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Calling All Marxists
Yes, I know ... By design, Volume I of Das Kapital employs "abstract" or "simplifying" assumptions about value which Volume III qualifies, as the latter endeavors to meet the actual dynamics of supply-demand head-on; how, under the pressure of competition, exchange-values can and do greatly diverge from original labor-input values.
And I agree there's a real question as to whether Marxian value and an analysis based on marginal utility are even addressing the same question(s). On its face, the latter is an account of valuation, not value.
But I'd be interested to know how anyone who still credits Marxian value, at least as a heuristic (or, better, as an apprehension of something basic and undeniable about economy and production), answers the basic "Austrian" contention:
"... a suit is not eight times as valuable as a hat because it requires eight times as much labor as a hat to produce. It is because a finished suit will be eight times as valuable [Ed. sc., desired-demanded] as a finished hat that society is willing to employ eight times as much labor for the suit as for the hat."
(Roepke, paraphrasing Wicksteed, in Economics of the Free Society, p. 20, n. 2)
I don't offer this so much as a challenge as an opportunity to understand how Marxists respond to marginal utility - beyond taking it as the fetish of modern "vulgar economists," that is.
March 3, 2005 | Permalink
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Comments
Seems to me your quote about the hat and the coat confuses value and price.
Of course, the fatal flaw in Marxist economics is the inability to identify an autonomous realm of supply and demand -- the market, in other words -- which gets wholly subsumed to production. However, in market centric economics -- neo-classical, for instance -- a mirror mistake is made -- production, dissolved into a scheme with a total market sphere (production becoming merely a cost) -- fetishizes the market, disguising the real social form of production -- class.
Posted by: roger at Mar 4, 2005 8:08:46 AM
Roger,
The citation doesn't mention the word "price" ...
I wonder if, in your second paragraph, you meant that production is subsumed to supply-demand (not vice versa)?
Posted by: Paul Craddick at Mar 4, 2005 4:00:34 PM
Roger,
I hope my previous reply didn't seem churlish ... I'm not exactly clear on what you're saying - and if you're not averse to a restatment, I'm all ears.
Posted by: Paul Craddick at Mar 4, 2005 10:50:48 PM
Paul, I assume that the sentence "It is because a finished suit will be eight times as valuable [Ed. sc., desired-demanded] as a finished hat" means that what you get in exchange value for the suit will stand in that ratio to the exchange value for the hat -- and that the price, in an economics that assumes that the demand is the ultimate cause of economic activity, will find its equivalent in the price.
As for your second question -- Marx seens to me to realistically reflect the stage of capitalism in which an economics could honestly hold that the means of production is the key to the economic system, and that the market was a secondary, derivative phenomenon, important insofar as it is the market that tranforms a produced thing into a commodity, but secondary insofar as the class structure arising from the means of production wholly determined the conditions of supply and demand. As I read this history, the sphere of supply and demand -- a fully consumerist society -- really didn't emerge until the end of the nineteenth century. And its emergence led to unexpected changes in the class structure -- for instance, the purchasing power of the working man expanded, rather than contracted, which goes against Marx's expectations. How this happens -- whether Marx overlooked the power of capitalism to only regenerate itself by exploiting new technologies, for instance -- can be put to one side. That it happened means that Marxist economic theory was confronted with a market sphere under-analyzed in Marx's own writings, which saw that sphere wholly in terms of the commodity relationship and the exploitation of the worker's labor -- instead of the worker's desire.
At least, that is one way of looking at it.
Posted by: roger at Mar 5, 2005 8:59:41 AM
Thanks, Roger.
The way I read the Roepke quote is that it is the fact that something is desired which sets the economic process in motion; which makes it economic to employ this quantum of labor to produce this amount of such-and-such. This in contrast to the view that labor-inputs, somehow independently, bestow a kind of occult value which will (then) be imperfectly reflected in market transactions. I guess this is simply a way of saying that production is for the sake of economic consumption. Ironically (or not!), the Marxian view seems to apply to a command-ration economy, where the "consumers" take what they can get.
If I'm following you in the 2nd paragraph, you seem to be saying much the same thing.
I do disagree, though, that there was anything unexpected in the non-"immiserization" of the workers (namely, their increasing purchasing power). The implications of that inherent drift of the market are huge, I'd say, and we can/will surely take that one up in again in my disputes!
Posted by: Paul Craddick at Mar 5, 2005 12:42:46 PM
Paul, I buy not only Marx's story here, but the overview of classical economics given by Galbraith in The Affluent Society. Marx is solidly in the line of pessimism that goes from Smith (arguably) to Malthus (inarguably) to Ricardo.
I also hold to the modern lefty version of the relative immiseration thesis -- that the units we should be looking at have to do with levels of wealth relative to the wealth in a society. In which case, you have a pleasing downward plunge of share of the wealth by the working class even in prosperous places like the U.S., and of course the horrendous fraud of neo-liberalism in the third world that has regressed the average wage in Mexico, Venezuala, Bolivia, Chile, etc. to the 1970 level.
Posted by: roger at Mar 5, 2005 1:38:47 PM
Paul, I've attempted a tart little response to yours here:
http://www.leninology.blogspot.com/
Posted by: lenin at Mar 16, 2005 12:42:54 PM
I think the preceding responses have missed the point. Marx does NOT ignore the role of supply and demand in the market, but he says that this causes fluctuations around an equilibrium price - which is what orthodox economists say too. The marginal utility theory does not explain this price. Marx of course explained this in terms of average social labour, not by an 'occult' process but because this is the one input which they all share. Or to put it crudely, because all costs are labour costs and cost more or less provides the determinant of price. Marginal utility theory essentially argues that cost has no bearing on price - which would come as a surprise to most people! The coat and hat example is inapposite as in practice the prices of hats vary in relation to coats. You could find some hats that were more expensive than some coats. But take the example of a car and a pencil. It is not that society has decided to employ more labour on the car because the car is 'valued' more. It is not possible to do otherwise. Even an artist who 'values' a good pencil more than a polluting motor vehicle is not going to pay out more for a pencil! Or to take society as a whole, look at air. We all need to breathe; air is necessary for the plant and animal life that provide our food and for many industrial processes. But do we pay for it? No. Because no labour is employed in its construction. This is a classic example of the distinction between what Marx calls 'use value' and 'exchange value'. It is exchange value that is determined by labour inputs. But marginal utility theory cannot explain why air is free, nor the difference in price between a car and a pencil.
Posted by: Diogenes at May 25, 2005 9:53:02 PM