I am bored and have some time on my hands, so I decided to go point by point and criticize the criticism.
The labor theory of value is the bedrock basis of Marxist or socialist economic theory. Disagreements between the socialist theory and that of the free marketeer can ultimately be traced back to the question of the theory of value. Which is why Adam Smith used the labor theory of value, right? :lol:
The labor theory of value states that all value is a result of human labor. The theory has a certain initial plausibility since laboring does commonly result in additional value. However, a closer brief analysis reveals the obvious errors in such a theory. Not quite, it's more complicated than this.
Labor is not the same in vulgar economics as it is in Marxist economics, which is one of the fundamental short comings of this criticism.
Let me quote Marx on this:
Originally posted by Marx+--> (Marx)Labour is, in the first place, a process in which both man and Nature participate, and in which man of his own accord starts, regulates, and controls the material re-actions between himself and Nature. He opposes himself to Nature as one of her own forces, setting in motion arms and legs, head and hands, the natural forces of his body, in order to appropriate Nature's productions in a form adapted to his own wants. By thus acting on the external world and changing it, he at the same time changes his own nature. He develops his slumbering powers and compels them to act in obedience to his sway. We are not now dealing with those primitive instinctive forms of labour that remind us of the mere animal. An immeasurable interval of time separates the state of things in which a man brings his labour-power to market for sale as a commodity, from that state in which human labour was still in its first instinctive stage. We pre-suppose labour in a form that stamps it as exclusively human. A spider conducts operations that resemble those of a weaver, and a bee puts to shame many an architect in the construction of her cells. But what distinguishes the worst architect from the best of bees is this, that the architect raises his structure in imagination before he erects it in reality. At the end of every labour-process, we get a result that already existed in the imagination of the labourer at its commencement. He not only effects a change of form in the material on which he works, but he also realises a purpose of his own that gives the law to his modus operandi, and to which he must subordinate his will. And this subordination is no mere momentary act. Besides the exertion of the bodily organs, the process demands that, during the whole operation, the workman's will be steadily in consonance with his purpose. This means close attention. The less he is attracted by the nature of the work, and the mode in which it is carried on, and the less, therefore, he enjoys it as something which gives play to his bodily and mental powers, the more close his attention is forced to be.
The elementary factors of the labour-process are 1), the personal activity of man, i.e., work itself, [as described above] 2), the subject of that work, and 3), its instruments.
In the labour-process, therefore, man's activity, with the help of the instruments of labour, effects an alteration, designed from the commencement, in the material worked upon. The process disappears in the product, the latter is a use-value, Nature's material adapted by a change of form to the wants of man. Labour has incorporated itself with its subject: the former is materialised, the latter transformed. That which in the labourer appeared as movement, now appears in the product as a fixed quality without motion. The blacksmith forges and the product is a forging.
If we examine the whole process from the point of view of its result, the product, it is plain that both the instruments and the subject of labour, are means of production, and that the labour itself is productive labour.
Labour uses up its material factors, its subject and its instruments, consumes them, and is therefore a process of consumption. Such productive consumption is distinguished from individual consumption by this, that the latter uses up products, as means of subsistence for the living individual; the former, as means whereby alone, labour, the labour-power of the living individual, is enabled to act. The product, therefore, of individual consumption, is the consumer himself; the result of productive consumption, is a product distinct from the consumer.
In so far then, as its instruments and subjects are themselves products, labour consumes products in order to create products, or in other words, consumes one set of products by turning them into means of production for another set.
The labour-process, turned into the process by which the capitalist consumes labour-power, exhibits two characteristic phenomena. First, the labourer works under the control of the capitalist to whom his labour belongs; the capitalist taking good care that the work is done in a proper manner, and that the means of production are used with intelligence, so that there is no unnecessary waste of raw material, and no wear and tear of the implements beyond what is necessarily caused by the work.
Secondly, the product is the property of the capitalist and not that of the labourer, its immediate producer. Suppose that a capitalist pays for a day's labour-power at its value; then the right to use that power for a day belongs to him, just as much as the right to use any other commodity, such as a horse that he has hired for the day. To the purchaser of a commodity belongs its use, and the seller of labour-power, by giving his labour, does no more, in reality, than part with the use-value that he has sold. From the instant he steps into the workshop, the use-value of his labour-power, and therefore also its use, which is labour, belongs to the capitalist. By the purchase of labour-power, the capitalist incorporates labour, as a living ferment, with the lifeless constituents of the product. From his point of view, the labour-process is nothing more than the consumption of the commodity purchased, i. e., of labour-power; but this consumption cannot be effected except by supplying the labour-power with the means of production. The labour-process is a process between things that the capitalist has purchased, things that have become his property. The product of this process belongs, therefore, to him, just as much as does the wine which is the product of a process of fermentation completed in his cellar. [/b] From Das Kapital, Chapter Seven: The Labour-Process and the Process of Producing Surplus-Value, Section 1 - The Labour-Process or the Production of Use-Values (http://marxists.org/archive/marx/works/1867-c1/ch07.htm#S1) by Karl Marx (1867).
Originally posted by Philistine Critic+--> (Philistine Critic)If the labor theory of value was correct then a diamond found in a diamond mine would be of no greater value than a rock found right next to it since each would require the same "amount" of labor-time.[/b] Why ever so?
Marx actually discussed the very example of diamonds in his book which our dear critic has chose not to read:
Originally posted by Marx
The value of a commodity would therefore remain constant, if the labour time required for its production also remained constant. But the latter changes with every variation in the productiveness of labour. This productiveness is determined by various circumstances, amongst others, by the average amount of skill of the workmen, the state of science, and the degree of its practical application, the social organisation of production, the extent and capabilities of the means of production, and by physical conditions. For example, the same amount of labour in favourable seasons is embodied in 8 bushels of corn, and in unfavourable, only in four. The same labour extracts from rich mines more metal than from poor mines. Diamonds are of very rare occurrence on the earth’s surface, and hence their discovery costs, on an average, a great deal of labour time. Consequently much labour is represented in a small compass. Jacob doubts whether gold has ever been paid for at its full value. This applies still more to diamonds. According to Eschwege, the total produce of the Brazilian diamond mines for the eighty years, ending in 1823, had not realised the price of one-and-a-half years’ average produce of the sugar and coffee plantations of the same country, although the diamonds cost much more labour, and therefore represented more value. With richer mines, the same quantity of labour would embody itself in more diamonds, and their value would fall. If we could succeed at a small expenditure of labour, in converting carbon into diamonds, their value might fall below that of bricks. In general, the greater the productiveness of labour, the less is the labour time required for the production of an article, the less is the amount of labour crystallised in that article, and the less is its value; and vice versâ, the less the productiveness of labour, the greater is the labour time required for the production of an article, and the greater is its value. The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labour incorporated in it. --emphasis added
From Das Kapital, Chapter One: Commodities, Section 1 - The Two Factors of a Commodity: Use-Value and Value (http://marxists.org/archive/marx/works/1867-c1/ch01.htm#S1) by Karl Marx (1867).
Originally posted by Philistine Critic
A photo of a loved one would have the same value as a photo of a total stranger or of a hated enemy--check your wallets or desktops to test this theory. Really? Marx covered this as well, in the next paragraph from the passage I quoted:
Originally posted by Marx
A thing can be a use value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, &c. A thing can be useful, and the product of human labour, without being a commodity. Whoever directly satisfies his wants with the produce of his own labour, creates, indeed, use values, but not commodities. In order to produce the latter, he must not only produce use values, but use values for others, social use values. (And not only for others, without more. The mediaeval peasant produced quit-rent-corn for his feudal lord and tithe-corn for his parson. But neither the quit-rent-corn nor the tithe-corn became commodities by reason of the fact that they had been produced for others. To become a commodity a product must be transferred to another, whom it will serve as a use value, by means of an exchange.)[12] Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value. --emphasis added
From Das Kapital, Chapter One: Commodities, Section 1 - The Two Factors of a Commodity: Use-Value and Value (http://marxists.org/archive/marx/works/1867-c1/ch01.htm#S1) by Karl Marx (1867).
The stranger's photo provides no usefulness, whereas the photo of a loved one does provide usefulness (or "use-value"). Thus the loved one's photo has value.
Originally posted by Philistine Critic
According to the labor theory of value if you have a slice of pizza for lunch, valued because of the labor-time required to produce it, you must necessarily value the next slice the same. The labor theory of value is a denial of the well-established law of diminishing marginal utility which states that the value to the consumer falls with additional consumption of the good in question. How a true believer Marxist ever justifies ceasing pizza eating is still a mystery. Again, this critic ignores the whole point of use-value.
Use-value, which is a boolean quantity (or for the more nerdy a predicate (http://en.wikipedia.org/wiki/Predicate_%28mathematics%29) as a function object - a "functor"), is used to determine if the commodity is useful or not (which we can mathematically represent as a 1 for useful and 0 for useless).
What we do next is calculate out the value of the commodity X, and then express the value in terms of units of the money commodity...and multiply by the use-value boolean.
If the commodity is useless, if the piece of pizza has no lure, then the use-value is 0 and the price is 0 units of money.
The "pizza problem" is not a problem, since the commodity wouldn't be consumed if the consumer were full...and thus the use-value would be non-existent and the object would have no value.
Originally posted by Philistine Critic
One has to wonder what two Marxists attending a movie do as they leave together. Is each timid in expressing his opinion as to the pleasure or displeasure of the experience since he may disagree with his companion? After all, the movie required the same amount of labor-time in its production. What the hell kind of reasoning is this? It's constipated.
Expressing opinion is against the labor theory of value? :lol: What philistinism!
At any rate, the viewer, after viewing the movie, may feel cheated if it was a bad movie...because money was taken and a use-value was not delivered.
On the other hand, if the viewer yielded a use-value from the movie, then there was a use-value generated and s/he does not feel cheated.
The cost to view the movie is dependent on various things, like the amount of labor that went into making the movie (it costs a variable amount to let a theatre show a film after all), the costs of maintaining and running the theatre, and so forth.
This is perfectly explainable via Marxist economics.
Originally posted by Philistine Critic
How in this theory can the value of land space, a nature-given resource, ever be explained? This has already been covered.
Originally posted by Philistine Critic
According to the labor theory of value, if a skilled carpenter produces a solid, comfortable chair which is useful for decades in a mere four hours, whereas a klutz in four days produces a chair which collapses with the first attempted use, the latter chair is more valuable. (Marx had an escape hatch for this last dilemma: Only "socially necessary labor" creates value; however, Marx defines socially necessary in terms of the competitive market itself--thus we are right back to the market values Marx so vehemently abhorred!) I honestly don't understand why this philistine critic pulls things from his ass!
First, before I begin, I don't think that a chair could be made in "a couple of hours"...it would take an expert a couple of days!
At any rate, supposing we had one "expert" make a chair in 3 days and a klutz make on in 3 weeks, why is the latter not as valuable as the other?
Because, if the latter produces a chair that can barely stand up, there is no use-value in it.
Supposing the example is flawed, and the klutz builds a chair that stands up, why is the expert's chair still more expensive?
What about all those years of experience that the expert has that the amateur klutz does not? That's also labor that is counted.
In comparison of the two, a consumer would choose that which satisfies his needs of sitting...which I can only assume would be the expert's chair that yields the use-value.
Originally posted by Philistine Critic
The labor theory of value resulted from the mistake of David Ricardo, who proceeded from Adam Smith's error in ascribing value to the total costs of production. Marx understandably built on Ricardo's theory and concluded that these costs can be traced back to the costs of labor--capital equipment being "frozen labor." This history of the labor theory of value isn't even right!
The earliest specification of the labor theory of value is from William Petty's Treatise of Taxes written in 1662. Sadly I cannot find an online copy of it :(
Arguably, one could trace the LTV back to Aristotle who used the input theory of value...since the LTV is little more than an extension of the input theory of value, specifying that we can trace back the inputs of commodities to dated inputs of labor alone.
At any rate, the next man to develop the labor theory of value was John Locke in Second Treatise on Government Chapter 5 On Property (http://marxists.org/reference/subject/politics/locke/ch05.htm) (1690).
The next big player that participated in the development of the labor theory of value was Benjimin Franklin in his pamphlet A Modest Enquiry into the Nature and Necessity of a Paper Currency (http://etext.lib.virginia.edu/etcbin/toccer-new2?id=FraMode.sgm&images=images/modeng&data=/texts/english/modeng/parsed&tag=public&part=all) (1729).
Originally posted by Philistine Critic
The alternate theory, the correct theory of value, is that value is subjective. The subjective theory of value concludes that goods have no inherent value, that goods are valuable only to the degree that there is a valuer desiring the good. This is not actually true. There are a number of other theories of value other than these two.
There is a famous input theory of value that uses Linear Algebra developed by Piero Sraffa which was used to demonstrate that: given the circumstances assumed by Neoclassical economics, that is a static equilibrium economy, the value of goods cannot be determined by Marginalism without being internally inconsistent and based on circular logic.
This subjective approach described by the Philistine Critic actually cannot work according to the father of Neoclassical Economics:
Originally posted by Alfred Marshall
Utility is taken to be correlative to Desire or Want. It has been already argued that desires cannot be measured directly, but only indirectly by the outward phenomena to which they give rise: and that in those cases with which economics is chiefly concerned the measure is found in the price which a person is willing to pay for the fulfilment or satisfaction of his desire. He may have desires and aspirations which are not consciously set for any satisfaction: but for the present we are concerned chiefly with those which do so aim; and we assume that the resulting satisfaction corresponds in general fairly well to that which was anticipated when the purchase was made. [1]
[...]
Footnotes:
[1] It cannot be too much insisted that to measure directly, or per se, either desires or the satisfaction which results from their fulfilment is impossible, if not inconceivable.
From Principles of Economics (http://marxists.org/reference/subject/economics/marshall/bk3ch03.htm) by Alfred Marshall (1890).
This philistine critic doesn't even know his own school of thought! :lol:
Philistine
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More fundamentally, Marx came to his labor theory of value from searching for an equality in the two goods which are exchanged for one another. Of course, Marx thought that the labor embodied in each good was that equality (rather than other factors he first discarded, such as weight, volume, etc.). But the nature of exchange is such that trade only occurs when there is an inequality in the subjective value of the good received and the good exchanged. If equality were indeed the basis of exchange, and say an orange was exchanged for a fish due to the equal amount of labor embodied in each, then logically, the two parties would immediately trade the two goods again since they are still equal in labor. This would become a never ending process until the two traders collapsed dead! As another example, and to test this theory, how many times have you traded a dollar bill for a dollar bill, and then traded them back, and then again? The critic doesn't understand the role of the labor theory of value in the Marxist paradigm and has resorted to simply making one up.
The hypothetical exchange this fellow suggests is based off of his ignorance of the existence of the use-value.
There is a reason why the exchange was made, and from the perspective of use-values both parties "got what they wanted". That's why vulgar economists argue that economics is not zero-sum, because "both parties win in an exchange".
However, this neglects the circuitry of capital, the fact that surplus value exists and has to come from somewhere.
That is, the M-C-M' circuit where - at a micro scale, which is what the vulgar economist prefers to discuss - a firm sells a commodity (represented by C) to an agent. The amount the firm sees is M' = M + dM, where M is the price of the constant and variable capital and dM is the surplus value.
The agent is paid out of the circuitry which the firm he works for completes. The surplus value goes, in part, to reinvest in the firm and, in part, to pay for the bourgeoisie's wages.
There is a mystery of "Where does surplus value come from?" in vulgar economics that is solved by elementary Marxist economics.
Philistine Critic
In short, the whole of socialist economic theory is derived from the mistaken labor theory of value--it collapses for lack of a base; the whole of free market economic theory is derived from the solid base of the valid subjective theory of value. Although you wouldn't know "it collapses for lack of a base" as this critic has done such a miserable job assessing the theory.
The "solid base" of the "valid" STV is without a base, since the Neo-Ricardian criticism has demonstrated that the very assumptions of the STV causes the STV to be internally inconsistent and based on circular logic.
This guy isn't worth the time it takes to explain these simple concepts.