Marxism and Labour Theory of Value

[Oswy]

I'm a history student who has become interested in marxist approaches - attractive for a number of reasons not least of which is the coherent and holistic nature of historical explanations.

Anyway, I've travelled a little into Marxism more broadly to discover that for non-Marxist - especially economics students - the Labour Theory of Value (LTV) is the prime target for criticism. It appears that this idea has been out of favour for sometime among theorists.

Q: Do Political Marxists still hold by the LTV, is it still considered viable, has it been modified or abandoned? Please bear in mind I'm not an economics student, but still curious as to where this particular idea stands in current Marxist thinking.

[bloody_capitalist_sham]

Well its quite important for Marxists. Because if it is right, then capitalist relations of production are exploitative.

Most Marxists use the LTV. and are very critical of bourgeois economics.

however, we have some much more knowledgeable comrades about economics than i so i will stop here. ;)

[Demogorgon]

Some Marxists no longer use the Labour Theory Of Value, but most do. The theory is currently out of favour amongst mainstream economists, but it hasn't been disproven, and there is certainly compelling evidence that it is correct. Also there remain non-Marxists, even non-leftists who still hold to the LTV, so it is not just one political factions property, so to speak.

[abbielives!]

here is a summery of the critismisms of LTV:

http://en.wikipedia.org/wiki/Labor_theory_of_value

I would be interested in seeing a point by point refutation...

[syndicat]

The objection concerning items bought and sold whose prices don't correspond to the labor to produce them, such as undeveloped land and rare art works, fails to consider that the LTV is a theory of COMMODITY prices. just because something is buyable doesn't make it a commodity. A true commodity must be something that can be readily reproduced in multiple copies. Marx took land to not be a commodity in this sense, and the same is true for rare art works. what is involved there is pure scarcity value, and, as Marx would say, its exchange value is whatever some moneybags is willing to pay for it.

in regard to Nozick's objection about the lack of clear definition of "socially necessary," i think this means that there is sufficient effective demand for the product that its utility to these buyers can be "realized" thru sale in such a way as to make an average profit and thus ensure that it will continue to be produced. if someone produces something, and loses money in the process, then that shows it wasn't "socially necessary" in Marx's sense.

[Kropotkin Has a Posse]

For the record, it was Adam Smith, "Father of Capitalism," as well as Ricardo, who first worked out a LTV.

[Djehuti]

I concider marginalism to be a joke.

Once upon a time, the Labour Theory of Value was useful for the bourgeoisie who used it as a weapon against the not-so progressive, but politically powerful land-owning class. Ricardo, among others, used the LTV in connection with his theory on land rent, to attack this class.

But in the hands of Marx, the LTV developed into a disaster for the bourgeoisie, for example he discovered the surplus value (Ricardo was but a hair's breadth from doing the same) and this turned the situation upside-down for the bourgeoisie. What were their weapon in their struggle against their enemy, had now been forged into a weapon that could be used by the proletarians against them! So what a great luck that Stanley Jevons, Karl Menger and Léon Walras quickly came up with a new theory! A theory that moves perspective of economic theory from the production to the consumtion, from cost to sale, from value to price...

What Marx called "value" is not the same thing as the vulgar economists call "value", that will say price. They are two different categories, but I am sure that they willingly choose not to acknowledge this. And they also refuse to understand that the LTV isn't about "calculating" or "measuring" or anything like that. It is rather a tool to reach even deeper insights.

Marx himself dealt with these silly vulgar economists in "Theories of Surplus Value", that would have become the fourth book of Capital, should he had finished it.

[Djehuti]

About socially necessary labour...

If technology is developed before the commodity gets sold, the social value of the commodity won't correspond with its individual value. The commodity always gets sold to its social value (if we put value = price). The job of the commodity producer is to make sure that that the individual value of the commodity becomes as low as possible in relation to its social value.

I sew a pair of pants in 15 hours with the tools that is the most commonly used in society at this time, in this case a common needle. If I now go to the market with my pants and wish to exchange them, I can get products equivalent to 15 hours of work (assuming that someone wishes to buy them; a commodity must have a use value for the person you wish to trade it with). Say that I meet with a person who has a 15-hours chair, with use of a pair of pants. We trade, and all is settled.

But... What happens if I instead of trading my pants, put them in the wardrobe for a year? During this year, technology makes a lot of progress and the sewing machine is invented. When the pants after a year gets out of the wardrobe, a pair of pants are manufactured at an average of 5 hours. If I now take my pants to the market and meet with the chair-manufacturer and propose a trade, he will most likely laugh at me. His chair took 15 hours to manufactre (assuming that technology has not advanced in this area), a pair of pants can be made with a sewing machine in 5 hours! The individual value of my pants is now 15 hours, but the social value is 5 hours. So I will have to go home and make two more pairs of pants before I can get my chair. It is through this difference betwee individual value and social value that the capitalist later can extract extra-surplus value, the entire goal of capitalist competition.

[JazzRemington]

So what a great luck that Stanley Jevons, Karl Menger and Léon Walras quickly came up with a new theory!

Not the derail this thread, but actually marginalism developed along side Marx but was not very well known during his time so Marx probably hadn't heard of it. It wasn't developed as a reaction to Marx's research.