Wednesday 15 May 2013

The Pilkington Critique.

Prof. Corey Robin (from Brooklyn College/City University of New York, a Crooked Timber collaborator and blogger) has long maintained that the thoughts of the two Friedrichs (Hayek and Nietzsche) are linked.

In his latest essay (and companion introductory piece) Robin goes one step further: there are striking similarities, he argues, between the marginalist (also known as neoclassical) and Nietzschean theories of value. Among other similarities that Robin outlines, both theories are strictly subjective and both lead to highly hierarchical views of society.

Personally, I find his reasoning compelling, intriguing and full of important implications; but not being acquainted with Nietzsche's thought, I can't say whether Robin made his case beyond any possible objection. I'd recommend interested readers to read Robin's essay (warning: it's long, and it would be better to read the introductory post first).

Predictably, the essay generated a number of rather critical responses from the "conservative, centre right, libertarian" blogosphere. (See here, here and here, h/t Mike Norman Economics)

Much more surprisingly, perhaps, it also generated a critique from the "progressive" side of the spectrum.

Philip Pilkington ("a writer and research assistant at Kingston University in London" and frequent contributor of Naked Capitalism), after a brief acknowledgement of Robin's work (to the extreme of awarding Robin an interview!), goes on to say:
"His latest piece is grossly misguided and reflective of the fact that, when it comes to theoretical economics, academic critics on the left simply do not know their enemy [Austrian and neoclassical economics] at all".
However harsh these words might sound, those who have followed Pilkington's output will recognize that he is often much less nuanced. So, that's the first surprise.

Pilkington then sums up his case:
  1. "Robin does not quite grasp the essence of either modern neoclassical or Austrian economics"; and
  2. Against Robin's thesis of a commonality between marginalist (particularly Hayekian) and Nietzschean doctrines, Pilkington asserts that "it is Nietzsche's critique of all theories of value and, by implication, all systems of morality that lay the ground for the most effective critique of the marginalist toxin".
Whatever the explicit reasons Pilkington alludes, one, however, is left with the suspicion that what "lies [sic] somewhere in the background" of Pilkington's critique is the use Robin makes of Marxist terminology:
"It would also appear that, lying in the background somewhere, Robin assumes that the only antidote to the scourge of marginalism is the dusty old labour theory of value - as problematic and discredited as it is. This is something of a guess on my part but if I'm correct it is but another indication that the left are fighting battles that have long since been thoroughly and completely lost".


To substantiate his claims, Pilkington first undertakes to show how Robin misread Nietzsche.

Robin quoted the following passage from Nietzsche ("The Gay Science", 1882), as evidence that the German philosopher's thought parallels marginalism:
"Whatever has value in our world now does not have value in itself, according to its nature-nature is always value-less, but has been given value at some time, as a present - and it was we who gave and bestowed it".
Robin goes on to compare Nietzsche's quote with an older quote from Menger:
"That was in 1882. Just a decade earlier, Menger had written: 'Value is therefore nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs, that is, to our lives and well-being'."
As Robin indicated, one can find matching quotes from the other first-generation marginalists:
"Repeated reflection and inquiry have led me to the somewhat novel opinion, that value depends entirely upon utility. Prevailing opinions make labour rather than utility the origin of value; and there are even those who distinctly assert that labour is the cause of value." (W.S. Jevons, 1871. "The Theory of Political Economy", chapter 1, Introduction)
At the risk of being repetitive: Jevons and Menger's works, both marginalist, predate Nietzsche's "The Gay Science" by some ten years.

Referring to Nietzsche's quote, Pilkington, who claims a deeper, superior understanding of the problem, says:
"In this passage [Nietzsche's] Robin sees an anticipation of the pseudo-subjectivist marginalist theory of value - that is: the theory of marginal utility."

After demonstrating his understanding of written language, Pilkington moves to show his knowledge of neoclassical economics:
"I shall not here get into too many concrete examples having provided them elsewhere before, but take the standard marginalist exercise in 'showing' that a perfectly competitive firm in a perfectly competitive market will always equate marginal revenue with marginal cost. (…)
On the one hand, it tells the student the morally purifying tale that they should make optimal use of scarce resources - this is based on the fantasy of 'utility'".
The "standard marginalist exercise" Pilkington is referring to is indeed standard: it's the problem of a firm's profit maximization.

Beyond the reproaches Pilkington makes, on which I agree, the example of a firm that equates marginal revenue (i.e. $!) with marginal costs ($!) is equating dollar measures, not utility.

Pilkington, it seems, confuses the textbook consumer's utility maximization problem with the firm's profit maximization problem. It's telling that he seems oblivious to the difference.


But, for argument's sake, let's forget about all that. Let's assume Pilkington made his points: Robin misread Nietzsche, which Pilkington knows very well; furthermore, Pilkington has a vastly superior economic knowledge.

Pilkington justified the "pseudo" attached to the label "pseudo-subjective" marginalist theory of value, which he opposes, anyway. On top, there is no point in looking to the "dusty old labour theory of value" for an answer: it is discredited.

What next? How does one build a theory of value from Nietzsche's "true" subjective views:
"Nietzsche's subjectivist theories of values and morals are completely different. Indeed, they are quite the opposite. Nietzsche's theories, as those philosophers that developed them recognised well, were all about flux and change - the movement of people, their wills and their desires through time. These theories were about the mysterious forces that lay inside each individual, forces which they themselves do not properly understand, that push them to and fro, dictating their whims and desires. These forces, for Nietzsche, were above and beyond anything that could be objectively conceived in any rationalistic manner. Because these very forces determined our very ability to reason and hence our very impulse to try to determine things objectively, they could not be conceived of through the frame of objective knowledge. Such would be like an eye trying to look in upon itself".
It falls upon Pilkington to answer this question.


Ultimately, it is regrettable that a writer who has gained some prominence by railing against mainstream and Austrian economics (rightly so, in my opinion, although apparently for all the wrong reasons) seems entirely unawares of how ironic this is:

"Robin assumes that the only antidote to the scourge of marginalism is the dusty old labour theory of value - as problematic and discredited as it is".
Menger, quoted by Corey Robin:

"The most momentous consequence of the theory is, I take it, that it is false, with the socialists, to impute to labor alone the entire productive return."

We, the unwashed, the uneducated, the workers, cannot expect much from "progressives" like this.


  1. Nietzsche is notoriously difficult to characterize. Given that he had a taste for provocation and disapproved of consistency, this is not surprising.

    However, I do think Robin would have done better to leave out the discussion of value. I don't think that Nietzsche ever discusses "value" as meaning "price." Yet a consistent price theory is what the marginalists and Austrians were clearly after.

    There is a story here about how the classical authors' use of the word "value" had a philosophical as well as an economic significance, and how this was somehow misunderstood by mid-1800s and later authors. (I am tempted to think that the passage of political economic thought to amateurs without a schooling in philosophy probably was to blame, but perhaps that's just Nietzschean elitism).

  2. While I find this comment very insightful:

    "There is a story here about how the classical authors' use of the word 'value' had a philosophical as well as an economic significance, and how this was somehow misunderstood by mid-1800s and later authors."

    I am not so sure about this one:

    "However, I do think Robin would have done better to leave out the discussion of value."

    I mean, in my reading (and although I may be mistaken, I think it was Robin's intention), Robin's thesis seems to be that current free-market libertarian thought, against its professed ideology, is essentially authoritarian. Its authoritarianism is less based on government, and more on economic power; but it's authoritarian, nonetheless.

    But whatever its nature, authority needs to be legitimized. This is a question of "values". So, as I see things, Robin had to discuss values.

    This is where your other comment comes into play: the word "values" doesn't need to be understood in an economic context. And perhaps this is a contributing factor in the misguided critiques to Robin's essay.

  3. I don't get why Pilkington has such an axe to grind over the LTV. At the least, though, one would think he'd actually make a greater effort to understand something about which he feels so strongly.

    1. I could only guess: Because it's the fashionable, safe thing? Because it's an easy way to sound "sophisticated" and "realist", without actually doing the hard work?

      Maybe because one really feels one's worth as a person is much higher than that of others and the mere suggestion that this isn't so is scary and offensive?

      In any case, he is not the first and won't be the last, either.

      I'm no psychologist or sociologist, so my guess is as good as yours. Take your pick.

  4. As a lefty, I was a little disappointed you didn't confront Pilk with some citations for the defensability of the Labour Theory of Value. I suppose that's tit for tat. But I'd like to see bullshit like that called with citations, so "progressives" et. al. don't get cocky with what's "discredited" or talk vaguely as if supported by a professional consensus sapienti.

    1. As you didn't specify, I'll suppose you mean empirical tests of the LTV.

      I've mentioned before, without going into details, what I consider the best empirical proof, for the academically minded: George Stigler's article on Ricardo's 97% LTV (Prof. Shaikh, the unmentioned author of the paper, is in my Resources page).

      I referenced Prof. Stigler's article here:

      Stigler, Ricardo and LTV

      I consider Shaik's article such a good empirical proof because neither Prof. Stigler can be accused of being a socialist (nor even a "fellow traveler") nor did he dispute the result itself. He is, however, being ironic with the title: I suppose any hypothesis with a success rate less than 110% is not acceptable to mainstream economists...

      For the everyday reader, which I actually hope to write for, and begging your forgiveness for what sounds to me like blowing my own trumpet, I wrote

      Is it alive?


      While I don't regard myself as qualified to pontificate in academic matters, I did start a series for the lay person on some history of economic thought (i.e. HET) subjects.

      So, for your amazement or amusement (whichever is more appropriate), I give you "Land, Rent and Wages" (I only wrote the first four parts, i through to iv). Just follow the link:,+Rent+and+Wages

      As you'll understand, it is more theoretical. In that series I explain several topics. Among them how profits, in a competitive economy, come from unpaid labour.

      You are free, as well, to use the "Labels" list at the right of the blog. The label "LTV" leads to what I've written on that subject. "HET" leads to related topics.