Marx responds to Bailey's call for us to accept that he has this unique ability to look into men's minds, and the mental processes they undertake to establish these relative preferences, so as to equate the utility of apples and oranges.
“This in fact means nothing more than: the cause of the value of a commodity or of the fact that two commodities are equivalent are the circumstances which cause the seller, or perhaps both the buyer and the seller, to consider something to be the value or the equivalent of a commodity. The “circumstances” which determine the value of a commodity are by no means further elucidated by being described as circumstances which influence the “mind” of those engaging in exchange, as circumstances which, as such, likewise exist (or perhaps they do not, or perhaps they are incorrectly conceived) in the consciousness of those engaging in exchange.” (p 163)
If we examine the case of speculation in assets, it's clear why this subjectivist conception has considerable support within the realm of the professional speculators. Shares and bonds, for example are fictitious capital. They are commodities only in the sense that they are things that are traded, bought and sold in the marketplace. If the price of Microsoft shares rises abruptly, it's not as though there are a multitude of producers of Microsoft shares out there, who can produce additional Microsoft shares, so as to benefit from these high prices, and the surplus profits that would result from it. It is only Microsoft that could produce more Microsoft shares, but given that such decisions are, in practice, taken not by Microsoft itself, as a corporate entity, but by its shareholders, and their representatives on its Board, it's not surprising that those shareholders, who see large capital gains, resulting from the rise in the share price, are loathe to do so.
Compare that with the situation in relation to, say, pottery. If the price of pottery rises sharply, without any change in the costs of producing it, the profits from pottery production will rise, and pottery manufacturers will have an incentive to increase their output to take advantage. As they increase their output, the market price of pottery will fall back, until they are again making only average profits. Even with things like gold, there might appear to be no objective basis for determining a price for gold, as seen over the last twenty years or so, when it has gone from $250 an ounce, to nearly $2000 an ounce, and back down to around $1200 an ounce. But, that is because a) unlike many other commodities, gold does not get physically consumed, b) the demand for gold fluctuates significantly due to speculation c) the production of gold cannot be quickly and significantly increased.
All of the gold ever produced is still in existence. It forms a constant potential supply on the market, so the supply of gold, unlike the supply of pottery is only marginally determined by the new gold that is produced. If the demand for gold declines that means its price can fall below its cost of production, and stay there for long periods. Although gold is demanded for things such as jewellery, and some industrial production, the main demand is for it as a hoard, stored in the vaults of central banks, or in private hoards. The demand for gold rises or falls significantly not on the basis of its use value as a metal, but purely on the basis of its nature as an object of speculation. So, its price could rise to $2000 an ounce when such speculation drives demand for it, and when that speculative demand subsided, it fell back to around its price of production of around $1200 an ounce. When, the price rose to $2000, it caused additional exploration and production, but gold producers know that the price swings widely, and so will never expand their production so much as to quickly satisfy demand, because they know that the surplus profits they make today, when prices are high, are countered by the losses they make in other years, when the price falls below the cost of production.
The same is true of property. The rational solution to the astronomical rises in property prices in the UK and elsewhere would have been to massively increase the production of houses. But, to build houses land is required. As house prices rocketed, land prices rocketed. Landowners, have a monopoly over the land they put on the market, and as land prices rose, they had an incentive to hold on to land, in the speculative belief that land prices would rise further. As land prices did rise further, so the cost of building houses was pushed much higher, so that it became impossible for builders to simply build large numbers of houses that they could sell at prices that produced an average profit, because a) as prices rose above a certain level the amount of demand for them was limited to a small number who could afford those prices b) any surplus profits were absorbed as rents by landowners, in the form of high land prices. That was exacerbated by policies such as the Green Belt, which further restricts the amount of land that can be thrown on to the market, so as to reduce land prices, and thereby slash the cost of building new houses.
And, this mysterious, unseen process that occurs in the mind, we are expected to accept is going on, in good faith, rather than using the faculty of our eyes to examine all the evidence, handed down over thousands of years, which sets out clearly the basis upon which this valuation of commodities and labour services took place was equal amounts of labour-time.
And, when we examine what goes on in the minds of capitalists producing, say, motor cars, we are expected to believe that these mental processes occur on the basis of relative preferences rather than on the rather cold and calculating basis of whether the cars they produce can be sold for more money than they currently cost to produce. And, when the car producers measure their own efficiency, they do so on the basis of man-hours per car.
“These same circumstances (independent of the mind, but influencing it), which compel the producers to sell their products as commodities—circumstances which differentiate one form of social production from another—provide their products with an exchange-value which (also in their mind) is independent of their use-value. Their “mind”, their consciousness, may be completely ignorant of, unaware of the existence of, what in fact determines the value of their products or their products as values. They are placed in relationships which determine their thinking but they may not know it. Anyone can use money as money without necessarily understanding what money is. Economic categories are reflected in the mind in a very distorted fashion. He [Bailey] transfers the problem into the sphere of consciousness, because his theory has got stuck.” (p 163)
And the theorists of subjective value remain stuck 150 years on.
No comments:
Post a Comment