“Skilled labor counts only as simple labor intensified, or rather, as multiplied simple labor, a given quantity of skilled being considered equal to a greater quantity of simple labor. Experience shows that this reduction is constantly being made. A commodity may be the product of the most skilled labor, but its value, by equating it to the product of simple unskilled labor, represents a definite quantity of the latter labor alone” (Marx and Engels 1975-2004, vol. 35, p. 54).
Marx did not know, and could not have known, that there is no multiplier that can reduce a more complex meaning to a simpler one. Only later in the 20th century was it shown by information theorists that there is no such algorithm that could eliminate “redundant” figurae and compress the meaning s to the minimal action s* to find out the complexity of s:
“The difference between the length of a string L(s) and its algorithmic entropy K(s) can be thought of as a kind of “algorithmic redundancy.” It’s a measure of how many extra bits we use to write s rather than s*, its shortest description. When we go from s down to s*, we squeeze out all that redundancy, leaving none in s*. That’s what makes it algorithmically random. … A program that could do perfect data compression—that could convert any string s into its minimal description s*—would be a very useful thing. But as we will see, such a program is impossible. … The problem here is that there is no program k that can compute algorithmic entropy. K(s) is an uncomputable function” (Schumacher 2015, pp. 241-247).
Since there is no algorithm that would reduce complex labor to simple labor, time cannot be a measure of abstract labor. However, different activities and their results can be reduced to a common equivalent, if not through the concept of time, then through the concept of cultural bits. Exchange value is measured not by the duration of time but by the amount of cultural bits contained in a set of use values. Use values are socially necessary existence values; exchange values is the socially necessary amount of cultural bits embodied in these values. Hereinafter, by value we mean exchange value in the context of use values, unless otherwise specified. Meanings became value as episodic exchange has turned into regular one, as small communities cohered into larger societies, as social necessity evolved.
According to the principle of least action, changes in the socially necessary multiplicity of existence values are linked to changes in the socially necessary mass of these values. We call this relationship between the set and the mass of existence meanings ordered by preferences the allocation of meanings. It takes activity to reproduce meaning, it takes meaning to reproduce activity. Value is the allocation of the only truly limited resource people have—their actions and results, that is, meanings—between competing goals. As an allocation of meanings, value has two sides: the side of benefits (meanings gained) and the side of costs (meanings expended). The socially necessary set and mass of meanings are determined not by some average but by the best alternative allocation that is foregone:
“In economics, the cost of an event is the highest-valued opportunity necessarily forsaken. The usefulness of the concept of cost is a logical implication of choice among available options. Only if no alternatives were possible or if amounts of all resources were available beyond everyone’s desires, so that all goods were free, would the concepts of cost and of choice be irrelevant” (Alchian 1968, p. 404).
The allocation problem and the choice problem are the same. The allocation problem implies choosing between counterfacts (benefits and costs), and the value is the best allocation to forego.
Philip Mirowski wrote that the transition from classical political economy with its “labor theory of value” to neoclassical economics with its concept of “marginal utility” is associated with the transition of physics from the concept of “substance” to the concept of “field” and with the penetration of mathematical methods into economic theory (Mirowski 1989, pp. 176-177, 194-195). If classical political economy and neoclassical economics considered physics as a model, then the economics of the 21st century is guided for this purpose by the sciences of information, evolution, and complexity. The theory of marginal utility reduced value to the perception of utility by a person and did not take into account social necessity. This theory was unable to establish an objective measure of economic indicators, in particular, it could not measure utility and show how and why utility depends on social mores and ideals. The concept of value as a socially necessary multiplicity and mass of existence values is a generalization of two competing theories of value: the classical labor theory of value and the neoclassical theory of marginal utility.
Exchange value is an abstract phenomenon that cannot be observed directly. But value has a tangible representation, its history can be traced through the history of money, since money is the material expression of value and a social instrument for calculating the necessary set and mass of existence values.
Money and prices
Money is both a process and a result of the historical evolution of economic calculation. As a material expression of exchange value that links past and future activities, money evolves through the entire sequence of forms of circulation from gifts and tribute to commodity exchange. The first function of money is a means of calculation and circulation. In a subsistence economy, calculations are carried out directly, the quantity and allocation of activities are directly linked to the future consumption of their products. Money appears in tribal societies as an indirect way of accounting for gifts and tribute: one can recall the rai stones on the Yap Islands. In a tribal society, however, money does not link production and consumption, past and future activity. Truly methodical calculation began with the advent of the state with its accounting and planning. The Chessboard Chamber controlled the treasury of medieval England using simple means such as checkered cloth and wooden tokens.
Value is a measure of the socially necessary activity and its results, money is the material expression of value. In practical terms, money is both a means of calculating value on the basis of the individually necessary amounts of activity and a means of calculating the consumption share of individuals and groups. Value is a socio-cultural phenomenon, and money and prices are a technology that builds on the programming of this phenomenon and mediates the evolution from the simplest to more complex forms of exchange.
Individual needs can only coincide with socially necessary needs by chance, otherwise individuals would be only an external manifestation of society as a kind of “superorganism.” Thus, the totality of individually necessary meanings can only coincide with the totality of socially necessary meanings by chance. In the general case, the aggregate of individually demanded goods and their prices should not be equal to the set of use values and their exchange values. “Through the mediation of money, subjects maintain relationships with what is not themselves, with the social as an institution” (Aglietta and Orléan 2002, p. 19).
Exchange value is the substance of money; price is the sum of money that an individual consumer, producer or intermediary is willing to pay for a given good. Exchange value is the measure of use value, price is the measure of utility. Although the meanings of existence are ordered among themselves, they are not ordered with the meanings of communication or self-expression. Exchange value is not the measure of dreams, morals and ideals, they cannot be bought with money. But exchange value and money are impossible without dreams, morals and ideals, since they make social choice possible and hence social necessity and value as a socially necessary mass of cultural bits embodied in use values. Loves and hopes, morals and ideals are not for sale, money is not paid for them. But goods are sold (or not sold) at a price determined with loves and hopes, morals and ideals in mind.
Value as a socially necessary mass of use values evolves in the process of self-reproduction of culture-society, while price as an individually necessary mass of utility develops in scattered acts of individual or collective self-reproduction. Value and price are linked through money: “Economists have the habit of thinking