[OPE-L] [Jurriaan on] dialectics, value and complexity

From: Gerald_A_Levy@MSN.COM
Date: Mon Sep 26 2005 - 21:22:33 EDT

----- Original Message -----
From: "Jurriaan Bendien" <adsl675281@tiscali.nl>
Sent: Monday, September 26, 2005 6:18 PM
Subject: dialectics, value and complexity


I realise that I wrote in my short off-the-cuff piece on dialectics (not
doing full justice to the subject obviously) that:

"Instead of an object in thought, we focus on a real object, the
substantive  thought being, that this object has its own specific
dialectical properties,  which have to be discovered rather than
assumed, and which can be known."

A professional philosopher would hasten to point out that, of course, you
cannot contrast "an object in thought" with "a real object" in that way,
because "an object in thought" is just as "real", i.e. just as much part of
reality, as any other object we may be aware of or experience, even if the
object in thought happens to be just a fiction. It would be more
appropriate  to say, "Instead of an object *existing only in thought*", as
contrasted  with something that exists independently of the individual
knower. The very  distinction I imply, already suggests a contrast between
 the "ideal" and the  "material". The "real" in the above quoted sentence is
more along the lines  of "get real, rather than fantasize", as one might
have occasion to say.

I suspect that part of the dificulty about dialectics is linguistic. A
German word like "bestimmt" can be translated as "determinate" or "defined"
or "limited", but the determinations, definitions or limits could be
logical, causal, existential, or ontological etc. It's all in how you try
to bridge the gap between "what's in here" and "what's out there" with
meaningful distinctions. The way I've tried to overcome this linguistic
difficulty is by talking about it in terms of "non-arbitrary" - i.e.,
something might have a practical, physical or social limit, which is
nevertheless not a formal-logical limit. In practical reasoning, what you
in  fact do is, you combine the logical and empirical limits in a reasonable
way, both deducing and inducing.

In this sense, dialectical reasoning in Marx's substantive sense can occur,
only if those non-logical limits have already been discovered, because only
then can you reason at a "higher level" based on the knowledge of all those
real limits, and perhaps discover a "higher or overarching logic" in
various  circumstances under study, that would escape you, as long as you
had your  nose too close to the minutiae of everyday empiria. But for Marx,
that base  knowledge is actually often strongly "empiricist" (if I dare to
use that  word) and not speculatively introduced, i.e. grounded in some
kind of systematic assimilation of real observational experience,
experience of something beyond thought-contents. Hence his irritation
with academics who wanted to hang out as "dialecticians" when their real
empirical knowledge was very patchy, when they hadn't bothered to
study the facts.

As a digression: -

This distinction between real and ideal might be a subtle point to mention,
but it has major implications for the endless dispute about values and
prices also. Among other things, as I have noted, there are such things as
"real" prices actually charged, and "notional" (ideal) prices, yet these
notional prices can nevertheless influence economic events, even although
they only exist in people's heads or in a book. This is forgotten in the
stampede to banish an objective theory of value from economics (of course,
an economist does not think his own bank account is "subjective" at all, he
wants his money to be there, regardless of anybody's subjective,
utility-maximising preference).

Take, for example, a really big composite price, like world gross product
for 2004, estimated at US$40.9 trillion. To compute that price, you need a
very substantive, comprehensive value theory, and I am not joking, because
different valuation methods will produce differences of over one trillion
dollars (see for yourself in the different World Bank estimates), even
assuming the national totals are validly computed. What is the "reality" of
this price, you might well ask? However we answer that, it's clear that we
have a price here, which can nevertheless influence policy in some way,
directly or indirectly.

People will nevertheless say yes, but *value* is only something in people's
heads, it has no objective "real" existence. Maybe that is true, insofar as
value - just like price - is a human attribution, a social *objectification*
of a (shared) idea. But in other respects, value has a very practical
existence; not only because it physically takes amounts of real work to
make  goods and services, but also because goods have value, prior to,
and after  they are exchanged for a price, and that means that the price
they  previously had, or will have in the future, is not some random
number, but a  predictable one. It is all very well to predict future prices
from past  price trends, but we have to be aware of the *value
assumptions* which  entitle that activity of prediction in the first
instance - the assumption  implied is nevertheless that goods and services
will have a value,   independently of their exchange, i.e. independently of
whether they are  traded or not. That is ultimately why they are
predictable at all.  You can  of course try to explain it all in terms of
supply and demand, but even in  doing this, the economist slipslides
between actual demand and actual  supply, and a potential (hypothesized)
demand and a potential (hypothesized)  supply. In this sense, the notion
of market equilibrium is precisely the  means for spiriting away any notion
of objective value.

There is a sub-dispute in economics about *administered* prices also.
Neoclassical economics argues that "real" prices are market prices, and
that if no market price exists, but only an administered price, a market
price can be imputed, based on what a good or service would be worth,
if it was traded in markets. This again clearly involves a value theory,
and in the light of my previous remarks, the argument, insofar as it is
about "reality", is really spurious. But why cannot administered prices
be "real" prices anyway? They function just exactly the same way in
everyday life as market prices, although they might not respond as
directly as market prices to the forces of supply and demand, which
is the main criticism (in reality of course, many corporate or Treasury
prices are administered prices anyway;   supply or demand forces may
not have very much to do with their magnitude,  or at least a significant
component of their magnitude).

This also feeds into a very important debate in socialist economic theory
reaching back to Oskar Lange, i.e. what "mix" of administered prices and
market prices is desirable for optimising the allocation of resources, and
how you can shift more and more from a mediated to an unmediated (direct)
allocation of resources, on the basis of a socially accepted morality (as
I've also noted at times, markets do not provide any particular morality of
their own, other than the obligations necessary to settle transactions).

The really sad thing about the *general* argument that market prices will
provide an optimal allocation of resources, is that what exactly
"optimality" consists in, is never really specified. It *cannot* be
specified either by definition, because in its own terms, it just consists
in what all individuals want to do with their money (cf. Milton Friedman's
"Free to Choose"). At least in socialist economics, there is some (partly
normative) notion of optimality, specifiable in terms of what we
scientifically know about normal human needs and requirements. The
pro-market argument is therefore never really in terms of what is good for
people, but overall comparative economic results. E.g. Ronald Reagan would
justify his system, on the ground that American agriculture could produce
much more output, at a fraction of the labour cost incurred in Soviet
agriculture (The 1998 wheat crop of Kansas alone would make nearly 34.6
billion loaves of bread, or enough to provide every person on earth with
nearly six loaves of bread. Mennonite immigrants from southern Russia in
fact introduced Turkey Red wheat seed in Kansas, during the 1800s, and
nowadays hard red winter wheat dominates the Kansas countryside, although
they are experimenting now with hard white varieties).

But, getting back to Marx, who got irritated about "all the palaver about
the theory of value", the more I've read about values, prices and markets,
the less I believe what I read, because the theories frequently do not
truly capture how those things really function in empirical reality, even at
the simplest level. The argument made is e.g. that market societies are "too
complex" to make collective planning possible, and so on (Prof. Domhoff
repeats this verity also). But the core of Marx's argument is really that
by  *changing social relations*, a lot of the intermediation between
producers and consumers simply disappears, and with it, a lot of the
apparent "complexity". Planning may be a complex cognitive task - even if
computer-aided - but markets can sure add a heck of lot of complexity of
their own.

In New Zealand, for example, they used to have one national grid with
regional power boards, and one set of administered prices for everybody.
Worked perfectly well for decades; it could, of course, be technically
improved, and occasionally was, beyond regular maintenance. Then they hired
consultants at taxpayers expense, and they carved that all up, into
competing private companies selling at "market rates" (sic.), which bought
each other up, and were in turn bought out by foreign owners, who charge
higher prices to the consumers, to obtain "shareholder value". I think the
govt was so nice to give every citizen a bit of money as their share of the
initial sell-off. Obviously though, thereby - regardless of how you might
view the merits of the whole exercise - you create a very "complex" system
of market signals, influencing New Zealand electricity supply, which
stretches around the globe, from the New Zealand consumer switching on a
lightbulb, to a shareholder doing his accounts, in some other, faraway

The privatised electricity conked out in Auckland at a certain point for a
week, because they had failed to maintain the cable network, and they had
to  get Australian labour out to fix it (they had "downsized").  Point of
this story however is, this whole "complexity" is *socially constructed*, it
did not exist before, and does not need to exist by virtue of some physical
or technical necessity. The "complexity" here, is merely a set of
intermediaries between producers and consumers, which disguises, who gets
the income from an activity, and what the real source of that income is.
The irony is, that at the very same time, the New Zealand government
cannot  really tell the full truth about the real income distribution among
the population in New Zealand! After a decade of restructuring and
sell-offs, a New Zealand Department of Labour economist cautiously
implied in an official report that real wages "from the point of view of
employees" (!) must have  fallen absolutely over the period 1993-1996
( http://www.dol.govt.nz/PDFs/lmb971d.pdf).



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