The Defense of the Labour Theory of Value in modern times

[International_Solidarity]

During the time of Karl Marx, the Labour Theory of Value was almost uncontested as a valid theory. Adam Smith wrote frequently about a Labour Theory of Value, as did David Ricardo. Marx expanded upon the Theories of these economists by bringing in new analysis of underlying forces of Labour Power and Surplus Value. (or at least this is my understanding. I really stepped up my economics education and read The Wealth of Nations, as well as some of Ricardo's work, and now I am now about one-third of the way through Volume One of Das Kapital)
My question is about the modern relevance of the Labour Theory of Value. I have read that most economists state that a "Theory of Price" is all that is needed, does anyone recommend any work defending the Labour Theory of Value against these new(ish), post-Marx criticisms?

I have heard that there is a good defense in Andrew Kilman's Reclaiming Marx Capital, but I have not gotten my hands on a copy of that book yet.

Thoughts and/or works?

[International_Solidarity]

Does no-one have any? I was really hoping for some results here.

[cyu]

Anarchist, not Marxist, so can't help you there ;)

This isn't to say I'd just dismiss Marx's economic analysis out of hand, but rather I'd see any reading of Marx as ultimately having a purpose other than simply understanding Marx.

I would say the purpose of economics as a discipline is to provide for every member of society. If any part of any theory, even Marx, does not accomplish that, then I would dismiss those memes as running counter to my goals.

Capitalists, of course, do not have supporting society as their goals. That's why they are perfectly happy with economic theories that only support the rich. And if the poor die, it may be a shame, but they're not going to stop their golf game to worry about it.

[Hit The North]

The MIA dictionary entry on the LTV defends its modern relevance:

https://www.marxists.org/glossary/terms/l/a.htm#labour-theory-value

[Glitchcraft]

I've never understood objections to the Labor Theory of Value. It seems like objecting to arithmetic.

[Lord Hargreaves]

The problem is that it is unclear how the labour theory of value relates to working out prices, costs, profits, etc.

The argument seems to be that some Marxists feel LTV analysis is essential to understanding, at the very least, the overall movement and overdetermination of these variables, whereas others - the Monthly Review school, David Harvey etc. - feel that LTV is either ultimately superfluous or distracts from the real merits of Marx's economic thinking.

I don't feel I'm really qualified to judge this issue, but I do feel uncomfortable with the idea that Marxist economics (or even Marxism in its entirely) somehow stands or falls solely with the LTV or the LTFRP. That to me is unnecessarily essentialist or reductionist. Thus I have limited sympathy with Andrew Kliman's project, even if I think he is a good economist

[Zukunftsmusik]

http://kapitalism101.wordpress.com/

[Flying Purple People Eater]

If the LTV was irrelevant today, then all anti-capitalist politics that ever would be are as well.

It's the god-damned backbone of leftist politics! The economic justification for anti-capitalist efforts. Without the LTV, what are we left with as a demonstrable reason to depose capitalism? 'The rich take from the poor'?

We'd be left with marginal utility theory, and it's false dichotomies and circular logic. If we go with Smith's beliefs, then I am creating value by typing this post, and if we go with the marginals then the very notion of social classes becomes semantic, and working-class bodies of defense would be seen as alien disruptions of the market. Call it pointless academic rubbish if you'd like but Marx's economic manuscripts are by far his most important works - they're the rational core of far-left politics. To ignore them and label them as 'historical redundancies' is an enormous injustice and leaves you as nothing but a moralist with a red or black flag.

[Lord Hargreaves]

This is exactly the kind of view that makes me "uncomfortable", as I laid it out in what I said above. Marxism cannot be reduced to the labour theory, and "leftist politics" cannot be reduced to Marxism anyway.

You are basically betting the whole house, the car and your kids' university fund all on a single hand...and it is an idea that even some prominent Marxists have doubts over, and most radical/leftist/heterodox economists in general reject outright. To me that is a suicidal position to take.

[Fakeblock]

This is exactly the kind of view that makes me "uncomfortable", as I laid it out in what I said above. Marxism cannot be reduced to the labour theory, and "leftist politics" cannot be reduced to Marxism anyway.

You are basically betting the whole house, the car and your kids' university fund all on a single hand...and it is an idea that even some prominent Marxists have doubts over, and most radical/leftist/heterodox economists in general reject outright. To me that is a suicidal position to take.

Perhaps, but we shouldn't adjust reality to suit our ideals. If the law of value is faulty there is no basis for applying the Marxist class view to capitalism. Marxists don't only analyse capitalist social formations, of course, so the discipline as a whole wouldn't be undermined, but certainly the Marxist analysis of capitalism would be proved invalid and would have to be replaced. It need not undermine your politics if you don't base them on Marxism. However, those of us who do would find ourselves in a tough spot.

Edit: Actually I'm going to have to disagree with myself and say that disproving the law of value would be a huge blow to historical materialism in general. One would have to accept that the mode of production has no influence on the mode of exchange, which would disprove the theory that modes of production play a deciding role in shaping other kinds of social formations. Then one must either accept the idealist view that social formations arise independently of material conditions or find some influencing factor other than production.

[Popular Front of Judea]

The OP may want to look into Anwar Shaikh (http://en.wikipedia.org/wiki/Anwar_Shaikh_(economist)). Of course his proof of the LTV is at the national level, using input-output tables. Not exactly useful for daily use.

(Came across this in the 4th chapter of Maghnad Desai's 'Marx's Revenge'. Not exactly a book for those wavering in their ideological certainty. ;))

[International_Solidarity]

This isn't to say I'd just dismiss Marx's economic analysis out of hand, but rather I'd see any reading of Marx as ultimately having a purpose other than simply understanding Marx.

I would say the purpose of economics as a discipline is to provide for every member of society. If any part of any theory, even Marx, does not accomplish that, then I would dismiss those memes as running counter to my goals.


Marx mostly writes about Capitalism. In fact, if you compare his writings on Capitalism to the rest of his writings, you would see that he barely even writes about Socialism or Communism (comparatively). Every Anarchist should read Marx because the vast vast majority of Marx's analysis proves why Capitalism is inherently flawed.

Pro-tip, don't let your tendency dictate what you do and don't read. ;)
That's just a bit of advise. As a Marxist, I have read a lot of works by prominent Anarchists and actually learned a lot. Kropotkin is by far my favorite and Mutual Aid is an excellent work.

[International_Solidarity]

Marxism cannot be reduced to the labour theory, and "leftist politics" cannot be reduced to Marxism anyway.


Of course we can't reduce Marxism to the LTV, but without the LTV what is there? What is you're alternative? I'm sure you aren't saying that Labour doesn't create value, because if you were why would you be here, but what is your alternative to the LTV and where does it come from?
I'm still kind-of on the fence about the LTV, so if you have any sources that would be great :)

[Lord Hargreaves]

Perhaps, but we shouldn't adjust reality to suit our ideals. If the law of value is faulty there is no basis for applying the Marxist class view to capitalism. Marxists don't only analyse capitalist social formations, of course, so the discipline as a whole wouldn't be undermined, but certainly the Marxist analysis of capitalism would be proved invalid and would have to be replaced. It need not undermine your politics if you don't base them on Marxism. However, those of us who do would find ourselves in a tough spot.

Edit: Actually I'm going to have to disagree with myself and say that disproving the law of value would be a huge blow to historical materialism in general. One would have to accept that the mode of production has no influence on the mode of exchange, which would disprove the theory that modes of production play a deciding role in shaping other kinds of social formations. Then one must either accept the idealist view that social formations arise independently of material conditions or find some influencing factor other than production.

I'm not really sure why you think the above, to be honest. Perhaps I have an inadequate understanding of the economics (it is admittedly the weakest link in my knowledge)

Historical materialism was more or less developed before Marx wrote Capital (as set out in the German Ideology, the Preface, etc) so it can hardly be said to be dependent on it. The basic crisis tendency of capitalism from this previous historical materialist perspective - the contradiction between the relations and forces of production (ie between the socialization of work and work effort and the privatization of the proceeds of work) - can exist without a technical discussion of exploitation, LTV or LTFRP.

And one can still talk about the structural problems of capitalism: anarchism of production leading to imbalances and overproduction, competition leading to inequality, pressures on wages leading to a lack of effective demand - and a huge wealth of general moral arguments: capitalism geared toward profit and not needs, alienation, political office up for sale, environmental destruction, etc.

So while you may think the labour theory of value ties all these things together and makes anti-capitalist critique more compelling, I can't concede the idea that it is utterly essential.

[Lord Hargreaves]

Of course we can't reduce Marxism to the LTV, but without the LTV what is there? What is you're alternative? I'm sure you aren't saying that Labour doesn't create value, because if you were why would you be here, but what is your alternative to the LTV and where does it come from?
I'm still kind-of on the fence about the LTV, so if you have any sources that would be great :)

I'm on the fence too, I'm just playing devil's advocate

[Hit The North]

This is exactly the kind of view that makes me "uncomfortable", as I laid it out in what I said above. Marxism cannot be reduced to the labour theory, and "leftist politics" cannot be reduced to Marxism anyway.

You are basically betting the whole house, the car and your kids' university fund all on a single hand...and it is an idea that even some prominent Marxists have doubts over, and most radical/leftist/heterodox economists in general reject outright. To me that is a suicidal position to take.

For Marx, capitalism is a circuit of increasing value. If capital does not create increased value then it cannot move forward - the capitalist cannot accumulate. The LTV is at the centre of this. According to the LTV it is the extraction of surplus value through the exploitation of human labour that explains this expansion. But, there is a more or less constant battle over the appropriation of the surplus at the point of production. This means that the relationship between capital and labour is crucial for understanding both the secret of capitalism and also the possibility for it supercession.

If you believe that the core expansion of value is on the basis of some other factor (technology separated from its boost to productive labour or the entrepreneurial spirit, or some other non-material factors) then you move away from a class analysis of capitalism and capitalist crisis.

If you think there are better "leftist" explanations of the core mechanisms of capitalist reproduction and crisis then feel free to present them.

[cyu]

How much is any theory of value a statement about justice?

Whether any theory is judged to be "correct" or not, does it "prove" whether some distribution of material goods is "just" or not?

Are you able to argue for some standard of justice in material distribution, regardless of theories of value?

Personally I would extrapolate from the words of Emma Goldman - that there are certain distributions of material goods that can be considered just or unjust, regardless of which economic theories are "proven" to be correct.

[Fakeblock]

Historical materialism was more or less developed before Marx wrote Capital (as set out in the German Ideology, the Preface, etc) so it can hardly be said to be dependent on it. The basic crisis tendency of capitalism from this previous historical materialist perspective - the contradiction between the relations and forces of production (ie between the socialization of work and work effort and the privatization of the proceeds of work) - can exist without a technical discussion of exploitation, LTV or LTFRP.

Marx accepted the labour theory of value long before Capital. Most (if not all, I'm not sure) economics of the time based itself on this theory. In his economic writings Marx just proved how contradictions in capitalism arise from this law.

But the reason I think Marxism (not leftist politics) is dependent on the theory is because without it there is nothing connecting the mode of production and the mode of exchange in capitalism. This contradicts the notion that there is a deciding or, at least, influencing relation between mode of production and other social formations. If exchange can exist independently of production, it follows that people can think and act independently of mode of production as well, which is a huge blow to historical materialism. One would have to accept that laws, ideology etc. can exist independently too. But if not production, then what forms the basis of human social organisation? And there is no serious non-idealist contender to Marx's theory that I know of. Marx's materialism would be proved incorrect regardless.

And it follows from this that one would have to reject the Marxian class view as Hit the North explained above.


And one can still talk about the structural problems of capitalism: anarchism of production leading to imbalances and overproduction, competition leading to inequality, pressures on wages leading to a lack of effective demand - and a huge wealth of general moral arguments: capitalism geared toward profit and not needs, alienation, political office up for sale, environmental destruction, etc.

So while you may think the labour theory of value ties all these things together and makes anti-capitalist critique more compelling, I can't concede the idea that it is utterly essential.

You can definitely form coherent arguments against capitalism without the law of value. These arguments won't be based on Marxism though. I think it's important to recognise Marxism as separate from communism or leftist politics in general. Personally, I think Marx provided the best analysis of capitalism so far and my politics are pretty dependent on it.

[Hit The North]

How much is any theory of value a statement about justice?



It's a question of providing a scientific account of how capitalism works, not providing an ethical judgement on capitalism.

You don't need the LTV in order to draw ethical conclusions about the iniquities of capitalism; you need the LTV to understand the origins of those iniquities.

[International_Solidarity]

I'm on the fence too, I'm just playing devil's advocate

I figured you had some kind of great alternative that was driving you to doubt the LTV and that is why I asked.
So basically you are just denying it without supplying any alternative? Or am I misunderstanding you?
Because if one rejects the LTV he needs a hell of a substitute in order to remain a Marxist.

[cyu]

You don't need the LTV in order to draw ethical conclusions about the iniquities of capitalism

Agreed.



you need the LTV to understand the origins of those iniquities.


Do you really? Would you say LTV is the only valid way to explain the iniquities? Do you believe there are no other ways to explain it?

For example, someone might say "because I *own* this land or factory, then I *deserve* such and such" while another person might say "because I *did* this, then I *deserve* such and such"? Seems both are merely justifications for how we should judge what deserves what.

Why does anybody deserve anything? What if nobody deserves anything? What if everybody deserves everything?

Why do we need to judge economic value in the first place? What is the purpose of such judgments?

[Lord Hargreaves]

I figured you had some kind of great alternative that was driving you to doubt the LTV and that is why I asked.
So basically you are just denying it without supplying any alternative? Or am I misunderstanding you?
Because if one rejects the LTV he needs a hell of a substitute in order to remain a Marxist.

There are vast technical issues involved - does technological advance result in constant capital savings as well as labour savings (and how does this affect the organic and technical compositions)? Is it really the case that all machines and commodities as inputs merely transfer value (equivalent to their exchange value) and have no impact on value? How does the rate of profit affect prices (and equilibrium prices expressesd as values) rather than the other way round? And is it possible to consistently calculate these variables over time without thinking of value? - which I don't feel capable, my not being an economist, of finally settling.

It isn't that I have an "alternative". Thinking about political economy in terms of the relationship between labour and capital, or social relations involved in production and how these are mystified by market exchange, etc., is definitely superior to not doing so.

As I said, I'm largely arguing the toss, that it is somewhat myopic to suggest that revolutionary class politics somehow stands and falls solely on these rather opaque, technical issues. Just my 2 cents.

[Hit The North]

Do you really? Would you say LTV is the only valid way to explain the iniquities? Do you believe there are no other ways to explain it?

For example, someone might say "because I *own* this land or factory, then I *deserve* such and such" while another person might say "because I *did* this, then I *deserve* such and such"? Seems both are merely justifications for how we should judge what deserves what.


People can make all sorts of claims and rationalisations as to why they should benefit, but none of these claims are scientific explanations of how capital is a circuit of self-valorization; why there are limits to this process, leading to periodic crisis; or why the relations of production produce such wide inequalities and class struggles. The LTV is the starting point for explaining these outcomes.


Why do we need to judge economic value in the first place? What is the purpose of such judgments?To reiterate: with the LTV, Marx is primarily concerned with explanation (scientific statement) not with moral or ethical justification (value statement). That's not to say that a normative position cannot be derived from the LTV, just that it isn't its primary function in Marx's economic analysis.

Of course all sorts of things can be used to make ethical claims. Ownership, thrift, hard-work, entrepreneurial endeavour, birth-right, gender and race have all been used to justify various inequalities at one time or other. In general, Marxists condemn these as ideological self-justifications.

The LTV is an explanation of a different order. It explains how surplus value is extracted from the direct producer and transformed into capital.

[Lord Hargreaves]

Marx accepted the labour theory of value long before Capital. Most (if not all, I'm not sure) economics of the time based itself on this theory. In his economic writings Marx just proved how contradictions in capitalism arise from this law.

But don't Marxists always insist that Marx's theory is completely different from that of Ricardo or Adam Smith? So the specifically Marxian ltv comes after historical materialism as a theory. I don't get how HM - the contradiction between relations and forces of production being the ultimate downfall of a mode of production, the development of productive forces being the motor of history, class struggles over the material conditions of the reproduction of society and of life (class struggle predates the operation of value under capitalism), the economic base throwing up a corresponding political superstructure - is unduly effected by the ltv.

[Jimmie Higgins]

But don't Marxists always insist that Marx's theory is completely different from that of Ricardo or Adam Smith? So the specifically Marxian ltv comes after historical materialism as a theory. I don't get how HM - the contradiction between relations and forces of production being the ultimate downfall of a mode of production, the development of productive forces being the motor of history, class struggles over the material conditions of the reproduction of society and of life (class struggle predates the operation of value under capitalism), the economic base throwing up a corresponding political superstructure - is unduly effected by the ltv.

I really appreciate your approach to the question and I agree that we shouldn't be dogmatic about any theory - the theory should help us better understand what's going on and if it doesn't do that, then it needs to be re-examined.

I am more sympathetic to the pro-LTV side of this debate however and I do find it to be a useful way of understanding some things about capitalism. If I'm understanding your argument in the above quote, I think where LTV comes into play is how that clash between classes plays out, what the basis of exploitation is under capitalism specifically. Other left-wing explainations IMO rely too much on capitalism being based on direct exploitation: stealing land (privitizing), simply paying workers less.

The classical LTV just says that labor creates wealth and workers get paid for that value. What distinguishes Marxist LTV is the idea that the exploitation is hidden in this process and so workers are paid "the value of their labor" on the surface but actually do more real labor and create more value. I think this can be clarifying because how things appear on the surface can sometimes be disorienting in capitalism because classical economics (and most mainstream accounts) claim that everything on the market balences out - to understand where the exploitation is coming from, concepts like LTV and Socially Necissary Abstract Labor Time are pretty good explainations.

But on a practical level, I think you are right that it's also not totally necissary for struggle. People will "feel" alienation and exploitation with or without Marxist theory and so to a certain extent some kind of general class consiousness happens irregardless (but not always automatically) just from having to work. But the theory is helpful in my view for moving from a sort of experiential gut understanding to a more systematic one.

[Fakeblock]

But don't Marxists always insist that Marx's theory is completely different from that of Ricardo or Adam Smith? So the specifically Marxian ltv comes after historical materialism as a theory.

Sure, but Marx's theory, like most of his time's economic theory, definitely had its roots in the early economic theories. Without a Smith and a Ricardo there could be no Marx. Perhaps one could compare it to Marx's relationship to Hegel.


I don't get how HM - the contradiction between relations and forces of production being the ultimate downfall of a mode of production, the development of productive forces being the motor of history, class struggles over the material conditions of the reproduction of society and of life (class struggle predates the operation of value under capitalism), the economic base throwing up a corresponding political superstructure - is unduly effected by the ltv.

As a whole, historical materialism doesn't seem to rely on the law of value, but I don't think that historical materialism can be applied to capitalist society without accepting it.

You mention the contradiction between productive forces and relations of production. But if you disregard the law of value you'll be hard pressed to find insolvable class antagonisms in capitalist society. As Hit the North said, if one accepts that value originates in exchange, not in production, one accepts that there is no contradictory relation at all between wage-labour and capital, thus eliminating the basis for proletarian-bourgeois antagonistic relations. There will no longer be an antagonism between an exploited class and an exploiting class, since this whole relation is based on the premise that the exploiting class extracts surplus value from the exploited class.

Going back to my original point, accepting that economic formations such as markets can exist independently of the mode of production means refuting the very essence of historical materialism. The logical conclusions of this is that humans can act independently and shape society at will. It follows that the development of productive forces and relations of production have minimal or no influence over the development of other social relations. I'd say that labour theory of value is the best (if not only) means of establishing a relation between the process of production and the process of exchange and therefore the best explanation compatible with historical materialism.

[Lord Hargreaves]

I think you're right Jimmy.

It just concerns me that people think the entire project of emancipation rests upon a few technical ideas discussed in a book over one hundred years ago. And I have an immediate allergic reaction against anything that even smells of an attempt to enforce dogma or police the boundary of what is and isn't considered "Marxist"

Many of the Marxists that have influenced my own thinking - so called analytic Marxists like GA Cohen and Robert Brenner, or Critical Theorists like Theodor Adorno, Marcuse etc. - either rejected LTV or ignored it completely. That, to me at least, suggests that the LTV isn't necessarily the be-all and end-all.

[cyu]

If LTV does not use ethical terms to justify value, how does it justify value? How is value determined in LTV if not by something that derives from an ethical judgment? Do Marxists really try to avoid talk of ethics? Isn't communism supposed to be better because it is more ethical?

I could say that vast economic inequality is simply the result of the use of force (or threat of force) by the ownership class on the working class. If I say that the wealthy use their media control to brainwash the poor into believing "property is right" and then convince the poor that violence used to protect property is "right" - is that LTV? Is that something else? Is the argument invalid?

[Hit The North]

If LTV does not use ethical terms to justify value, how does it justify value? How is value determined in LTV if not by something that derives from an ethical judgment?

It doesn't "justify value". It is an explanation of the value of commodities and how those commodities embody an expansion in the original values that were expended in their production. Ultimately, in a capitalist society, value is "justified" through exchange.


Do Marxists really try to avoid talk of ethics? Isn't communism supposed to be better because it is more ethical?


Some Marxists avoid talk of ethics, although I'm not one. But it is beside the point, as the LTV is part of Marx's scientific explanation of how capitalism works, not a call for a better or more ethical world.


I could say that vast economic inequality is simply the result of the use of force (or threat of force) by the ownership class on the working class. If I say that the wealthy use their media control to brainwash the poor into believing "property is right" and then convince the poor that violence used to protect property is "right" - is that LTV? Is that something else? Is the argument invalid?


No, those arguments (all of which might be partially or contextually true) would not be an LTV as they don't address the exchange between capital and labour.

[cyu]

How much of the exchange between capital and labor do we need to understand?

If someone shoots my parents, I wouldn't say I need to understand the mechanisms within the firearm or trajectory physics of the bullets.

If we want to engage pro-capitalist economists on their own turf and debate pro-capitalist economics with them, then some understanding of their theories may be necessary. However, if someone wants to claim that their shooting of my parents wasn't really murder considering the firing mechanisms of the guns they were using, do I really want to bother with that debate?

[RedMaterialist]

During the time of Karl Marx, the Labour Theory of Value was almost uncontested as a valid theory. Adam Smith wrote frequently about a Labour Theory of Value, as did David Ricardo. Marx expanded upon the Theories of these economists by bringing in new analysis of underlying forces of Labour Power and Surplus Value. (or at least this is my understanding. I really stepped up my economics education and read The Wealth of Nations, as well as some of Ricardo's work, and now I am now about one-third of the way through Volume One of Das Kapital)
My question is about the modern relevance of the Labour Theory of Value. I have read that most economists state that a "Theory of Price" is all that is needed, does anyone recommend any work defending the Labour Theory of Value against these new(ish), post-Marx criticisms?

I have heard that there is a good defense in Andrew Kilman's Reclaiming Marx Capital, but I have not gotten my hands on a copy of that book yet.

Thoughts and/or works?

I personally think the labor theory of value can be proved using statistics produced by BEA, Bureau of Labor, the Federal Reserve of St. Louis (FRED), the OECD, and other agencies. One problem with these numbers is that they are mostly based on using price as a measure of value. Thus, the GDP of the U.S. is based on the total price of all goods and services produced during a year. However, since we are dealing with an aggregate of the entire economy, the price of things will, on average, be the natural price (per Adam Smith) of those things. Thus, price becomes an accurate measure of value.

These are some indications of the validity of the LTV:

1. Richard Wolff has noted that the total GDP of the U.S. is about 12 trillion dollars a year, yet the total compensation (wages and benefits) paid for that production is about half, six trillion.

2. The index of labor productivity is always higher compared to labor costs (production compared to employee compensation.)

3. The OECD calculates that the average per hour production in the U.S. is about $50 while the average employee compensation is about $25.

All of this tells us that workers produce more than what they are paid. Where does the extra production value come from? According to Marx, Ricardo and Smith, the extra value is the value added by labor.

Most importantly, Marx, Ricardo and Smith, all agreed that this extra value is added during the process of production. The added value is realized or transformed after the commodity is placed on the market and sold. Profit, the value added, the surplus value, is created during production but taken when the commodity is sold.

Bourgeois economists, of course, were absolutely opposed to the idea that workers produced anything other than the value of their wages. The bourgeoisie approved of the new economic theories developed to justify their appropriation of the profit. This was relatively easy to do since, as Marx showed, profit and surplus value appear to originate post-production because that is when the added labor value is converted into money or price. The bourgeoisie confuses the appearance of profit with the reality of its production.

For these economists, profit is never part of production costs. For Marx, profit is the part of production costs which is not paid by the capitalist. The capitalists are convinced that profit is something which they create through their own genius and hard work.

The economists in the 19th century then simply ignored the labor theory of value and focused entirely on price. How then are value and prices determined for them? By the entirely subjective operation of the demand of each consumer. Consumer A is willing to pay $10 for a commodity, therefore the value of that commodity to him or her is $10. Consumer A is willing to pay $10 for widget X, but only $5 for widget Y. The difference is the margin of use which Customer A places on the two widgets. Value then becomes completely relative and can change from minute or minute or from customer to customer, depending on the use each individual derives from the commodity. This is the theory of marginal utility, the attempt to explain how value arises in the operation of buying and selling. Supposedly, the marginal utility of something is the price you would pay for the just previous use of the thing. This is essentially meaningless. Consumers thus control the market through their "freedom to choose."But marginal utility also applies to profit which, might explain why the margin of profit (rate of profit) is declining even in capitalist theoretical terms. Keynes talked about the declining marginal utility of profit.

Another explanation for profit taking by the capitalists is that they "risked" their money and therefore are entitled to the profit. This is only a justification and not an explanation of how profit is generated.

The marginal utility and risk theories are now mostly debunked by even mainstream economists. So they have now come up with a new theory. This is the opportunity cost theory. They have now moved value creation from the market and into production. There is a new "cost" which explains profit. A capitalist may invest $10 in one enterprise. That is his production cost. However, he could have invested that ten dollars in another enterprise. Therefore he gave up the second opportunity, it was a cost, and that extra cost is recovered as profit from the operation of the first enterprise. However, we are told that this added cost is not a real cost and it cannot be treated as a cost in the accounting of the enterprise. It is an entirely imaginary cost completely unaccounted for. Imaginary cost creates real profit. It would be interesting to see how the IRS or Inland Revenue treated opportunity costs as a cost in the production of profit.

This is just my rambling simplification of things. However, my point is that the labor theory of value is still valid and it can be proved using the language and premises (Marx) of the capitalist economists, i.e. by using their own statistics.

[cyu]

I would say there's a difference between the words that come out of the mouths of capitalists, and what they actually believe.

Years ago, when China was not yet considered an economic power, businesses were already moving into China and starting to brag about their market share in China. Back then, the US dollar was much stronger - so who really cares if you're big in China when any profits from there are dwarfed by profits in dollars? Well, it does make a difference if you see market share as represented by labor, rather than by yuan or dollars - 100% market share in China, if measured by labor, would dwarf 100% market share in the US.

These days, you also hear about land grabs in Africa and various other developing parts of the world - not just by traditional capitalists, but by new Chinese capitalists. What's so good about some old piece of farm land when compared to all the riches in Fort Knox or all the large numbers stored in computers on Wall Street? Well, if you have something that's relatively worthless in economic terms, and want something that's actually a useful resource, then you play up the value of your useless stuff, so you can trade that for more of the useful stuff.

[RedMaterialist]

If someone shoots my parents, I wouldn't say I need to understand the mechanisms within the firearm or trajectory physics of the bullets.

So, if someone hires your parents and pays them only enough to barely survive, you would not need to understand the laws of capitalism, even though your parents were starving in front of your eyes. You would not need to understand that your parents produce more value in their work than they are actually paid? And sometimes they are paid less than the value of their own replacement costs. The capitalist denies this and tells your parents to go get another job if they don't like their wages.

I think you are carrying the analogy of physics to the social laws of economics too far.


If we want to engage pro-capitalist economists on their own turf and debate pro-capitalist economics with them, then some understanding of their theories may be necessary. However, if someone wants to claim that their shooting of my parents wasn't really murder considering the firing mechanisms of the guns they were using, do I really want to bother with that debate?

They don't really say that. They say your parents could have left anytime they chose, and besides, they saw your parents trying to steal some bread.

[cyu]

As Emma Goldman says, "If they do not give you work or bread, then take bread." There isn't really any LTV analysis in that statement. It is merely a strategy for survival. Whether you understand the underlying economics or not, anybody can understand that ignoring capitalist property claims can enable the poor to survive.

http://cjyu.wordpress.com/article/if-they-do-not-give-you-work-or-bread-gcybcajus7dp-10/

This isn’t to say I’m encouraging everyone to take bread or engage in armed robbery on the high seas, because while I think it’s justified for those who need to do it to survive, I don’t believe (for obvious reasons) that it’s a good economic strategy.

I would instead encourage the taking of the actual means of production (land, raw materials, equipment, etc) – like what the MST of Brazil did or what the rest of the Latin American recovered factory movements are doing.

Depending on your politics, it may just come to a difference between those who prefer to debate first, act later - and those who prefer to act first, debate later. When it comes to issues of starvation and lack of medical care, life-and-death, I would come down on the side of act first, debate later.

[Jimmie Higgins]

As Emma Goldman says, "If they do not give you work or bread, then take bread." There isn't really any LTV analysis in that statement. It is merely a strategy for survival. Whether you understand the underlying economics or not, anybody can understand that ignoring capitalist property claims can enable the poor to survive.
In a way yes, and in a way no. Goldman was speaking in the context of a lot of strikes and to a striking audience, so the context makes it clear... she is most likely countering the moralism of the media and politicians saying that striking is "stealing". So her audience, I assume, was already class consious enough to see this as a bigger argument than "go get yours".

We don't need to understand the theory of evolution to use opposable thumbs; we don't need to understand gravity fully to know that we'll fall to our death if we jump off a bridge. If we want to construct a vehicle to take us into orbit around the earth... well we probably do need a strong practical understanding of gravity among other things.

But at any rate, yeah if workers are striking, then a lecuture on the LTV would be totally useless and annoying - I wouldn't say the value of LTV is in propaganda or rallying ourselves, it's a theory and this should help us understand the workings and tendencies of things a little more... but class struggle happens irregardless of Marxist or anarchist theory of anything.

But when understanding how things work does become important are in being able to counter other explainations of capitalism - both radical and liberal ones. So, for example, because exploitation is hidden, frequently when workers go on strike, the company says, we have no money -- we'd have to raise prises and go out of business if we paid workers more. If you have a liberal economic view, this is true because labor doesn't create "extra" value, workers are paid in full for the value of their labor. In the Marxist LTV view, workers are not causing higher prices, but instead are actually just cutting into company profits (it's a battle over how much of the surplus goes back to the worker and how much gets controlled by the boss). A company might still go out of business because their lower profits might mean they can't invest and will be overtaken--- but that's why capitalists and workers can't permanently be in a balance and must always battle over the surplus. Or, from the left, some people might see the high wages paid to sectors of workers (or whole regions as in Third-worldism and Western reformism) and decide no exploitation is happening and so these workers are "bought-off" or part of the bourgoise somehow.

So I do think it's clarifying and useful for seeing the general way exploitation works. It's not a pre-requisite for recognizing exploitation or class struggle, but the "debate" aspect is not counter-posed to taking action IMO, because I don't think workers fight-back unthinking like a economically determined reflex or are not influenced when the bosses and economists and popular "common sense" tells them, if you strike, the company will go out of business, if other worker's strike then the price of your shirts and bread will become too expensive.

[RedMaterialist]

If we want to construct a vehicle to take us into orbit around the earth... well we probably do need a strong practical understanding of gravity among other things.

I would say that destroying capitalism and replacing it with a dictatorship of the proletariat and then creating socialism is 1000x more difficult than putting a vehicle into orbit around the earth.

[Jimmie Higgins]

I would say that destroying capitalism and replacing it with a dictatorship of the proletariat and then creating socialism is 1000x more difficult than putting a vehicle into orbit around the earth.Apparently so is finding a workable metaphor :grin:

[The Garbage Disposal Unit]

Mmm. I think I'm maybe echoing what has already been said, or with some specific nuances, to varying degrees by Jimmy and Hargreaves, but, hey, occasionally different wordings convey different elements of things, right?

My feeling is that we've got to guard against narrow and mechanistic readings of labour theory of value that take it out of the real dynamics of class struggle, and the particularities of, for example, the realization of real subsumption in the imperial centre (how's that for non-dogmatically pounding together the ultra-left and Maoism?), etc. Which is my roundabout way of saying that depoliticizing Marx's political-economy does as much disservice as "de-economizing" it: neither stands particular well on its own. For one, I think both reading LToV as a "law" of capital that is fixed and immutable in its relationship to profit, prices, etc. means failing to grapple with capitalist re-/production that occurs outside the direct activity of commodity production by wage labour - but obviously capitalist re-/production isn't limited to this sphere (sex! culture! language!). All of this has a real impact on "value". On the other hand, abandoning the economic, "literal" side of LToV means abandoning the mechanism that underwrites the political side of the equation - one risks sliding into a weird neo-classical subjectivism where re-/production is understood in an atomic, individualist way. However, value, price, and profit have very real implications in terms of capitalist re-/production outside of the direct extraction of surplus value from the proletariat, and, in this sense, neither can be understood as "external" to the other.

[cyu]

Personally I don't support strikes. It's better than nothing, but as an anarcho-syndicalist, I would encourage employees to assume control over their workplace instead. (I would also encourage them to assume control over the local media, assuming it's broadcasting the usual pro-capitalist propaganda.)

Where does LTV come into this? As a justification for why employees are "allowed" to do what they are doing? Personally I would just say f**k that - take control, live your life, why bother debating with pro-capitalists over the merits of LTV if you don't bother debating with rapists about the "merits" of non-consensual sex?

...so if you're not debating with pro-capitalists about the merits of LTV, who are you debating with? Other leftists? Does it matter at that point?

[RedMaterialist]

Personally I don't support strikes. It's better than nothing, but as an anarcho-syndicalist, I would encourage employees to assume control over their workplace instead. (I would also encourage them to assume control over the local media, assuming it's broadcasting the usual pro-capitalist propaganda.)

Where does LTV come into this? As a justification for why employees are "allowed" to do what they are doing? Personally I would just say f**k that - take control, live your life, why bother debating with pro-capitalists over the merits of LTV if you don't bother debating with rapists about the "merits" of non-consensual sex?

...so if you're not debating with pro-capitalists about the merits of LTV, who are you debating with? Other leftists? Does it matter at that point?


It's not as simple as saying that a capitalist is a rapist. Marx disagreed with Proudhon's characterization of property as "theft." The capitalist takes the surplus value created by labor because he owns the means of production. When a car comes off an assembly line the profit/surplus value is already built, as in were, in the car. The capitalist owns the assembly line, he owns the car and therefore he owns the surplus value created by labor.

Surplus value is something which I think very few people understand, especially working people. I had been reading Marx off and on for probably 10 years and only recently came to understand it. I think that workers instinctively understand it: very few workers, except maybe high income union workers, do not believe that they actually produce more per hour than they are paid in wages. Whoever heard of a high school student being taught the LTV? If they were, they would realize immediately what low wages means: high profits for the companies.

I once worked at a seasonal job and at the end they would give workers a detailed and complicated-looking summary of what they had earned per hour and what they had produced. They called it hourly wages and value produced, or something. I had made something like 12.00 per hour and had produced a value of 50.00 per hour, according to their own figures. The labor theory of value hit me like a ton of bricks.

Suppose a socialist were to show up at a fast food workers rally and started talking about how McDonald's made a profit by paying workers 7.25 an hour for value which they produced worth 15.00 per hour. Isn't that what Marx did when he spoke to the International Workingmen's association in the famous Value, Prices and Profit?

[cyu]

What difference does it make whether there's a difference in theory between Marx and Proudhon? Does a person's stand on LTV affect whether employees should seize the means of production? If not, then what exactly is the difference in what leftist employees should do, depending on your view of LTV?

[RedMaterialist]

Why should workers revolt and destroy the existing economic system if they don't understand why they are doing it? Is is just irrational destruction? LTV is crucial for workers' understanding of capitalism. LTV: all value in any commodity comes only from the worker. The capitalist says that any value the worker put into the commodity is paid for in wages. Then, the capitalist says that when the commodity leaves production and enters the market it is the capitalist, through buying and selling, who then creates the extra value which is his profit. Thus, the capitalist is the "wealth creator."

Why should workers bring about a revolution if it is only to take something which belongs to the capitalist?

[cyu]

Are you debating suburban kids or what? Anybody who doesn't like their current working or living conditions has plenty of incentive to overthrow the economic system.

[Hit The North]

Are you debating suburban kids or what? Anybody who doesn't like their current working or living conditions has plenty of incentive to overthrow the economic system.

So why don't they?

[cyu]

So why don't they?


Very likely the same reason as you. Assuming you are a leftist, then you do have an incentive to overthrow the current economic system.

So why don't you?

[Hit The North]

Very likely the same reason as you. Assuming you are a leftist, then you do have an incentive to overthrow the current economic system.

So why don't you?

For some reason I can't get the rest of my community to agree to it and yet hardly any of them are "suburban kids". But then, I'm a Marxist while 99% of my community are not. So perhaps it's not just about incentive but also something to do with analysis of the situation?

[cyu]

I would say the main reason you don't have revolution isn't because of a lack of understanding of LTV, but rather a lack of control of the local media, and a lack of military equality.

[Popular Front of Judea]

Better chants would help too.


I would say the main reason you don't have revolution isn't because of a lack of understanding of LTV, but rather a lack of control of the local media, and a lack of military equality.

[Hit The North]

I would say the main reason you don't have revolution isn't because of a lack of understanding of LTV, but rather a lack of control of the local media, and a lack of military equality.

That doesn't answer the question, it just delays it. Why don't most people in my community see the need to control their local media and why aren't they stock-piling weapons for a future confrontation with the bourgeois state?

If you think that the incentives are in place and that they are a sufficient cause for revolutionary action, why is my community and your community not mobilising to create the preconditions for their own emancipation?

[cyu]

There are two ways to control people. One is by making them want to support the current system. This is where control of the mass media comes into play. It is used by both capitalists and by authoritarian regimes.

The second is by preventing people from changing the system, even if they wanted to. This is where military domination comes into play.

So if you wanted a free society, both the media would have to be liberated, and people would need military equality. While the second is a good goal, you don't quite need complete military equality for a successful revolution. The reason is that non-capitalists far outnumber capitalists - as a result, even a partial military shift towards non-capitalists can tip the scales over.

But military control is always only temporary control. Long term control (or lack there-of) requires the control (or liberation) of ideas. Thus the short term military advantage has to be translated into media liberation for long lasting change.

You don't need 99% of the local community to help you liberate the local media outlets - a much smaller percentage can do it, even without majority support. What matters is that after the media is liberated, that liberation can turn the community around into 99% support (assuming you're doing it right - ie. allowing full community participation, rather than filtering it only through the lens of capitalists or authoritarians).

If you look at any failed revolutions today (Egypt, Turkey, Greece, Oaxaca, Argentina, whatever) - what do they share? Did any of them achieve both military parity and media control, but still fail the revolution? I would say that their revolutions only failed because they did not achieve one or the other.

[Jimmie Higgins]

I would say the main reason you don't have revolution isn't because of a lack of understanding of LTV, but rather a lack of control of the local media, and a lack of military equality.

I think this is apples and organges: one is about how we understand the current system while the others are about more practical means of worker's asserting and defending themselves.

I think the debate Marx was responding to in Value, Price and Profit show one example of how we understand capitalism having implications for struggle. Marx's was responding to the arguement (made by others in the worker's movement and often today made by supporters of capitalism) that if workers strike, then the price of commodities will necissarily increase (reflecting an economic view that capitalists make money by hireing labor and then just raising the price a little to make more) and since workers need to buy some commodities on the market, then their wages will just dissappear into increased costs of living and so strikes shouldn't be supported. Furthermore, often this "theft" explaination or "gouging" explaination of profits leads to reformist conclusions of capitalism whereas Marxist LTV shows the systematic and inherent exploitation that is the result of capitalist production. His explaination of profits reconcile the surface view of the capitalists (as true in their daily experience: they pay market price for labor and must also sell the commodities at market price) with the experience and fact of exploitation of workers. Without this systemic view of profits (from which then the conditions of capitalism for workers spring: precariousness, speed-ups, threat of unemployment, denial of non-makert means of self-support), then it is possible to argue that we only need to remove the theft in capitalism to have a just system, we just need to get rid of the greed of the capitalists, rather than seeing that they don't have to be greedy, exploitation is inherent in the way the system works.


Like that of every other commodity, its value is determined by the quantity of labour necessary to produce it. The labouring power of a man exists only in his living individuality. A certain mass of necessaries must be consumed by a man to grow up and maintain his life. But the man, like the machine, will wear out, and must be replaced by another man. Beside the mass of necessaries required for his own maintenance, he wants another amount of necessaries to bring up a certain quota of children that are to replace him on the labour market and to perpetuate the race of labourers. Moreover, to develop his labouring power, and acquire a given skill,another amount of values must be spent. For our purpose it suffices to consider only average labour, the costs of whose education and development are vanishing magnitudes. Still I must seize upon this occasion to state that, as the costs of producing labouring powers of different quality differ, so much differ the values of the labouring powers employed in different trades. The cry for an equality of wages rests, therefore, upon a mistake, is an inane wish never to be fulfilled. It is an offspring of that false and superficial radicalism that accepts premises and tries to evade conclusions. Upon the basis of the wages system the value of labouring power is settled like that of every other commodity; and as different kinds of labouring power have different values, or require different quantities of labour for their production, they must fetch different prices in the labour market. To clamour for equal or even equitable retribution on the basis of the wages system is the same as to clamour for freedom on the basis of the slavery system. What you think just or equitable is out of the question. The question is: What is necessary and unavoidable with a given system of production? After what has been said, it will be seen that the value of labouring power is determined by the value of the necessaries required to produce, develop, maintain, and perpetuate the labouring power.

[cyu]

I think this is apples and organges: one is about how we understand the current system while the others are about more practical means of worker's asserting and defending themselves.



Agreed. If you want to debate pro-capitalist economists using LTV, feel free. If you want to debate them using other theories, feel free as well.

However, I'd prefer to deal with those that are already on "our side" - what do we do then? Let's say "we" have already agreed that murder or rape is wrong. What are we going to do about murderers and rapists? I personally would not waste time debating them in philosophical forums. Instead I would prefer to discuss the best ways to end the murders and the rapes.

Feel free to continue to debate the murderers and the rapists if you want, but at some point I just see it as a distraction from the actual goal.

[Jimmie Higgins]

Agreed. If you want to debate pro-capitalist economists using LTV, feel free. If you want to debate them using other theories, feel free as well.

However, I'd prefer to deal with those that are already on "our side" - what do we do then? Let's say "we" have already agreed that murder or rape is wrong. What are we going to do about murderers and rapists? I personally would not waste time debating them in philosophical forums. Instead I would prefer to discuss the best ways to end the murders and the rapes.

Feel free to continue to debate the murderers and the rapists if you want, but at some point I just see it as a distraction from the actual goal.Having a useful theory should not be simply for idle debates. As in the Marx quote I used, people who are in the worker's movement can have other theories or ideas about capitalism that lead to different practical conclusions. If people believe that capitalist's exploitation is mearly "theft" or "gouging" then they will likely be confused if capitalists do grant reforms (as in the German Socialists who argued that their sucess at winning reforms and economic struggles meant that capitalism could be electorially reformed and turned into socialism). Alternately like the guy Marx was debating in that quote, having a liberal economic view of capitalism (even if you are morally against it) leads to conclusions that if worker's strike, then capitalists just raise prices which then hurts workers and so strikes should not be supported.

The people on "our side" workers who want to fight, will want and need useful and clarifying theories to aid them. If the LTV is useless or detramental to this, then it needs to be thrown away or re-worked. I do find it much more useful and clarifying than other views I've come across and I think it helps inform practice but I'm open to other arguments and explainations. However, I don't think "we don't need it" is actually an alternative, it seems to counterpose a moral understanding of capitalism to a theorhetical understanding of capitalism. Also (and I don't think you are trying to make this point) sometimes when people argue that theory and practice are totally seperate seems to imply that workers don't really consider things but just react to things, which I don't think is true.

[cyu]

a liberal economic view of capitalism leads to conclusions that if worker's strike, then capitalists just raise prices which then hurts workers and so strikes should not be supported.


As mentioned before, I don't support strikes for a different reason - I'd prefer if employees assumed control of their workplace instead of leaving their workplace - and if the local media attempts to broadcast pro-capitalist propaganda, then assume control of the local media outlet as well. Merely a difference in tactics from the anarchist point of view ;)

Even if you didn't feel like justifying your actions using LTV after you've established community control of the local media, you could just as easily justify your actions in terms of democracy, self-determination, or freedom from domination and oppression.