Still wondering about Labour Theory of the Value of Commodities - Politics Forum.org | PoFo

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#15130120
Hello,

I think that the empirical evidence - so far as I can judge - that the rate of profit in capitalism does have a historical tendency to fall. However, I still seem to be intellectually unconvinced that at the bottom of that is the law of value (or labour theory of the value of commodities or whatever).

The most impressive book I've read about this is Reclaiming Marx's Capital by Andrew Kliman. Roughly, he argues for an interpretation where a capitalist system only ever produces a certain volume of value at a given time, which due to the tendency of the rate of profit to fall, will tend to decrease (though not smoothly or without interruptions). Prices can deviate value - and so presumably the total mass of prices from the mass of value - but (and this is just my assumption, having not got through all my Marx) if prices rise much in excess of value, then we are just creating ficticious capital. I think Marx's theory really needs this tethering of prices to value - if we don't have that, then maybe we still can get the law of the tendency of profit to fall operating, but there will be even more additional factors at play, so it may win out less.

Anyway, I was wondering about what it would mean today if price was tethered to value in this way. Value and price are both social facts - they don't exist outside human society. So what kind of behaviour does following something like value theory require. I was thinking that it could be something like when you are a producing goods for sale, you pay attention to how much time you put into them. If they take too long to produce - in comparison to the goods you require from others, then you will try to demand something more equivalent. You and the other producers will see your goods as having higher value in comparison. If some process comes along to make your good more efficiently, then people will go with that, and you will have to adapt or be progressively at a loss. Hence the average social labour time is important, as Marx thought. But I still don't feel I've thought through hardly anything here. Obviously this will only work for prices for items where nothing else intervenes. Acquire a rare work of art, within the right kind of legal and social system, and you will be able to extract alot of currency without having to think (too much) about how much time you will put into it.

Finally, I was also thinking about how preference functions fit into all this. I've heard some Marxists be very dismissive of the whole idea - but from when I used to be at uni, I remember working out that I didn't so much think that the idea of people's aims and desires being organised into preference functions as outlandish, but more just that it's a much more formal idea that it is usually presented. The important thing to remember about all such models is to ask whether they import anything in to themselves about the ultimate aims or concerns of the agents involved. If they don't, then they really aren't saying anything about human nature - just possible ways people could think through how to meet their aims. And how you meet your aims can be part of the aim, so we can neither conclude that people should arrange their desires into preference rankings, or indeed do. If this is the case, the model at the "heart" of neoclassical economics isn't incompatible with Marx, as that model doesn't even say what those economists think it does. It can be perfectly well re-expressed what Marx says about the formation of value in preference function language - whether it makes sense to is another matter - as that language is just a way of expressing attitudes of beings who are able to compare their aims and decide which are more or less important in a way that has a formal elegance that some theorists desire.

What do people think of this? What are the objections?
#15130367
The Young Wizard wrote:
if prices rise much in excess of value, then we are just creating ficticious capital.



Let's call it *speculative* capital, since 'fictitious capital' has already been termed, to mean 'debt':

https://en.wikipedia.org/wiki/Fictitious_capital


The Young Wizard wrote:
I think Marx's theory really needs this tethering of prices to value - if we don't have that, then maybe we still can get the law of the tendency of profit to fall operating, but there will be even more additional factors at play, so it may win out less.



B0ycey wrote:
Price isn't a factor in Communism. Value cannot be synonymous to price in any case. Does the price and value of water match according to your need?



---


The Young Wizard wrote:
I was thinking that it could be something like when you are a producing goods for sale, you pay attention to how much time you put into them. If they take too long to produce - in comparison to the goods you require from others, then you will try to demand something more equivalent. You and the other producers will see your goods as having higher value in comparison.



This comes eye-wateringly close to *Marx* (heh)....



In a socialist society this task will be undertaken through a conscious plan and democratic organisation. In capitalist society it is undertaken through the market. This involves equating the different kinds of labour necessary for the functioning of society. In a commodity-producing society, where labour is at once social but carried on privately, this allocation is achieved through the value system.

The value of each commodity is determined by the amount of socially necessary labour required to produce it. But this value must acquire an independent material form, and that form is money. As Marx put it: “Money is labour time in the form of a general object, or the objectification of general labour time, labour time as a general commodity.” [ Grundrisse , p. 168]

It is through money that the objective social bond that actually exists between the individual private producers is given expression. Economists, Marx wrote, say that people place confidence in a thing, money, because they do not place faith in each other. “But why do they have faith in the thing. Obviously because that thing is an objectified relation between persons; because it is objectified exchange value and exchange value is nothing more than the relation between people’s productive activities.” [ Grundrisse , p. 160]



https://www.wsws.org/en/articles/2020/1 ... 1-o24.html



---


The Young Wizard wrote:
Acquire a rare work of art, within the right kind of legal and social system, and you will be able to extract alot of currency without having to think (too much) about how much time you will put into it.



This is leveraging *rentier-capital* *non-productive* asset exchange-values, based on *scarcity* -- through auctions / bidding wars -- which is what capitalism values, *after* the initial action of *production*.



The aim of the Proudhonists was to do away with the social evils of capitalism, then becoming increasingly apparent due to its recurrent crises, by changing the relations of distribution and circulation, facilitated by money, without touching the underlying social relations of production, based on commodity production.



https://www.wsws.org/en/articles/2020/1 ... 1-o24.html



---


The Young Wizard wrote:
Finally, I was also thinking about how preference functions fit into all this. I've heard some Marxists be very dismissive of the whole idea - but from when I used to be at uni, I remember working out that I didn't so much think that the idea of people's aims and desires being organised into preference functions as outlandish, but more just that it's a much more formal idea that it is usually presented. The important thing to remember about all such models is to ask whether they import anything in to themselves about the ultimate aims or concerns of the agents involved.



Funny you should mention this -- I developed a model for a post-capitalist political economy that uses *exactly* this approach, in lieu of capitalist exchange values for the same function of relative valuing. Here are relevant excerpts:



communist administration -- All assets and resources will be collectivized as communist property in common -- their use must be determined through a regular political process of prioritized demands from a locality or larger population -- any unused assets or resources may be used by individuals in a personal capacity only



communist administration -- Assets and resources have no quantifiable value -- are considered as attachments to the production process



consumption [demand] -- Every person in a locality has a standard, one-through-infinity ranking system of political demands available to them, updated daily



consumption [demand] -- Basic human needs will be assigned a higher political priority by individuals and will emerge as mass demands at the cumulative scale -- desires will benefit from political organizing efforts and coordination



consumption [demand] -- All economic needs and desires are formally recorded as pre-planned consumer orders and are politically prioritized [demand]



consumption [demand] -- A regular, routine system of mass individual political demand pooling -- as with spreadsheet templates and email -- must be in continuous operation so as to aggregate cumulative demands into the political process



communist supply & demand -- Model of Material Factors

Spoiler: show
Image




https://www.revleft.space/vb/threads/20 ... -Questions
#15131527
In regards to the rare work of art I think of this summary:
https://www.google.com/amp/s/kapitalism101.wordpress.com/2014/05/03/on-labor-as-the-substance-of-value/amp/
we might also mention the exchange-value of produced commodities that are not freely reproducible. A one-of-a-kind work of art like a Picasso painting is a commodity but it cannot be reproduced. Thus it does not respond to the pressure of socially necessary labor time. The exchange-value of a Picasso is a reflection of whatever someone is willing to pay for it at the moment, much like honor and conscience. Marx excludes non-reproducible commodities from his analysis for the most part as well since they are peripheral to capitalist production. However, like imaginary value, when we look at non-reproducible commodities we see that they take the form of commodity-exchange because that is the dominant form of social labor in our society.


And in regards to describing things in terms of preferences, an issue is that Marx seeks to explain a scientific and objective basis of value bot explain the psychology of consumers.
Ranked preferences would have explanatory usefulness but not for explaining value as based in production and then realized in markets for consumption.
So i am a bit skeptical what would be retained in the concepts of Marx if one haphazardly introduced the concepts and terms of ranked preferences.

Vygotsky once made a lot of criticism of thinkers psychology who eclectically combined different schools of thought without regard for the compatibility or opposition of core ideas.
#15131536
Wellsy wrote:
In regards to the rare work of art I think of this summary:
https://www.google.com/amp/s/kapitalism101.wordpress.com/2014/05/03/on-labor-as-the-substance-of-value/amp/




we might also mention the exchange-value of produced commodities that are not freely reproducible. A one-of-a-kind work of art like a Picasso painting is a commodity but it cannot be reproduced. Thus it does not respond to the pressure of socially necessary labor time. The exchange-value of a Picasso is a reflection of whatever someone is willing to pay for it at the moment, much like honor and conscience. Marx excludes non-reproducible commodities from his analysis for the most part as well since they are peripheral to capitalist production. However, like imaginary value, when we look at non-reproducible commodities we see that they take the form of commodity-exchange because that is the dominant form of social labor in our society.



Wellsy wrote:
And in regards to describing things in terms of preferences, an issue is that Marx seeks to explain a scientific and objective basis of value bot explain the psychology of consumers.



Building on my previous post on this thread, I'll note that my 'communist supply & demand' model outlines a *post-capitalist* method for determining preferences after the annihilation of money / finance / exchange values / exchanges / barter, or trade (implicit exchange values), of any and every kind.


Wellsy wrote:
Ranked preferences would have explanatory usefulness but not for explaining value as based in production and then realized in markets for consumption.



I think this is putting the cart before the horse since we're *already* in capitalism, and the point is to *supersede* it, and all of its exchange values, and not academically *tinker* with it.

My model is meant for post-bourgeois, post-capitalist social relations of production.


Components of Social Production

Spoiler: show
Image



---


Wellsy wrote:
So i am a bit skeptical what would be retained in the concepts of Marx if one haphazardly introduced the concepts and terms of ranked preferences.

Vygotsky once made a lot of criticism of thinkers psychology who eclectically combined different schools of thought without regard for the compatibility or opposition of core ideas.



Relating back to the concept of 'rare', non-reproducible, works, my framework of ranked preferences (material and socio-political 'demands', per individual, per day), enables a sound societal handling for ascertaining preferences of *demand*, across any locality or larger geographical entity, for *semi-rare* items, since 'rare' items would necessarily be in museums, post-capitalism.



additive prioritizations'

Better, I think, would be an approach that is more routine and less time-sensitive in prioritizing among responders -- the thing that would differentiate demand would be people's *own* prioritizations, in relation to *all other* possibilities for demands. This means that only those most focused on Product 'X' or Event 'Y', to the abandonment of all else (relatively speaking), over several iterations (days), would be seen as 'most-wanting' of it, for ultimate receipt.

My 'communist supply and demand' model, fortunately, uses this approach as a matter of course:

consumption [demand] -- Every person in a locality has a standard, one-through-infinity ranking system of political demands available to them, updated daily

consumption [demand] -- Basic human needs will be assigned a higher political priority by individuals and will emerge as mass demands at the cumulative scale -- desires will benefit from political organizing efforts and coordination

consumption [demand] -- A regular, routine system of mass individual political demand pooling -- as with spreadsheet templates and email -- must be in continuous operation so as to aggregate cumulative demands into the political process

http://www.revleft.com/vb/blog.php?b=1174


I'm also realizing that this model / method of demand-prioritization can be used in such a way as to lend relative *weight* to a person's bid for any given product or calendar event, if there happens to be a limited supply and a more-intensive prioritization ('rationing') is called-for by the objective situation:

Since everyone has a standard one-through-infinity template to use on a daily basis for all political and/or economic demands, this template lends itself to consumer-political-type *organizing* in the case that such is necessary -- someone's 'passion' for a particular demand could be formally demonstrated by their recruiting of *others* to direct one or several of *their* ranking slots, for as many days / iterations as they like, to the person who is trying to beat-out others for the limited quantity.

Recall:

[A]ggregating these lists, by ranking (#1, #2, #3, etc.), is *no big deal* for any given computer. What we would want to see is what the rankings are for milk and steel, by rank position. So how many people put 'milk' for #1 -- ? How many people put 'steel' for #1 -- ? How many people put 'milk' for #2 -- ? And how many people put 'steel' for #2 -- ? (Etc.)

*This* would be socially useful information that could be the whole basis for a socialist political economy.

So, by extension, if someone was particularly interested in 'Event Y', they might undertake efforts to convince others to *donate* their ranking slots to them, forgoing 'milk' and 'steel' (for example) for positions #1 and/or #2. Formally these others would put 'Person Z for Event Y' for positions 1 and/or 2, etc., for as many days / iterations as they might want to donate. This, in effect, would be a populist-political-type campaign, of whatever magnitude, for the sake of a person's own particularly favored consumption preferences, given an unavoidably limited supply of it, whatever it may be.



https://www.revleft.space/vb/threads/20 ... -Questions
#15131621
The Young Wizard wrote:I think that the empirical evidence - so far as I can judge - that the rate of profit in capitalism does have a historical tendency to fall.


Not really.

The Young Wizard wrote:The most impressive book I've read about this is Reclaiming Marx's Capital by Andrew Kliman. Roughly, he argues for an interpretation where a capitalist system only ever produces a certain volume of value at a given time, which due to the tendency of the rate of profit to fall, will tend to decrease (though not smoothly or without interruptions). Prices can deviate value - and so presumably the total mass of prices from the mass of value - but (and this is just my assumption, having not got through all my Marx) if prices rise much in excess of value, then we are just creating ficticious capital. I think Marx's theory really needs this tethering of prices to value - if we don't have that, then maybe we still can get the law of the tendency of profit to fall operating, but there will be even more additional factors at play, so it may win out less.


There's no reason to believe the "volume of value" in terms of units of effective labor has decreased.

As for prices deviating from value, I guess the modern term for the same basic concept is "prices deviate from fundamentals". Most of the time this is only known ex-post.

The Young Wizard wrote:Anyway, I was wondering about what it would mean today if price was tethered to value in this way. Value and price are both social facts - they don't exist outside human society. So what kind of behaviour does following something like value theory require. I was thinking that it could be something like when you are a producing goods for sale, you pay attention to how much time you put into them. If they take too long to produce - in comparison to the goods you require from others, then you will try to demand something more equivalent. You and the other producers will see your goods as having higher value in comparison. If some process comes along to make your good more efficiently, then people will go with that, and you will have to adapt or be progressively at a loss. Hence the average social labour time is important, as Marx thought. But I still don't feel I've thought through hardly anything here. Obviously this will only work for prices for items where nothing else intervenes. Acquire a rare work of art, within the right kind of legal and social system, and you will be able to extract alot of currency without having to think (too much) about how much time you will put into it.


Needless to say the labor theory of value abstracts a lot of things away.

The Young Wizard wrote:Finally, I was also thinking about how preference functions fit into all this. I've heard some Marxists be very dismissive of the whole idea - but from when I used to be at uni, I remember working out that I didn't so much think that the idea of people's aims and desires being organised into preference functions as outlandish, but more just that it's a much more formal idea that it is usually presented. The important thing to remember about all such models is to ask whether they import anything in to themselves about the ultimate aims or concerns of the agents involved. If they don't, then they really aren't saying anything about human nature - just possible ways people could think through how to meet their aims. And how you meet your aims can be part of the aim, so we can neither conclude that people should arrange their desires into preference rankings, or indeed do. If this is the case, the model at the "heart" of neoclassical economics isn't incompatible with Marx, as that model doesn't even say what those economists think it does. It can be perfectly well re-expressed what Marx says about the formation of value in preference function language - whether it makes sense to is another matter - as that language is just a way of expressing attitudes of beings who are able to compare their aims and decide which are more or less important in a way that has a formal elegance that some theorists desire.


What they really criticize are the standard axioms of consumer choice. Of course that's not all there is nowadays.
#15131772
B0ycey wrote:Price isn't a factor in Communism. Value cannot be synonymous to price in any case. Does the price and value of water match according to your need?



Hello B0ycey, thanks for your comment,

So far as I understand, when Marxists are talking about Value, they can be talking about three different things (if they are not careful). There is what Marx calls "use-value" which is something like the useful and/or beneficial aspects of something. The tastiness and nutrition contained within an apple are part of it's use value, as is it's weight if you use it to hold down some papers from the breeze. That's certainly not synomous with price. It's what you call the "value of water according to need". In every day english, what your saying makes complete sense, anyway.

Value Marx uses more properly to denominate the quality commodities having when we talk about something "selling over it's value." In this example, the price has exceded the value. In much economic theory, it's generally thought that this expression really means something more like "Selling over the price that was expected". Not for Marxists - the value of products aren't reduced to their prices. Rather, the value of a product is set when it is produced, based on the average amount of time it would take to produce that item given the processes available to produce those products (so you can't add value to an item by taking ages to make it). The price then departs from that value once the product reaches the market, depending on supply, demand, market failure, etc, etc.
#15131773
Wellsy wrote:In regards to the rare work of art I think of this summary:
https://www.google.com/amp/s/kapitalism101.wordpress.com/2014/05/03/on-labor-as-the-substance-of-value/amp/


And in regards to describing things in terms of preferences, an issue is that Marx seeks to explain a scientific and objective basis of value bot explain the psychology of consumers.
Ranked preferences would have explanatory usefulness but not for explaining value as based in production and then realized in markets for consumption.
So i am a bit skeptical what would be retained in the concepts of Marx if one haphazardly introduced the concepts and terms of ranked preferences.

Vygotsky once made a lot of criticism of thinkers psychology who eclectically combined different schools of thought without regard for the compatibility or opposition of core ideas.


Thanks for the reference Wellsy, and the comment.

I agree with you that you need to be more hesistant than I have been here in incorporating theoretical models from theory to theory. I was just wondering, however.

My opinion (which may be wrong) is that nothing would be lost, because, when properly understood, the formal theory of preference rankings is so thin it says nothing about society, human nature, etc. All it asks is 1) do your creatures have preferences (I would say, in Capitalism or communism) yes 2) can they be ranked? If they can be (which is not a given for human beings - certainly not over all their preferences), then we can draw some conclusions about how that will formally structured. Maybe economists think that a theory of preference ranking should say lots of other things which ultimately vitiate capitalism, but I think they are just bolting alot of other things onto a perfectly understanable formal theory. Of course, if they want to call that bolted on theory "theory of preference rankings" then they can, but then someone could come along and say "Can I just take the bit about a rational agent ranking preferences?" Ranking preferences is as commonplace as saying "I'd like either pie and beans for dinner, or pie and peas, but I would prefer pie and peas". If we don't have that in communism, I'll be flabbergasted.
#15131774
"
Rugoz wrote:Not really."

Thanks for the comments, Rugoz. On this point I would recommend reading "The Long Depression" by Michael Roberts. So far as I am fit to judge, it makes a good case. Michael also writes regularly on his blog, which is excellent.



"There's no reason to believe the "volume of value" in terms of units of effective labor has decreased."

Do you mean people who can work, or people who do work?


"As for prices deviating from value, I guess the modern term for the same basic concept is "prices deviate from fundamentals". Most of the time this is only known ex-post."

Yeah, there is an epistemological issue here - how much can we know the value of commodities, rather than know the prices and confirm the long-term tendencies predicted by the theory. I've yet to read a satisfactory answer, but maybe there isn't one, and that's all the evidence for Marxist economics being correct we are going to get. If it can explain the phenomena better, that would be something.



"Needless to say the labor theory of value abstracts a lot of things away."


I agree. I think that was part of the intention. It's not necessarily unjustified.

"What they really criticize are the standard axioms of consumer choice. Of course that's not all there is nowadays.
"

Do go on
#15131782
The Young Wizard wrote:
I was thinking that it could be something like when you are a producing goods for sale, you pay attention to how much time you put into them. If they take too long to produce - in comparison to the goods you require from others, then you will try to demand something more equivalent. You and the other producers will see your goods as having higher value in comparison.



In "response":


The Young Wizard wrote:
Rather, the value of a product is set when it is produced, based on the average amount of time it would take to produce that item given the processes available to produce those products (so you can't add value to an item by taking ages to make it).



Yup, I was going to mention this.


---


Components of Social Production

Spoiler: show
Image



The Young Wizard wrote:
1) do your creatures have preferences (I would say, in Capitalism or communism) yes 2) can they be ranked? If they can be (which is not a given for human beings - certainly not over all their preferences),



Referring to the 'demand'- / *consumer*-sided part of my 'communist supply & demand' model, I'd like to point out that, post-capitalism, all one would have to do is make a *shopping list*, basically, and that would serve as an individually prioritized ranked demands list, for the model. It could be as often as *daily*, could include or not-include actual quantities for each item, and would include socio-political demands, too, as for *general* needs (milk, steel), or *specific* proposals / policy packages that are pre-existing, by name.



consumption [demand] -- Every person in a locality has a standard, one-through-infinity ranking system of political demands available to them, updated daily

consumption [demand] -- Basic human needs will be assigned a higher political priority by individuals and will emerge as mass demands at the cumulative scale -- desires will benefit from political organizing efforts and coordination

consumption [demand] -- A regular, routine system of mass individual political demand pooling -- as with spreadsheet templates and email -- must be in continuous operation so as to aggregate cumulative demands into the political process



https://www.revleft.space/vb/threads/20 ... -Questions



Regarding your posing of the characteristics of a consumer, I'd say that the post-capitalist consumer *should* prioritize / rank their material demands (needed or wanted goods / services, and/or socio-political initiatives), but if they *don't*, then their generic list could simply be *interpreted* as ranked, from #1, #2, #3, onward, by the larger socio-political inputs process. For any given regular list (say, under 20 items), the *lack* of intentional rankings by the individual wouldn't matter much, since, as a whole, it would still be a 'top 20' kind of list.

*Or*, if an individual *did* mostly rank their items, but maybe wasn't sure about specific rankings for some of them, again, it wouldn't matter much, meaning that the uncertain items would then be *arbitrary*. So, for example, maybe someone is certain about items #1-5, but then from #6 onward it doesn't really matter to them, so then the rest of the list could be more-or-less *random*, and it would *still* suffice for the purposes of common-goods production and fulfillment.
#15131954
The Young Wizard wrote:Thanks for the comments, Rugoz. On this point I would recommend reading "The Long Depression" by Michael Roberts. So far as I am fit to judge, it makes a good case. Michael also writes regularly on his blog, which is excellent.


The return on capital has not fallen. See e.g. here figure 2:
https://www.bis.org/publ/work794.pdf

Provide a link if you have another source.

The Young Wizard wrote:Do you mean people who can work, or people who do work?


People who do work.

The Young Wizard wrote:I agree. I think that was part of the intention. It's not necessarily unjustified.


Not for 19th century economics I suppose.

The Young Wizard wrote:Do go on


Behavioral economics, e.g. Prospect Theory.
#15131960
The Young Wizard wrote:Hello B0ycey, thanks for your comment,

So far as I understand, when Marxists are talking about Value, they can be talking about three different things (if they are not careful). There is what Marx calls "use-value" which is something like the useful and/or beneficial aspects of something. The tastiness and nutrition contained within an apple are part of it's use value, as is it's weight if you use it to hold down some papers from the breeze. That's certainly not synomous with price. It's what you call the "value of water according to need". In every day english, what your saying makes complete sense, anyway.


Marx distinguishes value in two forms. 'Use' and 'exchange'. But exchange he determines by LTV. However to understand 'exchange value' better I wouldn't read Marx but John Locke and to a lesser degree Adam Smith anyway because value in terms of exchange has other factors than just labor such as scarcity, demand, investment and 'marginal utility'. Are you aware of the "Diamond-Water paradox" by the way?

Nonetheless, ignoring all that your OP was saying that price and value are synonymous and Marx should consider it as such. But the mere fact we have use and exchange values means that value is merely a term of importance whilst price is fixed and objective. Value doesn't even need to be univeral I might add. That is to say something you consider valuable, to someone else might they might consider it worthless. And price is a quantifiable term for exchange that is the same regardless the value someone puts on the item. That is to say it is a monetary exchange value the seller puts on his private property - which the buyer may or may not be willing to exchange for. And that is the difference. For Marx, he wanted to abolish private property and as such the value of exchange. Very much like the way the lion doesn't charge his pride for sharing his kill. But that doesn't mean the lion doesn't value his kill. He would after all kill again to defend it.
#15132008
The Young Wizard wrote:Thanks for the reference Wellsy, and the comment.

I agree with you that you need to be more hesistant than I have been here in incorporating theoretical models from theory to theory. I was just wondering, however.

My opinion (which may be wrong) is that nothing would be lost, because, when properly understood, the formal theory of preference rankings is so thin it says nothing about society, human nature, etc. All it asks is 1) do your creatures have preferences (I would say, in Capitalism or communism) yes 2) can they be ranked? If they can be (which is not a given for human beings - certainly not over all their preferences), then we can draw some conclusions about how that will formally structured. Maybe economists think that a theory of preference ranking should say lots of other things which ultimately vitiate capitalism, but I think they are just bolting alot of other things onto a perfectly understanable formal theory. Of course, if they want to call that bolted on theory "theory of preference rankings" then they can, but then someone could come along and say "Can I just take the bit about a rational agent ranking preferences?" Ranking preferences is as commonplace as saying "I'd like either pie and beans for dinner, or pie and peas, but I would prefer pie and peas". If we don't have that in communism, I'll be flabbergasted.

I see your point, that it is that formal and limited in what it entails that it could still function without much problem in another theoretical context.
Although I would speculate the manner in which such a formal theory is often deployed and whether it can be entirely untethered from certain real-world relations which make the abstraction legitimate.
Not that people wouldn't have preferences outside of capitalist relations, but the manner in which those preferences are developed and presented in theory may be performed in a way that isn't damning on the theory itself but how it is used.
For example, some treat money as neutral and no different than a more efficient form of bartering between individuals (not all, but some) and in this way that largely ignore distinctions of capitalist relations from relations in which people barter commodities directly and ignore any qualities of money and implications.
https://kapitalism101.wordpress.com/2011/11/15/law-of-value-8-subjectobject/
When you are in the supermarket calculating your preference scales with the Preference App on your iPhone you aren’t just considering your preferences for fish and coconuts in the abstract, as if on a desert island. You are also considering the market prices of these commodities. This market price already exists before you make your subjective value judgements. But this is problematic. Subjective valuations were supposed to explain price, but now we have to assume the prior existence of prices in order to explain subjective value judgements. It seems we are stuck in a big messy circle.

And if we are exchanging everything for money then we must have a utility for money right? But money has no direct utility. It’s not even good for blowing your nose on. The value of money is what it will buy. And this is not set by our preferences but instead reflects the relation of money to all other commodities, reflecting the vast interpenetration of millions of markets all over the world. There is no such thing as a personal utility for money because money’s value is already established by forces beyond our control. (3)

And there are more difficulties presented to subjective value theory by the presence of money. On Barter Island Eugene and Ludwig had direct knowledge of what they were getting from each exchange. But in our world we don’t know exactly how much everything is going to exchange for ahead of time. When we sell a product in the market we don’t know exactly what products we will be able to buy with that income. There is a high degree of uncertainty. But with so much uncertainty how are we ever to form those nice, rational preference scales where we’ve perfectly calculated the exact utility relations of all commodities to each other? Well, we can’t! (4)

And the apprehension towards preference theory is I suspect when it is used in an effort to explain price and aspects of economic behavior under capitalism in a way that is seen to miss essential features which alter it. The field of sociology is itself a product of abstracting economics out of society, whereas when economics was known as the political economy, social relations were heavily embedded in the ideas and concepts.

And perhaps something in the realm of why one might infer value behind the appearance of price, is that the notion of an equliblurm suggests the existence of value as distinct from price. Price is like the written measurement of weight on an object, while the value is the weight itself. We see the quantity of 1lbs, but 1lbs isn't synonymous with itself or it'd be meaningless, it is a reference to the weight of the object which we experience when we try and lift it.
Spoiler: show
https://kapitalism101.wordpress.com/2014/04/28/intrinsic-value/
hroughout the opening chapter of Capital Marx jousts with many intellectual opponents, not all of whom are immediately named. One of these is Samuel Bailey. (cite Rubin, Kliman.) In Bailey’s “Critical Dissertation”, published in 1825, he sets out to clear up the mess of confusion associated with the concept of value in economics. He does so by arguing against any notion of an intrinsic value possessed by commodities. Rather, for Bailey, value is nothing more than the fleeting and temporary exchange value a commodity has when it finds itself being exchanged for another commodity. Following Adam Smith Bailey defines value as “the power of purchasing other goods.” (p.11)

“According to this definition, it is essential to value, that there should be two objects brought into comparison. It cannot be predicated of one thing considered alone, and without reference to another thing. If the value of an object is its power of purchasing, there must be something to purchase. Value denotes consequently nothing positive or intrinsic, but merely the relation in which two objects stand to each other, as exchangeable commodities.” (Bailey p. 11)

Bailey is setting up a clear dichotomy between a notion of intrinsic value in which value is something belonging to the commodity in isolation from other commodities, apart from and prior to exchange, and a relative notion of value in which value is only something that exists through the relation of one commodity to another. Since in everyday life we measure the values of commodities in their relation to one another (so much of A is worth so much of B) Bailey advocates for this second, relational notion of value and rejects the intrinsic notion.

This leads to some interesting conclusions. Because value is only relational for Bailey, not intrinsic to the commodity, the value of A is whatever it is exchanged with. If today A exchanges for 2B then 2B is the value of A. If tomorrow A exchanges for 4B then 4B is the value of A. An intrinsic theory of value would say that perhaps the value of A has stayed the same while the value of B has changed or that the value of A has changed while the value of B has stayed the same, or even that both values have changed. But for Bailey this makes no sense. There is no intrinsic value of A or B that can stay the same or change. The value of A is only its exchange value with B at the moment of being exchanged. It has no value of its own before or afterwards.

Examining how this might relate to the classical labor theory of value Bailey asks the reader to consider a quantity of corn, the value of which is determined by the labor time required to produce it. What happens if the labor time required to produce the corn stays the same while the labor time of all other commodities changes? Even though the corn’s labor time has remained the same it will exchange for a different quantity of other commodities. It will form new exchange ratios every time the labor time of other commodities change. Thus its “value” changes even though the labor time that it takes to make the corn has not changed. Here Bailey is attempting to prove that value is not an intrinsic aspect of commodities because exchange ratios are inherently relational. Since a ‘value’, as he defines it, is nothing more than a relation between two commodities, it cannot, by definition be the property of one commodity outside of this relation. [This is a repetition of the previous paragraph, but perhaps still helpful.]

Marx sets out to argue the exact opposite of Bailey. Marx argues that value is an intrinsic property of commodities and, at the same time, its also a relative concept. How is this possible?

The key theoretical move that makes this possible for Marx is to distinguish between value and exchange value. Value is intrinsic to commodities. It is the amount of labor time society requires to produce the commodity. If a widget takes 2 hours to produce then its value is two hours. Exchange value is the ratio in which one commodity exchanges for another. If a widget exchanges for 3 apples then 3 apples is the exchange value of the widget. If the widget exchanges for 30 pencils then 30 pencils is the exchange value of the widget. What then is the relation between value and exchange value?

Similar to Bailey’s conception each different pairing of the widget with a different commodity produces a different exchange value. However where Bailey sees in this nothing but random, fluctuating, relativist values, Marx argues that each of these exchange values is a reflection, a measure of an intrinsic value.

Marx’s argument is quite simple actually. If we say that commodity X is equal to commodity Y this means, by definition, that they both contain quantities of a common substance/property. Just as the comparison of physical properties like weight, volume and height is only possible if both objects share the same property, the comparison of economic value is only possible if both commodities possess an intrinsic value. [footnote: there are debates as to the validity of Marx’s argument. Kliman provides a stellar defense of Marx in his paper “The 4th thing on the 3rd Thing”. I will not repeat those arguments here.]

When we say that commodity X is equal to commodity Y this implies that they are both made up of the same substance, value, and that their values are of the same magnitude. We cannot see the value of X by looking at it in isolation. Commodities do not walk around with their values ‘stamped on their heads.’ Instead we only see the value of X when it stands in relation to Y. Y measures the value of X. X is worth so much Y. The same is true if we measure the weight of an object. A piano has a weight of its own that does not depend on other objects. But we can only measure the piano’s weight in relation to some standard unit of weight, a pound or kilogram. This unit of weight, the pound, is always defined in relation to an actual object, arbitrarily chosen to be the standard.

Bailey had argued that the value of X cannot change without also meaning a change in value for Y. Look at how Marx’s distinction between value and exchange value allows us to see the problem differently. Both X and Y have an intrinsic value. Let us imagine that the value of Y changes while X stays the same. This variation in the value of y produces different exchange values (x=y, x=2y, x=3y, etc.) The intrinsic value of X does not change but its exchange value does change! Various quantities of Y are expressing the value of X.

I believe that this way of understanding value is much more intuitive and inline with common sense. Consider the effect of inflation on the value of a widget. If I sell widgets for $10 and a decade later the value of the dollar falls by 50% I will adjust the price of the widget to $20. Has the value of the widget changed? Are widgets worth more to society? Not at all. All that has changed is the value of the unit by which we measure the value of the widget.

Marx’s argument that commodities have an intrinsic value is immediately followed by his argument as to what this value is and what determines the magnitude of this value. His answer is that value is objectified human labor and that living labor determines the magnitude of this value. Often discussion/debate immediately jumps to this issue of whether or not labor is the substance of value, skipping over the important implications of the notion of intrinsic value. We will deal with the notion of labor as substance of value in the next chapter. For the remainder of this chapter we will examine some of the important implications of Marx’s notion of intrinsic value


I would emphasize all sciences go beyond appearances to the inferred essence in some way physics isn't a science of meter-reading. Our observations are mediated by theory and devices that help build up our concept of a thing. Science wouldn't exist if the essence of a thing and its appearance were synonymous, which is what should make us skeptical of the turn to focusing only on Price with John Locke.
#15136164
[quote="Rugoz"]The return on capital has not fallen. See e.g. here figure 2:
https://www.bis.org/publ/work794.pdf

"Provide a link if you have another source."

https://thenextrecession.wordpress.com/

Sorry would have done, but didn't know the ettiquette of posting external links here.

"People who do work."

It eludes me why I asked this. Apologies.

"Not for 19th century economics I suppose."

I kind of think abstraction is unavoidable in theory. It's about having the right amount, and in the right direction. That's not a very interesting point from me, though.

"Behavioral economics, e.g. Prospect Theory."

Thanks for that. Another thing to try to get round to.
#15136165
[quote="Wellsy"]I see your point, that it is that formal and limited in what it entails that it could still function without much problem in another theoretical context.
Although I would speculate the manner in which such a formal theory is often deployed and whether it can be entirely untethered from certain real-world relations which make the abstraction legitimate.
Not that people wouldn't have preferences outside of capitalist relations, but the manner in which those preferences are developed and presented in theory may be performed in a way that isn't damning on the theory itself but how it is used.
For example, some treat money as neutral and no different than a more efficient form of bartering between individuals (not all, but some) and in this way that largely ignore distinctions of capitalist relations from relations in which people barter commodities directly and ignore any qualities of money and implications.

Yes, I completely agree with this.

https://kapitalism101.wordpress.com/2011/11/15/law-of-value-8-subjectobject/

And the apprehension towards preference theory is I suspect when it is used in an effort to explain price and aspects of economic behavior under capitalism in a way that is seen to miss essential features which alter it. The field of sociology is itself a product of abstracting economics out of society, whereas when economics was known as the political economy, social relations were heavily embedded in the ideas and concepts.

And perhaps something in the realm of why one might infer value behind the appearance of price, is that the notion of an equliblurm suggests the existence of value as distinct from price. Price is like the written measurement of weight on an object, while the value is the weight itself. We see the quantity of 1lbs, but 1lbs isn't synonymous with itself or it'd be meaningless, it is a reference to the weight of the object which we experience when we try and lift it.

I'm not quite sold on this analogy, unfortunately. The issue is that the price isn't somehow "the wrong price" when it deviates from the value, it's just that there are other factors determining price - where as we can get the label of weight wrong, but the actual weight of something can't be wrong (unless it's in some kind of uncanny short story!). I can't suggest another analogy, unfortunately.


I would emphasize all sciences go beyond appearances to the inferred essence in some way physics isn't a science of meter-reading. Our observations are mediated by theory and devices that help build up our concept of a thing. Science wouldn't exist if the essence of a thing and its appearance were synonymous, which is what should make us skeptical of the turn to focusing only on Price with John Locke.

These issues are certainly worth thinking through. I do think it's an open question whether science depends on their being an essence/appearence distinction. You have non-essentialist philosophies of science - not to say they are right, of course.
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The Young Wizard wrote:I'm not quite sold on this analogy, unfortunately. The issue is that the price isn't somehow "the wrong price" when it deviates from the value, it's just that there are other factors determining price - where as we can get the label of weight wrong, but the actual weight of something can't be wrong (unless it's in some kind of uncanny short story!). I can't suggest another analogy, unfortunately.


This is going to be a fast slap dash but might raise some food for thought ideally.

I think something which perhaps sits in the background is that it is based in the question of what creates new value such that one has more value than previously? For quite some time many focused on trade, but it became apparent in the debates that trade in itself doesn't create value, it only shifts it about. If you sell me something for much more than it is worth, you haven't created new value from the perspective o society, we have only shifted it from me to you.
When this equality of trade where no new value is created is taken to be true, I think it allows the inference that price can be false in representing the true value of a thing. That is part of why it is meaningful for one to even speak of someone being overcharged for something, because the price is not ar reflection of it's true value. When we reject the very notion of value as a real thing, then it becomes nonsensical to speak of such a divergence, if the price is really the only thing that exists. And people really do talk about price being the only truly existent thing. BUt of course as in your summary in the OP, one can set any price for a thing, but to be actually competitive in the market, one is subject to pressures that make one change the price such that it isn't simply a whimsy of the seller.
People talk about this with economic bubbles, that things are inflated above their true value and will burst and bring about the sudden shock in which value and price are brought closer together. Suddenly your money no longer guarantees you the future purchases of commodities you thought it would because its supposed value is now shown false. Although I guess someone could say it was always 'true' but it just suddenly shifted but this might make unclear why it shifted in 'value' so suddenly.
I think that explaining why prices end up as they do is often explained in terms of value where as I'm not sure how others who deny value beyond subject preference might explain it other than I guess to the many factors they say make up the price of a thing such as production costs and so on. BUt whether it allows them to explain such a crisis in the financial market I don't know.

These issues are certainly worth thinking through. I do think it's an open question whether science depends on their being an essence/appearence distinction. You have non-essentialist philosophies of science - not to say they are right, of course.

I would of course argue that those who emphasize the appearances do so because they are yet to resolve the issue of the ideal as found through the legacy of Goethe - Hegel - Marx.
And that is, what they end up is with concepts which are quite impoverished, abstract generalizations where it's a task of attaching the right attributes to a thing. This is where see something like Hume's bundle theory, there is nothing but attributes because take them away there is nothing left. Which has some truth to it, but when taken as a universal concept leads only to a nominalism that rejects universals because only the individual thing is 'real'. But they are simply naive about the nature of concepts and their development and hence why in their nominalism, eschew universal abstract generalizations as they don't have a concept of a concrete universal (unity of opposites).
https://www.researchgate.net/publication/259742845_Reality_of_the_Ideal
In classical phi-losophy, since Socrates and Plato, it is the adequate and universally valid forms of thought that are called ‘ideas’.

"However, later (and exactly in line with one-sided empiricism – Locke, Berkeley, Hume and their successors) the word ‘idea’ and its derivative, the adjective ‘ideal’, once again became a simple collective term for any mental phenomena, for even a fleeting, mental state of an individual ‘self’, and this usage also obtained enough power to maintain quite a stable tradition, which has survived, as we can see, to this day.

Destroying the watershed between ideas and sensual images, empiricists lose the ability not only to solve but even to pose correctly the problem of the ideal. In his day, Hegel spoke ironically that Englishmen ‘call a simple image – of a dog, for example – an idea’. By doing so, they could hardly deny the presence of ideas in the head of this very dog. The order and connection of ‘ideas’ like that certainly have nothing in common with the order and connection of things, including that real social tie which Plato called ‘politeia’. The former tie is an associative relationship, the ‘passive order of perceptions’ (Hegel); while the lat-ter one is a logical, active, cause-effect relationship.


I'll leave things here, but if you're interested in the distinction between the abstract general as common in modern thought and the concrete universal as a true concept of things which science does develop irrespective of people's conscious understanding of the development of logical thought, I have many various resources to summarize it's superiority.
A big limitation of the abstract universal is it holds no logical necessity, the selection of attributes is an arbitrary process and often includes things which are inessential to the concept of a thing even if they are factually true in some limited sense.
It seems to be a wishy washy philosophical venture but it is of critical importance to the actual task of scientific/logical thought.

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