Theories of value
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Interesting link here
https://www.marxists.org/reference/subject/philosophy/help/value.htm
Here's an interesting thought and its one that Ive come across many times in the literature – is it possible to combine aspects of the subjective theory of value with the labour theory of value such that they complement rather than contradict each other. How far can we push this line of argument, if at all?
alanjjohnstone wrote:Sorry, but i don't even understand the question….Spell it out more simply for the ignoramuses.Hi Alan, The argument is the the LTV is not a theory of prices and that the prices of goods generally sell either above or below their values even if, in the long run, they coincide. Theoretically this must be the case since the pressure of market competition constantly works to eliminate discrepancies between supply and demand thus cancelling out their effect Marx explained this rather well here: If supply equals demand, they cease to act, and for this very reason commodities are sold at their market-values. Whenever two forces operate equally in opposite directions, they balance one another, exert no outside influence, and any phenomena taking place in these circumstances must be explained by causes other than the effect of these two forces. If supply and demand balance one another, they cease to explain anything, do not affect market-values, and therefore leave us so much more in the dark about the reasons why the market-value is expressed in just this sum of money and no other” (Marx, K, Capital v3 pt 2, ch 10) The point is that supply and demand never do cancel each out and the market is in a constant state of disequilibrium. Hence the divergence of price from value at all times, This doesn't negate the law of value, it simply qualifies it and according to some, gives some scope for the subjective theory of value to come into play as an explanation for the determination of prices, For example, there is some merit in the law of diminishing marginal utility (although there are also exceptions to this law). Clearly the second ice cream you eat yields less utility or use value/pleasure than the first and third even less than the second , There comes a point – the margin – where eating more icecream yields no utility and even make for a disutility – you feel sick! That is when supply equals demand and the price starts falling thereafter What I am suggesting is that there are aspects of the subjective theory which we can accept but not the larger claims it makes about the relationship between price and value – in particular, its claim that prices are solely determined by subjective judgements of individuals which is pure bunkum. Bukharin demolished this argument by amongst other things that subjective value judgements are also influence by prices so the subjective thoery of value was in effect based on a circular argument. Marx is I think acknowledged a role for subjective factors when he pointed out that"nothing can have value, without being an object of utility” (Marx K; 1867, Capital V1 Ch 1 §1). The difference is that the subjective theory of value makes exchange value a function of use value whereas the labour theory of value sees these things as quite separate
Clearly the second ice cream you eat yields less utility or use value/pleasure than the first and third even less than the second , I would dispute this statement!
I thought that even followers of the view that use-value entered into economic value (the theory HM Hyndman described as "the final futility of final utility") had abandoned the view that subjective utility can be measured (as it differs from person to person, eg Tim) in favour a more "objective" approach based on averages. In other words, they think in terms of more and less (relative) than of an absolute figure. Or maybe there are still a few backwoodsmen around who think you can measure use-value?
Exactly, how could you assess the subjective value of beer. Is it the eighth pint that gets me drunk or the seven I had before the eighth pint. Which has the greater utility.
Quote:Finally, it should be borne in mind in considering the various forms of manifestation of ground-rent, that is, the lease money paid under the heading of ground-rent to the landlord for the use of the land for purposes of production or consumption, that the price of things which have in themselves no value, i.e., are not the product of labour, such as land, or which at least cannot be reproduced by labour, such as antiques and works of art by certain masters, etc., may be determined by many fortuitous combinations. In order to sell a thing, nothing more is required than its capacity to be monopolised and alienated.Marx, Capital IIIMarginalism treats each commodity as if it were a unique instance that can be monopolised, and so arrives at the view as per Marx above. beause Marx goes into the system behind the exchange events, he derives value from a social system. absically, all exchanges are what the buyer and seller are willing to pay (the libertarian fantasy) when seen at that precise moment. The question is how we got to that moment. Nor does it account for the infinite ultility of money, there is no marginal utility of money, more money can always buy more and do more.
Tim Kilgallon wrote:Clearly the second ice cream you eat yields less utility or use value/pleasure than the first and third even less than the second , I would dispute this statement!Why Tim? I don't think its an unreasonable gneralisation. I mean there are exceptions to the law of diminishing marginal returns but by and large it holds true, I think. If you continue to eat ice cream after ice cream I guarantee your desire for ice cream will diminish to zero soon or later. Unless you have an infinite capacity to eat ice cream! Thinking about it, the law of diminishing marginal returns bears an interesting relation to that basic dogma of bourgeois economics – that our demands are unlimited. I understand its more complicated than this and that as the utility we get from one good diminishes so we are supposed to switch our attention to another that we can lust after, but all the same…
Young Master Smeet wrote:Marginalism treats each commodity as if it were a unique instance that can be monopolised, and so arrives at the view as per Marx above. because Marx goes into the system behind the exchange events, he derives value from a social system. basically, all exchanges are what the buyer and seller are willing to pay (the libertarian fantasy) when seen at that precise moment. The question is how we got to that moment. Nor does it account for the infinite utility of money, there is no marginal utility of money, more money can always buy more and do more.Yes this is something that Mandel pointed out. The problem centres on the difficulty of“reconciling the theory of prices resulting from supply and demand with a theory of prices resulting from the quantity of money in circulation”. According to Mandel: It can be said that the Marginalist school was never able to solve the problem of the “marginal value of money”, and that for this reason it remained dualistic, combining a subjective theory of value with an objective theory of money (e.g. the quantity theory). It is clear that an increase in the “stock of currency” does not necessarily reduce the “marginal value” of this stock, as would happen in the case of an increase in a stock of corn, since money can be used to buy, one after another, commodities which correspond to different needs of equal intensity. The dualism of the theory is seen if one imagines an increase in the stock of currency suddenly causing a rise in wages, without any change in the marginal value of the commodities concerned" https://www.marxists.org/…/marxist…/marginalists.htm) This along with Bukharin's devastating critique of Marginalism (that it is based on a circular argument) and various other criticism that can be made of the subjective theory of value means that it rather resembles a piece of cheese full of holes
ALB wrote:I thought that even followers of the view that use-value entered into economic value (the theory HM Hyndman described as "the final futility of final utility") had abandoned the view that subjective utility can be measured (as it differs from person to person, eg Tim) in favour a more "objective" approach based on averages. In other words, they think in terms of more and less (relative) than of an absolute figure. Or maybe there are still a few backwoodsmen around who think you can measure use-value?The Austrian school of economics – von Mises and co – never did believe that subjective utility could be measured and attacked those early attempts you refer to, to produce some kind of objective measure of utility or use value (i think "utils" was name of the unit of utility suggested by some economist whose name I forget). The Austrians argued that subjective judgments could only ever be ranked along an ordinal scale and could never be measured in a cardinal sense The question is how then do subjective preferences get translated into measurable prices, what is the mechanism by which this is supposed to happen? I think it is at this point that whole explanation offered by them collapses. They don't really have a plausible theory of how prices are determined by subjective values – how, for example, does the subjective value that a starving pauper places on a four square meal impinge on the price of the meal? – because they can't seem to see that subjective values are mediated by other factors like how much purchasing power you have. Subjective values can obviously influence prices but they don't in the end determine them
robbo203 wrote:Tim Kilgallon wrote:Clearly the second ice cream you eat yields less utility or use value/pleasure than the first and third even less than the second , I would dispute this statement!Why Tim? I don't think its an unreasonable gneralisation. I mean there are exceptions to the law of diminishing marginal returns but by and large it holds true, I think. If you continue to eat ice cream after ice cream I guarantee your desire for ice cream will diminish to zero soon or later. Unless you have an infinite capacity to eat ice cream!
I am a very greedy man, nowadays, I am also a very fat man
Tim Kilgallon wrote:robbo203 wrote:Tim Kilgallon wrote:Clearly the second ice cream you eat yields less utility or use value/pleasure than the first and third even less than the second , I would dispute this statement!Why Tim? I don't think its an unreasonable gneralisation. I mean there are exceptions to the law of diminishing marginal returns but by and large it holds true, I think. If you continue to eat ice cream after ice cream I guarantee your desire for ice cream will diminish to zero soon or later. Unless you have an infinite capacity to eat ice cream!
I am a very greedy man, nowadays, I am also a very fat man
You wanna get in shape for the revolution, comrade! Quit eating all those icecreams; you will be "marginally" better off for it!
come the revolution comrade, no need for barricades, they can use me (not that there will be barricades anyway)
I'd have thought that Marx's and academic economics's view as to how prices are fixed is more or less the same, i.e.Marx: cost of production + going rate of profit.Academic economics: cost of production, including profit as (supposed) cost of entrepreneurship.Both allow for variation up or down depending on short-term market conditions but neither bring in subjective utility. In fact, doesn't conventional academic economics claim that it can explain everything without needing the concept of "value" (as opposed to price) and so these days doesn't have anything theory of value?
ALB wrote:I'd have thought that Marx's and academic economics's view as to how prices are fixed is more or less the same, i.e.Marx: cost of production + going rate of profit.Academic economics: cost of production, including profit as (supposed) cost of entrepreneurship.Both allow for variation up or down depending on short-term market conditions but neither bring in subjective utility. In fact, doesn't conventional academic economics claim that it can explain everything without needing the concept of "value" (as opposed to price) and so these days doesn't have anything theory of value?I suppose it depends on which academics economists you are talking about. The Neoclassical marginalist paradigm is diverse. The followers of Alfred Marshall differ from the Austrian School. And the so called Market Socialists like Lange are different again. But marginalism itself is rooted in the concept of economic subjectivism and utility even if the economists might dispense with mentioning it, let alone attempting to measure it. And economic subjectivism is underpinned by an epistemology of "methodological individualism" which sees the big problems of the day as arising from individual shortcomings rather than systemic failuresFrom that point of view I would say there is huge gulf between Marx's approach and the approach of most academic economists insofar as the latter ground themselves in a marginalist paradigm
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