Labor Theory of Value

[ar734]

Among all the Marxists, Leninists, M-Lists, Trotskyists, Stalinists, reformists, revolutionaries, Anarchists, Maoists, etc. etc

Is there anyone here who does not think that the Labor Theory of Value is valid?

[syndicat]

There are Marxists who reject it, e.g. GA Cohen.

There are various problems with it. It's not a comprehensive theory of prices because it's only a theory of readily reproducible commodities, not any thing that is bought and sold (e.g. land isn't a readily reproducible commodity). It has an overly simplified scheme in which there are only 2 classes, owners and those who are employed for a wage. It leaves out the bureaucratic class of managers, military officers, judges, etc. Moreover, there is the socalled "transformation problem" due to the fact that labor time and prices don't correlate when there are differences in capital intensivity. Obscure discussions about this make the theory less than obvious.

[Tim Finnegan]

It has an overly simplified scheme in which there are only 2 classes, owners and those who are employed for a wage. It leaves out the bureaucratic class of managers, military officers, judges, etc.
Is that really a case of Marx being "over-simplistic", rather than simply engaging in a certain degree of functionally necessary reductionism? The other classes are not denied, but are simply marginalised, because they are not the primary social forces in capitalist society. These classes are in practice hangers-on of the capitalist class rather than possessing an independent economic basis, so can't their role in capitalism be addressed as the theoretical model is expanded and the demand for their performed social function emerges?

[ZeroNowhere]

Not among the Marxists. Among the others, there are people who don't uphold the labour theory of value, yes.

[ar734]

There are Marxists who reject it, e.g. GA Cohen.

There are various problems with it. It's not a comprehensive theory of prices because it's only a theory of readily reproducible commodities, not any thing that is bought and sold (e.g. land isn't a readily reproducible commodity). It has an overly simplified scheme in which there are only 2 classes, owners and those who are employed for a wage. It leaves out the bureaucratic class of managers, military officers, judges, etc. Moreover, there is the socalled "transformation problem" due to the fact that labor time and prices don't correlate when there are differences in capital intensivity. Obscure discussions about this make the theory less than obvious.

I think your argument is

1) land is not a commodity, but it has value, but not value created by labor. What about land reclaimed from the desert, turned into cropland or golf courses. All of that value would have been created by labor. The initial land would have no labor created value.

2) would not the managers, etc., be paid by a part of the surplus value of productive labor (now including service labor?)

3) labor time and prices will not correlate because labor is not paid in full for its product. The price includes the difference between the labor time and the surplus value. The change in wages due to "intensity" of capital would be the fluctuation of the market, supply and demand.

As far as the "transformation problem" what exactly is that, say, in 25 words or less? I have seen it described as the problem of the transformation of labor into price. Is that basically what it is?

[Hoipolloi Cassidy]

Is that really a case of Marx being "over-simplistic", rather than simply engaging in a certain degree of functionally necessary reductionism?
A standard explanation is, that Marx returns to the issue and clarifies the relative (e.g., dialectical) "essence" of the LTV in Kapital III. Which gives any number of capitalist economists an excuse to a) argue that Marx was "wrong" in Kapital I, and b) repeat the points that Marx makes in Kapital III as if they were their own. Always a favorite pastime...

[syndicat]

the bureaucratic class are not a mere dependency of the capitalists. that's why "socialist" regimes that eliinated the capitalists still have a bureaucratic class, which then becomes the ruling class.

bureaucratic class is based on its organizational & information flow monopolies, that is, relative monopolization of the levers of decision-making and info & expertise related to that decision-making. this was a disagreement between Marx and Bakunin. Bakunin saw that there was a bureaucratic class based on its possession of the administrative apparatus in the state and its control over the coercive forces. In the corporate capitalist era there is a similar bureaucratic class in the corporations.


1) land is not a commodity, but it has value, but not value created by labor. What about land reclaimed from the desert, turned into cropland or golf courses. All of that value would have been created by labor. The initial land would have no labor created value.[

The labor theory of value does not say...and cannot say...that labor creates value. That's because, for Marx to account for prices, he has to say that it is the current technical conditions of production....the current amount of labor time needed...that determines price, not the amount that it actually took to produce X. in other words, between the point where X is created and some later sale date there may be technical inovations that lower required labor, and this then becomes the amount of labor that correlates with price, not the actual amount of labor.

see GA Cohen's discussion of LTV for a further elaboration of this point.



2) would not the managers, etc., be paid by a part of the surplus value of productive labor (now including service labor?)

you mean, do they participate in exploitation of labor? Yes. but they are also hired labor, and some of them contribute to some extent to necessary labor time to produce commodities.



3) labor time and prices will not correlate because labor is not paid in full for its product. The price includes the difference between the labor time and the surplus value. The change in wages due to "intensity" of capital would be the fluctuation of the market, supply and demand.

As far as the "transformation problem" what exactly is that, say, in 25 words or less? I have seen it described as the problem of the transformation of labor into price. Is that basically what it is?

3 is wrong. in Marx's labor accounting scheme, part of the time that workers labor is for free, that is, it is over and above the labor time it would take to produce what they consume. so they are not being remunerated for that extra labor. that is M's definition of "surplus labor". but the price correlates with total labor time, not just the part workers are remunerated for.

the transformation problem arises because if we look at the value of a car and compare it to the value of a shoe, price of the commodity per unit of labor time may be greater for the car than for the shoe, due to the high productivity of labor in auto manufacturing due to all the investment in equipment. so how does M get around this apparent violation of LTv?

[Tim Finnegan]

the bureaucratic class are not a mere dependency of the capitalists. that's why "socialist" regimes that eliinated the capitalists still have a bureaucratic class, which then becomes the ruling class.
Can you really lump all bureaucrat together like that? In the USSR, to take your example, the apparatchiks and the nomenklatura were regarded as discrete strata; the fact that they sat within the same bureaucratic structures no more suggests fellow class-membership than it suggests that a village priest and the pope are part of the same class.


bureaucratic class is based on its organizational & information flow monopolies, that is, relative monopolization of the levers of decision-making and info & expertise related to that decision-making. this was a disagreement between Marx and Bakunin. Bakunin saw that there was a bureaucratic class based on its possession of the administrative apparatus in the state and its control over the coercive forces. In the corporate capitalist era there is a similar bureaucratic class in the corporations.But the bureaucratic class, if we accept such a concept, only has such "monopolies" insofar as they are delegated to them by a ruling class (within or without the state), and often share a good deal of elbow-room within such bureaucratic apparatus with white collar workers. It's not an independent economic basis.

[RNL]

Here's a question I haven't been able to find an answer to: who originated the term "labour theory of value"? It must have been coined by an opponent of the theory.

[ar734]

I thought it was David Ricardo or Adam Smith.

[Zanthorus]

I think it's stretching it to say that you can be a 'Marxist' and reject Marx's theory of value (I'm not sure if I like 'labour theory of value' since it contributes to the confusion that Smith, Ricardo and Marx are all talking about the same thing when they talk about value) since as far as I can see the theory follows quite naturally from Marx's idea that the uniquely human capacity or 'species-activity' is social labour, and in capitalism we have production organised on the basis of private entities. The corrollary of this is that the social character of labour is only affirmed through the act of exchange. Marx even directly states in 'A Contribution to the Critique of Political Economy' that, given his premises, the theory of value becomes a tautological proposition: "Since the exchange-value of commodities is indeed nothing but a mutual relation between various kinds of labour of individuals regarded as equal and universal labour, i.e., nothing but a material expression of a specific social form of labour, it is a tautology to say that labour is the only source of exchange-value and accordingly of wealth in so far as this consists of exchange-value."


It's not a comprehensive theory of prices

Marx wasn't trying to explain prices, his explanation of prices only comes in Volume III of Capital. To paraphrase a quip made recently by the libcom user Angelus Novus, 'Marx' is not the German word for 'Ricardo'.


It leaves out the bureaucratic class of managers, military officers, judges, etc.

From the theory that value is equal to abstract labour-time it does not logically follow that there can only be two classes. In fact Marx mentions the existence of various transitional classes that don't fit into the capitalist/worker schema at the start of the chapter on class in Volume III. Nonetheless, the relation between capitalists and workers is the fundamental relationship. As a side note, Paresh Chattopadhyay provided something of an answer to this 'critique' of Marx in 'The Marxian Concept of Capital' by noting that within Marx's work one can find a distinction between functional capitalists who carry out the role of imposing the laws of capital within the production process and real capitalists who own capital, with the former acting as hired functionaries of the latter. This division is latent within the division between financial and industrial capital but finds it's highest expression in the division between enterprise owners and managers.

[ar734]

:)



The labor theory of value does not say...and cannot say...that labor creates value.

"Human labour power in motion, or human labour, creates value, but is not itself value. It becomes value only in its congealed state, when embodied in the form of some object." Capital, Ch. I


That's because, for Marx to account for prices, he has to say that it is the current technical conditions of production....the current amount of labor time needed...that determines price, not the amount that it actually took to produce X. in other words, between the point where X is created and some later sale date there may be technical inovations that lower required labor, and this then becomes the amount of labor that correlates with price, not the actual amount of labor.

But technical innovations don't happen immediately. A car may be worth 1,000 when it comes off the assembly line, and six months later it may be worth 500 because of increased productivity. The change in price is because of the reduced necessary labor time; but does that change the fact that the original worker was not paid for the surplus labor he/she put into the car?




3 is wrong. in Marx's labor accounting scheme, part of the time that workers labor is for free, that is, it is over and above the labor time it would take to produce what they consume. so they are not being remunerated for that extra labor. that is M's definition of "surplus labor". but the price correlates with total labor time, not just the part workers are remunerated for.


That much is clear. The worker doesn't work for "free." He is not paid the full value of his work..the difference is profit to the capitalist.



the transformation problem arises because if we look at the value of a car and compare it to the value of a shoe, price of the commodity per unit of labor time may be greater for the car than for the shoe, due to the high productivity of labor in auto manufacturing due to all the investment in equipment. so how does M get around this apparent violation of LTv?

With higher productivity, the value of the commodity will fall, not rise.

"In general, the greater the productiveness of labour, the less is the labour time required for the production of an article, the less is the amount of labour crystallised in that article, and the less is its value; and vice versâ, the less the productiveness of labour, the greater is the labour time required for the production of an article, and the greater is its value. The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labour incorporated in it." Capital, Ch I.

If the labor theory of value is not valid, then what is the point of socialism? If workers are not being exploited then why bother???

[ar734]

Marx even directly states in 'A Contribution to the Critique of Political Economy' that, given his premises, the theory of value becomes a tautological proposition: "Since the exchange-value of commodities is indeed nothing but a mutual relation between various kinds of labour of individuals regarded as equal and universal labour, i.e., nothing but a material expression of a specific social form of labour, it is a tautology to say that labour is the only source of exchange-value and accordingly of wealth in so far as this consists of exchange-value."

Wasn't Marx making a distinction between concrete labor (the actual tailor, e.g.) and abstract labor (the labor of all workers, treated equally?) Concrete labor produces use-value, abstract labor produces exchange value?

[Desperado]

Like nearly all economic theories scientific falsifiability is lacking. There are too many vague variables - "socially necessary" being one of the prime examples.

For me, the central issue is not that the workers create value, it's that the capitalists add none.

[Zanthorus]

Like nearly all economic theories scientific falsifiability is lacking.

The idea that force is equal to mass times acceleration is not 'falsifiable'. It is a definition. Nevertheless it is incredibly useful in physics.

[Rowan Duffy]

This is a good introduction to the transformation problem, though it does lean towards the TSSI. There are other approaches, including throwing out the arguably unnecessary aggregate constraints that Marx imposes.

http://kapitalism101.wordpress.com/what-transformation-problem/

In terms of falsifiability we have empirical evidence of the LTV.

http://www.wfu.edu/~cottrell/eea97.pdf

[RNL]

I thought it was David Ricardo or Adam Smith.
I doubt it. I'm pretty sure it must've been one of the early marginalists. I'd be very interested to know when the term was first used.

[ar734]

Like nearly all economic theories scientific falsifiability is lacking. There are too many vague variables - "socially necessary" being one of the prime examples.

For me, the central issue is not that the workers create value, it's that the capitalists add none.

The capitalists may not add any value, but, more than that, they take value that they don't pay for. At least, according to Marx and the LTV.

I think there is evidence of it: Workers produce and they get a wage. If the value of what they produce is equal to their wages then there is an even exchange. However, if workers produce more than their wages, then the workers are getting short-changed. Almost all statistics show that since 1980 productivity has gone up far more than wages. Somebody is keeping the difference and it isn't the workers.

[Veg_Athei_Socialist]

What I would like to know about the LTV is how is it decided what the value of labor is for a unit of socially necessary labor time? If I work on a farm planting for 1 hour, who is to say if that one hour is worth 10 cents or 10 dollars? How is it decided what the value of a unit of labor time is?

Also, what about comparing a job such as apple-picking to that of a doctor. Say they work the same amount of time, wouldn't their labor be worth the same value? Then why is it that doctors make so much more then?

[VeritablyV]

The Labor Theory of Value would also apply in the previous modes of production, correct? In Feudalism it would most likely be surplus produce as opposed to monetary surplus, but none the less still result of labor-surplus?

[ZeroNowhere]

The Labor Theory of Value would also apply in the previous modes of production, correct? In Feudalism it would most likely be surplus produce as opposed to monetary surplus, but none the less still result of labor-surplus?No, because only in commodity production does labour become abstract labour, and a value is merely a product of abstract labour. Feudal production was not based upon generalized commodity production, the rise of which brought its end, still less were primitive communism and the Asiatic mode of production.

[VeritablyV]

Thanks, so how then does Marx describe the exploitation and appropriation of produce in a Feudal Society? :confused:

[robbo203]

I think the point is that the LTV starts from the basic premiss that the sum total of values must in the end equal the sum total of prices. Individual prices will of course diverge from individual values as Marx would fully agree but to talk of the "transformation problem" of how values translate to prices is a bit of misnomer in my view. It is not seeing the wood for the trees. Marx is trying to describe or explain instead what is happening holistically - at the level of the system as a whole. He is not trying to provide a manual for capitalists to use by manipulating prices in the market place. Many critics of Marx seem to me to miss the spirit of what Marx is on about.

The implication of the insight that total values = total prices means that, if some commodities are being sold above their values then others have to be selling below their values. This is the ultimate systemic constraint that tends to push prices towards their value content.

[Thirsty Crow]

The implication of the insight that total values = total prices means that, if some commodities are being sold above their values then others have to be selling below their values. This is the ultimate systemic constraint that tends to push prices towards their value content.
Empirically, can you point out to certain sectors or individual products which are in fact sold below their value? Can you point out the mechanisms that enable such a phenomenon?

[Rooster]

What I would like to know about the LTV is how is it decided what the value of labor is for a unit of socially necessary labor time? If I work on a farm planting for 1 hour, who is to say if that one hour is worth 10 cents or 10 dollars? How is it decided what the value of a unit of labor time is?

That's decided by a whole host of things but principally by the minimum requirement for the worker to reproduce their self with the lost cost as possible. That's generally how minimum wage works. That's why in different countries you get different wages, more or less. You also have other factors such as unionisation which play a part in certain sectors of the economy.


Also, what about comparing a job such as apple-picking to that of a doctor. Say they work the same amount of time, wouldn't their labor be worth the same value? Then why is it that doctors make so much more then?

The general argument here is that a doctor has to spend years training to be a doctor. More labour has gone into the training of the doctor than that of an apple picker. Almost anyone can be pick apples, not everyone (in our current society and even then) can be a doctor.

[graymouser]

Thanks, so how then does Marx describe the exploitation and appropriation of produce in a Feudal Society? :confused:
He doesn't. Marx's Capital is only about commodity-producing societies, and not feudal societies.

[ar734]

What I would like to know about the LTV is how is it decided what the value of labor is for a unit of socially necessary labor time? If I work on a farm planting for 1 hour, who is to say if that one hour is worth 10 cents or 10 dollars? How is it decided what the value of a unit of labor time is?

Also, what about comparing a job such as apple-picking to that of a doctor. Say they work the same amount of time, wouldn't their labor be worth the same value? Then why is it that doctors make so much more then?

The value of the labor time is the same as for all other commodities: It is the value of the labor required to reproduce the worker for that particular time, the food, clothing, education, housing, etc. The amount can change from one society to another. The more expensive it is to produce the labor time, as for a doctor, then the higher the value of the labor time.

It takes more time to produce a BMW than a VW. Therefore the hourly value is greater than the VW.

[ar734]

Empirically, can you point out to certain sectors or individual products which are in fact sold below their value? Can you point out the mechanisms that enable such a phenomenon?

Walmart will undersell just about anything to drive a competitor out of the market.

[hatzel]

It takes more time to produce a BMW than a VW. Therefore the hourly value is greater than the VW.

Do you have figures to back this up? I mean, I'm not saying you're wrong or anything, as I don't have these figures to hand to argue either way. I do, however, know that BMW produce 1,580,489 units a year and employ 95,450. VW, on the other hand, produce 4,591,851 units a year and employ 368,500. All other things being equal, if BMW were to increase the size of their company to match VW's in terms of employee numbers, one would expect their output to increase to over 6,000,000 units per year, eclipsing VW's. This means that, per employee, BMW produce more units (and have a revenue of around €60 billion for it, compared to VW's €80 billion, despite vastly different outputs). Of course I don't know the break-down of the workforce (in the current case I am assuming that both have similar percentages employed in each roll, production, marketing, design, retail, management etc.), or where their raw materials come from, or anything about the production process, but if we assume that both companies were 100% efficient in production and time-management, it doesn't seem as though it necessary takes longer to build a BMW than it does to build a VW, just that VW produce more concurrently, in a variety of plants, whilst BMW may choose to use higher grade materials and precision production processes, as well as (some might argue) having a superior design team and 'brand', but there's nothing to suggest that any of this takes more time than the same process at VW, despite the superior subjective quality of the finished product...

Of course if anybody has any numbers to hand that actually talk about the production times of individual units, showing that BMW's actually do take longer to build than VW's, of course I'll shut my big mouth :blushing:

[Tim Finnegan]

The general argument here is that a doctor has to spend years training to be a doctor. More labour has gone into the training of the doctor than that of an apple picker. Almost anyone can be pick apples, not everyone (in our current society and even then) can be a doctor.
With skilled labour, you also got the influence of the collective monopoly on a particular form of labour held by certain trades or professions, which further bends things in the workers favour. As you say, anyone can be an apple-picker, but only a few people know how to do the work of a doctor, which drives up the average exchange value of the labour power of the latter.
Unionisation can act in a similar fashion, if it successfully shuts out scab labour, by creating an artificial limit on the number of workers who will perform certain labour.

[ar734]

The Labor Theory of Value would also apply in the previous modes of production, correct? In Feudalism it would most likely be surplus produce as opposed to monetary surplus, but none the less still result of labor-surplus?

One difference, I think, was that the serf actually saw the surplus taken from him. He would work for himself for three days and for the landlord for three days. Half of his labor, say wheat, he could see being appropriated. A modern worker can't actually see what is being taken from him/her. In fact, according to Marx, they think that they are getting paid the full value of their work, when, in fact, they are in a similar situation as the serf.

[ar734]

Do you have figures to back this up? I mean, I'm not saying you're wrong or anything, as I don't have these figures to hand to argue either way. I do, however, know that BMW produce 1,580,489 units a year and employ 95,450. VW, on the other hand, produce 4,591,851 units a year and employ 368,500. All other things being equal, if BMW were to increase the size of their company to match VW's in terms of employee numbers, one would expect their output to increase to over 6,000,000 units per year, eclipsing VW's. This means that, per employee, BMW produce more units (and have a revenue of around €60 billion for it, compared to VW's €80 billion, despite vastly different outputs). Of course I don't know the break-down of the workforce (in the current case I am assuming that both have similar percentages employed in each roll, production, marketing, design, retail, management etc.), or where their raw materials come from, or anything about the production process, but if we assume that both companies were 100% efficient in production and time-management, it doesn't seem as though it necessary takes longer to build a BMW than it does to build a VW, just that VW produce more concurrently, in a variety of plants, whilst BMW may choose to use higher grade materials and precision production processes, as well as (some might argue) having a superior design team and 'brand', but there's nothing to suggest that any of this takes more time than the same process at VW, despite the superior subjective quality of the finished product...

Of course if anybody has any numbers to hand that actually talk about the production times of individual units, showing that BMW's actually do take longer to build than VW's, of course I'll shut my big mouth :blushing:

Your post is very interesting. It will take some time to read and understand it. However, could you tell me where you get the figures from?

Also, I think one issue might be how much human labor time is spent producing a BMW and a VW. Do you have any figures on that?

[graymouser]

Do you have figures to back this up? I mean, I'm not saying you're wrong or anything, as I don't have these figures to hand to argue either way. I do, however, know that BMW produce 1,580,489 units a year and employ 95,450. VW, on the other hand, produce 4,591,851 units a year and employ 368,500. All other things being equal, if BMW were to increase the size of their company to match VW's in terms of employee numbers, one would expect their output to increase to over 6,000,000 units per year, eclipsing VW's. This means that, per employee, BMW produce more units (and have a revenue of around €60 billion for it, compared to VW's €80 billion, despite vastly different outputs). Of course I don't know the break-down of the workforce (in the current case I am assuming that both have similar percentages employed in each roll, production, marketing, design, retail, management etc.), or where their raw materials come from, or anything about the production process, but if we assume that both companies were 100% efficient in production and time-management, it doesn't seem as though it necessary takes longer to build a BMW than it does to build a VW, just that VW produce more concurrently, in a variety of plants, whilst BMW may choose to use higher grade materials and precision production processes, as well as (some might argue) having a superior design team and 'brand', but there's nothing to suggest that any of this takes more time than the same process at VW, despite the superior subjective quality of the finished product...

Of course if anybody has any numbers to hand that actually talk about the production times of individual units, showing that BMW's actually do take longer to build than VW's, of course I'll shut my big mouth :blushing:
This is why the equations in Capital are important. In this case, you have to take into account supply chain: BMW's fixed costs, what Marx called constant capital, could be considerably higher than Volkswagen's. That would mean that more went into making the BMW plant, the car parts etc., than went into the Volkswagen. And with a higher-end car, that's frequently true: the parts themselves are more expensive. Just wait until one breaks and you'll see that. There is also some degree of irrationality built into the car market, where people buy on name and reputation to some extent. But I would wager that higher-end parts, larger R&D outlays, expensive advertisements etc make up a lot of the difference.

[flobdob]

What I would like to know about the LTV is how is it decided what the value of labor is for a unit of socially necessary labor time? If I work on a farm planting for 1 hour, who is to say if that one hour is worth 10 cents or 10 dollars? How is it decided what the value of a unit of labor time is?

What is socially necessary is decided by the development of the productive forces. With the introduction of the sewing machine, the socially necessary labour required to produce a given item of clothing, for example, decreased. This is the precise point of the notion of "social necessity" - it explains the role and impact of the development of productive forces within a given social formation. Indeed, a key point of Marx's argument is that capitalism as a mode of production necessarily sets fetters on the ability for the system to continually develop the productive forces, leading to crises, depressions etc - and thus the material necessity for the socialist revolution is demonstrated.


Also, what about comparing a job such as apple-picking to that of a doctor. Say they work the same amount of time, wouldn't their labor be worth the same value? Then why is it that doctors make so much more then?

You're conflating a lot of issues as a result of looking at the "surface appearances". Within these 2 sentences you raise the basic issues of "the value of labour" (this amounts to saying "the value of value" - you need to understand the distinction between labour as value producer and labour power as the commodity form that this is created as in capitalist society), the notion of productive and unproductive labour, the difference between value and price, etc. These are things which are all tackled head on by Marx in 3 volumes of Capital and further investigation in Theories of Surplus Value. Have a read of them for yourself and see how he deals with it!

[ar734]

Do you have figures to back this up? I mean, I'm not saying you're wrong or anything, as I don't have these figures to hand to argue either way. I do, however, know that BMW produce 1,580,489 units a year and employ 95,450. V

sorry bad math...


More (socially necessary) labor time more value.


It looks like BMW and VW produce about the same number of cars per employee per year. How then to explain the difference in price?

Also, according to your figures, the labor time value per BMW is about 37K; for a VW it is about 17K. But everybody knows these are not the prices of a BMW and VW. If the average price for a BMW is, say 60K, then what you have is a worker producing value of 60K but only getting paid 37K. Which sounds a lot like... surplus value.

[S.Artesian]

VW is, using Rabbi K's numbers, producing 12.8 autos per employee per year.

Are VW and BMW producing the same exact cars, with the same composition, mass of metal, rubber, plastic, aluminum, horsepower, braking.... etc etc?

What's the total capacity of the VW plant operations vs BMW plant operations?

We have to look at the C-- the constant capital animated, transferred, by the wage-labor at the BMW and VW plants.

"Raw" comparisons are pretty tricky unless we take it at the highest, most general level, or conversely, to it down to the most minute level to make sure we're comparing like to like.

For example, we can look at general trends for an industry-- i.e. rapid increases in productivity in the US railroad industry-- revenue ton-miles/employee over time for the entire sector-- but saying BNSF is more [or less] productive than the UPRR simply based on revenue ton-miles per employee really doesn't tell us that much, as one carrier might be hauling much more low revenue items [like coal] for much greater distances, while the other is hauling high revenue generating items like automobiles or chemicals over shorter distances.

[ar734]

If BMW and VW produce approx the same number of cars per yr per employee (I think, 16 and 13 respectively) then there must be another reason BMWs cost more than VWs. I suppose it could be the cost of the materials used in the production: BMWs have more leather, heavier brakes, etc.

The more expensive materials would seem to take more time to produce than cheaper materials.

This would mean that the production of BMWs and VWs is essentially nothing more than the assembly of parts. Which I guess is why they call it an assembly line. It is really a case of the value of the parts they are assembling. I mean, a BMW worker doesn't take an hour to install a seat which a VW worker installs in 1/2 hrs. However the leather on the BMW would have taken much longer to produce than the vinyl on the VW.

Obviously Artesian is right. We need to see the total costs, materials, depreciation of equipment, etc. etc.

[Paul Cockshott]

Like nearly all economic theories scientific falsifiability is lacking. There are too many vague variables - "socially necessary" being one of the prime examples.

For me, the central issue is not that the workers create value, it's that the capitalists add none.

There is certainly a danger of creating a non falsifiable version of the labour theory of value if you say that 'socially necessary' is only determinably retrospectively by looking at the outcomes of market processes. This is what the value form school does, under I think, the influence of neo-classical economics. If you take 'socially necessary' in the sense of the labour that is on average required to make something, then the theory is eminently testable and gives very good results see: http://reality.gn.apc.org/econ/jelle.pdf

[Dave B]

on post 26



He doesn't. Marx's Capital is only about commodity-producing societies, and not feudal societies




Well actually that isn’t true, so with Karl discussing feudalism;


Capital Vol. III Part VI Transformation of Surplus-Profit into Ground-Rent Chapter 47. Genesis of Capitalist Ground-Rent

I. Introductory Remarks





So much is evident with respect to labour rent, the simplest and most primitive form of rent: Rent is here the primeval form of surplus-labour and coincides with it. But this identity of surplus-value with unpaid labour of others need not be analysed here because it still exists in its visible, palpable form, since the labour of the direct producer for himself is still separated in space and time from his labour for the landlord and the latter appears directly in the brutal form of enforced labour for a third person.

In the same way the "attribute" possessed by the soil to produce rent is here reduced to a tangibly open secret, for the disposition to furnish rent here also includes human labour-power bound to the soil, and the property relation which compels the owner of labour-power to drive it on and activate it beyond such measure as is required to satisfy his own indispensable needs. Rent consists directly in the appropriation of this surplus expenditure of labour-power by the landlord; for the direct producer pays him no additional rent. Here, where surplus-value and rent are not only identical but where surplus-value has the tangible form of surplus-labour,

http://www.marxists.org/archive/marx/works/1894-c3/ch47.htm (http://www.marxists.org/archive/marx/works/1894-c3/ch47.htm)


What he actually saying here is the labouring peasant produces in his own time and on his ‘own’ land what he needs for his own subsistance and that will be his necessary labour time.


And lets say on Thursdays and Fridays he works('unpaid') on the lord’s land and the produce and labour that is embodied in it belongs to the lord. That produce is the surplus product, the labour that has gone into it is the surplus labour and the amount of that surplus labour in time is the surplus value.

This is a more self evident, 'tangible' and 'palpable' form of surplus value and thus surplus labour than even what goes on in capitalism, as it is actually performed in a specific time period and place and the surplus product is also clearly differentiated.


Unlike in capitalism, and wage labour, where the necessary labour and surplus labour is mixed up together in one concrete form and activity and is only theoretically separated or differentiated.

As to the other point about stuff selling above or below its value in capitalism there are two cases.

In one case it is due to the average rate of profit that has to be obtained and the effect of differing amounts of fixed and constant capital required and accepting the given that the rate of surplus value is fixed etc etc. Which I suspect is another topic.

The other case is with the situation of a disturbance in supply and demand.

Value, Price and Profit VI. Value and Labour




What then is the relation between value and market prices, or between natural prices and market prices? You all know that the market price is the same for all commodities of the same kind, however the conditions of production may differ for the individual producers. The market price expresses only the average amount of social labour necessary, under the average conditions of production, to supply the market with a certain mass of a certain article. It is calculated upon the whole lot of a commodity of a certain description.

So far the market price of a commodity coincides with its value. On the other hand, the oscillations of market prices, rising now over, sinking now under the value or natural price, depend upon the fluctuations of supply and demand. The deviations of market prices from values are continual, but as Adam Smith says:
"The natural price is the central price to which the prices of commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this center of repose and continuance, they are constantly tending towards it."
I cannot now sift this matter. It suffices to say the if supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, that is to say with their values, as determined by the respective quantities of labour required for their production.

But supply and demand must constantly tend to equilibrate each other, although they do so only by compensating one fluctuation by another, a rise by a fall, and vice versa.

If instead of considering only the daily fluctuations you analyze the movement of market prices for longer periods, as Mr. Tooke, for example, has done in his History of Prices, you will find that the fluctuations of market prices, their deviations from values, their ups and downs, paralyze and compensate each other; so that apart from the effect of monopolies and some other modifications I must now pass by, all descriptions of commodities are, on average, sold at their respective values or natural prices.

The average periods during which the fluctuations of market prices compensate each other are different for different kinds of commodities, because with one kind it is easier to adapt supply to demand than with the other.

http://www.marxists.org/archive/marx/works/1865/value-price-profit/ch02.htm (http://www.marxists.org/archive/marx/works/1865/value-price-profit/ch02.htm)

What he is saying is in fact fairly simple and that is that rather than the law supply and demand setting prices it restores them to their natural price ie the amount of labour time required to produce them.

If a fortunate capitalist can sell his usually innovative new product at above its value because demand exceeds supply he will be making a rate of profit above the average. Other capitalists will rush in to get a piece of the above average rate of profit action.

Increasing supply and decreasing the price until the average rate of profit normalises.

The same happens on the labour market, as labour power is a commodity as well.

Thus if the labour power of airline pilots sells at a high price then people working in Macdonald’s turn their hand to that until you get paid the same for both.


The peasant by the way as well as producing what he needs for his subsistence on his own land can engage in a bit of simple commodity production/exchange of his own.

And take some of his own surplus eggs and butter or whatever to medieval markets to exchange, at their value, with other simple commodity producer’s surpluses.


.

[S.Artesian]

Thus if the labour power of airline pilots sells at a high price then people working in Macdonald’s turn their hand to that until you get paid the same for both.

Nonsense. That's the laissez-faire, invisible hand explanation, based on the assumption of "equality" and "freedom" in the market place, and has nothing to do with how labor is organized and distributed among sectors. That distribution has everything to do with the relation of the components of capital, variable and constant, and not the price of the variable.

[S.Artesian]

Empirically, can you point out to certain sectors or individual products which are in fact sold below their value? Can you point out the mechanisms that enable such a phenomenon?


Sure. At certain times, agricultural products sell below their value. At certain times, iron ore has sold below its value. At certain times, and for certain producers in the above cases too, semiconductors have sold below their value.

Overproduction.

[Dave B]

Nonsense. That's the laissez-faire, invisible hand explanation, based on the assumption of "equality" and "freedom" in the market place, and has nothing to do with how labor is organized and distributed among sectors. That distribution has everything to do with the relation of the components of capital, variable and constant, and not the price of the variable.



Well there is an example of it in a different context admittedly in Volume III

Capital Vol. III Part IV Conversion of Commodity-Capital and Money-Capital into Commercial Capital and Money-Dealing Capital (Merchant's Capital) Chapter 17. Commercial Profit



The commercial worker, in the strict sense of the term, belongs to the better-paid class of wage-workers — to those whose labour is classed as skilled and stands above average labour. Yet the wage tends to fall, even in relation to average labour, with the advance of the capitalist mode of production. This is due partly to the division of labour in the office, implying a one-sided development of the labour capacity, the cost of which does not fall entirely on the capitalist, since the labourer's skill develops by itself through the exercise of his function, and all the more rapidly as division of labour makes it more one-sided.

Secondly, because the necessary training, knowledge of commercial practices, languages, etc., is more and more rapidly, easily, universally and cheaply reproduced with the progress of science and public education the more the capitalist mode of production directs teaching methods, etc., towards practical purposes. The universality of public education enables capitalists to recruit such labourers from classes that formerly had no access to such trades and were accustomed to a lower standard of living. Moreover, this increases supply, and hence competition. With few exceptions, the labour-power of these people is therefore devaluated with the progress of capitalist production. Their wage falls, while their labour capacity increases.

2. How well this forecast of the fate of the commercial proletariat, written in 1865, has stood the test of time can be corroborated by hundreds of German clerks, who are trained in all commercial operations and acquainted with three or four languages, and offer their services in vain in London City at 25 shillings per week, which is far below the wages of a good machinist.


http://www.marxists.org/archive/marx/works/1894-c3/ch17.htm

[S.Artesian]

Well there is an example of it in a different context admittedly in Volume III

Capital Vol. III Part IV Conversion of Commodity-Capital and Money-Capital into Commercial Capital and Money-Dealing Capital (Merchant's Capital) Chapter 17. Commercial Profit

http://www.marxists.org/archive/marx/works/1894-c3/ch17.htm





Except that has nothing to do with labor migrating from McDonald's to United Airlines as the compensation for airline pilots increases.

[Dave B]

Airline pilots wages ( ie polyglot German commercial workers) have been reduced to and below that of ‘Macdonald’s’ workers (machinists) according to Michael Moore’s “capitalism a love story” I think; as an admittedly a flippant analogy.

[S.Artesian]

Regional, short-haul airline pilots are working at wages barely above poverty levels, and long haul pilots have had benefits reduced based on the general attack on workers living standards and wages that has gone on since 1979. Airline pilots wages did not decline because McDonald's couldn't compete and massive numbers of workers decided to become pilots.

This has not been the result of the "invisible hand" but the visible fist of the bourgeoisie offsetting the decline in profits by increasing exploitation of labor. Again it's the result of the changing relationship between the variable and constant portions of the capital and has absolutely nothing to do with the fantasy distribution based on migration of labor to the point of highest compensation, thereby creating an oversupply and driving down the price of labor.