Labor theory of value

[GracchusBabeuf]

All the OI'ers who want to debate the LToV, please do so in this thread. Please see here (http://en.wikipedia.org/wiki/Labor_theory_of_value) and here (http://www.marxists.org/glossary/terms/l/a.htm#labour-theory-value) for a discussion of what this theory is about.

The labour theory of value is the proposition that the value of a commodity is equal the quantity of socially necessary labour-time required for its production.

[mikelepore]

I think the proper expression would be that the value is PROPORTIONAL to the socially necessary labor time, or is CORRELATED with it or TRACKS with it. Not "is equal to." They have different units. Exchange value is in units of a monetary system, like dollars or yen or whatever. Time is time.

[Dejavu]

Do any of you guys hold that LToV is based on objective value?

[Kappie]

A question: how exactly is innovation valued (or does it have any value) under LToV? Innovations which increase the productivity of labor, do they hold any value? What about a machine which increases the productivity of labor, does it have value?

[mikelepore]

Do any of you guys hold that LToV is based on objective value?

It's not a property in the product, like mass or heat capacity, etc., if that's what you mean. It's a description of something that the marketplace tends to do with each product.

Everything is objective if it is a fact independent of the observer. We could lookup the value of iron or corn in the newspaper, and our feelings about them won't alter those numbers. That's a case of something being objective.

[mikelepore]

A question: how exactly is innovation valued (or does it have any value) under LToV? Innovations which increase the productivity of labor, do they hold any value? What about a machine which increases the productivity of labor, does it have value?

The main issue about that machine isn't it's own value, but the fact that that it lowers the values of the category of goods that the machine makes, even if those goods weren't made by that machine.

"The introduction of power-looms into England probably reduced by one-half the labour required to weave a given quantity of yarn into cloth. The hand-loom weavers, as a matter of fact, continued to require the same time as before; but for all that, the product of one hour of their labour represented after the change only half an hour's social labour, and consequently fell to one-half its former value." -- Marx, 'Capital', Chapter 1

[RGacky3]

Do any of you guys hold that LToV is based on objective value?

Theres no such thing as objective value, you can't have value without someone to value it.

[trivas7]

Do any of you guys hold that LToV is based on objective value?
What do you mean by objective value? The LToV for Marx is what governs the distribution of income bt social classes which results from the exchange and output of commodities under capitalism, independent of any subjective value. I.e., it excludes use-value from determination of value and advances Ricardo's version of the labor theory of value by making abstract social labor its foundation.

[mikelepore]

That you can't have value without someone to value it has nothing to do with it being objective. Something is said to be objective when there is an actual truth that is the same for everyone, and all sane people should recognize it. In the world market, in the real world, in this time of history, a certain mass of gold has a greater exchange value than the same mass of corn. That's the same truth for everyone in the world.

[Dejavu]

It's not a property in the product, l like mass or heat capacity, etc., if that's what you mean. It's a description of something that the marketplace tends to do with each product.

Everything is objective if it is a fact independent of the observer. We could lookup the value of iron or corn in the newspaper, and our feelings about them won't alter those numbers. That's a case of something being objective.


How do you think the value of the iron and corn was determined in the newspaper? Are you talking about prices? Dollars objectively measure the things value compared to other things but that is an effect of value determination which is a question you have not answered.

If you personally do not have a demand for a lot of Iron then that will not effect the price much. If collectively, a lot of people do not have a high demand (i.e. massive consumer devaluation) for Iron then that will effect the price which will likely go down. Nothing happened to the Iron itself, it did not somehow leak out its infused 'labor value.'

[Dejavu]

That you can't have value without someone to value it has nothing to do with it being objective. Something is said to be objective when there is an actual truth that is the same for everyone, and all sane people should recognize it. In the world market, in the real world, in this time of history, a certain mass of gold has a greater exchange value than the same mass of corn. That's the same truth for everyone in the world.

Objectivity and objective truth are not the same as objective value. If something is objectively valuable then peoples' recognition should have nothing to do with it. Of course , rationally speaking , objective value is nonsense. The only reason the gold has a higher exchange value than corn is because people value gold more. Try asking an Amish community whether they value 10 lbs of corn or 10 lbs of gold more in terms of what they can exchange with each other. Since Amish culture places little value on gold , in any sense, the idea that there is some infused objective value in gold that can be compared to other things fails.

[Dejavu]

What do you mean by objective value? The LToV for Marx is what governs the distribution of income bt social classes which results from the exchange and output of commodities under capitalism, independent of any subjective value. I.e., it excludes use-value from determination of value and advances Ricardo's version of the labor theory of value by making abstract social labor its foundation.

Which is why it made perfect sense in Marx's own version of reality. Its almost metaphysical in a way to think a commodity has some immaterial objective value property in its own right. Use-value and exchange value are a false dichotomy since they have no empirical grounding to make an objective distinction. People's demand relative to the supply of the thing determines it value in the market and it has a price when compared to other things. Anyway, this is updated economics I'm talking about. From my perspective, the argument I am making is sort of like ' Hey guys, the earth is not flat like some of the leading intellectuals and philosophers thought in the past.'

[Dejavu]

trivas , did you change your mind about the Austrian school and go back to Marxist economics or something? :tt2:

[Kappie]

If a person makes a dump in the woods and no one is there to see it, does it have any value?

[Dejavu]

If a person makes a dump in the woods and no one is there to see it, does it have any value?

Oh, oh my, now that's just.... oh my...

[trivas7]

trivas , did you change your mind about the Austrian school and go back to Marxist economics or something? :tt2:
I have changed my mind (for now). :blushing: Pretending that subjective valuation is an objective fact leads nowhere.

[Kappie]

Pretending that subjective valuation is an objective fact leads nowhere. How does pretending that there is an objective value which may or may not have any bearing on its value to people in either use or in exchange?

[trivas7]

How does pretending that there is an objective value which may or may not have any bearing on its value to people in either use or in exchange?
I'm sorry, I don't understand the question.

[trivas7]

Which is why it made perfect sense in Marx's own version of reality. Its almost metaphysical in a way to think a commodity has some immaterial objective value property in its own right. Use-value and exchange value are a false dichotomy since they have no empirical grounding to make an objective distinction. People's demand relative to the supply of the thing determines it value in the market and it has a price when compared to other things. Anyway, this is updated economics I'm talking about. From my perspective, the argument I am making is sort of like ' Hey guys, the earth is not flat like some of the leading intellectuals and philosophers thought in the past.'
Marx's version of reality, if you want to call it that, is that commodities are the product of historically mediated social relations. The distinction bt use-value and exchange value is simply the recognition of the relativity, social determination and historical limitation of the capitalist mode of production. Other economic systems operate by other categories. Yes, demand determines value in the abstract, but this tells us nothing re the political economics that operate to satisfy those demands.

[KC]

Do any of you guys hold that LToV is based on objective value?It is objective in the same way that race or nation are real. Which is exactly what Mike said, but which you either didn't understand or purposefully misrepresented.

[mikelepore]

How do you think the value of the iron and corn was determined in the newspaper? Are you talking about prices?

No, I shouldn't have implied that it's reported in the newspaper. It's never reported by anyone. But it's a real fact in the same sense that things which are reportable are real facts. That is, exchange value isn't an issue like which music sounds better or which food tastes better. It's an issue of what's going on in the world economy, something that's actually going on whether we know it or not.

No, the value isn't the price. It's usually the level about which a price oscillates due to supply and demand forces. When the price gets too far from the quiescent level there is a tendency it to reverse. I said "usually" because there are some cases where the price can be held for a very long time at a positive or negative offset from the value. Therefore we can't properly say that the value is the average price. But we can say that the value is the level from which the price has departed, and which the price would have been if various upward and downward forces were absent.


Dollars objectively measure the things value compared to other things but that is an effect of value determination which is a question you have not answered.

I have not answered what? At the top of the topic Marx was paraphrased on the point that the value of a commodity is determined by the duration of the socially necessary labor time of the production process.


If you personally do not have a demand for a lot of Iron then that will not effect the price much. If collectively, a lot of people do not have a high demand (i.e. massive consumer devaluation) for Iron then that will effect the price which will likely go down. Nothing happened to the Iron itself, it did not somehow leak out its infused 'labor value.'

No, that would not make the price of iron go down. If most consumers stop buying iron, that will *temporarily* make the price go down. The price having gone down will cause fewer producers to produce and sell it, and that investment capital would migrate to another sector. That will cause a reduced supply, which will increase the price, cancelling the previous price reduction.

[mikelepore]

Objectivity and objective truth are not the same as objective value. If something is objectively valuable then peoples' recognition should have nothing to do with it. Of course , rationally speaking , objective value is nonsense. The only reason the gold has a higher exchange value than corn is because people value gold more.

That's incorrect. The cost of production of gold is dominated by the fact that production of each ounce of the metal requires the producer to hire the people to locate, extract and refine hundreds of tons of the ore. If the market for gold would bear only the price of corn of the same mass, the production of gold couldn't be performed. But we are modeling a world in which that production is performed.


Try asking an Amish community whether they value 10 lbs of corn or 10 lbs of gold more in terms of what they can exchange with each other. Since Amish culture places little value on gold , in any sense, the idea that there is some infused objective value in gold that can be compared to other things fails.

Can I send an Amish person to the competitive marketplace to buy me some gold for just a couple dollars per bushel?

If I love bubble gum more than anyone ever loved a thing, will Shop Rite charge me a billion dollars for a pack of bubble gum?

If I intensely hate flying, will the marketplace allow me to buy a jet plane for a dollar?

No. Why not? Because it has nothing to do with the states of mind of the participants. It has to do with the cost of production. And the cost of production is approximately proportional to the total of all increments of direct and indirect labor.

[GracchusBabeuf]

Interesting discussion so far. If I have understood it correctly, the socialist way of thinking about the way prices are set in a capitalist system is that it is determined by the costs of production, mainly the labor that went into it.

As to the so called "supply and demand" theory of prices, it seems that Dejavu claims that prices in a market are set based on the consumers' wishes. I hope that is right? One thing I don't understand is that in case the set price is lower than the production costs because of "high demand", why would someone set a lower price to suffer a loss? Does this not go against the fact that the market is supposed to be based on profit-incentives?

[mikelepore]

If I have understood it correctly, the socialist way of thinking about the way prices are set in a capitalist system is that it is determined by the costs of production, mainly the labor that went into it

In the development of his theory, when Marx put out his pamphlet "Wage-Labour and Capital" he mainly used the phrase "cost of production" as the determining factor. Later when he put out his pamphlet "Value, Price and Profit" he generally stopped saying the phrase "cost of production" in that context and began to use the word "value" in its place. I interpret it mainly as a change in terminology. The cost of production remained a critical idea.

But it has to be idealized to some homogeneous case, so if you can work quickly, while I work slowly, but we live in the same society and period of history, the market will usually evaluate our products in the same way.

Supply and demand affect the instantaneous price, but they are equilibrating forces, the way a boat experiences gravity downward and buoyancy upward, and those two terms with opposite signs happen to come into balance and cancel each other just where the boat has reached the elevation where it's floating. Similarly, the way in which supply and demand affect the price is to make the price vary above the value at one time and below the value at another time. In doing that, supply and demand explain the variation around some level, but they aren't sufficient to explain the level about which that variation is taking place.

In "Value, Price and Profit" Marx summed up: "You would be altogether mistaken in fancying that the value of labor, or any other commodity whatever, is ultimately fixed by supply and demand. Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for that value itself."

[Green Dragon]

If I love bubble gum more than anyone ever loved a thing, will Shop Rite charge me a billion dollars for a pack of bubble gum?


If you were willing to give Shoprite a billion dollars for a gum, I doubt they would object.



If I intensely hate flying, will the marketplace allow me to buy a jet plane for a dollar?


If the plane manufacturer was willing to sell you a plane for $1, then the marketlace has allowed you to purchase a plane for $1.



No. Why not? Because it has nothing to do with the states of mind of the participants. It has to do with the cost of production. And the cost of production is approximately proportional to the total of all increments of direct and indirect labor.


All of that, labor, raw materials ect. are somebody else's finished products. The metal which was produced for the airplane is the metalworkers final product. Why are they shipping it to the airplane workers? Because the airplane workers want it. Why do the airplane workers want it? because somebody wants an airplane.

You are looking at the airplane and the purchaser of the airplane as the most important transaction in the chain. Yet there is no reason why the metal workers to ship their product to the airplane workers as opposed to the cannery workers: Except that the airplane workers state of mind demands it. Just like the person who wants that airplane.

[KC]

If you were willing to give Shoprite a billion dollars for a gum, I doubt they would object.

If the plane manufacturer was willing to sell you a plane for $1, then the marketlace has allowed you to purchase a plane for $1.

All of that, labor, raw materials ect. are somebody else's finished products. The metal which was produced for the airplane is the metalworkers final product. Why are they shipping it to the airplane workers? Because the airplane workers want it. Why do the airplane workers want it? because somebody wants an airplane.

You are looking at the airplane and the purchaser of the airplane as the most important transaction in the chain. Yet there is no reason why the metal workers to ship their product to the airplane workers as opposed to the cannery workers: Except that the airplane workers state of mind demands it. Just like the person who wants that airplane.Wow, way to completely miss the incredibly obvious point.:rolleyes:

[GracchusBabeuf]

Those who think LToV has been "refuted" by modern economists, the current myths of economics are debunked here (http://www.infoshop.org/faq/secCcon.html).

[mikelepore]

Economists are priests who have the job of inventing ideological reasons to uphold the rulers. In ancient Egypt and Rome, in case anyone doubted that the emperor was a god in earthly form, there were priest castes who would explain all the reasons why it must be true. In modern society this role is performed by the economists. They can recite all the recommended reasons for believing that people who are personally idle and produce nothing "create wealth."

[trivas7]

Marxist economics were not necessarily the major advance in socialist economics that some people think. Marx was not the first to use the labor theory of value, itself a development of bourgeois economics, as an indictment against the capitalist system.

For Marx, the fact that commodities are more valuable b/c they embody labor begs the question of why there are commodities at all. Starting from Ricardo's view that commodities exchange at their labor time of production, Marx argues that when producing the material conditions for their individual and social reproduction people enter into definite social relations w/ each other, as slave or master, lord or serf, capitalist or wage earner. These relationships exist objectively and independently of individual choice, even though they have been established in the course of historical development of society.

Marx finds other economists lack an explanation for many features of capitalism: the monopoly of the means of production by a small minority, the distribution of the products by monetary exchange, and remuneration in profits and wages. Before Marx is an economist, he is social scientist whose chief concern is w/ the relations that people set bt themselves, rather than the technicalities of price theory, or economic efficiency. His main contribution to economics is his discovery of surplus value as the means of exploitation. But the crucial questions for him re capitalism were always its sources of stability and crises, and how the will of society to change politically can develop into successful transformative revolutionary activity.