Labor is not deserving of special consideration. Advocating the concept of Labor Theory of Value displays ignorance of the concept of wealth and intrinsic value. There are a trillion factors that go into the value of a particular item or service. Socially necessary (a circularly defined term) labor is not one of them.
Show me any practical example of this theory solving or achieving anything positive. What’s the point of a theory that predicts nothing or describes nothing? All this theory does is try to make labor have some mystical properties.
Labor deserves special consideration. Advocating the Labor Theory of Value displays profound recognition of the concepts of wealth and intrinsic value. But there are no other factors that ultimately go into the value of a commodity than labor. Socially necessary labor time (a rigorously derived concept) is the only one that, in the end, counts.
Hey, see what I did there? I debated, octopus-style. Listen, check post #65 again for me, will you.
So for a final time, since you don’t actually appear to be reading what I write:
THE LABOR THEORY OF VALUE IS NOT ABOUT MAKING PREDICTIONS ON THE PRICE OF COMMODITIES OR THE SOLUTION TO ANY MICROECONOMIC QUESTION.
The thing is, I’m fielding accusations of offering circular logic from a guy who thinks “a pound of iron is worth a pound of iron” is a deep economic insight…I’m not sure why you feel obliged to “discuss” this…It’s not even like it’s hurting you or anything.
I want to discuss this. So I do. And yes a pound of iron having the intrinsic worth of exactly a pound of iron is a deep economic insight. Every other expression of value rations must be determined by exchange in a market. The fact that you don’t understand that and want to assign labor some unique and mystical power is proof that it’s deep.
You are advocating a theory that utilizes slightly obfuscated circular logic and can’t show one iota of utility that this theory possesses.
Re-quoted for emphasis.
There is nothing true about that statement. It’s axiomatic and other axioms have resulted in intellectual frameworks that have enriched the world. What has the Labor Theory of Value accomplished that is positive? Show one example of application of this theory that resulted in a net positive gain?
Once you get out of an extremely simple and contrived market like a place where no natural resources exist and everyone is simple laborers and there are no surpluses and no luxuries and no art then any tiny bit of insight or utility that the Labor Theory of Value could convolutedly attempt to explain vanishes.
Look, labor is nothing more than a transformative process. Human labor is not special. Humans themselves are not economically special. They may be special from the point of view of society but economics is a subset of that. When you study value which is what something is worth, you* can* attempt to compare value with a common unit. However the magnitude is unknowable analytically. The magnitude is also not a constant in time, space, or between people. Actual trade is the only thing that determines value and only at that time and in that particular exchange.
How in the hell do you think things like auctions, the stock market, commodity exchanges, etc work? You think people account for x-amt of socially necessary man-hours? Hell no! What do they do? They attempt to trade the good and the price goes up or down depending upon demand. I can point to millions of examples of supply and demand and the invisible hand actually working to create incentives for the production of wealth. That’s a theory that has been proven to be efficient at wealth creation.
Analytical, command based economies that attempt to rationally determine what the value of a product or service have done what? They’ve resulted in states where the ruling class lives well and everyone else deals with chronic material deprivation.
Sophistication, verbosity, obfuscation don’t necessarily result in a workable theory even if many learned men and women have spent lifetimes advocating or studying them. Think of all the philosophers and highly intelligent people who have worked for the Catholic Church. You’d trust their theory to describe the way the universe works or someone like Newton or Einstein that have had their theories validated by experiment?
Cite me an experiment that demonstrates the efficacy or effectiveness of the Labor Theory of Value. I’ve asked many times and haven’t seen a single cite that demonstrates it’s worth. Why not? Surely they exist.
Then I would encourage you to start doing so. You can start by actually reacting to I offer as explanations to your questions, for example. Or any other thing that would encourage me to see what you claim is “discussion” as anything more than a sad, uninformed, unduly hostile rant.
More obfuscation and deflection? You haven’t explained anything. You just repeat what the theory is. Please support the theory with some evidence it does anything or predicts anything.
And here’s the circular argument again distilled into into a simple expression.
The “value” of a good is determined by the labor used for it’s extraction or production.
The “value” of labor is determined by the “value” of said good.
Which is why that whole nonsense of “socially necessary” is used. That phrase transforms the theory from one that can be trivially debunked to one that can be almost trivially debunked.
Why do you believe anything has intrinsic value beyond what the thing actually is?
It serves Marx as a step in the process of explaining how capital works, so, among other things, it let’s him say things about money, surplus value, the production of capital, the form, duration, and meaning of the working-day, of wages, and finally (for Vol. 1) on the accumulation of capital. That’s the logic he’s painstakingly constructing. It’s a stepping stone in a long and (mostly) rigorous process of reasoning through the system of capitalism. One of the very first ones, too.
You’re right, it’s a circular argument! Too bad it’s not the one Marx is making, eh?
One final time, because I’m a teacher, and can’t stand ignorance unfought:
Marx defines value as the coming together of two distinct things, use value and exchange value. Use value is not quantifiable: it just is the mere fact of a thing’s utility or desirability. Exchange value is what a thing will exchange for in the market place: its price, as Hellestal correctly corrected me I think, once we’ve managed to get to the money form.
So:
(Exchange value|Use value)=Value
Use value is a given, because you can’t trade what does not have utility to someone; how do you find out the exchange value? By exchanging in a market place. It will turn out that, for example, five yards of cloth will fetch three ounces of lead. Why? Because, says Marx, these commodities embody the same amounts of socially necessary labor time In other words, SNLT determines the value of the commodity.
So:
(Exchange value|Use value)=Value=socially necessary labor time
Why socially necessary labor time? Because, as I have repeatedly said, it’s the only part of the commodity production process that is irreducible, and it’s not the individual labor that counts, but what, on average, is necessary (because you are not going to pay more for a commodity just because it took longer to make than the same commodity made by someone else).
Where is the exchange value of labor determined? In the process of exchanging for labor, obviously, as when you give me $5 to make some cloth. When is the exchange value of cloth determined? In the process of exchanging for cloth, as when somebody gives you $8 for the cloth I made.
It’s not that you can determine the concrete value of a commodity by investigating what labor went into it: it’s that the commensurability of exchange is determined by equal amounts of socially necessary labor time.
Why’s the cloth more valuable than my labor? That’s for you to figure out…
That just needlessly and inaccurately complicates things.
What markets have shown is that exchange value is all that matters.
For example even in a barter economy the relative value of cloth vs lead will change. One day you may get 1 oz of lead/1 yard of cloth the next day you may get 2 oz of lead/1 yard of cloth. The amount of labor is immaterial.
Ok let’s look at science. We have a unit for length. Length is defined nice and tidy. If we want to convert or exchange one unit of length for another that is trivial as things are defined and the unit conversions are simple division.
Same goes for other scientific units power, energy, time, area, volume all have units and can easily be converted. These units represent the same thing.
In the material world lets say you have an apple and an oz of lead. There is no 1 unit that completely encapsulates the utility and properties of theses two entities. The best you can say if you care about accuracy is that an oz of lead an oz of lead. It’s utility is how it can be used. It’s value in terms of dollars is what it can be exchanged for in terms of dollars. The fact that it took 200 man-hours of labor to mine and purify doesn’t mean anything. Now obviously if you exchange 200 man-hours of labor for 1 oz of lead the assumption is that this is going to a profitable endeavor. But it’s an assumption and the expenditure of labor doesn’t imbue that oz of lead with any additional utility or any additional exchange value than what it would have if it took 0 hours to get.
How does Marx account for depreciation? How does Marx account for surpluses? How does the “use value” provide any pertinent information or utility to society or to economic decision making? Isn’t “use value” just a poor and inaccurate accounting of labor “exchange value”? Why does it matter what the labor cost was? Even the average cost of labor is circularly defined.
Shouldn’t a theory predict or describe something? Shouldn’t a theory be testable?
And why do you keep defaulting to explaining what the theory is instead of using it on something or demonstrating that it has been used on something?
Geniuses advocated the concept of an aether that things moved relative to. Experiments proved them wrong. The theory wasn’t settled by debate. It was settled by experiment and evidence. Economics is a science. Scientific method should be used.
I think I understand what you are saying, but again, I don’t believe it is anything profound. Let’s assume that five yards of cloth=three ounces of lead=.01 ounces of gold=one six pack of bud light. Under the LTV, we could say that all of those products and amounts contain the same amount of SNLT or else, that SLNT would be allocated elsewhere, thereby modifying the above exchange rate.
And further, since labor is present in every single commodity, we can then control for the value of labor. Am I right so far?
If so, it seems as if all Marx is doing is cheating to make a political point. The implication is that all labor is equally valuable, even for commodities. Suppose it takes a skilled craftsman to make cloth or brew beer, but any idiot with a shovel can mine lead. However, that would be accounted for in the exchange amounts as well.
So, even if we come up with an figure known as SNLT, it will merely be the average of all labor across all commodity producing skills. Anyone could do that with several calculations.
Even so, it has no application to any industry, any accountant, any capitalist, or any entrepreneur, nor is it even useful to a central government planner. If I am selling carrots, I cannot use Marx’s SNLT figure to help my business because the value of the labor in producing carrots is not the average across all commodities. The particular value of labor in producing carrots may be higher or lower than Marx’s SNLT.
As such, it doesn’t help me decide between allocating my labor between producing carrots or producing coal, because, although I might know the coal to carrots exchange rate, I do not know the labor price I should be paying to produce coal, nor the labor price I should be paying to produce carrots. I simply have an average labor price across all commodities.
Again, I simply do not see how this is anything more than a politically eggheaded propaganda piece to make labor seem like the very backbone of any economic system such that everything else revolves around it. And since labor is at the center and everything else secondary, it should be the workers doing the actual work in charge instead of the filthy capitalists.
But if labor values are never used in exchanges in the real world, why have them? Doesn’t Occam’s Razor suggest that calculating values that are never used to determine a price are superfluous and should be removed from a model?
What’s the practical difference between spending time calculating the SNLT of a commodity and spending time trying to calculate how many angels can dance on the head of a pin?
I don’t see how “use value” or the “socially necessary” part of “socially necessary labor time” have any meaning, or add anything to a theory of value. 7 + X = 7. What’s the value of X?
“Use value” is the same thing as “exchange value”. We only know if something is useful if somebody wants to use it. And we know if somebody wants to use it, and how much they want to use it, by seeing who bids on it and how much they bid. How do we know if labor is “socially necessary”? Same way - does somebody want the labor, and if so, how much do they want it? By how much they are willing to bid for it.
As Mtgman said and octopus reinforced, an economic theory that can’t explain prices, and has factors that don’t add anything and can’t be quantified or demonstrated, isn’t much of a theory.
Some people might think that if the value of a commodity is determined by the quantity of labor spent on it, the more idle and un-skilful the laborer, the more valuable would his commodity be, because more time would be required in its production. The labor, however, that forms the substance of value, is homogeneous human labor, expenditure of one uniform labor power. The total labor power of society, which is embodied in the sum total of the values of all commodities produced by that society, counts here as one homogeneous mass of human labor power, composed though it be of innumerable individual units…The labor time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.[8]
Thus, according to Marx, any labor power squandered during the production of a commodity, i.e., labor that is socially unnecessary, does not add value, as value is determined by the average social labor.
Robert Nozick has criticised the qualifier “socially necessary” in the labor theory of value as not well-defined and concealing a subjective judgement of necessity.[9] For example, Nozick posits a laborer who spends his time tying knots in a piece of cord. The laborer does his job as efficiently as is humanly possible, but Marx would likely agree that simply tying knots in cords is not a socially necessary use of labor. The problem is that what is “socially necessary” depends entirely on whether or not there is demand for the finished product, i.e., the knotted cord. In this way, introducing the “socially necessary” qualifier into the labor theory of value simply converts the theory into a roundabout and imprecise description of supply and demand.
Fair enough, you don’t see it. That’s because you don’t want to see, not because it has not been explained. Fair enough. You’re not obligated to have your ignorance fought.
No, it’s not. Not for Marx, and I would say not for you, either, if you spared it a minute’s thought. Do you own a house? Chances are it’s a use value for you–you live in it, afterall. It may also be an exchange value at some point, if you move, or run into hard times. But these two features of your house are obviously distinct, because you can’t realize them at the same time: you can’t sell your house and still live in it.
And listen, Shodan, I’ve explained your pseudo-questions (you don’t want an answer anyway, right) over and over. You needn’t want to understand, but the honest course of action would be to say that you are unwavering in your quasi-religious belief in the power of capitalism, and have done. You’re offering the same circular not-argument that octopus made. It’s still not convincing.
Sure, whatever. More power to you for having such unwavering, inarguable and unfounded beliefs! It’s what we need.
Yeah, at the risk of repeating myself: the purpose of the argument is not to give you a means to determine a price in the real world (which comes much, much later in Marx’s analysis). And you don’t spend time “calculating the SNLT,” because it comes out more or less automatically in the process of exchange.
At the risk of repeating that I am repeating myself: we’re at page 150 or so of a three-volume dissection of the workings of the capitalist economy, not at page 700 of a microeconomics handbook. The LTOV is a stepping stone in a large analysis–you can dismiss it for not being what you want it to be, of course, but again, that’s like complaining that your Toyota doesn’t make coffee. It’s not MEANT to make coffee.
So I get this is hard, and maybe impossible to understand: you’re caught up in the essential rightness of neoclassical economic thinking. Things must have a price; their value is what they cost; there are only equitable trades (because if you trade, you MUST want what you get at the price you pay, else why trade), and so on and so forth. Marx challenges all of these assumptions (the latter, later). If you don’t want those assumptions challenged, fine; but you can’t really complain that your assumptions don’t fit with the theory that doesn’t care for them at all. What you’re saying is “but Marx doesn’t think like a neoclassical economist”. And you’re right.
Wrong. There are no “equitable trades”. If an individual values two things equally, an exchange would not occur. An exchange only occurs when there is a difference between two individual’s subjective values. For example I value a hamburger more than I value $5, and Dave values $5 more than a burger so an exchange occurs. If I valued them equally there would be no reason for me to exchange. If Joe valued them equally an exchange would not occur.
Economics is concerned with human action. Preference and value can only be demonstrated by action. Values are derived from the ranked preferences of individuals and demonstrated through action.
Hi UltraVires, can I say how much I appreciate this exchange? We’re unlikely to agree at the end, but I’m glad you give me the chance to explain and be listened to.
I’m still thinking about the “we can control” phrasing, but yeah, you’re right.
I doubt the latter (simply because Marx’s SNLT, today at least, takes in all labor done everywhere all over the globe). But yes, this is what SNLT is, the average of all labor across all commodity producing skills.
Yes, that’s also correct. There is no application to this, or at least, there is no immediate application to this for anybody in the economy. There are, obviously, political applications that come in quickly. It’s simply a statement of how the process of exchange works: an answer to the question what determines price when supply and demand are in equilibrium, in fact.
Yes. This average labor price, says Marx, is what makes commodities commensurable. The labor price you should be paying is determined in exchange, of course, and, simply put, you never really know that price anyway, because you can’t with certainty predict what the commodities you mean to produce will fetch later.
Well, first up, there’s very little difference between eggheaded propaganda that touts the importance of capital or investors or “job creators” and eggheaded propaganda that touts labor; but I disagree it’s propaganda. Marx is, in fact, quite sympathetic to the capitalists in Capital, realizing that they are as much caught in the system as everybody else, constantly in need of increasing surplus value even as that very act will ineluctably lead to economic crashes that will wipe out many of them.
Marx believes, and I believe too, that he gives a well-founded, indeed fundamental, analysis of the workings of capitalism from its very foundations, and in so doing, he has concluded that labor is the irreducible element of all commodity production, while commodity production is the chief element of the capitalism of his time. I would abstain, personally, from calling a well-made argument with which I disagree politically propaganda (is Adam Smith propaganda? Milton Friedman?)…again, I don’t think I will get you to agree with Marx, which is fine; but I’m not sure it’s okay to say its propaganda just because you disagree.
You might as well say Joe values the $5 as much more as you value the hamburger more, so the trade is equitable. Because otherwise, he would demand more money, or you more hamburgers.
If Marx’s value theory does not attempt to explain prices( a dubious claim, but ok), then the “values” he ascribes to labor are simply his subjective preferences that are not demonstrated through action, and thus are not the proper subject of economics. Try theology, psychology, or sociology.