Unemployed and the Price of Labour Power

[Desperado]

This has persistently confused me. It's my understanding that the LTV is a description of a situation where supply and demand are met in the market. Yet in the labour market there is a permanent over-supply of workers (the structural unemployment under capitalism). Wouldn't this result in wages being (on average) permanently bellow the value of labour power?

[Rowan Duffy]

This has persistently confused me. It's my understanding that the LTV is a description of a situation where supply and demand are met in the market. Yet in the labour market there is a permanent over-supply of workers (the structural unemployment under capitalism). Wouldn't this result in wages being (on average) permanently bellow the value of labour power?

This is a fabulous question :)

First, in the LTV prices can diverge from values, and will do so systematically if there are systematic forces which allow for asymmetry. This occurs in situations of monopoly or monopsony or where you have mafias etc. The asymmetry between employers and workers was already noted by Smith.

There are some bounds on the price. There will be the bare minimum price for the reproduction of the worker, which includes food, housing and transport to work and possibly other things depending on what task exists. There will be the maximum price dictated by the need of the capitalist to make a profit.

Somewhere here there also has to be some factor based on the militancy of the workforce and their ability at combination (unions etc) which can increase their potential wages.

However, now we can get into all sorts of interesting territory. If we add up all the commodity inputs to the worker, including the costs of birth and raising a child amortised over worker life, education etc., would this tell us something about the price obtained? Are loans for school a way for capitalists of extracting surplus value in the production of the worker? All sorts of weird questions here which I've not thought much about.

[Die Neue Zeit]

This is a fabulous question :)

First, in the LTV prices can diverge from values, and will do so systematically if there are systematic forces which allow for asymmetry. This occurs in situations of monopoly or monopsony or where you have mafias etc. The asymmetry between employers and workers was already noted by Smith.

IIRC, the LTV describes a very "generous" situation of exploitation even with "full value," before all the real-life additions of Ricardian asymmetry.


There are some bounds on the price. There will be the bare minimum price for the reproduction of the worker, which includes food, housing and transport to work and possibly other things depending on what task exists. There will be the maximum price dictated by the need of the capitalist to make a profit.

Did you get this from the Daily Kos anti-capitalist blogs? ;)

[Rowan Duffy]

IIRC, the LTV describes a very "generous" situation of exploitation even with "full value," before all the real-life additions of Ricardian asymmetry.

LTV, with no information or power asymmetries, gives a lower remuneration for labour power than the actual value of labour obtained by the capitalist which is the surplus derived. This isn't the a remuneration of the full value of labour.



Did you get this from the Daily Kos anti-capitalist blogs? ;)

No :)

[Die Neue Zeit]

LTV, with no information or power asymmetries, gives a lower remuneration for labour power than the actual value of labour obtained by the capitalist which is the surplus derived. This isn't the a remuneration of the full value of labour.

At first I'm a bit surprised, but then I do recall from intro econ the framework of a "perfectly competitive free market" (a recent Learning thread touches on this without using this exact term (http://www.revleft.com/vb/economics-labor-markets-t160822/index.html)). I'm trying to recall here, but is such lower remuneration due to a "perfectly competitive free market" in labour? :confused:

If I'm wrong, please elaborate.