On Marx's Labor Theory of Value

[Toro]

Good example of how Marx's labor theory of value can lead to a sub-optimal outcome of wealth and production. But then again, students of economics know this.

There is a numerical example of why this is so, then the author goes on

Now it should be clear that this labor-theory-of-value-based analysis makes no sense at all. The proprietor families starve themselves for a decade, and yet Marx views them as exploiters? The heavy investments of the proprietor class and their resulting demand for labor raises the real wage by 50%, and yet the working class is oppressed? Something is very wrong here.

Now at this point the standard response is that the example is rigged: that in the real world those who own property and hire labor and live richly gained their wealth not through sacrifice but through a combination of luck and theft and having chosen the right parents. Thus it is unfair to set forth an example in which the proprietors' moral claim to their higher income is so clear and strong.

And the rebuttal is that, yes, this example is rigged: that's the point. The aim is to construct useful analytical categories that will help one identify and assess injustice. The aim is not to construct analytical categories--like the labor theory of value--that claim to find injustice whether there is in fact injustice or not. The fact that the labor theory of value finds injustice whether it is there or not is a sign that it is not the brightest light on the tree of good ideas.

Marx's labor-theory-of-value-schema makes no distinctions between profits on capital that have their origins in luck, theft, and choosing the right parents on the one hand; and profits on capital that have their origins in sacrifice, industriousness, or flashes of genius on the other. They are all, to Marx, "exploitation," "unjust enrichment," "extraction of surplus value." They are all, to Marx, signs of evil. But in this particular example the proprietors are, in reality, not evil. The proprietors are, in reality, public benefactors. The effect of their savings and investment is to raise not just their own incomes (after an extended period of sacrifice) but everyone else's incomes as well.

Thus the labor theory of value category of "exploitation" does not map onto what either ordinary language or our moral intuitions call "exploitation." There are social and economic changes that are good that are, in Marx's schema, increases in the rate of exploitation. There are social and economic changes that are bad that are, in Marx's schema, increases in the rate of exploitation. It's simply not a useful tool for either moral philosophy or political action.

Moreover, the labor theory of value is of little help in predicting what average market prices will be. It's not a useful tool for economic analysis either. In my view, the labor theory of value is pretty much useless.

Grasping Reality with Both Hands: Lire le Capital: Mail Call

I agree.

 

[Diuretic]

The proprietor families starve themselves for a decade..

Wouldn't that be impossible? They'd all be dead well before ten years was out.

 

[dilloduck]

The proprietor families starve themselves for a decade..

Wouldn't that be impossible? They'd all be dead well before ten years was out.

The defintion of starving now means you don't own a plasma TV, two SUVs and haven't had cosmetic surgery. We're spoiled, greedy and envious.

 

[Skull Pilot]

I read a bit on this same subject in Inclined to Liberty

The author used a bit more comic relief to make the same point. He used painting as an example, i'll use something more germane to me.

If Marx is right, the chair that , as an amateur wood worker, takes me 40 hours to make would be worth more than the chair a master woodworker can make in 10 hours.

 

[Toro]

The proprietor families starve themselves for a decade..

Wouldn't that be impossible? They'd all be dead well before ten years was out.

He's being figurative, not literal.

 

[Diuretic]

The proprietor families starve themselves for a decade..

Wouldn't that be impossible? They'd all be dead well before ten years was out.

He's being figurative, not literal.

I'm not so sure