A critique of von Mises et. al.?

68 posts / 0 new
Last post
Joined: 25-11-06
Jan 25 2010 23:46
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.

OK, how are you defining "intangibles"? If they are merely things that one can't see, then there are millions of things that can't be seen but you can still manufacture with or without "constructive human interaction". If you are defining intangible as something that requires "constructive human interaction" to make money with, well, then you're just defining your outcome and begging any further questions.

Similarly, how do you define value? If it's the kernel of what's necessary to ultimately make money, then certainly there are things that one can't see that can still make one money. If it's things-people-want or things-people-value, then the same holds true. If value is that-which-is-created-when-"constructive human interaction" happen, then you're back to begging the question.

So your assertions on intangibles seem to be based on either begging the question or on assumptions you so far haven't mentioned.

Also, your ideas are measurement seem a bit confused as well. You seem to think that ordinary commodity's always need to be something like mathematically defined. Certainly not. A great work of art can be a commodity if enough art experts attest to it's greatness. This allows the work to be sold semi-reliably despite there not being any exact, quantitative measurement of it's greatness. It's true that commodities tend to have their qualities measured more and more in capitalist society but that's an effect, not a cause, of them being commodities.

I agree that the manner in which this society destroy direct human relations is undesirable and it is one of the contradictions that make it hard to sustain. However, we need to clear, coherent and exact in our analysis of these tendencies. The whole "Austrian school" approach is kind of the opposite - wrapping human qualities inside a mystified view of the process of exchange and value creation. You've mostly demonstrated this mystification process.

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.

Uh, that would be the ideal for any capitalist aiming for profits!

That leads to an important clarification point.

Marx's description of labor value was NOT a "theory of what is valuable" in any universal sense. It was not a theory that since workers create value, this value should divided equally among workers.

Rather, the theory of value is a description of the capitalist system. And the contradiction you describe, where the capitalist replaces workers with robots and computers and then cannot make profits, is at least one important contradiction seen in Marxian theory.

I mean, it's 2010, isn't the replacement of labor with computers a rather known experience? The contradictory nature of capitalism should be evident around with it but the density of mystification still makes this hard.

Again, Marxian theory NOT EQUAL TO a theory-of-what-has-inherent-value. No relation. Marx described the processes and problems of capitalist society.

Lexxi's picture
Joined: 25-09-09
Jan 26 2010 15:11
waslax wrote:
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.

This seems thoroughly confused, probably because the concepts of “subjective” and “objective” are thoroughly confused. I think the best way to understand mathematics is as a system of rules, somewhat like a language. Sometimes these rules are modified (e.g. the recognition of zero as a number, the recognition of negative numbers – these rules are not ‘objective’ – they have a long history of human invention). Mathematics, like language, developed as a response to the practical things required of it... I think it was ancient Greek where the word calculus or calculi meant ‘stone’ since stones were used for counting (also, it is claimed by some that the origin of 0 had its source when those pebbles were removed leaving a round indent in the earth, but 0 was also recognized before that). Geometry has its origin in the Greek word geodesic meaning to measure the Earth since the original purpose of geometry was measuring land plots. Algebra had business and commercial applications. This isn’t to mention the numerous counting systems, or indeed the time it took for an abstract number system to be developed in and of itself (e.g the number 5 to represent @@@@@... also interesting to note that in some languages the number 5 is the same word as ‘hand’ because there are 5 fingers on the hand).

Since you state that mathematics is immaterial, then where does its concepts derive from? No perfect circle exists in nature. Was the circle an invention of humans in response to whatever practical requirement – in which case the claim that it is “objective” is trite? Or was it something uncovered by humans, but always existing in an ‘objective’ fashion – in which case it is Platonist.

Joined: 25-11-06
Jan 26 2010 21:26


Human beings are material beings, so it's certainly true that we could not have any relation to a phenomena unless that phenomena related to our material bodies.

At the same time, the term "immaterial" seems to be applied to things that don't have a particular material existence. Mathematics, software and language are phenomena organizations of the material world that can appear in many different particular locations. Software is the most obvious, since we find disks with "the same" program in many different locations around the world (whether they are "really the same" is a question for philosophers to waste their time on). Mathematics or language is more or less like software except the brain reproduces them, though less exactly than computer software.

The funny thing is that living creatures also fit this description. A person actually has changed a large portions of the atoms in his or her body after about seven years. So I suppose there's degrees of "immateriality", if we want to call it that, in many phenomena.

But this has nothing to do with the price of tea in China anyway. I don't think materiality or immateriality plays a key determining role in Waxlaw's analytic system. It certainly isn't a category that determines anything for me, rather it's just a rough descriptive term. Capitalist society produces capital and commodities, some of the commodities are more "immaterial", some of them are more "material". Some commodities are more liquid, some are more gaseous, some are more solid. The exact definition of these adject can be worked-out according to the historical era rather than determined a priori through some investigation of first-causes.

Welcome to the argument room...

Joined: 12-01-10
Jan 27 2010 21:48
OK, how are you defining "intangibles"? If they are merely things that one can't see, then there are millions of things that can't be seen but you can still manufacture with or without "constructive human interaction". If you are defining intangible as something that requires "constructive human interaction" to make money with, well, then you're just defining your outcome and begging any further questions


An intangible is a negative: it's something which isn't tangible. Logically a tangible can be seen, touched, tasted, smelt and/or heard. A banana is a tangible: you can see it, touch it, taste it, smell it and, if you drop it, hear it.

So a tangible is something which has none of those characteristics. Teaching is an intangible: you can see the teacher, but not what he/she is teaching; you can't smell or taste it and you can't touch it. What you hear are sound waves. It's a noise. That's not teaching.

Teaching is only teaching when someone is taught.

In general, if something has a physical characteristic that can be discerned by our senses, it must be a tangible. If it has no physical characteristics that can be discerned by our senses, then how can it be manufactured in the way that cars can be?

On the value-money connection, you can make money without creating value. But in intangibles, value can only be created through constructivfe human interaction: teacher-pupil; doctor-patient; advisor-recipient of advice etc.

But even if you see those interactions as being a manufacturing process, which I don't think you logically can, how is value created? In manufacturing, you start with a raw material and add value sequentially by transforming raw materials into a final product that can be consumed. It's a linear and unidirectinal process.

In intangibles, like teaching, it's interactive and usually iteratively so. Teacher says something, pupil listens and thinks and then asks a question; teacher listens and thinks and then replies or perhaps asks a question back and so on.

Same for medicine. Same for all intangibles.

Similarly, how do you define value

If you can't see, touch, taste, smell or hear it, as you can't in intangibles, you can't define it. It's unknowable but obvious to the parties to the interaction. Otherwise, why would they bother to interact?

Also, your ideas are measurement seem a bit confused as well. You seem to think that ordinary commodity's always need to be something like mathematically defined.

In Marxist economics, a commodity must be exchangeable. But the value in an intangible can't be exchanged: it only exists as an interaction and stops being an intangible once it takes the form of something that can be exchanged (or commodified). In intangibles, value exists only between the parties to the interaction and that value will be shared (like in teaching and medicine etc).

Uh, that would be the ideal for any capitalist aiming for profits!

This is an important conceptual issue. Marxist economics says that additional value in capitalism can only be created by the application of human labour. If only machines make things and machines can repair machines (and there is no human labour involved), how can any new value be created?

Marx described the processes and problems of capitalist society.

But he didn't explain how value could be created in intangibles!

On the difference between objective and subjective, I'm satisfied there is either no difference of the dispute about what is or isn't objective is pointless.

A powerful example of an intangible is a financial derivative. A derivative in economics can be understood this way.

A transaction involves someone exchanging one thing for another thing instantaneously (the other thing could be specie money like gold).

A derivative is when someone gives someone a thing in return for a promise of another thing. So what is being exchanged is a promise, not a thing.

A promise is a definitive intangible: it's a description of a commitment made by one party to another party. Can that promise be sold to a third party? Not unless there is a way of forcing the person who has made the original promise to honour it with the third party, who may well be someone the first party may not even know let alone like.

But that enforcement process in turn is another intangible, an interaction that ultimately has no meaning unless there is an underlying tangible (property of some form) or the capacity to hold the body of the person who is deemed to be the obligor to the traded promise. In other words, trade in that promise can't work unless there is a commodity or a commodified person that irrevocably supports it (but then it's not a promise any more: it's a certainty, a tangible).

The trade in housing mortgage derivatives in the US was deemed to be a commodity until an attempt was made to enforce that promise on the original person who promised to repay the loan. When this happened, it was discovered, either, that there was no underlying commodity or no way to seizing the body of the person who made the promise and then broke it or both. The promise had no tradeable value since it is an interaction and depends upon one person credibly making a commitment and another person honestly accepting it.

Value was restored to such derivatives when the US government, for example, made the tangibles it owned available to support the derivatives. Those tangibles are the existing or future tax revenues it can secure by law and force from American taxpayers.

oisleep's picture
Joined: 20-04-05
Jan 29 2010 01:08

jesus fuck

Boris Badenov
Joined: 25-08-08
Jan 29 2010 01:55


Joined: 19-06-11
Jun 19 2011 22:27

On the question of market price of some kind of intangibles, I think there is indeed a point, but only in regards to intangibles that can be easily copied. So teaching or a live artistic performance are not included in this remark, unless you consider taped classes or taped performances as good as the live interactive experience, what clearly is not the case most of the times. However, let's consider software, books, or music records. Since they can easily be copied and shared in several digital media, the labour involved in creating one copy it's almost the same than the labour involved in creating virtually infinite copies, because there is virtually no labour at all in generating the copies, especially if you share them via internet, for example. So no matter how much labour time was involved in generate the first initial original copy, the price of such a commodity in a free market will tend virtually to zero, because supply would be virtually infinite, because you can copy as many times as you want without extra labour involved. The reason this doesn't happen is copyright laws. Copyright laws are a free market intervention in favor of capitalist companies who sell this kind of commodities.This reasoning applies as well to any kind of know-how, or patent, like pharmacy drugs, etc. With regards to automatition of production, this tends to low the prices too, that's why prices in electronics are always going down as time passes on. The solution capitalists use in this case, to allow prices go to low, it's planned obsolescence in combination with copyright laws and publicity. They periodically change the product, claiming improvements that are most of the times little or inexistent, to sell new products and take out from the market the old ones before their price is too low.
So basically, when it comes to intellectual property, there is a huge problem for capitalists, because it is very difficult to inforce, as the existence of internet piracy, pharmacy generics, etc show. And interestingly there is an arising of a sort of commonist-like kind of production of this kind of things there: the copyleft, ie: GNU project, etc.
So I think this is indeed a challenge that may help capitalism collapse as production becomes more and more automatized, but also there is the problem of finite material resourses of the planet and contamination. And the problem of lack of new markets, as globalization advances,and work conditions get homogenized (because if we have a pauperized working class, ruled by a elite without midclass, where global capitalism is tending, they will face the problem that they won't have who to offer their production to, because nobody would be able to afford it, not to mention the raising criminality and violence). So basically, unless there is indeed some sort of revolution I think barbarism is already seen in the horizont today.
(Sorry about my English, not my first language, and it's a bit rusty out of lack of use)

Joined: 21-01-19
Jan 21 2019 18:21

Nikolai Bukharin wrote a book titled "The Economic Theory of the Leisure Class" critiquing the Austrian School thought of Eugen Bohm von Bawerk.