A critique of von Mises et. al.?

Many of the standard ideas behind Austrian economics were already dealt with by Marx in Capital. For instance, the concept of "time preference" from Bohm-Bawerk is an updated version of Nassau Senior's abstinence theory. Austrianists rely on Say's Law, which says that a general crisis of overproduction is impossible, and which Marx debunked early on in Capital Vol 1.

Marginal utility is based on a tautology (prices are determined by marginal utility but the degree of utility can only be measured with reference to price). Engels deals with Jevons's marginal utility in the Preface to Cv3, stating that it is possible to construct a simple socialism out of marginal theory. The reasoning goes, that one dollar is worth more to a poor man than a rich man, hence the degree of social utility can be increased by redistributing wealth by means of the tax system.

I think Mises tries to undermine this by saying that utility is ordinal, not cardinal, based on the subjective preferences of the individual that cannot be measured numerically (with reference to price), but this still means that he is unable to say that redistributive polices which might increase the degree of social utility are in themselves bad and it wholly undermines the Austrianist position against taxation.

There is also no marginal theory of money, as far as I know, and the quantity theory of money, which Austrianists all seem to hold, is obviously incompatible with a subjective theory of value, which would indicate that their theories are logically inconsistent.

Beyond Hilferding's riposte to Bohm-Bawerk, and occasional treatments of Austrian economics by Marxists such as Paul Mattick, I don't know of any lengthy Marxian critiques of the school at all, but if anyone else does know of one, I'd like to read it. Maybe Marxists don't think they are worth arguing with, that Austrianism is basically a form of vulgar capitalist apologetics?

There is plenty of stuff on the Anarchist FAQ dealing with the Austrian School. It seems that most of the major intellectual battles with Austrian economics were fought before the Second World War with Sraffa, Kaldor, Keynes, Robinson et al.

More specifically:

General introduction and critique:
http://anarchism.pageabode.com/afaq/secC1.html#secc16

On time preference
http://anarchism.pageabode.com/afaq/secC2.html#secc27

On entrepreneurial activity
http://anarchism.pageabode.com/afaq/secC2.html#secc28

On Business Cycle Theory:
http://anarchism.pageabode.com/afaq/secC8.html

On "the Calculation Argument"
http://anarchism.pageabode.com/afaq/secI1.html#seci11

and:

http://anarchism.pageabode.com/afaq/secI1.html#seci12

On uncertainty:
http://anarchism.pageabode.com/afaq/secI1.html#seci15

Steve Keen's "Debunking Economics" has some useful material, as does Bukharin's "Economics of the Leisure Class"

While the "Austrians" consider their ideology as the single most important thing ever, very few others agree..

Anarcho

While the "Austrians" consider their ideology as the single most important thing ever, very few others agree..

both halves of this statement are true in my experience.

Another good article on Mise and ECA is from World in Common , ex-SPGBer , Robin Cox ,

http://www.cvoice.org/cv3cox.htm

Also of interest is an exchange between Adam Buick of the SPGB and David Steele of the Libertarian Alliance

http://www.la-articles.org.uk/FL-6-2-6.pdf
http://www.la-articles.org.uk/FL-6-4-7.pdf

I completely forgot about Simon Clarke's Marx, Marginalism and Modern Sociology.

IIRC, there were only a couple of chapters looking at the Austrian School itself and it didn't go into much depth - well, not as much as I'd have liked.

I was disappointed with it because I would have liked a more systematic and empirical critique of central claims of Austrian economics, such as claims over "lengthening the structure of production", "roundaboutness", etc.

Not specifically about the Austrian school, but the Gegenstandpunkt group has the best critique of "marginal utility" I've encountered (though admittedly I don't know the Clarke book):

Die Mikroökonomie
Von der Erklärung des Werts
über die Erfindung des Grenznutzens
zum mathematischen Lob des Marktes

http://www.gegenstandpunkt.com/vlg/mikrooek/moekin.htm

Unfortunately, only the table of contents is available online, not the book itself.

Parker

I was disappointed with it because I would have liked a more systematic and empirical critique of central claims of Austrian economics, such as claims over "lengthening the structure of production", "roundaboutness", etc.

Try: Robert L. Vienneau's "Some Capital-Theoretic Fallacies of Austrian Economics"
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1024311

Bukharin's work goes into some detail, but "Austrian" economics has moved on somewhat. Now it is all lip-service to disequilibrium (while keeping equilibrium analysis close at hand, as per its theories of the business cycle and unemployment). Also try The market, competition, and democracy : a critique of neo-Austrian economics by Stavros Ioannides ( E. Elgar Pub , 1992). Then there is post-Keynesian Paul Davidson's classic essay:

THE ECONOMICS OF IGNORANCE OR IGNORANCE OF ECONOMICS?
http://archives.econ.utah.edu/archives/pkt/2001m02/msg00014.htm

although, obviously, Davidson is coming via Keynes rather than Marx...

As for empirical critique, you do realise that any good "Austrian" will dismiss all empricial evidence and will only listen if you find some logical fault in their long chains of deductive reasoning?

As for empirical critique, you do realise that any good "Austrian" will dismiss all empricial evidence and will only listen if you find some logical fault in their long chains of deductive reasoning?

Exactly! This is what has always peeved me most about them. It's all about "irrefutable axioms of human existence" and other such nonsense which they assume a-priori in order to build their logical edifice.

Even if you do point out that the axioms are flawed, they will simply deny it.

Fortunately, most people ignore them and they are largely irrelevant outside of the net. Unfortunately they seem to have a dis-analogous existence online.

there are two broad trends in Austrian economics. There are the Hayekians, who are somewhat more mainstream and who included Mrs Thatcher, who once brandished a copy of Hayek's The Constitution of Liberty at a cabinet meeting saying, "This is what we now believe!"

And then there are the Rothbardians ...

Even if you do point out that the axioms are flawed, they will simply deny it.

Yes. I was reading Murray Rothbard's book on the history of economic thought the other day. He wrote about Jean-Baptiste Say's rationalist method, which is similar to that of Mises. It is worth quoting to get an idea of where Misean/Rothbardian Austrianists are coming from:

A particularly outstanding feature of JB. Say's treatise is that he was the first economist to think deeply about the proper methodology of his discipline,
and to base his work, as far as he could, upon that methodology. From
previous economists and from his own study, he arrived at the unique method
of economic theory, what Ludwig von Mises was, over a century later, to call
'praxeology' . Economics, Say realized, was not based on a mass of inchoate
particular statistical facts. It was based, instead, on very general facts (fait
generaux), facts so general and universal and so deeply rooted in the nature
of man and his world that everyone, upon learning or reading of them, would
give his assent. These facts were based, then, on the nature of things (la
nature des choses), and on the deductive implications of these facts so broadly rooted in human nature and in natural law. Since these broad facts were true, their logical implications must be true as well.

My emphasis. The notion that people will be converted upon hearing the message simply reinforces what to me is a missionary zeal.

in arguments about public policies, when 'facts' are allegedly
set against the 'system' of economic theory, it is actually one theoretical
'system' poised against another, and, again, only theoretical refutation can
prevail.

This is why, when Austrianists (particularly of the mental Rothbardian variety who populate the internet) will, when you cite someone else's research against them, always say "The proof of a theory lies in its logic, not in its sponsorship" (ie "I can disclaim anything I like").

Try: Robert L. Vienneau's "Some Capital-Theoretic Fallacies of Austrian Economics"

thanks! that's very useful.

There's a chapter on "the marginal revolution in economics against the labour theory of value' in Binay Sarkar and Adam Buick's new book 'Marxian Economics and Globalization'. (available from [email protected])

available from [email protected]

This "email me and I'll send you a copy" stuff is really old, Can't you just upload it to the libcom library or something?

I don't own the copyright or have the text files, but I'll make some enquiries... (A hard copy of the book is CHEAP btw.)

I second the recommendation of Bukharin's "Economic Theory of the Leisure Class". Also perhaps try some essays by Maurice Dobb.

Jura,
Here’s a late reply to your question.

First, let's look at the basic methodological differences.
1 Marx used a Hegelian methodology, which is essentially collectivist
2 Von Mises is essentially Kantian and uses an individualist methodology
Applying the methodology of the former to critique the conclusions of the latter might, therefore, be an impossibility.

Second, there's economics.
1 Marx was a materialist and only accepted objective theories of value. He argued, logically, that the value (whether measured in terms of cost or value) had to originate in the original objective factor of production which was labour.
2 Von Mises is a subjectivist and argued that the value of anything is purely what an individual thinks it is worth. You can see why Marx rejected this approach, but only by deduction. You can see what Von Mises thought of Marx explicitly in his book Socialism, which is a classic.

I shall stick to the economic issues. Objective theories of value are, I am sorry to say, logically flawed. And Marx's attempt to demonstrate that embodied labour values would be reconciled with exchange values (or price) were unconvincing. Suggestions that, in the long-term, there is a close proximity between labour content and prices falls short of a complete proof. Most modern Marxists have abandoned the labour theory because they can't make it work. I don't blame them. Trying to reconcile the labour theory of value with prices is like trying to measure the height of a building using bathroom scales.

Marx died without critiquing subjective value theory work done in 1870-71 by Stanley Jevons in the UK, Karl Menger in Austria and Leon Walras in Laussane. Austrian school thinkers including Bohm Bawerk, Von Mises and Hayek had the benefit of reading and criticisng Marx at their leisure. Mr Bukharin, who is recommended, attended Bawerk's seminars when he was studying in Vienna. Small world.

I too would like to see a coherent Marxist critique of Austrian economics but fear there isn't one. This is not just because of the conflicting philosophical approaches. It is because Marxist economics depends upon objective theories of value.

It is impossible to avoid the conclusion that prices must always reflect subjective factors: or what an individual or groups of individuals think something is worth. The price of something will reflect common estimation as well as costs of production. The claim based on science that all the surplus generated by production is due to workers consequently founders once this is accepted. It follows therefore that it is logically impossible to see how the whole Marxist system doesn't founder as well.

I say that with no pleasure at all. (I also believe the Popperian critique of falsification is also false).

There is, however, a fruitful approach to criticising Austrian economics (and all neoclassical economics) that produces conclusions that Marx might have liked. Let me take you on a logical journey. This involves understanding that Austrian and neoclassical economics depends upon the idea of equimarginal choice. The theory of equimarginality, presented in every economics text book, shows an individual making choices between bundles of two different products: say bread and wine. The theory argues, quite coherently, that an individual will have in mind a range of combinations of two products that are equivalently satisfactory (this is sometimes known as an indifference curve). The idea of an indifference curve or a trade off between two products -- that reflects the fact that the more someone has of something the less additional pleasure he or she will get when he or she gets another unit -- is the key logical bridge between subjectivity (wishes, wants, needs, desires) to objectivity (things or things regarded to be things).

All neoclassical economics then quite logically carries out an exercise to show how changes in relative prices lead to a fall in demand for the good that becomes relatively more expensive; hence an individual demand curve, hence a market demand curve. On supply, Austrian economists diverge from some neoclassical economists, because Austrians argue that the decision to supply things is also determined in the same manner: it is driven by subjective trade offs (most economics text books fudge this matter, but the reality is this is a contentious theoretical issue for Austrians).

If you can remain within the conceptual model used by neoclassicals and Austrians (and it's not difficult to grasp), then the logic of the existence of a market looks indisputable. Austrians, unlike most economic theorists and many neoclassical economists, argue that it is logically impossible for the spontaneous order emerging from this process to be improved by government intervention. Most economists, in contrast, argue that there are many instances of market failure: monopoly, public goods, externalities, network failures etc. These failures constitute all the technical grounds socialists use to argue for government intervention (the other main one is equity).

But Austrians and neoclassicals agree that equimarginality is the key bridge between the subjective world of wishes and desires to the real world of goods and things.

The outstanding logical failure of their approach, and one that no one has yet spotted, is that this line of thinking founders when dealing with pure intangibles (ie products that have no physical embodiment like teaching, medical treatment or management consultancy). Since they don't have a shape, taste, smell, weight or the capacity to make a sound, intangibles have nothing that human senses can recognise. Therefore, a rational person seeking to choose between bundles of goods will be confounded: he/she won't be able to tell the difference between the intangible equivalent of wine and the intangible equivalent of bread. They will all appear to be the same.

If this is the case, and I am confident my logic is correct, then there can be no individual demand curve for any and all intangibles (which account for 80 per cent of UK GDP for instance). If there is no individual demand curve, there can be no market demand curve. If there is no demand curve, there can be no market. The logical application of the analysis of supply in intangibles producing the same outcome: no supply curve.

So in intangibles, logically and using the methodology deployed by Austrian School thinkers, the market not only doesn't work. It doesn't exist at all.

That means that price has no decisive role in determining the supply and demand of pure intangibles. The price paid for them can move around completely at random. Financial derivatives are pure intangibles. The volatility in financial markets since 2007, which will soon be repeated, is essentially explained by that.

There are vast implications flowing from this analysis, which I have presented to many conventional/Austrian economists with no effective response. If price is meaningless, as the logic of the Von Mises system suggests, then business corporations will suffer from the same impossibility of calculation that Von Mises charged in 1920 the socialist state would experience. It's a delightful paradox.

The conclusion is that both the state and business corporation will founder and wither as the proportion of tangibles grows in advanced economies. Economic efficiency demands intangible production should come solely from employee-owned partnerships with no external finance. And that all supporting infrastructure should not be run for profit (or perhaps the collective ownership of the means of production).

This is most peculiar. Because starting with the Kantian, individualistic and subjectivist methodology deployed by Von Mises and Hayek, you finish up, quite logically, with the conclusions that Marx reached using a Hegelian collectivist and objectivist methodology.

My conclusion is that Von Mises and Hayek are methodologically right but reach incomplete conclusions because they ignored intangibles, now the majority of GDP in all OECD countries. Marx was methodologically wrong, in some instances wildly so as in the labour theory of value, but his conclusions are startling correct: as economies advance to their full productive potential, business corporations will collapse, the state will wither, individuals will find full freedom and the means of production will no be owned for the purposes of profit.

I have a complete manuscript explaining this in full, including the history of the theory of value since Aristotle, that I am happy to share.
Yours Aye

Marx operated with both objective and subjective value forms, hence the dual character of the commodity. Exchange-value is the (capitalist) expression of both the subjective and objective categories of value. If you haven't grasped this elementary contradiction then you can't really understand Marx's theory of value.

Khawaga

Question one Can you explain to me how the following passage from Capital can be anything other than an objective theory of value?

“A commodity has a value, because it is a crystallization of social labour. The greatness of its value, or its relative value, depends upon the greater or less amount of that social substance contained in it; that is to say, on the relative mass of labour necessary for its production. The relative values of commodities are, therefore, determined by the respective quantities or amounts of labour, worked up, realized, fixed in them.”

“In saying that the value of a commodity is determined by the quantity of labour worked up or crystalized in it, we mean the quantity of labour necessary for its production in a given state of society, under certain social average conditions of production, with a given social average intensity, and average skill of the labour employed….If then the quantity of socially necessary labour realized in commodities regulates their exchangeable values, every increase in the quantity of labour wanted for the production of a commodity must augment its value, as every diminution must lower it.”

Chapter 6, Value Price and Profit, Karl Marx, 1865 (published in 1898).

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.”
Chapter 1, Critique of the Gotha Programme, Karl Marx, written 1875, published in 1891.

Second question:

Can you quote a passage from Marx that even approximately suggests that he accepted a subjective theory of value? I can't find one, though I'm constantly told that Marx had a synthetic theory of value that combined both objective and subjective factors.

Third question:

A broader one. How could Marx, who was philosophically a materialist, have accepted any definition of value (which is the cornerstone of his economics) that involved subjectivity, perception, belief, estimation and other pyschological and/or metaphysical explanations?

because labour has to be validated as socially necessary by consumption of the finished commodities; that demand could be completely whimsical and subjective, e.g. some fad product that took X amount of labour would have no value if the fad had passed by the time the goods reached market. Marx's whole approach to value is based on this interaction between objective and subjective processes, it's certainly not an 'embodied' theory of value as a thing but a theory of value as a social relation.

What Joseph Kay said.

The problem with the passages you cite is that you've cherry picked them. The passages you do cite refer to objective value, whilst ignoring those that refer to use-value (If you want to read about the subjective element of Marx's value theory, just read the first chapter of Capital Vol. 1. It's there in plain text (in fact, on the first page of that chapter.)).

The quote from Marx's critique of the Gotha programme demonstrates that you have not understood the value and use-value distinction. In Marxist lingo wealth refers to use-value, not value. Natural wealth can only become value through human labour and objectified in the commodity. If I plucked an apple from a tree and ate it would have a use-value for me, but no value. If I maintained an orchard in order to sell the apples after harvest, they would have a value.

Things could not be exchanged as commodities if they were not scarce, owned and useful. But these are not "objective" properties of the things themselves, and Marx never says otherwise. All are relations between things and people. Usefulness is dependent on physical properties, but it is not itself a property.
Similarly, commodities differ as the products of different sorts of useful, concrete labor. But when we look at what they have in common, nothing physical, concrete or useful is left. What is left is an abstraction, "a phantom-like objectivity, they are merely congealed quantities of homogenous human labour... As crystals of this social substance, which is common to them all, they are values - commodity values." (Capital vol. 1, 128).
Use-value itself is also a value, "the resume," to use Marx's term (see his essay on alienation in Early Writings), of the alienation of the workers from their activity. The embodiment of labour as value is not a transhistorical, technological "objectivity," but an alienated and fetishitic relation between subject and object: "it is only a historically specific epoch of development which presents the labour expended in the production of a useful article as an "objective" property of that article, i.e. as its value. It is only then that the product becomes transformed into a commodity." (Capital vol. 1, pp.153-4, my italicization).
This is the case in a capitalist society, and that is of course the object of Marx's work. Value is historically specific and not eternal; in a society where labour is communal relations between people do not manifest themselves as 'values' of 'things,' and Marx says as much himself.
Rather than constructing an empty self-contained philosophical system in Hegelian fashion, as he is often accused by Austrianists, Marx sets out to understand the concrete internal reality of capitalism by analyzing its "elementary form," the commodity.

edmundosullivan

Question one Can you explain to me how the following passage from Capital can be anything other than an objective theory of value?

You do realise that in classical economics there is a difference between prices and values? Exchange value is not the same as price. Exchange value is what the price market graviates to overtime. That is based on the costs of production and is pretty "objective" (if something cost £10 to produce, it cost £10 to produce no matter how much the capitalist subjectively wants it to be £5). The market price changes and how much a specific good's price is depends on market conditions.

Unless you understand this pretty basic point, classical economics (and Marx) will be lost on you. Needless to say, von Mises did not have a clue on this (as on so many issues!). For more information:

http://anarchism.pageabode.com/blogs/afaq/secCapp.html

edmundosullivan

Can you quote a passage from Marx that even approximately suggests that he accepted a subjective theory of value? I can't find one, though I'm constantly told that Marx had a synthetic theory of value that combined both objective and subjective factors.

No classical economist ignored utility (or use-value, as they called it). The only reason why exchange value (price) existed was because people subjectively valued the product and were willing to exchange money for it!

I should also note that utility theory is pretty much a mess, as admitted by the high priests of neo-classical economics. Given that the "Austrians" argue that utility is subjective and cannot be compared between people, it logically means that they cannot generate market-wide demand curves. Although that did not stop Rothbard drawing them...

On the mess which is mainstream economics:

http://anarchism.pageabode.com/afaq/secC1.html

and I would suggest reading Steve Keen's excellent Debunking Economics:

http://anarchism.pageabode.com/anarcho/review-debunking-economics

Oh, and I should suggest reading Nicholas Kaldor's critiques of von Hayek in the 1930s. The first made von Hayek totally re-write his theory. The second made him give up on business cycle theory... And I should also point to Sraffa's critique as well. Both are referenced here:

http://anarchism.pageabode.com/afaq/secC8.html

However, the first stage in seeing the difference between Marx and Mises would be to understand classical economics -- the framework Marx was working in.

Thank you respondents.

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.

There's been no cherry picking. But even if there was, this passage suggests, if the contributions others have made are accurate, that Marx had several theories of value, not just one. In his absence, how can anyone be certain which one he preferred? Wny should I accept someone else's belief in what he really meant?

Some contributors suggest that the Marxist concept of value was a synthesis between objective and subjective factors. This implies that he was in more in line with Alfred Marshall, who reconceptualised value theory in 1890 as an interaction between supply and demand that produced the market-clearing price. This showed that price could be higher or lower than the value many consumers and producers attached to it but that, in the absence of any certain way of tracking the behaviour of individual consumers and producers, there was no way of quantifying it. What then is distinctive about the Marxist theory of value apart from being less clear than Marhall?

Others say, no Marx was actually a subjectivist: value is a social relationship and an intangible. But if that is the case, how can that be reconciled by the objective idea that surplus value has been extracted from workers? In fact, how can a subjectivist concept of value be reconciled with a materialist epistemology?

Classical Economists like Smith recognised there was a difference between prices and values. In fact, every thinker since Aristotle, and before, has struggled with the difference between market prices and what something is really worth (either objectively or subjectively). 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.

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.

“The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations."
Chapter 1, Book 1, An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith, 9 March 1776.

So economic value starts with labour and then is increased through trade (presumably with other places creating things through labour).

“The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not on the greater or less compensation which is paid for that labour.”
Chapter 1, Principles of Political Economy & Taxation, David Ricardo, 1817

Both Smith and Ricardo both saw that market prices seemed to have, at least on occasions, no relationship to values. They tried to answer that, but failed. Marx was attempting the same question and also did not succeed, at least judging by the fact that people can interpret what he wrote as showing he was an objectivist, or a subjectivist or both. You simply can't be all three: it would be the equivalent of reproducing the concept of the Holy Trinity.

The argument that Classical economists were objectivists is supported by the criticisms of their work by a contemporary as follows:

“To the labour of man alone he (Adam Smith) ascribes the power of producing values. This is an error. A more exact analysis demonstrates, as will be seen in the course of this work, that all values are derived from the operation of labour, or rather from the industry of man, combined with the operation of those agents which nature and capital furnish him.”
Chapter 1, Treatise on Political Economy, Jean-Baptiste Say, 1803.

The refutation of objective theories of value, which suggests that the conventional wisdom, in Britain at least, during the 20th century was objectivist is expressed by one of the founders of the utility-based/marginal/subjectivist school.

“Repeated reflection and inquiry have led me to the somewhat novel opinion that value depends entirely upon utility. Prevailing opinions make labour rather than utility the origin of value; and there are even those who distinctly assert that labour is the cause of value. I show, on the contrary, that we have only to trace out carefully the natural laws of the variation of utility, as depending upon the quantity of commodity in our possession, in order to arrive at a satisfactory theory of exchange, of which the ordinary laws of supply and demand are a necessary consequence.”
Chapter 1, The Theory of Political Economy, W Stanley Jevons, 1871

That is a very clear definiton of what Jevons meant. He could be right. I think he's wrong (for reasons I won't present now). But at least it's comprehensible.

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

At the risk of being a complete bore, I present section one, chapter one of Capital. How this can be interpreted either as a subjectivist theory of value or a synthetic theory of value defeats me:

“The wealth of those societies in which the capitalist mode of production prevails, presents itself as “an immense accumulation of commodities,”[1] its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity. A commodity is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another."

Strong implication that a commodity itself is a thing, a tangible.

“The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference.Neither are we here concerned to know how the object satisfies these wants, whether directly as means of subsistence, or indirectly as means of production.”

Reaffirms that a commodity is an object, a thing which is separate from our subjective wants and needs.

"...Every useful thing, as iron, paper, &c., may be looked at from the two points of view of quality and quantity. It is an assemblage of many properties, and may therefore be of use in various ways."

Marx persists with the view that a commodity is an object and a thing not an idea or an intangible. He uses paper and iron as an example. He talks about qualities but seems to suggest these are objective qualities like colour and material content, not what we think the qualities of commodities are. Measurement is of a quantity, a volume which means the commodity must have a physical characteristic.

Marx introduces utility next. But Marx’s utility is not the utility of neoclassical economists, Jevons and the Austrians. It’s an objective characteristic (could Marx be any more clear?).

"..The utility of a thing makes it a use value. But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity. A commodity, such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use value, something useful."

So value is objective, tangible, measurable. What is price? Marx prefers to use the term exchange value.

"Exchange value, at first sight, presents itself as a quantitative relation, as the proportion in which values in use of one sort are exchanged for those of another sort,[6] a relation constantly changing with time and place. Hence exchange value appears to be something accidental and purely relative, and consequently an intrinsic value, i.e., an exchange value that is inseparably connected with, inherent in commodities, seems a contradiction in terms."

Marx now tries to explain why use values are different from exchange values (either through barter or through money).

"...A given commodity, e.g., a quarter of wheat is exchanged for x blacking, y silk, or z gold, &c. – in short, for other commodities in the most different proportions. Instead of one exchange value, the wheat has, therefore, a great many. But since x blacking, y silk, or z gold &c., each represents the exchange value of one quarter of wheat, x blacking, y silk, z gold, &c., must, as exchange values, be replaceable by each other, or equal to each other. Therefore, first: the valid exchange values of a given commodity express something equal; secondly, exchange value, generally, is only the mode of expression, the phenomenal form, of something contained in it, yet distinguishable from it."

It’s all objects, things not ideas or subjectivity. The best way to measure the value of a commodity is by reference to the amount of labour (power) used to make them.

"……If then we leave out of consideration the use value of commodities, they have only one common property left, that of being products of labour. But even the product of labour itself has undergone a change in our hands. If we make abstraction from its use value, we make abstraction at the same time from the material elements and shapes that make the product a use value; we see in it no longer a table, a house, yarn, or any other useful thing. Its existence as a material thing is put out of sight. Neither can it any longer be regarded as the product of the labour of the joiner, the mason, the spinner, or of any other definite kind of productive labour. Along with the useful qualities of the products themselves, we put out of sight both the useful character of the various kinds of labour embodied in them, and the concrete forms of that labour; there is nothing left but what is common to them all; all are reduced to one and the same sort of labour, human labour in the abstract."

Marx in the following uses the term embodied labour (Ricardian concept)

"Let us now consider the residue of each of these products; it consists of the same unsubstantial reality in each, a mere congelation of homogeneous human labour, of labour power expended without regard to the mode of its expenditure. All that these things now tell us is, that human labour power has been expended in their production, that human labour is embodied in them. When looked at as crystals of this social substance, common to them all, they are – Values."

What follows is a clear statement of the embodied labour theory of value

"…We see then that that which determines the magnitude of the value of any article is the amount of labour socially necessary, or the labour time socially necessary for its production.[9] Each individual commodity, in this connexion, is to be considered as an average sample of its class.[10] Commodities, therefore, in which equal quantities of labour are embodied, or which can be produced in the same time, have the same value. The value of one commodity is to the value of any other, as the labour time necessary for the production of the one is to that necessary for the production of the other. “As values, all commodities are only definite masses of congealed labour time.”

Marx moves on and tackles the old chestnut: why are diamonds, which are not useful, so much more costly than water? It’s all to do with labour value. It's objective factors.

"…. Diamonds are of very rare occurrence on the earth’s surface, and hence their discovery costs, on an average, a great deal of labour time. Consequently much labour is represented in a small compass. Jacob doubts whether gold has ever been paid for at its full value. This applies still more to diamonds. According to Eschwege, the total produce of the Brazilian diamond mines for the eighty years, ending in 1823, had not realised the price of one-and-a-half years’ average produce of the sugar and coffee plantations of the same country, although the diamonds cost much more labour, and therefore represented more value. With richer mines, the same quantity of labour would embody itself in more diamonds, and their value would fall. If we could succeed at a small expenditure of labour, in converting carbon into diamonds, their value might fall below that of bricks. In general, the greater the productiveness of labour, the less is the labour time required for the production of an article, the less is the amount of labour crystallised in that article, and the less is its value; and vice versâ, the less the productiveness of labour, the greater is the labour time required for the production of an article, and the greater is its value. The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labour incorporated in it."

Now Marx tries to deal with the problem that some useful things occur in nature. This things have use value, but not value. Value only comes about from the application of labour.

"....A thing can be a use value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, &c."

edmundosullivan - I don't have the time to engage properly with your posts at the moment,but there's a few things that jumped out at me from your last post that I wanted to quickly respond to

At the risk of being a complete bore, I present section one, chapter one of Capital. How this can be interpreted either as a subjectivist theory of value or a synthetic theory of value defeats me:

“The wealth of those societies in which the capitalist mode of production prevails, presents itself as “an immense accumulation of commodities,”[1] its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity. A commodity is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another."

Strong implication that a commodity itself is a thing, a tangible.

“The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference.Neither are we here concerned to know how the object satisfies these wants, whether directly as means of subsistence, or indirectly as means of production.”

Reaffirms that a commodity is an object, a thing which is separate from our subjective wants and needs.

"...Every useful thing, as iron, paper, &c., may be looked at from the two points of view of quality and quantity. It is an assemblage of many properties, and may therefore be of use in various ways."

Marx persists with the view that a commodity is an object and a thing not an idea or an intangible. He uses paper and iron as an example. He talks about qualities but seems to suggest these are objective qualities like colour and material content, not what we think the qualities of commodities are. Measurement is of a quantity, a volume which means the commodity must have a physical characteristic.

everything you've mentioned above seems to me that you're trying to prove that marx's value is objective through showing that commodities themselves are physical objects/objects - now putting aside the fact that the determining condition here that a commodity is a 'thing that by its properties satisfies human wants' doesn't mean that that thing is required to be a tangible - the key thing you're missing is that while a commodity may be a bearer of value it doesn't mean that the physical commodity and the value it reflects/bears are the same thing - just because the commodity may be tangible/objective it doesn't mean that its value is - if you take a commodity that currently bears value and transport it to robinson crusoe's island/the moon/a pre/post capitalist society - the physical thing may be transported but its value certainly doesn't travel with it - so asserting that a commodity is a physical tangible object does not get you any further down the road of proving that value itself is objective

Marx introduces utility next. But Marx’s utility is not the utility of neoclassical economists, Jevons and the Austrians. It’s an objective characteristic (could Marx be any more clear?).

"..The utility of a thing makes it a use value. But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity. A commodity, such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use value, something useful."

So value is objective, tangible, measurable.

In contrast to my point above re value not being one and the same as the object which reflects that value - here all marx is saying is that the properties which contribute to making a thing a use value to someone (in contrast to its value/exchange value) is inherent within the object itself - however the ultimate test of whether something is a use value or not is not wholly dependent upon the object itself but by the person (or society) who may or may not have a use for it - so you're wrong to project from this that use value is an objective charactersitic - if all human beings were wiped out tomorrow leaving everything else exactly the same, those objects would no longer have a use value even though their physical (utility giving) characterstics are unchanged. The object talked about above that we transport to robinson crusoe's island would most likely cease to be a use value upon it's arrival, despite it's physical properties remaining intact and unchanged. So it's wrong to project from this that use value is an objective charactersitic. You even provide a quote from marx in your own post that demonstrates this, i.e .a commodity [which by definition is a use value] is a

'thing that by its properties satisfies human wants'

i.e. a thing is only a use value if it's properties satisfies human wants - it's properties are certainly necessary in it being a use value but they're not on their own sufficient, a human/society has to have a need for those satisying properties for the thing to be a use value

So your assertion at the end of the quote above that value is 'objective and tangible' is not supported by, and bears no connection to, the quotes from marx which you provide - It would be easy to provide countless other quotes from that same first section of capital vol1 back at you to support this point, but there doesn't appear to be any need to do this. I'd agree however that if a commodity's use value (and therefore the socially necessary labour required for it's reproduction) is validated by the complexities of society's needs & wants then its value - post this complex subjective validation - is then objective (although continually dependent upon these subjective contingencies) and in theory measurable (although in practice, probably not) - however even then there's no way you can get from that to claiming that its value itself is tangible - objective but immaterial is as close as you're going to get in that regard.

So in summary you seem to think for marx value is some kind of objective, tangible thing that has an existence independent from the social relations that give rise to it, this may have been the mistake of classical political economy prior to marx that he was (somewhat unsuccessfully in my opinion) trying to transcend, but it's certainly not something that can be attributed to him. For what it's worth I think marx is quite weak on the subjective parts and often seems far too happy to abstract away the issues that they raise, and while this is a tool that's required to illuminate/explore other areas it at times seems less than satisfying.

I've got some observations on the rest of your post(s) but don't have time to properly respond at the moment, i'm urgently needed in libcommunity

Marx is describing capitalist society, edmund. He is not making any metaphysical claims as to value being a transhistorical Objectivity. As he clearly states, 'value' could only exist in capitalism. We speak of use-values in a society defined by the commodity form. A caveman would not think of his tools or his game as "use values." These are not absolute qualities, inherent in the physical object regardless of the social makeup.

edmund

“The wealth of those societies in which the capitalist mode of production prevails, presents itself as “an immense accumulation of commodities,”[1] its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity. A commodity is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another."

Strong implication that a commodity itself is a thing, a tangible.

What Marx is saying here is that the commodity is a real thing and that it is the building block of the society he's analyzing. A commodity is not a thing outside of capitalism.

He is emphasizing the "thingness" of the commodity however because outside of the act when exchange-value is manifested through purchase, we tend to not think of the commodity at all; it is so basic to capitalism that it is almost entirely obscured.
As Marx says, the commodit is accepted as it "appears at first sight..., an extremely obvious, trivial thing." (Capital vol. 1, 163). He specifically argues that it is a "mistake [to treat the commodity] as [an] eternal natural form [and therefore] necessarily overlook its specificity." (174) In other words, the commodity is not perceived as being a value in addition to a use-value, a "thing" which exists only in a specific kind of society.
Replying to Adolph Wagner (an "academic socialist"), Marx wrote that "neither 'value', not 'exchange-value' are my subjects, but the commodity... What I start from is the simplest social form in which the labour-product is presented in contemporary society, and this is the 'commodity.'" (Marx "Notes on Adolph Wagner" in Texts on Method, 1975, pp.183, 198)

It’s all objects, things not ideas or subjectivity. The best way to measure the value of a commodity is by reference to the amount of labour (power) used to make them.

I'm not sure what the objection here is. Marx is talking about the "third thing" that commodities have in common, which, as it turns out is, "a phantom-like objectivity, they are merely congealed quantities of homogenous human labour... As crystals of this social substance, which is common to them all, they are values - commodity values." (Capital vol. 1, 128).
He explicitly critiques the so-called objectivity of the commodity value; only because it is the product of dead labour does it appear so. But he goes beyond that in Capital obviously, he goes beyond the postulations of the classical economists.
On the subject of embodied theories of value, when Marx says that abstarct labour is embodied in the commodity as value, he is NOT just echoing Ricardo's observation that labour is "bestowed" on commodities and adding a bunch of weird philosophical shit. Again, Marx viewed the embodiment of labour as value not as a transhistorical reality but a specific relation within capitalism.
One reason that Marx's work is seen as too "philosophical", I think, is because of the empiricist tradition which condones only investigation into how things behave, not into the nature of what they are. But Marx is not falling into metaphysical mumbo-jumbo by analyzing what the commodity is either.
I would love to continue this post, as looking up quotes gives me a chance to brush up on my Marx and this is an interesting topic anyway, but I have to leave it at that for now.

Thank you oisleep and Vlad.

Couple of reactions.

1 There sees to be a division within Marxist economics, and within critics of Marxist economics as well, about whether the Labour Theory of Value is objective, subjective or synthetic (ie both subjective and objective). But I can refer you to people (who should know) who either aren't explicit about it or who imply that the LTV is so obviously objective they don't even bother to explain it. Here's one example among many:

"Marx began with the simple assumption, accepted by classical political economy, that the price of a good was determined by it's value: that is, its labour. ...Marx solved this conumdrum by a beautiful conceptual device. Labour time was, of course, a way of measuring value QUANTITATIVELY...So the price of labour time, and the price of material input, must be explained by the same theory of value." Meghnad Desai Marx's Revenge 2002

Desai taught economics at the LSE for about 30 years and was, probably, the only economist there at some points who claimed an intimate knowledge of Marxist economics.
WHY DID NOT DESAI SAY SIMPLY: But value, as Marx understood it, was not objective, at least not objective in the sense that the Classical economists Smith and Ricardo accepted it?
He never manages it in more than 360 pages. Why?

2 The point that you both seem to make is this: there is the value of something as it is perceived (subjective) and value as it is in itself (objective/intrinsic). The parsing appears to be: but there are objective perceptive comptences (measurement, quantification) and subjective perceptive competences that involve feelings, emotions. Hence the expression (not used by Marx himself: why not?) that value is objective but immaterial (I like it!).

If that is definitely what Marx meant (and absent an explicit statement, or a voice from the grave, how can I be sure?) then I agree: Marx's theory of value was subjective. But if he didn't say that explicitly -- and given the host of sentences that at least imply objective value theory -- and Marxist economics only works with a subjective theory, then Marx was wrong, at least part of the time.

3 If the Marxist theory of value is subjective (and objective but immaterial must mean that), what are the implications for the assertion that Marxism proves capitalism objectively exploits workers (not just gives the impression it does or can stand accused that it does, but concretely, tangibly, materially, universally, historically etc does)? 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? But it won't necessarily happen, ever (this seems to Desai's final conclusion).

4 I'm not blogging to garner support for an objective LTV. I'm trying to place Marx's theory of value within the history of theories of value from Aristotle to the present day. Some are purely objective. Some are purely subjective. Some are synthetic. I had placed him with the objectivists like Smith and Ricardo. Now I'm not so sure. But it's not important.

5 What I'm really after is an understanding of what Marx really thought value was and how it was created. I thought he thought that value was a tangible thing, embodied in tangible things. The bloggers here say no: he thought it was an intangible thing within a tangible thing (a commodity). They also say that value is created in social relations, an intangible, subjective process. Now this much makes sense.

The theory of value creation that originated this exchange is inspired by an attempt to understand the implications of the rise of service production (intangibles), now accounting for more than 80 per cent of UK GDP.

Intangibles, by definition, can't be seen, touched, tasted, smelt or heard. If they could be, they would be tangible. An intangible is, for example, a conversation. This is just a word to describe an indescribable. It doesn't exist like a book exists. The conversation is an interaction: a social relation. And it is this interaction that creates value: an intangible that only exists in the minds of the participants in the conversation. It is objective but immaterial. Why does an interaction create value rather than take existing value and just transform it? It is because humans have the capacity to encourage each other to be more productive. Examples that instantly spring to mind are teacher and pupil; doctor and patient. The teacher, like Robinson Crusoe before Friday, creates no value on his or her own. He only does so by encouraging a pupil to think and do more. And the pupil in turn encourages the teacher to teach better. So that point is dead right.

Reversing out of intangibles into tangibles, this idea can still hold. Tangibles support value creation through their use (use value). But value is actually created in the human interaction (social relations) these tangibles facilitate. The price of the table is not the determined by the table itself but the use to which the table is put to support a human interaction (social relationship). Same for shoes. Same for cars. Same for everything. These are all commodities, but they don't contain value or transfer value (break with Marx's logic as presented by Oisleep here!). They FACILITATE value creation.

If you can grasp all that, the powerful conclusion is that price (or the exchange value) in a service transaction is determined by the subjective value each of the participants attaches to the human interaction. There is no determinate way, logically, to say what that price might be.
This means that price has no direct traction over, not suborbination to, value creation in intangibles. That in turn means the prices in service transactions can fluctuate wildly and have no impact on value creation. This is precisely what we have seen in the financial market which involves trade in derivatives and other instruments that are documentary expressions of an intangible.

That means that in intangibles, there can be no demand curve, no supply curve and no market. In intangibles, the market doesn't just not work. It actually ceases to exist.

There are a host of other implications that can be logically derived from this foundation: business corporations in an economy dominated by intangibles will suffer from the impossibility of calculation that Von Mises validly charged would cripple the state in an economy dominated by tangibles. Business corporations exist, and the only justification for their existence, is to capture, process and react to prices. If price has no purpose in vallue creation, neither does the corporation. Same goes for much of what the state does.

Business corporations in economies dominated by services/intangibles will suffer inexorably declining profit rates as they are forced to bid up the wages of workers (this might be the subject of a further discussion). The capacity of business corporations producing services to drive down wages because of their control of the means of production is much lower than that wielded by corporations producing tangibles because the means of production required by intangible/service workers are on a much smaller scale. All we needed for this process of value creation is a cheap laptop costing less than one month of an average worker's wage in the UK. The big threat is private control of the web, which is the potential threat of Google and the search engine corporations.

So in intangibles, the state and the business corporation will wither. The only viable alternative is an economy where people creating value through human interaction are entirely liberated from the state and the corporation to interact as they as individuals wish, like us, now.

This will be an obligations based economy rather than the rights-based economic system required when tangible production and trade dominates (and where the transfer of the right to enjoy a commodity is secured through contract enforced by a legal code, the courts and the state. If a thing is intangible, how can anyone be sure the right to enjoy it has been transferred? This leads to a discussion about the role of intellectual property rights and other intangible assets (capital) which I shan't initiate now).

Finally, the means of production -- the tangibles that support service value creation -- should be owned and operated on a non-profit basis (not sure if that necessarily means state ownership, at least not in the way it applied in the Soviet Union and the UK and elsewhere.) This will widen access to the means of production that is necessary for expanded value creation in a service economy.

Thank you. You've helped a lot.

By the way, to original bloggers, Steve Keen argues that Marxist economics would be improved if the entire LTV were disposed of.

Sraffra's system works beautifully only because it excludes prices (exchange values) entirely, and, by implication, subjectivity and its infernal elusiveness.

Finally, this line of reasoning presents a potential anti-Von Mises approach, though its logic should be acceptable to Von Misesians too!

edmundosullivan

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

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

And Marx was working in that framework!

edmundosullivan

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

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

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

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.

edmundosullivan

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.

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:

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.

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.

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.

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?

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

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

edmundosullivan

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

edumndosullivan

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.

Parker

edumndosullivan

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.

edmundosullivan

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.

Vlad336

Parker

edumndosullivan

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.

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.

edmundosullivan

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

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.

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?

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 :p

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

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).

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).

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.

edmundosullivan

"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:

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?

"...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"...

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.

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)

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.

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

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

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.

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

What is the sphere of exchange/circulation, exactly?

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.

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?

[

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?

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

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.

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.

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.

edmund

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.

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.

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.

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.

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.

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.

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.

waslax

edmundosullivan

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.

Well,

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...

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.

jesus fuck

"philosophy"

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)

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

https://www.marxists.org/archive/bukharin/works/1927/leisure-economics/index.htm

https://www.amazon.com/Economic-Theory-Leisure-Modern-reader/dp/085345261X/ref=sr_1_1?ie=UTF8&qid=1548094843&sr=8-1&keywords=bukharin+economic+theory