(1) the exchange values or prices of goods produced in pre-modern or tribal societies for ceremonial purposes or gift exchange;With regard to (2), Marx himself admits this in volume 3 of Capital and states that prices of things which “cannot be reproduced by labour, such as antiques, works of art by certain masters, etc. … may be determined by quite fortuitous combinations of circumstances” (Marx 1991: 772).
(2) non-reproducible commodities, whether antiques, works of art by certain artists or masters, objects or goods signed by famous people sold on markets, letters or writings by famous people, vintage wine, etc.
(3) second-hand goods, and
(4) the prices of financial and real assets bought and sold on secondary asset markets.
As we survey the list, we can see that it removes quite a vast swathe of goods from the purview of the labour theory, but it includes goods of a high economic significance like secondary financial and real assets.
The labour theory of value, then, cannot provide a universal theory of price determination nor explain why businesses earn profits in dealing antiques, works of art, or second hand goods, or why profits occur in businesses dealing in organising or intermediating the purchasing of secondary financial and real assets.
Even worse, Marx distinguished between so-called “productive” and “unproductive” labour and argued that vast sections of what we would now call the service economy do not add surplus value, even though they manifestly do produce profits and satisfy human wants and needs. If profits exist in these sectors but according to Marx they do not produce surplus value, we have yet another gaping hole in Marx’s theory of capitalism.
BIBLIOGRAPHY
Marx, Karl. 1991. Capital. A Critique of Political Economy. Volume Three (trans. David Fembach). Penguin Books, London.
Hey LK what are your thoughts on this review of "The Road To Serfdom" by Walter Block
ReplyDeletehttp://www.mises.ch/library/BlockonHayek_Road_to_Serfdom.pdf
Anarcho-capitalists like Block despise Hayek as some type of social democrat because Hayek refused to take positions as crazy as theirs, e.g., Hayek had the good sense to rejected apriorism; he seems to have accepted a broadly utilitarian ethics; and accepted the need for a minimal liberal state with certain interventions.
DeleteIn those respects, Hayek was right; anarcho-capitalists are wrong and live in a fantasy world.
E.g., apriorism is rubbish and relies on Kantian synthetic a priori knowledge which can't be taken seriously. The kind of ethics espoused by the anarcho-capitalists -- whether natural rights ethics or argumentation ethics -- lack justification and the arguments they advance in support of them commit well known logical fallacies such as the appeal to nature fallacy and non sequiturs.
Also, the anarcho-capitalists opposition to fractional reserve banking reveals a deep ignorance and incompetence, and actually makes them highly anti-capitalist.
And we could go on all day.
Thanks for the response. Mises also rejected anarchy but the Anarcho-Capitalists love him.
Delete"A shallow-minded school of social philosophers, the anarchists, chose to ignore the matter by suggesting a stateless organization of mankind. They simply passed over the fact that men are not angels. They were too dull to realize that in the short run an individual or a group of individuals can certainly further their own interests at the expense of their own and all other peoples' long-run interests. A society that is not prepared to thwart the attacks of such asocial and short-sighted aggressors is helpless and at the mercy of its least intelligent and most brutal members. While Plato founded his Utopia on the hope that a small group of perfectly wise and morally impeccable philosophers will be available for the supreme conduct of affairs, anarchists implied that all men without any exception will be endowed with perfect wisdom and moral impeccability. They failed to conceive that no system of social cooperation can remove the dilemma between a man's or a group's interests in the short run and those in the long run."
"Government as such is not only not an evil, but the most necessary and beneficial institution, as without it no lasting social cooperation and no civilization could be developed and preserved. It is a means to cope with an inherent imperfection of many, perhaps of the majority of all people. If all men were able to realize that the alternative to peaceful social cooperation is the renunciation of all that distinguishes Homo sapiens from the beasts of prey, and if all had the moral strength always to act accordingly, there would not be any need for the establishment of a social apparatus of coercion and oppression. Not the state is an evil, but the shortcomings of the human mind and character that imperatively require the operation of a police power. Government and state can never be perfect because they owe their raison d'etre to the imperfection of man and can attain their end, the elimination of man's innate impulse to violence, only by recourse to violence, the very thing they are called upon to prevent."
- Ludwig von Mises, The Ultimate Foundation of Economic Science
"The anarchists overlook the undeniable fact that some people are either too narrow-minded or too weak to adjust themselves spontaneously to the conditions of social life. Even if we admit that every sane adult is endowed with the faculty of realizing the good of social cooperation and of acting accordingly, there still remains the problem of the infants, the aged, and the insane. We may agree that he who acts antisocially should be considered mentally sick and in need of care. But as long as not all are cured, and as long as there are infants and the senile, some provision must be taken lest they jeopardize society. An anarchistic society would be exposed to the mercy of every individual. Society cannot exist if the majority is not ready to hinder, by the application or threat of violent action, minorities from destroying the social order. This power is vested in the state or government."
- Ludwig von Mises, Human Action
Continued
Delete"In an anarchist society is the possibility entirely to be excluded that someone may negligently throw away a lighted match and start a fire or, in a fit of anger, jealousy, or revenge, inflict injury on his fellow man? Anarchism misunderstands the real nature of man. It would be practicable only in a world of angels and saints. Liberalism is not anarchism, nor has it anything whatsoever to do with anarchism. The liberal understands quite clearly that without resort to compulsion, the existence of society would be endangered and that behind the rules of conduct whose observance is necessary to assure peaceful human cooperation must stand the threat of force if the whole edifice of society is not to be continually at the mercy of any one of its members. One must be in a position to compel the person who will not respect the lives, health, personal freedom, or private property of others to acquiesce in the rules of life in society. This is the function that the liberal doctrine assigns to the state: the protection of property, liberty, and peace."
- Ludwig von Mises, Liberalism
The opposition to fractional reserve banking is especially twisted. It seems to be based in dogmatic assertion about what forms of ownership are and are not possible; I have seen anarchocapitalists argue for instance that partnerships are logically impossible.
Delete"Marx argued that vast sections of what we would now call the service economy do not add surplus value"
ReplyDeleteWhere does he say that?
For Marx there is unproductive labour either (1) employed by capital (capitalists) or (2) employed by people who receive their own income/revenue (private household or government sector). See Capital, Volume 3, Chapter 17.
DeleteI guess certain services, on their own, can't serve as the basis of an economy. For example a bunch of hairdressers shipwrecked on an island can't sustain themselves by offering haircuts to one another.
Delete"I guess certain services, on their own, can't serve as the basis of an economy. For example a bunch of hairdressers shipwrecked on an island can't sustain themselves by offering haircuts to one another."
DeleteWell, you couldn't base such a society on production of soap, TVs, cars or computers, but production of these things is productive. If you trade with other people who visit you, you could sustain the desert island society, even with haircuts.
Do you think that 1,2, and 4 might all be examples of monopoly rent, or economic rent?
ReplyDeleteThe labour theory of value, then, cannot provide a universal theory of price determination nor explain why businesses earn profits in dealing antiques, works of art, or second hand goods, or why profits occur in businesses dealing in organising or intermediating the purchasing of secondary financial and real assets.
ReplyDeleteYes the value theory is only directed toward capitalist production. It never claimed to be anything but, and therefore affirming its domain is hardly a criticism. The point was not "a universal theory of price determination," but a theory to explain the laws of motion of a capitalist economy.
Even worse, Marx distinguished between so-called “productive” and “unproductive” labour and argued that vast sections of what we would now call the service economy do not add surplus value, even though they manifestly do produce profits and satisfy human wants and needs.
Yeah, all useful labor is not "productive" labor. Remember: this is "productive" not in the sense of a person's concept of what is or is not productive; it's from the perspective of capital -- i.e., what generates a profit from the production of commodities. So, people like public school teachers and fire departments — whom it must be stressed are critical to the functioning of society, are, in the eyes of capital seeking accumulation, freeloaders who consume but do not produce. To you and me, that's obvious rubbish. Marx and Engels also agreed that this is a travesty of our system, that such an alien set of values has so much control over our lives.
Incidentally, Ian Gough has a short and detailed survey of the "productive/unproductive" question.
"So, people like public school teachers and fire departments — whom it must be stressed are critical to the functioning of society, are, in the eyes of capital seeking accumulation, freeloaders who consume but do not produce"
DeleteAnd where does Marx say that government school teacher are productive?
Nowhere. I said they are unproductive in the eyes of capital, and thus in the analysis we're discussing. This is despite being useful, in some cases crucial, jobs — because, after all, it doesn't mean anything to be "productive" without specifying what one is productive of, and in this case the sought object is surplus value.
DeleteHence the point that socialists argue for an economic system organized on the basis of use-values rather than exchange value.