[OPE] The Labour theory of Value: A Marginal Analysis

I think Ian is on the right track, but point to me is - as I am sketching out in an article on this on and off when I have time - really that the phenomenon of "economic value" is both objective, subjective and intersubjective, even although academics ever since Sombart's reception of Cap. Vol. 3 like to distinguish between objective and subjective theories of economic value.

Marx may not have covered all dimensions of the forms of value, but he realised this basic reality very well, and indeed precisely because of the objective/subjective dimension, a mismatch or dyssynchrony can occur between perceptions of economic value and the objectified reality of economic value. Moreover, Marx tries to explain - as a condition of an adequate and complete explanation of economic value - why economic value would be perceived and represented other than it really is, within a pathology of reification (Verdinglichung, Versachlichung, Fetisches, Objektivierung).

Marx states explicitly in Cap. Vol. 1 that "nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value". http://www.marxists.org/archive/marx/works/1867-c1/ch01.htm#S1

So Marx can hardly be accused of ignoring utility, and actually from the very beginning of his economic studies he shows an awareness of it. The central problem of the concept of economic utility is that there is no direct, universal measure of "utility as such" possible, and that therefore the magnitude of "economic utility in general" must be inferred from "proxy variables" such as observable behavioural dispositions (preferences, choices, decisions), prices, or trading ratios. We can of course invent something like "utils" as unit of measurement, but they're a theoretical fiction. Several Austrian economists in fact bluntly denied the possibility of quantifying utility, concentrating only on expounding a law-governed utilitarian "logic" of market behaviour and economic choice. But even the perception and objective reality of preferences, prices and trading ratios may diverge; actual prices charged or paid can diverge from ideal prices used for calculation purposes, and they may not be specifiable without assumed conditions that could change.

Actually, in the original 1843/44 article by F. Engels which set Marx thinking more deeply about economic matters, it is mentioned that:

"There was a protracted quarrel over the nature of real value between the English, who defined the costs of production as the expression of real value, and the Frenchman Say, who claimed to measure this value by the utility of an object. The quarrel hung in doubt from the beginning of the century, then became dormant without a decision having been reached." http://www.marxists.org/archive/marx/works/1844/df-jahrbucher/outlines.htm

Marx achieves perhaps the most precise, clearest formulation of the concept of "use value" in his 1859 Critique:

"To begin with, a commodity, in the language of the English economists, is "any thing necessary, useful or pleasant in life," an object of human wants, a means of existence in the widest sense of the term. Use-value as an aspect of the commodity coincides with the physical palpable existence of the commodity. Wheat, for example, is a distinct use-value differing from the use-values of cotton, glass, paper, etc. A use-value has value only in use, and is realized only in the process of consumption. One and the same use-value can be used in various ways. But the extent of its possible application is limited by its existence as an object with distinct properties. It is, moreover, determined not only qualitatively but also quantitatively. Different use-values have different measures appropriate to their physical characteristics; for example, a bushel of wheat, a quire of paper, a yard of linen. Whatever its social form may be, wealth always consists of use-values, which in the first instance are not affected by this form. From the taste of wheat it is not possible to tell who produced it, a Russian serf, a French peasant or an English capitalist. Although use-values serve social needs and therefore exist within the social framework, they do not express the social relations of production. For instance, let us take as a use-value a commodity such as a diamond. We cannot tell by looking at it that the diamond is a commodity. Where it serves as an aesthetic or mechanical use-value, on the neck of a courtesan or in the hand of a glass-cutter, it is a diamond and not a commodity. To be a use-value is evidently a necessary prerequisite of the commodity, but it is immaterial to the use-value whether it is a commodity. Use-value as such, since it is independent of the determinate economic form, lies outside the sphere of investigation of political economy. It belongs in this sphere only when it is itself a determinate form. Use-value is the immediate physical entity in which a definite economic relationship - exchange-value - is expressed." http://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch01.htm#2

Surely any adequate theory of economic value must, like Marx himself tries to do, integrate the objective, intersubjective and subjective aspects of it, including human choices? That's my thesis, anyway... in which case it would be wrong to dismiss marginalism totally, whatever its limitations. The anthropological origin of value (of valuation or evaluation) must reside - I assume - in the ability of an organism to prioritize its own behaviours consciously (or at least sentiently) according to internally chosen options along a scale of some type, and respond at least relatively autonomously according to those choices (a bit more than a conditioned or instinctive response), but that ability is presumably shaped up by a certain physical and social environment, which promotes a behavioural flexibility which goes beyond conditioned response, and involves some kind of self-reflective awareness. In Marx's anthropology, human beings are beings who can "create and relate". Humans "begin to distinguish themselves from animals as soon as they begin to produce their means of subsistence. . . . In producing their means of subsistence humans indirectly produce their actual material life." The objectification of value, such that value acquires an existence and reality independent of the individual valuer, has definite social presuppositions - a normal pattern of social interaction, regularized work, enforcible ownership relations, trade etc.

In his History of Economic Analysis, Schumpeter declares boldly that marginal utility theorists had "established what A. Smith, Ricardo, and Marx had believed to be impossible, namely that exchange value can be explained in terms of use value" (Schumpeter 1954, p. 911-912). It is obviously an error to think that. Indeed the logical failure of this project leads to the modern fashion of "price discovery" in which exchange-values are explained in terms of... other exchange-values - effectively an explanation of prices by other prices. Alexander Gersch is on much stronger ground when he states that "Economics must take into account both the objective and the subjective background of exchange value because these interact." - A. Gersch, On the theory of exchange-value, 1969, p. 631. I think that insight is important if you want to explain the dynamics of the interaction between the law of value and the law of competition, which simultaneously enable and constrain (regulate, place limits on) economic behaviour. The question then is, what is the real relation between this "objective and the subjective background"?

Jurriaan

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Received on Mon Sep 8 14:24:25 2008