The Labor Theory of Value

Marx held that it was not the labor required to produce a particular good that determined its value; rather, it was the labor "socially necessary" to produce items of that type.

What determines the "socially necessary" amount of labor? Doesn't Marx reason in circles by claiming that the market price of a good is determined by the labor socially necessary to produce it? He cannot appeal to the good's market price in order to find out how much labor is socially necessary.

An identical flaw is at the heart of a related part of Marx's theory. How can the labor required to produce one hour of a good be compared with labor hours needed to make a good of a completely different type? How can my labor as a journalist compare with Lin's labor on the basketball court? A surgeon's labor with a bricklayer's? Unless Marx arrives at a common measure of labor, he has no labor theory of value at all. He is left with distinct types of labor, and he is unable to explain how the ratio of exchange is determined when a good produced by one sort of labor is exchanged for a good produced by another. If exchange value, according to Marx, gives us the basis for a true science of value, how is the ratio of exchanged measured without appeals to the goods market price?

Also, what justification does Marx have for conjuring up "exchange value" independent from "use value"?

No, the reasoning isn't circular.

If one company makes chairs on the basis of 1 worker hour per chair (so 10 workers working for ten hours make 100 chairs) and one company makes chairs on the basis of 10 worker hours per chair (so 10 workers working for 10 hours make 10 chairs) then the 'socially necessary labour time' to make chairs is the average of the two (200 worker-hours makes 110 chairs so the average is 1 hour 45 minutes ish).

That's all 'socially necessary labour' is - the average labour to produce something (taking into account more- and less-productive firms). Nothing to do with price.

That's not 'labour' though.

Exchange value is only market value, it's not independant of it, don't know where you got the idea they were seperate from.

Exchange value is the value that goods have when exchanging against each other. If it takes one hour to make a chair, but 10 hours to make a bed, then the bed will cost more. More labour has gone into it.

The fact that it exists? 'Exchange value' is precisely the 'added value' that labour adds to things to transform them into commodities. You'd pay more, I expect, for 10 litres of petrol that have been drilled, refined, tankered to the garage where they're put in the ground, and then come out of a pump into your car, than you would for a claim to 10 litres of petrol that are still under the ground and you had to fetch and refine yourself. Why?

Because in the first place other people have laboured to make the petrol more useful to you. Their labour power has increased its exchange value. You could do it yourself of course, but you would have to put in all that work. Maybe you would. You could exchange your labour power for theirs. Or, you could pay someone else to do it - but, probably it would cost you more than the saving you'd make from just buying pertrol that had added value by being laboured on already.

How much 'value' is added by this is the exchange value. The exchange value represents what the labour necessary sells at in the open market. That can be calculated for anything. In real life, what happens is that areas where labour is under-credited (the cost-estimation of labour is below its market value) make more profits and attract more competition; in theory it balances out.

Not sure any marxist is gonna turn round and say that the market mechanism is foolproof; but labour, being a commodity, sells at its price on the market just like other commodities.

Then it is worthless as a theory of value derived from and regulated by the operations of commodity markets.
Of course journalism and professional basketball playing are labor.

It's about the production of commodities. How is it then worthless? Is it really your contention that it must be 1-circular or 2-worthless?

I'd agree that journalism is - it produces a commodity, 'copy'.

I'm not sure what commodity is being created by a basketball player though.

Because prices do not correspond to the specific character of the utility. In other words, use value is determined by the nature of the product, whereas prices indicate that there is also another aspect to this issue, namely that different use values are in fact NOT incommensurable because they are the product of human labour as such (if they were incommensurable, than no exchange could take place). That's why commodities are both use values and exchange values.

You're missing the point completely. Anyway, Blake was wrong to say that value has nothing to do with prices. But value theory, or the labour theory of value does not aim at explaining price fluctuations. It is aimed at showing that there is a definite basis for the basic economic mechanism in capitalism, and that basis in fact involves exploitation of labour power, or in other words, it involves surplus labour time appropriated by the capitalist as profit (though, of course, this doesn't always happen because profit is dependent on sale on the market, but workers produce value irrespective of whether the capitalist will be able to make a profit by selling the commodities). Anyway, you're wrong to conclude that value is derived from market operations, and seem to be confusing value with either profits or prices. For Marxists, value, price and profit are different from each other both as real phenomena found in economic practice of capitalist production and exchange, and as concepts in criticism.

Of course they are. But they're not productive labour as classical bourgeois economics and Marxist critique of political economy define it, simply because the labour of a basketball player produces no new value. Though, this shouldn't be taken as a moral condemnation or something like that (Smith, for instance, used the notion of productive/nonproductive labour to uncover the wide possibilities for new labour power who were employed as servants in the mansions of the aristocracy, and thus condemning the economic practices of the aristocracy) because non-productive labour cannot be judged automatically as not necessary (indeed, in many cases it's very much necessary).

Just to criticize some of what seems to me as misconceptions here:

It's wrong to formulate the definition of "exchange value" as you did. Exchange value is definitely not market value because there is no such thing as market value, there are market prices.
To be more precise, the term "exchange value" should be understood in opposition to "use value" becuase utility, use value is something all modes of production have in common, they all produce useful products (this is a tautology, and banality, but no hurt in repeating the obvious), whereas exchange value is specific to capitalism in that it becomes the purpose of production and the basic regulatory mechanism.

Come to think of it, it might just be that I find the formulation "market value" combined with "exchange value" potentially misleading and not that clear (because it's obvious we're arguing the same thing in essence).

Now, to go back to the notion of incommensurability I mentioned. I think this is an important point in that actual exchange would be totally erratic and subject to all sorts of personal whims, and while we can notice a good deal of "erratic" price fluctuations, we cannot actually say that exchange in capitalism functions in that way. That's also what the labour theory of value explains, because it's based on a concrete, definite social-economic phenomenon which accounts for the way commodities are exchanged agianst one another.

Wherein lies the commensurability? An exchange is not an equality, but a double inequality. If I trade one of my apples for one of your oranges, then I value one orange more than one apple, and you value one apple more than one orange. Otherwise, no exchange would take place.
This begs the question of how Marx arrives at a science of economic value of labor. IOW, exploitation of labor power already assumes what needs to be established.

Pay more attention when reading.
Commensurability is due to the fact that commodities are products of human labour as such. Labour time is the factor of commensurability. Human labour is the lowest common denominator, so to speak. And the act of exchange in fact does establish an "equality" between the exchanged products, without which all exchange would be totally erratic, as I've already stated.
And you're using the word in a different way than I do when you say that you value one orange etc. The value of commodities has nothing do to with this personal, subjective process of establishing preference.
Broadly, there's at least two ways the word is used. As an ethical/preferential item, as you do, and as a definite concept in economics and Marxist critique of political economy. The latter is independent of personal preference and judgmenet.

How? By studying the economic practices? I'm not sure I understand what it is you're asking here.
If you're asking why labour time is value, then the answer would be because this assumption is verified by the study of exchange, and the questions posed by the existence of profit.

Again:
Do you not see the problem of using human labor as the basis of a science of economic value?

Man, it's labour time. Labour time as such.
If you don't accept this, then I hope to see you try and depict what exactly accounts for the commensurability of different use values as commodities which exchange against one another. We established that exchange that is not totally erratic is simply not possible withouth there being an element of commensurability between different commodities (and consequently between different concrete labours).
But I can't see what you aim at with that quote you provided. No one stated that labour power, as a commodity, is priced the same. To address the concrete example: "How can my labor as a journalist compare with Lin's labor on the basketball court?" (btw. I hope Knicks make it to the playoffs)

Because time, the expenditure of time, is the common factor. I'm actually at a loss as to what you're implying here. We've already established that Lin doesn't work as part of the productive labour force. He doesn't produce new value. But how does the question hanging in the air here, why is Lin's labor priced the way it is, how does this relate to value as determined by socially necessary labour time to produce a specific commodity? I don't get it. To repeat, socially necessary labour time (presupposing a certain degree of labour productivity accross the branch) is determines the ration of exchange in that a commodity which takes 10 hours to produce contains more value than one which takes 5 hours to produce.
Of course, if the commodity whose value stands at 5 hours of labour can in fact sell at a higher price, theoretically, if the concrete situation with competition and market saturation is such and such.

And its' not human labour, but socially necessary labour time that stands as the basis for a scientific inquiry into value.

The reason I defined it like that is because 'exchange value' is not the same as 'price'. Exchange value is not price, but it is the value around which prices fluctuaute.

There is no Marxist 'market value' certainly; but exchange value conditions market price without actually directly setting it.

:cool:

Here's thought experiment for you trivas7:

You have a car. It needs fuel.

I can either sell you 10 litres of fuel that has been pumped up from underground by people who used heavy machinery (built by other people) and processed by yet more people that work at the refinery (built by a different bunch of people) and put in tankers (built by more people) and driven by someone else to a petrol station (built by yet more people) and dispensed from a pump into your car (you do that yourself, I don't charge for that bit).

Or, I can sell you some unprocessed crude oil still under the ground.

Which of those do you chose?

If it's the second one, you have to do all that labour (the building the machines for extraction and processing and transportation, frankly you don't need the petrol station). But if you don't think LTV is real, what difference does it make?

If it's the first one, then why? There are 8 stages in that process at which human labour adds to the value of the crude; the stages I put in bold. You don't think human labour adds to value. Therefore, there's no reason to pay for those stages. So you may as well do it yourself.

Overall, how long it takes to produce something.

How many hours.

supply and demand being equal .....

(btw education counts as labor as far as many marxists are concerned).

Things can have use value and have 0 exchange value (homemade socks for example), and vise versa (take stocks).

Labor also has a value based on the labor it takes to allow for that kind of labor - this is why skilled labor that takes training or special education has a higher value and this is then passed onto the value of the commodities produced. Just as value is added to a commodity by adding more labor (a pot without decoration, all else being equal, will be worth less than a pot with either a industrial print or a hand-painted pot. Where "socially necessary labor time" comes in is that if the market is dominated by industrially produced pots, then you won't be able to make equivalent pots by hand and expect to sell them at 5 times what the industrial pots are valued at. Of course there are nice markets for handmade goods, but this is outside the normal way the economy operates, they are basically selling the "hand made" factor, not the pot itself to secure the sale at extra cost.

Again, things like the prices and value of prestige or collectable items or the value of "celebrity" aren't really the norm, it's like saying, well there are sometimes tidal waves that don't fit into any regular tidal pattern so therefore the idea of tides in general is wrong. For the second examples, what I said above applies. Education, through the value of the labor of teachers, is passed on, in a very general way usually, to the laborer. People who work in industrial manufacturing have a lower value because they have been de-skilled and it doesn't take much to replace that laborer with a new one. Someone who is specialized, built up some training, etc, has added value in their labor crudely related to how much value their education or the time it took the company to train someone is.

If you look at Capital, Marx spends a lot of time going over all these concepts and explaining his formulations and then he moves onto real life examples and basically says, "so that was the theory, but now let's look at how this doesn't actually play-out exactly like this in real life". He then goes through and shows how his concepts are fundamentally at play but are not some kind of key for decoding why X commodity does this or that or costs this or that because in the real world you can't isolate out all the little factors at play in a dynamic economy.

As a parallel, you can look at Darwin's theories, but you can't predict what may evolve from Kangaroos down the line, you can't know evolutionary theory and know exactly how and why such and such evolutionary change happened, but these theories explain the processes and the fundamental factors at play. Or with laws of Physics, you can look at Newtonian ideas and say, well that sounds good, but when I push a ball down the hill, it doesn't actually keep going, it doesn't even follow the same path or roll as far each time. Knowing gravity tells you what is likely to happen if a ball rolls down a slope, but it can't tell you everything, you'd have to look at the other forces at play: the bumps in the ball, mass, friction, the way it was pushed, the bumps in it's path, the atmospheric humidity, wind, etc.

It's the same with the economy. What Marx does is try and isolate out all the little variables and interrelations of the economy to isolate the main levers and gears - where does value come from, how is profit made, etc.

What anti-marxists (and anti-Darwinists for that matter) always try to do is point to exceptions and then say, well because this can't be explained by the basic theory easily, then the whole theory is wrong.

Where does the market price come from? Why is it that a decorated pot, all else being equal is always more valuable than a non-painted pot? Labor is the factor and it's an important factor to capitalists because it is flexible - a machine will cost so much and will be the same for anyone else more or less, it will cost the same amount but produce the same amount. Labor on the other hand can work the same amount of hours but be made to produce more or produce faster or get paid less to produce the same amount of value, so labor is the X factor in capitalism. Since the classical economists (who did recognize the centrality of labor in determining value) centuries and decades of intellectuals in the service of capitalism have tried to gloss over this or refute it because it's also a weak link in the system and if you say profits come from labor, and there's a labor movement, from a capitalist perspective, you have a tricky situation.

So economists don't look to the fundamental workings of the economy but rather all the surface features since a better understanding of the what and how rather than the why can help capitalists make money. It's the same with any developed system of exploitation. How did slave-owners justify slavery: they often used paternaism and would say without the slave-masters housing and feeding the slaves, they'd be homeless and without education or marketable skills. Well, on the surface this is true, but any look at how that society really functioned and the history of how those slaves got there in the first place tells us that it's actually not slavery that's helping "ignorant" people, but slavery that's keeping that population uneducated and without rights.

All of this is besides the point. In a market society every individual mind is accorded a dual role in determining the quantities of monetary calculation. In their consumer roles, all people make monetary bids for the existing stocks of final goods according to their subjective valuations, leading to the emergence of objective monetary exchange ratios
which relate the values of all consumer goods to one another. Nothing in a labor theory of value explains this process.

So you're happy to buy crude that you have to drill for and refine yourself, I take it?

Yes, I had noticed you'd ignored my question, as it pisses on your 'theory'.

By the way, you owe me $8 for that pissing.

You're talking about price, not value, this is clear by now.

So you are arguing that demand creates the price? There's a little truth to that in that the market sets the specific price (which can swing up and down), but not the relative value of commodities.

So let's say there is equal demand and stocks for two similar items. Would they have the same market price then? A computer made from plastic would be the same price as a toy truck made from the same amount of plastic if the supply and demand were equal? No, all else being equal, the value of a computer is higher because there are a lot more working parts (i.e. past labor added) and a lot more labor in the construction, a shortage or high demand might make both the price of computers or toy trucks go up, but the relative value of something that requires less labor will not be more than the relative value of something that requires more labor.

Hell, why are IKEA chairs $5 and the same style chairs at Target $25? Because IKEA passes the labor onto you (less manufacturing assembly, less transportation labor costs by shipping disassembled compacted goods), whereas the completed chairs require more labor.

THE LABOR THEORY OF VALUE IS THE PRICE WHEN SUPPLY AND DEMAND ARE AT EQUILIBRIUM!!!!!!

Jesus christ. Trivas, how the hell can you miss this, its in basically every post.

Lol

Can someone explain the Labor Theory of Market Prices to me? Oh, yeah that doesn't exist.

People don't dive for pearls and therefore they are expensive. They are expensive and therefore people dive for pearls.