Labor Theory of Value

[black magick hustla]

I understand how a commodity's value is equal to the labor power embodied in it nlah blah blah

but what about things like paintings or brands in clothing? a lot of paintings have virtually very little labor power exerted into them yet they have a huge exchange value because of how famous the artist is. Same with brand clothing--the brand clothing couldn't surpass in embodied labor power but the brand makes it more expensive.

Can someone tell me how to resolve this?

[mikelepore]

We can't observe the exchange value at all. All we can find out about is the price. The Marxian theory says that the price is the sum of two terms: the exchange value, plus a positive or negative offset produced by supply and demand. Therefore, when articles are priced according to collector sentiment, not continuously reproducible at will, etc., the pricing is like a communication in which the signal-to-noise ratio has become virtually all noise. We have lost the tracking with the starting level for the rate of exchange before the huge fluctuation acted on it.

Marx explained in his 1865 pamphlet _Value, Price and Profit_: "You would be altogether mistaken in fancying that the value of labor, or any other commodity whatever, is ultimately fixed by supply and demand. 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 that value itself."

But take away the steady reproducibility of the article, and the tendency to have those "temporary fluctuations" often becomes permanent. To emphasize what economic process they were describing, both Marx and Engels sometimes chose the words "reproduce" and "reproduction", not "produce" and "production", in their discussions of the significance of the socially necessary labor time.

[JazzRemington]

The price of things that ONLY one producer can make can be said to be monopoly prices because that producer has the monopoly on production of a particular commodity. A monopolist will charge as much as he can.

The idea that exchange value is equal to the amount of socially necessary labor is true only for purely and perfectly competitive markets.

[Luís Henrique]

Price != value

Value depends on what is the use value.

If two things are interchangeable, then they have the same use value: like two cards of a common deck, for instance. If they are not interchangeable, then they might have different values, as, for instance, two different cards of a Magic deck.

Luís Henrique

[ComradeRed]

Originally posted by Luís Henrique+October 26, 2007 04:58 pm--> (Luís Henrique @ October 26, 2007 04:58 pm) Price != value [/b]
Not according to Marx...

Marx
Throughout this work, I assume, for the sake of simplicity, gold as the money-commodity.

[...]

The expression of the value of a commodity in gold — x commodity A = y money-commodity — is its money-form or price. Das Kapital, vol. I (http://marxists.org/archive/marx/works/1867-c1/ch03.htm) by Marx. Emphasis is mine.

[Luís Henrique]

Originally posted by ComradeRed+October 27, 2007 04:41 am--> (ComradeRed @ October 27, 2007 04:41 am)
Originally posted by Luís [email protected] 26, 2007 04:58 pm
Price != value
Not according to Marx...

Marx
Throughout this work, I assume, for the sake of simplicity, gold as the money-commodity.

[...]

The expression of the value of a commodity in gold — x commodity A = y money-commodity — is its money-form or price. Das Kapital, vol. I (http://marxists.org/archive/marx/works/1867-c1/ch03.htm) by Marx. Emphasis is mine. [/b]
Yes, price "expresses" value - which is not the same as being equal to value.

Luís Henrique

[ComradeRed]

Originally posted by Luís [email protected] 27, 2007 09:50 pm
Yes, price "expresses" value - which is not the same as being equal to value.

Luís Henrique
The next line of your post is rather flawed however:


Value depends on what is the use value.
Uh, no, value is determined differently in the labor theory of value.

This is how value is determined in vulgar economics.

[mikelepore]

In the "long run", the average price approximates the value, because the price oscillates, in the same way that, if we had to choose the one typical number for (10 + sin x) we would have to say 10. But this tendency to gravitate back to any typical number relies on the idealization that economists later came to call "perfect competition." The original poster asked about articles sold by a monopoly supplier. In that case it may neither gravitate nor oscillate.

[mikelepore]

ComradeRed to Luis --

The next line of your post is rather flawed however:


Value depends on what is the use value.
Uh, no, value is determined differently in the labor theory of value.


Characteristics of exchange must depend on use value at least to the extent that use value determines what generic category the article is in. For example, bread isn't identified according to a class of brown things or the class of rectangular things, but as a type and subtype of edible thing. The use value identifies what the article essentially is, so that we can then have equivalence between several objects of the same category, one kilogram of pumpernickel bread being in the same class as any other kilogram of pumpernickel bread.

Everyone interested in economics should understand the important economic term, "fungible" ("a commodity that is freely interchangeable with another in satisfying an obligation of goods or commodities; freely exchangeable for or replaceable by another of like nature or kind in the satisfaction of an obligation" -- wordnet.princeton.edu)

Use of the words "bread" and "fungible" in the same remark.... no pun intended :)

[ComradeRed]

Originally posted by [email protected] 28, 2007 03:12 am
Characteristics of exchange must depend on use value at least to the extent that use value determines what generic category the article is in. For example, bread isn't identified according to a class of brown things or the class of rectangular things, but as a type and subtype of edible thing. The use value identifies what the article essentially is, so that we can then have equivalence between several objects of the same category, one kilogram of pumpernickel bread being in the same class as any other kilogram of pumpernickel bread.
But the use-value of bread does not determine the value of it. It determines the existence or inexistence of value for the person who is looking at the bread.

Marx states (Das Kapital, volume I, Chapter 1, Section 1 (http://marxists.org/archive/marx/works/1867-c1/ch01.htm#S1)): "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.".

Thus use-value does not determine the value, but determines the existence of value.

[Luís Henrique]

Originally posted by [email protected] 28, 2007 06:11 am

Value depends on what is the use value.
Uh, no, value is determined differently in the labor theory of value.

This is how value is determined in vulgar economics.
I think I didn't express myself clearly.

Evidently, value is determined by the average amount of labour put into a product.

But what the product is, depends on its use value.

Suppose a gardener plants roses. He produces yellow roses, pink roses, white roses, and red roses.

Suppose the average amount of labour embodied in the production of a rose is 1 hour. The value of a rose, then, is 1 hour of labour.

But suppose that, working 20 hours, our gardener produces 10 pink roses, 6 red roses, 3 yellow roses, and 1 white rose.

As long as the use value of roses of all colours is the same, each rose is still worth 1 hour of labour.

But if society attributes different use values for each different colour (ie, if a white rose has different uses than a pink rose), then white roses are a different product from pink roses, and their exchange value is ten times the exchange value of a pink rose, because it takes ten times more labour to produce a white rose than a pink one.

Luís Henrique

[ComradeRed]

Originally posted by Luís [email protected] 28, 2007 11:27 am
But if society attributes different use values for each different colour (ie, if a white rose has different uses than a pink rose), then white roses are a different product from pink roses, and their exchange value is ten times the exchange value of a pink rose, because it takes ten times more labour to produce a white rose than a pink one.
Uh...this is a misunderstanding of the idea of use-value.

Marx said "The utility of a thing makes it a use value." (Das Kapital, vol. I, chapter 1 (http://marxists.org/archive/marx/works/1867-c1/ch01.htm)).

It isn't measured as a continuous variable...as you seem to be hinting at.

A thing is either useful or useless, i.e. has a use-value or doesn't. The value of a pink rose depends on the amount of labor it takes to make a pink rose! That's according to the labor theory of value.

The only way a pink rose has a value 10 times that of a white rose is if the pink rose takes 10 times as much labor to grow than a white rose.

I reiterate that use-values only determine the existence or nonexistence of value of a particular good!

[Luís Henrique]

Originally posted by [email protected] 28, 2007 07:58 pm
A thing is either useful or useless, i.e. has a use-value or doesn't. The value of a pink rose depends on the amount of labor it takes to make a pink rose! That's according to the labor theory of value.

The only way a pink rose has a value 10 times that of a white rose is if the pink rose takes 10 times as much labor to grow than a white rose.
Exactly. That is the case. If a white rose takes 10 times more labour than a pink rose, it's exchange value is 10 times the pink rose's.

But this requires white roses being perceived as a different use-value; if the use-value of a white rose is the same as the use value of a pink rose, then in all probability white roses won't be produced - unless of course roses of different colours are necessarily produced when producing roses.

Use value is not a continuous variable. When I say "the same use value", I don't mean different magnitudes of value. I mean, for instance, the difference between pink roses being a gift to be given in weddings, while white roses being a gift to be given in proms - in this case roses of different colours are not interchangeable; they are two different products, each one with its own exchange value.


I reiterate that use-values only determine the existence or nonexistence of value of a particular good!

Certainly. What I am saying is in fact a corolary of that.

Luís Henrique

[blackstone]

Again, as ComradeRed stated, i think you have a mis-understanding of the term use-value.


Exactly. That is the case. If a white rose takes 10 times more labour than a pink rose, it's exchange value is 10 times the pink rose's.
This is correct.

Marx says,


The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labour incorporated in it
-Das Kapital, volume I, Chapter 1, Section 1


But this requires white roses being perceived as a different use-value; if the use-value of a white rose is the same as the use value of a pink rose, then in all probability white roses won't be produced - unless of course roses of different colours are necessarily produced when producing roses.

Remember the duality of a commodity. It has a use value, which satisfies a need and an exchange value. An object either has use value or it doesn't. So the use value will either be 1 if an object has utility or 0 if it does not. Subsequently, if a object has no use value, it has no value.

White rose and red roses are produced because they have utility and their use value satisfies some desire for a buyer on the market.



Use value is not a continuous variable. When I say "the same use value", I don't mean different magnitudes of value. I mean, for instance, the difference between pink roses being a gift to be given in weddings, while white roses being a gift to be given in proms - in this case roses of different colours are not interchangeable; they are two different products, each one with its own exchange value.

The two different roses are not interchangeable because they of use-value. For whatever reason, pink roses have a utility in weddings and white roses have a utility at proms. Pink roses have no usefulness in your scenario at proms, thus the usevalue of pink roses is 0. Therefore the object has no value. How can an object with no value be traded?

What it boils down to is, yes, certain characteristics of a commodity due effect the utility of an object. In so much as, if there is no utility, the object has no value because utility of an object determines if it has an exchange value.

This is something which i believe you was trying to convey.

[Luís Henrique]

Originally posted by [email protected] 29, 2007 01:51 pm
Remember the duality of a commodity. It has a use value, which satisfies a need and an exchange value. An object either has use value or it doesn't. So the use value will either be 1 if an object has utility or 0 if it does not. Subsequently, if a object has no use value, it has no value.
Yes. However, if two objects X and Y serve for exactly the same purpose, and object Y takes more labour to be produced, then it will likely not be produced at all.


White rose and red roses are produced because they have utility and their use value satisfies some desire for a buyer on the market.

Sure. What I am discussing, though, is not the reality of roses of different colour, but a hypothetical example of product identity.


The two different roses are not interchangeable because they of use-value. For whatever reason, pink roses have a utility in weddings and white roses have a utility at proms. Pink roses have no usefulness in your scenario at proms, thus the usevalue of pink roses is 0. Therefore the object has no value. How can an object with no value be traded?

No - since there are weddings and there are proms, both kinds of rose have a use-value. Supposing again that white roses took ten times more labour to be produced than pink ones, the exchange value of white roses would be ten times that of pink roses. And as both products have a use-value, both will be traded, and their price will fluctuate around their value.

However, if some cultural change made it acceptable to offer pink roses as prom gifts, white roses would lose their specific use-value. Taking more labour to be produced, they would become untradeable.

Then there is the difficulty posed by products that are necessarily subproducts of othe products. In the case of the roses, we might suppose that 10 hours of labour produced in average 9 pink roses and 1 white rose, independently of the gardener's intentions. In this case, I would argue that, if both kinds of roses have exactly the same uses, they would all be traded by prices fluctuating around their 1 hour of labour value. But if they have different uses, then they would be traded at different prices, the white roses tending to be 9 times more expensive than the pink ones (the pink roses' price fluctuating around the value of 30 minutes of labour, the white roses' around the value of 4h 30min of labour, so that the total price of 9 pink roses and 1 white rose would still fluctuate around the value of 10 labour hours).

This effect is easier to understand concerning the previous examples of collectible game cards.

Luís Henrique

[syndicat]

use-value is the ability of something to satisfy wants, desires. but this is relative. i could sharpen pencils with a knife, so a knife is useful for that purpose, that is a potential use-value of the knife. but i would much prefer to sharpen pencils with a pencil sharpener because it gives me a more uniform point and doesn't waste as much of the pencil. on the other hand, i'd want a knife, not a pencil sharpener, to cut up cucumbers. this led economists to substitute talk about preferences for use-value, to make the relational character of utility clearer.

Marx appears to use the term "value" to refer to the social investment of work effort in making something, something sufficiently useful to merit production of it. this is a very peculiar use of the term "value", and it misleads people because it is at odds with ordinary usage.

but if value is the labor invested in making useful things, how is labor a theory of it? after all, value is labor by definition. Theories are supposed to provide an explanation of something. what is LTV supposed to be an explanation of?

a problem with the theory is that the division of the proceeds of production within capitalism is affected largely by the class struggle. the decline in real wages in the USA since the '70s has happened due to the assault on unionism and worsening bargaining power of workers in the context of the global economy.

i suppose someone might say that this happens by changing the amount of labor of production that goes to meet worker consumption, and thus variable capital, and thus the rate of exploitation.

A problem with LTV is that it assumes that all labor is the same or can be so regarded. but in fact this is simply not plausible. especially since "labor" encompasses all employees in the firm, including the professional/managerial bureaucracy. in reality LTV misses an entire class division, between the class of salaried managers and top professionals, and workers below them and capitalists above them.

moreover, exploitation occurs in other aspects of capitalism besides the subjugation of wage-workers. If an immigrant goes to some predatory check cashing joint and they take some big piece out of his or her wage, that is a form of exploitation of that worker by a particular sector of capital, but as a "consumer."

[Entrails Konfetti]

Originally posted by [email protected] 26, 2007 11:50 pm
"You would be altogether mistaken in fancying that the value of labor, or any other commodity whatever, is ultimately fixed by supply and demand. 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 that value itself."
With that in mind, could we say that when supply and demand are in equalibrium with a given commoditie-- would this account for the "base value", of which is the worker's daily subsistance and the profit of the capitalists?

*Base Value because I didn't know what to call the value of the comoditie when there are no fluctuations of supply and demand at the particular point of equalibrium.

[syndicat]

comradered:
Thus use-value does not determine the value, but determines the existence of value.

and what is this "value" that use-value allegedly does not "determine" (whatever that means)?

[Nusocialist]

Originally posted by [email protected] 28, 2007 10:44 am
In the "long run", the average price approximates the value, because the price oscillates, in the same way that, if we had to choose the one typical number for (10 + sin x) we would have to say 10. But this tendency to gravitate back to any typical number relies on the idealization that economists later came to call "perfect competition." The original poster asked about articles sold by a monopoly supplier. In that case it may neither gravitate nor oscillate.
I don't think it relies of "perfect competition" as in a continuum of suppliers just a competitive market with relatively interchangeable and reproducible goods.

It is also only true, I believe, that price perfectly represents value with these conditions and within the industry which contains and its inputs contain the average organic composition of capital.

[syndicat]

in what way can competitive prices reflect "values" (whatever they are)? prices in a market certainly do NOT reflect true social costs. that's because markets permit cost-shifting behavior. when a company pollutes rather than build pollution control equipment, it is shifting the social cost to the people in the area that is polluted. a problem with the "Labor Theory of Value" is that it has no way of capturing this.

[mikelepore]

Originally posted by EL [email protected] 31, 2007 03:03 am

With that in mind, could we say that when supply and demand are in equalibrium with a given commoditie-- would this account for the "base value", of which is the worker's daily subsistance and the profit of the capitalists?


Yes, there is an equilibrium between upward and downward pressures on exchange ratios, but I think it has to be explained in terms like this: if a certain ratio isn't a fact, that activates the reassignment of capital to make the ratio become a fact. Suppose capitalists invested in farming had a choice whether to apply a minute of labor time to produce either one bushel of barley or three bushels of wheat. If the two commodities were also to have the same price, it would be financially unwise for them to do anything besides invest one hundred percent of their capital in the production of wheat and none at all in barley. Why do anything that would give you one bushel when doing something different would gives you three bushels of an identically-priced product? However, if the supply of barley did go down for that reason, its price would have to go up, because there would be some nonzero demand for that product at a greater price. Now that there is a difference in price, capital has a reason to produce some barley also. The ratio of their prices has to keep gravitating back to the ratio of labor time per unit mass of commodity 1 divided by the labor time per unit mass of commodity 2. If it didn't, it would leave investors with the unstable situation that economists call a free lunch, where simply moving capital is guaranteed to multiply it. The migration of capital destroys all of the free lunches it can find by quickly saturating them. At equilibrium, some unit of labor-time investment can produce either one three-dollar widget or three one-dollar widgets. Equilibrium has to leave the capitalist with only strategic choices, not the no-brainer choice of a free lunch situation. Funny thing, in stock market theory they call this the efficiency of a market, so they know the effect is there, not realizing that the Marxian Law of Value explains why it happens.

[Nusocialist]

Does anyone have that quote from Ricardo about things like paintings and fine wine having their price determined completely by use value?

[KC]

But this requires white roses being perceived as a different use-value

Yes it does. I don't understand what point you're trying to make?


Yes. However, if two objects X and Y serve for exactly the same purpose, and object Y takes more labour to be produced, then it will likely not be produced at all.

I don't think this is true. I think people can apply use-values to these more valuable items due to such things as status and quality, as well as affordability. In other words, some products are produced because they are more valuable, because of the status attached to them.


Does anyone have that quote from Ricardo about things like paintings and fine wine having their price determined completely by use value?

I would like to see it. Either you're misrepresenting it or it's simply wrong.

[Nusocialist]

I would like to see it. Either you're misrepresenting it or it's simply wrong.
Are you suggesting the price of a picasso is determined by its labour value?

[Nusocialist]

I found similar quotes from marx and Ricardo but not the one I wanted.


"That this (i.e. labor time) is really the foundation of the exchangeable value of all things, excepting those which cannot be increased by human industry, is a doctrine of the utmost importance in political economy; for from no source do so many errors, and so much difference of opinion in that science proceed, as from the vague ideas which are attached to the word value."
David Ricardo.

"Commodities which are monopolized, either by an individual or by a company, vary according to the law which Lord Lauderdale has laid down: they fall in proportion as the sellers augment their quantity, and rise in proportion to the eagerness of the buyers to purchase them; their price has no necessary connection with their natural value: but the prices of commodities, which are subject to competition, and whose quantity may be increased in any moderate degree, will ultimately depend, not on the state of demand and supply, but on the increased or diminished cost of their production."Karl Marx.

[Luís Henrique]

Originally posted by Zampanò@November 04, 2007 03:40 am

Yes. However, if two objects X and Y serve for exactly the same purpose, and object Y takes more labour to be produced, then it will likely not be produced at all.

I don't think this is true. I think people can apply use-values to these more valuable items due to such things as status and quality, as well as affordability. In other words, some products are produced because they are more valuable, because of the status attached to them.
Exactly (but then this means that they don't "serve exactly for the same purpose" - object X serves to a certain human necessity, object Y serves the same human necessity, plus showing others that "I can afford object Y").

In this case, what we are seeing is that exchange value is coming to determine the use value of at least some products.

Luís Henrique