[OPE] The Labour Theory of Value: a Marginal Analysis

From: Jurriaan Bendien <adsl675281@tiscali.nl>
Date: Thu Sep 18 2008 - 16:34:06 EDT


Thanks for the comment. I am sympathetic to what you say and certainly Von Bohm Bawerk was among the more intelligent critics of Marx. However, Von Bohm Bawerk was not a true marginalist theoretician, in fact he criticizes Carl Menger's notion of utility. And, he seriously misconstrues Marx's arguments. In particular, he mixes up "exchange value" with "value", whereas Marx very carefully and tediously explains that exchange value - a relative expression of value - is a general "form" which product-value - the substance of which is social labour-time - takes in trading processes, given the practical impossibility of quantifying abstract labour time exactly. Moreover, Marx argues that this "form" gains an autonomous, objectified existence which begins to dominate the producers.

Thus, for example, Von Bohm Bawerk writes:

"4. A fourth exception to the Labour Principle may be found in the familiar and universally admitted phenomenon that even those goods, in which exchange value entirely corresponds with the labour costs, do not show this correspondence at every moment. By the fluctuations of supply and demand their exchange value is put sometimes above, sometimes below the level corresponding to the amount of labour incorporated in them." http://www.econlib.org/library/BohmBawerk/bbCI.html

This is something which Marx never denied, and indeed he explicitly states that such fluctuation occurs, many, many times. In Marx's theory, the relative exchange values of reproducible labour-products are regulated by their values, meaning that labour-values constrain the variations in exchange values, set limits on them, and determine the direction in which their magnitudes will evolve in the longer term. Consequently, if we want to understand the real developmental tendency of the capitalist system, we need to understand how these value relations themselves will evolve, knowing very well that price fluctuations will exhibit all kinds of variations from time to time which may diverge strongly from value relations. And, Marx's argument is that there is a definite "logic" in the way value relations will evolve, it's a law-governed process. However much the prices for labour-products get out of kilter with their values, in the end price-relativities for products cannot escape from the law of value, because, in the end, it is impossible to escape from what labour-products really cost to produce, and it is impossible for monetary relations to escape from the devaluation of commodity-values, due to rising labour-productivity. All that is disguised by unequal exchange in the shorter term, but in the longer term the law of value prevails anyhow, as far as reproducible labour-products are concerned.

As I have said, I think (and I think Marx thought that too) the distinction between objective and subjective theories of value does not make sense at all, since value by nature has objective, intersubjective and subjective aspects, and thus any adequate theory of value must explain all of them, and how they are related. Indeed, Marx aims to show precisely why economic value will necessarily be perceived other than that it really is in capitalist society. If Marx largely ignores utility as a general category, it is only because, he argues, this does not reveal the specificity of the social relations of production which, according to the materialist conception of history, constitutes the economic structure (the base or foundation) of society:

"Although use-values serve social needs and therefore exist within the social framework, they do not express the social relations of production. For instance, let us take as a use-value a commodity such as a diamond. We cannot tell by looking at it that the diamond is a commodity. Where it serves as an aesthetic or mechanical use-value, on the neck of a courtesan or in the hand of a glass-cutter, it is a diamond and not a commodity. To be a use-value is evidently a necessary prerequisite of the commodity, but it is immaterial to the use-value whether it is a commodity. Use-value as such, since it is independent of the definite economic form, lies outside the sphere of investigation of political economy. It belongs in this sphere only when it is itself a definite form. Use-value is the immediate physical entity in which a definite economic relationship - exchange-value - is expressed." http://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch01.htm#2

Notice that Marx says that use-value does belong to the sphere of investigation of political economy "when it is itself a definite form" ("Der Gebrauchswert in dieser Gleichgültigkeit gegen die ökonomische Formbestimmung, d.h. der Gebrauchswert als Gebrauchswert, liegt jenseits des Betrachtungskreises der politischen Ökonomie. [Dies ist der Grund, warum deutsche Kompilatoren den unter dem Namen "Gut" fixierten Gebrauchswert con amore abhandeln. Sieh z.B. L. Stein, "System der Staatswissenschaft", Bd. I. den Abschnitt von den "Gütern"]. Verständiges über "Güter" muß man suchen in "Anweisungen zur Warenkunde" In ihren Kreis fällt er nur, wo er selbst Formbestimmung").

Point is that for the purpose of commerce, the utility of a good IS its exchange-value, goods are held for their commercial potential, and that is precisely WHY bourgeois economics usually explains exchange-value purely in terms of utility. You aim to make money from a demand, or create demand to make money from it. In the process, however, the specificity of capitalist relations disappears, and exchange relations are eternalised, since the existence of utility is common to all societies, and we obtain an alienated, reified picture of what goes on in human relations, which, although it may capture some aspects of things, fails to get to the essence of it. It is when we study exchange processes anthropologically, that we realize that this general idea of utility is a tautological truism which, if it tries to explain what really happens in trade, becomes absurd, because it largely abstracts from the true human and commercial interests involved. Few people who do business has any practical utility for utility theory, other than as a rationalization for what they do.

To have any rational kind of dialogue, there must be some shared premises, and that includes accepting the meaning of what the contenders convey. If what the participants intend to say is distorted or falsified, it is impossible to have any kind of rational dialogue, in that case we are just not listening to each other. If we are going to have a rational dialogue e.g. about Marx, then we ought at least do justice to what he actually intends to convey. If people aren't prepared to do that, there is no point in having a debate at all, and we are better off not mentioning Marx at all. I've for instance had a veteran Marxist saying to me that "reification" (Verdinglichung, Versachlichung) was a concept mooted by Gyorgy Lukacs, but that is simply not true. http://en.wikipedia.org/wiki/Reification_(Marxism) I may not be a Marxologist but that won't wash.

Of course there is also a utilitarian logic in trade, and businessmen may have all kinds of motives in this regard, some more honorable (in the sense they are genuinely concerned with human needs) than others. I do not think Marx denies that at all, even if he does not depict capitalists in "couleurs de rose", and in that sense it is quite possible to integrate parts of utility theory and the labour-value theory. All that Marx himself does, is to define the objective basis of the commercial logic: the relentless search for ways to capture at least an adequate surplus-value and preferable the maximum surplus-value, even regardless of what human needs actually are, with the imperatives to buy below value or at the smallest cost, sell at value or preferably above value, increase turnover (which may involve selling below value, if it is compensated for by sales volume) and realise the best possible profit. His argument is that, whatever their motives or quality concerns, businessmen cannot escape from that logic, at the very least in the long term, if not in the short term. That is what commercial "economizing" is about, and we can clearly see its good and bad results nowadays.

It would be wrong to say that "we cannot predict demand conditions" in general, and here I agree with Paul Cockshott. You have to distinguish between different kinds of goods. For some goods, the demand pattern is fairly stable and regular (e.g. bread), for others it is not (e.g. fire). For many consumables the demand is pretty stable, and we can predict demand within a definite statistical margin. With others (e.g. works of art or fictive assets) that is not possible because demand is erratic. The bourgeoisie produces an enormous amount of additional uncertainty about this, with its financial systems, but technically speaking that is unnecessary.

According to Marxism, trade as such is a bad thing, but this is absurd - if we did not trade, society would perish, unless we had a universal and fair system of credit allocation in place, and we haven't emancipated ourselves that far yet. We ought to distinguish, in the first instance, between beneficial trade, and trade which is harmful and unnecessary. Trade should, ideally at least, serve human requirements, not human requirements serve trade, and we shouldn't really be trading, if trade is unnecessary because there are better ways of allocating goods, although we may be too blind, alienated or hurt to see it. But in a class society, you can in practice only see it from the point of view of your own class location.

I can vouch for all this, because I have investigated it dispassionately - for better or worse - in extreme detail, paying attention to different sides of the argument including arguments I do not like at all but which really exist, and I have been ruthlessly criticized for my explorations as well, to the point of having stuff stolen that belonged to me.

I agree with you wholeheartedly about the importance of human choice and the problems this poses for economic affairs, but my criticisms concern the theories of choice and freedom, which are often very bad (I've made some pretty bad choices myself so I know about that). The critique of Soviet-type societies is also often very bad, I personally translated a book about that. The whole debate was falsely polarized by people who had an ideological, political or moral axe to grind, and little good insight came out of that.

But look, I just cannot delve into this topic in depth at this moment as I would like. If my Dad was alive today - he would have been 84 on Saturday - he would say I have been a lucky guy, "but what are you doing with your life, and why aren't you helping yourself"? All I know is, that you just can't keep holding up the queue, you cannot treat your body with impunity, and you cannot easily be a scholar and a real man of action at the same time. You cannot do everything at once, you can have too much of a good thing, you end up falling into apologies, the surreal substitutes for the real. In fact Ernest Mandel wrote me a letter admonishing me about that once. I have to make some choices in the present, that is where I am bogged down at, but I hope to return to this controversy because I think there's a solution. Life's a bitch and then you die, and when you're rid of your bitching, all you've got is your faith in a life after you let go of all that bothered you before.



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Received on Thu Sep 18 16:37:58 2008

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