[OPE-L] Lawrence Krader on objective and subjective value

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Nov 10 2007 - 13:45:17 EST

While I think of it. As I noted before on OPE-L, the common reception of Marx's theory of economic value as an "objective" theory was originally due to an influential article by Werner Sombart straight after the publication of Capital Vol. 3, titled "Zur Kritik des oekonomischen Systems von Karl Marx", in Archiv fur soziale Gesetzgebung und Statistik, vol. VII, 1894, pp. 591, 592. Sombart contrasted Marx's objectivism with the subjectivism of the Austrian School. 

Nikolai Bukharin accordingly wrote:

"Werner Sombart... designates Marx's system as an outgrowth of "extreme 
objectivism"; while the Austrian school, in his opinion, was "the most 
consistent development in the opposite direction". We consider this 
characterisation complete accurate. (...) Marx's theory is accordingly an 
objective theory of labour value..." (p. 36, 37). http://www.marxists.org/archive/bukharin/works/1927/leisure-economics/index.htm

But I think, in contrast to Sombart, it would be more correct to describe Marx's theory of economic value as a "materialist" theory in the epistemic sense of the word, i.e. a theory which explains the ideas about value and their history in terms of the real, practical relations between people that give rise to those ideas. Materialism contrasts with idealism here, i.e. with a theory which explains what motivates human action purely in terms of the thoughts people have in their own heads, in abstraction from the context in which those thoughts occur.

Since human practice involves both objective and subjective aspects, this interpretation is not "objectivist", except in the sense that the roots of the ideas about value are sought in a material and social reality that exists beyond thought. It raises the question of what the relationship between the objective and subjective aspects is.  

In Das Kapital, as Isaac I. Rubin emphasized, Marx indeed explicitly tries to explain why the categories of value present themselves they way they do in human consciousness generally, and in the consciousness of businessmen and the political economists in particular. Marx refers specifically for example to the reifying effects of market relations, in terms of "commodity fetishism", "the illusions of competition" which invert the real concatenation of events, and the "holy trinity" of value-creation. He notes also that "In bourgeois societies the economic fictio juris prevails, that every one, as a buyer, possesses an encyclopedic knowledge of commodities." (note 5) http://www.marxists.org/archive/marx/works/1867-c1/ch01.htm (this is arguably the basis of the doctrine of "consumer sovereignity")

The Marxian claim here is, that value relations necessarily present themselves in consciousness in a certain way (and, often, other than they really are, i.e. in a deceptive way), because of their intrinsic nature. Alfred Sohn-Rethel called this a "necessary false consciousness", but it is a consciousness which nevertheless motivates human action - a "one-sided" consciousness which abstracts from certain aspects, and accentuates others. A completely false theory obviously cannot genuinely orient human behaviour, and leads only to errors, but a theory can also have a (maybe "platitudinous") truth-content sufficient to orient human action without being able to explain the total meaning of that action. 

The explanation of the magnitude of exchange value in terms of use-value or "utility" has existed for many centuries, but what needs to be explained for example is why at a certain point this explanation became commonly accepted. We can of course refer to the internal logic of ideas (the refinement of concepts that make them more plausible), as Schumpeter does for example, but I presume that for Marx this development has to be explained in terms of the growth and universalisation of market relations themselves, and also in terms of intellectual politics. 

"Vulgar economics" abstracted away from any serious analysis of the core problems concerning value, not just because it could not resolve them theoretically, or because of intellectual politics to do with ideological interests, but also because it was concluded that pragmatically it did not matter so much anymore for policy, exactly what stand one took on them. The struggle of the rising bourgeoisie to assert and implement its own theory of value against the theories of rival social classes was largely over, except for a few Marxian challengers.

But it turns out that it does matter, because one-sided, or basically false, theories of value can have real, objective consequences. For a very recent example, Fred Moseley in his analysis of the subprime mortgage crisis has highlighted the contemporary paradox of how "securitization" of loans was meant to spread risks and thus insure them better, while the overall effect of that has been, that it is no longer even clear what those risks are, and I might add, this means that it is no longer clear either what the valuation of financial assets should be. 

It gives rise to the catch-cry of "transparency" but this runs headlong into the problem that value relations often cannot themselves be directly observed, and must be inferred from "price signals" which may be wrong signals, distorting what is really happening (at this point, the Federal Reserve moots the ah-hoc concept of "price discovery" - since what the correct price should be, is not longer obvious from really existing prices, and can no longer be theoretically articulated, it has to be be discovered by market actors through successive approximations, with a faith that they will succeed).  

I am aware that Lawrence Krader criticised the subjectivism of the Austrian school, but in his "materialist" theory of economic value, he nevertheless tries to integrate the subjective meanings attached to economic value. That is, the prerequisite for an adequate theory of value is, that it must also explain coherently why people generally (or particular social classes) perceive value in specific ways, and act accordingly on those perceptions, because those perceptions shape human action, and have definite objective results. To do this, the analysis of these perceptions has to refer back to the real social and material context in which they occur, in order to be able to explain why the subjective meanings themselves are not completely arbitrary or random, but vary only within certain definable limits, according to the real context which gives rise to them.

Hay & Levitt 1995 whom I cited before report that "Krader has kindly made available to the authors some 5,000 manuscript pages of a new work which attempts to re-examine specific fields (e.g. physics, mathematics, evolutionary biology) and problems (e.g. labour, value, consciousness) from the vantage point of the empirical and theoretical achievements since Marx's death" (op.cit. p. 101). The total manuscript has not been published as far as I am aware ( a fragment was published in the book "Labour and value", 2003 previously mentioned on OPE-L in 2004).


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