What is the biggest flaw in the labor theory of value?

Dan R., a loyal MR reader, poses this question:

I would be curious to know what you consider the biggest flaw in the labor theory of value to be. Also, would you say that it is disproven, unnecessarily bulky, or simply marginalized?

There is a simple model in which the labor theory of value is true.  If inputs are homogeneous and constant returns to scale hold, the proportions of labor input will indeed be proportional to price.  If not, labor inputs will be reallocated until this proportionality holds (Much ink has been spilled on whether this is what Smith, Ricardo, and others had in mind; it is one way of reading Smith's deer-beaver-hunting example.)

One problem is that we need labor, capital, and land for production, not just labor.  The so-called "transformation problem" tries to square this circle.  The simplest response, however, is to give up the labor theory of value.

Another problem is that inputs are heterogenous.  They have to be valued in dollar terms, and that requires imputation, a'la Friedrich Wieser, and that in turn requires information from the demand side.  Price determines cost of production at least as much as cost of production determines price.

Compared to Marshallian supply and demand scissors, the labor theory of value is at best awkward and most of the time it is wrong.  There are some economic sectors where constant returns to scale hold and thus demand has little influence over market price.  But those are special cases, even if some Cambridge-U.K. linked economists promote them as the main show. 

Addendum: David Henderson comments.

Comments

Much man-in-the-pub Economics seems to espouse an Oil Theory of Value.

Thank you for addressing my question.

I am a new reader and find MR a great read

Your discussion of the labor theory of value was illuminating, and short!

Question

How do you decide when to use Wikipedia as a reference re "the so-called "transformation problem"?

Treating natural resources as, in Engel's phrase, "free gifts of nature" is another huge, and environmentally destructive, flaw of the LTV.

Dan

I think a simpler, if a bit curt, answer is "open a window and look outside." We need only observe the world to note that value is subjective. What I am willing to pay is different from what you are willing to pay. The price I am willing to accept is different from the price you are willing to accept. The value of goods -- e.g. art, wine, baseball cards land -- can and does fluctuate independently of labor input.

Alternatively there's the realization that a labor theory of value implies that simply spending more time and effort creating an otherwise identical good gives it more value, which is self-evidently silly.

Henderson points to randomness, but what looks like randomness may not be. There are entire schools of thought derived to claim Warren Buffett doesn't exist or that he is just lucky.

CIP, market prices don't dictate values, values dictate market prices...eventually. The labor theory of value is but a rephrasing of an efficient market theory of labor (and only labor). Everywhere I look I see liberal economists in thrall to an ultra-efficient market theory even as they ridicule the idea.

"I would be curious to know what you consider the biggest flaw in the labor theory of value to be."

Circularity.

Example: If you pay 10 men, $10 per hour for 10 hours to turn $1000 worth of lumber into furniture, LTV would assign the furniture a value of $2000. If you pay the same men, the same wage for the same time to turn that lumber into sawdust, it would clearly not possess the same value as the furniture.

Marx attempted to address this paradox by arguing that it was the quantity of "socially useful labour" that mattered in the calculation. However, this results in a circularity problem if: A) the value of goods is determined by the labour that is used in their production, and B) the value of labour is determined by the value of goods produced.

I respond, claiming that both you (Tyler) and David are missing the main problem.

My favorite comment on the LTV comes from Peter Singer, of all people, in his largely sympathetic book on Marx. I don't have the exact quote, but it was something like "The capitalists of the future will not see their profits dry up as they dismiss the last workers from their fully automated factories."

Oh, I thought of another. Infinite regress: The price of labor is determined by the prices of inputs into that labor, which is determined by the price of the labor put into those inputs, and it's turtles all the way down. Thomas Sowell, in his book on Marxism, treats this one as a clincher. Otherwise, he sees Marx as effectively dodging most of the subjective value critiques.

Tyler has it minus one point and leaving some things not explained well. Swimmy's first comment
provides useful additions, as does M's. The comments of a number of folks are off, but I shall
not name names.

There is reference to the missing problem, but no explanation of it. It is the transformation
problem. In addition to the conditions Tyler lists for the theory to hold is that the ratio
of labor to the other inputs must be equal across all inputs. These do not need to be homogeneous
at all, but the ratio of the indeed necessarily homogeneous labor to each one of the heterogeneously
defined varieties of each input must be equal. Thus, there must be a "constant organic composition
of capital" (and land and oil and so on) for the strict labor theory of value to hold, whether in
the short run or the long run, which Swimmy is correct would appear to be what Marx meant it to be.

I note that while Marx did not mention the transformation problem in Volume I of Capital, the only
edition published in his lifetime, he was well aware of it, and discussed it in Volume III, with
some people speculating that it was his inability to satisfactorily resolve it that was what led
him to hold back from publishing the later volumes of his magnum opus. A variety of folks since
have proposed various algebraic tricks for how to turn labor values into equilibrium market prices
when the constant organic composition of capital assumption fails, which it certainly does in the
real world, but most observers consider these techniques to be distracting parlor tricks that
violate Occam's Razor. Why bring in all these extra bells and whistles to make the LTV explain
prices rather than just using a model that determines them more directly? Of course some
observers, most of them not economists, have argued that this is not the real point of the LTV,
which is ultimately polemical about focusing on the exploitation of labor.

Swimmy,

The infinite regress problem is not a disproof of the LTV. So, as one regresses backwards,
one sees the piece of machinery used to produce the good as being produced by labor and other
machinery, and that piece by yet more labor and some other machinery, and so on. As one
goes back in time, invoking more ancient "indirect labor," the proportion due to labor rises
and eventually approaches one, even if one has to back to primitive man making the first stone
axe with his own hands without any other input. In this view, "capital" is indeed just indirect
labor, although as Paul Samuelson somewhat sarcastically noted, one could produce a necktie theory
of value along similar lines, although that may be too ephemeral of an input to pull off the
backward infinite regress with. Sraffa was aware of this problem and thus invoked the "standard
commodity" concept in his analysis of all this, although Sraffa brought up other problems for the
LTV, such as that solving the transformation problem might imply negative surplus value (ooops!).

I would be pleased if you could state the definition the version of the LTV you are obejecting.

In the version as I understand it, it is trivially true (if one abstracts from the factor land): Zero profits imply that prices equal cost, hence labor cost plus capital cost. However capital goods itself are produced by labor and other capital goods. Arguing recursively, the only cost are labor cost. Thus, prices are determined by labor cost only.

I a general equilibrium model, one could take leisure as numeraire. So where is the problem with LTV?

LTV does neither say that people with different productivity have to get the same wage (according to LTV it is the AVERAGE of labor that determines prices) nor does it say that ANY work produces value (It is a statement about EQUILIBRIA reasoning that labor which produce no or less value does not occur )

I really would appreciate elaboration of the circularity problem noted by Cowen. Of course strength of demand demands scale of production and thus costs of production. But demand affects price via its effects on production. Why is this is a critique of the labor theory of value? Moreover, the argument is logical, not realistic. Consumers are not equal to producers in the determination of what is produced, much less the price at which it is sold. This is not a Marxist argument. It's the argument Schumpeter made:

"First of all, whether we like it or not, we are witnessing a
momentous experiment in malleability of tastes--is not this worth
analyzing? Second, ever since the physiocrats (and before),
economists have professed unbounded respect for the consumers'
choice--is it not time to investigate what the bases for this respect
are and how far the traditional and, in part, advertisement-shaped
tastes of people are subject to the qualification that they might
prefer other things than those which they want at present as soon as
they have acquired familiarity with these other things? In matters
of education, health, and housing there is already practical
unanimity about this--but might the principle not be carried much
further? Third, economic theory accepts exisiting tastes as data, no
matter whether it postulates utility functions or indifference
varieties of or simply preference directions, and these data are made
the starting point of price theory. Hence, they must be considered
as independent of prices.But considerable and persistent changes in
prices obviously do react upon tastes. What then is to become of our
theory and the whole of microeconomics? It is investigations of this
kind, that might break new ground, which I miss." ["English
Economists and State-Managed Economy,", 1949]. Schumpeter also wrote
in Business Cycles that "we will throughout act on the assumption
that consumers' initiative in changing their tastes--i.e., in
changing that set of our data which general theory comprises in the
concepts of 'utility functions' or 'indifference varieties'--is
negligible and that all change in consumers' tastes in incident to,
and brought about by, producers' actions. " (p. 73) Nathan Rosenberg
(1994) argues that Schumpeter has here destroyed the sanctum
sanctorum of the neo-classical citadel--"The commitments to the
exogenity of consumer preferences and the associated virtues of
consumer sovereignty."

Two words: time and risk.

I don't want your two-week-old cheese curds, but I do want your ten-minutes-old cheese curds. The same amount of labor went into each.

I don't want any cheese curds; I hate the way they squeek against my teeth. I'll bet you never noticed that, but now that you have, you won't want to buy those cheese curds they just labored to create.

@Greg,

If the good is reproducable, equilibrium price are determined by cost. This is simply the zero profit condition. Beeing reproducable is the same as constant returns to scale.

Of course, constant returns to scale does not apply to everything that takes up non-reproducable ressources such as land and oil and hence the LTV cannot explain rents for land use (this is exactly why Ricardo invested in land and how he got rich ) but the remaining part can be contemplated through the perspective of LTV without loss of precision compared to modern theory.

I think you are mixing up a stativ microecomic situation with a macroeconomic long run equilibrium.

Rakesh,

Regarding the point of Sraffa, I would note that in the funeral oration by Engels for Marx,
he claimed that the concept of surplus value was Marx's greatest discovery, and it was because
it highlighted the supposed inevitable exploitation of the worker by the capitalist. However,
what Sraffa showed was that indeed a situation of equilibrium with the transformation problem
solved could imply negative surplus value, that is, the workers exploiting the capitalists.

You certainly provided no argument for why "the transformation problem is a non-problem." Was
Marx himself a fool to be worried about it, as he was? There are a lot of people who have claimed
to have solved it, including even some new efforts recently, but none of these "solutions" has
exactly swept the boards to get people to agree to use them in conjunction with the LTV as the
best theory of price determination around.

If you think that Lord Desai is "a harsh critic of Marx" then I have some underwater housing
to sell you. Sure, in the short run, the LTV very approximately works, but not close to
exactly.

There is more, but you have not made your case. Sorry.

My post was meant to restate the intuitive plausibility of the labor theory of value, not to provide a defense of it tout court. You raise two criticisms--the possibility of negative surplus value and the transformation problem. I have spoken at length about these at the OPE-L archive, and I have office hours now. Replies later.

Quickly on the so called transformation problem.

1. If you accept it as traditionally conceived--and I do not, I don't think Marx actually left the input prices in values or simple prices, i.e. prices proportional to values; hence I don't think there is a need to transform the inputs into prices of production...the error to which Marx is admitting has not been understood correctly...but that all said...if you accept the problem as it is traditionally conceived, I think the Shaikh iterative solution is reasonable enough to keep alive the hypothesis that prices of production are anchored in values. Note I don't think it proves that to be true, but it keeps alive the hypothesis that total surplus value sets constraints on total profits. If this is the biggest logical problem Marx's theory is bedeviled by, it is in relatively good shape vis a vis neo classical economics with its heroic assumptions about a representative agent and its inability to explain the nature of money.

2. But let's say that two equalities--total surplus value=total profit and total value=total price--overdetermine an equilibrium system. Why not conclude then that equilibrium is incompatible with capitalism, governed as it is by the law of value. Your hero Schumpeter after all said a stationary capitalism is a contradiction in terms.

3. If you read Marx carefully, the mistake to which Marx is admitting is the opposite of what he is commonly understood to have stated, and I think that I am the first to point this out.

He's not saying that he left the inputs in simple prices or values. He understands that means of production and wage goods were already bought, a given precondition that cannot be transformed, and the market prices at which they were bought hovered around prices of production. He never admits a need for or even the possibility of a transformation of the inputs from values or simple prices to prices of production.

What he is saying is that he had assumed in his tables that value transferred from the means of production to the outputs could be inferred from the prices at which they were bought, but since we know by the end of his first round of transformation of the outputs that the value of the inputs must also have diverged from proportionality with prices at which they were bought, we can see that Marx was wrong to assume that he could guess what the value of the means production were on the basis of their manifest prices and thus what the value of the respective outputs of the five departments are.

But again this is trivial as Marx himself emphasizes. Yes we don't know what the actual value transferred from the means of production is in each of his five industries (we can no longer guess on the basis of their manifest prices because their values deviate from those) but we know the total value produced as monetarily expressed is greater than the cost prices and that the total surplus value is subject to some redistribution due to the equalization of the profit rate.

THis means that prices of production will be in some deviation to values. But it does not mean that total surplus value will not set limits to total profit and thus the average profit rate, and it does not mean that the most important factor accounting for changes in exchange ratios over time is not intersectoral variations in labor productivity.

The transformation problem is trivial and only gained in importance because it was the best way to give scientistic legitimation to the critique of Marx.

Marx seemed to be wrong because the unknowns and equations appear not to add up. But that is not the problem with Marx.

He suffers from a very impoverished and dismissive rights discourse, which opened the door to tragedy in the 20th century, and government interventions create possibilities for stabilization that he thought impossible. That's where the real arguments are.

Perhaps one can express it this way: The LTV is a model and as such neither right or wrong. The question is whether it is a useful model and this in turn depends on the question one tries to answer.

However, several conclusions drawn from some arguments formulated in LTV-language arguments, e.g. the exploitation of labor force , are wrong. But this should discredit LTV per se.

Rakesh,

As you have The Answer, well, I am sure that you can explain it to everybody during your
office hours. It is good to know that somebody really does know Exactly What Marx Thought.

BTW, I am aware that there is an alternative intepretation of Smith's views on the paradox
that has him looking a bit more sophisticated about it. Heck, something about if something
is scarce (and thus has high marginal utility) it might take a lot of labor to produce it or
find it, as in the case of diamonds. Right?

Prof. Cowen,

I couldn't make head or tails of what you were saying.

My fault?

I understood exactly what Noah Yetter was saying.

He's my idea of both an economist and a writer.

As far as I can see, you're neither.

I quoted Schumpeter, not Marx, making criticisms of the subjective theory of value. And I suggested that the labor theory of value works better logically and empirically as an explanation [now assuming a constant value of money] of changes in exchange ratios and unit prices over time (you may not believe that Meghand Desai has written the most important criticism of Marx since Schumpeter, but he has, and he grants that Marx's labor theory of value does quite well here) and that the labor theory of value is a plausible theory of the determinants of total non wage income and the average profit rate.

You say that this theory cannot hold in light of the transformation problem, and I suggest that the transformation problem has been misrepresented as devastating for Marxian economics--it pales into insignificance compared to the problems haunting neo-classical economics, e.g. its having no room for money and the production process, its assuming the independence of consumer tastes, its dubious assumptions about human psychology, its distortion of power.

Marx's admission of the problem has been misunderstood; and even as traditionally understood there are several good ways of dealing with it.

But yes there's something bourgeois about economics. Given the kind of training you put your students through, how many feel that they should have picked up Steven Greenhouse's The Big Squeeze? And if you haven't read it, how can you pretend to lecture anyone about the economy? At least if you have read and understood Marx, you know that you should read it carefully and know exactly what to make of it.

David Henderson wrote,

"Maybe that's what Tyler meant when he said "inputs are heterogeneous."

Why should there be any "maybe" about it?

Does a real economist and real writer leave any doubt about what he means.

Let me leave no doubt.

Tyler Cowen is not a faker.

That was a typo.

I meant, he was a faker.

How's that for not leaving any doubt?

I'll say this for him. I would have been banished from almost any other blog for such comments, as I have already been banished, for far less, from ThinkMarkets, formerely Austrian Economists, and Mises blog.

Whatever else he is, Tyler is at least a man.

Barkley,

My first lesson in economics was at an off-campus seminar, while I was at UCLA, in the fifties, conducted by a member of the infamous John Birch Society.

Some years later I saw my teacher at that event hooted off the old Joe Pyne television show in Los Angeles, for trying to advance the proposition that the Beatles were a Communist conspiracy. Maybe he deserved that treatment, but I felt badly for him anyway, for I remembered him as the man who had first turned me on to the beauty of economics, and with this plain and simple proposition:

There's demand for apple pies, but none for mud pies, so they won't be worth a red cent, no matter how much labor has gone into them.

While such plain and simple logic is what turns people on to economics, your cryptonomics is what turns them off of it.

So, to the young readers here, I say, don't pay any attention to the mystics and pretenders. Economics is always plain and simple, and, if it isn't plain and simple, it isn't economics.

And it ought to be perfectly that what Barkeley is saying is not economics.

To the young readers here:

Did you understand what I said about apple pies and mud pies?

Of course you did.

Did you understand anything Barkeley said?

Of course not. John Stuart Mill himself couldn't have understood it.

You understood me because I wanted you to understand me, and couldn't understand Barkeley because he didn't want you to understand him.

Don't you think that if he really wanted to make you understand him, he would have found the means to do so?

The implication of cryptonomics is that the reader is not up to its level. But, then, neither were such men as Hayek and Mises, if the reader was up to theirs. So, the mystics cannot simply pretend that the reader wasn't up to their level, but that the greatest economists of all time weren't up to it either. And that isn't really too likely, is it.

Barkely,

Either labor is something the consumers value for itself or it isn't. If they don't value any of the labor that went into mud pies, they won't value any more of it that went into apple pies. It is the end result alone that they value. And the price they are paying is already all that the traffic would bear, for the suppliers were already charging all that the traffic would bear. Putting more labor into the product cannot cause the price to go up, if it is already all that the traffic would bear.

As for your curves, no real economist speaks in such terms. They are the language of fakers.

And the very fact that you could not present your thesis in straightforward language was your own admission that there was nothing to it.

You're not an illiterate person, and I'm sure that, if you really had something worthwhile to say, you would take the time and trouble to do so in clear, straighforward language.

And, if it isn't worth your time and trouble to do so, it's hardly worth mine to try to figure out your hazy gabble.

Again, you may be at a much higher level than men such as Hayek and Mises, but I doubt it.

Sorry if I'm doing an injustice to an extraordinary genius.

DG,

Um, first of all I believe I have said very little about Hayek and nothing about Mises on this
thread, and to the extent I have, I most certainly did not put myself higher than them. You are
delusional on that one. Why are you making such off-the-wall remarks?

Second, my latest comments were addressed at a basic principles of microeconomics of a standard
textbook neoclassical sort. No, sorry, I am not going to try to put this in terms a 10-year old
would understand. Please do not be silly. As it is, this is very simple stuff, horizontal supply
curves whose positions are determined by labor costs, in turn determined by labor time. So,
supply determines price while demand determines output. This is as simple as it gets.

You seem
to be freaking out over the very idea that there might somehow be some conditions under which
the crude labor theory of value might hold, even though this whole discussion has made it very
clear that those conditions do not remotely come close to holding in the real world. So, please,
relax, do not worry, none of us is going to going to start touting the labor theory of value as
explaining market prices, although some here think that it is useful for other things, such as
explaining historical or social phenomena. But those are different matters and issues, and the
discussion of them does not occur at an introductory micro course level, and indeed involves
simply rejecting that whole approach entirely as irrelevant.

Regarding your remarks about the value of labor, sorry, but this is again simple neoclassical
economics. The value of any factor depends on the demand for it, which in turn is derived from
the demand for the goods that it can produce. So, maybe nobody wants mud pies, but that does
not mean therefore that labor has no value if people want apple pies that labor can produce.
Please get it together, DG. This is not rocket science or anything esoteric, just very basic,
garden variety introductory course level microeconomics, as simple as it gets.

Dg,

Trouble? With whom? Your old John Birch prof? One minute you tell me to talk to ten year olds, the next you
want me to talk at an "advanced level." If you want the latter, go read the papers on my website. The most advanced
are beyond all but a handful of people who read this blog, not to be too pompous about it, but accurate.

There are two cases. One is the question of whether or not the LTV is a good model for explaining the determination
of market prices. The answer is no. The other is whether or not it may be useful for explaining history and other
things. There my answer is also no, however I do think that Marx's observations of such matters are deep and often
insightful, even while they are frequently wrong. There is little doubt that for all his mistakes and flaws he was
one of the most brilliant and deep thinkers of the 19th century, if not all time.

Barkley
Hollander gets closer to understanding Marx than you do, and that should worry you, Barkley. He writes with supporting quotations: Marx's "precise intention here is elaborated subsequently when he insists that as exogenous change in cost conditions will generate a change in 'market value' such that quantity demanded and supplied are reequated (at a higher or lower level)--that is costs that ultimately determine the equilibrium quantity supplied and demanded...Marx here in effects repeats Ricardo who seemed at times to object to 'demand-supply analysis', whereas he insisted only on the *primacy of supply* objecting to formulations that did not focus on changed real-cost conditions as the ultimate determinant of equilibrium price and quantity demanded and supplied." Now the quotes make the point even clearer. But no time. Samuel Hollander The Economics of Karl Marx, p. 14

Cowen invokes the Marshallian S and D apparatus as superior to the Marxian law of value but the former does not recognize the primacy of changing cost conditions in the determination of the movement of prices and absurdly gives equal weight to the demand side as the supply side (Schumpeter gives good reason not to do this).
At any rate, think of the DRAM market. Did firms respond to oversupply in the late 80s with a restriction of supply. No, because too much was produced even more was produced by making even bigger upfront capital investments through which unit costs were reduced, the market expanded, and oversupply overcome. This kind of dynamic of which the Marxian law of value is intended to make sense--it is a dynamic law, not a law of equilibrium prices in a comparative static framework, a la Walrasian or Sraffian theory; it is fundamentally a law of the inverse *movement* of the quantity of use values and unit values as Marx makes clear in the first pages of Capital--is not represented by your blandly saying that the law of value is equivalent to a flat supply curve.

Sorry, typos galore above.

I wrote,

Didn't you mean to say, the conditions under which it was right or wrong, since it didn't matter whether which it was?

Of course, that should have been

Didn't you mean to say, the conditions under which it was right or wrong, since it didn't matter which it was?

I wrote,

But I thought it matter whether he was right or wrong.

Of course, that should have been

But I thought it didn't matter whether he was right or wrong.

DG and Rakesh,

Actualliy I think you two could have a very productive conversation about Schumpeter and Mises, who knew each other well in Vienna. You can also agree that I am a terrble writer not able to explain anything without completely muddling it up.

No, it's obvious that no one could have a productive conversation with him. I don't think you're muddled, I think you're refusing to put forward the best case for Marx, and I suppose you can't or refuse to make anything of what I wrote. I am arguing that you're not being charitable to Marx. On von Mises, you must have missed Brad DeLong's recent posting on him (see LvM's sympathies for fascism). Schumpeter's politics evolved or devolved from his Manchester liberalism in the Imperialism essay.

Barkley,

That was very interesting. I'm on the side of those who think Mises was absolutely right about that. At the time, fascism was the lesser of evils, and politics does make strange bedfellows.

Who refers to Ludwig van Beethoven in the ordinary flow of discussion as anything but Beethoven?

Prof. Horwitz loves to pose as the nicety police, but he sure let the dogs loose on me, and when they couldn't silence me, just banned me. What a pussy!

DG,

But what I want to know is if the book by Ebeling is "certainly not for beginners," does
it pass the "able to be understood by ten year olds" test that you put forth here for
commenters like me?

'a "better model of price determination" with the labor theory of value than the neoclassicals or other schools of economics do you?'
Cmon Barkley you are so much sharper than this. Of course my thinking that Marxian theory makes better sense of price in all its aspects than static and often overly subjectivistic neoclassical economics does not mean that I think Marxian theory is primarily a price theory, even liberally redefined.

Barkley,

Back to Richard Ebeling's great new book, Political Economy, Public Policy and Monetary Economics/Ludwig von Mises and the Austrian Tradition.

You may have caught me in a contradiction, subjecting you and the others here to the "able to be understood by ten year olds" test, while admitting that Ebeling’s book, which I liked so much, was "certainly not for beginners."

But was that really a contradiction or merely an apparent paradox for which there was an explanation?

I'm not sure myself.

Let's contrast Ebeling's work in this book with that of Don Boudreaux at Cafe Hayek. Boudreaux is another favorite of mine precisely because he writes for ten year olds, like Bastiat did. How could even a ten year old not understand the Parable of the Broken Window, the elegant simplicity of Boudreaux, and common sense logic of that kooky, first teacher of mine, with his apple pies and mud pies? Even Rakesh, at 10 years of age, would have recognized such simple truths when he saw them, and had to grow up and become a Marxist to be unable to do so.

So, why didn’t Ebeling write his book the way Bastiat did?

Ebeling had a different task. It wasn't to make a few simple points but to survey a vast intellectual landscape. It was not of his own making, and he had to take it as it was, and try to integrate its nonsense with its sense. That's a hard task. It was hard even for Mises, who was better at expounding his own ideas than at deconstructing those of others.

Ebeling faced another obstacle, the limitation of space. He didn't have the luxury of explaining everything in economics from A to Z but had to assume a certain level of knowledge on the part of his readers. For example, when he referred to ideal types, I wouldn't have known what he was talking about if I hadn'r already read Mises lengthy explanation of it. Should Ebeling have repeated it? Should he have written a much lengthier book, or relied on a level of knowledge from his readers beyond that of most ten and even seventy year olds?

There were times when I wished I could have been at his side while he was writing this book and asked for greater clarity at one point and another. Yes, it could be tough going, even for this 77 year old with all his background in the subject. But give Ebeling credit. He undertook a monumental task. And if he hasn't taken it to the ultimate point, at which even a 10 year old could understand it all, he has taken us a lot closer to it then we were before.

I have only read thrugh this book once. But just as I have lived with Human Action, this too is a book that I hope to live with for a long time.

Does this mean that the rest of you are now exempted from my "able to be understood by a 10 year old" rule?

That depends on how much faith I have in you.
I persisted with Mises, even when I couldn't understand everything he was saying, and am persisting with Ebeling, because they earned my faith. I saw enough in them to make me want to see the rest, and willing to make the effort.
If you need me to put my faith in you, you must earn it, the way Mises and Ebeling have. You must show me that you have something to teach me, and, at the very least, have come up to my own level, before I could hope that you had surpassed it.

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