Economics becomes a lot easier when you just accept that labor is a raw material like ore or wood.
And value is simply what someone is willing to pay for something.
Einstein could build a door hinge too. Does it suddenly then become worth millions?
I don’t think labor is a raw material like ore or wood; could you elaborate on how it is the same as physical materials?
I’m pretty sure that’s the price of something, not it’s value.
Yes, I’m fairly sure that if Albert Einstein had built one door hinge, it would be worth considerably more than a comparable door hinge made by a machine or an anonymous craftsman.
And that’s because labor is not a raw material, like ore or wood. Labor is the special part of the process that is difficult to quantify and not all labor is equal, while most wood or ore (of a type) is so similar that any one piece can be replaced by any other. Some labor may be so simple that any one laborer can be readily replaced with another random laborer, but that isn’t necessarily true in general.
I’m not being mean to you; economics is obviously not my science. It just seems that you say, “Labor has value,” but then go on to say, “Nobody uses a labor theory of value.” To me, this seems like two contradictory statements.
Linguistically, that’s a huge prima facie contradiction. I may be running up against “terms or art” in economic theory, and maybe you’re defining the terms differently than they sound.
Don’t take any of this personally. I’m finding it hugely confusing.
That seems to be the problem, then.
That, however, is equally a mistaken accusation; I never “attributed statements to you that you never said.” I addressed what you actually said.
If it’s a problem with abstruse terminology (like “suspect classes” in civil rights law) then, sure, I’m confused because the terms don’t mean what they do in ordinary common English. That happens a lot in technical subjects.
(In physics, if you walk a level mile carrying a bucket of cement, you haven’t done any “work.”)
True, of course. And yet labor does get paid, and labor does turn raw materials into finished products. Manufacturing, mining, agriculture, and service would all be impossible without it.
If someone came up with a “capital theory of value,” arguing that the entire economy depended on investment capital, I’d say, no, that’s wrong: but I wouldn’t make the error of excluding the middle and claiming that capital is of no value in economics. A “capital theory of value” is perfectly valid, and so is a “labor theory of value.” You just can’t claim it’s either zero or one hundred per cent.
I don’t think labor has no value. Labor has no intrinsic value in terms of any currency. Same as a bird egg. The only value it has in terms of currency is what someone is willing to exchange for it. That does not mean that it has 0 value in that currency or that it has no intrinsic value using a different metric.
The cost of producing a good is a function of the materials & labor needed to create it. In this regard, labor is indistinct from raw materials. To the consumer, who buys a product (i.e. gives it value), labor is truly just another input.
I have a rock I found in my backyard. I will only sell it for $10 million and not a penny less. It’s price is $10 million, it’s value is probably less than a penny. Because value is a simple function of what someone is willing to pay for something. Otherwise, it is a meaningless concept.
Hard to say. Either side is speculation.
It is rather analogous to raw materials. Not all iron ore is of equal quality. Not all wood of equal age & strength. Producers pay more for higher-quality raw materials. In what way is paying more for higher-skilled labor not analogous?
Yes you pay more for specialized labor. Nuclear plants pay more for enriched uranium. What’s the difference here, other than the (admirable but misunderstood) sentiment that the work of human beings deserves special treatment?
From the vantage of economics, labor and raw materials are nothing more than input costs to create a product. The labor theory of value is anti-economics; it creates an entire fraudulent philosophy based around our unwillingness to accept this cold reality.
I think this is only seems new if one is looking through the wrong lens. This portion of Marx was essentially religious eschatology, postulating the perfectability of man and the creation of a providentially virtuous society. It most closely resembles Puritan theology (which helps to explain the puritanism of communist governments), but elements of it had been part of Christian thinking for centuries. I’ve always thought that one of the reasons Marxism flourished so readily is because it mapped so easily onto a Christian belief system.
The Labor Theory of Value holds that the value of items can be explained by the input of labor. No clearing price on Earth is determined by the amount of labor put into the good or service. Every clearing price on Earth is determined by the subjective valuation of the consumer for the end use of a good or service. Therefore 100% of all values can be explained by a subjective theory of value and 0% of all values can be explained by a labor theory of value.
Just taking a stab at it.
Well, even if I don’t hate my job, I’d probably rather do something else with my time than work.
My standard question to your idea is “who will do the unpleasant hideously awful work that no one wants to do”?
You see, that’s the genius of Trump’s plan for that wall. Remember, a wall can keep people IN as well as out!
( 
But you moved both your body and a bucket of cement. That* is *work in a physics sense.)
The “Labor Theory of Value” defines value as generally being a function of labor; not of scarcity, not of raw materials, always labor.
This is nonsense, because most physical goods are not made of man-hours, but of scarce physical materials. Labor can refine physical matter, but does not create it. A man in an empty room will never be able to put in enough hours to create a strand of silk, a cord of firewood, or a gram of platinum.
I think the super-long-term goal should be for mindless robots to do all the work, so that our descendents have the luxury and freedom to explore the wonders of their futuristic sciences, ponder the deeper mysteries of the universe, and play a lot more X-Box than we do.
Robo-commie paradise. As long as the bots don’t, like, murder us all. That would suck.
In the meantime, I think more people should consider learning some economics. (Including a lot of economists. The field is so technical nowadays that, in my frank opinion, a lot of economists don’t actually know the subject, they only know how to rearrange equations in the approved ways.)
That’s a helluva interesting idea.
I have trouble evaluating the non-economic aspects of Marx’s writing. The moral philosopher Peter Singer argues that Marx’s primary achievements were philosophical, not economic, to which I can only say… okay then. I enjoy giving a sharp poke to any economic superficialities that I see, but at the same time, I don’t want to deny the man any legitimate credit in other areas that he might genuinely deserve.
This is a solid observation.
It’s worth pointing out, though, that Marx was fully prepared for a related criticism of the LTV.
I’m tempted to just shake my head at this. Yet another semantic escape hatch from Marx.
But at least it’s a consistent part of his framework. From the very beginning, he’s talking about “commodities” (Waren) and he’s defining these kinds of goods as those that are regularly traded in markets. Any labor that is totally wasted won’t lead to a manufactured good that is regularly traded in markets, so he’s not contradicting himself by saying that the labor that goes into useless objects has no value. It feels arbitrary to me, but at least this part of it holds together.
Of course, one of the huge advantages of modern value theory is that we don’t have to make these sorts of ad hoc refinements to our definition in order to make it all hang together. We don’t have to restrict our attention to manufactured goods that trade in the markets. Our notion of value today is not only simpler and more psychologically reasonable, but it also explains more things.
Here is a general rule that I think is fairly reliable.
If a person uses a term in lower-case a single time without bothering to define it, and then moves on to other ideas without any further ceremony, then it is reasonable to rely on a prima facie reading of said term.
In contrast, if a person introduces a new term as the very title of a document and uses a capitalized spelling of the term repeatedly within the document, while also attempting to define that repeatedly-capitalized term at length using not only explanations of historical context but also multiple excerpts from famous thinkers in history attempting to explain the same idea over the course of more than a century, with the document (again: titled with the name of the term) ultimately running to more than 5000 words in its attempt to explain what that term means… in that particular case, we might want to carefully consider the possibility that all this effort is being expended for the specific reason that the term is complex and deserves a more careful reading than any superficial prima facie approach.
The context in which the term appears can provide a strong clue about the best way to read the term.
I’m not going to claim that my scribblings above are paragons of perfect clarity. There’s always room for a better explanation. Some parts are always unclear.
However, in this particular case, I do personally believe that I put in sufficient effort to alert the average reader that the Labor Theory of Value is a very strange term that deserves more attention than a prima facie approach.
This has already been pointed out just above, but to repeat: you have, in fact, done “work” in this case.
You haven’t done any “work” if you hold a heavy bucket of cement securely while staying stationary, moving neither it nor yourself for an hour.
Not a new, though., It was noticed rather quickly that Marxism changed, within Marx’s own lifetime, into a sort of cult. It had prophets, holy books, and a kind of gnostic interpretation. I wouldn’t say that he exactly made some kind of advance in human philosophy, however, and in fact point to his ideas as important, but extraordinarily flawed. It’s no exaggeration that Lenin overturned the table of the world because of Marx, even though all he really accomplished was to trash dinner and break the good dishes.
Nm
Great post, Hellestal. Thanks for putting in the time.
I think the problem we are having with all this is that we are trying to apply simple rules and concepts to what is ultimately a complex system. How is the value of something determined? Well, by the interactions of millions of people who bid for the thing. Why do they bid the way they do? Who knows? There are so many components and interactions that can go into that we simply can’t fathom it.
An object’s value may be partly aesthetic. It might be due to its ability to be used to create more value. Part of its value may be related to the opportunity costs associated with buying or not buying it. Then there’s a time-based aspect to value - some things are only valuable when delivered at a certain time, or with predictable time intervals. Value can change with geography and time. A connection to the New York Stock Exchange can vary in value by millions of dollars depending on the latency built into it by distance. Milliseconds change the value of the connection by huge amounts. Local knowledge can change value. When one good changes price it can affect the value of another.
Value is a complex, fleeting phenomenon. We try to assign simple causes to it: Value comes from labour. Value comes from utility. But possibly the most we can say about it is that value is an emergent property resulting from a million inputs, a million decisions by a million different actors in a complex system of feedback loops and networked information exchange. It’s an emergent property of a giant computing machine called ‘the economy’ which has ‘software’ that evolved over time and which is largely opaque to us.
The labour theory of value never made sense to me as a fundamental concept. It seems rather obvious that it’s possible to expend labour in ways that create no value, or in fact which destroy value. As you say, Marx hand-waves this away by saying that he’s only considering the kinds of labour that DO create value. Aside from that being a tautology, it seems backwards to me. Labour doesn’t result in the creation of value - the recognition of the value of a good is what causes labour to divert to its creation.
Believing that it’s the labour that creates the intrinsic value of a good gets the relationship exactly backwards: The intrinsic value of a good is established by the market, and labour diverts to making it so long as the labour can’t be employed somewhere else where more value can be ‘mined’. Over time, this begins to look like labourers are creating value, but it’s probably more correct to say that identified value causes labour.
When any life is born, it can only experience/comprehend/learn from its inner self (from the workings/needs of its inner cell --all the way up to its consciousness) and the outside world (from learning what can be done outside of itself to sate its inner hunger --all the way up to learning how to be a part of human society as a whole) via its DNA expression that caused the cell to grow in that manner to begin with. As life grows, it learns the “rules” by which to live a “successful” life wherever it is, according to its available senses and abilities. Different places (ecological niches, climates, societies, groups, etc) have different rules that lead to “success,” as different forms of life also have different strategies (life’s hand dealt by DNA) to live by.
That ecological niche that a species has lived in for generations slowly (through mutation and parental teachings conducive to that narrow environment) writes in to the DNA a self-consistent tautology that is perfect for its own balanced ecology (way of life, or thinking). Just as you said above about how a perfect tautological boat cannot sail with the changing world, so too do we see invasive species dominating and destroying ecosystems before everything settles down again generations later into a new way of living (minus a few or all of the old species).
What I am getting at is that we all, each individual, in every instance of our lives “succeed” by creating (semi-consistent? good enough at least) self-consistent tautological meta-narrative “rules” by which we live our lives. I reject what you said above, ““I define myself to be right, therefore I am right” is not much of an argument.” I say that is instead the king of all arguments as it is constantly the overriding way we make sense of the world around us and live our lives. All of our thoughts/actions about the world which work for us, run the gamut between helpful to harmful for others in their own different situations around the world. Other people hearing your (or my, or anyone’s ideas about anything) are valid in whatever their personal interpretation and actions upon the message are.
I feel that all such “grand unifying theories” will forever be incomplete and rejected by people around the world precisely because, as I said above, we all are living different lives under different circumstances in a changing world. We cannot even agree with our “selves.” We are two brains in the living in the same body since birth and yet when our lobes’ connecting nerves are severed (as an epilepsy treatment) each half can then express itself and fight or disagree with the other, even though they shared 100% of their thoughts and feelings about everything up until that moment.
I feel that the Labor Theory of Value is incomplete, just as I feel that every theory (economic or otherwise) is incomplete. It is not even a case of not knowing or accounting for how many variables go into the complex math equation to spit out the answer of =$24.99. It is more of a chaotic interconnected fractal of equations with everything in the world interacting to create values for labor and capitol and desire and climate and boredom and etc…
You want people to become pets? To stay infantile forever? In the wild (any in any form of life) the only true income is the useful Calorie. The ability for your cells to continue to do work and stave off entropy and degradation for a few more minutes. There are, of course, different “types” of Calories that your body needs in various amounts; try holding your breath, or going without water, or food, or shelter. Too much of a good thing is also bad; try breathing 100% oxygen and see how fast your cells oxidize and die. Or over eat sweets, sure your body has learned over the generations to covet sugar and fat (see? A callback to life being a delicate balance that was never meant to combat or live through sudden changes) but too much will leave us malnourished. What am I getting at? Paper money, gold, barter, favors, everything we do is so we can easily trade our time and skills for the things we need to keep our cells happy. Houses and cloths so our cells don’t have to work so hard at keeping us alive at the optimal temperature, cars and the internet are both our new ways of hunting and foraging for food (a job that pays better money) in ever widening circles, and the new way we search outside our tribe’s genepool for new healthy mates. Etc…
But now, tell me, what is a pet vs a wild animal? Or even a child vs an adult? A pet (or a child) has all its needs met (it receives a “minimum sustainable income” of food and play and warmth and socialization on its owner’s [parent’s] dime. The owner has to do all the work and the pet/child really has no reason to do anything) and it never hunts or does work on its own, (maybe a service animal is similar to a child doing its chores around the house or getting a small part time job) But either way, the pet/child loses agency and the ability to do for itself what the owner/parent does for it.
Life is a constant struggle, but there is greater meaning and beauty to it. Are you not equating the life of wild wolves to “hideous work?” Do you think that when we then breed them over generations to stay permanent warped puppies and call them dogs, that now “with no need for that sort of hideous work” their lives are so much better and to be envied by their wild wolf cousins? Do people find 30+ year olds with no job history living in their parent’s basement a source of inspiration for being born into a passive enough household that they never had to join the rat race to being with? With so much free time on our hands with a guaranteed basic income, why would we not succumb to this behavioral sink (this min-com feels like too much of a good thing, like candy we will become psychologically malnourished over generations) like the rats did and eventually self-destruct from there being infinite resources and no threats to keep the population down and the idle mind from going crazy?
My cat’s breath smells like cat food.
I didn’t se this when it was first posted, so I apologize for the lateness to this. I also apologize that I will likely not be able to follow up too much on this post. This is, a) for time reasons and b) because the playing field, judging from our last run at this, is unlikely to be level–Marx’s axioms will be unacceptable to you, while your axioms will be unacceptable to me. But at least we may be able to clear up your understanding of Marx.
P.S. I also apologize of not even having the strength to see THIS reply through, but felt like I should at least post the stuff I got to. Hellestal, I’m sure you’re a good guy and a sharp economist. More power to you for trying this and the Smith thread.
First of all, and we have gone over this before, exchange-value to Marx is not the same as relative prices; price, for Marx, is exchange-value expressed in money. It does not have to be expressed in money, however. It’s unsurprisingly important to follow Marx’s outline of thought here, without jumping ahead to assumptions such as exchange-value=price.
Now, more pertinently, Marx argues that as soon as commodities go onto an exchange, they lose their use value (their particular quality) and only act as quantities. Which seems an surprising thing to find strange: if I have ten dollars worth of grain, and you have ten dollars worth of sand, and we exchange these, we will (totally absent any use we have for these commodities) still both have ten dollars worth of goods. I just went through Kapital again to see if there was any reason to assume that use value is quantitative for Marx, that you can have “more use value” rather than “more use values”, i.e. more useful things. I didn’t find anything, but I may not have looked hard enough.
Again, I am not sure how to comment on this. I did it over and over in the other thread. No, Marx is not talking about different things here than he was talking about before. Things have use value, as he says, without having value, because value, which is at the bottom of all commodities (not all things) is necessarily a product of human labor, but not necessarily a product of anything else. Your line about necessary and sufficient is certainly correct for some commodities, but not for all, and Marx is NOT talking about “the economy”, as you aver, but about commodities. I get that it’s a difficult abstraction. To take them one by one: the sun is a free use value, which Marx need not figure into his calculations; tools are, of course, but each and every one of them, too, is a product of human labor.
And then…this…
That’s, on the one hand, total nonsense. Even if workers toiled completely inefficiently, they would still make goods; and to call capital “equipment” is simply an ideological slight of rhetoric. But more importantly, it’s not even anything that stops Marx’s theory from being true. Yes, modern industrial economies (well, most) have capital employ workers to make goods. Marx’s only point in this is that whatever value inheres in these goods is ultimately based on human labor. All the capital in the world will not get you a 4 x 4 without human labor, but human labor obviously (because it very obviously precedes capital) will yield you a 4 x 4. That’s not Marx’s point exactly, but it will serve.
Yes. So? Why should he not? Does anybody pay anybody for sunlight, rain, dirt, foresight? Is any of these things a commodity? Again (and again, and again) you cannot just lightly skim Chapter 1 of Kapital, substitute “the economy” for Marx’s real argument, and then take Marx to task for not making sense to you.
How exactly does the decision to produce good A instead of B influence either”s value? I’m not sure what you’re getting at here.
[quote}
Here is his petard. Watch as he hoists it.[/QUOTE]
Ahem. You’ve got a wee bit of a problem understanding that proverb, I think.
Whereas here, you’ve got a problem understanding what Marx is saying that I’m not sure you’ve more than glanced at this text:
It would be helpful to state clearly what your objection to this is, precisely, besides your apparent feeling of unease with it. You’re still not getting what Marx is talking about. He is talking about commodities. Here’s the line that deals with your “take it further” line:
In other words, no, your society in fact never produced any value at all, because it was all subsistence life style. Marx’s argument pertains to commodities, wage-labor produced goods whose value is embodied labor. Do you deny that exchange-value embodied in money (price!) goes done as labor effectiveness increases, all things otherwise remaining the same?
And now, with some regret, I see that I have to bow out of this, because it’s so repetitive. You’re not understanding Marx’s argument, nor following him through his steps, nor apparently willing to approach this without a need to ridicule, or even engaging with the argument on its own merits. Do you think “I’m not making this up!” is an argument? Is there a logical flaw in Marx’s analysis that you would like to point out, besides “I think (because that’s what I’ve been taught) it must work differently!”?
This is a repeat of what we’ve gone through before, and everybody’s free to check it out there. But I don’t feel like answering the next guy who feels like he’s detonating Marxist economic thought by saying stuff like “but hey, if I spent labor on destroying a Monet, how have I made value, eh?”
Marx was obviously wrong.
Value is either intrinsic related to the properties of the goods themselves and that value can truly be accurately expressed by a precise enumeration of the good. In other words a particular carrot has the precise value of that particular carrot.
Or value in terms of exchange of goods or services is what is decided by actors in a competitive market. A human beating on a rock or a chunk of metal may or may not increase it’s value in terms of exchange. The act of beating isn’t some magical ritual that imbues the item with anything objective.