A critique of von Mises et. al.?

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Anarcho
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Jan 13 2010 22:18
edmundosullivan wrote:
First on question one, no one has explained to me how the ideas expressed in the passage from Value and Profit can be interpreted in other way than suggesting that the writer saw value as being objective. It's in print. He wrote it. Explain how anyone reading this might reach any other conclusion? Saying he wrote something different somewhere else is not a complete answer.

I did explain it. I linked to a site which explained it in far more detail. I guess that you are not interested in actually understanding Marx's ideas nor the classical economics it was based on.

edmundosullivan wrote:
Classical Economists like Smith recognised there was a difference between prices and values.

And Marx was working in that framework!

edmundosullivan wrote:
Marx answered this by saying the difference between the price of labour and the real value of labour was surplus value and this was acquired by capitalists through a process of objective exploitation that took value out of workers' pockets and put it in capitalists' pockets.

Er, no. Marx (repeating Proudhon) "answered" by arguing that because workers sold their labour-power to a capitalist then the capitalist can make them produce more than what they pay them. For more discussion:

http://anarchism.pageabode.com/afaq/secC2.html

In short, the use value and exchange value of labour are not equivalent as the former can produce more than the later.

edmundosullivan wrote:
Classical economists were pretty clear that they based their analysis on the idea that the value of goods and products was wholly or largely due to objective factors.

So are you suggesting that the cost of a produced good changes? That if a widget cost £5 to produce on 4pm on Monday the same widget cost a different amount at 5pm? Unless you invent a time-machine, the costs sunk into producing a specific good cannot change -- it is objective. Of course, the market price can and does change -- but it still cost £5 to produce...

I'm not sure how clearer I can make this...

edmundosullivan wrote:
The argument that Classical economists were objectivists is supported by the criticisms of their work...

As you show very well, it is easy to attack something when you do not understand it.

edmundosullivan wrote:
The default position remains: Marx was an objective value theorist (most of the time).

And the default position remains, a good costs a specific amount to produce. That does not change, it cannot change (unless you invent a time machine). A good which cost £5 to produce will always have cost £5 to make. The market price, as Smith, Ricardo, Marx argued, does change. If the market price is less than £5 then the good will be sold at a lose. You cannot subjectively change that production price, it is an objective fact.

What the classical economists did was to recognise this bloody obvious fact of reality. They argued that capital accumulation, investment in machines, could drive down the production price of a good overtime. They also argued that market price fluctations showed when and where capital should be invested and dis-invested. They had a dynamic model of an economy changing over time.

What did the neo-classical economists do? Take a snap-shot of the economy, take supply as a given (as it was, given that production takes time and time has been deliberately abolished in the model). From this given supply they used marginal utility to say what the equilibrium price was -- for that moment. Thus an analysis of production unfolding through time was replaced by an analysis of exchange in a moment of time.

It was hardly a step forward for science, but it was useful to defending capitalism and so its success was assured.

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waslax
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Jan 14 2010 10:10
edmundosullivan wrote:
If the Marxist theory of value is subjective (and objective but immaterial must mean that) ....

There's your problem right there, in a nutshell. You are confused about this, at a basic philosophical level. Objective but immaterial is not subjective, it is objective. That you don't seem able to understand this is at the root of your inability to grasp the basic nature of Marxist value theory.

Agreement with Vlad, and with almost all of what oisleep wrote.

Zeronowhere
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Jun 20 2011 06:19
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Objective theories of value are, I am sorry to say, logically flawed.

I like how you don't actually demonstrate any logical flaws in Marx's theory of value (or 'objective theories of value') after this.

Also, I'm rather skeptical about claims that Marx's theory of value is logically flawed coupled with this:

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Marx of course didn't say all value is produced by labour or production as this passage from the Critique of the Gotha Progamme shows. But again, value is an objective (intrinsic) concept).

“Labour is not the source of all wealth. Nature is just as much a source of use values (and it is surely of such that material wealth consists!) as labour which is itself only the manifestation of a force of nature, human labor power.”

In any case, exchange-value is not price of production, it just describes how much a commodity exchanges for on the market. Prices of production are the prices which market prices will tend towards.

mumbo jumbophobe
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Jan 15 2010 08:59

I am looking forward to publishing a brief critical article about Ludwig von Mises. Its working title is " L von Mises and the Art of Methodological Hanky-Panky" and in my opnion liquidates him as a serious thinker, at least on econ theory.

edmundosullivan
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Jan 15 2010 10:40

I'm getting well hammered here. Thanks for making me think and read.
Waslax. I'm confused, as you have pinpointed, about the difference between an objective theory and a subjective theory. If something is immaterial, that implies it has no physical existence. It can not be seen, touched, tasted, smelt or heard. It does not exist in so far as sense data is concerned. How then can be it objective?
I have tried to draw a distinction between human capacities of perception which are objective, in other words uses methods such as measure and quantification, and those which are subjective such as love, hate.
You seem to suggest that if something can be perceived objectively then it is objective. Consequently, Marx's theory of value is objective not subjective. But why then should not Von Mises' theory not be considered to be objectivee?
Mr Anarcho. I'm trying. The first web page you recommend has 30,000 words on it alone and includes a reference to Kropotkin.

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Jan 15 2010 11:53
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Doesn't it imply that the forecast that capitalism will collapse because of the decline in the profit rate is, in fact, an expression of hope, wish and desire?
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This is not a forecast Marx made.

this is true, although it's tightly wrapped up with perpetual crisis & collapse. Although marx's LTFRP never actually thought that we'd see a long run demonstatable fall in the rate of profit which would then result in capitalism eventually fizzling out (like most of classical political economy before him thought) - what it did predict was recurring crisis in which the tendency for the rate of profit to fall is overcome by the violent destruction of capital, not by external circumstances, but as a condition of its self-preservation accompanied in the periods between crisises by various countervailing tendencies which work in the opposite direction to the tendency of the rate of profit to fall

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And Kliman demonstrated quite recently that Marx's actual law of the tendency of the rate of profit to fall doesn't hold up all that badly.

I'm not that sure that Kliman actually demonstrates that it holds up in reality, and I don't think he ever claimed to, what he does claim to to demonstrate however is that it holds up logically and that attempts to disprove it are logically invalid. While many (okishio etc.) have sought to prove that it doesn't hold up at all or just dismissed it outright due to its counter intuitive nature (brenner etc..) - most of these attempts to disprove it comes from what kliman identifies as the physicalist/simultaneist tradition and it rests upon their simultanist models preventing a fall in the rate of profit (by artificially boosting the model rate of profit through retrospectively porting back the impact of productivity increases on historically advanced capital/input prices) rather than anything else.

However on the flip side i'd be a bit wary of saying that kliman has proved it the other way - as mentioned above marx never actually thought that we'd see a long run demonstatable fall in the rate of profit and the core of this enquiry (again unlike classical political economy before him) was why this was the case. So disproving the work of people who argue against marx's LTFRP can only really be done on logical, not empirical, grounds - and while I agree with Kliman in terms of his disproval of the diprovers, there could here be a bit of double standards in terms of how austrian's are ridiculed for their defense of their theories in pure logical, not empirical terms. And in a way if there was a long run fairly constant observed empirical fall in the rate of profit it would paradoxically actually disprove most of marx's work around the falling rate of profit rather than validate it.

for what it's worth i think the disprovers of marx's LTFRP are pretty simplistic and appeal to surface/phenomanal intuition rather than much else - and a lot of it seems, in its explanatory rhetoric, to rest on the basis of 'why would capitalism or capitalists do something that ultimately makes them worse off' - which pretty much misses the whole point of the masses of contradictions within capitalism - even ignoring that though the theories that supposedly disproves it (okishio etc..) are logically invalid and its conclusions asserted rather than proved,

The biggest problem of people like okishio who tried to disprove the LTFRP is that their method effectively dumps the labour theory of value - as their simultaneist models lead to physicalist conclusions which effectively equate the physical rate (output) of profit with the value rate - so in this view profit no longer has labour as its source, but instead physical quantities of things - simpistically it seems obvious that this is false and that where a labour theory of value is held productivity increases will always lead to a tendency (but not neceassirly an empirically demonstrable one) for the rate, but not the mass, of profit to fall

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Jan 15 2010 19:02
edmundosullivan wrote:
Waslax. I'm confused, as you have pinpointed, about the difference between an objective theory and a subjective theory. If something is immaterial, that implies it has no physical existence. It can not be seen, touched, tasted, smelt or heard. It does not exist in so far as sense data is concerned. How then can be it objective?

If i sit on a chair for an hour and you're watching me - you and I both independently and objectively know that I sat in that chair for an hour, this fact is a completely objective thing yet at the same time completely immaterial . When I get off the chair it's still an objective fact that I sat in the chair for that hour even though this fact (and the process of sitting in the chair which has become objectified in the fact) contains no tangible residue

you're right you can't see, touch, taste, smell or hear value but it can (in theory, however complex it would be in practice) be measured given that value is nothing other than socially necessary labour time

Parker
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Jan 15 2010 20:06
edumndosullivan wrote:
If something is immaterial, that implies it has no physical existence. It can not be seen, touched, tasted, smelt or heard. It does not exist in so far as sense data is concerned. How then can be it objective?

Time itself. Time is immaterial, you can't touch, smell or see it, but it is objective.

Boris Badenov
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Jan 15 2010 21:02
Parker wrote:
edumndosullivan wrote:
If something is immaterial, that implies it has no physical existence. It can not be seen, touched, tasted, smelt or heard. It does not exist in so far as sense data is concerned. How then can be it objective?

Time itself. Time is immaterial, you can't touch, smell or see it, but it is objective.

Only it's not. Have you not heard of this new thing called quantum physics?
But this whole issue is besides the point; Marx was no more claiming absolute objectivity in studying the commodity form as the building block of capitalism than Darwin was in studying natural selection to understand evolution.

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waslax
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Jan 15 2010 22:09
edmundosullivan wrote:
I'm getting well hammered here. Thanks for making me think and read.
Waslax. I'm confused, as you have pinpointed, about the difference between an objective theory and a subjective theory. If something is immaterial, that implies it has no physical existence. It can not be seen, touched, tasted, smelt or heard. It does not exist in so far as sense data is concerned. How then can be it objective?

Yes, if something is immaterial it has no physical existence. But it can still be objective. Numbers and mathematics are objective but immaterial. So is software. I don't see what is so difficult in understanding this.

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888
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Jan 15 2010 22:21
Vlad336 wrote:
Parker wrote:
edumndosullivan wrote:
If something is immaterial, that implies it has no physical existence. It can not be seen, touched, tasted, smelt or heard. It does not exist in so far as sense data is concerned. How then can be it objective?

Time itself. Time is immaterial, you can't touch, smell or see it, but it is objective.

Only it's not. Have you not heard of this new thing called quantum physics?
But this whole issue is besides the point; Marx was no more claiming absolute objectivity in studying the commodity form as the building block of capitalism than Darwin was in studying natural selection to understand evolution.

It's relativity that means that time has to be considered from within a particular frame of reference, more than quantum physics. But this doesn't really stop it from being 'objective' overall (though I think several different definitions of objective are being used in this thread). Anyway, you can sense the passing of time, otherwise you'd be extremely confused.

edmundosullivan
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Jan 16 2010 06:21

Thank you.
The previous suggest that so long as what I perceive can be perceived by at least one other human being, then it's objective.
So that car is red. Someone else agrees or can agree. That's objective.
Value is a social relation because it is the product of an interaction. More than one person is involved. Hence it's objective in the sense that both parties must be able to perceive that there is some value potential in the interaction (they might not agree how much or who gets it, but they agree it exists at least a priori either they wouldn't interact).
This does however make me wonder what it takes to be subjective. It sounds like something that only one person can perceive and, therefore, can be said only to exist in the mind of that person.
So if I say that car is lovely and someone else agrees, lovely is an objective category.
This seems to suggest that God is an objective category. Lot of people believe God exists.
By the way Steve Keen says that value is, at its core, objective.
Anyway it doesn't seem to really matter if Marx was an objective value theorist, subjective value theorist or a synthesist.

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Jan 16 2010 09:08
edmundosullivan wrote:
Thank you.
The previous suggest that so long as what I perceive can be perceived by at least one other human being, then it's objective.
So that car is red. Someone else agrees or can agree. That's objective.
Value is a social relation because it is the product of an interaction. More than one person is involved. Hence it's objective in the sense that both parties must be able to perceive that there is some value potential in the interaction (they might not agree how much or who gets it, but they agree it exists at least a priori either they wouldn't interact).
This does however make me wonder what it takes to be subjective. It sounds like something that only one person can perceive and, therefore, can be said only to exist in the mind of that person.
So if I say that car is lovely and someone else agrees, lovely is an objective category.
This seems to suggest that God is an objective category. Lot of people believe God exists.
.

I don't think that's true at all - I was thinking about the kantian notions of space & time when I typed my reply to you earlier but thought it would just derail the point being made, but it's probably useful to bring in here.

Your projecting what has been said about time which (along with space, and for all human beings) is an a priori/transcendental form of intuition/sensibility and therefore is a type of cognition which is based on reason, is independent of experience, and has a necessity and a strict universality - onto an a posteriori cognition (a lovely red car) which by its nature is based on, and in, experience and is contingent on a synthesis between the object being perceived and the specific person perceiving it (and an internal human synthesis between the faculty of sensibility which receives the manifold of sense data and the faculty of understanding which orders it and applies concepts/categories to it to ultimately produce that experience - a - lovely - red - car.)

Now even though kant didn't think that space & time actually existed apart from in the phenomenal world of rational beings, this doesn't make them subjective for human beings - space and time for kant were things which are not given to us through experience but instead come from us as a condition of having any experience at all (in a similar way to the categories/concepts of the faculty of understanding). Their a priori nature gives them that strict universality and objectivity for not just some, but all, human beings. And just because space/time doesn't exist in the noumenal world, just like the colour red - as far as human beings are concerned they have this necessity and strict universality in the phenomenal world, unlike all other intuitions that are given to us through the faculty of sensibility in that same world (i.e. like the colour red)

your example of the colour red is something that is just empirically ideal, i.e. completely subjective - space/time however are empirically real while at the same time being transcendentally ideal - but that's the closest anything is ever going to get to being objective to humans, things that are transcendentally real, i.e. the 'thing in itself' are always out of the picture and never known or accessible to us

I think the parallel and analogy between time (in the wider/general sense, i.e. not just socially necessary labour time) and value here is apt, albeit on strikingly different levels. Both space/time and value are not real 'things in themselves', and are both supplied by the 'subject' rather than given from some external thing in itself, and they both only exist, objectively, under certain given conditions, - for space/time its the universal condition of being a human/rational being and for value its the condition of an historically specific set of social relations

edmundosullivan
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Jan 16 2010 11:26

Oisleep. Ta.
Von Mises describes Human action as a synthetic apriori category. Following your argument, that would make his economic theories objective rather than subjective.
I'm an economist not a philosopher so this stuff is a bit tricky.

edmundosullivan
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Jan 16 2010 11:38

Oisleep.
A reference from Hans-Hermann Hoppe's Economic Science & the Austrian Method:

"This axiom, the proposition that humans act, fulfills the requirements precisely for a true synthetic a priori proposition. It cannot be denied that this proposition is true, since the denial would have to be categorized as an action—and so the truth of the statement literally cannot be undone. And the axiom is also not derived from observation—there are only bodily movements to be observed but no such things as actions—but stems instead from
reflective understanding."

Full text at Ludwig Von Mises Institute website...

Is a Marxian-Von Misesian synthesis possible?

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oisleep
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Jan 19 2010 16:25
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Von Mises describes Human action as a synthetic apriori category. Following your argument, that would make his economic theories objective rather than subjective.

i'm not so sure would it? it's quite a jump going from a general concept of human action being a synthetic apriori to von mises's economic theories being objective - surely by that reasoning absolutely everything that involves any kind of human action (physical or mental) would be objective

anyroads, following your argument (which i don't agree with) that if something is immaterial it is also subjective, then by definition according to the quote below from Hoppe that there is 'no such thing as actions' (i.e. actions themselves cannot be observed) making them immaterial and therefore, per your previous line of arguing, subjective, and ergo his economic theories also tongue

Quote:
A reference from Hans-Hermann Hoppe's Economic Science & the Austrian Method:

"This axiom, the proposition that humans act, fulfills the requirements precisely for a true synthetic a priori proposition. It cannot be denied that this proposition is true, since the denial would have to be categorized as an action—and so the truth of the statement literally cannot be undone. And the axiom is also not derived from observation—there are only bodily movements to be observed but no such things as actions—but stems instead from
reflective understanding."

Full text at Ludwig Von Mises Institute website...

Is a Marxian-Von Misesian synthesis possible?

I've no idea

edmundosullivan
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Jan 19 2010 17:42

Nor do I. That is why I blog.

Anyway back to Jura's initial question:

"Does anyone know about any marxist critiques of the Austrian School in general, and von Mises' Human Action in particular?"

The first point is that Von Mises is a methodological individualist: see page 41-44 in Human Action:

"...all actions are performed by individuals. A collective operates always through the intermediary of one or several individuals whose actions are related to the collective as the secondary source."

This conflicts with Marxist/Marxian views which regard the individual as a social being. But the distinction Von Mises makes between the I and the We (page 44, Ibid) is so fine and nuanced it almost disappears.

The second is the Von Mises' concept of Catallactics, the chaotic way that individuals deal with each other economically to create an economic system. But this too is not so different from the Marxian conception.

"For Marx, a society is a particular complex of interconnected elements, a whole composed of various aspects which "stand to one another in a necessary connection arising out of the nature of the organism (Contribution to the Critique of Hegel's Law, 1843)."' (This is taken from Beyond Capital, Michael Lebowitz.)

Can the difference be explained in terms of perspective? Von Mises looks from the inside out. Marx from the outside in. Both struggle to understand the complex, dynamic, unstable nature of civilisation and how it changes over time.

The other thing Von Mises and Marx have in common is that neither was very good at explaining what value is or how it is created. Von Mises suggested it is created through the act of commodity (good) exchange since value is utlity (enjoyment). So you get more value (enjoyment) by allowing people freely to exchange one thing for another (if they do that, it must be because they think the exchange will make them happier).

Marx doesn't say what value is at all and his explanation of how new value is created continues to confuse.

Neither Marx nor Mises explain at all how value can be created when the things produced and exchanged are intangible (eg friendship). This seems to be a gap since more than 80 per cent of UK GDP is accounted for by services (intangibles, like friendship).

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Khawaga
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Jan 19 2010 18:12
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Can the difference be explained in terms of perspective? Von Mises looks from the inside out. Marx from the outside in. Both struggle to understand the complex, dynamic, unstable nature of civilisation and how it changes over time.

Marx uses multiple perspectives. In all of his texts you will find sentences like "from the point of view of this, but from the point of view of that etc."

Marx definitively looks from the inside, to explain the inside. He is, after all, interested in internal contradictions. His ontology doesn't leave much to be "outside" as all is inner-related (to paraphrase Ollmann).

Quote:
The other thing Von Mises and Marx have in common is that neither was very good at explaining what value is or how it is created.

I think Marx is pretty clear on this. Human labour creates value, but because value is a social relation, it has to be realized through exchange.

Anarcho
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Jan 19 2010 21:57
edmundosullivan wrote:
"This axiom, the proposition that humans act, fulfills the requirements precisely for a true synthetic a priori proposition. It cannot be denied that this proposition is true, since the denial would have to be categorized as an action—and so the truth of the statement literally cannot be undone. And the axiom is also not derived from observation—there are only bodily movements to be observed but no such things as actions—but stems instead from reflective understanding."

Oh, and you missed out the conclusion from this, namely because "humans act" all of Austrian economics is true because it is based on logical deductions from this true axiom... And if reality suggests otherwise, well, so much the worse for reality:

Quote:
von Mises: "If a contradiction appears between a theory and experience, we must always assume that a condition pre-supposed by the theory was not present, or else there is some error in our observation. The disagreement between the theory and the facts of experience frequently forces us to think through the problems of the theory again. But so long as a rethinking of the theory uncovers no errors in our thinking, we are not entitled to doubt its truth"

In terms of a Marx-Mises synthesis, well, what would be the point? Marx had already discussed what the Austrians think their key contributions are (credit expansion causing the business cycle, disequilibrium, etc.) long before them. And how could you synthesise pathological love of capitalism with an analysis which is based on exploitation and oppression in the workplace?

RedHughs
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Jan 20 2010 00:15
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"...all actions are performed by individuals. A collective operates always through the intermediary of one or several individuals whose actions are related to the collective as the secondary source."

Ah, but individuals also only act through the molecules that constitute their flesh and blood rather than acting "as a whole". Thus any economic theory which doesn't make constant reference to chemistry is already proven false...

I mean a person never says anything ... it is their throat that makes the noise and each vibration comes from a different section of tissue. Also and no "person" writes theory - it is the paper, the pen or the keyboard, not to mention finger, skin, bone, muscle and fascia that creates these symbols... It is absurd, in fact, to claim that meaning comes from a "sentence" rather than from individual words....

Uh, these "philosophers"...

edmundosullivan
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Jan 20 2010 10:28

Khawaga. Thank you.
Value is created through labour and realised through exchange.

That is the clearest definition I've seen so far of the Marxist conception of value creation and distribution.
So my question is this:
How can the value in an intangible be exchanged?
Consider a teacher and a pupil.
The teacher teaches maths. It is a skill acquired and exercised through labour (mental and physical). A pupil learns through labour (mental and physical).
But does the teacher create value if there is no pupil?
Say the teacher stands in an empty classroom and does a one hour maths lesson.
Has value been created?
I can't see how and why it can be.
So to create value the teacher has to interact with someone: a pupil. No interaction; no value (or else your definition of value would seem to be very odd).
What role does the pupil play in this interaction? Does he or she just absorb teaching like a sponge absorbs water in a manner that physics can explain?
If he or she sits in the room and either doesn't listen to the lesson or understand it and leaves no wiser than he or she was at the start, has value been created?
I can't see how and why it can be.
The teacher might was well teach an empty room.
So value creation in teaching is interactive (rather than linear or circular) and reciprocal.
And the more interaction and reciprocation, the more value is created.
But has value been used up?
Not in the sense that consumption is the exclusive use of value.
If there was a second pupil in the lesson, the fact that one is benefitting from the lesson doesn't mean there's less for the second one.
It is as if there's a pub that produces only one pint of beer for each round bought. Despite drinker one consuming it, it fills up instantly for drinker two to consume.
That's a funny kind of commodity. I wish someone would invent it.
The presence of an engaged second pupil might even increase the value created in the interaction between teacher and pupil. It is as if there is a pub that produces one pint of beer a round and that pint turns into two pints after it is consumed by drinker one.
I really wish someone would invent that!
So in teaching, we have a value creation process which is interactive, reciprocal and non-exclusive.
The value is embodied in no tangible thing (unless you argue it's in the soundwaves).
But even if you could capture the soundwaves connecting pupil and teacher, would they deliver the same amount of value if they were transmitted in another room with another teacher and another pupil?
I can't see why or how it can be.
So value creation in teaching is interactive, reciprocal, non-exclusive and incommensurable.
Can this value be exchanged, like a commodity can be, and traded round and round in exchange for money and enhanced through exploitation?
I can't see why or how it can be.
The pupil leaves the classroom, head full of great, new and useful knowledge. He or she meets a friend outside and shares the new knowledge with him or her. Is the value transferred from pupil one to pupil two the same value as was created between the teacher and pupil 1?
I can't see why or how it can be?
Pupil 1 might garble, distort or, even, improve on what the teacher taught. Pupil 2 might get it, get it better or get it worse than pupil 2. Perhaps pupil 2 will completely misunderstand what pupil 1 learnt and could be worse off as a result.
It would be like someone buying a car that turned into a bike in the second-hand market.
Has value been created in the second interaction?
Let's say, for the sake or argument, yes.
Is it the same value as was created in the first interaction?
I can't see why it should be or how.
So the value created in teaching is interactive, reciprocal, non-exclusive from a consumption point of view, incommensurable and non-exchangeable.
Can it be stored?
How?
Say the interaction between the teacher and pupil 1 is transcribed and circulated. Pupil 3 reads it and understands it. Is the value created in the first interaction transferred?
I can't see why or how.
The transcription doesn't reduce the benefit enjoyed by the teacher and the pupil in the original interaction. And is the interaction between the teaching expressed in print and pupil 3 the same as the value created in the original interaction?
I can't see why it would be or how in both cases.
Has new value been created in the interaction between the pupil and the transcription of the original interaction?
It seems yes.
So the value created in teaching is interactive, reciprocal, non-exclusive from a consumption point of view, it's incommensurable, non-exchangeable and non-storeable.
And what about the role of price?
What difference would there be to the amount of value created in the original interaction if the pupil paid for the lesson directly, paid for it indirectly through tax or was given the lesson free?
None.
The value created in teaching depends entirely on the willingness of the teacher to teach and the pupil to learn. Without that, no amount of payment will create a scintilla of value.
And even if no price is paid, provided the teacher is willing to teach and the pupil is prepared to learn, value will be created.
So the value created in teaching is interactive, reciprocal, non-exclusive from a consumption point of view, incommensurable, non-exchangeable, non-storeable and unaffected by movements in the market price for teaching.
This is a very funny commodity indeed
Ah yes, I hear you say. But every teacher and every pupil uses tangibles, commodities; like pens and paper.
They are exchanged for money and they are produced using labour.
But do they actually determine the amount of value created?
No.
No matter how good the pen and paper, no value is created if the teacher is not willing to teach and the pupil to learn; if they don't interact constructively.
Tangibles support value creation in teaching. They don't create value.
And if this is true for teaching it's also true for healthcare, for management advice, for service workers in hotels and restaurants, for financial advisers; in fact for the 80 per cent of the UK labour force working in services.
Does this mean a new economic theory is needed that explains what value is and how it is created in intangibles?
I think it does.

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Jan 20 2010 11:34
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Does this mean a new economic theory is needed that explains what value is and how it is created in intangibles?

in a word, no

excuse my rudeness but I didn't read most of the post above as it made my head hurt, and i presume it can be summed up by the last line which i've quoted above. I think you're too hung up on some non-existent problem for value between a commodity being tangible or intangible like it makes a fundamental difference to the labour theory of value - it doesn't.

Value doesn't physically exist within a commodity, the value of a commodity merely reflects(*), when brought into contact with other commodities, the socially necessary labour that, through the labour process itself, has been objectified (immaterially) within that commodity - a commodity isn't a physical container holding a physical substance called value, therefore if a particular commodity happens to be an intangible one it doesn't change the conditions under which the labour theory of value operates. Sure you could come from a point of view that the labour theory of value is junk, but that would equally apply to tangible and intangible commodities alike.

* it probably won't make things any clearer here but it's worth pointing out that marx's labour theory of value doesn't suggest that the labour theory of value asserts itself directly (like ricardo thought) through and in commodity prices but only indirectly through the transormation of values into 'prices of production' and the tendency for the equalisation of profit rates. Briefly - at the total societal level the total level of value and the total level of prices are the same (so prices are anchored to total value production in society), but at an individual commodity level they are different - this difference between value and price was what ultimately brought ricardo down and the cracks/contradictions/inconsistencies in his work in this area were exploited by the vulgar & apologetic economists that followed him to ultimately move away from a labour theory of value altogether (a tactical, rather than a scientific, move in the face of an increasing threat to capital from the working class)

edmundosullivan
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Jan 20 2010 15:23
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Value doesn't physically exist within a commodity, the value of a commodity merely reflects(*), when brought into contact with other commodities, the socially necessary labour that, through the labour process itself, has been objectified (immaterially) within that commodity - a commodity isn't a physical container holding a physical substance called value, therefore if a particular commodity happens to be an intangible one it doesn't change the conditions under which the labour theory of value operates.

What does the phrase: "brought into contact with other commodities" mean? Do they collide? Do they meet on a street and say hello?
Your definition means that teaching is a commodity. But everything about teaching conflicts with any normal defintion of a commodity: it can't be traded, stored or measured against another one. It's a non-exclusive product that can't be consumed.
The value created in teaching can only exist in the minds of those involved in the teaching interaction. The only thing that circulates in intangibles are the human bodies containing the minds upon which the teaching has made an impression.
Value in teaching and medical care etc (and activities which are considered by neoclassical economists as non-economic, non-market services such as parenting) is created solely by human interaction.
The idea of value creation in intangibles complements Marxian concepts.
Interaction between humans involves the use of energy (labour). In fact the only thing it involves is labour.
It is a social relationship, because value creation in intangibles can only happen when human's interact.
There is a class consequence because the means of production (tangibles and processes) that support value creation can be (and are) privately owned by capitalists (like Google and Yahoo).
And there is a revolutionary consequence in liberating the human interaction required to produce value in intangibles from their dominance.

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oisleep
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Jan 20 2010 17:50
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What does the phrase: "brought into contact with other commodities" mean? Do they collide?

yes that's exactly what they do, in the sphere of exchange/circulation

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Your definition means that teaching is a commodity.

not necessarily, my 'definition' didn't say anything about what is or what is not a commodity all it did was say that commodities under capitalism reflect the socially necessary labour objectified in them, and that this holds true whether they are tangible or intangible.

A commodity is a use value produced by someone and consumed by someone other than the person producing it and who captures said use value through market exchange, and in a society where this happens where the labour power that creates those use values itself becomes a commodity then we have a capitalist society (as opposed to a society with markets where commodities have been exchanged for thousands of years before capitalism was a twinkle in the eye of the english countryside)

Also you're being very weak in your logic again just because i said a commodity can be intangible it doesn't mean that i think everything that's intangible is a commodity - somewhat more analysis would be required than that - however within capitalist socialist relations i'd say teaching pretty much is a commodity - certainly the act of teaching itself is bought and sold on the labour market like any other commodity so there's absolutely no doubt there, however that would be taking you too literally as i presume you're talking not about the act of teaching and those who carry it out but the end product of that process? again it's not difficult to see this as a commodity - this end product and the act of teaching that goes with it is parcelled up and sold as a commodity to parents of children who attend private schools, or kids who pay fees to go to university, it doesn't take a giant leap to see a similar process at work within public/state sector schools, the whole education process/system is being gradually commodified

Don't have time to type more on this at the moment, will try and respond more and to your other points below tomorrow

RedHughs
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Jan 21 2010 22:08
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The teacher teaches maths. It is a skill acquired and exercised through labour (mental and physical). A pupil learns through labour (mental and physical).
But does the teacher create value if there is no pupil?
Say the teacher stands in an empty classroom and does a one hour maths lesson. Has value been created?

Oisleep is being sooo patient with you, my dear!

If you seriously want an answer to that question, there are umpteen explanations of Marx theory of value you can read, starting with Capital Vol I, Chapter I. Indeed, everyone will tell you to go out and read the damn thing and in this case, they're right.

I'll even give away the answer a little. Value is only created through social relations. Of course if the teacher taught to an empty room or taught gibberish, the student wouldn't receive the information he/she needed to add his social capital and get a better job. On the other hand, assuming that there is still a demand for products that need to be produced by students who know the maths, then the teacher is merely supplying a socially necessary component of those end products. It is based on information and not energy but it still activities which cannot be avoided at a given level of productive forces.

A table and a block of wood are both configurations of atoms, with one happening to be more useful in some cases. A student who knows math is also just a different configuration of atoms than a student who doesn't know math. The intuitive justification for calling the difference between the students "immaterial" is that it's hard to tell the difference between the students and you have to perform tests to be sure. But so what, a CD with MS Windows burned on it and a blank CD also might not be able to be told apart with the naked eye but these can have very real differences as well.

I'll leave the rest for homework.

And the objectivity/subjectivity thing: A social relation encompasses the individual psychologies and preferences of the people within it - the production of Coca Cola depends on individuals being reliably trained to prefer this poisonous goop to the other poisonous goops around. It's "subjective" in the sense that subjectivities, the individual preferences of people are part of it. It's not "subjective" in the sense that it properties vary depending on the preferences of the observer - at least it varies only minutely in the sense that the variation of the observer's subjectivities creates some small change to the overall average preference of society.

Anyway, so many of the apparent paradoxes of economics come from thinkers beginning with an assumption that individual are indissoluble atom who's ideas and preference come from their immaterial soul rather being materially understandable and predictable things. The unfortunates who destroy their health via the consumption of corn syrup laced drinks and white bread are seen as "exercising their freedom" rather than providing a return on corporations' investment in "immaterial" advertising.

It is true that the sum total of a single person's behaviors together are indeed rich beyond capital's electrodes but the average behaviors of many average people are well in the reach of capital's management and prediction - and capital works every day to increase the accuracy of predictions and the scope of its control. Education, for example, is now becoming more and more codified as an industry which sells nothing but people train to respond a certain way.

A great example is the Year Up program. This wilily "charity" trains disadvantaged students in to act with middle manners - to the point of penalizing them for not smiling or being a second late for meetings.

edmundosullivan
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Jan 21 2010 20:55
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yes that's exactly what they do, in the sphere of exchange/circulation

What is the sphere of exchange/circulation, exactly?

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not necessarily, my 'definition' didn't say anything about what is or what is not a commodity all it did was say that commodities under capitalism reflect the socially necessary labour objectified in them, and that this holds true whether they are tangible or intangible.

What is the socially necessary labour objectified in intangibles? The amount of energy involved in a teaching for an hour is about 200 calories (a bag of crisps). Does that mean that the right exchange value for the hour of teaching is less than 50p? Or is it the price of the other things the teacher could create if he or she wasn't teaching? He or she could be working as a manual labourer on a building site. That's about 30 quid.

The right answer is: we can't say because you can't see, touch, smell, hear or taste what is being taught. All you can hear is soundwaves created by the teacher's vocal chords. That is not teaching. That's just a noise unless someone is listening to it and making sense of it.

Quote:
A commodity is a use value produced by someone and consumed by someone other than the person producing it and who captures said use value through market exchange, and in a society where this happens where the labour power that creates those use values itself becomes a commodity then we have a capitalist society (as opposed to a society with markets where commodities have been exchanged for thousands of years before capitalism was a twinkle in the eye of the english countryside)

Does anyone else agree with this definition of a commodity?

[

Quote:
Also you're being very weak in your logic again just because i said a commodity can be intangible it doesn't mean that i think everything that's intangible is a commodity - somewhat more analysis would be required than that - however within capitalist socialist relations i'd say teaching pretty much is a commodity - certainly the act of teaching itself is bought and sold on the labour market like any other commodity so there's absolutely no doubt there, however that would be taking you too literally as i presume you're talking not about the act of teaching and those who carry it out but the end product of that process?

To say that teaching is pretty much a commodity is imprecise. Is it or isn't it? And why?

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again it's not difficult to see this as a commodity - this end product and the act of teaching that goes with it is parcelled up and sold as a commodity to parents of children who attend private schools, or kids who pay fees to go to university, it doesn't take a giant leap to see a similar process at work within public/state sector schools, the whole education process/system is being gradually commodified

What you are suggesting is that the interaction can be captured, packaged and sold like cookies in a shop. People's time can be. Teaching can't. It is an interaction by definition. It takes more than one person.

RedHugh

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Value is only created through social relations

If you mean by social relations an interaction between and among people (mediated or unmediated by tangibles and processes), then you are right.

Attempts to commodify education will fail because teaching is an intangible that can't be commodified or bureaucratically controlled.

RedHughs
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Jan 21 2010 22:32
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If you mean by social relations an interaction between and among people (mediated or unmediated by tangibles and processes), then you are right.

Attempts to commodify education will fail because teaching is an intangible that can't be commodified or bureaucratically controlled.

What do you mean fail?

I can go to The University of Pheonix, pay money and they give me 'an education'. Seems like a successful commodification to me.

Where's the failure?

Even more, companies will pay me more when I have a university of Pheonix degree or an MSIE certificate, so it's not just a commodity but human capital - I'm selling my education along with me labor power.

edmundosullivan
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Jan 22 2010 15:42
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I can go to The University of Pheonix, pay money and they give me 'an education'. Seems like a successful commodification to me.

You can go to the University of Phoenix, pay money and they will try to teach you. But you are not listening and engaged, they will fail. That is unless the University of Phoenix is the type of university that simply sells degrees. If that is the case, you are not buying and education. You are buying a piece of paper.

Value can only be created in teaching through interaction. This makes it different to value production and consumption of a tangible which is linear and non-reciprocal.
Another example of value creation is in this blog interaction.
Question Has value been created?
Answer: This blogger thinks it has. Other bloggers may not agree, but that's not relevant unless you believe that value can only be created if more than one person says it has. This blogger's learnt and has gained useful knowledge and insights and is sorry is no-one else has.
Question: Has any commodity been produced or exchanged?
Answer: If it has, this blogger's not seen it.
Question: What's been consumed (as use value)?
Answer: Nothing tangible and certainly no commodities.
Question: What role has exchange value (price) played in this blog exchange?
Answer. None. This blogger could have made a million on the markets. Or he/she could have been simply sitting watching the TV or sleeping. Anyway, it's impossible for this blogger to decide the value of the knowledge gained. It seems reasonable now. But tomorrow, he/she might think it's baloney. This exchange might be viewed in due course to be infinitely valuable or, on the other hand, absolutely valueless. It can't be priced. Yet it's valuable.

RedHughs
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Jan 22 2010 19:55
edmund wrote:
You can go to the University of Phoenix, pay money and they will try to teach you. But [if] you are not listening and engaged, they will fail. That is unless the University of Phoenix is the type of university that simply sells degrees. If that is the case, you are not buying and education. You are buying a piece of paper.

Value can only be created in teaching through interaction. This makes it different to value production and consumption of a tangible which is linear and non-reciprocal.

If a company buys a piece of machinery and then fails to install properly and it breaks, they have wasted their money in essentially the same way that a student who doesn't study at school wastes their money (they have each wasted a capital investment). It's possible that the machine manufacturer certifies their functioning equipment (or perhaps some other entity does). In this case, when someone buys equipment, and breaks it through negligence, the manufacturer will refuse to certify it. Installing complex enough machinery can indeed require highly competent personnel and experienced management so the installation may indeed require many human qualities.

And, the company might still be able to get some use out of their equipment without certification just as a student might still use their education whether or not they get a degree. If you go school, learn something but don't pass the test, you can go out and start a company with your learning - a number of folks are famous for having done this (though successful startups are much rarer than the media projects).

ALL you are saying is that some human interaction is necessary in this process. Yes, it is. But humans are a physical entities, brains are physical things containing information just as computers contain information. We're fortunately less predictable than computers but we are predictable, especially in large, atomized groups (large, cohesive groups are different).

The capitalist system is based on predictably reproducible profits. The companies that hope to make a profit don't stay around long. The University Of Pheonix is an education factory. Not everyone gets certifiably educated there but a predictable percentage do. The University Of Pheonix's student's education does depend on their subjective preferences and their personal interactions with the teacher but this subjectivity is also objective in the sense of being reproducible and predictable.

I think you're caught in this sort of mystical eddy where, whenever considerations of human choice and preference appear, it's like magic unique soul fairy dust has been sprinkled on the relationship and no further examination of the causes and effects involved needs to be performed - or the argument switches unjustifiably to the argument of human nature in general being the sole cause of the particular action. (A given person's personal, subjective choice is one cause of a person becoming educated but this doesn't mean that education springs immaculately out of the grand human soul).

Capitalism is a feedback and control system reproducing itself approximately. Fortunately this reproduction and control isn't exact, unpredictable human qualities are and so other human tendencies may appear. But these tendencies essentially require human collective action since human beings are social animals acting through society rather mystical beings of light channel their soul-point candles.

edmundosullivan
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Jan 23 2010 05:37
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And, the company might still be able to get some use out of their equipment without certification just as a student might still use their education whether or not they get a degree. If you go school, learn something but don't pass the test, you can go out and start a company with your learning - a number of folks are famous for having done this (though successful startups are much rarer than the media projects).

The point is not whether you have wasted money or not. There are millions of ways of making or losing money; from being an investment banker to a drug dealer. But there is only one way of creating value in intangibles; through constructive human interaction. A society where intangibles dominate will collapse if all that is happening is that people are making money rather than creating value.

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ALL you are saying is that some human interaction is necessary in this process.

No. That human interaction is the only source of value creation in intangibles is everything I'm saying.

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But humans are a physical entities, brains are physical things containing information just as computers contain information.

This implies that human beings can and, possibly should, be replaced in production by machines since everything a human being does can be automated. If that were the case, and you are a labour value theorist, how would additional value be created? At best, you would have a steady state economy where machines repaired machines that repaired machines etc.

Human beings are different to machines, and will always be so, because of the intuitive way that we interact as individuals with other individuals as we restlessly seek to create value through direct and unmediated interaction.

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We're fortunately less predictable than computers but we are predictable, especially in large, atomized groups (large, cohesive groups are different).

Is this view that the behaviour of people at a group level is predictable consistent with Marxian theory? But stepping outside that mindset, there is a mass of new literature by economists who are argue that the behaviour of people in groups is much less predictable than previously imagined. The unpredictable outcome of human action is also one of the core conclusions of Von Miseans.

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Capitalism is a feedback and control system reproducing itself approximately. Fortunately this reproduction and control isn't exact, unpredictable human qualities are and so other human tendencies may appear. But these tendencies essentially require human collective action since human beings are social animals acting through society rather mystical beings of light channel their soul-point candles.

The Marxist view is that capitalism is a system of that exploits, alienates and oppresses humanity. Its economic theory is designed to prove that this is the case. The practical challenge, which still remains, is what to do about it.

Recognising that value in intangibles is created at the level of the individual through iterative and reciprocal interactions leads to the conclusion that efficiency as well as humanity requires a system where every individual is liberated from the grip of the state and the business corporation. This seems to be Marx's essential aspiration.

Conventional Marxist theory suggests that liberation will come about because of the inherent tendency of the system to collapse over time. The theory of value creation in intangibles helps to explain why. Firms (like banks) and other associations of intangible value creation will be less profitable and, consequently, fundamentally unsustainable if they depend upon external forms of finance (debt and/or equity). The only sustainable form of firm or productive association in intangibles is one where all the profit generated by its value-creating activities is retained by those that work in it. Some form of professional association, like lawyers, or co-operatives will always beat the joint stock corporation in markets and industries dominated by intangibles. The supporting tangibles and processes (like roads, school buildings and the digitalised communications system we are using now) should be built and operated on a minimum possible cost basis, which means they cannot be owned for the purposes of making a profit or paying off loans.

The problem for the state is the impossibility for it to produce or control the production of value in economies where intangibles are the dominant form of production.