“A field cultivated with the same expenditure of capital and labour as another field of greater fertility yields a larger return. Their surplus crop is by no means produced by the field alone, capital and labour as well are wrought into it; nevertheless every agriculturalist will rightly charge not the capital nor the labour with the crop, but, simply and solely, the better field, the value of which is raised by just the amount of the surplus. Such a judgment, so far from being illogical, embodies a great practical truth. In imputing the return by this method, I am enabled to find the correct adjustment of the economic measurement, which has to be carried out in the case of the commodities of production.”(Weiser, ibid)
But examine what happens when we remove the landowner from the equation (who as Ricardo and Marx would agree would use the opportunity, as a monopolist, to demand more rent from the capitalist). Say the land is owned by the capitalist. If the prices of the produce of the land remain the same (which they must if those prices are determined by the utility derived from them which has not changed) then the capitalist no longer has to pay rent to the landlord and his profit will rise. Yet, according to Weiser, why should it? It has become no more productive no greater level of utility can be imputed back to it than before. The reason, as demonstrated by Ricardo, is that the surplus value created is created by labour, and that surplus is divided up between the capitalist and the landowner. The practical application of this could be seen in Britain during the 19th century. Capitalist farmers wished to improve their land by investing in better drainage and other capital works. What was the reaction of the landlords? They welcomed it, because, at the end of the tenancy, the capital improvements became the property of the landowner, who used it, and the higher productivity that resulted, to justify higher rents. Consequently, landlords throughout the period were continually trying to reduce the length of tenancies.
(Additionally, consider what happens when this new more fertile land, brought into cultivation, is sufficient to meet the market demand, on its own, and thereby pushes out the production on the previous less fertile land. According to Weiser, now that a greater proportion of agricultural production comes from this more productive, and so more value creating land, the value of output should then rise! In fact, of course the opposite happens. The same amount of capital and labour is applied as before (and so according to Weiser should contribute the same value as before), but now, on this more fertile land, the total output, the quantity of use values produced rises. But, the total value of this output falls, because previously it sold at the market value, which was determined by the less productive (and so according to Weiser less value creating) land. As the total value of the output falls, but the mass of output rises, the unit value of output must fall.
Rather than the utilisation of more fertile, more productive land causing the value of the output to rise, as Weiser predicts, therefore, it falls. If we take the situation, where the less fertile land remains in production, because its output is required to meet the total market demand, then the market value of output will continue to be determined by this less fertile land. But, this illustrates the opposite of the point that Weiser is trying to make. The higher value of output is that on the less fertile, not the more fertile land. The individual value of the output from the more fertile land, is lower than not higher than the individual value of the output from the less fertile land! It is because of that very fact, as Ricardo describes, that the capital employed on the more fertile land, produces a surplus profit, and from which derives the differential rent.)
(Additionally, consider what happens when this new more fertile land, brought into cultivation, is sufficient to meet the market demand, on its own, and thereby pushes out the production on the previous less fertile land. According to Weiser, now that a greater proportion of agricultural production comes from this more productive, and so more value creating land, the value of output should then rise! In fact, of course the opposite happens. The same amount of capital and labour is applied as before (and so according to Weiser should contribute the same value as before), but now, on this more fertile land, the total output, the quantity of use values produced rises. But, the total value of this output falls, because previously it sold at the market value, which was determined by the less productive (and so according to Weiser less value creating) land. As the total value of the output falls, but the mass of output rises, the unit value of output must fall.
Rather than the utilisation of more fertile, more productive land causing the value of the output to rise, as Weiser predicts, therefore, it falls. If we take the situation, where the less fertile land remains in production, because its output is required to meet the total market demand, then the market value of output will continue to be determined by this less fertile land. But, this illustrates the opposite of the point that Weiser is trying to make. The higher value of output is that on the less fertile, not the more fertile land. The individual value of the output from the more fertile land, is lower than not higher than the individual value of the output from the less fertile land! It is because of that very fact, as Ricardo describes, that the capital employed on the more fertile land, produces a surplus profit, and from which derives the differential rent.)
“It would, for example, be impossible for me to decide whether to purchase a machine and what price to consent to give for it, if I did not know how to calculate the work it would do for me, i.e., what share in the total return to my undertaking should be imputed to it in particular.”(ibid)
But Weiser gets confused again here. How can Weiser calculate the work a machine will do, i.e. what value the resultant products from the machine will have, unless that value exists a priori. In other words the value of the commodity must be known to the capitalist before he produces it, or takes it into account. But according to Weiser and the Neoclassicists, the value (read here price) of the commodity is only decided when it is sold. On that basis, capitalists would never know what the value of the commodities would be when they come to be sold, consequently they could never calculate whether investing in a machine would be profitable to them or not.
What is the calculation that a capitalist actually undertakes in deciding on whether to buy a machine or not? It is precisely how much labour will the machine save, or what amounts to the same thing, how much extra production will result without me having to employ more labour to achieve it. In other words, Weiser’s own example, shows that the calculations capitalists make are based upon the amount of labour time that can be saved, and thereby reduce the cost of production beneath the average.
(And, as was seen in Part 2, the consequence of introducing such machines is not to cause the amount of value of the resultant commodities to rise, but to fall! A machine that results in output rising from 1,000 units to 10,000 units does not result in the value of this output rising from £1,000 to £10,000. The value of output might rise, say, to £6,000, so that the value of each unit of output falls from £1 to £0.60. That is because the effect of the machine is to raise the quantity of use value, but not the quantity of new value. The total value itself only rises from £1,000 to £6,000 because 10 times as much material is embodied within it than was previously the case.
Indeed, if Weiser was being consistent here, he would follow the example of McCulloch, who took Say to the extreme, and argued that all operation is labour, and as material is operated upon, material also is labour, and so creates new value. Weiser should like McCulloch argue that material too contributes to the creation of new value alongside labour, land and capital, but that then presents further problems in attempting to resolve the value of commodities into only the revenues of rent, wages and profits.)
Indeed, if Weiser was being consistent here, he would follow the example of McCulloch, who took Say to the extreme, and argued that all operation is labour, and as material is operated upon, material also is labour, and so creates new value. Weiser should like McCulloch argue that material too contributes to the creation of new value alongside labour, land and capital, but that then presents further problems in attempting to resolve the value of commodities into only the revenues of rent, wages and profits.)
“I impute utility only to those commodities which are not to be had in profusion, and on which I feel myself dependent in consequence,”(ibid)
In other words what we have is utility imputed from value, because Weiser has already stated his belief that only commodities which are not abundant have value. And so he finds himself like a dog chasing his tail. Utility is imputed from value, but he wants to argue that value is derived from utility. Like the chicken and the egg the conundrum goes round and round, but Weiser lacks the common sense of the dog which eventually gives up chasing his tail.
“Space fails me to explain my meaning more precisely. I will only specify further, that in the particular instance account must be taken of supply, demand, circumstances of allied products, technical progress, etc., in short of all the well-known conditions, from which experts are able with so much success to infer” (ibid)
This is a very strange statement to anyone versed in neoclassical theory. For according to neoclassical theory demand is derived from the aggregate of all consumers individual indifference curves. But if utility is the basic loadstone to which everything must be referred back how can you refer back to this utility by “taking into account” demand which is its derivative. Unless you establish the basis in utility you cannot move forward to arrive at demand, and if you cannot arrive at demand you cannot take it into account. Once again Weiser collapses into confusion and chaos.
“The subjective theory of value, one of the Austrian school's main pillars, actually goes back to the medieval Scholastic philosophers.” (J. Moser, "Origins of the Austrian School")
Actually it goes back to Aristotle. Moser doesn’t say this because Aristotle found himself in a dead end with this line of argument and later philosophers like Duns Scotus, Albertus Magnus, and Thomas Aquinas began to develop the Labour Theory of Value. Elsewhere, it was being developed by Ibn Khaldun. Plato had already come to the brink of formulating a Labour Theory of Value, and although Aristotle did try to develop a utility theory of value, he followed Plato and developed the idea of the commodity as both use value, and exchange value. It was the importance of this duality more than the forlorn search for a utility theory of value which was Aristotle’s inheritance to the scholastics, and it was not the utility theory of value which dominated the scholastics work as Moser claims but the exchange value aspect, the concept of the "just price" as separate from the "market price".
The new expansion of petty commodity production (not capitalism as Moser mistakenly describes it) during the Middle Ages in the cities of Italy, Flanders, England, France and Germany caused the ideas of exchange value and use value to be reconsidered. During this time the basis for the later development of capitalism is laid down with the accumulation of money capital in the hands of merchants. This capital was accumulated largely as a result of piracy, and of the appropriation of the surplus agricultural product of the peasants (and sometimes even the necessary product of the peasant. But although this accumulation of money capital was taking place, the economies in which these merchants existed remained largely natural economies.
The economic realities of trade led the scholastics to go beyond Aristotle’s idea of value determined by utility. This move away from Aristotle was set in progress in France by preachers such as Robert Grosseteste. But the big step forward from Aristotle’s utility dead end was made by Thomas Aquinas and Albertus Magnus. Albertus noted that need was the cause, but not the measure of the proportionality between utility and value.
Back To Part 2
Back To Part 2
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