can interact as we choose instead of an environment based upon interactions involving the initiation of force.  For example, if you don't own your body, and if that moral right isn't implemented as law, then you are fair game to anyone who wanted to knock you out and take your kidneys to sell.  Or are your kidneys only private property because that has been the social decision?  And when you think about that, can you really maintain this subjective, relativist position of rights?  Rights are objective and not social whims.  The choice of a society and of its leaders is will they observe rights... or will they pretend they don't exist?
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It's somewhat of a joke, than, that Rand projected the monopoly- of- knowledge scenario forwards into 20th century in 'Atlas'. Hayek found this laughably bad, which accounted for the famous randian hissyfit in their meeting at a cocktail party. Otherwise, today, what's clear is that the educational level of our grammar school teachers exceeds that of the self-proclaimed rulers of the universe bizness peeple.

I'm not familiar with what was said at the cocktail party you mention, but I do know that you don't understand what a monopoly is.  Nor do you understand the theme of Atlas Shrugged if you think it involved a "monopoly- of- knowledge."  Your strange remark about "self-proclaimed rulers of the universe bizness peeple" is like a bizarre characture of the far left's loony conceptions of the businessworld.  The only self-proclaimed rulers are those who want to enslave others to Marxist confiscation.
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Nothing makes Marxism look good.  From Stalin to Mao to to Cuba to Venezuala to Bernie Sanders... nothing makes Marxism look good.  Those who try it find the path always leads to a police state, starvation, deprivation, and finally, collapse.  The only place that the socialism can exist in any slightly pure state for any period of time is in the university and then only as a theoretical construct unattached to reality and only as long as the financial support comes from the outside - from taxes on businesses and workers and investors.  That should make it clear that it is a fantasy, like a man on the roof of a tall building who thinks he can fly, a fantasy that becomes fatal to those who try it in the real world.
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For a socialist to make posts in this forum, and to take cheap shots at Rand... well that automatically brands you as a troll.  What was in your mind as you type out a post like that, for a forum like this?  Does it make you feel all giggly and excited to imagine that you might be annoying people?  I don't know... it just seems kind of strange.

The best daffy-nition we can employ is Rand's own as given in 'Lost Ideal': totally free markets with no oversight. Hayek wrote that this notion was sheer lunacy--so is he a socialist, too? Their conflict is laughably well-known, btw; just google up 'rand versus hayek' and read away.

Historically, again, no society has ever existed anywhere, at any time that did not control or otherwise exert oversight to markets, including that of labor. In this sense, all societies have always been 'socialist'; therefore capitalism does indeed remain an 'ideal'. Yet it's never really been 'lost', as it were, because no one, except England between 1832 (repeal of Spreenhamland) and 1834 has ever foolishly tried. 

Modern capitalism (as defined as having controlled markets) admits that the best solution for laboer is to place its value on the market as to discern its relative worth with reference to productivity. Then, tweak away with income adjustments via taxation to achive fairness of distribution as defined by social custom.  The receipt is called 'welfare'--ostensibly the difference between market value and livable wage by socially-accepted standards via legislative process. 

Now arguably, the taxation part of the system might be called 'theft' by the bozo-crowd which, being bozo, see only the part of the whole picture that is to thsir own perceived advantage. And I say 'perceived' because the real alternative is the fixed pricing of labor, in which what would be paid out in taxes is simply subsumed as a commensurately higher wage package.

This I do not favor because, like Hayek, I'm not a socialist; I have no intrinsic distatse for private property. This is likewise to say that daffy-nitionally speaking, everyone is a 'socialist' except one Mr Wolfer and six or seven of his cronies. Yet, for the sake of argument, your small group might just be right, and everyone else wrong withtheir operationally-pragmatic definitions that create distinctions without real meaning.

So just think of Bohr's Quantum Gang who, as a tiny gaggle of out- of control- late twentyish grad students, changed the course of science! But then again, they used math which, having google-searched for 'rand math economic model ', simply does not exist. This, for you peeple, really sucks.