Comments on: Objective and Subjective Value http://dbzer0.com/blog/objective-and-subjective-value A bug in the code of the universe. Thu, 24 May 2012 02:11:35 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: solid http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-92353 solid Tue, 10 Jan 2012 16:47:51 +0000 http://dbzer0.com/?p=2074#comment-92353 "In his Open Letter, Cockshott claims that ‘In science competing theories are supposed to be evaluated on the basis of their ability to explain observed data’ and that ‘One can propose mechanisms for the labour theory to be confronted with evidence which might refute it’. He further argues that ‘It is much harder to see how the same might be done with the utility the- ory of value, whose scientific status is thus questionable’. The critique of the neoclassical utility theory of value is certainly correct. One key reason why this theory cannot be tested is that its elementary particle – the util – is unknowable. Neoclassicists bypass this problem – at least in their own minds – by going in reverse: they assume that dollar market prices ‘reveal’ utility and that dollar income flows reveal ‘factor productivity’. With this revelation, they can then go on to ‘measure’ (again, in their own minds) the util quantities of the so-called ‘real economy’ – from the ‘real’ flows of production and consumption to the ‘real’ stocks of assets and capital. Cockshott claims that this isn’t the case with Marx’s labour theory of value. Unlike the neoclassical util, the elementary particle of Marxism – socially necessary abstract labour time – can be objectively observed and measured. ‘It is possible’, he says, ‘to use input-output ta- bles to work out how many hours of labour went into producing the total output of each in- dustry’. But this claim is false. In fact – and as Cockshott knows full well – the only way to ‘know’ labour values is the neoclassical way: by revelation. Whereas neoclassicists assume that prices reveal utils, Marx- ists assume that prices reveal socially necessary abstract labour time. And that is it. As they stand, the quantities of utils and labour values exist not as empirical observa- tions, but as religious-like visions. They emerge not from open-ended research and scientific exploration, but from circular rituals that make them true by definition. This is how Cockshott himself describe the process in one of his recent works: Unfortunately . . . we have no such independent data on values. This would require a fully disaggregated input-output table along with data on labour inputs in hours. When we - 13 - compute industry values in practice, our primary data are nothing other than industry costs: we infer values from these costs, with unavoidable error. There are three sources of divergence between the underlying true values and the estimates of values derived us- ing industry cost figures. 1. Values are defined in terms of hours of socially necessary labour time, but in most empirical work direct labour hours are proxied by the wage bill. 2. The assumption that the rate of surplus value is uniform across sectors: most if not all empirical work on value employs this assumption, yet it is not likely to be strictly true. 3. The aggregation issue: each of the sectors or industries used in an empirical study represents the aggregation of a wide range of production processes. The aggregation is, of course, done in terms of monetary values. Thus the weights carried by each sub-sector in the formation of any given sector’s figures depend on market prices, which by as- sumption exhibit some degree of divergence from values. (Cockshott and Cottrell, Robust Correlations Between Prices and Labour Val- ues: A Comment. Cambridge Journal of Economics, Vol. 29, No. 2, March, 2005, pp. 312-313, emphases added.) The precise details of the procedure are often opaque, but the gist of it seems simple enough. First, being unable to know the quantity of socially necessary abstract labour hours embedded in commodities, Cockshott resorts to deducing this number from observable prices.[1] He does so by assuming that the direct number of hours (Marx’s v) is revealed by the dollar wage bill and that the indirect number of hours (Marx’s c) is revealed through itera- tive imputations of the dollar wage bill incurred in producing the non-labour inputs. And since, in and of themselves, labour values can never be known, this revelation, just like the neoclassical revelation of utility and ‘factor productivity’, can never be falsified. Second, Cockshott doesn’t correlate average unit price with average unit labour time (as revealed by average unit dollar cost with some transformation). Instead, he correlates total sales with total labour values (as revealed by total dollar cost with some transformation). This move from individual commodities to sectoral aggregates introduces the further hazard of spurious correlation (see the linked Excel file). Taken together, these assumptions enable Cockshott to show that there is a tight correla- tion between the aggregate dollar sales and the aggregate dollar costs of different sectors. What remains unclear is how these unsurprising price correlations relate to Marx’s labour theory of value – and, moreover, why Cockshott is convinced that they constitute a scientific proof of that theory." <a href="http://glasgow.academia.edu/paulcockshott/Papers/1119230/Testing_the_labour_theory_of_value_an_exchange" rel="nofollow">http://glasgow.academia.edu/paulcockshott/Papers/...</a> "In his Open Letter, Cockshott claims that ‘In science competing theories are supposed to be evaluated on the basis of their ability to explain observed data’ and that ‘One can propose mechanisms for the labour theory to be confronted with evidence which might refute it’. He further argues that ‘It is much harder to see how the same might be done with the utility the- ory of value, whose scientific status is thus questionable’.
The critique of the neoclassical utility theory of value is certainly correct. One key reason why this theory cannot be tested is that its elementary particle – the util – is unknowable. Neoclassicists bypass this problem – at least in their own minds – by going in reverse: they assume that dollar market prices ‘reveal’ utility and that dollar income flows reveal ‘factor productivity’. With this revelation, they can then go on to ‘measure’ (again, in their own minds) the util quantities of the so-called ‘real economy’ – from the ‘real’ flows of production and consumption to the ‘real’ stocks of assets and capital.
Cockshott claims that this isn’t the case with Marx’s labour theory of value. Unlike the neoclassical util, the elementary particle of Marxism – socially necessary abstract labour time – can be objectively observed and measured. ‘It is possible’, he says, ‘to use input-output ta- bles to work out how many hours of labour went into producing the total output of each in- dustry’.
But this claim is false.
In fact – and as Cockshott knows full well – the only way to ‘know’ labour values is the neoclassical way: by revelation. Whereas neoclassicists assume that prices reveal utils, Marx- ists assume that prices reveal socially necessary abstract labour time. And that is it.
As they stand, the quantities of utils and labour values exist not as empirical observa- tions, but as religious-like visions. They emerge not from open-ended research and scientific exploration, but from circular rituals that make them true by definition.
This is how Cockshott himself describe the process in one of his recent works: Unfortunately . . . we have no such independent data on values. This would require a fully
disaggregated input-output table along with data on labour inputs in hours. When we
- 13 –
compute industry values in practice, our primary data are nothing other than industry costs: we infer values from these costs, with unavoidable error. There are three sources of divergence between the underlying true values and the estimates of values derived us- ing industry cost figures.
1. Values are defined in terms of hours of socially necessary labour time, but in most empirical work direct labour hours are proxied by the wage bill.
2. The assumption that the rate of surplus value is uniform across sectors: most if not all empirical work on value employs this assumption, yet it is not likely to be strictly true.
3. The aggregation issue: each of the sectors or industries used in an empirical study represents the aggregation of a wide range of production processes. The aggregation is, of course, done in terms of monetary values. Thus the weights carried by each sub-sector in the formation of any given sector’s figures depend on market prices, which by as- sumption exhibit some degree of divergence from values.
(Cockshott and Cottrell, Robust Correlations Between Prices and Labour Val- ues: A Comment. Cambridge Journal of Economics, Vol. 29, No. 2, March, 2005, pp. 312-313, emphases added.)
The precise details of the procedure are often opaque, but the gist of it seems simple enough. First, being unable to know the quantity of socially necessary abstract labour hours embedded in commodities, Cockshott resorts to deducing this number from observable prices.[1] He does so by assuming that the direct number of hours (Marx’s v) is revealed by the dollar wage bill and that the indirect number of hours (Marx’s c) is revealed through itera- tive imputations of the dollar wage bill incurred in producing the non-labour inputs. And since, in and of themselves, labour values can never be known, this revelation, just like the neoclassical revelation of utility and ‘factor productivity’, can never be falsified.
Second, Cockshott doesn’t correlate average unit price with average unit labour time (as revealed by average unit dollar cost with some transformation). Instead, he correlates total sales with total labour values (as revealed by total dollar cost with some transformation). This move from individual commodities to sectoral aggregates introduces the further hazard of spurious correlation (see the linked Excel file).
Taken together, these assumptions enable Cockshott to show that there is a tight correla- tion between the aggregate dollar sales and the aggregate dollar costs of different sectors. What remains unclear is how these unsurprising price correlations relate to Marx’s labour theory of value – and, moreover, why Cockshott is convinced that they constitute a scientific proof of that theory."
http://glasgow.academia.edu/paulcockshott/Papers/…

]]> By: JayRaow http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-86886 JayRaow Fri, 10 Jun 2011 11:52:03 +0000 http://dbzer0.com/?p=2074#comment-86886 Awesome. Thank you Awesome. Thank you

]]> By: db0 http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-86756 db0 Fri, 03 Jun 2011 07:56:43 +0000 http://dbzer0.com/?p=2074#comment-86756 I've addressed some of Keen's criticisms in the past. <a href="http://dbzer0.com/blog/what-role-does-capital-play-during-production" rel="nofollow">Look Here</a> I've addressed some of Keen's criticisms in the past. Look Here

]]> By: JayRaow http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-86753 JayRaow Fri, 03 Jun 2011 05:11:59 +0000 http://dbzer0.com/?p=2074#comment-86753 Hi there, I'm very much new to the site and relatively new to marxian economic theory and have had a bit of trouble with criticisms of LTV but I thought from observing your posts you looked quite knowledgeable and may be able to she some light in response to these criticisms. The foremost of such is that from Steve Keen (from 'debunking economics' fame). His quite ravenous criticisms are great his book is fucking amazing in debunking neo-classical economics and it amazed me when I read it..Although he IS a post-keynesian and as such has much to critique marx and the LTV and in the past 7 years or so I don't think I've seen anyone at all respond to his critiques. So here they are if you can be bothered to go through them- : The misinterpretation of marx's theory of value: <a href="http://www.debtdeflation.com/blogs/wp-content/uploads/papers/Keen1993MisinterpMarxTheoryValue_JHET15pp282-300.pdf" rel="nofollow">http://www.debtdeflation.com/blogs/wp-content/upl...</a> USE-VALUE, EXCHANGE VALUE, AND THE DEMISE OF MARX'S LABOR THEORY OF VALUE <a href="http://www.debtdeflation.com/blogs/wp-content/uploads/papers/Keen1993UseValueDemiseLabourTheoryValue_JHET15pp107-121.pdf" rel="nofollow">http://www.debtdeflation.com/blogs/wp-content/upl...</a> as well as his master's thesis on marx (which you may have to skim or skip bits as it is >100 pages in length): <a href="http://www.debtdeflation.com/blogs/wp-content/uploads/papers/Keen_Marx_Thesis.pdf" rel="nofollow">http://www.debtdeflation.com/blogs/wp-content/upl...</a> Hopefully you may be able to address some of the issues because I happen to think his critiques are probably the most scathing and socialists must address and defend them if we are to support LTV. Hi there, I'm very much new to the site and relatively new to marxian economic theory and have had a bit of trouble with criticisms of LTV but I thought from observing your posts you looked quite knowledgeable and may be able to she some light in response to these criticisms.
The foremost of such is that from Steve Keen (from 'debunking economics' fame).
His quite ravenous criticisms are great his book is fucking amazing in debunking neo-classical economics and it amazed me when I read it..Although he IS a post-keynesian and as such has much to critique marx and the LTV and in the past 7 years or so I don't think I've seen anyone at all respond to his critiques. So here they are if you can be bothered to go through them- :

The misinterpretation of marx's theory of value: http://www.debtdeflation.com/blogs/wp-content/upl…

USE-VALUE, EXCHANGE VALUE, AND THE DEMISE OF MARX'S LABOR THEORY OF VALUE http://www.debtdeflation.com/blogs/wp-content/upl…

as well as his master's thesis on marx (which you may have to skim or skip bits as it is >100 pages in length): http://www.debtdeflation.com/blogs/wp-content/upl…

Hopefully you may be able to address some of the issues because I happen to think his critiques are probably the most scathing and socialists must address and defend them if we are to support LTV.

]]> By: db0 http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-82017 db0 Mon, 05 Jul 2010 08:14:55 +0000 http://dbzer0.com/?p=2074#comment-82017 One does not have to value the job another does in the workplace. The end result of such work however can be valued via the market mechanism. This is true only for market systems of course. In non-market systems, rating one's work is not important as long as they perform to the best of their abilities. One does not have to value the job another does in the workplace. The end result of such work however can be valued via the market mechanism. This is true only for market systems of course. In non-market systems, rating one's work is not important as long as they perform to the best of their abilities.

]]> By: Martin http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-82691 Martin Thu, 17 Jun 2010 19:07:45 +0000 http://dbzer0.com/?p=2074#comment-82691 How then does value relate to the workplace; I would suggest that work related value is rarely objective, even when an 'analyitical job evaluation scheme is used it is still highly subjective. Indeed the conccepts of uniqueness, dependence and replaceability whilst all highly subjec tive are as important as the tasks undertaken. How then does value relate to the workplace; I would suggest that work related value is rarely objective, even when an 'analyitical job evaluation scheme is used it is still highly subjective. Indeed the conccepts of uniqueness, dependence and replaceability whilst all highly subjec tive are as important as the tasks undertaken.

]]> By: Guest http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-80894 Guest Fri, 30 Apr 2010 04:39:36 +0000 http://dbzer0.com/?p=2074#comment-80894 The_Libertarian - Volume 1, Chapter 1, Section 1 of Das Kapital says "Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value." So if you had even read the very first section of the first chapter of the first volume of Marx's Kapital, you would have known the strawman argument you erected and attributed to Marx was never believed by him - the opposite was in fact believed by him. So you attribute a belief to Marx, something which Marx thought exactly the opposite of, and then call Marxists dumb due to you believing Marx thought this, whereas even the briefest cursory reading of Kapital would have shown you he did not believe it. So who are the dumb ones? The_Libertarian – Volume 1, Chapter 1, Section 1 of Das Kapital says "Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value."

So if you had even read the very first section of the first chapter of the first volume of Marx's Kapital, you would have known the strawman argument you erected and attributed to Marx was never believed by him – the opposite was in fact believed by him. So you attribute a belief to Marx, something which Marx thought exactly the opposite of, and then call Marxists dumb due to you believing Marx thought this, whereas even the briefest cursory reading of Kapital would have shown you he did not believe it. So who are the dumb ones?

]]> By: db0 http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-80794 db0 Fri, 23 Apr 2010 11:32:04 +0000 http://dbzer0.com/?p=2074#comment-80794 Glad to hear it. I'm happy to facilitate dialogue and thought :) Glad to hear it. I'm happy to facilitate dialogue and thought :)

]]> By: RichofSpirit http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-80793 RichofSpirit Fri, 23 Apr 2010 09:20:02 +0000 http://dbzer0.com/?p=2074#comment-80793 I'm a market anarchist and I really enjoyed this post. We disagree on a great many things but I find myself returning to your site to get the most intelligent thoughts from "the other side." Thanks for your contributions to the discussion. I'm a market anarchist and I really enjoyed this post. We disagree on a great many things but I find myself returning to your site to get the most intelligent thoughts from "the other side." Thanks for your contributions to the discussion.

]]> By: Teaching an Economics you don’t believe | Stephen Kinsella http://dbzer0.com/blog/objective-and-subjective-value/comment-page-1#comment-78851 Teaching an Economics you don’t believe | Stephen Kinsella Mon, 26 Oct 2009 20:32:19 +0000 http://dbzer0.com/?p=2074#comment-78851 [...] Objective and Subjective Value Posted by Stephen on Friday, January 30, 2009, at 9:01 am. Filed under Papers, Research. Follow any responses to this post with its comments RSS feed. Comments are closed, but you can trackback from your blog. [...] [...] Objective and Subjective Value Posted by Stephen on Friday, January 30, 2009, at 9:01 am. Filed under Papers, Research. Follow any responses to this post with its comments RSS feed. Comments are closed, but you can trackback from your blog. [...]

]]>