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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Sunday, December 11, 2005

The Utility of Disutility

Bill at Impossibilist Blog raises some interesting questions about my version of the labor theory of value, rooted in the disutility of labor.

Now - I can heartily agree the value of labour - i.e. of work done - is the labour time invested in it. I can further happily agree that one basis for this is the disutility to the worker of performing the labour.

The question arises though - does this vary according to the nature of the work, or is it in fact a generalised disutility common to all workers. Is it a scalar or binary matter. If the latter, then Marx is right, we cannot discern the value of a type of labour performed through the market value of the goods.

To elucidate the question, he proposes a hypothetical example:

A village - small - an homogenous populaton where everyone shares a common set of core skills and everyone can basically do everyone elses job.

Thus, everyone could do the work, but for a variety of reasons they don't - they specialise. Some might be good at certain tasks. Some might not like certain tasks. Some might have a favoured location. It might be heriditory tradition. When they exchange, though, they know they could have made the product themselves. They know roughly how long it would have taken them; and how long it is generally taken to perform that task. They can then exchange goods to what they consider to be an equal value - if only after haggling.

In that case, Bill says, the disutility of labor would be binary--that is, "labour time would resolve down to an equal general equivilent between economic actors."

Now, according to Mises, the disutility of labor as such has a binary quality to it; specific forms of work may be more unpleasant or repugnant than others, but all labor carries some disutility by its very nature, regardless of the pleasantness or unpleasantness incidental to the work. Indeed, part of the pleasure incidental to some forms of skilled work, associated with the sense of craftsmanship, involves satisfaction at minimizing superfluous or unnecessary efforts.

But despite the binary nature of this basic level of disutility, common to all labor, the total disutility of labor experienced by a worker has a scalar quality, resulting from the greater or lesser unpleasantness of particular forms of work.

Marx may have been right that it is impossible to get, ex post, from the exchange-value of specific goods to the value of the labor embodied in them. Even leaving aside the scalar or binary quality of labor's disutility, it's impossible to tell from a snapshot of current prices how far a specific price deviates from the equilibrium value.

But from the disutility of labor, combined with other a priori assumptions about the nature of human beings as utility maximizing beings, we can deduce that all exchange values are a combination of labor value and scarcity rents. Some of the scarcity rents are for naturally inelastic goods, like economic rent on land and natural resources. Others are short-term rents on elastic goods, whose supply hasn't yet adjusted to demand. But most important is the category of rent on artificially inelastic goods, like vacant land to which access is controlled by a landlord, usurious interest rates resulting from banking market entry barriers, and monopoly prices to the consumer resulting from state-enforced cartels.

So even though the labor theory of value, as explained in terms of subjective disutility, has little use for empirical analysis of specific prices, it has a great deal of value as an a priori tool of analysis. The central insight of classical political economy, that price moves toward cost, unless impeded by secondary factors, is a vitally important one. The other major insight developed by Ricardo's radical disciples, equally important, concerns the role of "artificial rights of property" and other state-created scarcities, in causing deviation from the cost principle. Taken together, they can be put to revolutionary conclusions. And a labor theory of value founded on the disutility of labor ties in well with both of these insights: As Tucker said, "under free competition there is no price where there is no burden." And as a corollary, "is there anything that costs except labor or suffering (another name for labor)?" [Instead of a Book, 1973 Gordon Press facsimile edition, 214, 403]

The scalar quality of the disutility of labor, likewise, may scuttle Marx's identification of exchange value with straight labor-time. Similarly, Bill has in the past, in other venues, raised the question of identifying the discrete labor-contribution of an individual worker in production that requires collective labor. The answer: in a free labor market, the individual worker can withdraw his labor from the production process when his wages are insufficient to compensate his experienced disutility. When labor, collectively, receives its full product without paying scarcity rents to the owners of capital and land, the product of labor will be distributed among laborers individually according to their disutility--through, as Hogskin put it, the higgling of the market:

Each labourer produces only some part of a whole, and each part having no value or utility of itself, there is nothing on which the labourer can seize, and say: "This is my product, this will I keep to myself." Between the commencement of any joint operation, such as that of making cloth, and the division of its product among the different persons whose combined exertions have produced it, the judgment of men must intervene several times, and the question is, how much of this joint product should go to each of the individuals whose united labourers produce it?

I know no way of deciding this but by leaving it to be settled by the unfettered judgments of the labourers themselves. If all kinds of labour were perfectly free, if no unfounded prejudice invested some parts, and perhaps the least useful, of the social task with great honour, while other parts are very improperly branded with disgrace, there would be no difficulty on this point, and the wages of individual labour would be justly settled by what Dr Smith calls the "higgling of the market." Unfortunately, labour is not, in general, free; and, unfortunately there are a number of prejudices which decree very different rewards to different species of labour from those which each of them merits.

Bill's picture, in his hypothetical example above, of the disutility of labor evening itself out through self-selection in a largely worker-controlled labor market, reminds me of Franz Oppenheimer's idea that under the inducements of a truly free labor market, labor would distribute itself among employments until incomes became "equal"--in my terms, equal in relation to given quantities of subjectively perceived effort. He quoted with approval Adam Smith's claim that

[t]he whole of the advantages and disadvantages of the different employments of labour and stock must, in the same neighbourhood, be either perfectly equal or continually tending to equality.
He also cited, with similar approval, von Thunen's equilibrium at which "labor of equal quality is equally rewarded in all branches of production...."


Blogger Unknown said...

yes, the "higgling", in an unfettered market will bring wages toward their marginal disutility.
If wages fall below what workers feel is worthwhile to them to pursue that line of work, the marginally satisfied will begin to drop out of that field and farm or freelance, or work in some other kind of job... if wages go far above this disutility, more people will be induced to enter the labor market and compete with them. At any one time, most laborers will not be getting paid exactly what they feel is their disutility of their labor... but overall it will get closer and closer over time...

Now, in "capitalist" labor markets, there are restricted substitution options and increased opportunity costs for this kind of labor switching. So wages tend to be driven below their marginal disutility... not enough maybe to make homelessness or welfare subsistence look better, but as close as they can get before losing too many laborers.
Things like prozac and psychotherapy might be seen as a way of subsidizing the marginal disutility of labor, enabling lower wages.

December 12, 2005 11:44 AM  
Anonymous Anonymous said...

Some observations:

this is covering the supply part of the supply/demand "blades of scissors", and the actual "value" as observed in terms of money wages paid may differ;

labour market distortions like those I cover at http://member.netlink.com.au/~peterl/publicns.html#NWKART1 show how the disutility side of things might not clear markets (there's an externality from "vagrancy costs", these days compounded for by social security in developed countries but still an externality);

in actual developing countries things went through stages, starting with difficulty "getting the natives to work" (high wages that they could use for luxuries, but little take up as they stayed with their subsistence resources), then colonial exploitation that forced them to work for top up wages, then unemployment but higher wages since the take up needed a living wage;

the exploitation approach used various measures including poll or hut taxes, often commutable for forced labour at set wages.

The forced labour approach was actually the main engine revenue raiser in 18th century France, not technically a tax since this "corvee" was technically a labour obligation that could be and mostly was commuted for cash payments - it wasn't at base a cash obligation.

When labour was at the base of taxes, that created a fiat link to the notional value of the currency. When the forced labour received nominal payments, that added to this linkage and also released cash into the economy helping to "develop" it into a more sophisticated form of more convenience to governments.

These tax systems often went through local middlemen, either tax farmers or tribal chiefs or whatever, which helped reinforce the control structure and added an element of financing through other roles the farmers had, e.g. accepting payments in kind which they converted to cash through military contracts etc.

I haven't pulled all these together, of course, so I'm sure there is more to be said on the subject.

December 12, 2005 10:27 PM  
Blogger troutsky said...

Please excuse the non-acedemic nature of my comments and questions, this interests me but I have little background in classical economics.This question of the subjective value of labor seems in this discussion to hinge on values.For instance "specific forms of work may be more unpleasant or repugnant than others" or one might say more empowering or more satisfying,it might be judged according to "subjectivley percieved effort" or how much suffering, sacrifice or even just pure time went into the production.The disutility, if I understand correctly, is that no matter how satisfying, it is not leisure time.It seems to me all these questions seem to further hinge on the unspoken questions of the relative merit value of innate ability or intelligence.In other words,if the repugnant jobs fall to the less intelligent, how do we express our value of equanimity, of solidarity with all workers and what definition of just compensation do we employ? Albert and Hahnel propose rewarding "sacrifice" and would deal with empowerment by creating "job complexes"( a variety of menial tasks mixed with skilled).This in effect deals with Hogskins"prejudices which decree different rewards" but it may in effect value equanimity over efficiency.It also requires a bureacratic mechanism (iteration) to establish relative values, something anarchists seem to fear.

In contrast to your views,I visited a syndicalist site which claims Marxs' labor theory of value a "quasi-religious doctrine which cannot hold up to the slightest empirical scrutiny" They call Albert/Hahnel Marxists and believe the bureacracy would inevitably devolve into a "dictatorship of a facilitator class". Do you have any views on this? My project is trying to synthesise these varied anti-capitalist viewpoints but see little opportunity here for coordination.

December 15, 2005 10:16 AM  
Blogger Kevin Carson said...


I got the same impression of Albert and Hahnel, although they seemed to think their facilitators' dictatorship would be a benevolent one. Reminds me of Stromberg's quip about the "Menshevik in seven-league boots, with the body of Leviathan and the head of a social worker."

Tucker viewed rents from innate ability as a form of differential rent, but (like economic rent on land) of little importance once artificial privilege was eliminated. He was surely neglecting the seriously mentally handicapped, but my guess is that community mutual aid associations would be quite generous with such people in a society where labor had its full product to dispose of.

Your view of disutility seems right on the mark. The Austrian explanation of it is exactly the same as you say above: rather than competing uses of productive labor, the real alternative to labor is leisure. For capital and land, on the other hand, there is no corresponding positive utility to holding them out of use for its own sake. (Except maybe for the idea of a Sabbath for land in the OT--but then, Yahweh had to threaten with a pretty big stick to make people comply with that).

December 15, 2005 1:36 PM  

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