Friday, April 18, 2014

Did Kalecki Accept the Labour Theory of Value?

I thought that Kalecki did not accept the labour theory of value, but Matias Vernengo raises a question about this in a comment here, and asks for the evidence.

I have to admit to relying on memories of some reading on Kalecki quite a while ago, but some further research yields this interesting statement from the Polish Marxist economist Włodzimierz Brus, which seems to be from his personal conversations with Kalecki (who had
returned to Poland in 1955):
“While recognizing the enormous significance of the Marxist approach and of many Marxian tools of economic analysis, Kalecki never felt that he had to accept every component of Marxian economics or to retain those parts of it which have become obsolete in view of new experience and of the progress of economic theory. He felt, for example, a strong distaste for the Marxian theory of value, which he considered metaphysical and (if I am not mistaken) never wanted to discuss.” (Brus 1977: 59).
Of course, Brus might be mistaken, but other writers on Kalecki do seem to agree that Kalecki pretty much avoided the subject of the labour theory of value in his writings, and his silence suggests that he did not support it (Sawyer 1985: 148; Toporowski 2004: 217; Chapple 1983: 551; King 2001: 609; Chapple 2013: 302: “He had no time for the labor theory of value”) or (at least) had no interest in defending it:
“Kalecki seems never to have declared himself in print as to where he stood in relation to the labour theory of value. He assumed that prices were fixed by firms according to their unit costs of production to which margins or mark-ups were added to secure certain levels of profit.” (Harcourt and Hamouda 2003 [1988]: 219).
Brus, Włodzimierz. 1977. “Kalecki’s Economics of Socialism,” Oxford Bulletin of Economics and Statistics 39.1 (February): 57–67.

Chapple, Simon. 1994. “Kalecki’s Theory of the Business Cycle and the General Theory,” in John Cunningham Wood (ed.), John Maynard Keynes: Critical Assessments. Second Series. Croom Helm, London. 538–559.

Chapple, Simon. 2013. “Kalecki, Michał,” in Thomas Cate (ed.), An Encyclopedia of Keynesian Economics (2nd edn.). Cheltenham, Edward Elgar Pub. 301–304.

Hamouda, O. F. and G. C. Harcourt. 2003 [1988]. “Post-Keynesianism: From Criticism to Coherence?,” in Claudio Sardoni (ed.), On Political Economists and Modern Political Economy: Selected Essays of G. C. Harcourt. Routledge, London. 209–232.

King, John E. 2001. “Kalecki, Michał,” in Phillip Anthony O’Hara (ed.), Encyclopedia of Political Economy. Volume 1. A–K. Routledge, London and New York. 607-610.

Sawyer, Malcolm C. 1985. The Economics of Michał Kalecki. Macmillan, Basingstoke.

Toporowski, Jan. 2004. “Kalecki’s Arguments for Socialism,” in Zdzislaw L. Sadowski and Adam Szeworski (eds.), Kalecki’s Economics Today. Routledge, London and New York. 215–221.

Thursday, April 17, 2014

Mises and Empiricism

Israel Kirzner relates an anecdote about Mises in his book Ludwig von Mises: The Man and his Economics (2001).

Kirzner once asked Mises how any individual person can know that other people really are “purposeful” in the sense of the human action axiom (Kirzner 2001: 88).

Kirzner relates that Mises’s answer surprised him greatly: Mises replied in effect that we know the existence of other human agents by observation (Kirzner 2001: 88).

Kirzner proceeds to use this answer to argue that Mises was not really the extreme apriorist that he is normally held to be (Kirzner 2001: 89).

However, Mises’s answer (if he really meant it) suggests another conclusion: Mises was just a confused and inconsistent thinker.

Elsewhere in his body of work, Mises regards the epistemological status of the human action axiom as synthetic a priori and a type of Kantian category prior to experience, as we can see here:
“… it is expedient to establish the fact that the starting point of all praxeological and economic reasoning, the category of human action, is proof against any criticisms and objections. No appeal to any historical or empirical considerations whatever can discover any fault in the proposition that men purposefully aim at certain chosen ends. No talk about irrationality, the unfathomable depths of the human soul, the spontaneity of the phenomena of life, automatisms, reflexes, and tropisms, can invalidate the statement that man makes use of his reason for the realization of wishes and desires. From the unshakable foundation of the category of human action praxeology and economics proceed step by step by means of discursive reasoning. Precisely defining assumptions and conditions, they construct a system of concepts and draw all the inferences implied by logically unassailable ratiocination. With regard to the results thus obtained only two attitudes are possible; either one can unmask logical errors in the chain of the deductions which produced these results, or one must acknowledge their correctness and validity.” (Mises 2008: 67).

“The human mind is not a tabula rasa on which the external events write their own history. It is equipped with a set of tools for grasping reality. Man acquired these tools, i.e., the logical structure of his mind, in the course of his evolution from an amoeba to his present state. But these tools are logically prior to any experience.

Man is not only an animal totally subject to the stimuli unavoidably determining the circumstances of his life. He is also an acting being. And the category of action is logically antecedent to any concrete act.

The fact that man does not have the creative power to imagine categories at variance with the fundamental logical relations and with the principles of causality and teleology enjoins upon us what may be called methodological apriorism.

Everybody in his daily behavior again and again bears witness to the immutability and universality of the categories of thought and action.
He who addresses fellow men, who wants to inform and convince them, who asks questions and answers other people's questions, can proceed in this way only because he can appeal to something common to all men--namely, the logical structure of human reason. The idea that A could at the same time be non-A or that to prefer A to B could at the same time be to prefer B to A is simply inconceivable and absurd to a human mind. We are not in the position to comprehend any kind of prelogical or metalogical thinking. We cannot think of a world without causality and teleogy.” (Mises 2008: 35).
As I have argued here, this Misesian epistemology is entirely unconvincing.

One needs empirical evidence to determine what even constitutes a conscious and voluntary human act as defined in the action axiom.

In fact, the “action” as conceived by the human action axiom is to be strictly limited to:
(1) the conscious behaviour of humans;

(2) to exclude unconscious and involuntary behaviour, and

(3) (presumably) to non-mentally-ill human beings.
But Mises requires empirical evidence to demonstrate what these things even are and how to identify them.

To give an example: take sleep-walking. We observe human beings who perform complex physical tasks such as walking and (in extreme cases) driving motor vehicles while in a state of sleep. Such people cannot remember the experiences. Yet sleepwalkers’ eyes are open: presumably the visual system (retinas, optic nerve, visual cortices, etc.) is functioning and presumably the visual cortices show brain activity that is correlated with visual perception.

Are sleep-walkers engaged in action with a purpose? The Misesian might counter: no, because sleep-walkers are not conscious. But how on earth do we know that sleep-walkers are not conscious? Can we know it a priori?

We cannot do so, and need empirical evidence. For example, it could be that being in a sleepwalking state is like being in a dream state and involves some level of consciousness, but that most sleep-walkers simply forget the experience when they wake up. Would they then be engaged in action with a purpose?

However, it seems that most sleep-walking does not occur in REM sleep (when most people dream) but in the deepest, slow-wave sleep in which dreams are rare (Seager 1999: 34), so the idea that most sleepwalkers are genuinely unconscious is possible and probable. But, as noted above, it is empirical evidence and inductive argument that yields this type of a posteriori knowledge about sleep-walking, not a priori reasoning.

But it is far worse than this, for, as Kirzner noticed and Mises appears to have conceded, you need empirical evidence and inductive argument by analogy to make the case that other human minds even exist (Kirzner 2001: 88 even states that it is observation that convinces us to reject solipsism).

These insights are enough to damn the alleged synthetic a priori status of action axiom.

That Mises spent his life defending the Kantian synthetic a priori status of the action axiom but then casually and privately admitted to Kirzner that observation (a kind of empirical evidence) is needed to know that other purposeful human minds even exist only shows what a third rate philosopher and thinker Mises really was.

Armstrong, D. M. 1963. “Is Introspective Knowledge Incorrigible?,” The Philosophical Review 72.4: 417–432.

Kirzner, Israel M. 2001. Ludwig von Mises: The Man and his Economics. ISI Books, Wilmington, Del.

Mises, L. 2008. Human Action: A Treatise on Economics. The Scholar’s Edition. Mises Institute, Auburn, Ala.

Seager, William. 1999. Theories of Consciousness: An Introduction and Assessment. Routledge, London and New York.