From: Alejandro Agafonow (alejandro_agafonow@YAHOO.ES)
Date: Mon Aug 13 2007 - 15:21:45 EDT
Hello Ian.
Ian Wright: «[…] then (iii) it is market prices that lag labour-values. This is part of the classical "long period" equilibrium view: it is objective costs of production that, all other things being equal, eventually manifest as natural prices.»
That’s because Engels’ Preface is so interesting and it could help Marxists to revise the attractor metaphor. I prefer to interpret Marxist labour value, even I’m not a Marxist, as a sort of «technological frontier». Why? Because that allegedly point when commodities acquire their full usefulness and therefore their full labour value is an exception, while the rule is that commodities lack their full usefulness due to market imperfections. As long as competition pulls every firm to approximate that frontier always happens that (1) an entrepreneur realizes that a business opportunity has been neglected before or he (2) convinces consumers to change their mind about a commodity or (3) consumers change autonomously their mind. This implies that real markets tend toward monopolization every time that frontier is broken.
An attractor has implicit a notion of equilibrium, something rare in real market economies. As a metaphor it implies that the active part of market dynamic rests upon nature and not upon women and men. It is as if entrepreneurs were condemned to follow nature dictum but what really happens in real market economy is that they challenge nature. Entrepreneurs don’t face parametric prices, they influence upon real market prices. You don’t have to agree with the usefulness of the function of an entrepreneur in a market economy, been it capitalist or socialist, to agree with this empirical description.
Ian Wright: «Would Mises accept that if everyone decided to subjectively value commodities differently than we do today then it would be economically possible that pencils can cost less than airplanes? In other words, how far does Mises idealism go?»
Your question could be improved if you invert the elements… it would be economically possible that airplanes can cost less than pencils? We can force the knowledge of present preferences structure to imagine what could happen according to Austrian theory of value.
If it were the case that people acquire a pathological desire for treasure pencils and renounce to the usefulness that airplanes bring in transportation of people and commodities, even at point of risking their own lives because of lacking of material once available thanks to air transportation, it might happen that airplane manufacture will lose «economic character» which means that won’t lend anymore useful services. Producing it would be like producing sand in the Sahara desert just that the desert isn’t there. Of course, even in these hypothetical conditions you need to incur in high accountable/pricing costs to produce an airplane, but it would be not profitable. On the other hand, pencils prices could acquire exorbitant magnitudes, depending on the real existence of the resources to manufacture them and the degree of competition in the market of pencils. In these crazy conditions it wouldn’t be crazy to have pencils as expensive as
airplanes.
But Mises didn’t go as far as some of his disciples. The Spanish Austrian economist Jesús Huerta de Soto says that cost are absolutely subjunctives, so that we can’t build demand and supply schedules. He doesn’t seem to realize that in his «imaginary capitalism» he loses even the arithmetic function of money and calculation becomes impossible in his model. He is an anarcho-capitalist but I don’t know if the most radical Austrians follow him, like Hans Hermann Hope or Murray Rothbard.
Kind regards,
Alejandro Agafonow
----- Mensaje original ----
De: Ian Wright <wrighti@ACM.ORG>
Para: OPE-L@SUS.CSUCHICO.EDU
Enviado: lunes, 13 de agosto, 2007 18:28:24
Asunto: Re: [OPE-L] A startling quotation from Engels
> 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.
Isn't it precisely the other way around? Given that (i) labour-values
are variables of state, i.e. properties of the current economic
configuration, and (ii) labour-values are attractors for market
prices, i.e. the law of value, then (iii) it is market prices that lag
labour-values. This is part of the classical "long period" equilibrium
view: it is objective costs of production that, all other things being
equal, eventually manifest as natural prices.
> 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.)
I didn't quite understand the point you make here. Could you
elaborate? Would Mises accept that if everyone decided to subjectively
value commodities differently than we do today then it would be
economically possible that pencils can cost less than airplanes? In
other words, how far does Mises idealism go?
Best wishes,
-Ian.
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