Re: [OPE-L] A startling quotation from Engels

From: Ian Wright (wrighti@ACM.ORG)
Date: Mon Aug 13 2007 - 12:28:24 EDT

> For Engles only when market reaches the point where commodities are fully
> useful, then commodities have its full labour value. On the contrary, market
> mechanism depreciates its labour content. But that point of full usefulness
> someway implies the fictitious walrasian-paretian equilibrium. If it is
> never reached labour values remain constantly one step backward and to my
> understanding the transformation purpose lacks relevance. Now I'm aware you
> didn't mean this.

Isn't it precisely the other way around? Given that (i) labour-values
are variables of state, i.e. properties of the current economic
configuration, and (ii) labour-values are attractors for market
prices, i.e. the law of value, then (iii) it is market prices that lag
labour-values. This is part of the classical "long period" equilibrium
view: it is objective costs of production that, all other things being
equal, eventually manifest as natural prices.

> This brings us to another issue. It's true, like you said, that economic
> value has objective and subjective aspects, but contrary to the belief of
> neoclassical economists, the objective content of prices are very limited
> letting us just working arithmetically with them. Prices are only an
> indirect way of utility cardinalization, but in last resort there is a
> subjective content. So it is a misconception to state that prices are an
> objective expression of value. Consider the Mises's quotation below:
> «Neither is objective exchange-value measurable, for it too is the result of
> the comparisons derived from the valuations of individuals. […]If in this
> sense we wish to attribute to money the function of being a measure of
> prices, there is no reason why we should not do so. Nevertheless, it is
> better to avoid the use of a term which might so easily be misunderstood as
> this. In any case the usage certainly cannot be called correct - we do not
> usually describe the determination of latitude and longitude as a 'function'
> of the stars.» pp. 48-49. (Ludwig von Mises, The Theory of Money and Credit,
> 1912,  New York, The Foundation for Economic Education, 1971.)

I didn't quite understand the point you make here. Could you
elaborate? Would Mises accept that if everyone decided to subjectively
value commodities differently than we do today then it would be
economically possible that pencils can cost less than airplanes? In
other words, how far does Mises idealism go?

Best wishes,

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