[OPE-L] The roots of value theory

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Feb 24 2007 - 19:02:47 EST

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
http://en.wikipedia.org/wiki/Real_prices_and_ideal_prices 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
choice in a certain way, when faced with a certain condition or stimulus
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.



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