Labor Theory of Value

[ar734]

Among all the Marxists, Leninists, M-Lists, Trotskyists, Stalinists, reformists, revolutionaries, Anarchists, Maoists, etc. etc

Is there anyone here who does not think that the Labor Theory of Value is valid?

[syndicat]

There are Marxists who reject it, e.g. GA Cohen.

There are various problems with it. It's not a comprehensive theory of prices because it's only a theory of readily reproducible commodities, not any thing that is bought and sold (e.g. land isn't a readily reproducible commodity). It has an overly simplified scheme in which there are only 2 classes, owners and those who are employed for a wage. It leaves out the bureaucratic class of managers, military officers, judges, etc. Moreover, there is the socalled "transformation problem" due to the fact that labor time and prices don't correlate when there are differences in capital intensivity. Obscure discussions about this make the theory less than obvious.

[Tim Finnegan]

It has an overly simplified scheme in which there are only 2 classes, owners and those who are employed for a wage. It leaves out the bureaucratic class of managers, military officers, judges, etc.

Is that really a case of Marx being "over-simplistic", rather than simply engaging in a certain degree of functionally necessary reductionism? The other classes are not denied, but are simply marginalised, because they are not the primary social forces in capitalist society. These classes are in practice hangers-on of the capitalist class rather than possessing an independent economic basis, so can't their role in capitalism be addressed as the theoretical model is expanded and the demand for their performed social function emerges?

[ZeroNowhere]

Not among the Marxists. Among the others, there are people who don't uphold the labour theory of value, yes.

[ar734]

There are Marxists who reject it, e.g. GA Cohen.

There are various problems with it. It's not a comprehensive theory of prices because it's only a theory of readily reproducible commodities, not any thing that is bought and sold (e.g. land isn't a readily reproducible commodity). It has an overly simplified scheme in which there are only 2 classes, owners and those who are employed for a wage. It leaves out the bureaucratic class of managers, military officers, judges, etc. Moreover, there is the socalled "transformation problem" due to the fact that labor time and prices don't correlate when there are differences in capital intensivity. Obscure discussions about this make the theory less than obvious.

I think your argument is

1) land is not a commodity, but it has value, but not value created by labor. What about land reclaimed from the desert, turned into cropland or golf courses. All of that value would have been created by labor. The initial land would have no labor created value.

2) would not the managers, etc., be paid by a part of the surplus value of productive labor (now including service labor?)

3) labor time and prices will not correlate because labor is not paid in full for its product. The price includes the difference between the labor time and the surplus value. The change in wages due to "intensity" of capital would be the fluctuation of the market, supply and demand.

As far as the "transformation problem" what exactly is that, say, in 25 words or less? I have seen it described as the problem of the transformation of labor into price. Is that basically what it is?

[Hoipolloi Cassidy]

Is that really a case of Marx being "over-simplistic", rather than simply engaging in a certain degree of functionally necessary reductionism?

A standard explanation is, that Marx returns to the issue and clarifies the relative (e.g., dialectical) "essence" of the LTV in Kapital III. Which gives any number of capitalist economists an excuse to a) argue that Marx was "wrong" in Kapital I, and b) repeat the points that Marx makes in Kapital III as if they were their own. Always a favorite pastime...

[syndicat]

the bureaucratic class are not a mere dependency of the capitalists. that's why "socialist" regimes that eliinated the capitalists still have a bureaucratic class, which then becomes the ruling class.

bureaucratic class is based on its organizational & information flow monopolies, that is, relative monopolization of the levers of decision-making and info & expertise related to that decision-making. this was a disagreement between Marx and Bakunin. Bakunin saw that there was a bureaucratic class based on its possession of the administrative apparatus in the state and its control over the coercive forces. In the corporate capitalist era there is a similar bureaucratic class in the corporations.

1) land is not a commodity, but it has value, but not value created by labor. What about land reclaimed from the desert, turned into cropland or golf courses. All of that value would have been created by labor. The initial land would have no labor created value.[

The labor theory of value does not say...and cannot say...that labor creates value. That's because, for Marx to account for prices, he has to say that it is the current technical conditions of production....the current amount of labor time needed...that determines price, not the amount that it actually took to produce X. in other words, between the point where X is created and some later sale date there may be technical inovations that lower required labor, and this then becomes the amount of labor that correlates with price, not the actual amount of labor.

see GA Cohen's discussion of LTV for a further elaboration of this point.

2) would not the managers, etc., be paid by a part of the surplus value of productive labor (now including service labor?)

you mean, do they participate in exploitation of labor? Yes. but they are also hired labor, and some of them contribute to some extent to necessary labor time to produce commodities.

3) labor time and prices will not correlate because labor is not paid in full for its product. The price includes the difference between the labor time and the surplus value. The change in wages due to "intensity" of capital would be the fluctuation of the market, supply and demand.

As far as the "transformation problem" what exactly is that, say, in 25 words or less? I have seen it described as the problem of the transformation of labor into price. Is that basically what it is?

3 is wrong. in Marx's labor accounting scheme, part of the time that workers labor is for free, that is, it is over and above the labor time it would take to produce what they consume. so they are not being remunerated for that extra labor. that is M's definition of "surplus labor". but the price correlates with total labor time, not just the part workers are remunerated for.

the transformation problem arises because if we look at the value of a car and compare it to the value of a shoe, price of the commodity per unit of labor time may be greater for the car than for the shoe, due to the high productivity of labor in auto manufacturing due to all the investment in equipment. so how does M get around this apparent violation of LTv?

[Tim Finnegan]

the bureaucratic class are not a mere dependency of the capitalists. that's why "socialist" regimes that eliinated the capitalists still have a bureaucratic class, which then becomes the ruling class.

Can you really lump all bureaucrat together like that? In the USSR, to take your example, the apparatchiks and the nomenklatura were regarded as discrete strata; the fact that they sat within the same bureaucratic structures no more suggests fellow class-membership than it suggests that a village priest and the pope are part of the same class.

bureaucratic class is based on its organizational & information flow monopolies, that is, relative monopolization of the levers of decision-making and info & expertise related to that decision-making. this was a disagreement between Marx and Bakunin. Bakunin saw that there was a bureaucratic class based on its possession of the administrative apparatus in the state and its control over the coercive forces. In the corporate capitalist era there is a similar bureaucratic class in the corporations.

But the bureaucratic class, if we accept such a concept, only has such "monopolies" insofar as they are delegated to them by a ruling class (within or without the state), and often share a good deal of elbow-room within such bureaucratic apparatus with white collar workers. It's not an independent economic basis.

[RNL]

Here's a question I haven't been able to find an answer to: who originated the term "labour theory of value"? It must have been coined by an opponent of the theory.

[ar734]

I thought it was David Ricardo or Adam Smith.

[Zanthorus]

I think it's stretching it to say that you can be a 'Marxist' and reject Marx's theory of value (I'm not sure if I like 'labour theory of value' since it contributes to the confusion that Smith, Ricardo and Marx are all talking about the same thing when they talk about value) since as far as I can see the theory follows quite naturally from Marx's idea that the uniquely human capacity or 'species-activity' is social labour, and in capitalism we have production organised on the basis of private entities. The corrollary of this is that the social character of labour is only affirmed through the act of exchange. Marx even directly states in 'A Contribution to the Critique of Political Economy' that, given his premises, the theory of value becomes a tautological proposition: "Since the exchange-value of commodities is indeed nothing but a mutual relation between various kinds of labour of individuals regarded as equal and universal labour, i.e., nothing but a material expression of a specific social form of labour, it is a tautology to say that labour is the only source of exchange-value and accordingly of wealth in so far as this consists of exchange-value."

It's not a comprehensive theory of prices

Marx wasn't trying to explain prices, his explanation of prices only comes in Volume III of Capital. To paraphrase a quip made recently by the libcom user Angelus Novus, 'Marx' is not the German word for 'Ricardo'.

It leaves out the bureaucratic class of managers, military officers, judges, etc.

From the theory that value is equal to abstract labour-time it does not logically follow that there can only be two classes. In fact Marx mentions the existence of various transitional classes that don't fit into the capitalist/worker schema at the start of the chapter on class in Volume III. Nonetheless, the relation between capitalists and workers is the fundamental relationship. As a side note, Paresh Chattopadhyay provided something of an answer to this 'critique' of Marx in 'The Marxian Concept of Capital' by noting that within Marx's work one can find a distinction between functional capitalists who carry out the role of imposing the laws of capital within the production process and real capitalists who own capital, with the former acting as hired functionaries of the latter. This division is latent within the division between financial and industrial capital but finds it's highest expression in the division between enterprise owners and managers.

[ar734]

The labor theory of value does not say...and cannot say...that labor creates value.

"Human labour power in motion, or human labour, creates value, but is not itself value. It becomes value only in its congealed state, when embodied in the form of some object." Capital, Ch. I

That's because, for Marx to account for prices, he has to say that it is the current technical conditions of production....the current amount of labor time needed...that determines price, not the amount that it actually took to produce X. in other words, between the point where X is created and some later sale date there may be technical inovations that lower required labor, and this then becomes the amount of labor that correlates with price, not the actual amount of labor.

But technical innovations don't happen immediately. A car may be worth 1,000 when it comes off the assembly line, and six months later it may be worth 500 because of increased productivity. The change in price is because of the reduced necessary labor time; but does that change the fact that the original worker was not paid for the surplus labor he/she put into the car?

3 is wrong. in Marx's labor accounting scheme, part of the time that workers labor is for free, that is, it is over and above the labor time it would take to produce what they consume. so they are not being remunerated for that extra labor. that is M's definition of "surplus labor". but the price correlates with total labor time, not just the part workers are remunerated for.

That much is clear. The worker doesn't work for "free." He is not paid the full value of his work..the difference is profit to the capitalist.

the transformation problem arises because if we look at the value of a car and compare it to the value of a shoe, price of the commodity per unit of labor time may be greater for the car than for the shoe, due to the high productivity of labor in auto manufacturing due to all the investment in equipment. so how does M get around this apparent violation of LTv?

With higher productivity, the value of the commodity will fall, not rise.

"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." Capital, Ch I.

If the labor theory of value is not valid, then what is the point of socialism? If workers are not being exploited then why bother???

[ar734]

Marx even directly states in 'A Contribution to the Critique of Political Economy' that, given his premises, the theory of value becomes a tautological proposition: "Since the exchange-value of commodities is indeed nothing but a mutual relation between various kinds of labour of individuals regarded as equal and universal labour, i.e., nothing but a material expression of a specific social form of labour, it is a tautology to say that labour is the only source of exchange-value and accordingly of wealth in so far as this consists of exchange-value."

Wasn't Marx making a distinction between concrete labor (the actual tailor, e.g.) and abstract labor (the labor of all workers, treated equally?) Concrete labor produces use-value, abstract labor produces exchange value?

[Desperado]

Like nearly all economic theories scientific falsifiability is lacking. There are too many vague variables - "socially necessary" being one of the prime examples.

For me, the central issue is not that the workers create value, it's that the capitalists add none.

[Zanthorus]

Like nearly all economic theories scientific falsifiability is lacking.

The idea that force is equal to mass times acceleration is not 'falsifiable'. It is a definition. Nevertheless it is incredibly useful in physics.

[Rowan Duffy]

This is a good introduction to the transformation problem, though it does lean towards the TSSI. There are other approaches, including throwing out the arguably unnecessary aggregate constraints that Marx imposes.

http://kapitalism101.wordpress.com/w...ation-problem/

In terms of falsifiability we have empirical evidence of the LTV.

http://www.wfu.edu/~cottrell/eea97.pdf

[RNL]

I thought it was David Ricardo or Adam Smith.

I doubt it. I'm pretty sure it must've been one of the early marginalists. I'd be very interested to know when the term was first used.

[ar734]

Like nearly all economic theories scientific falsifiability is lacking. There are too many vague variables - "socially necessary" being one of the prime examples.

For me, the central issue is not that the workers create value, it's that the capitalists add none.

The capitalists may not add any value, but, more than that, they take value that they don't pay for. At least, according to Marx and the LTV.

I think there is evidence of it: Workers produce and they get a wage. If the value of what they produce is equal to their wages then there is an even exchange. However, if workers produce more than their wages, then the workers are getting short-changed. Almost all statistics show that since 1980 productivity has gone up far more than wages. Somebody is keeping the difference and it isn't the workers.

[Veg_Athei_Socialist]

What I would like to know about the LTV is how is it decided what the value of labor is for a unit of socially necessary labor time? If I work on a farm planting for 1 hour, who is to say if that one hour is worth 10 cents or 10 dollars? How is it decided what the value of a unit of labor time is?

Also, what about comparing a job such as apple-picking to that of a doctor. Say they work the same amount of time, wouldn't their labor be worth the same value? Then why is it that doctors make so much more then?

[VeritablyV]

The Labor Theory of Value would also apply in the previous modes of production, correct? In Feudalism it would most likely be surplus produce as opposed to monetary surplus, but none the less still result of labor-surplus?