Labor theory of value

[ThatGuy]

What do the people on this board or other modern communists/marxists think about the labor theory of value? Is it a sound theory? How important is it to the whole socialist ideology?

[Alan OldStudent]

What do the people on this board or other modern communists/marxists think about the labor theory of value? Is it a sound theory? How important is it to the whole socialist ideology?

Yes, I think the LTOV (labor theory of value) is a sound and valid approach to understanding economics. It is somewhat out of fashion among most academic economists, and even some socialists think it has weaknesses. But in my opinion, it's sound. People who aren't socialists ask me about it from time to time.

Here is how I explain the labor theory of value to people who don’t know much about socialism or economics.

From the very beginning, when we began as a species of about 200,000 years ago, we have had to face the problem of how do we exist, how do we acquire the necessities of life. How do we feed ourselves, protect ourselves from the elements, provide some kind of safe environment for our children. The mechanics of earning our living describes, broadly speaking, political economy and economics. Economics is not really about money but about how we organize ourselves to meet our basic needs to live.

The answer to the question of how we earn our living comes to this:

We take raw material from nature, from the earth, or what we gather. Then, we apply muscle and brainpower to it to process it into something that satisfies a human want or need. That application of brain or muscle power to a raw material is what we call "labor." Labor can also be the use of brain or muscle power to perform a service that satisfies a human want or need. The resulting good or service satisfies a human want or need, which is to say, it has value.

To sum up: All human economic processes more or less encompass three facets:


We acquire Raw Materials
We process those raw materials by application of brain or muscle power (labor)
And we distribute those new goods and services to consumers.


That, in a nutshell, is what economics is.
*+ *+ *+ *+ *+ *+ *+ *+ *+ *+ *+ *+ *+ *+ *+ *+ *+

As said before, something has value if it satisfies a human want or need. Labor is the application of brain or muscle power to a material to add a new value. or to perform a service that satisfies a human want or need.

Every economic system, every human society must organize itself to accomplish these tasks if it is to exist. Otherwise, that society will collapse.

Because of our biology and evolutionary history, this economic activity has to be a social process, a cooperative process. No individual can supply all his/her own needs by an individual effort for very long.

For more than 95% of our existence, we homo sapiens sapiens lived in the old stone age. Since the very beginning, we've had one sort or another of division of labor. For most of our history (old stone age), it’s most likely that men did the hunting, and women did the gathering, maintained the fires, and cared for the children. Over time, as technology evolved, human society became more and more complex and has found other ways of organizing economic activity.

Today, we have a very complicated way of addressing those 3 steps of acquiring raw materials, applying labor to process those raw materials into goods and services that satisfy human needs, and distributing those new goods and services. Our social organization now accomplishes that through commodity production and distribution through the market in a system we call capitalism.

Some other ways that we have historically done this is through a slave economy, a gift economy, occasionally a barter economy, and a feudal based economy. Socialists and communists say that the capitalist system has become a fetter to satisfying human wants and needs in the most efficient and economic fashion, and we call for capitalism to be replaced by another system.

This is a very simplified explanation, but it covers the essentials, at least enough to allow for intelligent discussion and followup.

I point out to my listener that something has value if it satisfies a human want or need, if it enables us to exist in our physical/social world.

If my listener doesn't buy the LTOV, s/he may often ask: Does everything that has value come from labor, the three-step process described above?

I answer: Not really. For example, air has value, but we don’t have to work for it.

However, most everything that we depend upon to live is the result of human brain or muscle power being applied to some kind of raw material, whether that raw material is gathered directly from nature, or is the result of some preceding process. For example, nails a carpenter might use to build you a house can be thought of as a raw material, but they are the result of an earlier process of labor being applied to a raw material.

I ask my listener to just think about their lives. I tell them this:

You get up in the morning, get your breakfast, put on your shoes, and go about your daily activities. You stayed in some sort of dwelling. That dwelling is made of building materials that were the products of labor. Cooperative and social labor applied to raw materials created every component of that building . The food you got out of your refrigerator, a manufactured good, results from a chain of workers from all over the world. The electricity you use to cook your food, the fuel you use to heat your dwelling and to transport you to work all exist because of human labor. Literally, you could not live had it not been for the cooperative labor of many thousands of people in many parts of the world. Those things have value because they enable you to live. Every one of them came about because people applied brain and muscle power to raw materials to create those items.

Moreover, there's a social dimension to the exchange of value for value, that is to say, commerce. We could not speak of something having value if there were no human society. You can look at shiny new car. It has value only because humans want or need it. If the human race disappeared in some kind of catastrophe quite suddenly, it would still be a shiny new car. But it no longer would have value. That's because value exists only in a social context. Value has a social component precisely because it is necessary for any society to be able to exist. And no human being can really exist without the support of society.

Regards,
Alan OldStudent
The unexamined life is not worth living--Socrates

[ThatGuy]

Well, your main point seems to be, that people cooperate economically and depend on one another. No argument with that, except you sometimes take it too far when saying that we couldn't live with the thousands of people that produce what we consume. We could, but our lives would be harder and possibly shorter.

The labor theory of value is about labor being the only criteria by which value can be measured, and that it can be measured objectively. What I'm interested in is your opinion on these two assertions.

[darkblues]

db

[Bardo]

The labor theory of value is about labor being the only criteria by which value can be measured, and that it can be measured objectively.

No, labor is only a component that adds to the value of a potential commodity. Use value or utility is another, which along with labor value influences a commodity's exchange value.

[liberlict]

Personally I think it's a silly theory, value is obviously subjective, it's obtuse to say otherwise. But even if we were to assume value can be measured that way, I don't see how it follows that I'm being exploited when capitalists don't pay me the full amount of labour's worth. I still get to benefit from purchasing economic goods that others have labored to make. I'm quite happy to pay that little "tax" on my work because I get it back why I go to buy things others have produced.

[Alan OldStudent]

Hello brother That Guy:


Well, your main point seems to be, that people cooperate economically and depend on one another. No argument with that, except you sometimes take it too far when saying that we couldn't live with the thousands of people that produce what we consume. We could, but our lives would be harder and possibly shorter.

The labor theory of value is about labor being the only criteria by which value can be measured, and that it can be measured objectively. What I'm interested in is your opinion on these two assertions.
Thank you for asking my opinion, and please excuse the delay in responding to you. Here's my take on your question:

First off, let's look at why something might be of value. The short answer is that something has value if it satisfies a human want or need. It has what we call use value. So let's look at that a little more deeply.

In order to exist, you need certain things. Chief among these are air, food, clothing, and shelter. Without those, you would die. In our modern world, you need some form of transportation. You need electricity, power, houses, streets, access to medical care, thousands of goods and services. You literally could not live without these goods and services.

How do we acquire these necessities of life? Mostly, in modern society, these are bought and sold, which means most everything you need to even exist came about through an economic transaction.

Buying or selling is a social activity, meaning it can only occur in a social context. The necessities for your personal existence depend on these items, the product of labor applied to materials or labor to perform a service.

It's quite important to understand that these goods and services exist because people apply brain or muscle power to raw materials, and you can't live without them.

Consider this: A chair maker buys wood, nails, glue, leather, awls, thread, and so on. He may purchase these items for 6 dollars. He then applies brain or muscle power to those materials and comes up with an object that has a new utility: a chair one can sit on it. This is a utility the raw materials lacked. So the chair maker has added a new use value. But he as also added a commercial value, because he will sell the chair for more than the cost of his materials and overhead. That extra value, surplus value, means he can sell that chair for 12 dollars, say. The chair has acquired an exchange value.

Let's recap those 3 kinds of value:


Use value.
Exchange value.
Surplus value.

All this value exists because, in the first instance, the chair (or any good or service exchanged) satisfies a human need.

An item or service that has both a use value and an exchange value is a commodity. To have an exchange value, an item must have a use value, or nobody would want to buy it. Most of the material necessities of life today are distributed through commodity exchange, in the market.

Looking at the chair maker again, how does he acquire the raw materials? Does he go into the woods and cut down a tree, season the wood, hew it into planks, and so on? Maybe, but not likely. He probably buys the lumber. But where did the pre-hewn lumber come from? How about the thread? How about the leather, the needle? Does our chair maker go out and mine iron ore, smelt it, and fashion a needle? Does he gather raw materials to make a weapon to hunt a beast, skin it, cure the leather and render the sinews to make glue and leather? No, not likely. Most all his raw materials and his tools result from an earlier process where people applied brain and muscle power to a raw material to add value.

Maybe in one of those interim steps, someone used a sophisticated machine to mechanize the process. Where did that machine come from? You probably know where I'm going with this. Labor added value at every step of creating even the most sophisticated and complicated machine or tool.

So the raw materials and tools our chair maker uses had what we might call "dead labor" as opposed to the "living labor" of the chair maker himself. They themselves were the process of new value being added to a preceding raw material.

Ultimately, from the chap who gathers the raw material from nature itself, to the ultimate manufacturer, it is people who applied brain or muscle power that added value to something at every step of the society's economic activity, because each step added a new use value. All these values become distributed through exchange as commodities on the market. In fact, we could not live without this intricate process. As John Donne the poet says, no man is an island unto himself.

Remember in my other post I described 3 steps in economic activity like this?


We acquire raw materials.
We process those raw materials into goods.
We distribute those raw materials to consumers.

We do this because we must do it to live. That's why we say value comes from labor.

So the next question is this: Does all value come from labor, or do some things have value but do not involve labor.

The answer is this: Not everything that has value (satisfies a basic human want or need) comes about from labor.

For example, air has value, but we don't work for it. Land has value, but we don't manufacture it.

Moreover, great art may command a very high price compared to the amount of labor required. But for the common commodities that make human life possible, they have value because of labor contributed a usefulness that fulfills a human want or need.

How to measure that value is not an easy question to answer, and economists debate this a lot. Price and exchange value do not appear to be the same thing, but price tends to hover around exchange value, sometimes going up a bit, sometimes down a bit, largely in response to supply and demand.

All economists debate how to measure price equivalencies, and Marxian economists often disagree on how to measure exchange values. To really get into it requires a certain competency in maths, and then the answers are not exact. They tend to be more in the realm of statistical averages. But in my opinion, the general concepts of the labor theory of value are quite valid at explaining why commodities have value, and even in analyzing pre market-based economies such as feudalism and slavery.

Hello Liberlict:

Personally I think it's a silly theory, value is obviously subjective, it's obtuse to say otherwise. But even if we were to assume value can be measured that way, I don't see how it follows that I'm being exploited when capitalists don't pay me the full amount of labour's worth. I still get to benefit from purchasing economic goods that others have labored to make. I'm quite happy to pay that little "tax" on my work because I get it back why I go to buy things others have produced.
You know, friend Liberlict, a great many very bright academic economists, who are probably much more clever than either you or I, agree with your assessment that the LTOV is "silly," as you put it. You state that value is "obviously" subjective. I hate to sound dull, but it doesn't sound all that obvious to me that value is "subjective." Why does it seem so obvious to you? What am I missing?


Regards,
Alan OldStudent
The unexamined life is not worth living—Socrates

[Jimmie Higgins]

Well, your main point seems to be, that people cooperate economically and depend on one another. No argument with that, except you sometimes take it too far when saying that we couldn't live with the thousands of people that produce what we consume. We could, but our lives would be harder and possibly shorter.

I think that argument is quite true actually. We could not support the levels of population that now exist if people were producing their own food and goods it wouldn't just be that everyone has less or works more (in fact in some ways they may work less - though harder - because work would only be "as needed" - you couldn't harvest when things arn't in season, can't plant things 8 hours a day, 5 days a week). This form of agriculture (as well as artisan production vs. industrial production) has a much lower output and that we now have a society that produces "surpluss" (or at least is capable of doing so) is why capitalism was an advance from feudalism - induvidual peasant production, for example, was replaced by larger capitalist farming production. It's the control of this social surplus that is part of what makes capitalism equally as problematic as it is productive.




The labor theory of value is about labor being the only criteria by which value can be measured, and that it can be measured objectively. What I'm interested in is your opinion on these two assertions.I don't think the theory as used by classical economists like Ricardo or by Marxists... like Marx :lol:... claims to give any exact measurable value. It can help us get a sense of values of commodities in relation to other commodities, but not the price or some exact "unit" of value. It's more an explaination for where value comes from.

And labor is not the only source of value, but it's is a flexible value that can be manipulated by the capitalist. Because a the value added to a commodity by labor is based on a "socially necissary labor time" or a generalized amount of labor that it would take to make that commodity, a capitalist can make workers work harder or faster or longer in the wage system. A machine runs as fast as it runs, you can't starve it so that it's willing to run faster to make more wages, you can't intimidate it, etc. So anyone who has that machine will be getting the same value from it - labor, however, can be pushed down (or workers can fight and push it up).

If mailboxes are all made by hand and it takes 3 hours to make one normally, people probably would value it more than, say, a wooden spoon that usually takes someone an hour to make. No one would trade one mailbox for one spoon, but they might trade for the price of three spoons. But if a mailbox maker discovers some new production technique that allows them to produce 5 mailboxes in 3 hours, the value of that mailbox is still going to be the same and you make tons of profit. But when the other mailbox makers figure out the new production techniques or something similar, the value begins to drop back to the new average labor time.


Personally I think it's a silly theory, value is obviously subjective, it's obtuse to say otherwise. But even if we were to assume value can be measured that way, I don't see how it follows that I'm being exploited when capitalists don't pay me the full amount of labour's worth. I still get to benefit from purchasing economic goods that others have labored to make. I'm quite happy to pay that little "tax" on my work because I get it back why I go to buy things others have produced.
Having part of the value you have created taken from you is basically the definition of economic exploitation. It's just "normalized" theft, so it seems natural to us just as feudalism seemed natural or slavery. For the slave, slavery was just fact so there's no use arguing about it (you can run away or put up with it and that's about it); for the slave-owner, they would be ruined if they started having to hire workers and so it was an economic fact also not worth arguing over. Not having slaves would be as unimaginable to owners in the slave economy as workers controlling production is unimaginable to the capitalist today.

For many workers, most wages just go back to social reproduction anyway: a house/appartment, a car to get to work, food, a little diversion and entertainment so you don't go crazy on the job. In the post-war era, high unionization, a need to keep cold-war "social peace" meant that many more workers were able to keep more of the value they created, but this has been steadily erroded for a generation now. A worker in an unskilled or semi-skilled job could expect favorable rates on purchasing a home, free or very cheap higher education for their children and a "social wage". Now it's a different story - now people go into massive debt to try and have something approaching what people had a generation and a half ago. (at least this is the case in the US).

[Tim Redd]

What do the people on this board or other modern communists/marxists think about the labor theory of value? Is it a sound theory? How important is it to the whole socialist ideology?

I think the idea that only human labor and not machines creates surplus value is suspect. Marx got the general concept of value from Adam Smith and Ricardo. Smith formulated the concept to explain the relative costs of commodities. I wrote the article "Automation Won't Save Them" that further explains my view on this. It's at risparty dot org.

[liberlict]

Hello Liberlict:

You know, friend Liberlict, a great many very bright academic economists, who are probably much more clever than either you or I, agree with your assessment that the LTOV is "silly," as you put it. You state that value is "obviously" subjective. I hate to sound dull, but it doesn't sound all that obvious to me that value is "subjective." Why does it seem so obvious to you? What am I missing?


Regards,
Alan OldStudent
The unexamined life is not worth living—Socrates

Hi, I am something of a 'relativist', although I have to emphasize I don't want to categorize myself along with some others who call themselves 'relativists' these day. "post-modernism' is a fairly idiotic movement IMO, that seeks to invalidate all notions of truth. I am not that kind of relativist. But questions like 'how much is an economic good worth?' are of the same sort as 'how attractive is that women?'. It's in the eye the beholder. Especially when it applies to the service economy, rather than material goods; i.e, prostitutes, boot-polishers, car washers and such. Smith and Ricardo knew this, I believe, and they only used it as a general yard-stick, and were perfectly happy to drop it where anomalies appear. Marx, took the Ricardian system and gave it an almost religious significance, and built a whole world-historical deterministic theory out of it. It just doesn't work that way. Those are my objections to it.

[liberlict]

I think that argument is quite true actually. We could not support the levels of population that now exist if people were producing their own food and goods it wouldn't just be that everyone has less or works more (in fact in some ways they may work less - though harder - because work would only be "as needed" - you couldn't harvest when things arn't in season, can't plant things 8 hours a day, 5 days a week). This form of agriculture (as well as artisan production vs. industrial production) has a much lower output and that we now have a society that produces "surpluss" (or at least is capable of doing so) is why capitalism was an advance from feudalism - induvidual peasant production, for example, was replaced by larger capitalist farming production. It's the control of this social surplus that is part of what makes capitalism equally as problematic as it is productive.



I don't think the theory as used by classical economists like Ricardo or by Marxists... like Marx :lol:... claims to give any exact measurable value. It can help us get a sense of values of commodities in relation to other commodities, but not the price or some exact "unit" of value. It's more an explaination for where value comes from.

And labor is not the only source of value, but it's is a flexible value that can be manipulated by the capitalist. Because a the value added to a commodity by labor is based on a "socially necissary labor time" or a generalized amount of labor that it would take to make that commodity, a capitalist can make workers work harder or faster or longer in the wage system. A machine runs as fast as it runs, you can't starve it so that it's willing to run faster to make more wages, you can't intimidate it, etc. So anyone who has that machine will be getting the same value from it - labor, however, can be pushed down (or workers can fight and push it up).

If mailboxes are all made by hand and it takes 3 hours to make one normally, people probably would value it more than, say, a wooden spoon that usually takes someone an hour to make. No one would trade one mailbox for one spoon, but they might trade for the price of three spoons. But if a mailbox maker discovers some new production technique that allows them to produce 5 mailboxes in 3 hours, the value of that mailbox is still going to be the same and you make tons of profit. But when the other mailbox makers figure out the new production techniques or something similar, the value begins to drop back to the new average labor time.


Having part of the value you have created taken from you is basically the definition of economic exploitation. It's just "normalized" theft, so it seems natural to us just as feudalism seemed natural or slavery. For the slave, slavery was just fact so there's no use arguing about it (you can run away or put up with it and that's about it); for the slave-owner, they would be ruined if they started having to hire workers and so it was an economic fact also not worth arguing over. Not having slaves would be as unimaginable to owners in the slave economy as workers controlling production is unimaginable to the capitalist today.

For many workers, most wages just go back to social reproduction anyway: a house/appartment, a car to get to work, food, a little diversion and entertainment so you don't go crazy on the job. In the post-war era, high unionization, a need to keep cold-war "social peace" meant that many more workers were able to keep more of the value they created, but this has been steadily erroded for a generation now. A worker in an unskilled or semi-skilled job could expect favorable rates on purchasing a home, free or very cheap higher education for their children and a "social wage". Now it's a different story - now people go into massive debt to try and have something approaching what people had a generation and a half ago. (at least this is the case in the US).

I'm sure many serfs objected to their working conditions. Which is why they were quick to run away and sell their labor for more profit when feudalism broke down. If capitalism breaks down, and workers have better options they will find a better way to sell their labor, possibly in a communist society. The challenge as I see it, is for communists to provide better incentives for the working class. Which is why this website exists, I guess?

[Jimmie Higgins]

I'm sure many serfs objected to their working conditions. Which is why they were quick to run away and sell their labor for more profit when feudalism broke down.Actually I think in most cases there was a resistance to emerging capitalist relations - especially when it came to the enclosure of lands which robbed pesants of their ability to sustain themselves, but they also often resented and revolted against the aristocracy as well. I think both kinds of resistance had a lowest common denominator of a desire of pesants to control what happens to them.

In the US and in some places today like china, rural farmers often didn't leave farms, but contracted their daugheters to mills or sent their unessential (for farm-work) sons to cities to look for wage work and send something back as remitances.


If capitalism breaks down, and workers have better options they will find a better way to sell their labor, possibly in a communist society.But feudalism didn't really break-down, even when it was economically "broken-down". Capitalist relations overcame feudal modes of production and began incorporating feudal production but for market reasons - but even then feudal administrations stayed in power often until politically overthrown by revolutions.


The challenge as I see it, is for communists to provide better incentives for the working class.In a sense I think you're right, but really I think it comes down to in the short-term just ecoraging workers to fight independantly in their class interests, then out of inevitable class struggles where workers put their own agenda into the center of politics communists/anarchists specifically can offer advice and ideas for why the demands of workers and the oppressed can only be met if they themselves cooperativly run society.

But in those short-term struggles, we do have to prove that militancy and class politics and organization is the way for workers to make any headway, the way people can begin to chart their own course rather than just be blown around by the whims of their employers, politicians, and the demands of profits and the market.

[Jimmie Higgins]

I think the idea that only human labor and not machines creates surplus value is suspect.But how do machines increase surplus value? Isn't it by reducing/speeding up human labor.

Not to mention, where does the capital to invest in machinery come form? Isn't that just the value created from past laborers, the surplus value that capitalists then take and re-invest?

[Tim Redd]

But how do machines increase surplus value?

Because both humans and machines add to the usefulness and value of a thing by transforming it.


Isn't it by reducing/speeding up human labor.There are probably more things made purely by machines than humans nowadays.


Not to mention, where does the capital to invest in machinery come form? Isn't that just the value created from past laborers, the surplus value that capitalists then take and re-invest?Capital is the storage and application of past transformations as I see it.

I make these points about transformations and more regarding political economy in the same paper I referred to above: "Automation Won't Save Them" at risparty dot org. I encourage you to check it out.

[Sotionov]

The majority of classical liberal supporters of capitalism were supporters of LTV, even though Adam Smith was somewhat a "social-democrat".

I find the question of intrinsic value unanswerable, and thus pointless, which thus means that any attempt to put the LTV into practice is also pointless.

What I support is the labor theory of property, as put forward by Rousseau and elaborated on by Ricardian socialists and Individualist-anarchists. It is a much clearer and precise theory that when looked from a persepective of how it's details can be put into practice points directly to the neccessity of the establishment of libertarian socialism.

[Tim Redd]

The trajectory of Modern communists/Marxists thinking in this area, i believe, is that labor is shifting towards having an increasingly immaterial value.

Mind defining "immaterial" value?

[darkblues]

db