Toward a Capital Theory of Value

David L. Prychitko addresses the labor theory of value:

The labor theory of value is a major pillar of traditional Marxian economics, which is evident in Marx's masterpiece, Capital (1867). Its basic claim is simple: the value of a commodity can be objectively measured by the average amount of labor hours that are required to produce that commodity.

If a pair of shoes usually takes twice as long to produce as a pair of pants, for example, then shoes are twice as valuable as pants. In the long run the competitive price of shoes will be twice the price of pants, regardless of the value of the physical inputs.

The labor theory of value is demonstrably false. But it did prevail among classical economists through the midnineteenth century. Adam Smith, for instance, flirted with a labor theory of value in his classic defense of capitalism, The Wealth of Nations (1776), while David Ricardo later systematized it in his Principles of Political Economy (1817), a text studied by generations of free-market economists.

So the labor theory of value was not unique to Marxism. Marx did attempt, however, to turn the theory against the champions of capitalism.

Now, I would not posit a parallel theory of value in which capital is central. But I will posit a capital theory of value along these lines:

1. A broad array of capital goods (e.g., metal presses and railroad cars) will produce the same outputs (e.g., auto body parts of a certain quality and a certain number of passenger-miles) despite wide variations in the intelligence, education, and motor skills of their operators.

2. That is to say, capital leverages labor (especially unskilled labor).

3. Rewards justifiably -- if unpredictably -- flow to those who invent capital goods, innovate improvements in capital goods, invest in the production of such goods, and take the risk of owning businesses that use such goods in the production of consumer goods and services.

4. The activities of those inventors, innovators, investors, and entrepreneurs constitute a form of labor, but it is a very special form. It is not the brute force kind of labor envisaged by Marx and his intellectual progeny. It is a kind of labor that involves mental acuity, special knowledge, a penchant for risk-taking, and -- yes, at times -- hard work.

Without capital, labor would produce far less than it does. Capital, by the same token, enables labor of a given quality to produce more than it otherwise would.

Vive le capitalisme!

The Censored Wisdom of T.S. Eliot

Eliot, unfortunately for us, censored himself on at least one occasion. Virginia Quarterly Review explains:

In May 1933, T. S. Eliot delivered three lectures at the University of Virginia, as part of the Page-Barbour Series. By Eliot’s own description, these lectures were intended as “further development of the problem which the author first discussed in his essay, ‘Tradition and the Individual Talent.’”...

[T]he lectures, gathered in Spring 1934 as the slim volume After Strange Gods, have gained most of their notorious reputation, because they contain some of the strongest evidence of Eliot’s intolerance for non-Christian religions and his blatant anti-Semitism. At one point, he declared that, “The population should be homogeneous; where two or more cultures exist in the same place they are likely either to be fiercely self-conscious or both to become adulterate. What is still more important is unity of religious background; and reasons of race and religion combine to make any large number of free-thinking Jews undesirable.”...

Barely a decade later....Eliot had grown leery of having his remarks published in post-Nazi Europe. Eliot withdrew After Strange Gods from publication, and it has remained unavailable ever since.

[O]ne of the lectures, “Personality and Demonic Possession,” appeared in VQR in January 1934.... The following essay is decidedly the least incendiary of the three Eliot delivered at Virginia; however, even here it is clear the degree to which his dogmatic artistic beliefs have blurred into social intolerance.

VQR, being a publication with academic pretensions, evidently takes the position that to it amounts to "social intolerance" when someone has coherent literary and social standards -- as opposed to the morally relativistic stance that all ideas and cultures are created equal. What VQR calls "social intolerance," is really a defense of the kind of civility and civilization that enables VQR and its ilk to survive, which it would not have done in the USSR or could not do in the Caliphate.

Recent events in Europe -- and long-term trends in the United States -- attest to the wisdom of Eliot's statement that "where two or more cultures exist in the same place they are likely either to be fiercely self-conscious or both to become adulterate." That really is an understatement, given the barely contained (and sometimes uncontained) state of tension (and sometimes violence) that exists where whites, blacks, and tans rub together in the U.S., and where Muslims and non-Muslims rub together in Europe.

Eliot does go too far in his emphasis on religious homogeneity. Jews certainly can be and have been staunch defenders of Western civilization -- by which I mean a republican government of limited powers; respect for the rule of law; and, underpinning those things, rationality as opposed to emotionalism in political and civil discourse. But it must be said that many Jews (along with many more non-Jews) have been prominent among those who advance and fund ideas that are inimical to Western civilization. But the failings of those particular Jews cannot be laid to Judaism, else the failings of their non-Jewish brethren could be laid to Christianity.

In any event, here is what Eliot has to say about emotionalism, on page four of "Personality and Demonic Possession":

[E]xtreme emotionalism seems to me a symptom of decadence; it is a cardinal point of faith in a romantic age to believe that there is something admirable for its own sake in violent emotion, whatever the emotion or whatever its object. But it is by no means self-evident that human beings are most real when most violently excited; violent passions do not in themselves differentiate men from each other, but rather tend to reduce them to the same state.... Furthermore, strong passion is only interesting or significant in strong men; those who abandon themselves without resistance to excitements which tend to deprive them of reason become merely instruments of feeling and lose their humanity; and unless there is moral resistance and conflict there is no meaning. But as the majority is capable neither of strong emotion nor of strong resistance, it always inclines, unless instructed to the contrary, to admire passion for its own sake; and if somewhat deficient in vitality, people imagine passion to be the surest evidence of vitality.

Thus do demagogues dupe the masses.

A Provisional Summing Up

Liberty arises from mutual respect and forbearance. Those who would live in liberty therefore bear a super-contractual obligation -- a societal obligation. It is an obligation to treat others as those others would be treated, in the expectation that those others will reciprocate that respect and forbearance.

State power erodes the societal bonds upon which liberty depends. The possibility of attaining gratification through the exercise of state power tempts us to use the power of the state to treat others coercively. As subjects of the state we develop the habit of looking to the state for guidance about proper behavior, instead of consulting our consciences and our fellow men.

One misuse of state power leads to another, eventually destroying the fragile bonds of mutual respect and forbearance that undergird liberty. We have followed this slippery slope in America. Our slide into statism began in earnest with with Teddy Roosevelt's "Square Deal," accelerated with Franklin Roosevelt's "New Deal," and has been compounded since through the steady accretion of power by the central government.

The Universe . . . Four Possibilities

UPDATED, BELOW

1. Everything just is -- without an outside cause or overarching design. Scientists claim to find "laws" governing the behavior of matter, energy, time, and space. But such laws only partly explain the universe; there is no grand unifying theory of everything. And those laws are subject to change as science unveils new aspects of matter, energy, time, and space -- as it does continuously.

2. Same as 1, but the sum of everything is a "cosmic consciousness," akin to the consciousness that seems to emerge from the disparate parts of the brain. Being "in tune" with the cosmic consciousness is a "gift" that entitles its self-anointed recipients to pass judgment on the behavior of those lesser mortals whose actions are out of step with the cosmic consciousness.

3. Similar to 2, but instead of a "cosmic consciousness" there is a "cosmic balance." The "right" balance is, of course, known only to the self-anointed high priests of environmentalism and animal rights. In their reckoning, human beings have no special place in the scheme of things, and may not even be a necessary part of the "right" balance. Their natural allies are those who deny the superiority of Western civilization, the importance of the Judeo-Christian tradition to the development of that civilization, and the particular importance of the Constitution of the United States (in its original meaning) as a bulwark of that civilization in one of its most secure bastions -- the United States of America. Ironically, extreme libertarians (i.e., anarcho-capitalists, or market capitalists) and Objectivists (their close correlates) -- both of which groups disdain the high priests of environmentalism and the enemies of Western civilization -- also hew to a belief in a "cosmic balance," given their insistence that rights are Platonic essences that simply exist without the benefit of human efforts to secure them through politics and war.

4. There is an external force or consciousness that brought everything into being. That force or consciousness may merely have set things in motion, or it may play a continuing role in some or all aspects of existence. The intentions of the external force or consciousness are known to religionists, by revelation and/or faith; science is inadequate to fathom those intentions or to prove that the universe conforms to an underlying "design." Those who reject this fourth possibility as "unscientific" -- that is, most scientists as well as the typical libertarian/Objectivist -- can do so only by accepting one of the equally unscientific (i.e., untestable) possibilities outlined above.

To be continued . . . perhaps.

UPDATE

In "Existence and Creation" (May 20, 2011) I refine these four possibilities and add a fifth.

People Are Idiots

The proof is found in the lede of an AP story:

People overwhelmingly support two of the Democrats' top goals — increasing the minimum wage and making it easier to buy prescription drugs from other countries....

Increasing the minimum wage will hurt the class of persons it is intended to help. There will be fewer jobs (or worse working conditions) for those unskilled workers who now seek employment, and even fewer jobs for succeeding generations of unskilled workers.

Making it easier to buy prescription drugs from other countries will result in (a) fraudulent sales of inferior substitutes and (b) less R&D by American drug companies. Those results will harm the consumers of drugs.

As I say, people are idiots.