I read Mr. Plawiuk's latest blog post. I gave up on using Explorer to
open it - nothing showed - so trusty Firefox took to the task....

> IT'S THE LABOUR THEORY OF VALUE, STUPID

If I had written an essay on the subject under discussion, the title
would've been "It's the Stupid Labor Theory of Value." NOTHING in the
assertions made, and attempts at argument - replete with
mischaracterizations of the Austrian School approach, bringing in Smith
to help confuse the issue, for instance - gave me an inkling of how to
make any precise sense of the Marxian theory of value, which to this day
strikes me as a complex mass of verbiage designed to let dogmatists feel
good about casting aspersions on better economists and better analysis.
That is its "general" sense, as far as I can determine.

The Hilferding quotations, quite long, were not apposite, and were,
instead, an embarrassing richness of the poverty of the Marxist school.

> In Libertarian Dialectics and in other comments I have made on my
> blogs I have challenged what I call the price, distribution,
> production economic model of the Austrian School of Economics, Von
> Mises and Hayek, and their heirs at the Chicago School of Economics,
> Friedman et al. It is also called neo-classical economics, what
> could also be called liberal economics.

The Chicago School has a separate origin from Austrian economics. Most
Chicagoans admire the Austrians ONLY for a few things, such as support
of laissez faire. For discussions of value, capital, and the rest, they
are in many ways lightyears apart.

Frank Knight was the closest Chicagoan to the Austrians, in terms of
basic method (his approach was a sort of common sense praxeology, while
Mises' was a sort convolved Kantian praxeology). But even he spent much
of his time disagreeing with Hayek and Mises on the nature of capital.

Calling the two schools "liberal" economics is OK, if you understand
that dialectically and scientificially, the two schools don't share as
much as outsiders seem to think they do.

> This is why I refer to the majority of right wing Libertarians, as
> liberaltarians,

Yeah: what the world needs, another coinage! "Liberaltarian," that's
what I am? I don't understand the "why" here, actually, but that's OK.
Can't I be just an "individualist liberal" if you insist on taking away
the term "libertarian" from me?

> those who embrace the supply side economics of these

Calling Austrians supply-siders is just so stupid (hey: I find the word
in the title, so I'm going to use it in my commentary) that it almost
deserves no comment. Oh, well. The marginal revolution was largely a
demand-side revolution, and the theory of value that came out of that
revolution - especially amongst the Austrians - has always regarded the
demand side as defining of value. That's the chief element of the
revolution. "Supplies," it was seen, always depended on the evaluations
of customers. And in each exchange in barter, both sides simultaneously
demanded and supplied, according to the same principles, with the
evaluations of human needs and desires having logical priority. When
money is used, the seller (with the "supply") is seen to be demanding
money. This all makes a great deal of sense, and if it seems as
paradoxical as Marx's opaque pronouncements on economic concepts, then
it's only because I'm rushing. Read Menger, then read Bohm-Bawerk and
Mises, and you'll get the idea. (Some suggest Rothbard, and he's good in
places, but terrible in others.) Of course, the basic points about
supply and demand can be found in simple, partially analyzed form in the
French liberal school, and in Nassau Senior, all of whom Marx dismissed
as "vulgar economists." The phrase of derision let him dismiss rather
than deal with their practical categories.

But the thing you can't say is that Austrians are "supply-siders." This
is to malign as well as hopelessly miss the point of 150 years of
scholarly work. (There is a sense in which pre-marginalist British
classical economics is supply-side, and of course, during the Reagan
years a number of economists began reviving certain supply-side notions,
with varying degrees of clarity.)

> schools. These characters are masques of capitalism as Marx once
> described their subjective function.
>
Just more dumb Marxian invective.

Look, I studied utopian socialism and even a bit of Marxism before I
read a lick of real economics. I kept bumping up against this idea, the
"labor theory of value." And it never made a lick of sense to me. My
experience with labor was largely cutting, hauling, and stacking
firewood. Tedious labor, yes. But what was its value, I kept asking
myself? And was the labor of my father, me, and my sister, the same? No.
Obviously not. The true value of our labor, as labor, had to have
something to do with productivity, productivity of a useful good in our
wood-burning household.

Nothing ever written in favor of the labor theory of value, whether by
Adam Smith or David Ricardo, Destutt de Tracy or a whole host of
socialists, made any sense to me. Labor, the source of many valuable
things and services, was not itself the source of value. Could not be,
for labor was not one thing, but many things, each with differing
values. And value was best defined as Menger defined it. As the
importance of a good for a distinct human need, or want. There can't
help but be a subjective component.

And if you think that, starting with this so-called "psychological"
approach you can't understand the complexities of human society (as the
quoted Hilferding asserts), then you haven't done much reading, and you
likely know little of science. In science, as C.S. Peirce explained, one
prescinds complexity out of a problem, analyzes an element or two, and
then builds chains of complexity step by step. it's a logical as well as
a empirical enterprise. And that's how economics, when done right, is
done. Austrian economics (and various neoclassical theories, too) may
start with simple preference scales of isolated individuals, but step by
step they build up more complex relationships. That is the strength of
the approach.

Marxian theory insists on a lumping of labor in a pot, and then makes
assertions about value here and there in a dogmatic fashion.

Oh, and Marx himself was always careful to call his opponents nasty
names (such as "that bourgoise cretin," said of Tracy, and something
nearly as nasty for the great Nassau Senior).

Someday I'll write an essay entitled "Marxian Economics as Vulgar
Semiotics," but until that day, I'll just snipe at this nonsense via
emails and on the Web.

Oh, I should conclude with a discussion of the clearest bit of
Hilferding nonsense:

"With Marx, in fact, every individual relationship is excluded from the
conception of value-creating labor; labor is regarded, not as something
which arouses feelings of pleasure or its opposite, but as an objective
magnitude, inherent in the commodities, and determined by the degree of
development of social productivity."

Labor is not "inherent in commodities," a nonsensical statement. Labor
is human activity engaged in with a productive end. (We could whittle it
down a little more precisely, but let it go at that for now.) Menger and
Mises clearly defined it as this. Its productivity is key. If it ain't
productive, it's a failure as labor, or else was intended as something
else, a leisure activity. (Sitting around reading a novel is not labor
unless you are going to review the thing for pay, say.) But look at what
Hilferding says Marx defines labor. He ignores actual labor, as an
activity of actual individual human beings, and, pulling a switcheroo in
the definition department, says it is "an objective magnitude" somehow
"inherent in commodities" and somehow "determined by the degree of
development of social productivity." This convoluted mess allows him to
claim all sorts of nonsense, of course.

But of course Marx was interested in classes of people, not real people.
He wanted to say something about classes. He didn't give a fig why some
people were successes and other not if he couldn't point the finger at a
class origin for the difference. The fact that my little sister was a
desultory firewood piler, and I a frantically fast one, would have made
no difference to our future careers (if we had them) in the firewood
business. (Full disclosure demands my addmission that I was sometimes
desultory, too. In fact, looking back on the days of firewood making, I
can't say I was ever enthusiastic. This may have something to do with my
career as an editor of words, rather than a laborer in wood.)

The reason socialists like Marxian theory of labor is that it absolves
laborers from responsibility for their lives. Whereas Austrian and
neoclassical theory suggests that what people do does make a difference.
Of course, since social economic life is all about cooperation, it
becomes clear that our choices that make the biggest difference are
often choices about trying to find original ways of meeting others'
needs in a marketplace. Just slogging around "laboring" is nowhere near
as productive as figuring out new, more highly valued goods and
services, hence the higher rewards to smarter laborers and especially to
entrepreneurs and those who service inventiveness and efficient,
mass-producing business.

As such, Marx and his ilk were mere apostles of envy, obscurantists who,
no matter what their benevolence to society at large may be, wind up
destroyers on a mass level. It is not a series of accidents that led to
Stalin or Mao or Pol Pot and their mass murders. The entelechy is there
in plain sight, in the theory itself. In the theory, perhaps, of labor
value, which avoids talking about real labor and real laborers, and how
value inheres to their actions.

t w v

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