Re: [OPE-L] The roots of value theory

From: Diego Guerrero (diego.guerrero@CPS.UCM.ES)
Date: Sun Feb 25 2007 - 04:08:16 EST

Hi, Jurrian,

You write in your wikipedia article: "Another example would be an
equilibrium price calculated by an economist. This is a price which a type
of product or asset would have, if supply and demand were balanced. This
price does not exist in actual trading processes, it is only an ideal or
theoretical price level, which at best is only approximated in the real

Should be say that the ideal price is only approximated in the real world or
instead that the real price is only approximated by the ideal price?


----- Original Message -----
From: "Jurriaan Bendien" <adsl675281@TISCALI.NL>
Sent: Sunday, February 25, 2007 1:02 AM
Subject: [OPE-L] The roots of value theory

> Hi Anders,
> Good to have a talk! I wish I had your energy. I was impressed with how
> you
> relate your insights into economics to possible economic alternatives.
> What I meant to say about accounting, all accounting (as I said in a wiki
> article) is ultimately based on concepts of:
>  a.. comparable value (value equivalence) in space and time
>  b.. value used up or destroyed
>  c.. conserved value in space and time
>  d.. transferred value
>  e.. newly created value
> In other words, we cannot relate, group and aggregate prices in different
> ways without making some value-based assumptions that enable valid
> comparisons, and these assumptions cannot themselves be derived from
> prices.
> A theory is involved which tells us which prices should be aggregated and
> the rules for their aggregation. Where does it come from? Well,
> from a social practice, i.e. a practice occurring within social
> relations, a social context which defines association, co-operation,
> mutual dependence and belonging.
> Without those value assumptions, the aggregates themselves would be
> meaningless. Thus, when economists focus on market-prices, value
> assumptions
> are always in the back of their mind, even if they are not aware of that,
> and regard value theory as metaphysical.
> George Soros obliquely refers to this:
> "Every market participant is faced with the task to estimate the value in
> the present of a future development of events, but that development is
> co-determined by the value which all market participants together
> attribute
> to it in the present. That is why market participants are forced to be led
> partly by their subjective judgement. Characteristic of that bias is that
> it
> is not purely passive: it has influence on the course of events which it
> should represent. This active aspect is lacking in the concept of
> equilibrium such as is used in economic theory." (George Soros, "The
> Crisis
> of Global Capitalism" (1998), Chapter 3, Dutch edition, p. 83).
> Neo-classical economics rejects any value theory other than subjective
> marginal utility preferences, but social accountants who provide the
> empirical data for their economic science cannot regard value as simply
> subjective. Otherwise, anything can count as anything, according to
> subjective preference, and any old computation is permissible.
> Economists often talk loosely about an "output value" but that output
> value
> = the value of sales (gross definition) or sales less costs (net
> definition). But that means that the very definition of an output value
> depends on a concept of sales and costs, i.e. much depends on what we
> include in sales and costs, i.e. what our grossing and netting procedure
> will be, and what valuation principles we adopt for that. The output value
> of course seems to arise in exchange because it consists of sales or sales
> less costs.
> This has important implications for how we view the MELT insofar as it
> expresses a ratio between a quantity of labour-time and the monetary value
> of an output. For example, the components of GDP are at variance from real
> business practice, they are calculated according to a "concept" of value
> added which requires prices to be valued, grossed and netted in certain
> ways. As soon as we ask why a certain procedure has been adopted, we are
> automatically back with a value theory. If we seek to measure a MELT we
> therefore face the problem that the very data we use are themselves
> calculated according to a value theory, and it can be a value theory alien
> to the MELT concept. Obviously in that case, the "New Interpretation" runs
> into problems, because it assumes input and output values to be
> self-evident
> whereas in reality they are themselves already based on a value theory.
> Marx did us a disservice by acting as though prices are all of one kind.
> As
> I have explained in a wikipedia article
> the concept of
> prices is much more problematic and complex. There are ontologically
> different kinds of prices. Once we realize that, value theory becomes much
> more credible, because we realise that value theories are being used all
> the
> time in price computations anyway.
> Just as the concept of property has its origin in the animal instincts for
> territoriality and appropriation, just so the concept of value is
> ultimately
> sourced in the ability of organisms to consciously prioritise behaviour
> according to internally chosen options. Human beings can hold values,
> which
> express themselves in behavioural dispositions - the predisposition to act
> by
> choice in a certain way, when faced with a certain condition or stimulus
> which
> permits different responses. The expression of this predisposition ranges
> from very primitive behavioural routines, to very complex ones which may
> be
> difficult to detect or elucidate.
> Values are implicitly related to a degree of behavioural freedom or
> autonomy
> by organisms which goes beyond a conditioned response; values steer or
> guide
> the organism, on the basis of internally chosen options. Thus, values
> imply
> the (conscious) prioritising of different behavioural alternatives which
> are
> perceived to be possible for the living organism. Conversely,
> value-conflicts can disorient the behaviour of the organism, throwing it
> out
> of balance.
> What makes the concept of value so difficult in a social economy of any
> complexity is that we are dealing here with objectified value relations.
> It
> is not that the human subject as moral subject at any time ceases to make
> subjective valuations, but rather that these subjective valuations occur
> within the framework of objectified value relations which exist whether
> they
> like it or not, as an aggregate effect of their social existence, and
> which
> they have no or little control over (hence the use of meteorological
> metaphors in economics). The difficulty is that these value relations,
> insofar as they are aggregate social results, often cannot be observed or
> known directly, only inferred from the observable effects that they have.
> Nothing is therefore easier that to say that these value relations do not
> exist, or exist only in the mind etc. Yet as soon as we study real social
> behaviour we notice that people in society have to adjust their behaviour
> to
> objectified value relations over which they do not have much control. A
> product or asset simply has a certain social value, which sets limits on
> the
> ability to trade it, regardless of what an individual may think.
> When Marx hammers the mystification that value has its source in the act
> of
> economic exchange, he is at the same time saying that (objectified) value
> exists and persists regardless of exchange. But this is not, as I have
> argued before, some kind of profound ontological "essentialism" but an
> observable fact of life insofar as social behaviour presupposes those
> value
> relations and adjusts to them. The real problem with essentialism in this
> case is, that it severs the interconnection between the subjective
> valuations of human subjects and the framework of objectified value
> relations within which those subjective valuations are made.
> In this context it would be wrong to say that Marx has an "objective
> theory
> of value" because this severs object and subject. Rather, he has a
> relational theory of value, in which value is expressed through
> people-people, people-thing and thing-thing relations. Ultimately, those
> relations can be expressed only in dialectical categories since the value
> relations between objects and subjects operate between different logical
> levels, and are in constant motion. We can formalise only if we
> analytically
> isolate variables and constants.
> This all helps to explain I think why Marx frequently refers to the
> "forms"
> and "substance" of value. It is not that Marx thought that price theory is
> irrelevant - he cannot say that, because prices are forms of value - it is
> rather that no coherent price theory can be formed without a theory of
> value, which is true, and that is a strength of his theory. Strictly
> speaking of course Marx does not have a labour theory of value, he has a
> labour theory of output values. The values of assets external to
> production
> might be formed in a different way.
> Once this type of insight sinks in, I think it becomes possible to talk
> about human valuations and economic values in all sorts of other areas
> than
> production, and thus extend the theory.
> Cheers
> Jurriaan

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