Integrating Objectivity and Economic Exchange

Political Philosophy
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Any economic theory of value resolves usually to account for and explain one thing: the phenomenon and nature of exchange value.

I hold Orthodox Marxists as being intrinsicists in that they ground exchange value in an absolutist theory of value wherein value is a function of a commodities’ “congealed, socially necessary labor time”, irrespective of any and all valuers as such. I hold Austrians as being subjectivists in that they ground exchange value in the valuer’s subjective state, irrespective of any consideration of the object of evaluation as such.

The concept value presupposes a valuing agent and a purpose for valuing. Marxists omit the agent and hold value to inhere _within _commodities. Austrians omit the purpose and hold value to inhere _within _the minds of men. Following Rand’s thematic lead in her essay, “What is Capitalism?” and with an understanding of the relational nature of value, we can escape this false economic dichotomy.

An evaluation is a function of a relationship between a valuer and an object of value. All objects of value serve to (or have the potential to) satisfy some end or purpose of a valuer. Thus value, in fashion similar to that of the concept of “unit” in ITOE, does not exist in commodities _qua _commodities, nor purely in the mind, but in an objectively (whether or not the attainment of some object engenders or constitutes the fruition of some held end can be determined by reference to the facts of reality) demonstrable relationship between commodity and the mind which values it.

Economists have long been puzzled as how to understand the mechanics underlying the exchange of commodity X for commodity Y. Marxists have answered that there is a fundamental unit of value (socially necessary labor-time) congealed within the commodities in exchange and that exchange is only possible where there exists an equality between this labor-time congealed in X and Y. But if we take the relational nature of value into account, we see that the possibility of exchange is not a function of a given amount of commodities’ concomitance of shared intrinsic value, nor of a given amount of exchangers’ concomitance of shared subjective valuing, but of the objective concomitance of the the double (or more) inequality of value (between exchangers) any given commodity holds in relation to any given exchangers. In other words, exchange is made possible only because each party involved in the exchange stands (or believes) to gain from the exchange; the exchangers value what is being exchanged differently. In still other words, exchange is made possible not because two objects of exchange represent intrinsic values of equal measure, nor because two objects of exchange are subjectively valuable for any or no reason, but because each object of exchange holds a differing objective value in relation to different valuers/exchangers. 

Economists haven’t been looking in the right places for value. What precedes and makes possible exchange is not the concomitance of equal value _in the commodities exchanged (there’s no such thing), nor even the concomitance of some kind of intensity of subjective valuation of exchangers, but the objective concomitance of each person in exchange standing to gain from it. For exchange between X and Y to occur, it does not matter _how much some owner A of X values X or how much some owner B of Y values Y, only that 1) A values Y more than X, 2) B values X more than Y, 3) A values Y more than B values Y, and 4) B values X more than A values X.  Exchange is made possible by the conceived or real potential for win-win interaction, not by an equality of disembodied values, nor by an equality of intensity between the subjective valuers’ valuing of what they exchange away. 

Questions/comments/critique?

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Very well written.  Marx, reasoning dialectically, rejected anything other than a “labor-time” theory of value as being non-objective, and therefore un-scientific.  This was very much in line with the move towards various forms of Materialism and Positivism, influenced by various scientific discoveries in the 1800’s, and Marx’s desire to create a scientific socialism based on scientific centralized planning.  And the Austrians, contemporaneous with the Vienna Circle and Logical Positivism (but somewhat variously opposed) also reasoning dialectically, believed that Value could only ever be Subjective.  And because of this, they could never explain how economics could be anything other than adversarial (i.e. non win-win) or, at best, “contract based”.

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Does your theory of value take in to account the fact that objectivity is volitional and that very many folks have unobjective values? 

Are you familiar with Dr. Peikoff’s position on the difference between economics and the rest of the sciences? 

How does your theory countenance the different senses of subjective and objective? For example, Metaphysical objectivity vs epistemic objectivity.

Edit: thought this anser by Yaron would be worth listening to in relation to the OP.

http://www.peikoff.com/2014/03/17/to-yb-what-is-your-view-on-austrian-economics/

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10 hours ago, Plasmatic said:

Does your theory of value take in to account the fact that objectivity is volitional and that very many folks have unobjective values? 

I am not advocating a personal theory of value apart from the Objectivist understanding. The point here was just to imitate Rand’s discussion of the intrincisim/subjectivism/objectivism trichomoty but with the concept of exchange value as opposed to the concept of value with the Objectivist importation of the normative standard of man’s survival _qua _man (“value is that which is conducive to Man’s life”). 

I am however interested in your suggesting a relationship between volition and objectivity on the axiological level. I understand that objectivity on the epistemological demands a willful, volitional adherence to a logical methodology. I am not acquainted however with the ties between volition and the having or not having objective values (do you mean values which are or are not promoting the moral standard of man’s life?). 

10 hours ago, Plasmatic said:

Are you familiar with Dr. Peikoff’s position on the difference between economics and the rest of the sciences? 

How does your theory countenance the different senses of subjective and objective? For example, Metaphysical objectivity vs epistemic objectivity.

No, I am totally unfamiliar with Piekoff’s position.

I just adopt what I belive to be the Objectivist stance. I understand metaphysical objectivity as referring to those existents which exist independently of any and all minds. I understand epistemological objectivity as referring to a specific cognitive methodology (a logical, i.e. reality-oriented one) whose end product necessarily consititues knowledge. Both the method and its products are “objective”.

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On ‎3‎/‎8‎/‎2016 at 0:49 AM, KALADIN said:

each object of exchange holds a differing objective value in relation to different valuers/exchangers. 

This is absolutely true.  It forms the basis for a moral exchange (which as pointed out by others above does not necessarily form the basis of all exchange, many of which are irrational).  [We all know however, that the fact alone than men can err or act irrationally against his self-interest, is not relevant to a discussion of what morality IS, and does not negate the moral requirement of freedom from the initiation of force.  That some exchanges might also be irrational equally has no relevance to a discussion of what values are, or that man requires economic freedom.]

You have identified a direct extension of Objectivist ethics/metaethics and its analysis of what value IS, that it is not intrinsic, nor subjective, but Objective, and grounded in the objective requirements of an individual’s life.

You will find a similar discussion regarding values (throughout the Objectivist literature), that values are Objective but contextual i.e. in relation to specific individual valuers.  Although some values are very much common or universal, this does not take away from the fact of reality which is that due to differences in a person’s ability, actual circumstance, knowledge, personality, i.e. differences in what people are, values will occupy different places within their value hierarchy and some you could say even have (or lack) particular different values.  Values ARE not intrinsic, nor subjective, they are Objective in relation to specific valuers.

Your post, although not directed to politics, reminds one of the importance of economic freedom. There is a direct extension from morality to economics.  We know a proper government protects rights and that rights have their basis in ethics.  Freedom to trade and value is required for moral exchange, and insofar as moral exchange is possible only when individuals are free from force, the State must refrain from regulating value, attempting to set prices, wages, etc.

 

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Kaladin, I didn’t see that you had responded until recently.

Kaladin said:

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I am not advocating a personal theory of value apart from the Objectivist understanding. The point here was just to imitate Rand’s discussion of the intrincisim/subjectivism/objectivism trichomoty but with the concept of exchange value as opposed to the concept of value with the Objectivist importation of the normative standard of man’s survival _qua _man (“value is that which is conducive to Man’s life”). 

The comment about Dr. Peikoff’s position on economics is related to the Oist conception of value, more specifically evaluation.   Somewhere in the induction in Physics and Philosophy lectures Dr. Peikoff mentions Ms. Rand’s view of the role of " teleological measurements" in economics. His point was that all of the sciences that pertain to the interplay between the metaphysical and the man-made (consciousness) are dealing with teleological measurements (as opposed to, say, physics).

 

Kaladin said:

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I am however interested in your suggesting a relationship between volition and objectivity on the axiological level. I understand that objectivity on the epistemological demands a willful, volitional adherence to a logical methodology. I am not acquainted however with the ties between volition and the having or not having objective values (do you mean values which are or are not promoting the moral standard of man’s life?). 

The differences between the senses of objective and subjective become important here.

Remember that the Oist ethics are normative and therefore involve evaluation:

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A moral code is a set of abstract principles; to practice it, an individual must translate it into the appropriate concretes—he must choose the particular goals and values which he is to pursue. This requires that he define his particular hierarchy of values, in the order of their importance, and that he act accordingly. Thus all his actions have to be guided by a process of teleological measurement. (The degree of uncertainty and contradictions in a man’s hierarchy of values is the degree to which he will be unable to perform such measurements and will fail in his attempts at value calculations or at purposeful action.)

Teleological measurement has to be performed in and against an enormous context: it consists of establishing the relationship of a given choice to all the other possible choices and to one’s hierarchy of values.

OPAR

One “must choose” goals and values. The choice of values is conditioned on volitional, active effort. Remember Ms. Rand’s comments in Atlas Shrugged:

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No, you do not have to live; it is your basic act of choice; but if you choose to live,. you must live as a man—by the work and the judgment of your mind.

"No, you do not have to live as a man; it is an act of moral choice. But you cannot live as anything else—and the alternative is that state of living death which you now see within you and around you, the state of a thing unfit for existence, no longer human and less than animal, a thing that knows nothing but pain and drags itself through its span of years in the agony of unthinking self-destruction.

"No, you do not have to think; it is an act of moral choice. But someone had to think to keep you alive; if you choose to default, you default on existence and you pass the deficit to some moral man, expecting him to sacrifice his good for the sake of letting you survive by your evil.

"No, you do not have to be a man; but today those who are, are not there any longer. I have removed your means of survival—your victims.

"If you wish to know how I have done it and what I told them to make them quit, you are hearing it now. I told them, in essence, the statement I am making tonight. They were men who had lived by my code, but had not known how great a virtue it represented. I made them see it. I brought them, not a re-evaluation, but only an identification of their values.

"We, the men of the mind, are now on strike against you in the name of a single axiom, which is the root of our moral code, just as the root of yours is the wish to escape it: the axiom that existence exists.

The conditional nature of reason requires one to mark clearly the metaphysically given from the man-made.  If your model of economics does not counsel one to consider the legitimately subjective sense of an individuals volitional evaluation of their own value hierarchy, then how will you deal with a market that involves irrational evaluations?

Ethics tells us what one ought to value but that is an " If-then" conditional. If one chooses to live then they must choose to constrain their values by recognizing metaphysically given facts , facts that are _ not open to evaluation and therefore not the province of teleological measurements.    _It is a metaphysically given fact that any given market contains volitional agents that act irrationally. The legitimately meaningful sense of _ subjective _ applies to these evaluations. It is however an objective fact that these agents preferences are subject to their own self-made evaluations. It is my own subjective (or personal if you rather) preference that I prefer blondes but it is an objective fact that I do have this preference.

Any investor interested in an objective evaluation of their rational, life serving options, better recognize that IF  the market they are evaluating contains volitional agents who have conditional evaluations of their own, they must THEN consider these metaphysically given facts.

Be careful not to make the fallacy of the frozen abstractionregarding economic theory. A market contains man-made preferences and that is a metaphysically given fact. That a rational investor evaluates the evaluations of other market agents as irrational and unobjective does not mitigate the damage to the objective investors values that will follow from acting as though these irrational agents are not present in said market. 

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