[OPE-L] The roots of value theory

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Mon Feb 26 2007 - 14:09:18 EST

1) In reply to Diego: both could be true, and arguably one could think of a
situation in which both are true at the same time. As I've argued before,
the notion of equilibrium may refer to a number of different sorts of
situations which are not infrequently confused. The difficulty with
equilibria is typically how you know that you've got one in the real world -
the only real observable evidence you have, is that prices or sales stay
constant in some sense (usually a rare event). You are of course free to
modify my wiki entry, if you think there is a mistake in it, I mean I do not
claim to be a professional economist.

My idea is that there is a number of categorically different kinds of prices
possible - from actual prices paid to acquisition prices, from accounting
prices to administered prices, from theoretical prices to hypothetical
prices, and so on. Prices may furthermore be applied to different classes of
objects under different conditions, from e.g. a packet of butter bought in a
shop to labour, hedges, futures, services and leases. Among East European
economists, this idea was more frequently theoretically acknowledged. It
suggests, that we do not get beyond generalities in price theory, unless we
consider the social-institutional frameworks within which those prices are

I think the difference between a product-value and the ideal price of a
product, as far as Marx was concerned, is that the product-value really
exists, insofar as that product really takes X amount of society's current
labour hours to make, something which the members of society necessarily
have to adjust too even if they do not know its exact magnitude, and whether
they are trading in it or not, whereas the ideal price is a theoretical
price. Thus, the production price would be in most cases a theoretical price
level, which could be thought of either as some sort of equilibrium price,
or a regulating price (I think that, given what Marx says about the
production price, it is better interpreted as a regulating price level, a
sort of price-norm). As I have mentioned in a simplified introductory
article http://en.wikipedia.org/wiki/Prices_of_production I also think one
ought to distinguish between enterprise production prices, sectoral
production prices and economic production prices.

What makes things complex is, that real prices and ideal prices can mutually
influence each other, just as values and actual price signals can influence
each other over time inasmuch as market demand and labour-expenditures
adjust to each other. I discovered the importance of this myself when doing
research in social and economic statistics, but you can also see that
operating in the price-reckoning of ordinary business activity. So one of
the things you would need to do to complete Marx's theory, would be to
consider the "price form" and its different modalities, since although much
of textbook economics regards prices as obvious things, there is much more
to it. Indeed, nowadays an interface is developing between price theory and
information theory. I think if we examine the price-form itself more
closely, we get more clues as to why so much of economics oscillates between
the objective and the subjective in a more or less eclectic manner, quite
apart from the lack of a coherent theory of value.

2) In reply to Jerry: in transit Anders Ekeland and I had some dinner in
Amsterdam on Friday night, and discussed further about value theory and
political topics (who says OPE-Lers cannot meet?). I wanted to add something
to what I said to him, and thought it might be useful to post it to the
list. Often I write more clearly on the topic than I talk about it, but that
is because I don't work as professional economist, it's more a personal
hobby I have pursued on my own, in my spare time (some think I am nuts to do

To my knowledge, the first mention of an "objective theory of value" was by
Rudolf Hilferding in his reply to Bohm-Bawerk, the Austrian Finance Minister
and economic theoretician. Nikolai Bukharin I think also referred to it,
maybe in his "The Theory of the Leisure Class". However I do not have the
relevant works handy here, I left most of my books in New Zealand. The
problem is to understand how human valuations may result in objectified
values which gain a life of their own, and exist independently of what
particular individuals may think or wish, as a given social fact, i.e. how a
product or asset acquires a social valuation which exists independently of
what transactions may occur with regard to that particular product or asset,
and which sets real limits for the trade in it up to the point that, in a
sense, commercial value "rules" social life. I do not know who first talked
about a relational theory of value - of course, the marginalist idea was
mooted long before Menger/Walras/Jevons etc. theorised it more
systematically (this is not really acknowledged in Schumpeter's
ideosyncratic history of economics).

In paragraph 101 on p. 631 of his ideosyncratic treatise "On the Theory of
Exchange Value", Alexander Gersch stated that "Economics must take into
account both the objective and the subjective background of exchange value
because these interact." I think that has to be true, but it's a bit of a
non-sequitur, insofar as you then have to explain how they interact, i.e.
you have to explain how individual transactors cannot escape from the
aggregate social effects of their transactions which delimit what they can
do. And that is the problem you have when you try to explain, how the law of
value might operate as it were "behind the backs" of the producers, as an
unintended aggregate effect of a myriad of transactions during an interval
of time. In so doing, you have to consider also, anthropologically, how
bourgeois society splits value into social values (legally encoded - the
sphere of the political state), economic values (the economic sphere) and
personal values (the sphere of civil society). I think the "essentialist"
position has some merit, but I don't want to drown it with too much
theoreticism, that is all.


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