Labour Theory of Value.

[Oswy]

How central is the LTV to contemporary Marxist economics? I ask this on the basis of how routinely it seems to be this concept which comes in for criticism by non-Marxists.

[Tim Cornelis]

Without it, there is no Marxist economics at all. So, pretty central...

[Oswy]

Without it, there is no Marxist economics at all. So, pretty central...

Thanks. I have encountered John Roemer's idea about exploitation being rooted in an unequal access to the means of production regardless of the viability of the LTV. It's a simpler idea and, in my view, difficult to argue against, but presumably it doesn't or can't perform the function of the LTV at a technical level.

[Strannik]

Is there a topic that would cover criticism of LTV? As far as I understand some of the left have abandoned it, yet I have never encountered a criticism that wouldn't miss the point - that labour is the activity that creates all "surplus" value.

For me personally, question "what is value" is the central question in every production system and social formation.

[Blake's Baby]

Well, the main criticism of LTV, as far as I can tell, is that you can spend all day arranging dogpoo into a pile, but it doesn't mean it's worth anything, and therefore labour doesn't create value.

Which is true, but irrelevant. Because what capitalism does is use surplus labour to create commodities, which are (by definition) destined for sale on the market. Seperated from the market, outside of any system of turning work into profit, of course there will be no profit. The surplus labour is what allows profit to be made, but you can't just hold up soemthing that has been worked on and say "here's 50% materials/overheads and 50% pure profit". The profit comes at the end of the cycle.

A classic argument goes something like: "if LTV was real then all we'd need to do to make the economy grow is put half the unemployed to work digging holes and the other half filling them in again". Which mises (I keep trying to type 'misses' but my brain insits it 'mises'...) the point. 'Value' is not the same as 'profit'. 'Value' is only potential profit, and depends on a market. If no-one wants a hole, no-one is going to pay for it, no matter if it would take them ages to dig one on their own. It's only when someone wants a hole and is prepared to pay for a pre-dug one or one that someone else will dig so our 'hole-wanter' doesn't have to, that 'profit' can be realised.

On the other hand, if someone wants a hole, and there's one already, no profit. A hole then is not in itself a commodity. It's the existence of a market, again, that makes it a commodity; scarcity, the imbalance between wants and availability, that give the leaverage to extract profit from surplus value.

[Strannik]

As far as I can tell, for Marx definition of labour is "activity that creates value/surplus value/social value". Basically value creating activity. If arranging dogpoo is not considered valuable by any standards, arranging it cannot be considered labour.

But is there any other criticism for LTV?

[Blake's Baby]

I don't think so, because I'm a marxist. I was trying to get to the 'value-creating' bit with the discussion of how profit is only realised in the market. I'm just trying to show what criticisms pro-capitalists have, I'm not claiming that they make sense.

[Strannik]

Yes, I understand. But I was thinking of leftist criticism of LTV. Why do some leftists abandon it, if the "mudpies" argument is the only one against it? They should understand, that it is based on a different, bourgeoise definition of labour?

[Tim Cornelis]

Most of the criticism of the LTV is based on false interpretations of it, but not all.

In Marxism the value of commodity is the gravitational center of prices, so to speak. Prices will always gravitate around the value of a commodity, which is the (socially necessary) labour embodied in it.

So Price = Value + Supply and Demand. Similarly, one could argue Price = Cost of Production + Supply and Demand.

The subjective theory of value argues that value is subjective and that this subjective evaluation determines demand for a product. If consumers deem the value of a commodity to be less than its price they will not buy the commodity. And if enough consumers do not buy it, the price needs to be lowered by the entrepreneur.

Therefore Price = Supply and Demand--where 'demand' is the subjective evaluation by consumers (or, consumer preferences).

To give a simple analogy.

One apple is exchanged for one pear.

Marxists would say, this shows that the labour embodied in both the pear and apple is roughly the same giving it the same exchange-value as one apple is exchanged for one pear.

Marginalists argue that both parties in the exchange deem the other party's commodity to be more valuable than the commodity they currently themselves possess, otherwise they would not exchange the good voluntarily. Thus, value, it is argued, is subjective.

[Strannik]

Would it be correct to say that value has both subjective and objective component; for subjectivists the subjective component is all that counts and for marxists they are both important, at least from social point of view (i.e. society can't reward activities which are considered valuable if they are not objectively creating value)?

[Rooster]

As far as I can tell, for Marx definition of labour is "activity that creates value/surplus value/social value". Basically value creating activity. If arranging dogpoo is not considered valuable by any standards, arranging it cannot be considered labour.

It is labour. The point is, it's not useful labour or socially necessary labour. And as mentioned above, the main alternative in the bourgeois world of the LTV is the supply and demand one. It's not in itself a critcism of it though.

[Tim Cornelis]

Would it be correct to say that value has both subjective and objective component; for subjectivists the subjective component is all that counts and for marxists they are both important, at least from social point of view (i.e. society can't reward activities which are considered valuable if they are not objectively creating value)?

I am no authority on the LTV so my interpretation may be off as well, however, I suppose on could argue that the subjective and labour theory are reconcilable as for example political economist and individualist anarchist Kevin Carson has done in Studies in Mutualist Political Economy (http://www.mutualist.org/id47.html). The first part of the book may also give you a better, more accurate, and more extensive look into the critique of the labour theory of value.

For example, it could be argued that the value is 'objective' in the sense that it represents the labour embodied in a commodity, and demand--which is subjective evaluations by consumers--ultimately both determine the price. No commodity will systematically be sold under its cost of production, therefore value (objective) and demand (subjective) both determine prices.

I have no idea the degree to which the above is accurate, easily refutable, reconcilable with Marxist economics, so don't take it at face value!

However, it is not correct to argue that subjective value is important to Marxists besides 'objective value'. Marx does not care about the subjective evaluations of consumers, these are irrelevant for his analysis of the value of a commodity.

[Die Neue Zeit]

However, it is not correct to argue that subjective value is important to Marxists besides 'objective value'. Marx does not care about the subjective evaluations of consumers, these are irrelevant for his analysis of the value of a commodity.

Sure "subjectiveness" is important. It's just more limited. This comes in the form of use-value. If I don't want to buy something right now, that something has no immediate use-value to me.

[Tim Cornelis]

Sure "subjectiveness" is important. It's just more limited. This comes in the form of use-value. If I don't want to buy something right now, that something has no immediate use-value to me.

That is actually not what is meant by use-value. Use-value is the objective use of a particular good.

For example, the use-value of a chair is not the degree of comfort it provides for the sitter, but the fact that the purpose of it is that you are able to sit on it--i.e. its use.

I think at least.

[Rooster]

Would it be correct to say that value has both subjective and objective component

Price, maybe, but value? No. Exchange value and use value both have real meanings. Exchange value is where labour time and such figure into it. Use values are sometimes what libertarian capitalists consider subjective and think that it has an effect on the price. Such as, they'll value a pair of under pants more than any other, but I think that's confusing what Marxists mean by value and use value. An object being produced must have a use, it must satisfy a need, for it to be a commodity. That's why mudpies aren't commodities, they don't satisfy a need so labour power that's being spent on them is useless.

[Strannik]

So, when we exchange a pear and an apple, its because each has a higher use value for the other while the exchange value is the same?

Is use value individual - I either need a ladder or I don't? And as such the motivator of all exchange?

[Raó i força]

First of all, I apologise for my bad english.

I've heard an argument which I don't know how good it is. If you found a diamond at the forest, you would be paid as much as if you worked hard to obtain it or hired somebody to work mining for you. According to this, the value of that diamond is not the work to get it, but the relationship between diamonds sold and people who want to buy diamonds, it is related to the concep of shortage.

It is kind of intuitive, but I think the point is that every product is sold in a market, so the worth of that product in terms of labor-value is the average work-force need to make the product. I mean, you cannot individualize the subject: if people go on a rush finding diamonds at our very forests, diamonds prices would descrease because all the work invested in diamond mining would be smaller for every single diamond.

What do you think about this? Am I correct?

[Strannik]

One could argue, that shortage of diamonds means that one has to do a lot of work to find diamonds. A diamond found in forest saves a lot of work for someone. So yes, you are correct - the less work you have to do the smaller the value.

I guess labour could be viewed like a force that "pulls" resources from nature into social realm of economics, they obtain the objective value through labour. Is it then correct to say, that resources to which labour can't be applied have no value. For example water on a planet in another star system - does it have value or not?

(Personally I consider the question of value to be the cornerstone of economics and everything else depends of it :) I have many more questions.)

[Blake's Baby]

Prices are averages - a diamond that you find in the forest will on average be the same a million diamonds that have to be heavily mined (ie, expensive). Alternatively, a diamond that you have to heavily mine will be the same price as a million diamonds that you find in the forest (ie, cheap). That is why it's not worth setting up really expensive 'air factories'. As we can just go and find some air, it's not worth putting people to work to mine it, put it in little packets and sell it.


Would it be correct to say that value has both subjective and objective component; for subjectivists the subjective component is all that counts and for marxists they are both important, at least from social point of view (i.e. society can't reward activities which are considered valuable if they are not objectively creating value)?

No, I don't think this is right. I'm not happy with this notion of 'objective value'. Things are 'valuable' because they are considered valuble. A Faberge egg has no more 'use' than a pile of arranged dogpoo. And if the dogpoopile took the same to create as the Faberge egg, they both embody the same social labour. But one is valuable and one not precisely because one is considered valuable.

It's easy to argue that 'anyone can create a pile of dogpoo if one has time and dogpoo'. But then, anyone can create a gaudy egg if one has time and some glitter. So in the end it's just fashioon (ie, not something intrinsic to the object but instead existing in the ideological sphere) that gives the Faberge egg its value.

Likewise Monet ('oil-based pigments splatted on canvas background') or Rodan ('rock that has been bashed') or pretty much all other art - these are considered valuable precisely for the subjective reason that we're told they should be, outside of the work that went into them. Because there's an awful lot of art that also took lots of effort but doesn't go for very high prices.

[Doflamingo]

I don't fully understand this yet (I've never taken an economics class or read any books from Marx.)


Would it be correct to say

Labour Theory of Value is dependent on a few things

- Value of labour (the value of the labour is dependent on the demand for the labour)

- Amount of labour (the more work put in to the labour, the more profit will be made)

With this, it would be said that doctors would still make more money than a ditch digger or a plumber because the demand for doctors is higher.

Am I correct? If I'm not please correct me.

[Die Neue Zeit]

That is actually not what is meant by use-value. Use-value is the objective use of a particular good.

For example, the use-value of a chair is not the degree of comfort it provides for the sitter, but the fact that the purpose of it is that you are able to sit on it--i.e. its use.

I think at least.

I hope others can contribute here to the subject. What I wrote was my impression of use-value as presented by Steve Keen in his "Commodity Theory of Value" critique of Marx's LTV. If I have no immediate use for something on sale, then exchange value can fluctuate while being irrelevant to me.


Most of the criticism of the LTV is based on false interpretations of it, but not all.

In Marxism the value of commodity is the gravitational center of prices, so to speak. Prices will always gravitate around the value of a commodity, which is the (socially necessary) labour embodied in it.

So Price = Value + Supply and Demand. Similarly, one could argue Price = Cost of Production + Supply and Demand.

I'm skeptical of that overly basic formula. What is "value"?

The more pressing question, I think (and of course correct me if I'm wrong) is: How does one Transform the dynamic relationship between Use-Value, Exchange-Value, and Surplus Value into Price?

I've read up some stuff on Ricardian and neo-Ricardian LTVs, as well as Bichler and Nitzan's "power theory of value," and I think that all their stuff on information asymmetry has to fit into the Transformation Problem somewhere.

[Vladimir Innit Lenin]

Most of the criticism of the LTV is based on false interpretations of it, but not all.

In Marxism the value of commodity is the gravitational center of prices, so to speak. Prices will always gravitate around the value of a commodity, which is the (socially necessary) labour embodied in it.

So Price = Value + Supply and Demand. Similarly, one could argue Price = Cost of Production + Supply and Demand.

The subjective theory of value argues that value is subjective and that this subjective evaluation determines demand for a product. If consumers deem the value of a commodity to be less than its price they will not buy the commodity. And if enough consumers do not buy it, the price needs to be lowered by the entrepreneur.

Therefore Price = Supply and Demand--where 'demand' is the subjective evaluation by consumers (or, consumer preferences).

To give a simple analogy.

One apple is exchanged for one pear.

Marxists would say, this shows that the labour embodied in both the pear and apple is roughly the same giving it the same exchange-value as one apple is exchanged for one pear.

Marginalists argue that both parties in the exchange deem the other party's commodity to be more valuable than the commodity they currently themselves possess, otherwise they would not exchange the good voluntarily. Thus, value, it is argued, is subjective.

Sorry, just a quick technical observation. Price cannot equal value, supply and demand. It equals V + E, where V = value and E = the equilibrium point where supply equals demand, though even that is contentious in a Socialist economic model, as even when the market cannot match supply and demand, there may still be demand for a product and its supply may have to be artificially be raised using a non-market mechanism, in order to avoid a market situation where a lack of supply and over-demand means the price is inflated.

[Blake's Baby]

Sorry, DP.

[Blake's Baby]

I don't fully understand this yet (I've never taken an economics class or read any books from Marx.)


Would it be correct to say

Labour Theory of Value is dependent on a few things

- Value of labour (the value of the labour is dependent on the demand for the labour)

- Amount of labour (the more work put in to the labour, the more profit will be made)

With this, it would be said that doctors would still make more money than a ditch digger or a plumber because the demand for doctors is higher.

Am I correct? If I'm not please correct me.

I can't see how they would be correct either, sorry.

1 - value of labour:

I'm not sure how one would measure demand in this case, but I definitely go to the doctor's less often than I buy bread for instance. And I guess for most people it's the same. So one might expect that the very high demand for bread would make it extremely expensive, whereas doctors would be offering cut price deals to get people through their doors, in a "don't buy really expensive bread, come and get a rubella innoculation instead - buy today and get your flu jab while you wait!" kinda situation.

Marx talks about 'simple labour' and 'complicated' or 'skilled' labour, and believes one can be resolved into the other. In theory, your plumber could perform a heart-bypass operation, but it would take much longer, because he'd have to keep stopping to look at the manual; in practical terms, you'd probably die. Equally, my baker could fix my plumbing, only she'd have to keep stopping to look at the manual; in practical terms, I'd probably have a very wet kitchen. Equally, I could make my own bread and even sell it, but I'd not make very much because I'd have to keep stoppping to look at the receipe; in practical terms my bread would sell for less than I invested in it.

So the amount of technical skill necessary to perform a given action is part of the process of determining 'value' and this comes down to replacability. It's not the demand alone for the labour that makes it worth x-units per hour; it's also the supply of that labour. Doctors are in short supply because it takes 7 years to train them. Plumbers are in short supply (but not as short as doctors) because it takes 3 years to train them. Bakers are in moderately short supply because it takes 2 years to train them. Idiots can be replaced by whistling and therefore command no 'value' in the labour market.

The origin of the term 'proletariat' for the working class comes from the latin meaning 'those with no property but their children'. Wages themselves can be regarded as the level of payment necessary for workers to reproduce themselves. Unskilled workers are paid low wages because to replace them (for them to raise unskilled children) is not an economically difficult task - they can enter the job-market at 16 or whatever and that's no great loss to society. Doctors are paid a large wage/salary because for them to replicate themselves through their children requires a much higher investment by society (good school grades and several years at university when they are not expected to be providing for themselves).

Thus, to produce the children of doctors (who might be expected to become doctors themselves) is a much higher social investment than to produce the children of assembly-line workers (who might be expected to become assembly-line workers, if they can even find a job).

2 - Amount of labour:

I could spend 2 hours making 2 loaves of bread; my baker can make 8 loaves of bread in 2 hours. Our bread will sell for the same, because no-one is going to pay me £4 a loaf and her £1, especially as her bread is probably nicer, but that's by-the-by. The price of bread is £1 a loaf. The fact that I'm bad at making bread and on average put 4 times more work into it doesn't alter the fact that bread trades as a commodity, and when on average bread can be produced for £1 a loaf, that's what it goes for. Even if my baker sells out of bread, people will be more likely to walk across town to another baker and pay £1 a loaf, rather than buy my £4 a loaf bread. Unless I sell mine for £1 a loaf.

My baker put 15 mins of labour into each loaf (on average) and 25p of materials (flour, electricity, wear and tear on mixing bowls etc) and gets £1 in return. I put 1 hour of labour into each loaf (on average) and 25p of materials (exactly like the baker) and I get £1 in return.

She 'pays' herself £2 an hour; so she has, for her 2 hour day, £8 income from her bread split between £2 in overheads, £4 in wages, and £2 pure profit.

I pay myself £2 an hour; so I have for my 2 hour day (same labour time), £2 income from my bread split between 50p overheads, £2 in wages and a deficit of 50p instead of a profit. I must either get a bank loan and hope 'the economy picks up' and tomorrow I can sell bread at £2 a loaf, or reduce wages, or reduce costs, or increase productivity (make more bread with the same effort - get better at doing it, which comes back to the whole skilled/unskilled thing).

[Strannik]

I think I get the amount of labour part; the value of labour is more complicated. In essence, what I would like to do is to write some kind a short essay on value. I have a feeling that something is wrong with the marginal utility and that it can be criticized from a materialistic point of view. I'm actually not sure if this has anything to do with Marx.

Until now my thoughts go like this:

(Socially necessary average) labour time is the common "resource" that creates all commodities. Commodities might be services, include various amounts of resources as well as various types of resources (finding rare resources takes more labour time).

Therefore it can be said that all commodities contain labour and when we are exchanging commodities, we are exchanging spent labour time. Matter and energy can not be destroyed or created, yet human lifetime, therefore also human labour time, is finite and once spent, lost forever. Human labour time is the one finite resource that can't be recovered.

When two people exchange an apple and a pear, they exchange differently spent labour time (lets say time spent climbing an apple tree and a pear tree). That time is an objective amount of productive human lifetime that is now lost forever; it can no longer be spent in any other way. So this is what I understand to be the time value; the objective part of a commodity's value. (For some time I thought that this is what Marx calls exchange value; now I'm not so sure).

Now the question is, why do we exchange things? If I give my apple for your pear, I obviously value it more than my apple. There is some kind of "rated" value. I rate the pear higher than apple, even though they contain objectively the same amount of labour time; this is why the exchange happens. I thought that this is what Marx calls use value - looks like I did not understand that one correctly?

The problem is, what happens when we exchange commodities that do not have same time values. When I exchange one hour of street cleaning for one hour of bread baking, everything's ok. Both I and baker get what we want. But what if the baker demands a full day of street cleaning for their one hour of bread baking?

It seems to me that if commodities are traded above their time value this brings about inefficient social allocation of commodities. The baker gets my 12 hours worth of lifetime and can now spend them according to their personal needs. But the point of social division of labour is that we all have specialities and can therefore do more - baker bakes more efficiently and faster; I clean streets more efficiently and faster. When I have to spend 12 hours work for their 1 (necessary) hour of bread baking, society loses, for I cannot spend these hours on some other job (cleaning somewhere else, for example).

On the other hand, if baker can transform his 1 hour to 12 hours, they obtain a large share of social labour time and can command social commodity production according to their personal needs, not necessarily social needs. There is some kind of conflict here.

(Otherwise, if commodities are traded below their necessary time value, society also loses).

(P.S - on service jobs such as doctors and plumbers, I believe that we are not just paying for doctor's time spent operating or plumber's time spent plumbing, but also for the time it took for educate and train them - in a sense "doctor" and "plumber" are commodities).

Anyway, I feel that if I get through this, all this value stuff can be formulated quite simply. :)

[Zukunftsmusik]

Well, the main criticism of LTV, as far as I can tell, is that you can spend all day arranging dogpoo into a pile, but it doesn't mean it's worth anything, and therefore labour doesn't create value.

Which is true, but irrelevant. Because what capitalism does is use surplus labour to create commodities, which are (by definition) destined for sale on the market. Seperated from the market, outside of any system of turning work into profit, of course there will be no profit. The surplus labour is what allows profit to be made, but you can't just hold up soemthing that has been worked on and say "here's 50% materials/overheads and 50% pure profit". The profit comes at the end of the cycle.

A classic argument goes something like: "if LTV was real then all we'd need to do to make the economy grow is put half the unemployed to work digging holes and the other half filling them in again". Which mises (I keep trying to type 'misses' but my brain insits it 'mises'...) the point. 'Value' is not the same as 'profit'. 'Value' is only potential profit, and depends on a market. If no-one wants a hole, no-one is going to pay for it, no matter if it would take them ages to dig one on their own. It's only when someone wants a hole and is prepared to pay for a pre-dug one or one that someone else will dig so our 'hole-wanter' doesn't have to, that 'profit' can be realised.

On the other hand, if someone wants a hole, and there's one already, no profit. A hole then is not in itself a commodity. It's the existence of a market, again, that makes it a commodity; scarcity, the imbalance between wants and availability, that give the leaverage to extract profit from surplus value.

What you sum up here, I think, is that labour in marxist terms is social labour. LTV isn't applicable to food-making in your own home, or for that matter arranging doggpoo in a pile. I think the argument in the beginning of your post is called the mud-pie-argument

http://kapitalism101.wordpress.com/2010/05/13/law-of-value-3-das-mudpie/

[Luís Henrique]

For me personally, question "what is value" is the central question in every production system and social formation.

Value is only central in capitalism, not really in feudalism and other pre-capitalist modes of production.

Luís Henrique

[Luís Henrique]

Well, the main criticism of LTV, as far as I can tell, is that you can spend all day arranging dogpoo into a pile, but it doesn't mean it's worth anything, and therefore labour doesn't create value.

This is a quite unimpressive criticism. If it doesn't create value, it isn't labour.

The actual criticism that neoclassics make is much more challenging.

They would say that value is price, or that there is not such thing as "value" altogether. That "value" is a metaphysical, mystic, antiscientific, notion; that "value" cannot be actually measured. That if the only way we become aware of the existence of "value" is price, then price is the only thing that really matters, and "value" is an unnecessary hypothesis.

Luís Henrique

[Red 7]

The idea that value can exist within some subjective vacuum, springing forth suddenly from the psychological depths when making individual transactions is pure Idealism. If anything is mystical, it is the ideas that 'needs' and 'desires' are subject to anything but the world around you - which includes society. What Marx's LTV essentially does, and which has now been largely abandoned to the ridiculous circular platitudes of economic orthodoxy, is to try to understand the material connections between humans and the objects of which they use and deal with.

Value does exist - above and beyond Price (which floats around it's center of force) - acting as a sort of gravitational pull in the material commodity market. The market prices themselves arise out from the concrete interactions in production (labour - supply/demand) under society. The key concept to understand when thinking about "value" in Capitalism is to try and understand it as a social quality. For individuals - value may be subjective, but this is 'value' essentially understood as a type of judgement, rather than an active and objective quality or force as it is in LTV. These subjective values are not the forces at work within the capitalist market. The forceful and objective value of a commodity is instead arranged around its socially-necessary labour time - the amount of labour, on average, in the whole of that society, that it takes to create a certain commodity.

As an example, in an individual transaction... I can subjectively decide (make a judgement) that the fruit you possess is worth more to me right now than my own 60" Plasma Screen, and we can go ahead and make that deal. Obviously now, that doesn't mean value has become 'subjective', instead anyone with half a mind can now see that I've been hard done by. I've been ripped off... as within our current society, it is obvious that the subjective value (the Price) gravitates around an objective value (although by all means - relative and constantly in transformation) and everyone knows the amount of labour time that has gone into making a TV is much greater than a bit of fruit (and hence it is more valuable). This difference in value arises from the market forces, of which themselves are driven by (social) labour.

Gold is always a useful thing to think about. On its own, in its individual value, its absolutely useless. Yet if society decide to give it significance, and there is a demand for it - then coupled with the labour time for excavation, it becomes valuable. This idea of 'social value' also blows out of the water those arguments that bourgeois economicists like to bring up, where they cite INDIVIDUAL scenarios... like someone making mudpies (which are socially useless) or someone suddenly finding a lump of gold. The same goes for the Art market... which often works on an individual basis, and hence does not follow the laws of value to the same rigidness. Of course you could also argue, the fact there is a market, does mean there is some objectiveness to the value of art. For example, when the US Government and C.I.A pumped money into the market and bank rolled people like Jackson Pollock in the 50s to combat the perceived 'leftist' European art of modernism - this had an objective effect in demand. You wouldn't pay 100 million dollars for a painting by some nobody, would you? Subjective value indeed.

[Strannik]

So, for bourgeoise there is only price - whatever amount of cash I manage to talk out of someone is the objective (social) value of the commodity?

While for marxists socially necessary labour time isn't measure of a commodity's value, it IS the commodity's objective value? Meaning that the inventory of commodities a society possesses is in final analyzis only a function of how it has spent its labour time.

Is it correct to say that in capitalism one tries to trade commodities above their value (driving the price as high as possible)? So there is not just worker exploitation but customer exploitation as well?

(PS. It is not true that gold by itself is absolutely useless. It is widely used in electronics :) )

[Red 7]

For the bourgeois value is an individual subjective judgement made about an object - of which is then expressed through the action of exchange (for money - the universal exchange value). They don't talk about objective or social value at all, markets are just the giant sum of all the individual subjective judgements. A television set has a higher Price because it is arguably of more use to someone than a fruit, and so a larger amount of individuals subjectively decide (of their own rational volition) that it's worth this larger amount.

Some of the problems you can see here are - no mention of production or labour, no mentioning of society as a whole and how it might effect an individuals desire (demand) for certain things (through custom etc). Also I might add that for this theory they speak of objects (in their absolute sense) - as opposed to commodities (which are socially and historically involved, and of which Marx investigates).

For Marx, instead of subjective (and unquantifiable) value which is simply determined by the mathematical sum of all immediate individual actions, value takes on a larger role within society (which if you think about it, is just an extended field of individual action) and its economic system. It's really a broadening of horizons - if you read Capital, you'll see Marx (to many a bourgeois readers' dismay) takes a number of different positions in his analysis. It can be very elastic at times, but really, if you want to see the big picture you have to understand the mass of things at work in the creation of value. It's a huge social endeavour with a large number of varying connections that all go in to determining what a commodity is (its value) and how it comes about.

Really, there are no easy, reducible or static, definitions to hand out. That's also why the bourgeois offering is so massively unintelligible and unquantifiable - its simply an isolated explanation of how the market works, everything else which is involved (production, labour, social relations) is just chucked out the window.

Socially necessary labour time definitely plays a role in deciding a commodity's value. However, It definitely isn't absolute, it's very relational. However - if you want to find the scientific value of a certain commodity, you have to find a way of measuring this (which granted, isn't easy). This is the social average (or necessary time). So you might hear bourgeois economists going on about issues of scarcity - natural values found in the earth etc - like gold and oil and diamonds. If you come across a huge diamond whilst you're out one day on a walk - surely value has been spontaneously created without the process of labour? Yet whilst it's true that you'll probably be a very rich man instantly - this is only due to the fact that others in society have laboured so extensively on average for the excavation of diamonds. Scarcity has nothing to do with it. You can only be rich in a society. If diamonds were so easily picked up everywhere - they would be of considerably less value. This substance of labour is so powerful in fact, that many of the most valuable diamonds today are worth what they are simply because of the historical difficulties involved in getting to them. There's actually a perverse kind of irony with diamonds - without the "blood" they wouldn't be nearly as valuable. Without this socially necessary labour time (the average amount of time/effort it takes to produce something in society) your diamond would be worthless and its Price indeterminable.

The same goes for if you pump in hours of labour into something nobody wants, you aren't creating value. Value is not intrinsic to labour as an action - it instead revolves around social labour, labour as coordination. If you take twice as long to make a television set than other factories, you aren't doubling the value - its socially necessary labour time that measures this.

You are right in saying commodities are simply the expression of how society has coordinated and spent its labour time. This could also be coordinated differently, around use-values rather than exchange-values (production solely for profit). This is one way value can radically change for the betterment of society.

With your final question, I have a little trouble deciding whether or not this is the case. I tend to think you can't trade a commodity above its value (as that isn't decided by you individually). It's definitely true that a capitalist will try to get the highest Price out of their customers. There are numerous occasions when a commodities Price might be set above its actual value... although they do tend to balance out. I think exploitation really begins in the realm of production, and it's there that capitalists profit through the gathering of surplus value created through human labour. I suppose the customer is exploited in as far as he is paying for more than he gets in wages as a worker, and this gap can increase at certain times (such as in the case of a Monopoly).

And thank you for your comment on Gold, comrade. I did not know that. Although perhaps we can still say Gold is useless on its own - it is only with the mobilisation of Gold by men in a society that puts it to use! :thumbup1:

Also apologies for any mistakes or misuse of terms in the above passages. I am still learning myself.

[Blake's Baby]

No, customer exploitation is basically still worker exploitation.

Yes, capitalists try to get as high a price as possible, but when they do it's all about profits that ultimately come from the worker.

If I make things (at your ThingCraft factory) for you and the total cost to you per item (for my wages - £1 - and the power to drive the machines and the raw materials and whatnot - another £1) is £2 per item, and you sell them for £12 per item, that still means that my £1 of labour (cost to you) and £1 of materials and other overheads makes a £10 profit. You're not exploiting the consumer, you're exploiting the worker because it's my effort that has transformed £1 of materials into £12 of income for you, but I've only been paid £1 for that.

If you sell it at £20, you've made £18 profit. From me, not from the consumer. My £1 of labour on £1 of materials has now netted you £20 income. Without me making it, there's no product; if there's no product, there's no consumer of the product, only someone else whose wants and needs are not fulfilled by capitalism. So it's still me being exploited.

There is no 'natural price'. There is no 'fair price that results in exploitation for the worker but not the consumer, but beyond which the consumer is exploited'.

Even if I make these items for you and you sell them (at £12) to someone else, who then sells them for £20... are they exploiting the consumer, who could have bought them for £12 from you? Or are they exploiting you, who could have sold them for £20 to the consumer?

In the end, they're still exploiting me, I'd argue, because it's my labour that's made the item in the first place. If they can sell it for £20, I could have taken it from the factory and sold it for £20 myself. At which point I'd be exploiting myeself. Fundamentally, it's the work that determines value (because without the work, there is nothing to sell) and the average of work that produces price (because I can't take it and sell it for £20 if the factory down the road is flooding the market with a very similar product for £8).

So in the end the consumer isn't exploited, in a Marxist sense, I think. The consumer is just part of a vast process of aggregation of prices. It's the production (human action on raw materials or whatever to produce a product which is destined to be marketed) that produces the value.

'Price' is then just the socially-acceptable aggregate of value. A million items from the ItemCorp factory down the road at £8 will mean I have to sell my expropriated one at £8 - or less - and you have to sell your thousand that I've made for you at £8 too, because that's what the 'market' - the aggregation of prices - says is reasonable, due to the fact that some big players (such as ItemCorp) can produce massive quantities.

If your particular thing is perhaps selling items on the basis that they're 'handcrafted' rather than the 'mass-produced' ones ItemCorp makes you might be able to get a few quid above the general price, but again, it's a particular kind of added value that the worker is putting in not the consumer. Obviously (if it's true) the costs to you will be higher - at ThingCraft, each item costs you £1 in wages because I can make 6 per hour, whereas they only cost ItemCorp 30p because their brand new thingicator machines improve their productivity so each worker can produce 20 per hour. But their other costs are higher, £1 per item for you but £1.20 for them - they have to pay off the bankloan for their 50 thingicators.

So the breakdown of costs for the two companies is:
ThingCraft, with its old thing-mangles - wages £1, overheads £1 per item
ItemCorp, with its new thingicators - wages 30p, overheads £1.20 per item

But what's being produced is:
ThingCraft - 6 items per worker per hour
ItemCraft - 20 items per worker per hour

Of course, these items will sell for nearly the same. Some people might want to pay a 'handmade/traditional' premium to get the ThingCraft version but you can't price it too high or too many customers will think 'I can just get the ItemCorp version for £8'.

The thing is, if you look at the figures for the two different companies, ItemCorp employees are actually being exploited much more than ThingCraft employees...

[Luís Henrique]

Is it correct to say that in capitalism one tries to trade commodities above their value (driving the price as high as possible)?

Well, in capitalism everyone tries to sell commodities above their value (and to buy them below value). And evidently some are able to eventually do either. But in the greater scheme, the average price coincides with value.


So there is not just worker exploitation but customer exploitation as well?

No. Customers may be eventually duped into buying what they don't actually need, or defrauded on quality, but there is no systemic exploitation of consumers comparable to exploitation of labourers.


(PS. It is not true that gold by itself is absolutely useless. It is widely used in electronics :) )

And in dentistry (or has that become obsolete already?)

But gold is by far more useful as money than as anything else. Arguably, its low utility as something else is part of its usefulness as money.

Luís Henrique

[Luís Henrique]

There is no 'natural price'. There is no 'fair price that results in exploitation for the worker but not the consumer, but beyond which the consumer is exploited'.

Well, evidently there is no such thing as a natural price; all prices are man made, and, as such, artificial. But when commodities (other than labour power) are sold at their value, that is the "fair" price that doesn't harm either buyer or seller.

When things are sold below their value, the seller loses, and the buyer gains. Examples of this would be a person selling his house for the first offer because they are in desperate need of money, or a company selling stuff underprice to renew stocks or to get rid of commodities before they expire, etc. Conversely, when things are sold above their value, the seller gains and the buyer loses. Examples of this would be temporary monopoly gains, as well as simple commercial fraud.

What matters however is that none of these things are sustainable in the long term. Competition will drive capital from sectors that are selling underprice to sectors that are making superprofits, thus reducing price in the latter and increasing it in the former. This doesn't happen concerning the peculiar commodity that is labour power, because it is not produced by capitalists.

Luís Henrique

[u.s.red]

Price = Profit + Non-labor costs (machinery, interest, rent, etc.) + labor costs (wages.)

Profit = value added or created by human labor and not paid for by the capitalist.

[u.s.red]

Capitalists sell commodities, on average, at their true value. Marx, Wages, Price and Profit. However, they do not pay the full price for the commodities. They don't pay for the surplus-value added by workers. This is why capitalists can make a profit by selling commodities at their true value.

[Rooster]

Capitalists sell commodities [...] at their true value. [Capitalists] do not pay the full price for the commodities.

Yes they do? Things exchange for what they're worth. You can rip someone off some of the time but you can't rip them off all of the time.


They don't pay for the surplus-value added by workers. Well, of course they don't. That's because surplus-value is the use-value of labour-power. They pay the worker a wage in exchange for labour-power.


This is why capitalists can make a profit by selling commodities at their true value.None of what you said really made any sense. You just stuck two things together.

[Blake's Baby]

Capitalists sell commodities, on average, at their true value. Marx, Wages, Price and Profit. However, they do not pay the full price for the commodities. They don't pay for the surplus-value added by workers. This is why capitalists can make a profit by selling commodities at their true value.

No Rooster it does make sense... sort of.

The idea of the difference between the price and the value of the commodity is the difference between the dead labour (resources, which as we know are just alienated living labour transfered into an object with a use-value, plus the overheads, including machines and power, which again are merely alienated living labour transformed into productive tools) plus the living labour; and the actual realisable amount it makes, which is the same as average socially-necessary labour time.

Labourers transform resources (eg plastic) via dead labour (elecricity flowing through machines in a factory that needs light and whatnot) into product. The product sells for ... whatever price it does (which is roughly the equivalent of the socially-necessary labour time). If this is more than the capitalist's overheads plus wages, then the profit is derived from the difference between the 'value' and the 'price'. In this sense, the 'value' includes the added value that the worker has given the product, and the 'price' to the capitalist is the overheads plus wages. The difference is the surplus value.

But 'cost' (to the capitalist) in this instance I think is a better way of describing it than 'price'.

[u.s.red]

Yes they do? Things exchange for what they're worth. You can rip someone off some of the time but you can't rip them off all of the time.

Well, of course they don't. That's because surplus-value is the use-value of labour-power. They pay the worker a wage in exchange for labour-power.

None of what you said really made any sense. You just stuck two things together.

Well, it made sense to Marx. Just look at Chapter VII of Capital.

Here it is again: Worker produces commodity. Capitalist pays the worker a wage of $10. Capitalist takes the commodity and sells it for $20, its true value and makes a profit of $10.

How is this possible? Simple. The worker adds value to the materials on which he works, over and above what his wages are. This added value is surplus-value. Hence, the labor theory of value.

As Marx points out in Vol III, all of this happens on average, in the capitalist system as a whole.

[u.s.red]

No Rooster it does make sense... sort of.

The idea of the difference between the price and the value of the commodity..



According to Marx, price is merely the monetary expression of value. Prices may go up and down over time, but, on average, price will gravitate toward a "natural price" (Smith's phrase.) This average, natural price is the real value at which the capitalist sells the commodity.

The cost of the commodity includes the value added by the worker, for which the capitalist pays nothing. The only cost paid by the capitalist is wages and dead labor or previous wages.

If you cannot explain profit this way, then you cannot explain profit. Marx, Prices, Wages and Profit.

[Marvin the Marxian]

Marx's Labor Theory of Value is simply the theory that the value of a commodity is the average amount of socially necessary labor-time, or abstract labor, that's required to produce it. This is an objective theory of value because this amount can be measured, at least in theory.

One important implication of this theory is the Law of Value, which governs the quantities at which different commodities exchange with one another (their exchange-values). It states that the exchange-values of commodities are proportional to their values. This law is also based on the nature of exchange, which requires an amount of one commodity to be replaceable by an amount of another.

It's also important to note that if labor-power, or the capacity to labor, is treated as a commodity, then it also has a value. And like any other commodity, its value is the average amount of socially necessary labor-time needed to produce it. But how is labor-power produced? I think a better way of looking at it is in terms of it being sustained. This means things like food, clothing, shelter, etc.

Exploitation is another important implication of the LTV combined with the capitalist mode of production, which involves private ownership of the means of production. Because the means of production are privately owned, workers can be compelled by the owners - the capitalists - to labor at one rate or duration, but be paid for another rate or duration. The latter must be smaller than the former if the capitalists are to make any profit. Given the LTV as explained above, this means the capitalists profit by expropriating part of the value created by their workers. This is called exploitation.

[JustMovement]

If someone took a graph of the real price (adjusted for inflation) of a commodity over a suitably long amount of time, and then drew a line of best fit through it, and then took the average labour time necessary to produce one item of the commodity, they should relate right? So say that real price has decreased by 10% over this suitably long enough period of time, that would imply a comparable rate of decrease of labour time?

[Ostrinski]

If someone took a graph of the real price (adjusted for inflation) of a commodity over a suitably long amount of time, and then drew a line of best fit through it, and then took the average labour time necessary to produce one item of the commodity, they should relate right? So say that real price has decreased by 10% over this suitably long enough period of time, that would imply a comparable rate of decrease of labour time?Labor-time is a concrete variable and never decreases. Rather, with the decrease in labor time and power necessary to produce a commodity, the value drops. The less useful labor materialized within the commodity, the less the value.

[JustMovement]

right i meant say the average price of a bushel of corn has decresed by x, woudl that mean that the time necessary to produce that bushel of corn has also decraesed by x? (this is over a long enough amount of time)
Im not trying to say that we ever have to work less, but less work is needed to produce because machines are better

[Ostrinski]

right i meant say the average price of a bushel of corn has decresed by x, woudl that mean that the time necessary to produce that bushel of corn has also decraesed by x? (this is over a long enough amount of time)The other way around. The less labor time and power necessary to produce it, the greater the productivity, the less the value, the lower the price.


Im not trying to say that we ever have to work less, but less work is needed to produce because machines are betterIt's not that less work is needed, just that technological progress means we can produce more with the same amount of work, depreciating the value of the commodity in question. But to produce one individual thing requires less work parallel to technological development, you are right.