Law of Value 8: Subject/Object

Law of Value 8: Subject/Object

part 1:

part 2:

part 3:

part 4:

One of the more common objections raised to Marx’s theory of value, at least here in the theoretical void of cyberspace, is the objection posed by subjective value theory. Though these modern objections often take quite a crude, simplistic tone, they are echoes of a rather old debate, one that dates back to debates between Marxists and Austrian economists that took place in the late 1800’s and early 1900’s. Austrian thinkers like Bohn-Bawerk and Mises were staunch defenders of free markets and private property, seeing capitalism as the ultimate expression of human freedom. In response to the revolutionary challenge of Marx’s economic ideas they advanced an alternative view of economics in which economic value was not determined by human labor but by the subjective valuations of individuals.

The Austrians called their theory Subjective Value Theory (STV), also known as marginal utility theory, and they called Marx’s theory an Objective value theory. Marx himself never used this sort of language to describe his theory because such a simplistic dichotomy would have robbed his theory of much of its nuance and depth. Nevertheless, Marx’s defenders often accepted this dichotomy, advancing a staunch defense of Marx’s supposed “objective” theory of value. If we really want to understand Marx’s theory of value we need to dig a little deeper than this.

At first it may seem that this debate over value theory is purely an academic one, not so urgent an issue in these times of crisis and political upheaval. But value theory actually sits at the center of any theory of capitalism and is therefore extremely relevant if we are to understand this crisis of capitalism. The Subjective-objective debate is more than just an academic feud about how to theorize prices. It is a debate about two rival visions of the world, one deeply apologetic of capitalism and one radically critiquing it.

Though mainstream neo-classical econ has sought to distance itself from the  the particularly extreme capitalist apologetics of the Austrian school, both share a common origin in the theory of Marginal Utility. (1) This economic crisis has brought to light the utter bankruptcy of mainstream economics as its ideologues stutter and stumble in the face of an economic depression that doesn’t fit into their models, bringing into question its most foundational theories, like the theory of marginal utility. In this crisis it is important to understand the failures of the dominant ideology so that we know what we are fighting and how not to replicate those mistakes in our own movements. Therefore we will need to spend some time in this video laying out some of the fundamental failures of the subjective, or marginalist approach to economics.

The mantra of all ideologies is the phrase “that’s just the way things are.” Econ professors and right-wing pundits love to use this phrase. When factories close they tell us “that’s just the way things are”. When people are poor and live in degradation we are told that this is the way of the market and that nobody is to blame but the poor themselves. They can make this argument because their theory of the market is based on a theory of subjective value. If economic value is subjective, as the theory of Marginal Utility argues, then the marketplace is just a clearinghouse for our desires. It serves as a vast, unconscious, democratic network, adjusting needs and production with scarcity to provide the best possible organization of our competing subjectivities. The outcome of this market process can’t be critiqued because it is just the spontaneous result of our desires. There is nobody to blame if something goes wrong. Responsibility is dispersed between millions of individuals. The only thing we can critique, from the Austrian perspective, is those who try to interfere with this market process, like unions, social movements or the government.

If value is entirely subjective then we also can have no theory of exploitation. The division of the social product into wages of workers, profit of capitalists and rent to landlords is not explained by the power of these social classes. Instead it is seen as the result of purely technical factors, like the scarcity of inputs relative to the subjective decisions made by workers and capitalists as they enter into free contracts. Rather than a theory of classes, we have a theory of pure individuals, all seen as equals in the market. And since individuals have always had subjective values the subjectivists can argue that capitalism is the expression of universal human characteristics and not a particular historical form subject to change.

It certainly is true that when we go to the grocery store to spend our meagre wages we get to choose between Coke and Pepsi. But if this sort of choice is the ultimate horizon of human freedom then we really haven’t achieved much as a species. While subjectivists busy themselves with complex models of consumer behaviour as we choose between Coke and Pepsi, they miss the fact that these choices happen within the context of larger institutional arrangements which we have no choice over at all. It is these larger structures that Marx is interested in: private property, wage-labor, commodity exchange, and the law of value. For Marx the market is a place where blind economic laws dominate over us, where subjects are powerless and where objects like money and commodities are imbued with social powers. We are all hyper-aware of this fact today as we watch the most powerful people and states in the world flounder helplessly in the face of this economic crisis. The Law of Value commands, people obey.

a point of clarification:

Great confusion comes from the fact that the word “value” is used to mean different things. Some people think that because you and I make personal value judgements when we go shopping that these judgements must be the source of the value of commodities.  But the personal value judgements we make in our heads are not the same as the exchange values of commodities. Commodities have exchange values, the quantitative ratios in which they exchange with other commodities. People make value judgements, judgements which are not measurable or quantitative. Just because we use the same word, value, for both phenomenon doesn’t mean that they are the same thing or that there is any relation between the two at all. This relation has to be proven. Many logical mistakes are made by people who don’t distinguish between these two uses of the same word. Don’t be one of those people!

STV argues that we can understand exchange-ratios solely through a theory of the subjective, psychological motives of consumers. It’s attempt to do so is fatally flawed, shot through with unwarranted assumptions, shoddy abstractions and circular logic. Let’s take a look at some of these problems

The Subjectivist Vacuum, or, Pay No Attention to the Man Behind the Curtain

Welcome to Subjectivist Island. Here lives Eugene, our happy island barbarian. Everyday Eugene makes choices. He decides to spend his time building his teepee, catching fish, or practicing his backstroke. He likes the backstroke most of all, but after so many laps around the island he gets tired of it and starts to prefer catching fish or teepee building. Intent on maximizing his utility, Eugene gets out some paper and a pencil and makes himself a preference scale so that he can figure out the exact proportions to devote to all 3 activities each day. He cherishes this preference scale because it is the source of his freedom. It’s just like the preference scale you carry around in your pocket everyday….. you carry one don’t you? (2)

Ok, now setting aside the fact that most of us don’t carry around a preference scale in our pockets, there is a bigger problem: Subjectivists want you to believe that this little story about Eugene and Subjectivist Island is all that you need to know in order to understand the functioning of modern capitalist society. Funny then, that we had to abstract away all of capitalism, all society in fact, in order to arrive at our theory of preferences. Were we to think critically we might begin to suspect that there is something fishy going on with this abstraction. That fishy something is the stink of an ideological abstraction. We discussed such ideological abstractions in the last video, Law of Value 7, but let’s review a few points here.

The point of a dominant ideology is to make it seem like the present order of things is a universal order; that the status quo is the natural expression of things, unchangeable. How convenient then, for our bourgeois theorists, that our natural, universal man, Eugene, happens to contain the seed of modern capitalist society in all of his preferenc-ing and acting. It’s as if every choice made by every human since the dawn of time was just an expression of innate capitalist instincts, waiting to come into being in our modern society.

But it’s not enough just to point out the obvious ideological basis of subjectivist theory. We must also prove that this ideological abstraction is illegitimate. Let’s do that. It should only take a few minutes.

The parable of Subjectivist Island leads one to think that human desires are formed privately, independent of society. But this has never been the case. Desires are taught, socially constructed, and can’t be understood independently of society. How do subjectivists respond? They say “Yes desires may be constructed but this is out of the scope of economics so we don’t have to consider it.” In fact, this is how modern economics deals with all criticism- it ignores it and says it’s the topic of another discipline. How convenient! It’s like saying that we don’t have to consider the fact that the earth is round because that’s beyond the scope of flat-earth theory.

We can’t understand desire without also understanding the ways in which we go about attaining our desires. Here’s where the abstraction of Subjectivist Island breaks down. On the island Eugene attains his desires by directly acting to get the things he wants. But these are not the sort of choices we make in a capitalist society. In capitalism we have to sell our labor to someone else so we can make a wage that we can then spend on the things we want, but only after we’ve given most of our wage to the landlord, the mortgage company and the state. Subjective value theory has to prove that it can move this abstract model of choice from Subjectivist Island to a full-scale capitalist economy. It does this through the fantasy of barter.

Let’s say Eugene, while back-stroking one day, discovers another island called Barter Island. Here lives Ludwig who cracks coconut all day. They decide to trade fish and coconuts, each one carefully measuring their utilities for fish and coconuts on their preference scales, calculating the precise exchange ratios to maximize their utilities, resulting in an exchange ratio between coconuts and fish. “Now,” says the subjectivist, “we have shown that our abstraction was legit and that we can explain exchange ratios purely through the science of preference scales.” If only it were that simple.

The first thing we might notice is that the exchanges on Barter Island can only take place because Eugene and Ludwig have different resource endowments. If they both had access to coconut and fish then there would be no reason to trade. In order for trade to continue in a sustained way, trade must reproduce these differences.

This means that in order for a capitalist market to work there must be the constant reproduction of a certain type of property relations in which people have to enter the market in order to get what they need to live. Specifically people must be deprived of their own means of production, forced to enter the market to sell their labor in order to buy the things they need. This property relation must be continually reproduced through exchange so that there is always scarcity and people are always dependent on the market.

Thus, we can see that something very sneaky has been done. Hmmm… what is it?  We were trying to form a theory of barter based solely on subjective preferences when all the sudden we realized we needed to assume a certain type of property relation in order to make any sense of it. Thus, abstracting away property relations and forming a theory of exchange without them is impossible and illegitimate.

Even more damning is the fact that capitalist societies don’t have anything to do with barter. People don’t produce to directly exchange products for other products. We produce in order to exchange things for money. Money is an intermediary in all economic activity. So it makes no sense to say we measure our subjective utility for coconuts against fish when exchanging. We measure everything against money. When you are in the supermarket calculating your preference scales with the Preference App on your iPhone you aren’t just considering your preferences for fish and coconuts in the abstract, as if on a desert island. You are also considering the market prices of these commodities. This market price already exists before you make your subjective value judgements.

But this is problematic. Subjective valuations were supposed to explain price, but now we have to assume the prior existence of prices in order to explain subjective value judgements. It seems we are stuck in a big messy circle.

And if we are exchanging everything for money then we must have a utility for money right? But money has no direct utility. It’s not even good for blowing your nose on. The value of money is what it will buy. And this is not set by our preferences but instead reflects the relation of money to all other commodities, reflecting the vast interpenetration of millions of markets all over the world. There is no such thing as a personal utility for money because money’s value is already established by forces beyond our control. (3)

And there are more difficulties presented to subjective value theory by the presence of money. On Barter Island Eugene and Ludwig had direct knowledge of what they were getting from each exchange. But in our world we don’t know exactly how much everything is going to exchange for ahead of time. When we sell a product in the market we don’t know exactly what products we will be able to buy with that income. There is a high degree of uncertainty. But with so much uncertainty how are we ever to form those nice, rational preference scales where we’ve perfectly calculated the exact utility relations of all commodities to each other? Well, we can’t!  (4)

It seems that every time we try to abstract away property relations and production relations they end up sneaking back into the picture. This is because it is absolutely illegitimate to try to explain capitalism without a theory of the social relations between people as they actively produce the world they live in. Luckily we have a better theory, that of Karl Marx.

In the Real World….

In the real world, outside of the fantasies of bourgeois economics, subjects and objects have no meaning apart from their relations to each other. There is no such thing as a subjective individual floating in a vacuum. We develop our subjectivity through our relation to the objective world we inhabit. And the objective world can’t be understood apart from the actions of societies of individuals who transform this world, bending it to their will, giving it meaning. Subjects and objects always exist in a relation, deriving their meaning from this relation.

On Subjectivist Island it seems like subjects form their value judgements through passive contemplation before they act on them; judging happens first and then action. In the real world we can only understand our subjective preferences once we understand the active process by which people relate to and transform the world. People work on nature. We chop trees and make houses. We build cars and dig up oil to power them. In transforming the objective world we also transform ourselves. The modes by which we work upon the world determine our views of the world, the sort of values, needs and desires we have in this world and the manner in which we pursue those desires. These different modes of producing have changed throughout history, each mode producing very different sorts of societies with very different value systems. These different modes of relating to and transforming the world Marx calls “modes of production”. (5)

Capitalism is not the first mode of production characterized by extreme inequality, war, exploitation and instability. These qualities are part of all class societies. What is unique about capitalism is the way this domination of one class over another takes the form of relations between commodities. This is due to a particularly unique subject-object relation in capitalism, something Marx refers to as “subject/object inversion”. We will return to this in a moment.

Subjects, Objects and their Prices

Objections to Marx’s theory of value often have to do with the way his theory of value relates to market prices. If value comes from the amount of labor that goes into producing things, then how do we explain the fact that a rise or fall in demand changes market prices? The fact that demand influences price makes it seem like subjective decisions influence value as much as labor time.

The value-price relation is not an easy one to enclose in neat, tidy definitions. The more we look at it the more complex the network of social relations that go into the formation of prices. I will deal with the value-price topic in more detail in a future video (Law of Value 11: Price), but a few remarks are in order here. We’ve actually covered this ground briefly before in Law of Value 3 where we talked about the way private labor becomes social labor. (6)

Private labor is the amount of labor an individual worker devotes to the production of a commodity. The goal of the worker is for her private labor to become social labor, that is, that her commodity be sold in the market and thus be equated with all the other commodities in the market, making her labor part of the total social labor of society. But this isn’t so easy. Because production is only coordinated through the fluctuation of market signals, it is always uncertain whether commodities will be sold, and whether private labor will become social labor.

As we’ve seen in previous videos, in order for private labor to become social it must produce at the socially necessary labor time. SNLT is a way in which the social level of productivity acts back upon the private labor of the individual, disciplining the individual to work at the social average. Individuals or firms that can’t work at the SNLT go out of business, like when American auto-workers lose their jobs due to competition with plants in other countries. Their labor is then reallocated to other areas where they can be more profitable, or they don’t work at all. As many of us know, losing a job and having to find new work is a long, hard, painful process. But these discomforts don’t matter to the market. The market treats all labor like digits in a calculator, anonymous units to be moved around in the search of profit. The gap between private labor and social labor is the mechanism by which labor is moved around and reapportioned through the blind forces of the market, in the absence of a social plan. (7)

Now all this should sound familiar. But what does this have to do with the relation between demand changes and price? The same process of reapportioning labor happens with changes in demand.  Just like the need to produce at the SNLT, society must also apportion the right amount of labor to produce the right amount of things so that markets don’t become over-saturated or under-stocked. If the supply of elevator music exceeds demand then some of this music will remain unsold and some of this private labor will not become social. Producers will be forced to move their labor elsewhere. This apportioning of labor happens through the fluctuation of price. [insert image of person thinking, though bubble creating a commodity, or a price sign or something] This does not mean that demand creates value. Demand hasn’t created anything. It has merely indicated, through price signals, that labor needs to be reallocated. This is how demand effects the distribution of social labor in a society coordinated through the fluctuations of prices. This distribution is only possible because there is a relation between prices and labor time.

A further examination of demand

So we can show that demand, rather than creating value, is part of the reallocation of labor that is implied in the gap between private and social labor. But we can also take the analysis further and show how demand itself is produced in capitalism. From the perspective of subjectivist island it seems like demand is the product of free, independent minds, viewing reality from some distant, objective standpoint. But in reality our subjectivity is a part of a mode of production. This is nowhere more apparent than in the capitalist mode of production. In capitalism the only type of demand that counts is “effective demand”, that is demand backed up by purchasing power. Consumer demand comes from wages paid to workers. That means we can’t understand demand without first understanding wage labor and exploitation.

The products which consumers buy with this money are not just the random result of psychological preferences. In fact, most of our money goes to the purchase of very basic things we need in order to keep us alive as workers so that we can produce more value for capitalism each day: rent, food, clothes. (8) These are needs and desires dictated to us by capitalism, for the purpose of perpetuating capitalism, not the abstract psychological preferences of isolated individuals. (9)

But the bulk of the demand in society comes not from consumers but from capitalists. You and I buy toothbrushes and pay rent. Capitalists buy factories, assembly lines, natural resources, and private armies. This demand has nothing to do with the personal preferences of capitalists. (10) It has to do with the technical requirements of production, the amount of inputs it takes to make a widget at the SNLT. Some people think that capitalists enter production only in order to meet the demands of consumers. This is a myth. The advertising industry is the best refutation of this myth. Capitalists produce in order to make a profit. Then they go looking for markets. Most of the time they have to create the market by convincing people there is a need for their product. But capitalist firms also sell to each other, totally bypassing the need to find consumer markets. (11.)

This all gives us a very different picture of the subject-object relation than we get in bourgeois economics. Rather than a free society of empowered individuals who are free to act upon their abstract desires and take full-responsibility for their lot in life, Marx’s critique of the capitalist mode of production reveals a world in which individuals are at the mercy of the coercive laws of the market. The sorts of superficial freedoms they have to choose between coke and pepsi pale in comparison to the disciplining of our lives to SNLT and the pursuit of profit.

Subject/Object inversion

[Mitt Romney quote about corporations being people]

There is a lot of talk in the Occupy Wall Street movement about ending “corporate personhood”. The problem with this demand is that the legal status of corporate personhood is just the icing on the cake. In a capitalist society corporations are much more like people than people are. Capital is the active subject and people its object. This is what Marx means by “subject/object inversion.” Rather than people being the active agents of the social order it is the “objective” logic of the market that dominates subjects. Blind economic laws rule and people obey. Money becomes more powerful than life. Corporations become people and exert more power in society than individuals or even social movements. While people run around in the street with signs begging the system to take notice of them, the cold-logic of capital becomes the active agent in society, using the body of the worker like a passive expendable commodity, subordinating societies, governments and even nature itself to the impersonal motives of profit.

The crazy thing is that this “objective” world is still just the product of our own creation. We actively reproduce it everyday. This is what makes Marx’s critique of capitalism so powerful: The world we live in, despite the incredibly disempowering structure of our current situation, is always only the result of our own actions and we do have the ability to collectively change it. But in order to exercise such collective power we must break with the capitalist mode of production.


In case you were wondering Subjectivist Island and Barter Island don’t exist. They are abstractions. Now every theory needs abstractions- we must sift through a world of data and identify the broad contours and important categories that define reality. Subjectivist and Barter Islands are “ideal abstractions”, that is, abstractions that exist only in the minds of philosophers.  Marx makes a different kind of abstraction, a “real abstraction”. A real abstraction is not made by philosophers arbitrarily leaving out parts of social reality. A real abstractions is made by reality itself.

In a capitalist society human labor becomes abstract. In the caste system of feudalism where people were born into certain types of work and there were strict divisions between castes there was no such thing as labor in general, or a worker in general. But in a capitalist society labor loses all of these specific features. Capital treats us like anonymous digits in a profit-calculator, moving us from place to place in the search for profit. Our labor becomes abstract labor. We become, not peasants, knights, or artisans, but workers in general. Marx’s theory of value is based on this real abstraction that is made by the mode of production itself, not the minds of philosophers.

This doesn’t mean that the perspective of marginalism comes from nowhere. Marginalism comes from a real existing standpoint within capitalism, the standpoint of the atomized individual contemplating commodities. This standpoint is real. We experience it everyday at the grocery store. But it is an incomplete perspective because it leaves out the entire world of social production that puts commodities on the shelves and money in our pockets. This perspective is the perspective of commodity fetishism, in which the social power of our own labor takes the form of inherent properties of objects. (12)

But in times of economic crisis we see cracks in the walls of this reality. Old ways of thinking lose their relevance. Crises are a time when the economic laws of capitalism are exposed not as eternal, universal laws as the bourgeois economists would want us to think, but as the particular laws of this time, laws that we might be able to overthrow. As the law of value breaks down, as people start to question the order of things, the capitalist state must enter the picture, replacing the failing law of value with the brutal law of the state. The charming, freedom-loving world of the market apologists is revealed for what it really is, an exploitative order based on violence. Like a schoolyard bully, a system is always the most violent when its weakness is exposed. When the law of value breaks down the politics begin. Subjects must become active. This can be the politics of the ruling class as it scrambles to reassert the status quo or it can be the politics of radical movements that posit the possibility for new social orders.

1. Undoubtedly I will raise the ire of both neoclassicals and Austrians by treating the two camps as one for much of this video. Both schools of thought have their historic origin in the theory of marginal utility, though the way this theory has been treated and evolved in the two camps has diverged over time. This video deals with marginal utility on a very basic level, analyzing the types of abstractions needed to sustain a theory of marginal utility (namely extracting away production relations) and thus should serve as an appropriate starting point for a critique of either school of thought. There are many more critiques to be made of both camps.

2. Prior to his preference scale Eugene used utils to measure all the objects of his desire. These were basically little bits of his subjectivity that he kept in his pocket like gold coins. He exchanged them with himself every time he made a decision. At some point in the 20th century bourgeois economists decided that utils didn’t exist and replaced them with graded preference scales. These look sort of like a combination of a bar graph and an abacus and all of us carry them with us at all times and consult them before we engage in any human action. They are the primary instrument of our freedom but the government wants to take them away from us and make us slaves.

3. Austrians will be quick to point out that the ‘great’ Ludwig Von Mises provided a solution to this problem of the subjective value of money. He argued that since money was originally a commodity like gold that originally, in barter, people did have a subjective value for the particular uses of gold. Thus the original exchange value of gold was a result of these subjective valuations. Once gold became money, of course, its exchange value was altered by its role in the circulation of commodities. It became worth “what it could buy”. People formed their subjective estimations of gold based on this objective “what it could buy” measure. Yet the fact that we can trace a historic path from the original subjective valuations of the use of gold, to the subsequent layers/sequences of valuations that eventually arrived at the objective value of money seemed, to Mises, a solution to the problem. In Bukharin’s “Economic Theory of the Leisure Class”, in a footnote, he points out that this “solution” by Mises merely replaces an idiographic, historical description for a theory. It doesn’t matter if we can describe some historic process whereby a commodity becomes money. The value of money is not created or altered by subjective preferences for money.

4. The neo-Austrian response to this problem is to distance themselves from the neo-classical idea of the rational consumer and to stress the imperfect information of the consumer. Rather than consumers being super-rational beings that can calculate the relations between the objects of desire, the fallibility of human understanding is stressed and the market is seen as the ultimate informational clearing house which adjusts the imperfect desires of the multitude, smoothing them out, allocating resources in the most efficient and democratic way. Their language often takes on religious overtones here, stressing the inherent insufficiency of human judgement against the omnipotent, mysterious power of the market. The problem is that these magic moves of the hidden hand of the market are just asserted and never proven. Rather than actually proving that the market can do this Austrians prefer to stress that the only alternative is the State-Communist BogeyMan.

5. For Marx the subject-object relation is not just a matter of personal psychology, of people thinking about objects in the abstract. Instead it is based in the real, concrete working activity of people actively transforming the world. This is what is by “materialism.” Often people think that “materialism” means that individuals are unimportant, or history is predestined, but this is not what Marx means. He wants us to understand the specific ways in which subjects and objects relate through the real activity of social groups in their day-to-day activity, in their mode of production.

6. The first thing to note is that, just as the commodity passes through many different hands and fulfills different functions as it moves through the vast network of capitalist social relations, so too value takes many different forms. Different aspects of the value relation come in and out of focus depending on where we turn our gaze. Value can take the form of private labor, social labor, and market price. These three forms of value all act back upon each other, co-determining each other, just as all the various moments of production and exchange influence each other.  Market prices can fluctuate from day to day due the seemingly chaotic way information about prices is transmitted through markets. But through these fluctuations we can observe law-like regularities. etc.

7. And this is why the dream of running your own business and “being your own boss” is only possible in the cracks and interstices of capitalism, in those few paltry industries that it is not profitable for big firms to enter. The amount of resources a large firm has at its disposal make it quite difficult for the self-employed to work at a competitive socially necessary labor time.

8. A timely tangent: The consumption habits of the unemployed and underemployed are also largely dictated by capital. Being unemployed is expensive and time-consuming. One must drive to interviews, have a clean suit to look good for those interviews, send out tons of resumes, etc.

9. This is why we need a theory of distribution before a theory of price. The theory of marginal utility tries to explain price first, and then explain the distribution of the social product between classes afterwards. The most extreme version of this would be the price theory of Mises who argues that not even the cost of production enters into the formation of prices. For Mises, consumers determine prices through their valuations, then the revenue from the sale of the commodity is distributed amongst the factors of production according to the competitive bidding of capitalists. On the contrary, the classical economists before Marx formed their theory of price only after the distribution of the social product between classes… Thus the price of the commodity would be the wages paid to workers plus the profit of the capitalists plus the price of inputs (which go to other capitalists) plus any interest or rent owed to other parts of the capitalist class. Obviously a class analysis of society is only possible with the classical approach.

10. Nor does the capitalist production have anything to do with “corporate greed”. Please, Occupy Wall Street, stop using this ridiculous term. It doesn’t mean anything. There is no such thing as corporate greed. Corporations don’t have personalities. They aren’t greedy. Capitalism is the problem, not the subjectivities of capitalists.

11. Underconsumption theory, one of the more prominent radical theories of the current crisis, is based on idea that production is for consumption. Underconsumption theory argues that since all production is eventually for consumer consumption that a shortage of demand or purchasing power from consumers can cause an economic crisis. This neglects the role of capitalists in creating their own demand for products, not for the personal leisure of capitalists, but for productive consumption, as inputs in the production process.

12. See my video on commodity fetishism: Law of Value 2

Further Reading/Bibliography:

Marx, Marginalism and Sociology by Simon Clarke. This is available online, and I wrote about it recently on this blog.

From Political Economy to Economics by Fine and Milonakis. This is a great history of economic thought with a focus on methodology. It discusses the way economics has been narrowed from the broad social questions of classical economics to the narrow, mathematical abstractions of the modern neo-classical method.

Human Action- Ludwig von Mises. This book is ridiculous. Good for a bathroom read. And if you run out of toilet paper…

Economic Theory of the Leisure Class by Nikolai Bukharin. I have written about this book here.

Dialectical Phenomenology by Roslyn Bologh. This book was quite influential on my thinking about the subject-object relation and the concept of mode of production. It runs cheap on Amazon. It is a discussion of Marx’s method through a reading of the Grundrisse. I highly recommend it.

Disassembling Capital by Nicole Pepperel. This is available here. Pepperel’s blog Uncomfortable Science (formerly Rough Theory) is a fascinating read. She has a really fresh and deeply knowledgeable take on Marx.


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46 Responses to Law of Value 8: Subject/Object

  1. MrEverpresent says:

    Congrats for your videos. The newest videos are amongst your finest work.

  2. Alright Jack says:

    Brilliant! The videos themselves are getting better and better. And the content becomes deeper. I love how up-to-date these ones are, with the inclusion of the Ron Paul crazies, OWS, Papandrou and Berlusconi. The object-subject inversion becomes very clear when even the most powerful subjects in this world are subjected by the objective forces of the market, where these forces overrule this concept of Democracy in which we instill so much pride and importance. In this week managing in a couple of days what half the Italian population haven’t managed to do in almost a decade, and in the same week forcing a Greek prime-minister to resign just when he finally decided to do things the democratic way again.

    It underlines the need for theory in order to achieve the necessary social change; most importantly the Marxist critique of capitalism. It’s a shame many of these videos only get about a 1000 viewers. This is the stuff that should be dealt with in any introductory social science/ economics course. I also love the call to action in the end.

    It’s the first time I come across the term, but I find the argument of Marx making “real abstractions” and other philosophers making “ideal abstractions” a bit problematic. Although, I do see where he’s coming from. Different theories just try to do different things. Marx interprets reality in order to criticize capitalism as a whole, with changing it as his point. Other (Bourgeois) theories explain the status quo, in order to either defend it or make it run more efficiently (in which they are very advanced). But everyone has their own ideology and mental conceptions about the world, claiming to be the only one who truly sees through every ideological filter and is able to establish a “real abstraction” is just a bit misguided I’d say.

    Although, again, I’m just pointing this out rather than criticizing you. As you’re explaining Marx’s work and taking over his argument on real abstractions is then only fair. I think it actually comes down to a different understanding of the concept “ideology” as well, with Marx using it in a negative sense (false consciousness), which has been rejected by later Marxist inspired philosophers (including Althusser I think) that use it more as the mindsets that everyone develops/takes-on in order to make sense of the world.

    • I don’t even think that Marx used the word ideology or false consciousness in capital. Correct me if I’m wrong but doesnt this belong to the younger Marx? Almost nothing from the writings of this period were published during his life!! This is important to know.

    • I don’t think it has to do with ideology at all. Capitalism is unique in the way it treats social actors as abstractions, in the way decisions about the labor process are made by blind market forces, and the way use-value is dominated by the imperative of surplus-value production. These phenomenon are not present in previous modes of production. They make possible a specific form of theorizing in which the individual is understood as an abstraction, a worker or a capitalist, a producer of value, etc that is not possible in other modes of production in which people are understood still as members of classes, but in a way that doesn’t abstract from the particular usefulness of their labor, and in which the social relations between classes were direct social relations and not mediated through the impersonal calculations of the market.

  3. Very good Brendan, I was missing the LAW OF VALUE series, I’ve been reading von Mises’s “Theory and History”, and I think he totally miss the point in his critique of Marx. Look at this video:
    And then read this:

  4. zkscelso says:

    There’s a serious lacking of basic understanding and/or long-term planning involved in an anti-capitalist project on the ground in the midst of OWS, in my view. There seems to be such a strangle hold on the ideology of the citizenry such that it becomes easy for a libertard with a camera to pick on protestors and make fools out of them with leading questions, with the supposed implication being that since no alternative to capital exists, everything going on is the govnt’s fault. I mean, some of these people don’t even have a definition of exploitation to provide. As Zizek says, we need to be self-critical, and we need to focus on undoing the ideological entrenchment of the status-qua.

    • Beavis says:

      While you are correct, I think it’s important to take into consideration the fact that OWS is the biggest mass spark of class consciousness we’ve had in a very long time, as Zizek put it in another article of his, “Occupy first, demands come later”. You have to remember this is America, where cold-war leftovers are still reheated and served as regularly as possible, and where radicalization on a scale this large seems like a dream. Many people are beginning to ask the right questions, I’ve had a few friends ask me about capitalism in ways they never had before. I don’t think that OWS will directly produce a systemic effect, but it certainly has and will continue to produce a social effect. Things can only get worse than this with Capial’s ruthless grip around the throat of the world, and if at this point people are willing to wake up, even if they’re still a little groggy right now, there’s hope for something much bigger in the decades to come.

      I’d also like to say that this blog entry was very well-done. I will send this to as many people as I can.

  5. f f says:

    Value comes from the human mind.

    I…really don’t know how you don’t understand this.

    • If you’d care to note the “point of clarification” in this video you’d see that there are two different uses of the word “value” here and that conflating them is just a form of equivocation.

  6. Ok I really need your help here because as much as I have studied Marx, Engels, etc, I still have some problems getting my head around “time-preference” theory to the point where I can refute it in any incarnation(or better said re-wording) in which it might appear. See I know the basic idea, but I’m not familiar enough with the argument inside-out so as to break it down. This is important because in a public debate it’s not enough to say “your time-preference theory assumes capitalist conditions,” and as much as I’d like to I can’t just respond with, “Sorry but that theory has no bearing on reality.” Either argument will sound like a hand-wave to the layperson-spectator.

    Can you break this down for a person who studies economics by himself, and maybe recommend some user-friendly refutations of Bohm-Bauwerk’s claims?

  7. albertobolognetti says:

    what a GIFT. thanks for doing these vids!!!

  8. lifeisgood says:

    Cheers to you for these lessons & videos. They really aid well while reading Marx’s Capital. Video is a much easier means of learning & understanding a concept. I had a suggestion regarding these videos. Labour/Worker means all who sell their labour power. Then why not include examples of employees working at middle & top levels, who sell their labour power & earn quite well(though still under the realm of exploitation)? Meaning instead of only referring to the daily wage earners, you can use the above suggestion too. Capitalism today has diversified the ‘aesthetics’ of exploitation!

    This might help those working in these jobs to better relate themselves with the ideas & concepts of Marx. Am suggesting this as here in India many people consider Marxist analysis to be limited to the daily wage earner and you’ll be surprised that these souls call themselves Marxists! Self-proclaimed Marxist tend to do more harm to the analytical apparatus of Marx & his ideas, rather than doing any good.

    A great New year to you! Keep up this good work.

  9. Stephen says:

    Hello Brendan, I have enjoyed watching your wonderful videos. I was wondering if you were planning on doing any videos on Keynesian economics? I was in a debate with a friend on the topic, and he was insistent that Keynesian school of economics was NOT capitalism, but corporatism, or statism. How would you personally argue that Keynesian economics is indeed bourgeois economics? How does mainstream bourgeois eclectic economics of today retain the fundamental features of capitalism? I personally argued that the labor theory of value (along with other neoclassical elements) was still in full effect even during “corporatism.” Also what would Marx say about market socialism?

  10. Michael Beil says:

    Hopefully, Brendan will answer this question; however, it really makes no difference. I am currently living in Germany and have begun reading Das Kapital. So far, the LTV theory does not cause any problems for me, and I have a fairly easy time wrapping my head around the abstract nature of the theory; however, I am interested in the functionality of the theory as it concerns Real Estate and Rent as institutions of Capitalism. The current Housing Bubble seems to have nothing to do with LTV Theory. I mean, the houses are already built, just like in our financial industry, the money seems to be already there, and the high rollers just seem to be passing it back and forth, betting on things to succeed or fail. It just seems like Casino Gaming, the only difference is that everything is rigged in their favor. What or where in Das Kapital would one find a discussion about these problems, about Rent, Real Estate, Banking, or where these instruments not around while Marx was alive and thus he was unable to answer these question…?

  11. Michael Beil says:

    Nevermind…I found your videos on Credit, and they answered pretty much all of these questions. Wow, I feel like an idiot.

  12. How have I misrepresented the Austrian perspective here? I don’t claim to be using the Austrian definition of capitalist anywhere in this video. It is clear that I am using Marx’s definition of capitalism: the operation of the law of value, wage labor, abstract labor, etc. What I do represent is the “subjectivist” approach to understanding economic phenomenon.

  13. MrEverpresent says:

    Haha, this angry Austrian made my day.

  14. lifeisgood says:

    Lord forbid, why do you Austrians keep apologizing to everyone about how correct you are and how less others know about you and your ideas?!

    You suggest MES and Human Action, its alright. But have you read them yourselves? If so, do you really take Rothbard seriously? Are you so naive to take Praxeology seriously? Don’t commit these mistakes.

    Yes, Austrian Economics is worth reading and understanding, but the ‘Logically true’ dogmatism that you people adhere to is dangerous and useless.

    Humans Act: Now, tell me what you can explain with this single axiom? Can you?! And this is a trivial observation that anyone can hold. Wasting your time in a school of thought whose only goal is to “free people”{sic} form the clutches of the evil Government, is in my limited understanding, a sheer wastage of energy. The only solutions your theories and ideas provide is: Remove the monstrous Government and all will be fine.

    You haven’t read Marx! Let me assert that as an ‘a priori’ truth. You haven’t understood him if you can’t see the futility of other alleged schools in Economics including Austrians. And the common Austrian tactic of “voluntary exchange based capitalism” is a sham. There’s nothing like free market, every market has its rules. The diversion from greater issues touched by Marx to “lets remove the state” is a sheer idiotic act. Please Steve, don’t waste your time therein.

    Studying Austrian Economics is fine, but proclaiming as if “we know the truth and you all are idiots” brings out the inherent dumbness within you. Go and appeal to Mises and Rothbard, don’t waste digital space and our precious time here.

  15. Steve Law says:

    Oh, and to answer your question YES I have read Mises Human Action, and am now studying from Rothbard’s works. I have also studied from several others such as Hayek , and NOT TO LEAVE OUT MARX himself ! As I said before I HAVE read Das Kapital as well as The Communist Manifesto!
    Marx’s works are fraught with economic fallacies, utopian imaginations as well as underscored with envy and resentment. The latter two, as I said before, are the underpinnings of the psyche behind socialism and why some fall to its errors.

    I take it you are “educated” and angry and bitter about not having enough work, maybe? You sound like the type. Having to pay back the student loans maybe? If that is the case, you made a bad investment in your “education” because you forgot to learn how to survive and thrive if this is all you do with your time…spreading socialist dreams of utopian communism. It’s actually funny people actually still think it can happen even with every historical note of any version of socialism proving a total failure. You guys are freaking funny!

    Well I guess they didn’t teach you that all the education in the world won’t replace the entrepreneurial spirit which brings you all the things in life that support and aid the human condition and this action cannot be replaced by force and compulsion. That without the promise of gain and private ownership none of thee things will come about for you to trample with your whining and crying about being exploited.

    Good luck with your communism.

  16. Steve,

    This forum is a place where I welcome criticism and encourage civil debate. You have now posted 3 lengthy posts, none of which contain any specific critique of anything in my video. Instead you have launched a winded critique of what you imagine to be my political position. But I have never voiced support for the “state socialism” of the USSR, China, etc or for European social democracy. In fact I consider both of these to be forms of state capitalism. But that is a topic for a different discussion.

    In this video I have honestly tried to present an adequate critique of the methodology behind subjectivism. I did a lot of reading to research this video, including Mises and Bohm-Bawerk. But it is perfectly possible I may have misrepresented something and if this is the case I would love to hear that explained to me. But your argument about the US not being “pure capitalist” has no bearing on any of the arguments in this video. I happen to think that the myth of “pure capitalism” really gets to the heart of what is really philosophically problematic about the Austrian system, but that isn’t really relevant at all to anything in this video. I believe you said that you hadn’t actually finished watching the video. Perhaps you could do this and then give me some criticism about something I actually say in the video. I would welcome that.

    I am deleting your earlier comments because they are off topic and I consider them spam. Posting videos that have nothing to do with my blog, making ridiculous accusations about who I am and what my background is based on absolutely no knowledge, and trying to equate my arguments about philosophical method with Stalinism without any actual argument that would explain this logical leap…. these are all really obnoxious and tasteless moves and not welcome here.

    • lifeisgood says:

      I’ve replied Steve, Do publish it. Good time ahead!

    • lifeisgood says:

      This is the problem with most of the people out there. People have so many prejudices about Marx. Add to that the Libertarian propaganda. They leave no stone unturned to abuse Marx, Steve being its latest victim. I also had a suggestion. Do read “Beyond the Invisible Hand” by Kaushik Basu. His analysis, especially refuting ‘methodological individualism’ & many other mainstream ideas is worth looking at seriously. Also, he uses mainstream tools to criticize mainstream econ itself!

      Your site’s a reliable collection of Marxian ideas and their explanations. I believe Mainstream Economics has its own advantages, but has ideological limitations too. Consumer behaviour and Macroeconomics courses are filled with pro-capitalism, anti-communism ideas. It also breeds anti-government notions.

      You might like visiting Mike Huben’s-, he’s been criticizing Libertarian fallacies since last 20 years! Austrian Economics is a collection of refreshing literature, but the absurd extremists in there(which form a tiny cult therein too) pollute it. Hayek and Mises are refreshing and provide a novel way of looking at the world around us. Praxeology(though largely neglected in mainstream econ.) is quite refreshing. Its always an investment to learn newer and newer things, isn’t is?!. Keep blogging!

  17. lifeisgood says:

    YOU:I should know better than to try and convince any of you. All I can do at this point is help sway others from your trap.

    ME: All I would now do is to SAVE you from the Austrian trap, to which I was introduced a long time ago and suffered the Libertarian brainwashing you people do undertake on young minds.

    YOU: I won’t spend much time here. I’ll only say that you spoiled fools don’t even understand that many of the tools you use to spread your ideologies are the product of entrepreneurship such as the Apple computer in the blog pic up above. You think the state can provide people with better products? You actually believe socialism will provide you with all you need and you may be right…until there’s no more left for your demagogue socialist elitists to steal.

    ME: As I said above in my reply to youm, you haven’t read Marx! Even an amateur of Marxian Economics knows that Marx was an “Anarchist”. He proposed a state-less, religion-less, caste-less society. Socialism was the way towards ommunism. Marx’s conception and ideas about Communism has hardly anything to do with the former USSR as we’ll see below.

    YOU: Socialism is a failure and the EU ought to be proof enough for you. America has been slipping down that slope for some time now as well, and as more and more socialist programs fail, all you fools can do is suggest that we need more socialism.

    ME: Same Austrian rambling even here! EU, U.S., etc. all are not truly Capitalist, thus we need to abolish them! Bring something better.

    YOU: We could sit and debate intellectually back and forth but I have been there and done that and I know what a time consuming waste that is. I actually work and struggle and save and try and achieve and build something for the future, for my community, for my family, and you know something? The amount of money I pay just in income taxes could pay for my child’s education as well as their capital to eventually build a business of their own that would actually employ some complainer like yourself who would most likely feel exploited because he had to work for someone else.

    ME: You struggle, You get your ass kicked for the capitalist who employs you. Stop making false assertions that you have read Marx, you would have understood by now that you’re only making a fool out of yourself. Did you even think once, why the hell you’re struggling? Why the hell those crony-capialists can make such huge amounts of money without even putting a bit of the hard work you are putting daily? Do you know the difference between an Avaerage American citizen and a CEO of an MNC? Don’t you think that you as an individual are working really hard only to earn a wage that hardly seems justified? Of course if you’re brainwashed by Austrain propaganda than you’ll have no objections to it, but the millions out there, working daily, are the ones who CREATE all the wealth you see around you, yet we find them “struggling”, just as you are, to meet the ends. Of course if the capitalist is benevolent and agrees to pay better, you may earn more, indeed at the mercy of your employer.

    YOU: You want to try socialism? I say, OK, go ahead. Just don’t make ME pay for your little experiment through political force! If socialism is so great why doesn’t it ever come about naturally through the market mechanism? Through choice? Why must it ALWAYS be supported through force and compulsion?

    ME: Socialism, as being defined by your Austrian compatriots is NOT what Marx’s conception was. You say Socialism failed, but you have no proof to offe except the well-known Austrian ramblin about EU, U.S., etc. We’ll se these fallacies below. Socialism, till your beloved capitalists are controlling the political spectrum, cannot be established even by force. Indeed, education is the key and thus this and other such blogs. Again, yur definition of Socialism suits your conception. It might be right, but do not bring in Marx here. His ideas, as I’ll explain, have not been understood by most of the people who criticize former USSR, current EU, U.S., etc.

    YOU: Your communist dreams cannot work at all unless you convince enough lazy fools who think just like you to get your political friends together in DC to continue taking and taking and taking. It’s ALL your types do! Take! And all the while you rationalize by saying that you are all exploited by capitalists. When all the while it isn’t pure capitalism you complain about at all. It’s mercantilism/socialism/serfdom.

    ME: No! It IS Capitalism.This is how Capitalism is in the real world. Its not some Rothbardian fantasy. This is how Austrians brainwash others, just as I was done once, but save myself. You urgently need to visit – to come ou of this brainwashed state of mind. You say there is no capitalism, then why is there Private property, why is ther eprotection of this property, why are there so many- and I repeat so many entrepreneurs thriving all around the world. Just research about India and China, entrepreneurship is thriving there. And if this is Socialism acc. to you, then cheers- Socialism can better foster entepreneurs. Your free-market dogmatism doesn’t.

    YOU: NO you DON’T know shit about economics!!! If you support socialism or communism you couldn’t possibly have a real life understanding of economics.

    ME: Communism, Socialism, just like Capitalism has been distorted to suit current Political developments. Right wing wants to prove all’s Socialism out there; Left wing wants to prove all’s Capitalism out there; In reality both co-exist. Any extremist ideology is dangerous and I would agree with you if you believe this too. Its alright to be aginst Socialism, etc. but putting in name of Marx shows utter negligience about him. His ideas didn’t support fostering Capitalists, giving bail outs, letting the wall-street cronies piss off the World Economy, letting hundreds of people liv under poverty even in developed nations like U.S., etc. These are all Capitalist acts and events. Of course you must have been taught to call this crony-capitalsim, but my friend, that’s how Capitalism works in reality! The sooner you realize this, the better you’ll be able to understand the truth.

    YOU: Here you American socialist communist wannabe fools. This is Yuri N. Maltsev, enjoy:

    ME: Am unaware about this person, am not from U.S. There are many such people who call themselves Soialists/Communists but must never had even touched Marx’s Capital. Making judgements from such people’s views is incorrect.

    YOU: Oh, and to answer your question YES I have read Mises Human Action, and am now studying from Rothbard’s works. I have also studied from several others such as Hayek , and NOT TO LEAVE OUT MARX himself ! As I said before I HAVE read Das Kapital as well as The Communist Manifesto!

    ME: Idiot, its called Capital, stop calling it by its German name, will you?! It makes no difference even if you read 1000s of pages. The question that must be raised is: Do you think it is absolutely fine to subject Organic creatures like humans to the Demand and Supply rhetoric? Do you think you are not as good as your capitalist employer is? Do you think that Labour class is a mere factor of production who must be left free for capitalists to use as they deem correct(and you’ll call this voluntary contracts, won’t you?!)? Don’t you think it is obscure that a tiny fraction of total population controls the factors of production, while majority(80-85% or even more- including you) is treated as a mere resource to be used subject to market condititons? Do you know private property is based on “Aggression, corecion and Force”? Do you think its absolutely fine to own a property for production which is enforce by the State(or in your Rothbardian fantasy by Private competing entities- though the quesiton of whether there will be such entities at the first place and whether they’ll really not kill, loot, murder people instead of competing is open to debate)? Lastly, do you think its correct to own a natural property like Land? And if yes, then you too support force, corecion and aggression. By the game of lcuk, those who could acquire it will live a wonderful like for coming generations and those who couldn’t will sell labour and “struggle” daily like you, me and even this blogger!

    YOU: Marx’s works are fraught with economic fallacies, utopian imaginations as well as underscored with envy and resentment. The latter two, as I said before, are the underpinnings of the psyche behind socialism and why some fall to its errors.

    ME: Wrong again! His work is based on the condititons of the time he was writing. When Industrial Revlution emerger, it was through force and fraud that large tracts of land was acquired- both by the state and the crony capitalists then. He was a product of modern capitalism, when newer technologies like Steam engine, etc. were emerging. He could forsee Industrial Capitalism and the devlopments that would bing. you haven’t read him correctly, but with a lot of prejudice and jaundiced ideas-like the Austrian ones! His analysis of the Joint Stock companies are wonderfully illuminating even today, his analysis of the working day, etc. is by far the most detailed discussion of a law in terms of its effects on the Labour class. It was not envy and resentment, it was the hatred for the ezploiting class which any of us would have developed if we were at this place. About Economic fallacies, you can bring it up on this blog and you’ll be replied. Stupid assertions don’t make anything true. Bring on the Economic arguments one by one and you’ll get the answers here by the bloggers.

    YOU: I take it you are “educated” and angry and bitter about not having enough work, maybe? You sound like the type. Having to pay back the student loans maybe? If that is the case, you made a bad investment in your “education” because you forgot to learn how to survive and thrive if this is all you do with your time…spreading socialist dreams of utopian communism. It’s actually funny people actually still think it can happen even with every historical note of any version of socialism proving a total failure. You guys are freaking funny!

    ME: Nope. Am from a wealthy family, capitalist class indeed! Am not from U.S. My education has been wonderful. have done quite a many jobs, now preparing for competitive exams. Her let me point another fallacy, Why the hell should we- including you struggle and survive while your capitalists don’t have to? And I ask again, do you think you are no better than your employer? Do you think the majority of labour class is a mere factor of production and the capitalist class is some God sent angel who will generate jobs? Why the hell should I, you or naybody be at the mercy of these capitalists to “generate” jobs for us so that we can live, feed our families? Why can’t we ensure our children a better future without struggling like dogs and cats while the capitalist class hardly has to worry- of course except worrying about the risk involved in the business- which is what they have to, to continue being capitalists and not get their assess rubbed up like we labourers do?

    And even you’re thriving for a Rothbardian sham, aren’t you? Let me say this, have your rothbardian utopia come real, then you’ll be the first one to run to Marx and re read him to understand the truth better. Marxists are always eager to have a Rothbardian fantasy come real, my complete support to you, have it and lets see what happens.

    YOU: Well I guess they didn’t teach you that all the education in the world won’t replace the entrepreneurial spirit which brings you all the things in life that support and aid the human condition and this action cannot be replaced by force and compulsion. That without the promise of gain and private ownership none of thee things will come about for you to trample with your whining and crying about being exploited.

    ME: Wrong. You call it a product of Entrepreneurial spirit, I call it the product of numerous Labourers. Even your entrepreneur is a Labourer, isn’t he?! But the question is, how the hell is he able to undertake his/her entrepreneurial spirits? Because he has the factors of production under his ass. you remove it and see what he/she can do. And how can he get these FoPs, by the very state which you hate so much. Without a centralized ownership of Land, Capital, etc., who will sell you those key elements of undertaking the capitalist production?! And are you really so naive to belive ein something like Natural rights?

    YOU: Good luck with your communism.

    ME: Thanks! Good luck with your Rothbardian utopia too!

    YOU:Oh, BTW, the video I am referring to is the very first on e at the top of this page:Law of Value 8: Subject/Object. Here, I’ll get into a bit more detail in critiquing your work. In this quotation from your above article and video:
    ” People make value judgements, judgements which are not measurable or quantitative. Just because we use the same word, value, for both phenomenon doesn’t mean that they are the same thing or that there is any relation between the two at all.” This actually describes subjective value to some degree the system of though you are admonishing any workable theory of.

    ME: You monkey! The blogger is clarifying that value of a commodity is NOT the product of your subjective value judgements in your head. He has put these lines under the heading: a point of clarification. You bring really worth looking at arguments, before that, learn to read what has been written is which context!

    YOU: This idea is about choice and your illustrations are mostly fixed in contemporary scenarios. Again you and I have not truly been living within a purely capitalist system. It may seem like a semantic issue but thanks to the current fallacious misuses of the word “capitalism” we have this Orwellian confusion all over the place.

    ME: Right. We haven’t lived in a purely capitalist system(and btw there’s nothing like system, as Hayek would argue, markets are Organic!) because this is what Capitalism is in reality. Accept it, your fantasy notions won’t change this fact. Moreover, how can You, I or anybody- including Rothbar, can define Capitalism or any other economic system? To defend your views, you have to prove that there’s no true capitalism as the state’s there! Bring something better and worth taking seriously except apologizing for Capitalism.

    YOU: We might actually begin to agree if you at least realize that what we have here is crony-capitalism, or political entrepreneurship, where the politically connected are favored through a money monopoly, e.g., central bank and concomitantly it’s complimentary legal tender laws. The money, or I should say currency, problem is another area of concern for anyone wanting to discuss what real capitalism (from the Austrian perspective) actually is.

    ME: Brutally worng. As I said above, how the hell you or me or Austrians can define Capitalism? Its given. Private property, voluntary contracts, wealth accumulation, etc. are the important features and they exist today. This is exactly the way an Anarcho-cap tied to brainwash me by saying there’s nothing like true free-market capitalism out there. Nice way of fooling, but it won’t work here. Politics is the undeniable truth of life. You remove the state- am with you, but what guarentee do you have that there won’t be power mingers any more? Are you so naive to believe that another hitler won’t take birth. Don’t you see the condition of societies where Governments are weak and unstable- Nigera, Somalia, Libya, Syria,etc.? Do you even understand that Power today is the “basic” necessity of humans? Are you so naive to believe that in your Rothbardian fantasy, ther won’t be crisis in Capitalism(true free-market one)? Do you really believe that your capitalists will be able to avoif knightian risk and uncertainity? Do you really believe that the Private entities you’ll have to construct to replace the state won’t suppress you and me and other s and form a nation-state? Why do you believe in such idiotic notions. You’ll only waste your time if you continue taking Rothbard seriously.

    YOU: There are several confused and contradictory statements that you make within just the first few paragraphs which have me as perplexed as the very confused writings of Marx is with his economic analysis.

    ME: You’re indeed confused, because you don’t understand Marx’s analysis. If you did, you wouldn’t waste your time in the apologia of capitalism and rather undertake serious study of marx again. You start with David harvey’s “Companion to Marx’s Capital” along with Marx’s Capital-Volume 1. And Stop trying to save your face. I’ll being out one more fallacy of yours soon below.

    YOU: I simply want to see intellectual clarity and honesty. You could either be confused or you are misinforming those who you may hope to have follow you.

    ME: No one’s misinforming you. Why do you believe common people to be so naive that they’ll get carried away by any sort of false propaganda? You yourself are unclear about your views and keep rambling the same Libertarian propaganda that I used to confront daily some time ago. Put all the onus of whatever is bad on the state, and your capitalism is saved! Its my challenge, go and establish your fantasy in real, then we’ll see who was right and who was’t.

    Again ME: Lastly, you may note that Mises had a different view on Government:
    “There are people who call government an evil, although a necessary evil. However, what is needed in order to attain a definite end must not be called an evil in the moral connotation of the term. It is a means, but not an evil. Government may even be called the most beneficial of all earthly institutions as without it no peaceful human cooperation, no civilization, and no moral life would be possible. In this sense the apostle declared that ‘the powers that be are ordained of God.” (Mises 2007: 57).

    Read Mises well first, then take on Marx! If you’re really serious about searching for the truth, grasp Mises rather than Rothbard. And read Marx again, being with Harvey and Mandel’s intro. You’ll find the latter on and the former by googling it up.

  18. Steve Law says:

    “ME: Thanks! Good luck with your Rothbardian utopia too!”
    There can be no utopia and Austrians do not claim that there will or can ever be. Yours would not be mine.

    Again if socialism was such a great advancement I wonder why every version of it must be enforced through force or compulsion as opposed to voluntarily because if I actually HAD a choice I would choose my charities, or not, it would be my CHOICE. And today, it isn’t, I have NO CHOICE but to continue paying for failing social experiments.

    For the most part, again, what the Austrians support for the most part (and of course there some divisions in the Austrian school of thought) is voluntary market order. It’s simple, you can paint it how you want. But voluntary market order would not involve state compulsion or force, locally OR globally.

    “ME: As I said above in my reply to youm, you haven’t read Marx! Even an amateur of Marxian Economics knows that Marx was an “Anarchist”.”

    Marx was an anarchist? Really? A statist anarchists then right? Because what he was after required state enforcement, no way around it, otherwise, as I made the point before these circumstance you mention would come about naturally through society no? That’s insane. Every attempt at social planning has resulted in the same thing throughout history. Marx was not reinventing the wheel. You guys are out of your minds.
    It’s always the same. Socialism isn’t working quite well enough therefore we need to try a little more.
    You guys are hopeless.

    You still never addressed what I said about your contradiction on subjective value.

    Delete my videos and posts as “off-topic”… ? You could at least have left them so all of what I asked you was still there for your cronies to see and maybe ask the same question.

    • lifeisgood says:

      YOU: There can be no utopia and Austrians do not claim that there will or can ever be. Yours would not be mine.

      ME: Prove your points. You speak a lot, without giving any justification of it whatsoever. Rothbardians among the Austrians do claim a Utopia, where no state is needed, private competing entities shall provide every thing that state gives today. You don’t need a Doctorate to understand this simple fact.

      YOU: Again if socialism was such a great advancement I wonder why every version of it must be enforced through force or compulsion as opposed to voluntarily because if I actually HAD a choice I would choose my charities, or not, it would be my CHOICE. And today, it isn’t, I have NO CHOICE but to continue paying for failing social experiments.

      ME: No. Again, the same old rambling about Taxes. Yes, you have choices, maybe Libertarianism is making you an idiot. You have following choices:

      1. Leave your country, go somewhere else.
      2. Purchase a land, establish your Rothbardian fantasy there.
      3. Form a group of similarly thinking idiots, then gather some capital, purchase a land and start a Libertarian nation there.
      4. Don’t pay taxes, get jailed and show your protest against the state if you’re really against the State.
      5. Work harder, purchase a space ship, leave our Earth!

      YOU: Marx was an anarchist? Really? A statist anarchists then right? Because what he was after required state enforcement, no way around it, otherwise, as I made the point before these circumstance you mention would come about naturally through society no? That’s insane. Every attempt at social planning has resulted in the same thing throughout history. Marx was not reinventing the wheel. You guys are out of your minds.

      ME: Yes, he was! Of what kind an Idiot you are, will you please clarify? He was an anarchist. And what is statist anarchist?! Are you in your conscious intellect while making such absurd claims! Communism, according to him, will have the state whither away.

      Some basics: There are either Anarchists(no state, no religion, no caste, etc.), Anarcho-capitalists(Rothbardians & others), Anarcho-communists. You say you’ve read Marx and yet are unaware of this simple fact? As such what else to expect from Libertarians.

      YOU: It’s always the same. Socialism isn’t working quite well enough therefore we need to try a little more.
      You guys are hopeless.

      ME: Capitalism is failing you buffoon! Having a state doesn’t mean its Socialism. The modern states today foster capitalism, wherever possible. IMF, WB, etc. are all the manifestations of capitalist ambitions. These institutions force free-market madness among the developing nations. A dismal failure though. Anyway, you’ll not understand, your replies really generate deep concerns in me for you.

      YOU: You still never addressed what I said about your contradiction on subjective value. Delete my videos and posts as “off-topic”… ? You could at least have left them so all of what I asked you was still there for your cronies to see and maybe ask the same question.

      ME: Am a guest visitor, not the owner of this blog!
      You’re avoiding all the numerous questions I’ve asked you in my previous replies, you haven’t replied even one question of mine.

      On behalf of the blogger, I replied your obscure question of the contradiction. Am putting it here again from my previous replies to you; Here it is:
      ME: You monkey! The blogger is clarifying that value of a commodity is NOT the product of your subjective value judgements in your head. He has put these lines under the heading: a point of clarification. You bring really worth looking at arguments, before that, learn to read what has been written is which context!

      And I haven’t deleted your videos as am not the blogger you’re assuming me to be. Am repeating again- am a guest visitor, not having no involvement with this blog. Now don’t make such stupid assertions without reading well, again.

      Well, and nice way of diverting the entire discussion. Reply to every single question I’ve asked you in my previous replies. Lets see what you have to offer other than straw-men and ad hominems.

      Lastly, stop making noise when you can’t give any single coherent point, argument or even a reply to the many things put forward by me. your utter ignorance about even Mises’s views shows you’re only wasting everyone’s time here, go and read some literature first. I have scarce time, kindly do not waste it by putting brazen & childish arguments. Regards.

      • lifeisgood says:

        Forgot to add: You are plagued with ‘Socialism vs Capitalism only’ fallacy. That’s an age-old Libertarian tactic to avoid any sort of genuine intellectual debate. You should be aware of the fact that there are many variants other than the two extreme sides: For eg. Market Socialism, Libertarian Socialism, Anarcho-communism, Trusteeship based society and many more. This is one more fallacy you’re breeding in your brain which will deter you from making any credible arguments as is the case with you right now. And am worried about it as there are already many such self-proclaimed Austrians out there who do not even understand their own school of thought correctly. Also, there’s nothing like free-market, every market has its own restriction and rules. Even in your utopia, you’ll have to enforce rules and regulations- even if by Private competing entities.

        Suggested reading(Basic)- 23 things they don’t tell you about Capitalism by Ha-Joon Chang. You’ll find it on amazon, or your favourite online book store; you might like it! Anyway, put credible arguments only or else I won’t be wasting anymore time on you.

        — Regards.

  19. Steve Law says:

    Alright, I’ll leave you guys alone, I’m already bored anyways…

  20. Steve Law says:

    Here’s a much more precise example of the “island” theory presented at the end of video 1 above:

    • Steve,
      This video you post seems to be completely in accord with the description “crusoe-nomics” that I offer in my video. You have wasted a lot of energy making vague accusations about me getting my description of Austrian econ wrong, being full of contradictions and inconsistencies, yet you have not given one example of this. Please give a precise critique or go away.

  21. lifeisgood says:

    Dear Brendan, I had a suggestion. Why don’t you think of publishing the “Law of Value” series as a pdf book[online, free of cost] & a priced hard copy? You can easily convert the text into pdf and put it on your site. That would be splendid!

    Do give this a second thought.


  22. Matthew says:

    Hey Brendan, I just have a few questions on Marxism and the subjective theory of value.

    As far as I can tell, the double inequality of exchange is the fundamental difference between Marxists and so-called “Subjectivists”. Marxism doesn’t really preclude the “subjective theory of value”, as you have shown; however, the purpose of the double inequality of exchange is to render the LTV unnecessary. Under the double inequality of exchange, the supposed equality between goods, which makes the labor part of the LTV necessary, is nonexistent. Any supposed equality is actually just an arbitrary side effect of this inequality. For example, the fact that 3 pies exchange for 2 apples could be because some guy just values 3 pies less than 2 apples, and vice versa. The equality is nonexistent. I’ve read your blog and in it you state that the double inequality is talking about something other than exchange value, which is true. Rather, the DIE is saying exchange value is really nonexistent, and it’s an illusion which comes about as a result of the DIE. The double inequality of exchange isn’t wrong, but why is the LTV necessary? The LTV doesn’t preclude the DIE, in other words, but what does it add?


    • MrEverpresent says:

      No, because Marx showed that value is intrinsic to the commodity. I cant summarize the complexity of Marx in this text box. The exchange value of the 3 pies IS the 2 apples for which it exchanges. Value as exchange value IS the other commodity, the physical body of the other commodity.

      • Matthew says:

        From what I’ve read, Marx’s intrinsic value argument was based on the fact that goods exchange for each other in certain ratios, and thus there’s something intrinsic to both which is being compared. The double inequality of denies there’s actually any equality because the exchange ratios are just a side effect of their unequal utilities to buyers and sellers. Marxists don’t deny the double inequality of exchange, but charge that it can’t explain the equality of exchange ratios. I wanted to know what their arguments were.

        I haven’t read that Kilimanjaro article yet, so thanks for that.

        Looking into bourgeois economics is important because we need to establish the superiority of Marxian analysis.


    • MrEverpresent says:

      This text will help you emancipate ( You don’t to lower yourself and use bourgois theories. They will make you feel like Plato in his cave.

    • First, I wouldn’t say that the double inequality of exchange vs. the concept of exchange as a zero-sum game is THE fundamental difference between the two schools of thought. I’d say (as I do in my video Subject-Object) that this theoretical difference is the result of methodological differences and that these methodological differences are at the heart of the real differences between the two.

      Secondly, subjectivists do not deny that there is such a thing as prices or money. They acknowledge that these are measurable objective magnitudes. They just claim that these magnitudes are the result of an aggregate psychological processes of individual choices and that there is no other social processes needed to understand the formation of these objective magnitudes. But often the language is confusing and so we miss the fact that if there are clear objective magnitudes of money moving around that this means that in the sense Marx is using the term, exchange is an exchange of equal quantities of EXCHANGE VALUE, regardless of what the subjective utilities are in the transaction. By conflating utility and exchange value many confusions happen and people often talk past each other. In my opinion, the theory by which subjectivists attempt to explain objective exchange value through subjective utility is fatally flawed. I also believe it rests on faulty and inherently reactionary methodological foundations. This I discuss in many posts:
      “Value Can’t Be Created in Exchange”
      “A Review of Simon Clarke’s Marx Marginalism and Sociology,”
      “Buhkarin on the Subject-Object Debate”
      and my videos
      “Production and Exchange”
      “Subject Object”

      When you ask “Why is the LTV necessary.. what does it add?” I think this is a good question. First, the LTV is an explanation of a real world process, the process where labor is distributed/allocated between tasks through market exchange. So it’s not just a matter of selecting a theory that we “need”. In the real world social labor must be distributed in some way. In a market society this is done in the market when the products of that labor exchange with one another. The prices formed in this process act back upon production distributing labor from one task to another. If there wasn’t some relation between money prices and labor time there would be no way for society to carry out this process. The LTV attempts to explain this real process. The STV (subjective theory of value) doesn’t attempt to explain this process because its method deliberately abstracts away all questions of production and treats economics as a study of the way personal desires relate to consumption. It abstracts away from the labor process as distinct from consumption, conflating the two as just “human choices” and thus abstracts away from all social relations of production, like the fact that capitalists own production and laborers have to sell their labor to capitalists in order to be able to buy their desires in the market. (Yes of course subjectivists talk about production later in their theories but production is not part of the basic theory of value for them.)

      Because the question of the allocation of labor through commodity exchange sits at the heart of Marx’s theory of value this allows him to identify the unique characteristics of capitalist productive relations that makes such a system unique from other social organizations: private ownership of the means of production which turns the bulk of the population into wage laborers who must sell their labor power as a commodity. When labor power becomes a commodity it can be easily distributed through society in response to market signals. This means that the theory understands that capitalist property relations and the capitalist state that enforces them are part of this whole process, and that these are unique historical forms of social organization that haven’t always existed and don’t have to exist in the future. In contrast, the STV abstracts from all historic specifics in order to make capitalist social relations look eternal and universal.

      There are many different approaches Marxists have taken to answer the question of why we know that labor is the content of value: why machines and animals can’t create value, why utility can’t value, etc. I’ve actually been pondering a blog post outlining some of these approaches and commenting on them. Perhaps I’ll throw out some here and see what folks think….

      1. Unique physical characteristics of labor. Sometimes you will see claims that there are unique things that human labor can do that machines, animals etc can’t do and that these unique qualities are what makes labor the content of value. There is an ongoing debate happening right now on the Outline of Political Economy listserve (a closed list serve of Sraffian, Marxish and other ‘left’ economists on this topic at the moment. click the link to read the archives of this debate.) Some of the folks on OPE have argued this position which surprised me since I always thought that this position was a dead end. Machines replace human labor all of the time. The only unique thing about human labor is that is can refuse to work which makes labor a social issue not a one of physical traits. If machines could refuse to work then they too would be social creatures and their work would be labor. For an essay on this point see Tess Morris Suzuki’s essay in the book “Cutting Edge” edited by Jim Davis.

      2. Analytic proof. In chapter one of vol. 1 of Kapital, in the opening pages, Max provides an Analytic proof of the why labor is the only thing that can be the content of value. Some call this Marx’s ‘3rd thing argument’. I more or less use this logic in my video Law of Value 4: Value. This is the topic of the Kliman essay that Mr. Everpresent linked to above. Kliman makes the best defense I have read of this analytic proof. Many others derive this analytic proof as BS philosophy claiming that there are many other common traits of commodities that could be considered the common substance between all commodities. Isaac Rubin (in the fantastic book “Essays on Marx’s Theory of Value”) accepts that there are problems with Marx’s analytic proof but says that if we take into consideration Marx’s larger methodological approach that we can still salvage the argument. Nicole Pepperel (in her recent dissertation) says that Rubin and Kliman miss joke…. that Marx is playing with his readers in these opening pages, offering cynical homage to various philosophical approaches all which he relatives/critiques as the text evolves and that eventually, when he gets to the fetishism argument we start to see the real Marxist approach to the question evolve. I have found Pepperel’s arguments pretty compelling at times.

      3. Method. People like Rubin and Hilferding, as well as some on the OPE listserve linked above, take the position that we can justify labor as the content of value if we justify Marx’s overall method: that he sees societies as ensembles of social relations of production and that we must understand the allocation of labor and the social relations that it is based on if we are to understand what is unique about a society. I largely agree with this approach. Yet I think we still have the challenge of needing to provide precise linkages between this wide methodological approach and the precise question at hand: why labor is the content of value. Specifically: could be allocated through commodity exchange but other things could also ‘create value’ as well and be allocated through exchange. So we need further specification here. That being said, from the perspective of developing radical political positions I think understanding Marx’s method is the most important thing, and the details can be left to the theory dorks.

      4. Real Abstraction. Many folks point to the fact that Marx’s abstractions are based on the real abstractions that capital itself makes. Rather then being arbitrary abstractions at the whim of philosophers (like the ‘praxeology’ of Mises) Marx is following the actual real world abstractions of capital. Capital is a system based on abstractions. Value itself is abstract. Marx eventually reveals that the source of this abstraction if not just any labor but abstract labor and that this requires a working class deprived of specific means of production and reduced to generic inputs into the profit calculator of capital. I think that on this point many of the above approaches converge. Pepperell and Rubin both point toward this point even if the specifics of their approaches diverge. Kliman, while he insists on the validity of Marx’s analytic proof, still holds abstract labor as the fundamental abstraction that grounds value. I write about this in the scripts for my upcoming videos on abstraction.

  23. Matthew says:

    Kilimanjaro – HA

    I wrote that from a mobile device. Autocorrect never ceases to amaze me.

    • MrEverpresent says:

      Yeah, that was really funny. I think you are right about the bourgeois economics. Comparing both perspectives is important.

  24. MrEverpresent says:

    -> “The Subjectivist Vacuum, or, Pay No Attention to the Man Behind the Curtain”

    I noticed that Marx in his notes on Adolph Wagner also gives a critique of modern Bourgeois economics. Very interesting notes. He also repeated that eating, drinking etc. are the real basis of society. His conception of materialism seems consistent from 1847 onwards.

  25. steve says:

    “Capital is the active subject and people its object. This is what Marx means by “subject/object inversion.” Rather than people being the active agents of the social order it is the “objective” logic of the market that dominates subjects. Blind economic laws rule and people obey.” Ugh. This is the most vulgar & crude interpretation of Marx possible. It’s worse than the orthodox marxism critiqued by Laclau & Mouffe in ‘Hegemony & Socialist Strategy’ — but their criticisms are extremely applicable here.

    In fact, I suggest people look at that book, especially the first chapter or so, to learn much of what is wrong with this formulation — at least from the perspective of an immanent critique, which does not get into arguments about what Marx actually wrote, said, or meant. For the latter, I strongly recommend Derek Sayer’s superb little book, ‘The Violence of Abstraction: The Analytical Foundations of Historical Materialism,’ freely available at (thankfully, because the few remaining bound copies sell for around $100 or more)

    And, for an alternative view regarding the claim that capital is now the subject, read some of the earlier texts by Tronti & Negri, who argue that capitalism is dynamic and transforms itself on a regular basis *in response* to worker resistance! (Resistance can express itself in all sorts of ways too, including quitting, tardiness, absenteeism, sabotage & pranks, complaints & constructive criticisms to bosses, collective actions & organizing, negative media coverage, etc.)

    • Thanks for the comment. Criticism is always welcome, especially constructive criticism. Would you mind explaining specifically what is ‘vulgar’ about referring to subject/object inversion in this manner?

  26. mreverpresent says:

    Brendan, the masses are dying for a new kapitalism101 video. I know this because I heard it through the grapevine. They need more joy in their life.

    • Thanks for the word from the masses! My current plan: finish writing a book. Then possibly remake my law of value video series to reflect the improved formulations that I arrive at in the book. Apparently writing a book is hard work. It is taking me awhile.

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