Defending the LTOV from libertarians, help!

[Unclebananahead]

I could use some thoughts, opinions and the like from those more familiar with libertarian/Rothbardian/Austrian neo-classical economics and the appropriate responses thereto. I would really appreciate it.

So here's what Mr. Libertarian wrote:


Labor requires knowledge/capital in order to create anything. No matter how hard you work at making something, if you don't know how to make it, there is no production. So yes, your labor theory of value tirade is bullshit. Econ 101. Labor is not the measure of value, subjective preference is. And if someone wants to be paid more based on that, and others are willing to do it, what gives you the moral hubris to think you know better. You're ideas have only harmed the working class and everyone else for generations. Stop perpetuating nice sounding sophisms in order to boost your ego and inadvertently justify a system of corruption, poverty, and war.

What the hell does he mean by "subjective preference"? And how is it that they believe this refutes the LTOV?

[The Garbage Disposal Unit]

Libertarians obviously haven't thought about subjectivity much.
In any case, what I think they're trying to say is that the value of an object is simply that which is ascribed to it by an individual, and that prices on the whole reflect the balance of individual preferences in relation to the economy as a whole. Of course, this appears true if one reduces the economy to, well, ECON 101 and Supply and Demand, as this putz does. Of course, "the market" doesn't simply exist in the abstract, and things only become commodities (ie only enter the realm of the market) by the activity of labour.
The problem here is that libertarians are starting from a totally wacky concept of value that imagines a relationship between what is "valued" by individuals and its collective expression in "the market" without bothering to consider any of the material realities that underwrite commodities, or the social relationships that shape the commodity form itself. Ask them to point to something that has value without labour, and watch them squirm (or, watch them point to securities/financialization, then laugh until you cry thinking about how these morons missed 2008).

[argeiphontes]

The value of a commodity (under the LTV) is determined by the Socially Necessary Labor Time, not by any one individual person making an object. The SNLT is an average across the entire industry, so for example it's possible to create a bubble by introducing new technology and temporarily selling something above its value, or lose money by using too much labor to make something. Supply and demand are forces that allocate labor to different tasks, because if something is commanding more value in the market than it takes to produce, then more producers will enter the market.

A great series of videos are available from the guy who writes the kapitalism101 (https://www.youtube.com/user/brendanmcooney) blog. There's one on the realtion of price and value, IIRC it's video #10 in the series.

[argeiphontes]

Subjective preference is the idea that commodities are valued just according to how individuals psychologically value them. The classic example is diamonds vs. water. Austrians will say that diamonds are subjectively valued more than water, even though they have no use value at all (other than industrial diamonds) while the water is necessary for life. The problem is that diamonds take a hell of a lot of work to mine and polish, while drinking water is still easy to find in the Western world.

If you're dying of thirst, you'll trade all your diamonds for water. But Marxian econ doesn't deny supply and demand, just says that on average the water takes less labor to produce and so it's price in the aggregate will move around the amount of labor that went into it.

You might want to the check out the LTV thread in OI. Paul Cockshott posted a paper that proves that prices correlate with labor time to about 95%, so the LTV can be considered empirically correct.

[Red_Banner]

I could use some thoughts, opinions and the like from those more familiar with libertarian/Rothbardian/Austrian neo-classical economics and the appropriate responses thereto. I would really appreciate it.

So here's what Mr. Libertarian wrote:



What the hell does he mean by "subjective preference"? And how is it that they believe this refutes the LTOV?


Libertarianism is anarcho-communist.

Joseph Dejacque was the first person to call himself "libertarian".

Only in recent decades have right-wingers hijacked the term.

[Ahab Strange]

Hi all, first post and still learning so steer me in the right direction if im misinformed.

Something that's always struck me when talking about the LTV with ancaps/"libertarians" etc, is that they make out that the LTV is either wrong or incomplete with regards to how values arise in capitalism. They then say it follows that socialism is theoretically impossible because of this.

Even if we were to run with this and "accept" that labour may not be the sole source of value under capitalism, that still doesn't disprove the fact that everything socially useful is socially produced, and that labour is a measurable, underlying characteristic of every socially useful commodity and service.

Bottom line: even if ancaps argue that the LTV is less useful when analyzing capitalism, it is still rational to build an alternative, post capitalist society around labour values.....

[ckaihatsu]

[T]here was a contradiction in Smith’s argument about labour and value which had important implications. Like almost all Enlightenment thinkers, Smith assumed that people with unequal amounts of property are equal in so far as they confront each other in the market. But some of his arguments began to challenge this and to question the degree to which ‘free’ labour is that much more free than slave labour.

Smith’s assertion that labour is the source of all value led him to the conclusion that rent and profit are labour taken from the immediate producer by the landlord or factory owner.

"As soon as land becomes private property, the landlord demands a share of almost all the produce which the labourer can either raise or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land... The produce of almost all other labour is subject to the like deduction of profit. In almost all arts and manufactures the greater part of the workmen stand in need of a master to advance them the materials of their work, and their wages and maintenance until it be completed. He shares in the produce of their labour...and this share consists his profit."67

There is not harmony of interest, but a clash between the interests of the masters and the interests of the workers:

"The interests of the two parties are by no means the same. The workmen desire to get as much as possible, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour. It is not difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute and force the other into compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorises or at least does not prohibit their combinations, while it prohibits those of the workmen... In all disputes, the master can hold out much longer. A landlord, a farmer, a master manufacturer or merchant...could normally live a year or two on the stocks they have already acquired. Many workmen could not subsist a week."68

The logic of Smith’s argument was to move beyond a critique of the unproductive hangovers from ‘feudalism’, made from the point of view of the industrial capitalists, to a critique of the capitalists themselves—to see them as unproductive parasites, living off profits which come from the labour of workers. It was a logic transmitted, via the writings of Ricardo (who attacked the landowners from the point of view of industrial capitalism), to the first socialist economists of the 1820s and 1830s and to Karl Marx. The weapons which the greatest political economist of the Enlightenment used to fight the old order were then used to fight the new one.

Smith shied away from drawing such conclusions. He was able to do so by mixing his notion that value came from labour with another contrary notion. In this, he said the value of a commodity depended on the combined ‘revenues’ from it of landlord, capitalist and worker. [T]he circularity of the argument [is that] (revenues depend on value, but value is the sum of the revenues)




Harman, _People's History of the World_, pp. 260-262


Also:


[23] A Business Perspective on the Declining Rate of Profit

http://s6.postimage.org/c0b0m6i25/23_A_Business_Perspective_on_the_Declining_Rat.jpg (http://postimage.org/image/c0b0m6i25/)

[Czy]

and inadvertently justify a system of corruption, poverty, and war.

This is fucking rich, though, when he is the one justifying capitalism! I would have lambasted him for saying that.

Any way, the subjective theory of value is a case of circular reasoning. In their model, prices are supposed to measure the marginal utility of a commodity (if you're not familiar with MU, check out wiki). However, at the same time, prices are required by the consumer in order to make the evaluations on how best to maximise their satisfaction. Although it tries to explain prices, prices were necessary to explain marginal utility.

Their argument is essentially: A is true because B is true; B is true because A is true.

[RedMaterialist]

Every libertarian I've ever met has thought of Adam Smith as a sort of infallible economic god. Yet Smith was one of the first who said that labor was the source of all value: "Labour, therefore, is the real measure of the exchangeable value [on other words, price] of all commodities." (Chap 5, The Wealth of Nations.) Your friend first needs to explain why Adam Smith believed in the labor theory of value.



Labor requires knowledge/capital in order to create anything. No matter how hard you work at making something, if you don't know how to make it, there is no production.

Labor has existed for as long as humans have existed. It takes generations of transmitted knowledge for humans to learn how, for instance, to fish. It is ridiculous to say that a human teaching its children how to fish is somehow some kind of capitalist enterprise. Even in modern terms knowledge is only created by humans using their own brains or by using the mental production of other humans. Knowledge is a human production, not a production of capital. Knowledge, however, can certainly be commodified by capitalism.


Labor is not the measure of value, subjective preference is.

Again, he needs to explain Adam Smith. If subjective preference was the measure of value, then two people could walk into a Walmart; they each could decide to buy a loaf of bread. One could take a loaf to a clerk and say that he wanted to pay $1.00, and the other person could say he wanted to pay $2.00. Subjectively, each shopper would have the right to pay what he believed to be his own subjective preference. The next time your friend makes that argument, suggest to him that you and he conduct this experiment.

What he probably means is that every sale is a kind of auction. Two people take a loaf of bread to the clerk and then begin bidding on what price each will be willing to pay. If that is what he thinks, then do the same experiment.

But if he is stupid enough to make the gigantic e-bay auction argument, in which millions of people make millions of bids each second, this still would not prove how "value" is produced. It would only show how, over time, a general price for each commodity is determined. Adam Smith called that the "natural price" as opposed to the "market price," which can vary day to day, week to week, etc.

Your friend confuses price with value. The question is not what is the basis for price, but what is the basis for value.



justify a system of corruption, poverty, and war.

It was the capitalists who were responsible for the slavery, murder, torture and rape of north and south america, who used starvation and murder as political tools in ireland, china, and india, who slaughtered millions in wwI and II.

[Sinister Cultural Marxist]

Labor requires knowledge/capital in order to create anything. No matter how hard you work at making something, if you don't know how to make it, there is no production. So yes, your labor theory of value tirade is bullshit. Econ 101. Labor is not the measure of value, subjective preference is. And if someone wants to be paid more based on that, and others are willing to do it, what gives you the moral hubris to think you know better. You're ideas have only harmed the working class and everyone else for generations. Stop perpetuating nice sounding sophisms in order to boost your ego and inadvertently justify a system of corruption, poverty, and war.

Lolbertarians should not be such condescending pricks when their English is so terrible. Don't lecture people on "Economics 101" when you were so obviously sleeping through "English Language 101".

As for the theoretical flaws of his statement, everyone else has more or less covered that.

[ckaihatsu]

---





It was the capitalists who were responsible for the slavery, murder, torture and rape of north and south america, who used starvation and murder as political tools in ireland, china, and india, who slaughtered millions in wwI and II.





Smith’s account of the new system was one sided. British capitalism had not leapfrogged over the rest of Europe simply by peaceful market competition. Slavery had provided some capital. The colonies had provided markets. State expenditures had been high throughout the century and had provided encouragement without which new, profitable and competitive industries would not have emerged. The crutches of colonisation, of slavery and of mercantilism had been necessary for the rise of industrial capitalism, even if it was beginning to feel it no longer needed them.

Countries without a state able to provide such crutches suffered. This was certainly the case with Ireland, whose native capitalists suffered as Westminster parliaments placed restrictions on their trade. It was increasingly true of India, as the officials of the British East India Company pillaged Bengal without providing anything in return. Once British capitalism had established a dominant position, capitalist classes elsewhere would need state support if infant industries were not to be strangled at birth.




Harman, _People's History of the World_, pp. 259-260

[Jimmie Higgins]

Labor requires knowledge/capital in order to create anything. No matter how hard you work at making something, if you don't know how to make it, there is no production. So yes, your labor theory of value tirade is bullshit. Econ 101. Labor is not the measure of value, subjective preference is. And if someone wants to be paid more based on that, and others are willing to do it, what gives you the moral hubris to think you know better. You're ideas have only harmed the working class and everyone else for generations. Stop perpetuating nice sounding sophisms in order to boost your ego and inadvertently justify a system of corruption, poverty, and war. Well this whole view comes from a very middle class and common perspective among pro-capitalists that the market is just a bunch of individual actors, not real people in real circumstances... like needing to eat and have a place to live and only having the market as a means to secure survival. Labor has a value and is treated as a commodity... but while capitalists can choose to invest in this or that or sit on their money, we need to eat a couple of times a week and so have to sell our labor.

Also the labor theory of value doesn't dispute that withing capitalism, investment capital and all the things the capitalists say is necessary for their production isn't a fundamental part of the circuits of capital: it only argues that labor is the main variable aspect which can be exploited and create extra value. The argument quoted dismisses LTV while totally dodging an alternative source of value; buying and selling, ("subjective preference" I guess) is not an adaquate explaination for the expansion of capital because it's a zero-sum prospect - one capitalist gets a bargain and another gets short-changed. Investments are part of capitalism for sure, but what determines an investment that increases value or one that looses... the investment moves capital, it doesn't create it out of nothing. "Knowledge" is silly and idealist... it's basically an argument that commodities have to have a use-vale... this is true (no one will buy a wad of useless pre-chewed gum) but it's also self-evident just like saying "you'll need to take in air if you want to climb a mountain". But there are plenty of good ideas that are not turned into commodities because for capitalists to profit, it can't just be "use-value" otherwise all hungry people would be fed under capitalism. Besides, nothing can be created without labor at some point - even some app made by some guy in his garage needs workers to build the parts, create electricity etc.

[Dave B]

Well Mr libertarian with his ;.


Labor requires knowledge/capital in order to create anything. No matter how hard you work at making something, if you don't know how to make it, there is no production.
Makes a good point which in fact we can utilise to demonstrate the validity of the labour theory of value.

The labour theory of value, as with all scientific theories, is presented as a model reduced as much as possible to its simplest form.

Which is then utilised or applied to make sense or interpret more complex and perhaps unforeseen situations; and is thus tested.

Mr Libertarians proposition is probably best improved by the statement;


The labour process requires knowledge in the form of skill; as practiced by the producer.And for the want of another term; intellectual or technological knowledge.

Which needs to be analysed separately.

If we just take as one ‘theoretical’ example of the first ie an American university graduate.

They will have acquired, in theory anyway, useful skills as knowledge. That skill and knowledge, before they even ‘employ’ it, did not for them fall from the sky it was produced or ‘embodied’ in them by the labour time of others.

The amount of labour time of others it took to ‘obtain’ it; is its value.

Its value being fairly straightforwardly determined by the amount of the student loan that was needed to obtain it.

But that is owned by the banker.

If the student as a result of their acquired skills are say twice a productive as an unskilled worker [skill and productivity are entangled] when they work for 8 hours the labour that is embodied in their product or the product they produce is 16 hours of unskilled labour.

[The value of all commodities is always measured as unskilled labour, as the lowest common denominator.]*

http://www.marxists.org/archive/marx/works/1867-c1/ch07.htm


The ideal model or Marxist paradigm [which will need further analysis as will be obvious] is that the university worker produces 16 hours of unskilled labour in, a lets say, working day.

Lets presume for the moment that the ex student worker receives wages for 16 hours of unskilled labour per day.


And that like unskilled workers they spend the wages for 8 hours of “unskilled labour” to keep body and soul together in order to reproduce their ‘physical’ labour power.

The remaining wages of 8 hours for unskilled labour they pay to the bankers as interest on capital and to repay the ‘principal’.

There is nothing outrageous I hope about the idea of working university students living the life bohemian vagabond unskilled workers to pay off even the principal of loans.

In that case the of value labour time of university lecturers etc is transferred to the student who gradually transfers it into their product just as the value of spindle is gradually transferred to the cotton or whatever.

And the value of the university lecturers labour time manifests itself in the value of ex students product which the student receives to pay the banker who has already paid the university.



In the meantime, as interest on the loan is paid, the average rate of profit is obtained on unconsumed loaned capital as is the way of things.

It needs to be understood that [skilled] labour power is a particular commodity that is bought and sold on the market like everything else and the price it receives is subject to the unpredictable short term variations of supply and demand.

And that is when the value of skill becomes disentangled from its value enhancing productivity.

It is probably the case that with fairly simple commodities like sugar and cotton prices of over demand and short supply etc can be corrected to their ‘natural price’ relatively quickly.

Corrections in the supply and demand for skilled labour can take longer and hence you can get even wilder fluctuations in its market price.

You can have another kind of knowledge required for the production of commodities ie technological knowledge. That in modern capitalism is normally obtained by investment in research and development.

The value of the embodied labour time in that is recuperated from, reappears and is transferred to the value of the final product through the system of intellectual property rights and the patent system as is done in modern capitalism in a very business like way eg the biotech and pharmaceutical industries in particular.

The days of gentleman inventors is pretty much over and concepts like ‘dragons den’ is a farce.

Although research and development as bit too much of a long term gamble for the capitalist class can be ‘socialised’ by the national capitalist class in the universities etc.

And so called ‘public’ education can lower the price of skilled labour by the economies of mass production and lower the premiums that otherwise would have to paid for auto didactic unskilled workers.



Secondly, because the necessary training, knowledge of commercial practices, languages, etc., is more and more rapidly, easily, universally and cheaply reproduced with the progress of science and public education the more the capitalist mode of production directs teaching methods, etc., towards practical purposes. The universality of public education enables capitalists to recruit such labourers from classes that formerly had no access to such trades and were accustomed to a lower standard of living…………..How well this forecast of the fate of the commercial proletariat, written in 1865, has stood the test of time can be corroborated by hundreds of German clerks, who are trained in all commercial operations and acquainted with three or four languages, and offer their services in vain in London City at 25 shillings per week, which is far below the wages of a good machinist.

http://www.marxists.org/archive/marx/works/1894-c3/ch17.htm

* i am ignoring the further exploitation of the ex student by their immediate employer.

[RedMaterialist]

I would say don't bother trying to defend the LTOV to libertarians. You'll never change their minds. It's better to explain the LTOV to workers whose wages never reflect the full value of what they produce.

[ckaihatsu]

[11] Labor & Capital, Wages & Dividends

http://s6.postimage.org/f4h3589gt/11_Labor_Capital_Wages_Dividends.jpg (http://postimage.org/image/f4h3589gt/)

[RedWaves]

Libertarians are morons, I wouldn't even waste my time with some idiot living in mom's basement explaining how his views rock and yours suck.

[Ahab Strange]

However moronic their views may or may not be, their views are gaining inertia with alot of people, sadly more so than ours as far as i've encountered.

The fact is these people cant be left alone. They have to be debated and engaged and shown to be wrong. Despite the anti-statist talk of libertarians and ancaps, there are more than a few people in the ruling echelon who sympathise with their economic outlook, i.e. more, unbridled capitalism as the solution to the worlds ills.

And at the other end of the spectrum, there is a general unspoken feeling among the general public that no matter how angry the current system makes them, with all its contradictions staring them in the face, that some form of capitalism is the only viable way. We know this isn't the case, but when the general public are so convinced that "communism has been tried and failed", Libertarianism might have just enough radical appeal to angry populace to snowball into a serious problem....

[Radical_Pluralist]

There is no reason to be dismissive of libertarians. Many of them are anti-state and, therefore, potential allies.

argeiophontes makes a very good argument that any reasonable libertarian would have to at least respond to:


If you're dying of thirst, you'll trade all your diamonds for water. But Marxian econ doesn't deny supply and demand, just says that on average the water takes less labor to produce and so it's price in the aggregate will move around the amount of labor that went into it.

You might want to the check out the LTV thread in OI. Paul Cockshott posted a paper that proves that prices correlate with labor time to about 95%, so the LTV can be considered empirically correct.
Not only does argeiophontes seem to understand the Austrian position, but he meets it half-way and only posits a refinement of the LTV.

If the LTV had been explained to me during my time as a libertarian, when I was arguing with a pseudo-revolutionary, by saying, "Hey, look at this chart that says, on aggregate, price tends to correlate with labor-time", I would have had to take a step back and take notice. (mind you, most libertarians weren't/aren't as empirical as me; so they may still revert to "theory" or "rationality" to dismiss empirical evidence -- that can't be helped)

Instead, the person I was arguing with could not answer the basic question I had, "If I make a cheap, straw band as a ring and sell it, no one will buy it. If I make a cheap, straw band as a ring and give it to my wife as I propose to her, it will suddenly become the most valuable ring in the world to both of us."

If it had been put to me that my example was merely an anecdotal counter-case, one that broke the model for specific reasons, but that on aggregate the LTV explained price very well; I would have immediately understood.

For example, the minimum wage puts an upward pressure on unemployment; but that doesn't mean, empirically, that unemployment increases when the minimum wage is raised. There are more factors at work.

What needs to be fought first-and-foremost is the idea that if someone disagrees with you it means they are stupid, incapable, or stubborn; rather than that you are not explaining yourself well.

Having been very involved with a libertarian-anarchist movement in America, I can tell you that most of them view communists/socialists as "stupid, frustrating, impossible", etc., when, really, these libertarians were making bad arguments or otherwise not explaining themselves clearly.

[Evo2]

"Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for the value itself.

Suppose supply and demand to equilibrate, or, as the economists call it, to cover each other. Why, the very moment these opposite forces become equal
they paralyze each other, and cease to work in the one or other direction. At the moment when supply and demand equilibrate each other, and therefore cease to act, the market price of a commodity coincides with its real value, with the standard price round which its market prices oscillate.

In inquiring into the nature of that VALUE, we have therefore nothing at all to do with the temporary effects on market prices of supply and demand. The same holds true of wages and of the prices of all other commodities.


...

Besides, if I say a quarter of wheat exchanges with iron in a certain proportion, or the value of a
quarter of wheat is expressed in a certain amount of iron, I say that the value of wheat and its equivalent in iron are equal to some third thing, which is neither wheat nor iron, because I suppose them to express the same magnitude in two different shapes. Either of them, the wheat or the iron, must, therefore, independently of the other, be reducible to this third thing which is their common measure (labour)" Karl Marx - Value, Price and Profit

http://www.marxists.org/archive/marx/works/download/pdf/value-price-profit.pdf


What they mean is that a persons subjective want determines the price of a product however this only explains fluctuations in relation to price, yet price is not VALUE. The value of a product is the socially necessary labour time needed to produce a commodity (this is why mass production, which reduces socially necessary labour time to produce a product, lowers its value)

Price fluctuates around a commodities CORE VALUE, either above or lower, based on supply and demand. This is why we can recognise a bargain when we see one.

The "subjective theory of value" is a con, its nothing more than a theory of how supply and demand effects PRICES but not VALUE (something that Marx recognised and agreed with).

Neo-classical economics is only concerned with price, and abandoned all investigation into value a long time ago.

[A Revolutionary Tool]

^Anti-state=/= an ally for they're anti-state for all the wrong reasons. Plus it doesn't make sense to me to think "this person shares this similar trait with me ideologically so it will be easier for them to accept my arguments." In fact it's always been the opposite in my experience, liberals tend to be the most smug pricks I've had to deal with, face to face conversations with conservatives always fare a lot better for me even if they're not communists at the end of the day. I myself never went through a liberal stage but went from a conservative to a communist.

And your libertarian case of the straw band just goes to show how little libertarians actually know about the LTV. That's the classic mud pie argument except this band has value only to you two and it's not any sort of economic value measurable by any way(it wouldn't have a price even unless you're making your wife pay for the shitty straw ring :lol:). If anybody would actually pay for it(and a lot of money for it if it's the most valuable thing to you) they would be declared grade A fools by any economist bourgoeis or not.