From: Alejandro Agafonow (alejandro_agafonow@YAHOO.ES)
Date: Mon Aug 13 2007 - 06:09:42 EDT
Dear Jurriaan:
When I use the adjective «clever» to refer to some of your statements I mean that they show a good understanding of the issues in question. I’m not accusing you of anything. I agree with you.
BENDIEN: «The law reaches its maximum force, if there is open (free) competition not just in the circulation but also in the production of all commodity-products, i.e. if all obstacles to market-competition are removed from both production and circulation. »
By obstacles to market competition do you mean those that impede the equalization of marginal rates of transformation? Monopolization, lack of knowledge about business opportunities, lack of knowledge about commodities qualities or/and technical facilities for production, etc.
For Engles only when market reaches the point where commodities are fully useful, then commodities have its full labour value. On the contrary, market mechanism depreciates its labour content. But that point of full usefulness someway implies the fictitious walrasian-paretian equilibrium. If it is never reached labour values remain constantly one step backward and to my understanding the transformation purpose lacks relevance. Now I’m aware you didn’t mean this.
BENDIEN: «PART of the way that the division of labour is structured, is attributable exclusively to the prevailing structure of property rights. It has nothing to do with the efficient allocation of resources. […] In the case of the USA today, at least 40 million people are employed in administrative occupations (public and private) concerned mainly with facilitating transactions that give access to goods and services. This does not make much rational economic sense. In the USA there are about 3 million truck drivers, and many of them truck food from one side of the country to the other, burning fossils fuels. In particular cases, the "fresh" food is no longer fresh upon arrival, and up to 40% of "fast food" produced is wasted and thrown out. Why all this occurs, often has little to do with economic sense, but with property rights and the income derived from those property rights.»
If by «attributable exclusively to the prevailing structure of property rights» you mean that we have to redistribute property or resources to fully take advantage of market mechanism, I’m with you. But you have in mind another thing. It is the fallacy of engineer reasoning. The pricing cost will soon revel that if we want to reduce «facilitating transactions» and «truck services» for food and their «food wastage» we would have to take away resources that are satisfying more urgently preferences in other places (supposed an equitable distribution of income) to fulfil engineer fancies. These allegedly wastages are economically justifiable due to the structure of consumer preferences and if we let the engineer cancel technical inefficiencies we would have a myriad of economic inefficiencies impeding to reach a right allocation of resources.
This brings us to another issue. It’s true, like you said, that economic value has objective and subjective aspects, but contrary to the belief of neoclassical economists, the objective content of prices are very limited letting us just working arithmetically with them. Prices are only an indirect way of utility cardinalization, but in last resort there is a subjective content. So it is a misconception to state that prices are an objective expression of value. Consider the Mises’s quotation below:
«Neither is objective exchange-value measurable, for it too is the result of the comparisons derived from the valuations of individuals. […]If in this sense we wish to attribute to money the function of being a measure of prices, there is no reason why we should not do so. Nevertheless, it is better to avoid the use of a term which might so easily be misunderstood as this. In any case the usage certainly cannot be called correct - we do not usually describe the determination of latitude and longitude as a 'function' of the stars.» pp. 48-49. (Ludwig von Mises, The Theory of Money and Credit, 1912, New York, The Foundation for Economic Education, 1971.)
Kind regards,
Alejandro Agafonow
----- Mensaje original ----
De: Jurriaan Bendien <adsl675281@TISCALI.NL>
Para: OPE-L@SUS.CSUCHICO.EDU
Enviado: domingo, 12 de agosto, 2007 13:15:06
Asunto: [OPE-L] A startling quotation from Engels
Hi Alejandro,
My name is Jurriaan Bendien, not Badien. You accuse me of trying to be
"clever" but you offer no substantive arguments in support of your
accusations. I am not trying to present here a complete theory of socialist
economics, I am trying to say briefly what the problem is about. Most
Marxists do not even frame the problems correctly, hence they cannot be
solved by them.
I did not refer in my post to "equilibrium mania of walrasian-paretian
economists", and what this has to do with the problem is unclear.
I did not argue for " the elimination of THE WHOLE CIRCUIT of intermediate
transactions between producer and consumer". I said specifically that Engels
(like Marx) believed "A WHOLE CIRCUIT of intermediate transactions between
producer and consumer (and all the labour-time necessary for it) would be
simply eliminated and redundant", making the allocation of resources more
transparent.
I am very aware, that insofar as you have trade of any kind, or a complex
division of labour, that you cannot eliminate ALL intermediation, and that
is not in dispute.
The real argument is that a large PART of the intermediation arises, purely
because of particular property rights.
Likewise, PART of the way that the division of labour is structured, is
attributable exclusively to the prevailing structure of property rights. It
has nothing to do with the efficient allocation of resources.
A good example, about which Prof. Perelman has written, concerns
"intellectual property rights" of a type which prevent the general use of
new innovations. Another example is a type of trade in financial claims
which does not facilitate any rational economic relationship between
producers and consumers.
Marxists frequently talk about "the market" but this is meaningless, because
there are all sorts of structures of market-trade possible, i.e. there are
all sorts of modalities of trade possible under all sorts of conditions. In
the USSR, a strong attempt was made to wipe out market-trade and replace it
with centrally planned direct allocation, but the effect was, that people
started to trade informally since the central plan was incapable of meeting
many human and economic requirements. There is no point in imposing
collective planning, if it is not more efficient and effective than ordinary
trading, as an allocative mechanism, and there is also no good reason, why
collective planning cannot combine with regulated trading.
No market of any complexity can function, without enforced legal norms
securing property rights and market-access, and without a social
infrastructure. To give you an idea of variety of markets possible, in the
supposed citadel of unfettered capitalism, the USA, government employees
number about 16% of the labour force. In Holland, a more egalitarian
society, government employees are about 11% of the labour force. This is
just to indicate you can have a more egalitarian society with less
bureaucracy, and a less egalitarian society with more bureaucracy. In fact,
Al Szymanski calculated once that in the 1960s or 1970s proportionally the
number of bureaucrats in the USA was larger than in the USSR.
In the case of the USA today, at least 40 million people are employed in
administrative occupations (public and private) concerned mainly with
facilitating transactions that give access to goods and services. This does
not make much rational economic sense. In the USA there are about 3 million
truck drivers, and many of them truck food from one side of the country to
the other, burning fossils fuels. In particular cases, the "fresh" food is
no longer fresh upon arrival, and up to 40% of "fast food" produced is
wasted and thrown out. Why all this occurs, often has little to do with
economic sense, but with property rights and the income derived from those
property rights.
I suspect a "dualist" theory of value is incoherent. I have argued myself,
that it is rather meaningless to talk about an "objective" or a "subjective"
theory of value, since per definition economic value has both objective and
subjective aspects. This is acknowledged by Austrian and neoclassical
economists who e.g. regard prices as an objective expression of value. The
perception of Marx's theory of value as an "objective theory of value"
originated with Werner Sombart in 1894 who wasn't even a Marxist.
The real question which any theory of economic value has to explain, is how
the objective and subjective aspects are related.
Jurriaan
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