Randian Economic Objectivism? Friday, March 26, 2010
I started reading Capitalism: The Unknown Ideal the other day, and, in discussing competing theories of value, a curious passage showed up that reads:"The subjectivist theory holds that the good bears no relation to the facts of reality, that it is the product of a man’s consciousness, created by his feelings, desires, “intuitions,” or whims, and that it is merely an “arbitrary postulate” or an “emotional commitment.”I understand the subjective theory: that goods are only valuable because they fulfill human wants to remove uneasiness, and as we are all different, goods are valued to different subjective tastes.
The intrinsic theory holds that the good resides in some sort of reality, independent of man’s consciousness; the subjectivist theory holds that the good resides in man’s consciousness, independent of reality.
The objective theory holds that the good is neither an attribute of "things in themselves" or of man's emotional states, but an evaulation of the facts of reality by man's consciousness according to a rational standard of value. (Rational, in this context, means: derived from the facts of reality and validated by a process of reason.) The objective theory holds that the good is an aspect of reality in relation to man-- and that it must be discovered, not invented, by man."
I understand the "intrinsic" theory: that goods are valuable because of specific qualities inherent in either their sale or production. From Smith to Ricardo to Marx, the "labor theory of value" was a type of "instrinsic" value system.
But the objective theory is what I do not understand. What "facts of reality" is Rand talking about? I would understand if she were talking about objective ethics. We create an objective standard of ethics based on natural law and other arguments, but an objective standard for goods? What?!
Why are factories valued at a certain amount? Why are bananas, and shoes, and typewriters valued at what they are? Because of their specific ability to meet human needs. Typewriters fulfill the ability to write journals far better than bananas may, but bananas fulfill the ability to satisfy the writer's hunger - and so depending on your subjective need (to write or eat), each good is valued differently at different times. Am I misinterpreting her?
Hayek set about very clearly explaining the way prices are formed in a market economy (See: The Use of Knowledge in Society). He explained them as a product of the disseminated bits of information that we each acquire at every moment of our lives - my information that I value hunger over the ability to sky-dive is why I purchase pizza over parachutes. Parachutes would fulfill a much smaller need than pizza and so I am not willing to pay for its use. Others, perhaps, according to their own subjective opinions and information regarding their wants and needs, would purchase the parachutes over the pizza. There are no immutable "facts of reality" that must be considered. Our market economy is a product of human action. It was not created by indivisible laws of nature and humans happened to arbitrarily stumble upon it. It is entirely a product of homo sapien development; most markedly by our faculty of reason.
Have I misunderstood or misconstrued her point? She talked further about something being "socially objective." But at this point I was so lost in pretentious jargon that I could barely continue. What good is socially objective? Who decides? What "facts of reality" are there that our reason must adhere to? Is a bottle of ketchup more objectively valuable than a bottle of mustard because the "universe says so?"
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