[OPE] Consumption & law of value

In envisioning socialism we encounter a poverty of concepts, principally because the great deficiencies of economic science in correctly describing economic processes, but also because the Marxist-Leninist system was based on an interpretation of the meaning of socialism as a socialdemocratic, state socialism (of the type propagated by the Second International) which replaces open markets by state redistribution.

As Marx himself already observed, in bourgeois society, an ideological bifurcation emerges between the sphere of market activity and the sphere of the law, which has its corollary in a separation of the juridical and economic sciences (the distinction between economic value and moral value and separate phenomena). A legal framework is viewed as an external constraint on economic activity defined as the trading activity of business which generates income and wealth.

In reality, however, it is not feasible to make that separation between the two spheres, since the rule of law,. moral behaviour and business activity depend on each other to function. So the very idea that you can discuss trading activity "scientifically" completely in abstraction from considerations of justice and morality is very dubious.

In addition, Marx notes that bourgeois economics also wants to discuss and analyse production and distribution independently from each other, thus obscuring how property rights are actually related to the claims to economic resources and what their effect is.

Markets do not supply any morality on their own, beyond whatever is contingently necessary qua behavioural consistency to settle transactions. For example, markets cannot function if there is insufficient trust that people keep their promises with regard of what trading activity obliges them to do.

Bourgeois ideology also sees liberal democracy as growing directly out of market activity, even although for the most of the history of trade, business fell under the authority of non-democratic regimes. So the causal theory according to which market growth creates democracy is false.

Because of all this, it is a big methodological error, if we discuss the socialist allocation of goods are a purely scientific or technical problem. The allocation of goods cannot be divorced from a set of norms which define what a community thinks is good for people, which is embedded in its organisation norms and associational forms.

The problem with the concept of utility is that the usefulness is specified aposteriori in tautological terms of an observed consumption level. In other words, we infer from the fact that people use or consume goods that they are useful. If they use or consume a lot of a type of good, then we infer that it is very useful, and inversely if they consume little of it, then it is less useful.

But you don't have to be a genius to understand that such a definition is itself not very useful, because it is simply not very informative. It tells us nothing about precisely why or how it is useful, and indeed utility in this theory becomes conditional on the intensity of observed subjective preferences to purchase a good. But the proof of the intensity of subjective preference is again the sales volume. Problem is that if you lower the price you will sell more, and if you raise the price you wil sell less. And thus, utility itself fluctuates according to the pricing regime. The whole argument about utility then moves in a vicious circle, it's an inspid tautology the only merit of which is that it encourages us to look upon conditions in terms of how useful they are to our own purpose.

It's effectively a shop-assistant's theory of the economy with the difference that the shop-assistant is much more aware of the nuances of customer motivations, than the theoretician of utility is.

It's not clear to me that it is possible to distinguish between primary "moral" goods and non-primary "technical" goods, since what is only a technical concern for the planner is a moral concern for the supplier.

The substance of the issue is much more about which allocative decisions are best left with individuals themselves to make, and which allocative decisions really ought to be made collectively, and what level or type of consultation is most effective.

My own methodology in solving these issues is completely different from the "tributary socialism" of the New Marxist Exploiting Class.

Jurriaan

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Received on Sun Apr 19 06:31:41 2009