Labour theory of value argument

[Slavoj Zizek's Balls]

I was talking to someone about the labour theory of value and they said that the entrepreneur was entitled to the profit made from the goods. "The labourer creates an axe and sells it for $1. The capitalist then sells it for $1.50 and he is entitled to do so as the axe was sold to him. It is his possession to do as he pleases." Anyone like to shoot this down?

[Questionable]

It's a loaded deal. The laborer has no choice but to enter this "deal" with the capitalist, or he'll starve.

Besides, the right of property is a right unique to the economic system of capitalism. It's not a "natural right" as he would probably say. His same logic could have applied to human slavery back when it was legal.

[Uppity Prole]

I was talking to someone about the labour theory of value and they said that the entrepreneur was entitled to the profit made from the goods. "The labourer creates an axe and sells it for $1. The capitalist then sells it for $1.50 and he is entitled to do so as the axe was sold to him. It is his possession to do as he pleases." Anyone like to shoot this down?

The exchange of labour time for a wage is not an equal one.

The labourer's labour time in making the axe has added an amount of value beyond which s/he has been paid for it by the capitalist.

The capitalist gets 50 cents per axe for doing nothing. Morally the capitalist's position is illegitimate but this unequal and exploitative relationship is normalised in capitalist culture.

[Slavoj Zizek's Balls]

Much appreciated Questionable and Uppity Prole.

[RedAtheist]

I was talking to someone about the labour theory of value and they said that the entrepreneur was entitled to the profit made from the goods. "The labourer creates an axe and sells it for $1. The capitalist then sells it for $1.50 and he is entitled to do so as the axe was sold to him. It is his possession to do as he pleases." Anyone like to shoot this down?

Such a situation does not occur in a capitalist economy. A capitalist would not buy a $1 axe off a worker and than sell it at a higher price, because if there are axes being sold at one dollar (or at slighty above one dollar) people would buy the $1 axe and not the $1.50.

The capitalist cannot make a profit by raising the price of the product above its social value. Thus the profit must come from elsewhere. Marx of course argued that it came from workers producing more value than they were paid for.

It is important to note that workers do not sell completed labour (i.e. completed products) to capitalists. They sell their ability to work for a certain period of time, meaning that at the time when they first sign a contract with a boss the amount of products they will produce has not yet been determined. The capitalist then has an interest in getting as much work out of the worker as possible.

[Blake's Baby]

The situation, as RedAtheist says, doesn't occur in industrial capitalism. Workers don't own the products they make - our pro-capitalist debator would, I'm sure, be horrified if the workers said 'actually, instead of taking wages this week, I'm taking the car I built home'. In the axe example, the worker could not sell the axe to the capitalist, then sell ito someone else for $1.50. In the real world, this doesn't happen - because the workers are 'hired hands' not craftsmen in their own right, they don't own their own products.

It's more or less what happened in mercantile capitalism though. If you find a place where axes are worth $1 and take them to a place where axes are worth $1.50, then where is that extra 50c coming from?

But, Marx dealt with this when he said that prices and values weren't the same thing. If supply=demand, then profit comes from value. If supply=/=demand, then extra profit may come from exploitation of circumstance. In the case of the two places with different prices for axes, the merchant can 'buy short and sell long' by exploiting local imbalances of production and distribution, but Marx specifically says in his discussion of labour being the ultimate source of profit that prices most approximate to values when neither the buyer nor the seller is in a monopoly position. In other words, when supply is broadly equal to demand.

Even in the axe example, however, you have to move them. Guess what does that? Labour. So the 50c extra on the price of the axe could still be justified in terms of labour power. An axe here is worth $1. An axe there is worth $1.50. I can pay a man 20c per axe to take them there and still make 30c profit.

So, my advice is to tell them that Marx's schema is based on the notion of a rationally-functioning capitalism, and then agree with them that capitalism is pretty irrational and dysfunctional. Marx's schema isn't wrong, but to take it literally as a guide to prices is a mistake, because applies to a version of capitalism that doesn't always happen. Marx stripped out the surface complexities to look at the mechanics, he was looking at the underlying processes. There's a load of inefficient mess on top that the pro-caps are trying to use to claim that Marx was wrong. Welcome to capitalism, where the defenders of the system use the fact it doesn't work properly to claim its critics are wrong...