Value. Frederick Harry Pitts

Introduction

      This book introduces how the idea of value has been understood within political economy, and the social and political implications of its different interpretations. The book traverses Aristotle, mercantilism, the classical political economy of Smith and Ricardo, Marxism, marginal utility theory and its neoclassical descendants, institutionalist economics and the sociology of valuation. Surveying the most important conceptualizations of value, the book considers issues such as what makes one thing exchangeable with another, the relationship between value and price, and the ascription of value creation to some activities over others. The book transcends economic explanations alone, exploring the social and political significance of decisions made about what things are worth, and the people and processes involved in their creation.

A closed case for much of mainstream economic thinking, the issue of value is a pressing one because it exposes the tension at the heart of the social and political processes that render all things equivalent and comparable under the single measure of price. These processes are increasingly at stake politically. National populists content to sacrifice economic rationality for an emotional politics of belonging; anti-‘globalist’ protectionisms fencing value back within borders; anti-austerity social movements protesting the hunger for gold of high finance; the establishment of so-called ‘real’ economies centred on alternative currencies and business models that purport to keep wealth within localities – all lay claim to a critique of the social and political processes through which capital, states and other actors value and price the world around us. But only further populist discontent and frustration will follow the failure of this constellation of political tendencies to grasp what really underpins a society that knows the price of everything and the value of nothing.

      Value theory, the book shows, provides a better footing to grasp the social forms and relations with which the present political moment fumbles. In navigating value, the book is indebted to Marx’s critique of political economy, which, rather than as an alternative economics or political economy, is treated here as a critical theory of society itself.¹ As opposed to critical theory, traditional or mainstream theory does not go beyond the way things appear – the forms in which human social relations are mediated, such as labour, capital, money and the state.² It takes these things for granted, and presents them as natural or static. In some cases, it purports to solve practical problems pertaining to them; in others, it makes moral arguments about the justice or ethics of a given social formation. Archetypal of this tradition is the classical political economy of Adam Smith and David Ricardo – which broke new ground by understanding labour, capital, value and the relationship between them. Well before the rise of pure economics, classical political economy highlighted the idiosyncrasies of a system where a surplus accrues from the transaction of apparently equivalent commodities. Tracing this surplus back to the labour process, political economy embedded economic phenomena within social relations of power and domination. But it did not adequately enquire as to the conditions of possibility and reproduction of historically peculiar products of human practice such as commodities and money.

      It was left to Marx, with his critique of political economy, to explore how the forms of economic objectivity assumed by classical political economy were grounded in a set of antagonistic social relations and systemic structures that compel individuals to act in certain ways. Critical theory, unlike traditional theory, recognizes and relativizes its own theoretical claims and those of others as a part of the social world they theorize. Marx’s immanent critique confronted classical political economy on this basis, as a part of the society it studied, proceeding through the tales that capitalism told about itself in its works of theory to the underlying social constitution they expressed.

The rebranding of economics as a science introduced a separation between politics and economy unthinkable to the political economy that preceded it, and this has coloured the reception of value theory since. The intellectual historian Philip Mirowski, whose work we return to throughout this book, acerbically observes that economists presume an impossible ability to model the reality of economic life from a safe scientific distance, but are themselves implicated in the ‘cultural movements of their time or the metaphors used to rationalize the physical and social worlds’.³ As Marx captured, even the most seemingly objective ideas about society are themselves part and parcel of that society and its reproduction.

      In this sense, value theory is no mere academic exercise. The ‘objective’ theories of value that reigned supreme until the late nineteenth century stressed labour’s role in production, and policed a boundary between productive and unproductive sectors of the economy that had real impact on decisions made about investment, policy and income distribution, as well as the politics of social division in ascendant capitalist societies.⁴ Later, ‘subjective’ theories of value in neoclassical economics centred on preferences, including those of workers in choosing labour over leisure depending on the right incentives. Whilst freeing value theory from ‘productivist’ principles centring solely on the sphere of production to capture better the relational character of value in the sphere of consumption, valid substantialist insights, which highlight the role of the employment relationship in the constitution of value, were cast aside. The persuasiveness of subjective theories of value was aided by the claims to scientific status inherent in neoclassical economics. One of the great misfortunes of subjective theories of value, Mariana Mazzucato notes, is how:

In the intellectual world, economists wanted to make their discipline seem ‘scientific’ – more like physics and less like sociology – with the result that they dispensed with its earlier political and social connotations … while economics students used to get a rich and varied education in the idea of value, learning what different schools of economic thought had to say about it, today they are taught only that value is determined by the dynamics of price, due to scarcity and preferences.⁵

      There is, of course, some sense in this schooling, insofar as these ideas, true or not, really do structure the way things are valued – or at least how value is calculated – in capitalist society. Marginalist utility theory still structures how governments govern, investors invest and businesses do business.⁶ In this way, theories of value have a performative effect and one might just as well learn to use the master’s tools as any others. Nonetheless, the essence of a critical method is to think through and against the grain of the way things are to create the potential of an alternative. However much neoclassical economics captures or sculpts the reality of economic life in contemporary capitalism, it is insufficient to simply stop there. It is the contention of this book that, in order to do this, a leap must be made from economic to social theories of value.

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The problem of value, as Robert Heilbroner puts it, represents ‘the effort to tie the surface phenomena of economic life to some inner structure or order’.⁷ Aristotle inaugurated the study of this problematic, inquiring after how the ‘equalization of unlike objects as commodities … requires an arbitrary and conventional means of equalization: in other words, a notion of value’.⁸

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