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But use value cannot be quantified, since utility is not a mathematical scale, but a subjective feeling that varies from person to person and with time as prefe

But use value cannot be quantified, since utility is not a mathematical scale, but a subjective feeling that varies from person to person and with time as preferences shift or swing. I'm also unaware of how you can explain diverse business cycles throughout history as emanating from it. Practically every economic theory that has tried to objectively quantify "value", i.e. those of Ricardo, Marx and Sraffa, relies on gigantic and complicated expositions involving leaps of abstraction and mathematical transformation problems that are completely detached from how real-world people actually think about or treat value. (Indeed, such exercises in value theory aren't so much about determining value as much as trying to work out given theories of income distribution and perceived exploitation.)

danharaj 11y ago
I don't think our inability to quantify it means it's not objective. It means our mathematics is not advanced enough yet to capture use-value. Use-value is definitely objective as it is determined by nature. A screwdriver is useful because it screws screws. Use-value is definitely context dependent and agent dependent. This is fine. But we have to acknowledge that the reason why people assign exchange-value to goods is because they have actual use-value: economics describes physical, real world activities. I can agree that no one has presented a good dynamical theory of use-value. That's sensible: it would require at least a full description of reality, and a deep understanding of nonlinear mathematics. One quibble i have is i don't think Marx tried to establish such a theory: his observations about use-value and exchange-value can be made without a full theory of use-value or a full theory of exchange-value. The relationship between the two can be examined in the abstract and that is Marx's program. I can still perform calculations with use-value to derive exchange value: why is water worth so little in exchange-value even though it is so vital to life? The marginalist point of view says that the price of water is determined by equilibrium between marginal cost and utility. Why is the marginal utility of water so low? Well, if we're talking about people drinking water, then it is obvious, isn't it? You only have to drink so much water. When you're not thirsty, water has none of that use-value anymore. Ignoring the relationship between use-value and exchange-value is... weird. It's replacing the true and difficult reality with a nice fiction amenable to manipulation with our primitive mathematics. Do markets define exchange-value or do they compute exchange-value from the aggregate use-values of everyone participating? Edit: as for business cycles, i think they are caused by structural flaws in property rights and financial institutions, but if you asked 5 people why the business cycle occurs, you'll get 6 conjectures and 3.5 theories.
- vezzy-fnord 11y ago
  The marginalist conception of value is indeed underwhelming, but it's also a compromise. Determining value through mathematical exercises using hypothetical n-commodity worlds with homogeneous factors and units is at best useful as an exposition for a theory of income distribution (as Sraffa tried to do) in that by assuming a labor or commodity theory of value you can attempt to argue for a rate of exploitation. Marxian economics has a whole lot of categories that are awkward, like "constant capital" being homogeneous and "variable capital" referencing wages of labor in producing commodities. There's barely any room for disequilibrium effects, complementarity, reserves and so forth. In turn, the organic composition of capital is held to be c/s+v, but empirical evidence on relation between OCC and crisis is scant and the concept of OCC is again completely foreign to uncertainty, disequilibrium and capital structure. It's just a ratio between two questionable taxonomies. Marxian economics has many similar failings as neoclassical economics, but because of its origins as a heterodox critique of Smith, Ricardo and Mill from a particular period, its evolution has been even more confusing. Marginalism is situated in a means-ends framework, which is the most one can really say about value without introspecting into personal intentions and valuations. It should be underlined that neoclassical production theory (MC=MR) is separate from the subjective theory of value proper, however. Menger, Jevons and Walras all had different takes on it. It's also worth noting that Marxian conceptions of use and exchange value have little to say about contemporary monetary and financial economies. Marxians still focus too much on issues like falling rate of profit, accumulation and OCC and often miss elephants in the room like financial fragility, or downplay them. It strikes me as archaic. Whether or not markets compute or define exchange value seems to me like a problem of overaggregation where the contemporary social institution of a "market economy" is conflated with a market in the abstract as a system of mutual exchange, as in Proudhon and others.

danharaj 11y ago

I don't think our inability to quantify it means it's not objective. It means our mathematics is not advanced enough yet to capture use-value. Use-value is definitely objective as it is determined by nature. A screwdriver is useful because it screws screws. Use-value is definitely context dependent and agent dependent. This is fine. But we have to acknowledge that the reason why people assign exchange-value to goods is because they have actual use-value: economics describes physical, real world activities. I can agree that no one has presented a good dynamical theory of use-value. That's sensible: it would require at least a full description of reality, and a deep understanding of nonlinear mathematics. One quibble i have is i don't think Marx tried to establish such a theory: his observations about use-value and exchange-value can be made without a full theory of use-value or a full theory of exchange-value. The relationship between the two can be examined in the abstract and that is Marx's program. I can still perform calculations with use-value to derive exchange value: why is water worth so little in exchange-value even though it is so vital to life? The marginalist point of view says that the price of water is determined by equilibrium between marginal cost and utility. Why is the marginal utility of water so low? Well, if we're talking about people drinking water, then it is obvious, isn't it? You only have to drink so much water. When you're not thirsty, water has none of that use-value anymore. Ignoring the relationship between use-value and exchange-value is... weird. It's replacing the true and difficult reality with a nice fiction amenable to manipulation with our primitive mathematics. Do markets define exchange-value or do they compute exchange-value from the aggregate use-values of everyone participating? Edit: as for business cycles, i think they are caused by structural flaws in property rights and financial institutions, but if you asked 5 people why the business cycle occurs, you'll get 6 conjectures and 3.5 theories.

vezzy-fnord 11y ago
The marginalist conception of value is indeed underwhelming, but it's also a compromise. Determining value through mathematical exercises using hypothetical n-commodity worlds with homogeneous factors and units is at best useful as an exposition for a theory of income distribution (as Sraffa tried to do) in that by assuming a labor or commodity theory of value you can attempt to argue for a rate of exploitation. Marxian economics has a whole lot of categories that are awkward, like "constant capital" being homogeneous and "variable capital" referencing wages of labor in producing commodities. There's barely any room for disequilibrium effects, complementarity, reserves and so forth. In turn, the organic composition of capital is held to be c/s+v, but empirical evidence on relation between OCC and crisis is scant and the concept of OCC is again completely foreign to uncertainty, disequilibrium and capital structure. It's just a ratio between two questionable taxonomies. Marxian economics has many similar failings as neoclassical economics, but because of its origins as a heterodox critique of Smith, Ricardo and Mill from a particular period, its evolution has been even more confusing. Marginalism is situated in a means-ends framework, which is the most one can really say about value without introspecting into personal intentions and valuations. It should be underlined that neoclassical production theory (MC=MR) is separate from the subjective theory of value proper, however. Menger, Jevons and Walras all had different takes on it. It's also worth noting that Marxian conceptions of use and exchange value have little to say about contemporary monetary and financial economies. Marxians still focus too much on issues like falling rate of profit, accumulation and OCC and often miss elephants in the room like financial fragility, or downplay them. It strikes me as archaic. Whether or not markets compute or define exchange value seems to me like a problem of overaggregation where the contemporary social institution of a "market economy" is conflated with a market in the abstract as a system of mutual exchange, as in Proudhon and others.