Frederick Harry Pitts - Value

What is Political Economy? series

Frederick Harry Pitts

polity

Copyright Frederick Harry Pitts 2021

The right of Frederick Harry Pitts to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

First published in 2021 by Polity Press

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ISBN-13: 978-1-5095-3565-1

ISBN-13: 978-1-5095-3566-8 (pb)

A catalogue record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

Names: Pitts, Frederick Harry, author.

Title: Value / Frederick Harry Pitts.

Description: Cambridge, UK ; Medford, MA : Polity Press, 2021. | Series: What is political economy? | Includes bibliographical references and index. | Summary: Why are some things worth more than others? A leading expert investigates-- Provided by publisher.

Identifiers: LCCN 2020024385 (print) | LCCN 2020024386 (ebook) | ISBN 9781509535651 (hardback) | ISBN 9781509535668 (paperback) | ISBN 9781509535675 (epub)

Subjects: LCSH: Value. | Economics.

Classification: LCC HB201 .P55 2021 (print) | LCC HB201 (ebook) | DDC 338.5/21--dc23

LC record available at https://lccn.loc.gov/2020024385

LC ebook record available at https://lccn.loc.gov/2020024386

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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 Marxs critique of political economy, which, rather than as an alternative economics or political economy, is treated here as a critical theory of society itself. 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. Marxs 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. 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 labours 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. 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: