Labor Theory of Value question.

[eric922]

So on another forum a discussin about Marxism came up and liberal poster, posted this:





I know his view of the Labor Theory of Value must be wrong, because he is starting at price and price is not the same thing as value, at least as I understand it. My basic argument is that he is wrong, because he misunderstands the the LTV. Value and Price are different things, is that correct?

[Zukunftsmusik]

So on another forum a discussin about Marxism came up and liberal poster, posted this:



Sorry, but Marx is just plain old, flat wrong. All of Marx stands (or alas falls) on the Labor Theory of Value. And LTV is wrong. For the uninitiated, LTV says that prices - ALL prices - come from the amount of labor required to produce the item or service. According to LTV, supply and demand DO NOT generate prices. Only the amount of labor contained in an item or service.

LTV is demonstrably false. A quick trip to the mall easily provides examples showing the fallacy of LTV.

Classic example. Consider the wages of A-Rod vs Michael Phelps. Does it take more labor to be an Gold Glove Major League infielder or to win 8 Olympic Gold Medals?

The fact is that A-Rod makes Waaaaay more than Phelps is that lots more people want to pay to see A-Rod play baseball ( to boo him or cheer him) than are willing to pay to watch Phelps swim. Hence LTV is wrong. And without LTV, all of Marx is fiction. Interesting fiction, but fiction nonetheless.
]

I know his view of the Labor Theory of Value must be wrong, because he is starting at price and price is not the same thing as value, at least as I understand it. My basic argument is that he is wrong, because he misunderstands the the LTV. Value and Price are different things, is that correct?

Correct. Marx says that value is socially necessary labour time, ie "amount of labour put into the object". Prices he calls "money-names", because they are given not as direct reflection of a commodity's value, but also out of other factors. It's normal among marxists to say that prices fluctuate around value.

[Comrade #138672]

Correct. Marx says that value is socially necessary labour time, ie "amount of labour put into the object". Prices he calls "money-names", because they are given not as direct reflection of a commodity's value, but also out of other factors. It's normal among marxists to say that prices fluctuates around value.Today a lot, if not most, prices do not seem to be even slightly related to their value (according to LTV) or fluctuating around it.

[Book O'Dead]

So on another forum a discussin about Marxism came up and liberal poster, posted this:


[QUOTESorry, but Marx is just plain old, flat wrong. All of Marx stands (or alas falls) on the Labor Theory of Value. And LTV is wrong. For the uninitiated, LTV says that prices - ALL prices - come from the amount of labor required to produce the item or service. According to LTV, supply and demand DO NOT generate prices. Only the amount of labor contained in an item or service.

LTV is demonstrably false. A quick trip to the mall easily provides examples showing the fallacy of LTV.

Classic example. Consider the wages of A-Rod vs Michael Phelps. Does it take more labor to be an Gold Glove Major League infielder or to win 8 Olympic Gold Medals?

The fact is that A-Rod makes Waaaaay more than Phelps is that lots more people want to pay to see A-Rod play baseball ( to boo him or cheer him) than are willing to pay to watch Phelps swim. Hence LTV is wrong. And without LTV, all of Marx is fiction. Interesting fiction, but fiction nonetheless.
]


I know his view of the Labor Theory of Value must be wrong, because he is starting at price and price is not the same thing as value, at least as I understand it. My basic argument is that he is wrong, because he misunderstands the the LTV. Value and Price are different things, is that correct?

You can't argue this topic among Marxists if you insist on using the terminology of the enemy.

The so-called LTV is a misnomer, and as long a you allow it no reasoned discussion about the Marxian Law of value is possible.

[Blake's Baby]

There are two fallacies involved in his refutation of LTV.

First, as you've already ascertained, he equates 'price' with 'value'. 'Value', for Marx, is what prices fluctuate around. The reason no one charges $800 for a cheese sandwich is that someone else will sell you one for a dollar. A dollar is the 'value' of cheese sandwich (more or less), no matter how many you are prepared to supply at $800 each. Someone may go 'hey my cheese sandwiches are nicer, they're a dollar 50' and someone else may go 'budget no frills cheese sandwiches, only 90c' but then the dollar is still the price around which the sandwiches are fluctuating. The reason is that it takes x-amount of effort to buy some bread and cheese (themselves the result of other people's labour) and y-amount of effort to put them together, and x+y=$1 in this case. If you wanted to drop 'wardrobe' in there instead of 'cheese sandwhich', x would include wood and panel pins, y would be much longer, but the principle is the same x (any pile of raw materials) + y (labour) = a commodity that is worth money.

The second fallacy is, that Marx does deal with supply and demand. He says, firstly, that in the market supply and demand do affect prices; but he explores the value of labour in a somewhat abstract setting where neither supply no demand is assumed to effect price, to find out what other mechanisms are in place. He posits a situation where neither the buyers nor the sellers are able to influence prices. In other words, his working model of capitalism is one that works better than capitalism actually does work.

You could always try, 'of course, you're right, Marx's model is predicated on a situation where capitalism is working efficiently, and actally I agree with you, it can't'. See how he reacts to that, maybe.

Secondly, in relation to Marx dealing with supply and demand, he doesn't say all labour produces value. There has to be a pont. I don't know who Phelps and A-Rod are, but they seem to be a baseball player and a swimmer. OK; if one is putting labour into something unwanted, that labour will be worth less than if they put it into something wanted. The 'end market' is explained by Marx as being necessary. Otherwise, moving a pile of bricks endlessly round a room would produce value, which is meaningless. It doesn't, Marx knows it doesn't and explained that it doesn't - but your correspondent doesn't know this and has therfore never read marx's works on economics. They are talking about something they've never read and have no understanding of.

The root of the problem is, an-caps and the like refuse to acknowledge that any 'value' exists beyond 'what someone is prepared to exchange for it'. Which is what Marx was going beyond, in investigating the source of profit.

[Lucretia]

It is a labor theory of value, not a labor theory of prices, and not a labor theory of use value. The labor theory of value is that only human labour power creates new value, and that the value of an item is equal to the socially necessary labour time required to create it. How this works itself out in terms of prices is a related, but separate, question, which can not easily be resolved by walking into a store with manifold commodities and checking their prices. There are several orders of determination that need to be unpeeled before you can understand a commodity's price, but Marx's point is that the foundation of the price -- before all those other determinations take effect -- is value.

[aty]

Today a lot, if not most, prices do not seem to be even slightly related to their value (according to LTV) or fluctuating around it.
In markets that have a lot of competition it does. Capitalism can never be a free market and that is why prices in capitalism never will correlate exactly with the amount of labour put into the product.

In a totally free market prices would correlate with the value. But a totally free market can never exist, we just use this model for making it easier to understand how society funtions.

[Zukunftsmusik]

Today a lot, if not most, prices do not seem to be even slightly related to their value (according to LTV) or fluctuating around it.

I'm honestly unfamiliar with any statistics or numbers that may prove or disprove this, but I was talking about capitalism in the abstract, or rather theoretically. Where have you gathered information to back up your claim?

[Comrade #138672]

I'm honestly unfamiliar with any statistics or numbers that may prove or disprove this, but I was talking about capitalism in the abstract, or rather theoretically. Where have you gathered information to back up your claim?Wait, so were you talking about prices (in a capitalistic system) fluctuating around labor value or value defined by supply and demand? I thought you were talking about labor value. If not, I don't have any scientific evidence to back up my claim. Sorry. It seemed self-evident to me. Perhaps you can show me why it's not self-evident?

[Blake's Baby]

Perhaps you can demonstrate why my belief in invisible unicorns is not rational?

If you make an assertion about something - 'it's obvious that prices do not fluctuate around their labour-derived value' - then it's up to you to try to provide something to back it up. You can't ask someone else to disprove what you believe - something that seems self-evident to you, but no one else has a clue why.

If you want to know why labour produces value, Marx explained it pretty well, and the majority of people here accept that analysis. If you disagree with that analysis, please explain why, and while you're on you can also explain why my $800 cheese sandwich business is doing so badly.

[Zukunftsmusik]

Wait, so were you talking about prices (in a capitalistic system) fluctuating around labor value or value defined by supply and demand? I thought you were talking about labor value.

Value can't be defined by supply and demand, unless we distort 'value' into meaning simply 'price'. I was definitely talking about value in the marxist sense ('labour value').


If not, I don't have any scientific evidence to back up my claim. Sorry. It seemed self-evident to me. Perhaps you can show me why it's not self-evident?

As I said I haven't read any investigations on this, let alone investigated it myself, which is why I asked. I was simply curious, because it would be interesting to see how and why prices don't fluctuate around value (if it's true as you say). If you come up with the claim, I'm afraid the burden of proof is on you.

[Comrade #138672]

As a beginner my knowledge is limited. I'm trying to learn something here. I will try to explain it, even though my understanding may be flawed. Feel free to correct me.

Prices are not equal to labor value, although labor value certainly contributes to the prices. Does this mean that prices necessarily fluctuate around labor value; implying that its the most important element contributing to prices? What about scarcity? And "planned" scarcity by capitalists? Aren't these factors highly independent from labor value? What about monopolies or cartels? Prices can then be kept artificially high. This is especially true for patent rights, which creates monopolies very easily.

It's not as self-evident as it seemed before; once I started to really think about it. Now I'm slightly confused.

[Zukunftsmusik]

As a beginner my knowledge is limited. I'm trying to learn something here. I will try to explain it, even though my understanding may be flawed. Feel free to correct me.

I didn't mean to come off as an ass or anything, I'm learning too.


Prices are not equal to labor value, although labor value certainly contributes to the prices. Does this mean that prices necessarily fluctuate around labor value; implying that its the most important element contributing to prices? What about scarcity? And "planned" scarcity by capitalists? Aren't these factors highly independent from labor value? What about monopolies or cartels? Prices can then be kept artificially high. This is especially true for patent rights, which creates monopolies very easily.

First of all, I don't think it's necessary to call it "labour value". As long as we keep it clear that we're using marxist vocabulary here, value should suffice. (Value=socially necessary labour time put into an object/commodity)

Value doesn't exactly contribute to the price given to an object, as far as I understand. Price is what Marx calls the money-name, an imaginary sum of money that in the future will be exchanged for the commodity that is given a price. The price is more precisely a reflection of a commodity's value. Yet, as I think Blake's Baby pointed out, if a neighbouring salesman sells the same commodity for a smaller price, you must take his competition into consideration, and this and similar factors will make the price of the commodity to differ from its value.

With scarcity, do you mean like lack of an object or a commodity? Let's say there is a scarcity of wheat, due to bad weather. Then there would be put more socially necessary labour time into making the same amount of wheat as before the scarcity struck. This would give the wheat made during the period of scarcity more value (because more labour is put into it). This would be reflected by higher prices. But I suppose these prices could be artificially high (meaning: higher than their actual value) because of the lack of supply.

As far as cartels and monopolies go, I suppose it's simply in the capitalists' interests to earn as much as possible, and when given the chance through gaining power within a field of the market, they will.

[aty]

Prices are not equal to labor value, although labor value certainly contributes to the prices. Does this mean that prices necessarily fluctuate around labor value; implying that its the most important element contributing to prices? What about scarcity? And "planned" scarcity by capitalists? Aren't these factors highly independent from labor value? What about monopolies or cartels? Prices can then be kept artificially high. This is especially true for patent rights, which creates monopolies very easily.
.
Yes, but the law of value is based on a fictional model of a totally free market where scarcity, monopolies and cartels can not exist. In such a market prices would correlate with the amount of labour put into the product. Capitalism is not a free market, capitalist property relations can never produce a totally free market.

[Blake's Baby]

Yeah, I tried to get at that earlier. Marx assumes (and tells us that he is assuming), for the purposes of showing what value is, that neither supply nor demand has an undue influnce. Fact is, both supply and demand have an influence. Too much supply means goods will be cheaper. Too much demand means goods will be more expensive.

'Cheaper' and 'more expensive' than what? Than the cost of producing them - their 'value'.

If it takes one worker eight hours to make a chair, and it takes four workers eight hours to make a table, the value of the table will be 4 times as much as a chair. It has four times as much labour in it. The workers are paid ten dollars an hour so the 'value' of the first chair is $80 and the 'value' of the table is $320.

No one wants a table on its own, but people want chairs, so the demand for chairs is higher. 'Artisan Bespoke Chair Emporium' can sell them at $120 for a single chair. The table sells for $300.

But that means the table is selling for below its value. If that goes on the company will lose money (and go bust, because it can't compete in a market where its tables cost $320 to make but only sell for $300).

The chairs on the other hand, sell for 50% above their value. For every $20 the company loses on a table, it can make 4 chairs and get $160 profit.

So the actual prices in the market fluctuate around a standard, and this standard is the actual cost of production. Another company is going to find that it too can make chairs for $80, or, if they spend more on machinery upfront that speeds the production process, they may find that they can make them for $72, but need to repay the loan for the equipment that adds another $6 of overheads to every chair; they can make them for $78. A third company does the same, and can also make chairs for $78 dollars.

Now the 'value' of a chair has changed. There are more producers using the new equipment, so the amount of time that is needed to build a chair has changed - the value has changed because the labour has changed. They're being made faster, and in a couple of years the loans for the new machines are paid off anyway; the chair now has a 'value' of $70. It sells for $110, because 'Budget Seat Inc' and 'Chairs'R'Us' decided to undercut 'Artisan Bespoke' in the chair market. The price goes down over three years; supply has caught up with demand (there are now 3 producers, 'Artisan Bespoke Chair Emporium' is still making hand-made expensive chairs but feeling the squeeze, because frankly 'Budget Seat Inc' and 'Chairs'R'Us' chairs are just as good, but machine made.

The price moves around with the 'value'. The value moves around with the labour. Eight hour chairs now can be made in 7 hours; when the next gadget to automate the process comes along, it'll make chair-making even faster, and the 'value' will go down further. Chairs will be made in 5 hours, 4 hours, 3 hours... eventually one worker can make 8 chairs in a day, and the market is flooded with chairs that cost $10 to make, far beyond its demand.

At this point, firms go bust. There's too much capacity in the industry, supply is far outstripping deamnd. But it still takes an hour to make a chair, so a chair still has a 'value' of $10, even if the company has to give them away with breakfast cereal to get people to take them.

[RedMaterialist]

[QUOTESorry, but Marx is just plain old, flat wrong. All of Marx stands (or alas falls) on the Labor Theory of Value. And LTV is wrong. For the uninitiated, LTV says that prices - ALL prices - come from the amount of labor required to produce the item or service. According to LTV, supply and demand DO NOT generate prices. Only the amount of labor contained in an item or service.

Not correct. All value comes from socially necessary labor. Prices are the monetary expression of value.


LTV is demonstrably false. A quick trip to the mall easily provides examples showing the fallacy of LTV.

Classic example. Consider the wages of A-Rod vs Michael Phelps. Does it take more labor to be an Gold Glove Major League infielder or to win 8 Olympic Gold Medals?

The fact is that A-Rod makes Waaaaay more than Phelps is that lots more people want to pay to see A-Rod play baseball ( to boo him or cheer him) than are willing to pay to watch Phelps swim. Hence LTV is wrong. And without LTV, all of Marx is fiction. Interesting fiction, but fiction nonetheless.
]

A-Rod and Phelps do not earn "wages." However, their value is certainly different. Why does ARod make more than Phelps? It is not just that labor determines value, but socially necessary labor that determines value. Phelps may put in the same amount of labor, or even more labor, than ARod. What counts is what labor is socially necessary. In a modern, mass consumption society, the need to be distracted by games, television, advertising, etc., puts a huge value on the labor of ARod and less on Phelps. ARod is more socially necessary than Phelps. Of course, that means our society is totally fucked, which becomes more apparent each day.


I know his view of the Labor Theory of Value must be wrong, because he is starting at price and price is not the same thing as value, at least as I understand it. My basic argument is that he is wrong, because he misunderstands the the LTV. Value and Price are different things, is that correct?

Marx misunderstood his own theory? Value and Price are different: value is necessary labor time, price is the monetary expression of value.

[Lucretia]

Not correct. All value comes from socially necessary labor. Prices are the monetary expression of value.



A-Rod and Phelps do not earn "wages." However, their value is certainly different. Why does ARod make more than Phelps? It is not just that labor determines value, but socially necessary labor that determines value. Phelps may put in the same amount of labor, or even more labor, than ARod. What counts is what labor is socially necessary. In a modern, mass consumption society, the need to be distracted by games, television, advertising, etc., puts a huge value on the labor of ARod and less on Phelps. ARod is more socially necessary than Phelps. Of course, that means our society is totally fucked, which becomes more apparent each day.



Marx misunderstood his own theory? Value and Price are different: value is necessary labor time, price is the monetary expression of value.

It's sort of silly to use millionaire professional athletes to make a point about the labor theory of value. These top athletes basically extract a monopoly rent from their rare abilities such that they are not really paid just for their "labour power" -- socially necessary or otherwise.

[RedMaterialist]

Wait, so were you talking about prices (in a capitalistic system) fluctuating around labor value or value defined by supply and demand? I thought you were talking about labor value. If not, I don't have any scientific evidence to back up my claim. Sorry. It seemed self-evident to me. Perhaps you can show me why it's not self-evident?

There is a lot of evidence of the LTV. You could start with the GDP figures from the Commerce Department. Under the National Income and Product Accounts, Section One (percent change from preceding year), table 1.15. What this table shows is the following equation: Non-Labor + Labor + Profit = Price; raw materials, equipment, plant, etc. (all of which are provided by someone's labor) + Labor + Profit = Price.

Thus, labor and profit are what determine price. It's not price (the market) which determines the cost of labor or profit. Profit, of course, is the value created by labor and appropriated by capital.


Another example is productivity per hour. In the U.S. this is about $50 per hour; i.e. a worker in the U.S. produces value per hour of $50. What are the average, or median, wages per hour? About $25. Profit is 50-25- non labor costs. Workers produce $50 per hour. No additional value is added by the "market" or the buying and selling of the product. Nevertheless, the value of the product is expressed in its price.

[RedMaterialist]

It's sort of silly to use millionaire professional athletes to make a point about the labor theory of value. These top athletes basically extract a monopoly rent from their rare abilities such that they are not really paid just for their "labour power" -- socially necessary or otherwise.

I agree. However, the anti-marxists are always bringing up the examples of the rare wine, millionaire athletes, etc.

"extracting a monopoly rent" is hard to apply to the salary of Arod or phelps. ARod is like a landlord who has a monopoly of all the land in a city?

[Lucretia]

I agree. However, the anti-marxists are always bringing up the examples of the rare wine, millionaire athletes, etc.

"extracting a monopoly rent" is hard to apply to the salary of Arod or phelps. ARod is like a landlord who has a monopoly of all the land in a city?

An exceptional skill is a property that increases the value of a player just as much as exceptionally fertile soil increases the value of a piece of agricultural real estate. Whether the rare property is a physical thing or an ability is irrelevant or ... wait for it ... immaterial. But how this relates to the labor theory of value is that the theory is meant to explain capitalistically produced commodities -- the rarity of a rare bottle of wine or epic home-run hitting abilities are not capitalistically produced commodities, anymore than land in general -- which can be commodified and sold according to a set value and related price -- is "produced" capitalistically. The theory is meant to explain which input produces new value in a process of commodity production, it's not meant to explain how values are applied to what Marx called pseudo-commodities -- which can be things that enter a market and assigned a value on the basis of supply and demand (a market process which is still obliquely related to labor theory of value, for the more labor expenditure it takes to create a product the more value it has precisely because the item produced will be "rarer" in the sense of being more difficult to re/produce). These pseudo-commodities -- things like an old bottle of wine -- are not "produced" in any meaningful sense of the word.

[Blake's Baby]

Atheletes' labour power is expended on making sporting events exciting, generating crowds that sponsers target.

That's a somewhat abstract way of looking at it but it's not entirely untrue either. The labour-power of an athelete in a popular sport is worth more than the labour-power of an athelete in an unpopular sport, just as the labour power of someone in skills in short supply is worth more than the labour power with common skills. It's still susceptible to Marxist analysis.

[RedMaterialist]

Atheletes' labour power is expended on making sporting events exciting, generating crowds that sponsers target.

That's a somewhat abstract way of looking at it but it's not entirely untrue either. The labour-power of an athelete in a popular sport is worth more than the labour-power of an athelete in an unpopular sport, just as the labour power of someone in skills in short supply is worth more than the labour power with common skills. It's still susceptible to Marxist analysis.



I think one problem with that analysis is that it assumes that value or worth is determined by demand. Marx says that value is determined by abstract, social, labor time. But that is true only for commodity production. The professional athlete, I would say, is not a commodity; he or she owns their own skills, the skills cannot be mass produced or reproduced; there is a huge demand for the skills; and the demand cannot be satisfied. Thus the huge price paid for the skills.

My conclusion is that the labor theory of value applies only to commodity production. well, anyway...

[Lucretia]

I think one problem with that analysis is that it assumes that value or worth is determined by demand. Marx says that value is determined by abstract, social, labor time. But that is true only for commodity production. The professional athlete, I would say, is not a commodity; he or she owns their own skills, the skills cannot be mass produced or reproduced; there is a huge demand for the skills; and the demand cannot be satisfied. Thus the huge price paid for the skills.

My conclusion is that the labor theory of value applies only to commodity production. well, anyway...

Well, in a sense, all value is "determined" in a manner of speaking by demand in the sense that in order for a product to become a commodity in the first place (in order for it to have value/exchange value), there needs to be demand for it by other people who find it useful in some way. Otherwise you just have an object.

But that is different than saying that a commodity's value is quantifiably determined by demand. There's more demand for automobiles than fighter jets, yet the higher demand for autos doesn't translate into greater value.

[Blake's Baby]

I think one problem with that analysis is that it assumes that value or worth is determined by demand. Marx says that value is determined by abstract, social, labor time. But that is true only for commodity production. The professional athlete, I would say, is not a commodity; he or she owns their own skills, the skills cannot be mass produced or reproduced; there is a huge demand for the skills; and the demand cannot be satisfied. Thus the huge price paid for the skills.

My conclusion is that the labor theory of value applies only to commodity production. well, anyway...

No, Marx says that all labour produces value if there is an underlying use-value; so there must be a market demand in the end anyway. Value is determined by demand, for without demand, there is no extension of value, no matter how much labour you put in.

It takes exactly the same amount of effort for me to swing a bat as it does for a professional sportsman. Why don't I get paid thousands for doing it? Because my labour power is going towards ends that have no use-value (no-one wants to see me swing a bat).

Why is this? Because I have no competency at it. Why not? Partly, natural disadvantage - dodgy eyesight makes it difficult to accurately judge distances so sometimes I miss - but also, I haven't trained for 20 years to become really good at it; so I haven't expended any labour to make my 'product' (in this case, my skill) any better (more saleable).

This is the same argument as to why doctors command higher wages than labourers, even though, physically, it's easier to pick up a pen/scapel/stethoscope than a hod of bricks. Doctors have to go through 7 years of training (lots and lots of accumulated labour there) and labourers don't. It's much harder to 'make' doctors than labourers.

As I say, the whole question of sportspeople is a bit abstract because it's difficult to see what they actually 'make' to 'sell'; but they are definitely expending labour power, both when they 'do their thing', and also when they train to do their thing, and the training is analogous to studying or otherwise improving any other employable skill-set.

[Lucretia]

Having noted above that an underlying prerequisite of value is demand by other units of production/consumption, I think it's also important to emphasize the supposed "supply" part of the issue: how objects are supplied to meet demand, which is through the application of labour power. As I said, this is decisive in the determination of value (whereas demand is just a prerequisite for this determination, and might affect how value is reflected in its phenomenal form [price]).

Anyhow, I don't think it's fair to say that all labour produces value if there is an underlying use value. That conflates value with use value in a way that makes the first concept transhistorical, in contrast to Marx's adamant argument that value and the commodity-producing labor (abstract labour) that forms it are both very much historical.

I think one reason there might be confusion about this issue is that, for Marx, value was fundamentally about a relationship between people as autonomous yet interdependent producers. It was not a metaphysical property that attaches itself to a product in the process of being made. Nor is it about a relationship between things.

[Blake's Baby]

...

Anyhow, I don't think it's fair to say that all labour produces value if there is an underlying use value. That conflates value with use value in a way that makes the first concept transhistorical, in contrast to Marx's adamant argument that value and the commodity-producing labor (abstract labour) that forms it are both very much historical...

In which case that's because I'm not being clear.

Re-reading the original, I do say 'all' labour produces value, etc. I shouldn't have. Can't think why I would have done so.

What I thought I'd said was that labour can only produce value if there is a use value, that the labour enhances or brings out. Labour on something useless (or useless labour on something useful, eg smashing some pottery) does not produce use-value, there must be a use-value present somewhere for the labour to add to.

Use-values are a prerequisite of value. They don't determine the 'amount' of value, but without them there is no exchange value, because no-one wants something no-one wants, no matter how hard anyone has worked on it.

But the way of setting it out is abstract. Labour, and exchange value, are as you rightly say activities and relationships that exist in an historical context.

[RedMaterialist]

No, Marx says that all labour produces value if there is an underlying use-value; so there must be a market demand in the end anyway. Value is determined by demand, for without demand, there is no extension of value, no matter how much labour you put in.

Labor produces value...demand determines value. That sounds like a pretty fundamental contradiction.


This is the same argument as to why doctors command higher wages than labourers, even though, physically, it's easier to pick up a pen/scapel/stethoscope than a hod of bricks. Doctors have to go through 7 years of training (lots and lots of accumulated labour there) and labourers don't. It's much harder to 'make' doctors than labourers.

The doctor-laborer example is easier to analyze. Doctors have 20 plus yrs of high quality education, the laborer might be able to get work with no school. There is much more labor or "value" used to produce a doctor. Labor produces the value of a doctor, not demand.

Professional athletes can be hired before they even finish high school, yet are paid 20 times what a doctor is paid. It seems clear that demand determines the value of a athlete in high demand; while labor determines value of a doctor and laborer. This, however, may be confusing value with price. The labor value of a doctor is much higher than the athlete; but the athlete's demand completely obliterates the difference in labor value.

The athlete has little value, but an extremely high price.

[Blake's Baby]

Labor produces value...demand determines value. That sounds like a pretty fundamental contradiction...

Why? They don't mean the same thing. Demand determines the existence of value. Without a use, as Marx says, there is no 'value'. A pile of horse-shit is not a sandwich, no matter how long you try and put it between two slices of bread.

On the other hand, some bread, and some cheese, (even worse, some grain in a field, and a cow yet to be milked) isn't a sandwich either. Someone has to make them, ie put labour into them - cutting the corn, grinding it, baking the bread, milking the cow, churning the milk, then taking the bread and cheese and - using a knife that embodies the labour of others - cutting the bread and the cheese, and then finally bring them together.

Commodities, for Marx, contain both use-value, and exchange-value. They can't have one without the other, and remain commodities. Is that a contradiction?

I think it's more like saying that something can't have a left side if it doesn't also have a right side.




The doctor-laborer example is easier to analyze. Doctors have 20 plus yrs of high quality education, the laborer might be able to get work with no school. There is much more labor or "value" used to produce a doctor. Labor produces the value of a doctor, not demand.

Professional athletes can be hired before they even finish high school, yet are paid 20 times what a doctor is paid. It seems clear that demand determines the value of a athlete in high demand; while labor determines value of a doctor and laborer. This, however, may be confusing value with price. The labor value of a doctor is much higher than the athlete; but the athlete's demand completely obliterates the difference in labor value.

The athlete has little value, but an extremely high price.

The athelete has 'value' because he produces a product - something people want to watch. I'm the best fucking starer-at-walls this country has ever produced, sadly, no-one wants to watch me stare at walls, so there's no money in it.

Professional atheletes may be hired when very young sometimes, but that's missing the point I was making; they still train very hard or they lose what they had. They labour at improving themselves - or at not falling behind - because they are directly selling their own energy, muscle power, balance etc, producing a product - an exciting display of support - in the hope of generating customers - supporters - who can then be fleeced by capitalism.

Sports that do not generate fans - eg wall-staring - do not produce sponsorship or big salaries.

Sports that generate fans - eg soccer, baseball - do produce sposnsorship and big salaries.

Why? Because attracting fans is 'valuable'. The labour it takes to attract them is labour for capitalism. Sportspeople generate profits for capitalists. Simple as.

[Lucretia]

Labor produces value...demand determines value. That sounds like a pretty fundamental contradiction.

It's not a fundamental contradiction once you understand what Marx's labor theory of value is intended to explain. As I stated above, its intention is to explain the source of new value in commodity production, which is of course human labor. The purpose is not to reduce all value to human labor, for if that were the case, the unworked raw materials that go into a labor process--even before they are extracted or touched by human hands--could not have value, e.g., an untapped and newly discovered oil field. Such resources do however, possess an exchange value as commodities (and therefore also value), which is why Marx frequently makes references in Capital Volume 3 to "the value of land." These things possess value just as much as commodities produced by labor power, thus demonstrating that for Marx value was fundamentally about a relationship of autonomous interdependence in which difficulty of reproducing an item (either through labor or through locating it frantically in the wild) determines that items value.

The law of value thus really explains more than people give it credit for -- which is frequently just that, all else being equal, commodities containing a definite quantity of human labor will tend to exchange as equivalents with other commodities with that same quantity of human labor. It explains the a system of reified relations between people, a set of relations in which production is social but ownership and appropriation are private, and therefore relations between people are determined by privately expended labor or other alien, morally arbitrary forces such as scarcity of natural resources -- and not things like human need.

[RedMaterialist]

Why? They don't mean the same thing. Demand determines the existence of value. Without a use, as Marx says, there is no 'value'. A pile of horse-shit is not a sandwich, no matter how long you try and put it between two slices of bread.

On the other hand, some bread, and some cheese, (even worse, some grain in a field, and a cow yet to be milked) isn't a sandwich either. Someone has to make them, ie put labour into them - cutting the corn, grinding it, baking the bread, milking the cow, churning the milk, then taking the bread and cheese and - using a knife that embodies the labour of others - cutting the bread and the cheese, and then finally bring them together.

Commodities, for Marx, contain both use-value, and exchange-value. They can't have one without the other, and remain commodities. Is that a contradiction?

I think it's more like saying that something can't have a left side if it doesn't also have a right side.




The athelete has 'value' because he produces a product - something people want to watch. I'm the best fucking starer-at-walls this country has ever produced, sadly, no-one wants to watch me stare at walls, so there's no money in it.

Professional atheletes may be hired when very young sometimes, but that's missing the point I was making; they still train very hard or they lose what they had. They labour at improving themselves - or at not falling behind - because they are directly selling their own energy, muscle power, balance etc, producing a product - an exciting display of support - in the hope of generating customers - supporters - who can then be fleeced by capitalism.

Sports that do not generate fans - eg wall-staring - do not produce sponsorship or big salaries.

Sports that generate fans - eg soccer, baseball - do produce sposnsorship and big salaries.

Why? Because attracting fans is 'valuable'. The labour it takes to attract them is labour for capitalism. Sportspeople generate profits for capitalists. Simple as.


I think what you are saying is that demand creates, determines, is the source of value. This explains why a pro athlete is worth far more than, say, a doctor.

However, the demand theory of value also concludes with this explanation: An automobile is worth $20K because of demand, i.e., someone is willing to pay that much. Therefore, the profit on that automobile has nothing to do with the total value of the labor contained in it; the worker gets his share in wages, the capitalist gets his profit; all is equal. The essential point of Marx was that the entire $20K is labor value, but the capitalist has only paid $10K for that labor value in wages; hence the surplus value of labor is the profit, not the demand of a customer.

I think that possibly a professional athlete has a very low use-value, but an extremely high exchange value

[RedMaterialist]

How much labor does it take to produce professional athletes?

Starting a about age 4-5 the parents begin encouraging them; they watch millions of hours of tv produced by human labor; coaches spend 10 times as much time on them as teachers; colleges pay millions of dollars to recruit them; if you look at the total cost of labor input it might conservatively be 5 million dollars; then add on marketing, tv rights, etc.

the value of labor is not only the labor input of the individual worker who last worked on the commodity, but the total mass of labor worked up into the commodity.

this is not to say that all labor is equal. a parent might decide to get the kid into handball, pole-vaulting or dressage. I think Marx would say there is little use value in those professional sports, thus the commodity value is little, relatively speaking.

[Blake's Baby]

I think what you are saying is that demand creates, determines, is the source of value. This explains why a pro athlete is worth far more than, say, a doctor...

Are you talking about use-value or exchange-value?

That something has use-value is a precondition of it gaining exchange-value, but the reverse isn't the case. Use-value is the bedrock here. If a thing has no 'use', then no-one will exchange for it, no matter how much labour goes into it. Labour, alone, does not produce value. The hole I dug in my back yard, and then filled in again, does not make my back yard more valuable than it was before. All that labour is wasted from an economic point of view because it didn't produce more use-value.

On the other hand demand alone doesn't produce value either, otherwise capitalism would charge us to breathe. Can't last more than a minute or so without air - it's in extremely high demand, by all of the 7 billion people on the planet - but then can't get someone else to breathe for you either. Air can't easily be commodified, because it's difficult to extend its use-value by applying labour to it.

So for something to be a commodity, it has to have use-value (like the hypothetical sandwich derived from some grain, a cow, and some metal - in other words, some raw materials) and labour to realise a product (in the example, to process the raw materials into bread, cheese and a knife). This is why the cheese sandwiches you buy in the shop cost more than the cheese and the bread would cost if you bought them and made the sandwich(es) youself.

I dunno what prepacked sandwiches cost where you are but where I am buying a loaf of bread and a block of cheese (about enough for 10 sandwiches, say) would be about the same as buying 2 packs of sandwiches (2 sandwiches all together). So the more processed version of the cheese and bread is about 5 times more expensive. Why is this? 'Convenience' is the answer. What does convenience refer to here? It refers to someone else's labour. You've paid a premium for someone else to spend their time making the sandwich rather than doing it yourself. So, their labour has added value to the products (bread and cheese) to make them more useful.

You do not have to spend that five minutes finding a knife and a board to cut the bread, washing a knife to cut the cheese with, and bringing the bread and cheese together, then wrapping them in cling-film to take to work with you; instead, you can go to the supermarket and buy a prepacked sandwich for your lunch, that's more expensive than the sandwich yo make at home, but not ridiculously so.

This is 'exchange value', because the premium you pay is based on the mass of other bits of labour competing against each other. If sandwiches cost $800 each, but bread still cost a dollar and cheese was 3 dollars, no-one would by sandwiches. The amount of 'premium' you would pay (10 sandwiches made at home, $4, 10 sandwiches from the shop, $8,000) would not be worth your while. The price of the sandwich would not relate to its exchange value (it takes 2 minutes as long as you have the easily accessable raw materials and tools). If sandwiches did 'sell' (though they wouldn't sell of course) for $800 then some enterprising capitalist would suss out that if he could only get the price down to around $4 then millions of people might buy them.

Capitalist critics just see this as a 'demand' question but the root of why people pay five-times-over what it would cost them is precisely the exchange value of the sandwich, the labour that has gone into it to increase the use-value, and how this labour relates to other labour and the potential of labour (eg, not making a sandwich means I have to pay a little extra to buy one, on the other hand if my five minutes in the morning is worth more to me than the few dollars it'll cost to buy one, it may be worthwhile).

Now, the reason labour competes against other labour (not just sandwiches against sandwiches) to determine exchange value is that money doesn't really care how it's made. If one sector of the economy is doing well (generating large profits, which means prices are tending to be well above labour costs), more capitalists will invest in that sector and competition will increase the number of those goods on the market - the first $800 cheese sandwich will be followed by dozens of others and then some bright spark will introduce the $700 sandwich, then someone else will introduce the $600 sandwich... the market will be flooded as the capitalists vie to maximise profits. In the mean time all of that investment in sandwich production will take money from electronics or anything else - labour in those other industries will be in shorter supply... Ultimately the price of sandiches will begin to float around the actual 'value' of the product, which in turn relies on the amount of labour involved, relative to other labour.






However, the demand theory of value also concludes with this explanation: An automobile is worth $20K because of demand, i.e., someone is willing to pay that much. Therefore, the profit on that automobile has nothing to do with the total value of the labor contained in it; the worker gets his share in wages, the capitalist gets his profit; all is equal. The essential point of Marx was that the entire $20K is labor value, but the capitalist has only paid $10K for that labor value in wages; hence the surplus value of labor is the profit, not the demand of a customer...

Why is someone willing to pay that much? If we could all build automobiles at home, cars would cost $500. So it's the labour that produces the value - we pay the premium because someone else has laboured on it. I wouldn't buy a pile of metal bits for 20 grand if I had to spend a month building it myself. So, yeah, it's the labour that is the source of the profit for the capitalist...


I think that possibly a professional athlete has a very low use-value, but an extremely high exchange value

A successful professional athelete has a high use value because they generate a target audience - ie customers - for capitalism. Higher prices are paid to more successful atheletes in more popular sports because higher profits can be generated, so the labour involved produces higher returns. I will never get sponsorship for my wall-staring no matter how good I am at it, but the top atheletes in the most popular sports get hundreds of thousands of dollars. Is it because of shortage of labour supply? Hardly - most boys want to be professional sportsmen at some point, I'd guess - but to be good at a sport requires both some luck and a lot of training (labour) and resources (more labour). For the average person, the necessary amount of training and investment in resources, to make them a successful professional athelete, would be enormous - as it would be to make them a doctor or judge or some other highly-paid profession.

In the end, the wages people get reflect the labour necessary to replace them - because labour is also a commodity, it too has an 'exchange value' and if one labourer costs too much - if their 'price' does not float with their 'value' - then they'll be replaced, as we can see when actors or sports people make demands that in the end their employers won't stand for. "Celebrity X wants $10 million to appear in this movie, but we think they're only worth $8 million, we'll get Celebrity Y to appear instead, they're only $6 million and they appeal to our demographic...". On the other hand there is little necessary cost in replacing an unskilled labourer. If someone can walk, listen to instructions and carry things, then they can do the job. There isn't much investment necessary to find someone with those skills.

Is any of this helping?

[RedMaterialist]

In the end, the wages people get reflect the labour necessary to replace them - because labour is also a commodity, it too has an 'exchange value' and if one labourer costs too much - if their 'price' does not float with their 'value' - then they'll be replaced, as we can see when actors or sports people make demands that in the end their employers won't stand for. "Celebrity X wants $10 million to appear in this movie, but we think they're only worth $8 million, we'll get Celebrity Y to appear instead, they're only $6 million and they appeal to our demographic...". On the other hand there is little necessary cost in replacing an unskilled labourer. If someone can walk, listen to instructions and carry things, then they can do the job. There isn't much investment necessary to find someone with those skills.

Is any of this helping?

So, then, why is A Rod paid more than Michael Phelps?

[Lucretia]

So, then, why is A Rod paid more than Michael Phelps?

Why do you keep asking this question over and over again? It has already been explained that when you talk about extremely unique talents of the kind found among professional athletes, the price extracted by the athletes cannot be analyzed in terms of "value of labour power." It's a matter of extracting a monopoly rent, and is really just a matter of negotiating an acceptable price based on demand for the monopolized talent. You might as well ask, "Why is Meryl Streep paid more for her role in X movie than Jack Nicholson?"

[RedMaterialist]

Why do you keep asking this question over and over again? It has already been explained that when you talk about extremely unique talents of the kind found among professional athletes, the price extracted by the athletes cannot be analyzed in terms of "value of labour power." It's a matter of extracting a monopoly rent, and is really just a matter of negotiating an acceptable price based on demand for the monopolized talent. You might as well ask, "Why is Meryl Streep paid more for her role in X movie than Jack Nicholson?"

I asked the question again because the OP raised it at the beginning of the post. The usual attack on the LTV is that it doesn't explain Meryl Streep's value. Her value (price) is explained by the demand for her talent. The free market people say it is the same way for any product. The value of a bar of soap is explained by the consumer's demand for it. Marxists say the value of the soap is determined by the amount of socially necessary labor contained in it; its price is the monetary expression of that value.

Meryl Streep's value determined by demand; bar of soap by labor....why the difference?

[Lucretia]

I asked the question again because the OP raised it at the beginning of the post. The usual attack on the LTV is that it doesn't explain Meryl Streep's value. Her value (price) is explained by the demand for her talent. The free market people say it is the same way for any product. The value of a bar of soap is explained by the consumer's demand for it. Marxists say the value of the soap is determined by the amount of socially necessary labor contained in it; its price is the monetary expression of that value.

Meryl Streep's value determined by demand; bar of soap by labor....why the difference?

I explained why there's a difference twice already. The labor theory of value doesn't say that all things which exchange in a market economy exchange at their value. Again, this is to conflate value with prices. Some things which exchange have no value at all -- gifts of nature like land which have "value" only in a nominal sense because they aren't the products of human labour -- and other things, like rare items or monopolized goods, have value but do not exchange at or even near their value. They exchange according to an entirely different logic.

To think that the theory of land rent, or monopolistic exchange negating the law of value, invalidates the labour theory of value demonstrates a profound and disturbing misunderstanding of what Marx's theory is -- which, as I said, is a theory of how politically autonomous but economically interdependent people will collectively reproduce themselves in a society.

When two people make completely different commodities as autonomous and interdependent producers, and then exchange their commodities with one another, how do they determine the basis for exchange? (Note: the question here is how do they exchange, not why do people want to exchange them or what makes the exchange possible -- which is a completely different question, one that would seem to make the exchange of technically valueless items like uncultivated land impossible)? Marx's answer, of course, is that the only objective measure to compare the two commodities is through time expended in laboring to produce them.

Now, as I said, there are some items that are exchange, but which have no value, and the exchange of these items is determined by Marx's theory of ground rent that is itself derived from the labor theory of value (but which is distinct from it).

Similarly, there are cases where producers who meet to exchange are not symmetrically interdependent or perhaps not interdependent at all because one of them has a monopoly on a necessary commodity, but only needs to exchange for other commodities that no single person or entity holds a monopoly on. In this case, the monopolized item will still possess a value because it is a commodity (by definition, this means it has a value -- unlike gifts of nature, which only assume a commodity form). But the item will NOT exchange at their value, because the social relations of autonomy and interdependence that Marx was analyzing will not obtain for the specific exchange in question. In such cases, exchange becomes increasingly subject to considerations apart from value, including how desperate somebody might be to purchase it for whatever reason.

In the case of the two athletes and actors their talents, their personality, the way they present themselves on screen, how amazing they are at hitting a cylindrical object flying by them at 100+ miles per hour, is so unique that it is a property that functions as a monopolized commodity that they then sell at monopoly prices, not prices subject to the law of value.

Does this make sense? Again, the key point here is that Marx's value theory was about people and how they relate to one another. It was not a general theory of exchange simpliciter, for indeed the relationship between peasant and lord was technically one of exchange (though not commodity exchange). To mistake his theory of value for a theory of exchange of items is to fall into the trap of fetishizing commodities that Marx was actually trying to (and skillfully did, I might add) explain in volume 1.

[Lucretia]

I would also add that that the labour theory of value is the foundation of Marx's critique of alienation from a scientific perspective. If you throw it out, as some "Marxists" have attempted, don't understand it, or misrepresent it, you have basically shut the door to any meaningful Marxian strategy for socialist revolution.