[Marxism] Reply to S. Jeong on labor-time calculation

Jim Farmelant farmelantj at juno.com
Thu Oct 18 15:26:53 MDT 2018

This discussion sort of reminds me of some of the ideas that the Austrian economist and philosopher Otto Neurath had concerning socialist economic planning.

In an article that Mark Lindley and myself wrote on Friedrich Hayek, we noted concerning Neurath:

Until fairly recently, his role in the socialist-calculation debate has tended to be downplayed in literature about the debate, most likely because he communicated with Hayek by post rather than publicly. In recent years, however, research on ecological economics and sustainable development has fostered a revival of interest in some of his economic ideas because he advocated “in-kind” (as distinguished from monetary) economic accounting( Naturalrechnung ). (In the 1920s he also advocated Vollsozialisierung , i.e “complete” rather than merely partial“socialization.”) His proposed changes to the economic system were therefore more radical than those advocated by the mainstream Social-Democratic parties of Germany and Austria, and he debated these matters in the ’with leading Social-Democratic theoreticians (such as Karl Kautsky, who insisted upon the necessity of money in a socialist economy). It was while serving as a government economist during the war that he had observed that“As a result of the war, in-kind calculus was applied more often and more systematically than before.... It was all too apparent that war was fought with ammunition and with the supply of food, not with money” —and had come to believe in the feasibility of an economic system with planning done in terms of quantitative amounts of specified goods and services, and with no use at all for monetary currency. (It was in response to these ideas that Mises wrote his famous essay of 1920.) For Neurath, war economies displayed advantages in regard to speed of decision and execution, optimal distribution of means relative to (military) goals, and no-nonsense evaluation and utilization of inventiveness. Two disadvantages which he perceived as resulting from centralized decision-making were a reduction in productivity and a loss of the benefits of simple economic exchanges; but he thought (as did Lenin) that the reduction in productivity could be mitigated by means of “scientific” techniques based on analysis of work-flows etc. as advocated by Frederick Winslow Taylor (an American mechanical engineer and management consultant). Neurath believed that socio-economic theory and scientific methods could be applied together in contemporary practice.Although he was opposed to “market socialism” (as well as to capitalism), he believed in granting some degree of independence to small producers in the crafts and in agriculture:
“The doctrine that there is a trend towards ever more comprehensive organizations has been confirmed fully, less so the doctrine that small businesses will be replaced by large-scale concerns.”

He considered it essential, however, that small producers of various sorts be organized in a multitude of regional and branch organizations to ensure that goods and services would be produced according to a central plan, and he held that “total socialization” would require a comprehensive statistical apparatus:“Even before they begin their work, all bodies ... should be required to report to the Central Economic Administration, which, in collaboration with the Center for Statistics ... will fit the individual results into the universal statistics.”

When countering the theories of some of the leading Austrian champions of market economics (Carl Menger and Joseph Schumpeter), Neurath found that he had to challenge some of their basic assumptions. From Aristotle and from socialist literature he adopted the radical notion of wealth as based on use-value and welfare, whereby economic theory would be concerned with “wealth” in the sense of people’s physical and social conditions. His concept of welfare was, however, more Epicurean than Aristotelian; he said that “social Epicureanism”
“deals with the happiness of human beings as an effect of social actions. What is the effect of different orders of life, of different measures, on the conditions of life of human beings and thereby on their happiness and unhappiness?”
He felt that economists should try to find out which conditions promote people’s wealth in that sense of the term,and which institutions increase or decrease it. But he also perceived a theoretical challenge in regard to representing wealth and its allocation in such terms – namely, how to defend the rationality, objectivity and fairness of decision-making in the alternative framework. In considering “the problem of pleasure maximum,” he argued that cardinal measures – that is, quantitative ratings with cardinal numbers (such as, say, 481, 25¾ and 7,333) as distinct from ordinal numbers (1st, 2nd, 3rd...) – for comparative utility or “pleasure values” could not be computed for any one individual, much less for different individuals. He also rejected the assumption that it is possible to sum together the utility functions (the pleasures) of separate individuals. He therefore concluded that it is not possible to calculate maximum social-utility functions, i.e., that interpersonal comparisons of utility are impossible – and likewise for comparisons of utility for the same person at different times.
 Neurath felt that this general absence of valid unitary measures and algorithms for decision-making weakened the theoretical case for a market economy, because he held that market-economic theory assumes a framework in which “people influence each other’s actions exclusively by means of the higher and lower qualities of life that result from the process of exchange,” with the main conditioning-factors being profit and loss (and with the goals being those of maximizing the one and minimizing the other). On the other hand he thought it would be a virtue of an administrated economy that [it could,] by rewards and penalties, prompt the individuals to do things which they would not have done in an economy characterized by exchange, because without these rewards and penalties the consequences would have been different.


Jim Farmelant
Learn or Review Basic Math

---------- Original Message ----------
From: jgreen--- via Marxism <marxism at lists.csbs.utah.edu>
Subject: [Marxism] Reply to S. Jeong on labor-time calculation
Date: Thu, 18 Oct 2018 01:37:47 -0400

A reply to Seongjin Jeong on labor-time calculation
and 21st century socialism
(from Detroit/Seattle Workers' Voice list, Oct. 14, 2018)

By Joseph Green

How To Remove Eye Bags & Lip Lines Fast (Watch)

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