I’m starting a new series of posts in response to Marx’s Capital. I have not read the work previously, so I will be writing as I learn. Because I’m not much into reading, I will study Marx’s Capital primarily via Librivox audio podcast (rss), but I will refer to the Google Books version of the text when necessary. To assist with understanding, I will be viewing David Harvey’s video lecture series (rss) on the book as I listen. Here is the introductory lecture:Vodpod videos no longer available.
As usual, it looks like I’ve come to the first class unprepared. After an hour of general history, Harvey launches into Marx’s theory of value before I’d “read” and considered Chapter 1 of Capital. I’ll save most of my critique for Marx himself, but here is my an initial reaction to Harvey’s lecture:
To discover what constitutes the value of a commodity, Marx describes the trinity of values that exists inherently in every item produced for a sale or exchange. The trinity consists of the item’s use value, its exchange value, and its value. Each of those terms is a term of art that requires elaboration. The final, unmodified value in the trinity reflects the amount of socially necessary labor required to produce the commodity.
To me, this theory of value should be to economics what the Ptolmaic model of the universe is to astronomy. It may have made sense when it was conceived, and it may have been useful for some limited purposes, but it rests on a faulty assumption that unnecessarily complicates the theory until it is difficult, if not impossible, to be of practical use.
The Ptolmeic model assumes that the Earth is at the center of the universe, and that the heavenly bodies revolve around it. This seems intuitively correct, but it renders the complex movement of the heavenly bodies in the sky rather difficult to explain. Planets appear occasionally to loop in retrograde motion for no good reason. To explain this phenomena requires inventing new terms of art, like deferent, epicycle, and equant. One could use these constructs to describe what they saw, and to predict future movements of the planets, but that took a lot of work. Eventually, the efforts some visionary thinkers revealed that the system simplified dramatically upon assuming that the sun was at the center, rather than the Earth. The paths of the planets reduced to ellipses, rendering the notions of the deferent, epicycle, and equant as obsolete.
In Marx’s case, as told through David Harvey, the commodity is erroneously presumed to be the center of value. I could see why someone might assume that, but it renders certain observations about human behavior rather difficult to explain. Why are certain things that are of no practical use, like diamonds, very expensive, while certain necessities, like bread, are relatively cheap? To explain this phenomenon requires inventing new terms of art, like use value, exchange value, and value. One might be able to describe certain human behaviors in these terms, but to do so is unnecessarily complicated, increasing the risk of arriving at false conclusions. The system simplifies dramatically when we assume that the subjective desires of the consumer are at the center of value, rather than the commodites up for exchange in the market. There is no longer a need to inquire into the consumer’s intentions for the commodities, or how many homogeneous units of labor were expended on its production. All that matters for the purpose of determining the value is the subjective desires of the consumer as evidenced by his or her actions. The notions of use value, exchange value, and value, if they are not completely obsolete, should no longer carry the weight that Marx has assigned them.
Jeffrey Herbener explains the Austrian economic theory of value, utility, and price in this informative lecture from the Mises Institute. Aside from some relatively minor disputes between Austrian economists and mainstream economists over the usefulness of utility functions, etc., this is basically the worldview to which I subscribe, and which I seek to challenge through reading Capital: