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Title: The More Things Change....
Author: Kevin Carson
Date: April 5, 2006
Language: en
Topics: capitalism, criticism, labor theory of value
Source: Retrieved on 4th September 2021 from https://mutualist.blogspot.com/2006/04/more-things-change.html

Kevin Carson

The More Things Change....

The epigraph to my book is a quote from Bohm-Bawerk’s Capital and

Interest:

I have criticized the law of Labour Value with all the severity that a

doctrine so utterly false seemed to me to deserve. It may be that my

criticism also is open to many objections. But one thing at any rate

seems to me certain: earnest writers concerned to find out the truth

will not in future venture to content themselves with asserting the law

of value as has been hitherto done.

In future any one who thinks that he can maintain this law will first of

all be obliged to supply what his predecessors have omitted--a proof

that can be taken seriously. Not quotations from authorities; not

protesting and dogmatising phrases; but a proof that earnestly and

conscientiously goes into the essence of the matter. On such a basis no

one will be more ready and willing to continue the discussion than

myself.

He criticized Rodbertus in particular for being “content on almost every

occasion to assert... in the tone of an axiom,” the proposition that

labor creates exchange value--justifying it in every case by an appeal

to the authority of Smith and Ricardo.

I wrote my book as an attempt, in good faith, to meet Bohm-Bawerk’s

challenge. Now, in following libertarian discussions of my book since it

came out, I’ve had occasion to observe more than once that the shoe is

on the other foot.

Criticism of my book is a mixed bag. Some critical reviews, like those

of Robert Murphy and Roderick Long, have been quite thoughtful. It’s

obvious, from looking at their reviews, that they read the book

carefully. Although they disagreed with many of the ideas in the book,

they were directly engaged with them and actually used their own

critical thought processes in responding to them.

But the majority of criticisms I’ve seen, especially of my attempt to

rehabilitate the labor theory of value in Part One, have the same

failings that Bohm-Bawerk observed a century ago in proponents of the

labor theory. As typical examples, take this comment from the Mises Blog

announcement of the symposium issue of JLS:

The economic value of a good or service is what someone thinks it is

(people often put different values on the the same object). This is true

BY DEFINITION (it is not a matter that needs to be “proved”).

The price a person offers for a good will be less than or equal to the

value they place upon it.

The “cost of production” (labour cost or other costs) does not determine

economic value — it has nothing to do with economic value.

If the costs of production are greater than the value that any potential

buyer places on a good that just means that the producer will either

have to sell at a loss or not sell at all.

Why waste a long article dealing with the labour theory of value?

One might as well write a careful refutation of the “four elements”

(Earth, Fire, Water, Air) theory of the physical world.

--Paul Marks

Or this one:

Carson[‘s] entire framework is built on a foundation disproven a long

time ago. The labor theory of value is obselete. There’s no ‘recasting’.

He’s trying to fit a square peg into a round hole. Seriously, it’s time

to move on to realistic foundations, like, say, the subjective theory of

value. I can’t believe people are actually debating stuff like this....

--Steve

Or this comment under Roderick Long’s post, also by Paul Marks:

The site appears to be developing an obsession with Dr [sic] Carson.

That the economic value of a good or service is a matter of what people

think it is (i.e. is not a matter of the cost of production) is true by

DEFINITION (it is not a matter of proving it).

Different people put different values on the same good — and the prices

they offer for it will be less than or equal to the value they place

upon it (unless they are offering a higher price as a way of giving the

seller money — as hidden charity).

If this is less than the cost of production (not just labour costs) the

seller has the choice of selling at a loss or not selling.

As for lending out money for people to build factories.

Lending (for any purpose) must be from real savings (i.e. income people

have chosen not to consume).

Trying to finance borrowing by printing money (or book keeping tricks)

in order to “reduce interest rates”, sets in motion a boom-bust cycle.

In short both the “labour theory of value” and the credit expansion way

of getting rid of “monopoly capitalists” are nonsense.

I know we are supposed to be polite on this site.

But, as I have written before, I am irritated (to put it mildly) that

people can earn a living [!] by writing nonsense and other people waste

time writing formal examinations of this nonsense.

Some of us do not have such an easy time in life. --Paul Marks

Many of the criticisms in the reviews of Walter Block and George Reisman

also fall into this category. As I wrote in my rejoinder article,

...Block’s response to most of my criticisms of the Austrians amounts to

little more than talking past them, and reasserting some dictum of

Böhm-Bawerk or Mises that “everybody knows,” without ever directly

addressing my counterarguments.

Such critics appeal to the authority of Bohm-Bawerk and Mises in the

same way a medieval scholastic might appeal to Aristotle: “Bohm-Bawerk

said it, I believe it, that settles it.” Or as Keith Preston put it in

one of the comment threads,

Some of Block’s other comments remind me of something a Bible-banger

might say: “It’s in the Word of Mises! I believe! Praise Rothbard!

Amen!”

They smugly assert that the subjectivists or marginalists “disproved”

the labor theory of value, with only the vaguest idea either what labor

and cost of production theories of value actually entail, or exactly

where the subjectivists differ from them. They repeat second-hand

criticisms of the labor theory borrowed from Austrian polemicists, while

showing little evidence of having actually read either Ricardo and Marx

or the Austrians. They repeat, as devastating criticisms of cost of

production theories, strawman arguments about mud pies, sunk costs, and

irreproducible goods, totally unawarene that the classical political

economists and the Marxists specifically addressed all those issues and

that the labor theory of value was intended to apply only to the

equilibrium price of reproducible goods.

Worst of all, they discuss the LTV as though it made embodied labor the

basis of some intrinsic value in a good. In fact, the LTV and other

production cost theories of value simply assert that the price of

reproducible goods gravitates toward a “normal” equilibrium value

determined by cost of production (which is nowhere directly refuted by

the subjectivists, since their claim to have replaced cost with utility

as the basis of value is based on a very specialized and artificial

understanding of those terms, and not on their meanings in ordinary

usage).

In other words, such critics resort to “quotations from authorities” and

“dogmatising phrases.” Like James Taggart, their minds are so clouded by

what “everybody knows” that they’ve lost the ability to think.

A couple of commenters (both of whom have my humble thanks) took Marks

to task for his lame comments on the labor theory. In the comment thread

to Long’s post, Joshua Holmes wrote:

Marks, you need to read Carson’s book before you talk any more about

what you think the labour theory of value is. Hell, you need to read the

blog post to which you’re responding. Prof. Long says:

Carson defends the labor theory of value, but in a subjectivized form,

holding that the price of a good tends to correspond to the subjective

disutility of the labor needed to produce it... (emphasis his)

And Geoffrey Allan Plauche cited

the argument Mill made that full understanding of one’s own position

can’t be had without confrontation with the differing views of

others...complacency, dogmatism, and rote memorization are the likely

results otherwise.

Hmmm.... Like the kind Bohm-Bawerk referred to above, maybe? In other

words, Marks, read the damn material before you comment on what it says!

Unless actually knowing what the hell you’re talking about before you

shoot your mouth off is one of those “luxuries” that you can’t afford.

Marks, incidentally, also felt qualified to “refute” my views on

interest, although it’s patently obvious he didn’t actually read my

remarks on that subject, either:

As for banking — as is pointed out by Dr Reisman (and, as he reminds us,

by many other people over the last few centuries). One can not lend out

money that one has not got (without creating a boom-bust cycle).

“I want to build a factory, but I have not get the money and no one will

give me an interest free loan”.

Dr Carson’s “monopoly profits of the capitalist”.

Do we really need a formal article to show that Dr Carson is in error?

Have the population become so brain-dead that they can not see that

“unless everone gets interest free loans whenever they want to build a

factory, factory owners are getting moneopoly profits” is nonsense?

Let’s see.... 1) The first section of my rejoinder, on the Rothbard

article, specifically denies the claim that mutual banking is an

inflationary scheme. In fact, the mutualist argument against banking

entry barriers directly parallels Rothbard’s argument against such entry

barriers in the life insurance industry. 2) A mutual bank that issues

notes against a member’s property isn’t “lending” money any more than a

commercial bank that makes a secured loan under the present system. The

only difference is that, under the present system, the state’s entry

barriers enable the capitalist bank to charge a monopoly price for the

service. 3) The objection isn’t that “no one will give me an interest

free loan,” but that the state restricts competition in the supply of

credit and thus makes it artificially scarce and expensive. “I never

actually read anything Dr Carson wrote--but I did stay in a Holiday Inn

Express once!”

The comment threads under the two posts at Mises Blog are worth reading

for other reasons. Several people, including Richard Garner, have some

kind words to say about Yours Truly. And Keith Preston ably jumps into

the ring over the historical nature of state capitalism, and the

neo-fascist nature of the present economy. In particular, “Person” got

all exercised over my suggestion that state subsidies to transportation

might (surprise, surprise, surprise!) promote consumption of

transportation services at above Pareto-optimal or free market levels.

As I understand Person’s argument (if you can call it that), 1) bigness

is inherently more efficient, 2) cheap transportation makes bigness

possible, and therefore 3) saying that a free market would have less

transportation consumption and less centralization is tantamount to

saying we’d be worse off under a free market. Now, it seems to me that

if the spurious “efficiencies” of large size and centralization only

appear when part of the total cost package is shifted or concealed,

we’re not really “better off” now. We’d be better off, and more

efficient, if all the costs showed up on the ledger. But Keith’s

attempts at reasoning with this fellow availed little. Are you really

surprised?

There’s one area in which I have to stand up in defense of my critics.

Keith Preston objects to Robert Murphy’s focus on Part One of the book,

on value theory, at the expense of Part Two (on the historical

development of state capitalism). I have to say, in Murphy’s defense,

that I originally intended Part One as the theoretical core, and Part

Two as a historical application of those principles. So the material on

value theory is really the heart of the book. That’s not to say the

historical material can’t be read by itself, if economics puts you to

sleep. But value theory is what I had in mind when I set out to research

the book, and the historical material was taken up almost as an

afterthought.