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

From: Ian Wright (wrighti@ACM.ORG)
Date: Mon Aug 13 2007 - 21:20:10 EDT

> That's because Engels' Preface is so interesting and it could help Marxists
> to revise the attractor metaphor. I prefer to interpret Marxist labour
> value, even I'm not a Marxist, as a sort of «technological frontier». Why?
> Because that allegedly point when commodities acquire their full usefulness
> and therefore their full labour value is an exception, while the rule is
> that commodities lack their full usefulness due to market imperfections.

The classical economists, particularly Marx, were very much aware that
market prices only very exceptionally coincide with natural prices, if
at all.

> An attractor has implicit a notion of equilibrium, something rare in real
> market economies.

Of course. But an attractor is real even if the economy, for whatever
reason, never reaches it. It is helpful here to employ the distinction
- a mechanism operating in isolation such that it reveals its "pure form", and
- the same mechanism operating in an open system, in conjunction with
many other mechanisms, in which its operation may be disguised,
prevented, only partially realized etc.

For example, the fact that airplanes and birds fly doesn't imply that
the law of gravity is false. Similarly, the fact that market prices do
not coincide with natural prices doesn't imply that the law of value
is false.

But both laws are absolutely essential in order to understand the
"laws of motion".

In the social sciences we cannot create experiments that produce
closed systems in which social mechanisms are revealed in their "pure
form". We therefore have to use the power of abstraction instead. The
"law of value" is just such an abstraction.

> As a metaphor it implies that the active part of market
> dynamic rests upon nature and not upon women and men. It is as if
> entrepreneurs were condemned to follow nature dictum but what really happens
> in real market economy is that they challenge nature. Entrepreneurs don't
> face parametric prices, they influence upon real market prices. You don't
> have to agree with the usefulness of the function of an entrepreneur in a
> market economy, been it capitalist or socialist, to agree with this
> empirical description.

Marx's labour theory of value dramatically emphasizes that the "active
part of market dynamic" rests upon the creative powers of social
labour. It is not just entrepreneurs but the working class in general
that continually challenges nature and revolutionizes social

I agree that technical innovations and changes in tastes cause changes
in market prices and objective costs of production. But why do you
think these facts contradict a labour theory of value?

> Your question could be improved if you invert the elements… it would be
> economically possible that airplanes can cost less than pencils?

Oops that was what I meant to type.

> If it were the case that people acquire a pathological desire for treasure
> pencils and renounce to the usefulness that airplanes bring in
> transportation of people and commodities, even at point of risking their own
> lives because of lacking of material once available thanks to air
> transportation, it might happen that airplane manufacture will lose
> «economic character» which means that won't lend anymore useful services.
> Producing it would be like producing sand in the Sahara desert just that the
> desert isn't there. Of course, even in these hypothetical conditions you
> need to incur in high accountable/pricing costs to produce an airplane, but
> it would be not profitable. On the other hand, pencils prices could acquire
> exorbitant magnitudes, depending on the real existence of the resources to
> manufacture them and the degree of competition in the market of pencils. In
> these crazy conditions it wouldn't be crazy to have pencils as expensive as
> airplanes.

I agree that your scenario is possible. But the question is: is this a
stable state, and where does the economy go next?

At this point the classical "law of value", and the corresponding
notion of long-period equilibrium, has an explanatory role. Pencils
have a crazily high price because demand currently far outstrips
supply. Assume therefore that profits are high for pencil
manufacturers; in consequence, capital and labour resources get
reallocated to pencil production. Supply begins to meet demand. Prices
change. In what direction do the prices change? According to the
classical theory they move towards the natural prices that measure the
objective costs of production.

In other words, pencils have less *value* than airplanes because they
require less total labour for their production. This is an objective
fact that acts as a material constraint on the evolution of market
prices, completely independent of agents' subjectivity. So Mises is
talking out of his hat when he says, "Neither is objective
exchange-value measurable, for it too is the result of the comparisons
derived from the valuations of individuals."

Perhaps if we all wished hard enough together, all at once, then
airplanes would objectively have the same value as pencils, and
everyone could have their own jet?

> But Mises didn't go as far as some of his disciples. The Spanish Austrian
> economist Jesús Huerta de Soto says that cost are absolutely subjunctives,
> so that we can't build demand and supply schedules. He doesn't seem to
> realize that in his «imaginary capitalism» he loses even the arithmetic
> function of money and calculation becomes impossible in his model. He is an
> anarcho-capitalist but I don't know if the most radical Austrians follow
> him, like Hans Hermann Hope or Murray Rothbard.

I'm sorry I didn't understand what you meant by "absolutely subjunctives".

Best wishes,

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