Value question

[Labor Shall Rule]

I've never read Capital, nor am I that experienced in Marxian economics, so I normally have problems defending the Labor Theory of Value in other forums.

How do I respond to the argument that the market decides everything, and that value is subjective?

[jake williams]

The fact that it's complete and utter bullshit, firstly. Are you seriously saying that you're having trouble with the argument that the market determines "correct" prices? The best response to that argument is literally along the lines of "You're a complete retard and I can't talk to you".

[mikelepore]

People who say that don't know what "subjective" means. You can look it up in reference tables how many ounces of iron will currently exchange for an ounce of gold, so there is a factual truth there that is independent of whether someone believes it or not. That means it's NOT subjective.

[RNK]

Saying it's complete and utter bullshit is correct but doesn't go far in explaining why it is incorrect.

The usual arguement goes something along the lines of "Corporate interests are public interests, because it is in the corporation's interest to appeal to what the public wants as public trust, ie a public willing to buy the commodities of that corporation, is necessary for the corporation's own survival".

This, of course, is a very humanist, neo-liberal arguement and has little (but some) materialist basis.

On the surface, if you look at the relationship between owners of production and consumers in its most simplist form, you can come to this conclusion. It's a conclusion which in no way attempts to peel back any of the 'layers' of the issue and analyse it scientifically.

First off, it does not take into account the nature of the monopoly which is one of the capitalist's most effective and destructive tool.

The first line in the dictionary on the definition of monopoly reads:


.exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices.

That single sentence is enough to dismiss this myth of "corporate humanism". For all intents and purposes you could tell someone who brings up this arguement to look up the word monopoly in the fucking dictionary.

But some people are stubborn, and expect you to explain why (even though this is a basic fact which many people, including a lot of capitalists (in the realm of inter-capitalist contradiction), accept, and it a phenomenon which is highly studied and analysed both inside and outside of revolutionary socialist theory).

The concept of co-operative monopoly is also completely alien to many people -- the idea that corporations which hold similar interests would act in accordance with one another, under unspoken or spoken agreements. The Security and Prosperity Partnership, for one, is an indication of the existence of this co-operative exploitation. The SPP in short is a multinational forum where industry and business leaders -- ie, corporate interests ranging from military manufacturing to Wal-Mart -- gather together in expensive chateaus, with government officials, and discuss how best to co-operate on economic matters (hence the Partnership part of the name).

So what happens when you have all of these individual monopoly capitalist interests sitting down and agreeing on co-operative measures? You have what amounts to complete control over all facets of the economy, from agreements on wage caps, anti-unionization measures, price increases and production cuts all in the name of "economic growth" (which, by the way, has become synonymous with benefit to corporate interests in the capitalist system).

[gilhyle]

It is true that at the time prices are set they are determined by the interaction of supply and demand (all other things being equal).

However, what is it that determines price ? What is demand ? What is supply ? Demand came from somewhere, it didnt magically reach a certain level that just happens to exist. Equally supply. Whatever product you are talking about, decisions had to be made to invest capital, devote labour etc. in order to create that supply. Equally, the idea that there is a 'price', a market clearing price, is itself a fiction that only happens because of the intervention of the State.

So it doesnt answer much to say that price is set by supply and demand. It is an obvious and banal fact about price. We need to understand the very artificial situation in which there is a certain demand and a certain supply and a process for concluding contracts of sale and a process for setting a price. None of these are 'natural'.

To understand where the demand and the supply and the price come from, we need to understand what is involved in separating labour from capital, getting people to market, getting people to work in factories. etc.

The labour theory of value is not about how prices are set, it is about how a society comes to organise itself around the purchase and sale of commodities. For the vast majority of production to happen in the commodity form, the exchange of commodities has to be consistent. In other words commodity production will not be generalised if a sack of potatoes sells one day for one price and the next day for a radically different price. Why would anyone go into potatoe production if there was not a proportion between the price she or he could regularly get ? Of course price will vary with supply and demand, but considering all the demand and all the supply of all the products together there must be on-going proportions that make some sense by reference to a common standard. That common standard, Marx proposes is the time it takes to produce commodities.

In practice, price never accurately reflects value, but it circulates around value. Consider what would happen if it didnt. If you could systematically sell a commodity for a price that did not reflect the time taken to produce it then the most effective use of anyone's time would be to produce that commodity, so supply would rise and the price would fall.

In other words, the Law of Value and supply/demand are not alternatives, suply/demand actually implies the law of value.