LTV and wine

[Hammer_Sickle_Revolution]

Hey comrades. I'm reading capital at the moment and this commodity keeps being used against the LTV - wine, it gows like this:

"An old bottle of wine is worth more than a fresh bottle, yet the old bottle had no human labour put into - therefore the LTV fails."

They often replace wine with other commodities like apples from the wild and apples from orchards etc. etc. - any ideas?

By the way, if you're reading this, and you haven't read Capital - read it, I strongly recommend it.

[mikelepore]

The Marxian law of value applies to generic (fungible) commodities during the steady state of continuous production, so first you would have to confirm that the old bottles of wine are within that category. Otherwise it would be outside of the range of application of the theory. To say "therefore the LTV fails" would be like saying "Bernoulli's equation for fluid flow is a failure -- it fails to explain the behavior of a ray of light." Every theory fails when applied to something outside of its range of application.

Secondly, the theory isn't about the price of a commodity. It's about the equilibrium value that is the starting point from which there is the observed departure in price due to supply and demand forces. How do you know whether the "worth" of the old bottle of wine is because of a departure caused by supply and demand, or because of the base level from which that price has departed?

Thirdly, you can't just use intuition to jump to the conclusion that the theory has failed. Let's see the numerical data about the labor costs for building and operating the facilities that store old bottles of wine, the labor costs that have been wasted when some production runs have been tested and they failed to meet specifications and were therefore marked spoiled, etc.

[mikelepore]

yet the old bottle had no human labour put into it.

The problem with that supposition is, if that were true, why doesn't every savvy Wall Steet investor say, "I think I'll invest a very small amount now and immediately begin selling futures for a sure-thing million dollars' worth of old bottles of wine"? Do clever investors have such "free lunch" opportunities for having unlimited profits pour out, but they simply failed to think of doing it?

[Demogorgon]

Well the cost of storing these wines in exactly the right conditions and so forth is not inconsiderable, but really the reason they are so expensive is because there are so few of them. The LTV is meant to explain the exchange values of readily exchanged commodities, not priceless works of art or very fine wines and so forth.