The Economics of Kenneth Arrow • Hacker News Board

Re: The Economics of Kenneth Arrow

#31

Post by claudiawerner » Wed, Aug 28, 2019, 10:58 PM UTC

QuesnayJr wrote: post #29

ebog wrote: post #20

Earlier quoted context omitted.

It seems like an ok reading of the history on first glance but it is the Marxist perspective. I suppose necessary to understand the heterodox viewpoint. > So central to capitalist reality is this motor of growth that it lies behind both imperialist conquest and the launching of those periodic prolonged booms of which the Belle Époque and the post-war Golden Age are the most recent examples. This is a pretty ridiculou…

Marxist value theory basically died out in the 70s, which Freeman basically concedes in the "The Marxists Divide" section. His TSSI is an attempt to resusitate the theory, but it has found few adherents.

It is worth noting that the TSSI isn't the only one around any more, though - nor is the strictly quantitative interpretation of value theory. The TSSI was constructed as an interpretation to solve the transformation problem, but there's Dumenil's New Interpretation now and Fred Moseley's Macro-Monetary Interpretation. It is not surprising that Freeman would make such a concession as an economist rather than as a philosopher, where Marxian value-form theory flourished in Germany and Japan during the 70s and 80s and still to this day.

Re: The Economics of Kenneth Arrow

#32

Post by QuesnayJr » Thu, Aug 29, 2019, 10:41 AM UTC

claudiawerner wrote: post #30

QuesnayJr wrote: post #28

Earlier quoted context omitted.

The subjective theory of value is just that if people think something has value, then it has value. For a Marxist, telling people they are wrong about their subjective judgements is irresistable, so I can see why they strongly reject it. Value theory was entombed by Marx' followers. Marx offered a theory that was a) a positive theory on how the economy functioned, b) a normative theory on why capitalism was immoral,…

>The subjective theory of value is just that if people think something has value, then it has value. For a Marxist, telling people they are wrong about their subjective judgements is irresistable Marxists do not, in fact, tell people that they are "wrong" about subjective judgements, but they do say that you are wrong to say that my house is $1 even if it is valued at $100k. You are free to value it at $1. Further, b…

"c" is as decisively refuted a claim as any in history. The Jehovah's Witnesses have a better case that their claim that the world would end in 1914 came true.

Value theory is an intellectual dead end, one that ultimately doomed Marxist economics. That's why it's necessary to say it's not about any of the things that people thought it was about for the first hundred years, but different things that suddenly became important post-Sraffa. That's why it's necessary to say that Sraffa was "missing the whole point of the theory" -- because Sraffa ultimately killed the theory.

The standards in philosophy and the social sciences are different. A philosopher can proclaim that the English Civil War or the Glorious Revolution were the result of class struggle. A historian has to actually get in there and study the evidence, and up close grand narratives tends to fall apart.

Re: The Economics of Kenneth Arrow

#33

Post by Matticus_Rex » Thu, Aug 29, 2019, 4:48 PM UTC

claudiawerner wrote: post #24

Matticus_Rex wrote: post #22

Earlier quoted context omitted.

It... is? The difference is that the labor theory has been thrown out as unsalvageable, whereas expected utility theory is useful enough in some theoretical applications to stick around.

The question is whether the grounds upon which it was thrown out (which relate to specific problems) are therefore sufficient for it to be "unsalvageable". Nonetheless, as I already mentioned, the pretension that economics lacks normative content gives the false impression that ideas must be discarded because they are not scientifically valid rather than for ideological reasons.

That's the thing, though -- the labor theory isn't just "not scientifically valid." It clearly doesn't describe what is -- it's not how people value things, and it doesn't make sense as a description of what ought to be.

Re: The Economics of Kenneth Arrow

#34

Post by claudiawerner » Thu, Aug 29, 2019, 7:13 PM UTC

Matticus_Rex wrote: post #33

claudiawerner wrote: post #24

Earlier quoted context omitted.

The question is whether the grounds upon which it was thrown out (which relate to specific problems) are therefore sufficient for it to be "unsalvageable". Nonetheless, as I already mentioned, the pretension that economics lacks normative content gives the false impression that ideas must be discarded because they are not scientifically valid rather than for ideological reasons.

That's the thing, though -- the labor theory isn't just "not scientifically valid." It clearly doesn't describe what is -- it's not how people value things, and it doesn't make sense as a description of what ought to be.

The LTV was never intended as a description of what "ought to be" (in fact, Marx cautions against such use), and it was intended to describe how things are. The idea is that people do value things according to their socially necessary labour content, and that this mechanism works "behind the backs" of all members of society. I'm curious in what way it isn't scientifically valid.

The LTV wasn't thrown out because it fails to describe how things are, because soon enough marginalists realize that the same criticisms actually apply to their own theory. It was thrown out (mostly by Samuelson and his pals) of specific issues: the transformation problem, the generalized commodity exploitation theorem, and by extension the Okishio theorem, all of which have been addressed in the Marxian economic literature.

Re: The Economics of Kenneth Arrow

#35

Post by QuesnayJr » Sat, Aug 31, 2019, 12:59 PM UTC

claudiawerner wrote: post #34

Matticus_Rex wrote: post #33

Earlier quoted context omitted.

That's the thing, though -- the labor theory isn't just "not scientifically valid." It clearly doesn't describe what is -- it's not how people value things, and it doesn't make sense as a description of what ought to be.

The LTV was never intended as a description of what "ought to be" (in fact, Marx cautions against such use), and it was intended to describe how things are. The idea is that people do value things according to their socially necessary labour content, and that this mechanism works "behind the backs" of all members of society. I'm curious in what way it isn't scientifically valid. The LTV wasn't thrown out because it f…

LTV is clearly normative, and it's why people still try to revive it. The idea that factory owners are exploiting their workers has a certain intuitive appeal as a moral proposition.

The LTV wasn't exactly thrown out -- there are situations where marginalism and the LTV exactly coincide -- but it was superseded because outside a narrow sphere it becomes incoherent. The classic example is technological substitution -- if you have two ways of making something, one that is capital-intensive and one that is labor-intensive, then you will probably pick the one that's cheaper. So you can't calculate the labor content of a good independently of prices.

The specific issues you enumerate are issues within Marxist economics in general. The LTV was superseded well before Samuelson's paper on the transformation problem.