How is the value of a commodity determined by the labor put forth in it?

[Jacob Cliff]

Or, more accurately, how is the value of a commodity determined by the socially necessary labor time put forth into creating it?

I ask this because of the commonly used subjective theory of value, which states that all value is subjective and up to the individual. Now, I understand this is absurd because you can't use your subjective value of an object when purchasing something from a store clerk. But it is up to the owner of the store, or whoever is in charge of selling, to determine the value at which it is sold.

It's as simple as if I decide to sell to a friend a candy bar for $5, only applied on a store's scale. Is it not up to the seller to decide? Or, more accurately, a commonly agreed price to sell based on how much consumers are willing to pay?

I understand this is a stupid f*****g question from a Marxist standpoint, but I have a very stupid f*****g understanding of a lot of Marxist theory. Thanks.

[e_e]

I think that it is extremely difficult to calculate and determine the exact prices of a commodity according to the socially necessary labor put into it. The labor theory of value is a concept, not a system to operate in.

The LTV is not a strictly Marxist term. Adam Smith also used the term before in classical economics. It is unimaginably difficult and impractical to determine prices according to the labor put into in a capitalist market. But the theory only states that the true value of a commodity is based upon the socially necessary labor put into it. Whether or not the commodities are sold at the price at their true value does not matter in a capitalist society. In a communist society there is no "voluntary exchange " (as cappies say), or no arbitrary price that is required in a capitalist system.

[ComradeAllende]

This question has also puzzled me as well, especially with regards to the subjective theory of value. I understand the subjective theory does make sense regarding the consumer's viewpoint, but I also understand that value (from a Marxist perspective) originates from production. I've heard that it's based on circular reasoning, but I still can't get a grasp of it.

[Spectre of Spartacism]

Or, more accurately, how is the value of a commodity determined by the socially necessary labor time put forth into creating it?

I ask this because of the commonly used subjective theory of value, which states that all value is subjective and up to the individual. Now, I understand this is absurd because you can't use your subjective value of an object when purchasing something from a store clerk. But it is up to the owner of the store, or whoever is in charge of selling, to determine the value at which it is sold.

It's as simple as if I decide to sell to a friend a candy bar for $5, only applied on a store's scale. Is it not up to the seller to decide? Or, more accurately, a commonly agreed price to sell based on how much consumers are willing to pay?

I understand this is a stupid f*****g question from a Marxist standpoint, but I have a very stupid f*****g understanding of a lot of Marxist theory. Thanks.

The owner of the store determines the price, but not the value. If the owner chooses to sell a commodity at a price well above the amount of socially necessary labor, potential buyers will purchase the commodity from competing firms with prices set nearer or at the value of the commodity.

The price gauging store owner will not be able to realize the value of the commodities he possesses and will be forced either to lower the price to more accurately reflect their value, or to be forced out of business.

[Hatshepsut]

Or, more accurately, how is the value of a commodity determined by the socially necessary labor time put forth into creating it? ...I ask this because of the commonly used subjective theory of value, which states that all value is subjective and up to the individual.

It’s very easy in principle, and explained in Vol. 1 Chap. 1 of Capital, on pp. 27-29 if you’re using the Zodiac pdf transcription from Marxists.org (or, no more than 1 or 2 pages into Chap. 1 with any edition). Marx does not use the term subjective value, the nearest equivalent being use value, also explained in this part of the book. These terms are not identical because use value is a shared attribute, treated as inherent in a material thing. An object of value to only one person, say a sentimental heirloom, has no real use value; Marx wouldn’t call it a “useful thing.” Indeed, Marx applies notions of subjectivity to the capitalist and to surplus value instead of to commodities.

A retailer of goods can extract surplus value from commodities, but does not produce it in-house because all value was already present in the commodities beforehand. That is, circulation doesn’t produce any new value. The merchant merely shares in the surplus value with the manufacturing capitalist, and this surplus value comes entirely from the labor of the workers who made the goods. Marx takes up merchant capital in Vol. 3 Chap. 16.

In retailing, I see no guarantee that superprofits as in price gouging won’t arise, for there may be no competitor nearby, or retailers may collude to fix prices. However, existence of many independent merchants will tend to limit price gouging.

[Jacob Cliff]

The owner of the store determines the price, but not the value. If the owner chooses to sell a commodity at a price well above the amount of socially necessary labor, potential buyers will purchase the commodity from competing firms with prices set nearer or at the value of the commodity.

The price gauging store owner will not be able to realize the value of the commodities he possesses and will be forced either to lower the price to more accurately reflect their value, or to be forced out of business.
So is Socially-Necessary Labor Time value itself or what produces/determines value? Because it seems that we can't physically or objectively represent "value" -- just show the labor-time necessary to produce a commodity.

[RedMaterialist]

Or, more accurately, how is the value of a commodity determined by the socially necessary labor time put forth into creating it?

I ask this because of the commonly used subjective theory of value, which states that all value is subjective and up to the individual. Now, I understand this is absurd because you can't use your subjective value of an object when purchasing something from a store clerk. But it is up to the owner of the store, or whoever is in charge of selling, to determine the value at which it is sold.

It's as simple as if I decide to sell to a friend a candy bar for $5, only applied on a store's scale. Is it not up to the seller to decide? Or, more accurately, a commonly agreed price to sell based on how much consumers are willing to pay?

I understand this is a stupid f*****g question from a Marxist standpoint, but I have a very stupid f*****g understanding of a lot of Marxist theory. Thanks.

There are no effing stupid questions about Marxist theory. One of the things about this site is that it lets you ask questions and then try to develop understanding from different viewpoints. there are dogmatists here, too, unfortunately.

Price, as I understand it, is determined by the cost of production of a commodity. These costs, generally, are 1. labor, 2. non labor, and 3. surplus labor/ profit. The capitalist pays for labor and non labor, but does not pay for the surplus labor. The commodity is then sold for its true/full value and the capitalist pockets as profit the surplus labor/value which he did not pay for.

In other words, profit is already incorporated into the commodity before it leaves the production process, which may extend to the clerk in a WalMart checking out a customer. The question is, then, how is this value of the commodity converted into the price of the commodity. The value/ profit that is in the commodity does not carry a tag saying "profit."\

The traditional answer was the price is determined by supply and demand. The seller wants a high price the buyer wants a low price. They then haggle over the price until an approximation of the value is reached. this assumes, however, that the buyer can go to another seller and get a lower price or that the seller can wait for another buyer and get a higher price.

This is what makes gigantic, monopoly capitalism so valuable for the capitalist. There are only a few sellers and millions of buyers. The sellers can set prices without any problems of supply and demand. They are market makers, literally.

But that still leaves the problem of how the sellers know what price to put on the commodity. How does WalMart know to put a price tag on a candy bar for 1.00? Why not make it 10.00? I suppose it's because that is what the public is willing to pay for that candy bar. Which gets back to customer preference, except that it is not really the individual preference but the social preference. Sort of marginalism for socialists.

I don't think anyone yet has solved the so called transformation problem. How values are transformed into prices.

[RedMaterialist]

So is Socially-Necessary Labor Time value itself or what produces/determines value? Because it seems that we can't physically or objectively represent "value" -- just show the labor-time necessary to produce a commodity.

I think socially necessary labor time is what produces value, exchange value, surplus value, or profit.

The capitalist wants the highest possible price at the lowest possible cost. The Shrek guy trying to sell the 15.00 pill for 750 understood the problem. However, it is the social price that society is willing to pay that may actually determine the selling price. Shrek has now been socially exposed (through social media) as a price gouging parasite, in other words as a capitalist.

As I understand, the actual cost of producing the pill is less than a dollar. So the cost of production plus profit no longer determines the price. The price is socially determined, just like value.

At least this is my theory for now.

[Spectre of Spartacism]

So is Socially-Necessary Labor Time value itself or what produces/determines value? Because it seems that we can't physically or objectively represent "value" -- just show the labor-time necessary to produce a commodity.

It is the substance of value, and value is the form socially necessary labor time takes. There is a relationship of determination here, but it is an internal relationship.

[RedMaterialist]

So is Socially-Necessary Labor Time value itself or what produces/determines value? Because it seems that we can't physically or objectively represent "value" -- just show the labor-time necessary to produce a commodity.

Value is objectified in the physical commodity itself, and price is the monetary expression of that value. I think what creates value (exchange value) in capitalist production is the use of generalized, abstract labor. All work is essentially equal, with the only difference being time. So, a carpenter is no more "valuable" than a bricklayer. They both bring different use-values to their work (carpentry, bricklaying) but the exchange value they produce is equal, differing only in time.

Workers on an auto assembly line, office workers are all replaceable commodities, therefore their products are all commodities, interchangeable, mass produced.

So, according to Marx, I think, it is the abstract, generalized nature of the labor used to create commodities which produces value and surplus value. And since the value is abstract it can't be seen, yet it is still there, thus the fetish nature of the commodity. Marx also said that the abstract, invisible quality of Protestantism was the perfect religion for this type of production.