How important is the labor theory of value to communist doctrine? [Archive]

argeiphontes

16th November 2013, 08:06

Check out Andrew Kliman (http://akliman.squarespace.com/) and his work on the TSSI (Temporal Single-System Interpretation (https://en.wikipedia.org/wiki/TSSI)) model of Marxian economics. I don't buy any claims about what Marx intended since a slightly revised version of Marxian economics is still OK in my book.

I've never taken an Econ course, and I'm just starting to probe the depths of Marxian economics (https://kapitalism101.wordpress.com/) but I don't think it's important at all. It's part of the critique of capitalism, and socialism is justifiable on its own terms. Personally I advocate market socialism (at least for a long transitional system), and, empirically, worker-managed firms tend to do better than similar capitalist firms, and are more desirable from many angles, "efficiency" being one of them. (n.b. Richard D. Wolff doesn't believe in efficiency, and he has a point--it's a normative construct.)

That being said, the LTV actually has its roots in Adam Smith and David Ricardo, who were champions of capitalism. Furthermore, the LTV is the only one that intuitively makes sense to me. The less labor that goes into a commodity (the more capital intensive production becomes), the lower the Socially Necessary Labor Time (an "average" time), the lower the price. (Price accurately represents value in the aggregate, with individual fluctuations.) I would expect a lower bound for the price that would reflect the installation and maintenance of the machinery and the work of the button pushers. Nothing can be done with absolutely no labor, of course.

Other aspects of Marx's theories seem to be perfectly true, like the falling rate of profit since at least 1965, as reported in a study by Toilette & Douche (https://socialismiscrucial.wordpress.com/2013/09/03/deloittes-comprehensive-study-that-empirically-supports-the-falling-rate-of-profit/). Kliman and, um, that other guy who's name I can never remember but who was an economic adviser on the Mayor of London's team, say something like 1955.

So, Marx is not close to dead. The current crisis seems to be well explained by him. I'm not sure what the Austrian explanation would be, but I guess I'll google it for my own edification...

The important thing to note, like a commentator on Krugman's blog mentioned today, is that the economy hasn't recovered because capitalists have not been willing to suffer through the devaluation of capital necessary to increase ROA, as happened during the Great Depression and WWII (literal destruction of capital). Corporations are sitting on piles of cash with no where to put it, to this day I would assume.

Anyway, I'm babbling, so I'll stop now, but I never get to discuss economics (even though my roommate has a Master's in it) and had a few beers...

Creative Destruction

16th November 2013, 08:09

If you're a Marxist, it's key to understanding the process of commodity production under capitalism. It's an objective tool to determine how commodities achieve value and how labor is center to that value. It doesn't really contain judgements as to the process itself -- that is, it doesn't critique the capitalist system itself and an argument for communism isn't necessary for it to work. Rather, Marx uses his LTV as a basis to explain what he has pointed out to be exploitation of the worker. But would an LTV analysis necessarily lead to communism? I don't think so.

argeiphontes

16th November 2013, 08:24

I don't think proffering value to commodities is limited to human labor. Contrary to Marx and Ricardo, I think machines proffer value as well. I detail this in the paper "Automation Won't Save Capitalism" at risparty.org.

You say, "...machines produce more value than the value of their cost..." but how do you know this to be true? I'm not being argumentative here, just asking, because I've been trying to think of a "thought experiment" along these lines but am drawing a complete blank. Maybe it would just be exploitation of the value of the labor involved in maintaining and operating the machine?

Say I just set my computer and printer to print out copies of Marx's Capital and went away for a while. What value would the copies have? It's hard to think of what it would be, since I would have to expend some labor to realize this value in exchange by collating them and offering them for sale on the market, not to mention pushing the Print button in LibreOffice.

What if I tried to rent the air in my apartment to "breathers" or something? That's funny but it's not a good thought experiment either because air is not a commodity. ;)

Maybe MP3s are a good example, because the labor involved in copying them is very close to zero or is often handled by the "customer" ("Wanna copy my files, sure, here's my player.") kind of like pizza in a take-out joint. Then again, just because people can take for free doesn't mean the goods have no value, since they are often willing to pay the artists directly.

Economics is hard... ;)

edit: Oh! The work of self-replicating machines might have no value. Or would it? Damn it.

argeiphontes

16th November 2013, 08:43

Actually, though, I should probably just read Capital. Other than the stupid examples I tried to present (the reason there are no free commodities is because something that requires no labor is not a commodity anymore so it's a contradiction in terms; the work of self-replicating robots would no longer be a commodity), the LTV makes perfect sense to me.

Tim Redd

17th November 2013, 06:38

You say, "...machines produce more value than the value of their cost..." but how do you know this to be true? I'm not being argumentative here, just asking, because I've been trying to think of a "thought experiment" along these lines but am drawing a complete blank. Maybe it would just be exploitation of the value of the labor involved in maintaining and operating the machine?

Either machines produce more value just as human labor does or the machine passes on only a portion of its cost of production into each commodity it creates. But if the latter is true about machines then it would seem to be true about human labor as well. So I disagree with Marx and Ricardo that somehow human labor is magically different from machine labor. It doesn't seem plausible that if both humans and machines can transform objects to create commodities, that only humans can add surplus value to a commodity. That is my basic point.

I'm still trying to determine if both humans and machines add surplus value beyond what it costs to produce them to a commodity as Marx and Ricardo claim, or conversely if both humans and machines simply add a portion of what it cost to produce either of them. In the first case capitalist profits come from surplus value. However in the case where humans and machines simply add a portion of what it cost to produce either of them, capitalist profits come from being tacked on to whatever were the cost to produce humans or machines. Frankly I'm strongly favoring this last view of the nature of commodity production.

I tend to think that Marx was influenced by a desire to justify revolution when he promoted the concept that workers create surplus value in a commodity that the capitalists wrongly appropriate for themselves. In Capital volume 3 Marx pointed out that in many if not most cases, humans were basically appendages to machines in the production process.

I don't think we need to justify revolution on the basis of the working class being exploited in this way. Rather revolution is required because capitalist control of the means of production leads to crisis and their private ownership of the means of production conflicts with the broad progressive needs of humanity which the means of production should be serving. There is the social need to eliminate all exploitation and oppression, which Lenin proclaims as the a key goal of communism in "What is To Be Done?" and this is a million times more difficult if the means of production are used to realize profits as they are in a capitalist society.

Tim Redd

17th November 2013, 06:42

Apology, still learning how to use the new mobile app so I had to delete a series of accidental posts.

Tim Redd

17th November 2013, 06:52

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Tim Redd

17th November 2013, 06:52

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Tim Redd

17th November 2013, 06:53

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Tim Redd

17th November 2013, 06:55

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Tim Redd

17th November 2013, 07:29

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liberlict

18th November 2013, 00:16

Doctrine is a loaded word. If you want to know what it is and why it is important then you should take the time to read Capital.

I've read Capital, more or less. It seems to me Karl realized LTV was wrong between the first and third editions, which is why he invented the theory of commodity fetishism, to explain why commodities don't exchange at their labor values.

Basically it says that commodities would exchange at labor values if it wasn't for capitalism corrupting humans' attitudes towards things.

argeiphontes

18th November 2013, 00:36

The explanation that I've heard is that prices only reflect value in the aggregate. The kapitalism101 blog I linked to earlier seems to be a good layman's introduction to Marxian economics. Both the TSSI and Simultaneous Single System interpretations mentioned in the paper linked below are able to replicate Marx's theoretical results that Total Price = Total Value and Total Profit = Total Surplus - Value.

So I disagree with Marx and Ricardo that somehow human labor is magically different from machine labor. It doesn't seem plausible that if both humans and machines can transform objects to create commodities, that only humans can add surplus value to a commodity.

It could still be (empirically?) true that Marx is right. Machines are paid back through depreciation, too. (Adding to prices but not values.)

Last night I found a good paper that's nontechnical that goes into some of this and has a nice table showing how the TSSI overcomes refutations of various parts of Marxian econ, including all of Marx's value theory:

http://akliman.squarespace.com/writings/Value%20in%20Process%20web.doc

I also found out why Kliman made the joke of not working on Piero's farm no more. Ironically, the paper includes the example of self-replicating machines I suggested.

argeiphontes

18th November 2013, 01:22

Basically it says that commodities would exchange at labor values if it wasn't for capitalism corrupting humans' attitudes towards things.

Prices sort of revolve around the value, like a graph with a bunch of ups and downs has a line of best fit. I think your answer is in this 20-minute video (https://www.youtube.com/watch?v=UqOtQM8PCvA) on Price and Value.

Yeah, so divergence between price and value is the way that labor (and investment) are apportioned in the economy (supply and demand). So if something sells for more than its value, it's commanding more labor-time in exchange than the labor-time that went into it, and more labor will be apportioned to its production, driving the price down eventually.

Tim Redd

18th November 2013, 17:20

Prices sort of revolve around the value, like a graph with a bunch of ups and downs has a line of best fit.

Marx points out many places in Capital that probably the biggest thing that makes price swing around value is supply and demand.

Guerillero

19th November 2013, 18:23

I ask myself if work has a really important value. There are two things which have to be fulfilled for a person: achieving the ressources to live and to live. So if technological development is advanced, the first fact should be fulfilled. Work is there to abolish it not to create new work which has no sense. The second fact is individual and might include the appreciation of work, but can only take place when property is devastated. Voluntary work will only be there if constraints and property are removed, otherwise they have to provide all the other people with what they need, life needs no basic conditions. Then life can take place in an equal way, together with nature.

Creative Destruction

19th November 2013, 19:03

I've read Capital, more or less. It seems to me Karl realized LTV was wrong between the first and third editions, which is why he invented the theory of commodity fetishism, to explain why commodities don't exchange at their labor values.

Basically it says that commodities would exchange at labor values if it wasn't for capitalism corrupting humans' attitudes towards things.

I don't think you understand the LTV or commodity fetishism. The value of the commodity is separate from its price. The pricing regime of the commodity is made up of several factors.

Despite the pricing regime, the commodity still retains its exchange value, though, which is the value of a commodity in relation to other commodities. Something that takes 2 hours of socially necessary labor time to produce is equal in value to other commodities that take 2 hours of socially necessary labor time to produce.

liberlict

20th November 2013, 05:47

I don't think proffering value to commodities is limited to human labor. Contrary to Marx and Ricardo, I think machines proffer value as well. I detail this in the paper "Automation Won't Save Capitalism" at risparty.org.

Machines produce value, but the machines themselves can be valued for the labor that it took to build the machine, cant it?

The Jay

20th November 2013, 05:53

Machines produce value, but the machines themselves can be valued for the labor that it took to build the machine, cant it?

No, machines are used to produce value. They do not produce value themselves. There is a reason that machines are called 'dead labor'. The thing about machines is that they are used to try to produce a commodity per factory in less an average time than the total average time per laborer in the field of that commodity's production in the market. This enables the capitalist to sell the item for slightly under the average amount of money the item would normally cost without that particular innovation. They do this because that innovation would save them more money per item in labor costs but also attract more sales, returning more of their investment than their competitors.

liberlict

20th November 2013, 06:02

I don't think proffering value to commodities is limited to human labor. Contrary to Marx and Ricardo, I think machines proffer value as well. I detail this in the paper "Automation Won't Save Capitalism" at risparty.org.

The thing is exploitation must happen even under communism: Marx says in Critique of the Gotha Program that commodities must be set aside for those who are unable to produce - the weak, infirm etc. In other words welfare. Where else is this going to come from other than the able laborers?

"from each according to his ability, to each according to his needs" basically means that the the weak exploit the strong, because the least productive get rewarded the same as the most productive.

Conscript

20th November 2013, 14:40

The thing is exploitation must happen even under communism: Marx says in Critique of the Gotha Program that commodities must be set aside for those who are unable to produce - the weak, infirm etc. In other words welfare. Where else is this going to come from other than the able laborers?

"from each according to his ability, to each according to his needs" basically means that the the weak exploit the strong, because the least productive get rewarded the same as the most productive.

That's not really exploitation, nobody is accumulating capital. The point of socialist society is produce an abundance of use values for all not just who can afford it, however Marx already realized how something called 'bourgeois right' needs to be enforced in situations of scarcity. You need to read the rest of gotha, it's in there.

I don't see this as any more exploitive than following Marx's recommendation to extract some surplus value to afford maintenance, disaster relief, and expansion of the means of production.

"From each according to his ability, to each according to his needs" describes communism, a system of abundance and free access. Only in socialism, which endures scarcity', is this 'welfare' even remotely an issue.

argeiphontes

20th November 2013, 18:29

The thing is exploitation must happen even under communism: Marx says in Critique of the Gotha Program that commodities must be set aside for those who are unable to produce - the weak, infirm etc. In other words welfare. Where else is this going to come from other than the able laborers?

"from each according to his ability, to each according to his needs" basically means that the the weak exploit the strong, because the least productive get rewarded the same as the most productive.

Except that you're using exploitation in a normative sense. In capitalism (and other modes of poduction), exploitation is the systemic feature that causes workers to receive less than the value of their work, and that surplus being appropriated by the capitalist class.

In socialism/communism, workers (everyone) are free to dispense their surplus how they see fit, including a social safety net. That happens at the distribution stage of social surplus, not at the production/appropriation stage, where systemic exploitation takes place in capitalism. You could have a communist system that didn't have this feature, though it would be unethical IMO, which is a different question.

Tim Redd

20th November 2013, 19:44

Machines produce value, but the machines themselves can be valued for the labor that it took to build the machine, cant it?

Yes, just as humans may produce value beyond what it costs in labor power to hire them, machines have a cost of purchase. Again I tend to think neither humans or machines produce value. Think they pass on respectively the cost of the labor power to hire them or what it costs to purchase into the products piecemeal per product reach creates.

Paul Cockshott

20th November 2013, 21:24

Paul Cockshott

20th November 2013, 21:30

I think the title pretty much explained my question. I'm interested in this now because I have been reading a lot about labor theories of value recently. I think it's moribund myself, but I've noticed a lot of communists do as well. I haven't much got into looking at the proposal of subjective theories of value, though, and how they operate in communist schema; Any explanations or reading suggestions would be appreciated. I've been told to read David Harvey, which I will do. Generally I would just be interested in anything you have to say on the topic. Thanks!

It is far from Moribund, there is a multiplicity of econometric studies demonstrating that the labour theory of value is accurate in its predictions about the price structure. The vector of value of industrial outputs for all industries - down to the 4 digit BEA classification correlates at over 95% to the labour contents of their outputs. Look at the work of Frolich, Zachariah or Cottrell for example (reality.gn.apc.org/econ/Zachariah_LabourValue.pdf‎)

Paul Cockshott

20th November 2013, 21:32

Check out www.tu-chemnitz.de/wirtschaft/vwl2/downloads/paper/.../deviation.pdf‎

Tim Redd

21st November 2013, 03:29

The thing is exploitation must happen even under communism: Marx says in Critique of the Gotha Program that commodities must be set aside for those who are unable to produce - the weak, infirm etc. In other words welfare. Where else is this going to come from other than the able laborers?

It's only exploitation if you think that the non 1% helping each other is exploitation. Even under capitalism the non 1% are willing to help the elderly, weak, infirm, etc. What are you saying is a typical right wing, conservative, Repug-lican view of the world. It's the exact same thing Rand Paul and Ted Cruze are spouting. Socialism and communism are about moving away from the "I got mine, to hell with you" bourgeois mentality and morality.

"from each according to his ability, to each according to his needs" basically means that the the weak exploit the strong, because the least productive get rewarded the same as the most productive.Again you are dogging the central economic tenet of communism as some kind of tyranny when in fact what you are favoring is selfish bourgeois ideology. The very kind thing socialist revolution is meant to bury.

Tim Redd

23rd November 2013, 01:36

It is far from Moribund, there is a multiplicity of econometric studies demonstrating that the labour theory of value is accurate in its predictions about the price structure. The vector of value of industrial outputs for all industries - down to the 4 digit BEA classification correlates at over 95% to the labour contents of their outputs. Look at the work of Frolich, Zachariah or Cottrell for example (reality.gn.apc.org/econ/Zachariah_LabourValue.pdf‎)

I think the BEA input/output chart blows the concept of surplus value out of the water. That charts shows that the costs going into an economic node (locus, firm, etc.) equals the prices coming out of it. Whereas if Marx's concept of surplus value was true then prices coming out of the node would be higher due to the addition of surplus value happening inside the node. (The factory nodes in this case.)

edit: well I guess something is amiss with the chart because if prices out of a node equals prices in then where is the profit?

Baseball

24th November 2013, 05:03

There is certainly a surplus product under communism but it is not exploitation because the surplus is not privately appropriated, instead an income tax is levied to support those unable to work. The tax can be democratically decided upon.

Well, it most certainly cannot be claimed that "there is certainly a surplus product under communism" any more so than such a claim can be made about capitalism. Profit i.e. "surplus" does not come about by magic; it has to be its objective of production, it has to be worked at.
Saying communist production for profit is more ethical or not exploitive because it goes to building hospitals or community centers rather than to some fatcat's yacht is completely beside the point. Once production for profit is agreed to be the objective, then production has to be lined and directed certain ways. And those ways simply do not square with what communism claims as its objectives.

argeiphontes

26th November 2013, 07:26

Saying communist production for profit is more ethical or not exploitive because it goes to building hospitals or community centers rather than to some fatcat's yacht is completely beside the point. Once production for profit is agreed to be the objective, then production has to be lined and directed certain ways. And those ways simply do not square with what communism claims as its objectives.

The difference is who appropriates and distributes the surplus, and what the relations of that distribution are (authoritarian/capitalist vs. democratic/communist). Are you saying it's possible to exploit yourself?

Also, profit isn't exactly the same as surplus, but let's assume it is for the sake of argument. Except that pure communism has no money or markets, so it's necessary to think in terms of distribution of actual goods.

Any society that has a division of labor produces some surplus, but not necessarily profit. In capitalism, a profit may not be made by everyone under all circumstances, i.e. on an individual basis, but it must be made or no capitalist would undertake to be a capitalist, and capitalism wouldn't exist.

Hope that helps.

Paul Cockshott

26th November 2013, 20:48

Well, it most certainly cannot be claimed that "there is certainly a surplus product under communism" any more so than such a claim can be made about capitalism. Profit i.e. "surplus" does not come about by magic; it has to be its objective of production, it has to be worked at.
Saying communist production for profit is more ethical or not exploitive because it goes to building hospitals or community centers rather than to some fatcat's yacht is completely beside the point. Once production for profit is agreed to be the objective, then production has to be lined and directed certain ways. And those ways simply do not square with what communism claims as its objectives.
A surplus product is not the same as profit. So long as more is produced than is needed for the reproduction of the direct producers there is a surplus. If some of this goes towards those unable to work, and some to the improvement of productive resources in a communist country, that does not mean that you have profits.

Slavic

26th November 2013, 20:56

A surplus product is not the same as profit. So long as more is produced than is needed for the reproduction of the direct producers there is a surplus. If some of this goes towards those unable to work, and some to the improvement of productive resources in a communist country, that does not mean that you have profits.

Thanks for explaining it that way, makes a lot of things more clearer for me. Was under the assumption that a socialist society would eliminate surplus value, but could not wrap my head around how commodities would become abundant without the existence of surplus value.

Baseball

27th November 2013, 03:59

A surplus product is not the same as profit. So long as more is produced than is needed for the reproduction of the direct producers there is a surplus. If some of this goes towards those unable to work, and some to the improvement of productive resources in a communist country, that does not mean that you have profits.

Yes, it does. That is called a profit. There is no substantive difference in what you have described.

Baseball

27th November 2013, 04:12

The difference is who appropriates and distributes the surplus, and what the relations of that distribution are (authoritarian/capitalist vs. democratic/communist). Are you saying it's possible to exploit yourself?

That is entirely beside the point. There is no substantive difference.

Any society that has a division of labor produces some surplus, but not necessarily profit. In capitalism, a profit may not be made by everyone under all circumstances, i.e. on an individual basis, but it must be made or no capitalist would undertake to be a capitalist, and capitalism wouldn't exist.

It is certainly true that capitalists need to make profit, else they cease being capitalists, and eventually would cease to exist.

But it is also apparently true that the socialist community needs to produce "surplus" else it cannot distribute it to build hospitals and support those who cannot work. Should the socialist system be unable to do so, would socialism "cease to exist"?

#FF0000

27th November 2013, 04:13

Yes, it does. That is called a profit. There is no substantive difference in what you have described.

No. Profit is what's left over after all of the costs, including the costs of reinvesting into and maintaining the enterprise, are taken into account.

Baseball

27th November 2013, 04:23

No. Profit is what's left over after all of the costs, including the costs of reinvesting into and maintaining the enterprise, are taken into account.

Also called "surplus" A socialist community will have costs to production as well.

argeiphontes

28th November 2013, 04:03

The difference is who appropriates and distributes the surplus, and what the relations of that distribution are (authoritarian/capitalist vs. democratic/communist). Are you saying it's possible to exploit yourself?

That is entirely beside the point. There is no substantive difference.

Except that that's the whole point of communism/socialism. The elimination of appropriation of surplus by another class, and a return to its appropriation by the producers themselves, to be democratically and collectively managed.

(They can then do what they want with it, including giving some of it to those who aren't themselves able to produce.)

If you don't understand capitalism or communism (or feudalism, etc. for that matter) in terms of the social relations of production, then how can you claim to understand them at all? There's certainly a substantive difference to the people involved.

The Garbage Disposal Unit

28th November 2013, 04:28

Yeahokcallmewhenyourcomputermakesababycomputer.
But, for real, machines don't create value in the same way people do, since technology, in the proper sense of technique, represents moving labour around, not doing away with it. You have to look at these things in their social context (ie who makes the parts, who mines the fuel, who upkeeps the power grid, who delivers the machines, etc.), and not in isolation: the box cutter I used every day at work didn't emerge ex nihilo but represented dead labour in-and-of-itself.
Variable capital (you know, people) represents a certain degree of dead labour too, but also represent a force that fundamentally resists marketization, since, you know, the 24/7 affective reproductive labour which is necessary for constituting humans isn't the sort of thing you can really buy/sell (the proliferation of marketized domestic labour is effecting it, but not really changing it fundamentally).

Baseball

28th November 2013, 04:30

Except that that's the whole point of communism/socialism. The elimination of appropriation of surplus by another class, and a return to its appropriation by the producers themselves, to be democratically and collectively managed.

(They can then do what they want with it, including giving some of it to those who aren't themselves able to produce.)

If you don't understand capitalism or communism (or feudalism, etc. for that matter) in terms of the social relations of production, then how can you claim to understand them at all? There's certainly a substantive difference to the people involved.

Its called a profit. How it is managed and directed is beside the point.
The objective would remain to produce in order to produce a profit.

Paul Cockshott

4th December 2013, 22:56

Its called a profit. How it is managed and directed is beside the point.
The objective would remain to produce in order to produce a profit.

No it is called tax.

RedMaterialist

5th December 2013, 01:24

Its called a profit. How it is managed and directed is beside the point.
The objective would remain to produce in order to produce a profit.

It is the objective of a capitalist to produce in order to make a profit, by not paying someone for the work they do. They accomplish this by producing only for the purpose of selling. It's a modern form of slavery, aka wage-slavery. Socialists, on the other hand, cooperate for the benefit of society by producing goods for their utility to society, not in order to make a profit.

A capitalist, in fact, cannot make a profit except by paying a worker a wage which is less than the value the worker produces. All value produced under socialism will remain the property of the workers and those who need help; society keeps the 'use-value,' not the capitalist. This is why a capitalist is only interested in exchange value and never use value.

Listen to a commodity speak: Our use value may be a thing that interests men. It is no part of us as objects. What, however, does belong to us as objects, is our value. Our natural intercourse as commodities proves it. In the eyes of each other we are nothing but exchange values. (Marx, Capital, Vol I, Part 4.)

A socialist is only interested in use values.

liberlict

6th December 2013, 04:10

The difference is who appropriates and distributes the surplus.

O.K, but this is not going to lead to an egalitarian society. Unless you believe all productive laborers are voluntarily going to 'appropriate' the fruits of their labor to the less able. You're still going to have a class society. I don't see what will have been achieved.

liberlict

6th December 2013, 04:15

Except that you're using exploitation in a normative sense. In capitalism (and other modes of poduction), exploitation is the systemic feature that causes workers to receive less than the value of their work, and that surplus being appropriated by the capitalist class.

In socialism/communism, workers (everyone) are free to dispense their surplus how they see fit, including a social safety net.

Really? So if the most productive decide they want to hoard all their produce and not share it, they are allowed to?

Remus Bleys

6th December 2013, 04:20

argeiphontes

6th December 2013, 06:38

O.K, but this is not going to lead to an egalitarian society. Unless you believe all productive laborers are voluntarily going to 'appropriate' the fruits of their labor to the less able. You're still going to have a class society. I don't see what will have been achieved.

Speaking for the market socialist idea, perfect equality isn't required. 'Class' is a relationship to the means of production, not just having more money. In capitalism, such a person or group can acquire means of production and start hiring labor to work it, but in market socialism they can't. For someone to be rich, their work would have to produce lots of value, which usually isn't possible for a single person. But if it is, it's unclear why they're not entitled to the full value of it like everyone else. No doubt, somebody will get rich for whatever reason, but it doesn't destroy the system because they have the same relation to capital as everyone else.

To grow a firm, you have to add people, and every person you add to a firm gets a share of the profits. The firm produces more, so it balances out, and there is downward pressure on firm size. There's no requirement for equality within any firm, but everything is subject to democratic control. (Mondragon has a 1:4 maximum dispartity right now, which was voted in by the members.) There's still a labor market, so people don't have to just accept any working conditions. Markets will help market socialism be egalitarian, since Marx described a tendency for rates of profit to equalize.

There's a tax on the capital of firms, so that money can be used for whatever purpose, including social welfare or a guaranteed basic income scheme, just like taxes in any democracy.

Of course, market socialism isn't communism, so none of this could work in real life.

liberlict

17th December 2013, 08:41

Speaking for the market socialist idea, perfect equality isn't required. 'Class' is a relationship to the means of production, not just having more money. In capitalism, such a person or group can acquire means of production and start hiring labor to work it, but in market socialism they can't. For someone to be rich, their work would have to produce lots of value, which usually isn't possible for a single person. But if it is, it's unclear why they're not entitled to the full value of it like everyone else. No doubt, somebody will get rich for whatever reason, but it doesn't destroy the system because they have the same relation to capital as everyone else.

To grow a firm, you have to add people, and every person you add to a firm gets a share of the profits. The firm produces more, so it balances out, and there is downward pressure on firm size. There's no requirement for equality within any firm, but everything is subject to democratic control. (Mondragon has a 1:4 maximum dispartity right now, which was voted in by the members.) There's still a labor market, so people don't have to just accept any working conditions. Markets will help market socialism be egalitarian, since Marx described a tendency for rates of profit to equalize.

There's a tax on the capital of firms, so that money can be used for whatever purpose, including social welfare or a guaranteed basic income scheme, just like taxes in any democracy.

Of course, market socialism isn't communism, so none of this could work in real life.

Yeah, market socialism doesn't suffer from logistical problems and fantasies associated with 'pure' socialism'. It's a completely different kettle of fish. I'm something of a market socialist myself.

liberlict

17th December 2013, 09:01

That's not really exploitation, nobody is accumulating capital. The point of socialist society is produce an abundance of use values for all not just who can afford it, however Marx already realized how something called 'bourgeois right' needs to be enforced in situations of scarcity. You need to read the rest of gotha, it's in there.

I don't see this as any more exploitive than following Marx's recommendation to extract some surplus value to afford maintenance, disaster relief, and expansion of the means of production.

"From each according to his ability, to each according to his needs" describes communism, a system of abundance and free access. Only in socialism, which endures scarcity', is this 'welfare' even remotely an issue.

I thought I was defining 'exploitation' the same way communists define it--workers not receiving the full value of the labor. Where this 'stolen' value goes seems to me to be a different issue altogether.

Queen Mab

17th December 2013, 17:07

I thought I was defining 'exploitation' the same way communists define it--workers not receiving the full value of the labor. Where this 'stolen' value goes seems to me to be a different issue altogether.

The labour theory of value is a critique of political economy, not a universal law. There are no commodities in a communist society.

liberlict

17th December 2013, 19:45

The labour theory of value is a critique of political economy, not a universal law. There are no commodities in a communist society.

The things that get produced by workers, you can call that what you want, makes no difference.

Ledur

6th January 2014, 17:56

I don't think proffering value to commodities is limited to human labor. Contrary to Marx and Ricardo, I think machines proffer value as well. I detail this in the paper "Automation Won't Save Capitalism" at risparty.org.

From Wikipedia (http://en.wikipedia.org/wiki/Labor_theory_of_value):

When speaking in terms of a labor theory of value, value, without any qualifying adjective should theoretically refer to the amount of labor necessary to the production of a marketable commodity, including the labor necessary to the development of any real capital employed in the production.

Yes, machines are a part of the 'value'.

Red Shaker

7th January 2014, 03:23

The labor theory of value says that the value of a commodity is determined by the socially necessary labor time used to produce it. The labor time needed to produce a finished product has many components. Think about a wood table. The tree has to be grown. It has to be made into lumber. The lumber has to be formed into table parts and assembled. The table has to be painted. A worker added value at each step in this process. But value also came from the ax that cut the tree down, the saw at the mill where the lumber was made, and the lathe that was used to form the lumber into table parts. The value of the table is the sum total of the value of all the commodities used up in the process of producing the final product. The value of the ax, the saw and the lathe are determined by the labor time it took to produce them. If the ax took 180 minutes to produce and it can cut down 180 trees before it breaks then it transfers one minute of value to each tree it cuts down.

liberlict

7th January 2014, 04:49

Ledur

7th January 2014, 12:53

How is labor valued when the value is labor itself?

You mean, when someone is working without any tool?

What about services that don't actually produce anything, but satisfy some want or need?

Cleansing, for example? They have their value too, calculated in the same fashion.

Comrade #138672

7th January 2014, 13:07

Communism without LTV is impotent. It is utopian socialism at best. LTV is absolutely necessary to understand capitalism and socialism in a scientific way.

I don't think proffering value to commodities is limited to human labor. Contrary to Marx and Ricardo, I think machines proffer value as well. I detail this in the paper "Automation Won't Save Capitalism" at risparty.org.Machines embody previous (dead) labor, i.e. constant capital. When machines are used in the production process, they transfer a part of their value to the produced commodities, by their wear and tear.

If you're a Marxist, it's key to understanding the process of commodity production under capitalism. It's an objective tool to determine how commodities achieve value and how labor is center to that value. It doesn't really contain judgements as to the process itself -- that is, it doesn't critique the capitalist system itself and an argument for communism isn't necessary for it to work. Rather, Marx uses his LTV as a basis to explain what he has pointed out to be exploitation of the worker. But would an LTV analysis necessarily lead to communism? I don't think so.Marx also used LTV to demonstrate how capitalism is inevitably going to collapse (the tendency of the rate of profit to fall), which must bring about socialism.

Yeah we all understand what it is. We're wondering if it's correct or not.
How is labor valued when the value is labor itself?That is even easier (although highly unrealistic in present-day capitalism). The value of a commodity is W = c + L, where c is the constant capital and L is the performed labor. When no constant capital is consumed, just assume c = 0. Thus, W = L, which means you can talk directly about the raw socially necessary labor-time without having to deal with c.

What about services that don't actually produce anything, but satisfy some want or need?You have to conceive of services as services producing value.

Niccolo

7th January 2014, 14:33

Emphasis added is mine.

The Labour Theory of Value is central to an understanding of the economics of capitalism because capitalism is commodity production par excellence, and the Labour Theory of Value basically explains what fixes the value of a commodity. At one time there were rival theories of value, but now academic economics tends to deny the need for such a theory.

All you need, they say, is a theory of price. We shall see, however, that prices cannot be explained without recourse to the concept of value. First, some definitions. Wealth is anything useful produced by human labour from materials found in nature. In capitalist society, Marx said, wealth takes the form of an immense accumulation of commodities. A commodity is an article of wealth produced for the purpose of being exchanged for other articles of wealth. Thus commodity production is an economic system where wealth is produced for sale, for the market. In its simple forms it exists only on the outskirts of non-commodity producing societies where wealth is produced directly for use, either by the producers for themselves or by a subject class for their masters. In the beginning commodities were bartered, but as commodity-production developed one commodity came to assume a special role: it became the universal equivalent, for which all commodities could be exchanged and vice versa; it became, in short, money. Here we have a problem for the science of political economy: what determines the proportions in which commodities exchange one for the other?

[. . .]

One conclusion we can draw from the fact that commodities consistently exchange for one another in fixed ratios is that all commodities must share some common characteristic to a greater or lesser degree. What? As articles of wealth all commodities share two characteristics: they are useful and they are products of human labour. Which of these could provide a standard? Some have suggested usefulness (or utility), but the trouble here is that the same article can be useful to a greater or lesser degree to a different person. Usefulness is a personal matter: a personal relation between the commodity and its consumer. So utility would be a changing, subjective standard and could not explain why commodities consistently exchange at stable ratios. We are thus left with commodities as products of human labour.

[. . .]

But how does labour determine the value of a commodity? The value of a commodity, said Marx, is determined by the amount of socially necessary labour contained in it or, what is the same thing, by the amount of socially necessary labour-time spent in producing it from start to finish. Note that the Labour Theory of Value does not say that the value of a commodity is determined by the actual amount of labour contained in it. That would mean that an inefficient worker would create more value than an efficient worker. By socially necessary is meant the amount needed to produce, and reproduce, a commodity under average working conditions, e.g. average productivity, average intensity of labour.

[. . .]

Accepting this as an empirical observation leads us to looking at some ratios and whatnot which hint at some pretty devastating inherent problems with capitalism.

Marx isolated the capital invested in hiring the workers because, the only source of new value being the exercise of labour power, this was the part of the capital which increased to provide free for the capitalist a profit, or surplus value, of in this case £20,000. Marx called this part the variable capital (v). The other part invested in the factory, machines, etc. was just as essential to production but its value was only transferred to the final product without any change in its size. Which was why Marx called it constant capital (cc). There are various relations between total capital (C) and its components:

s/C or s(cc + v) is the rate of profit
s/v is the rate of surplus value
cc/v is the organic composition of capital

The organic composition of capital expresses in value terms the technical relationship between the productive apparatus and the number of workers needed to operate it, what academic economists would call the degree of capital intensity.

As can be logically seen, with capital intensity increasing, so does the organic composition of capital, meaning the rate of profit falls as the ratio of dead labour to living labour increases, ceteris paribus.

Red Shaker

7th January 2014, 15:30

Ledur

7th January 2014, 23:43

A service is a commodity and its value is the socially necessary time to produce it. The value of labor for the purpose of exchange is expressed in the money commodity which in turn is related to the value of gold. The value of gold is the socially necessary time to produce it. For example if it takes one hour of labor time to produce an ounce of gold it can be exchanged for some other commodity that can be produced by one hour of labor time.

Oh here comes my greatest doubt about LTV.

Would raw materials have the same way of calculation?

Raw materials have a price, adjusted partially by supply and demand, and partially arbitrarily (artificial scarcity - more profits).

Today a oil barrel costs around 100 US$, in a highly lucrative activity... that is, workers are VERY "exploited" (Marxian term)... surplus value in this activity is hundreds of times their wage.

If we use LTV, wouldn't oil be a small part of the "value" it is today, thus making it very cheap?

Another (simpler) example, a worker takes an hour to mine a diamond. Suppose the tools to mine a diamond have a not-so-high value. With one day of my work, could I take this diamond?

Comrade #138672

8th January 2014, 16:52

Oh here comes my greatest doubt about LTV.

Would raw materials have the same way of calculation? Yes. Why not?

Raw materials have a price, adjusted partially by supply and demand, and partially arbitrarily (artificial scarcity - more profits).

Today a oil barrel costs around 100 US$, in a highly lucrative activity... that is, workers are VERY "exploited" (Marxian term)... surplus value in this activity is hundreds of times their wage.

If we use LTV, wouldn't oil be a small part of the "value" it is today, thus making it very cheap? No, because the value of oil does not depend on the wages, but on its socially necessary labor-time. It means that the rate of exploitation is high.

Another (simpler) example, a worker takes an hour to mine a diamond. Suppose the tools to mine a diamond have a not-so-high value. With one day of my work, could I take this diamond?I do not think that diamonds are mined so easily. In your example, nothing is said about the income of the worker. If we assume that at least one hour is performed by the workers for themselves, and the constant capital is indeed insignificant, then yes, a worker would earn one diamond a day.

Obviously this is not the case. This does not mean that LTV is wrong. It means that your example is highly unrealistic.

Ledur

8th January 2014, 18:03

I meant "buying" instead of "taking" a diamond with one day of my labour, because its value is, for example, 6 labour-hours, after the miners extract them.

All I am trying to say is that prices of raw materials don't reflect reality, they could be "cheaper" under LTV. For example, a gallon of gasoline is US$ 3 - someone on an average job (US$ 12/hour) has to work 15 minutes to buy a gallon of gasoline.

Using LTV, highly productive workers could produce 1 gallon for the value of 1 minute labour-time.

And there's also a recursive loop (my last doubt): if I need to extract 1 barrel of petroleum, using a plastic tool (which uses petrol), how could LTV calculate total labour to extract petroleum?

Comrade #138672

8th January 2014, 18:55

I meant "buying" instead of "taking" a diamond with one day of my labour, because its value is, for example, 6 labour-hours, after the miners extract them.It does not matter. You would still have the equivalent of that diamond in money form.

All I am trying to say is that prices of raw materials don't reflect reality, they could be "cheaper" under LTV. For example, a gallon of gasoline is US$ 3 - someone on an average job (US$ 12/hour) has to work 15 minutes to buy a gallon of gasoline.Prices do reflect value ("reality"). Prices always fluctuate around the real value of commodities. What you describe here is known as the transformation problem.

Using LTV, highly productive workers could produce 1 gallon for the value of 1 minute labour-time.No. Value depends on the socially necessary labor-time, which is based on the average labor-time required to produce a commodity. Highly productive workers would produce more value, while very unproductive workers would produce less value.

And there's also a recursive loop (my last doubt): if I need to extract 1 barrel of petroleum, using a plastic tool (which uses petrol), how could LTV calculate total labour to extract petroleum?Ha. I started a thread about "value loops" about a week ago. Even with "value loops", it is still possible to approach the real value of a commodity.

This is more or less explained here, although not everybody agrees with my reasoning: http://www.revleft.com/vb/value-loops-t186050/index.html

Ledur

8th January 2014, 19:28

Prices do reflect value ("reality"). Prices always fluctuate around the real value of commodities. What you describe here is known as the transformation problem.

Any good read/thread about it?

No. Value depends on the socially necessary labor-time, which is based on the average labor-time required to produce a commodity. Highly productive workers would produce more value, while very unproductive workers would produce less value.

I was talking already about the "average".

If 100 workers produce in a 1 day (5h) 500 items, the value of each item is 1 hour-labour.... if they change the industrial process and can output 1000 items, the new value is 1/2 hour-labour (ignore any changes at other production factors).

Ha. I started a thread about "value loops" about a week ago. Even with "value loops", it is still possible to approach the real value of a commodity.

This is more or less explained here, although not everybody agrees with my reasoning: http://www.revleft.com/vb/value-loops-t186050/index.html

I'll take a look.

Comrade #138672

8th January 2014, 19:54

Any good read/thread about it?Give me a moment.

I was talking already about the "average".

If 100 workers produce in a 1 day (5h) 500 items, the value of each item is 1 hour-labour.... if they change the industrial process and can output 1000 items, the new value is 1/2 hour-labour (ignore any changes at other production factors).Yes, but what about it?

I'll take a look.It is similar to calculating pi. Although pi is theoretically an infinite sequence of decimals, we can still talk about pi as a real thing and use it in many ways. Each subsequent recursion step is less significant than the previous recursion step. This allows us to approach its value in our calculations with a limited number of recursion steps. The same thing goes for "value loops". This does not mean that it is very important. It just means that it is not impossible to calculate it.

Ledur

8th January 2014, 21:11

Yes, but what about it?

If a production process is more productive than the former process (labour/capital intensive), it generates an output with less value.

LTV is a deflactionary system, right? Purchasing power is limited to the sum of all hours all people in the world work, hence more technology-intensive production will generate products with less value than before, and this is the only way to increase relative purchasing power/public fundings.

It is similar to calculating pi. Although pi is theoretically an infinite sequence of decimals, we can still talk about pi as a real thing and use it in many ways. Each subsequent recursion step is less significant than the previous recursion step. This allows us to approach its value in our calculations with a limited number of recursion steps. The same thing goes for "value loops". This does not mean that it is very important. It just means that it is not impossible to calculate it.

I was thinking about it. An arbitrary value (above the actual value) could be used for raw materials only, and 100% of the "profit" could be taxed for a public fund (education/health/research etc).

- If you lower this value, purchasing power increases, but the rate of accumulation of public funds falls.
- and vice-versa.

Lowtech

12th January 2014, 03:48

Theory of value is exactly the right place to start. However some arguments against the LTV exist around what would happen should we leave all other things the same in our current economy and attempted to give labor an objective value.

This is the same as saying the design for a submarine is inefficient with an electric battery, proposing instead to put in an atomic energy based system without redesigning the whole submarine to adequately take advantage of the new source of energy.

without a new prototype designed from the ground up, Engineers would be up in arms, "its all designed to use electricity!"

"the factories are only equipped to build the standard model!"

visionaries that see the potential will make a Frankenstein makeshift prototype that the opposition will point out for it's inadequacies and "obvious" failures.

Where the analogy applies here is that capitalists try to discredit the LTV by extrapolating how our current economics would work with the only change being how labor is valued, not a full redesign of production itself.

Communists seek a full redesign, not the straw man that capitalists attack, and this requires a fundamental change of how value is universally defined.

Economics is only as good as it's definition of value. And how should it be defined?: Economically, value can only exist in the various forms a human can consume it; eat it, use it, wear it or occupy it as a space. Value must also have physical accountability; meaning can you measure it? This is production based on need, which is in contrast to capitalism's production for profit. If you disagree, think about this, the changing price of gas does not change how far you can travel on 1 gallon of gas in your vehicle. Prices are subjective, value is not.

In all actuality, the most vital forms of value are those that are produced for direct consumption, be it food, shelter, electrical infrastructure. These kinds of value have the shortest life cycles, where they are produced then ultimately consumed by an end user. These in particular form a social cost, as the work of the entire civilization goes into the mass production of electricity and other infrastructure. Profit artificially increases this social cost and has no practical basis.

All production for profit creates artificial scarcity (concentration of wealth), however value cannot be produced from thin air, it must come from somewhere, so this artificial scarcity in turn artificially inflates the social cost of all value propagated in our economy; the working majority then must work harder than necessary for the value it needs to survive.

Paul Cockshott

13th January 2014, 10:16

edit: Oh! The work of self-replicating machines might have no value. Or would it? Damn it.

I think the crucial factor is universality. Humans are universal robots in the original sense - Robot = worker in Czech. We are universal workers who can do any task given training. Hence the possibility of abstract labour. There is no abstract labour of oxen, they work, but can only draw cart, ploughs etc. Abstract labour has to be something that can enter into any product.
Now were it possible to build a truely universal automaton, one like the android in Blade Runner, then these would be analogous to humans and human labour would cease to be the standard of value. Capitalists would employ androids instead of us, and would be as willing to dispense with us as they were to dispense with draught animals once steam and petrol came along.

Marxaveli

14th January 2014, 19:39

Call me dogmatic, but I look at LTV as being common sense and universally true. Labor is required to produce all value in society - without labor, society ceases to function entirely. This cannot be said of capital however, proven by the fact society existed long before capital ever did. One doesn't even have to be a Marxist to understand this, it is simple common sense. I mean gold, diamonds, wood, oil, etc all have value but not until they are mined, chopped/cut down, or processed - until then they have no value. How is this done? Labor.

liberlict

22nd January 2014, 03:33

That is even easier (although highly unrealistic in present-day capitalism). The value of a commodity is W = c + L, where c is the constant capital and L is the performed labor. When no constant capital is consumed, just assume c = 0. Thus, W = L, which means you can talk directly about the raw socially necessary labor-time without having to deal with c.

So it's just a time calculation of labour value? I.e., it takes 11 hours to produce a tonne of tomatoes (or whatever)? I can see how this would work in a static economy, where time vouchers are paid based on historical production. But how can it value investment? Say X & Y both have an idea on how to cure cancer? X's idea cures cancer, Y's does not. How do you calculate that?

You have to conceive of services as services producing value.

You don't always know before hand if labour is going to produce value.
Take for example untouched land. Some land has oil under it, some doesn't, but you won't know until you dig it up. How can LTV account for that?

Comrade #138672

22nd January 2014, 17:20

So it's just a time calculation of labour value? I.e., it takes 11 hours to produce a tonne of tomatoes (or whatever)?Yes, based on the socially necessary labor-time.

I can see how this would work in a static economy, where time vouchers are paid based on historical production. But how can it value investment? Say X & Y both have an idea on how to cure cancer? X's idea cures cancer, Y's does not. How do you calculate that?This is more difficult to determine, but I would say that it is still based on the socially necessary labor-time of the scientist to produce the necessary research. You cannot really compare two workers or scientists like that, though. Also, ideas cannot embody value, because they cannot be commodities.

In the long term, the value of the cure for cancer depends only on the labor-time socially necessary to mass-produce it.

You don't always know before hand if labour is going to produce value. Indeed.

Take for example untouched land. Some land has oil under it, some doesn't, but you won't know until you dig it up. How can LTV account for that?The average time it takes to find oil determines the value of that labor, including the cases when oil is sought after without it being found.

liberlict

24th January 2014, 01:52

Yes, based on the socially necessary labor-time.

Yeah but you can't calculate what is socially necessary. Einstein sitting in his room labouring over esoteric math mightn't have seemed socially necessary at the time. It's only looking backwards that we know.

This is more difficult to determine, but I would say that it is still based on the socially necessary labor-time of the scientist to produce the necessary research. You cannot really compare two workers or scientists like that, though. Also, ideas cannot embody value, because they cannot be commodities.

I think Marx answered it by dividing produce into two categories, reproducible ones like tomatoes or boats or whatever. And non-reproducible ones like a cure for cancer or something. Which is perfectly logical.

The average time it takes to find oil determines the value of that labor, including the cases when oil is sought after without it being found.

Ok, that makes sense for oil. But what about simple land. With it's use value just being 'to live on'. Land has no labour value attached to it. It just is. You could evaluate it on the time it takes to find the land perhaps. Or you can treat land in the special case of 'non-reproducible' commodity. Or the time it takes to seek out and settle land. But with all these qualification it seems to me you'd be better off just throwing the theory in the garbage and treating value as subjective.

Lowtech

24th January 2014, 17:26

Yeah but you can't calculate what is socially necessary.

We know quite well what people need. Amounts of water, food, materials for buildings, etc. Building codes are partly an example of establishing "socially" necessary practices. The same is true of Law in general. What you're implying is the only socially necessary things that can be calculated or evaluated are exclusively those pertaining to property and capitalist-friendly.

Einstein sitting in his room labouring over esoteric math mightn't have seemed socially necessary at the time. It's only looking backwards that we know.

An idea itself cannot feed people or itself become a building, etc. therefore it has no economic value. Ideas have importance, they should be shared freely, but not monetized. Whenever anything that has next to no value, that can be freely duplicated, like an idea or digital file for example, is misconstrued to have "value," and monetized, as we do currently in a market environment, capitalists make a monetary gain to the detriment of society fully utilizing actual value propagated within an economy.

Ok, that makes sense for oil. But what about simple land. With it's use value just being 'to live on'. Land has no labour value attached to it. It just is. You could evaluate it on the time it takes to find the land perhaps. Or you can treat land in the special case of 'non-reproducible' commodity. Or the time it takes to seek out and settle land. But with all these qualification it seems to me you'd be better off just throwing the theory in the garbage and treating value as subjective.

why? because you tenaciously hold onto the belief that markets are an axiom of economics?

The changing price of oil in a market does not change the distance you can travel in your vehicle on a gallon of gas. Value is not subjective. However, why one would insist on adhering to a belief system (e.g. neoliberalism) that predisposes you to treat economic value subjectively is a whole separate debate.