Theories of value

[ALB]

I think we're talking at cross purposes. Of course Marx's approach is different from that of conventional academic economists. I wasn't talking about this but about their views on how prices are calculated and realised in practice.As to whether academic economists now have a theory of value separate from a theory of price, here's what the Penguin Dictationary of Economics says (or said in its 1987 edition):

Quote:

Late-nineteenth-century economists like A. MARSHALL subverted theories of value to theories of price, determined by demand and supply; with each determined by MARGINAL UTILITY or MARGINAL COST. Since then, the theories of price and value have not been separated except by followers of K. MARX.

They seem to have more interest in "utility" rather than "cost", maybe because if they looked into cost too much they would find that this can't be separated from labour expended.

[Young Master Smeet]

Is this related to the market efficiency hypoothosis?  Whatever price the market pays is the 'right' price, because markets have all the best information available?  It's certainly a very incurious empiricism at best.  I suppose economists have to shy away from philosophy…. https://en.wikipedia.org/wiki/Efficient-market_hypothesis

[robbo203]

ALB wrote:

I think we're talking at cross purposes. Of course Marx's approach is different from that of conventional academic economists. I wasn't talking about this but about their views on how prices are calculated and realised in practice.As to whether academic economists now have a theory of value separate from a theory of price, here's what the Penguin Dictationary of Economics says (or said in its 1987 edition):

Quote:

Late-nineteenth-century economists like A. MARSHALL subverted theories of value to theories of price, determined by demand and supply; with each determined by MARGINAL UTILITY or MARGINAL COST. Since then, the theories of price and value have not been separated except by followers of K. MARX.

They seem to have more interest in "utility" rather than "cost", maybe because if they looked into cost too much they would find that this can't be separated from labour expended.

 Hi Adam,  Fair point. And your re right – they do seem to have more of an interest in utility than cost notwithstanding the reference to marginal costs  This means they have ultimately to fall back on a subjective theory of value with all the absurdities that that entails.  The Austrian economists at least  have the merit of stating clearly what the others merely imply.  Von Mises put it like this:  “It is ultimately always the subjective value judgments of individuals that determine the formation of prices…Market prices are entirely determined by the value judgments of men as they really act”.(Mises, L. von. 2008. Human Action: A Treatise on Economics. The Scholar’s Edition. Mises Institute, Auburn, Ala, p.329–330). There are numerous reasons why this statement is demonstrably false, not least because subjective value judgements are themselves heavily influenced by objective prices as Bukharin pointed out. Also it fails to overlook how these judgements are mediated by purchasing power in capitalism.  The beggar's desire for a square meal counts for nothing without the money to purchase such a meal. The problem with  economic subjectivism is that it frames the approach to the problems of society in essentially atomistic and individualistic terms. After all it is only the individual who can make subjective judgements; society is not an individual. This means it is completely unable to grasp the systemic nature of these problems which it has by default to put down to individual shortcomings It cannot see the wood for the trees because all it is looking at is the individual tree

[ALB]

Move over Bukharin, here's what FC Watts wrote on this theory in the January 1908 Socialist Standard (full article on Impossiblist1904's site here):

Quote:

When the rising bourgeoisie were directly concerned in the processes of production, when their personal directing activities were also involved, their political economy, from Sir William Petty to Ricardo, came to recognise labour to the full as the creator of value. As, however, with economic development the capitalists became less and less personally connected with the labour process, as they become increasingly mere absentees, coupon clippers, and ignorant of production, which came to be carried on entirely by hirelings, and as moreover by the culmination of classic economy by Marx the kernel of capitalist exploitation was laid bare, so it became necessary to find a theory of economics that did not lead with inevitable logic to Socialism. At the same time, by the capitalist becoming a consumer solely, so the consumer grew in importance in his eyes and the attributes of consumption in the form of “demand,” “ utility,” etc. — the reflex of the value process — became its foundation from the inverted viewpoint of the parasite. Thus a school grew into prominence which no longer recognised value as a result of the application of labour to useful ends, but held in effect that under the guise of “demand,” “esteem,” and “utility,” the value of a commodity was the creation, not of the producer, but of the consumer! To the workers, however, in daily contact with the material basis of life, such a theory must ever remain unreal and fantastic, and with them the fact of the worker as source of value must retain its fundamental importance until and unless a time comes when wealth is produced without labour, and when palaces, banquets and motor cars descend ready made from heaven.

[Dave B]

 I think that the utility theory of value was first layed out by Jevons. https://en.wikipedia.org/wiki/William_Stanley_Jevons  I think the utility theory as a model system works were stuff can’t be reproduced, or produced (eg bottles of beer and coats rescued from a shipwreck on a desert island.) Or when the hows , whys and where do ‘commodities’ come from is overlooked or not investigated. Which you might expect from and with a bourgeois bias. To say that products are labour is a tautology not a political forced hypothesis. The labour theory of value drops out first as an objective human material reality in simple commodity production; as Rubin wrapped up in a paragraph somewhere.   Based on jealousy and envy of applied effort. Thus I, with my self employed bourgeois limitations, am not going to put up with exchanging 40 hours of my effort for 20 hours of somebody else’s effort.  If a maker of blue suede shoes is getting the same amount of stuff for 20 hours of work as I am getting for 40 hours of effort producing goose eggs; then I am in the wrong game. I will re skill, sell up my goose herding capital and go into the blue suede shoe making lark and sell and undercut the other blue suede shoe maker. Or increase supply and decrease demand, a process that will continue until the differential in income versus reward is eroded. An analogous thing goes on in the labour market today. We sell our labour power which is still a commodity even in wage labour; the fact that it is discounted further back is neither here nor there for the moment. These superman gobshite £50 per hour computer programmers (blue suede shoe makers) from the 1990’s and for that matter Harry Enfield ‘loads of money’ plasterers were laughing. Our ‘goose herders’, since then, from Minsk to Mumbai have moved in to establish more of a market equilibrium in the price of effort with the commodity of programming labour power. In the old simple commodity producing days the limitations were just start up capital, and re-skilling. When the ratio of means of production and value of labour power were low; or in other words if you were reasonably frugal you could save up enough to buy yourself a handloom or whatever everything worked ok    Today one cannot decide that Joe the domestic plumber stuff is for suckers and the big money is to made in making cars or pharmaceuticals as for that you need loads of dosh to start off with. Simple commodity production (the self employed) persists in spheres of economic production where start up capital is low. But the capitalist class, with the dosh, still play the same basic game as the blue suede shoe maker and goose egg producers. Except it is not their own labour power that they are jealous/envious of, but the labour power that they buy.  

[robbo203]

Quite a good article here in support of the LTV https://unlearningeconomics.wordpress.com/2013/07/20/reconsidering-the-labour-theory-of-value/

[Author]

Posts