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People who don't believe in the Labour Theory of Value are STILL stupid

Some time ago, I wrote an entry called "People who don't believe in the Labour Theory of Value are stupid." I still believe this and maintain that any scientific analysis of capitalism has to begin with the Labour Theory of Value. And yet I keep encountering economic "scientists" who not only hold the most idealist notions about value, but who are willfully incapable of understanding the Labour Theory of Value.

Take for example this supposedly authoritative analysis from (surprise, surprise) a libertarian site:
"According to intrinsic theories of value, value is inherent in objects; remains constant despite changing demand, the passage of time, and other factors; and can be "objectively determined" by calculations based upon some fundamental scientific principle. The labor theory of value is clearly an intrinsic-value theory. [...] The other approach is the market-exchange theory. According to this theory, value is not inherent in objects, but is a product of many different consumer judgments. According to market-exchange theories, value depends upon people's desires: the more they esteem an object and are willing to trade for it, the more it is worth. This theory is the basis of free-market capitalism, which Marx bitterly opposed."
When I see these straw-person versions of the labour theory of value I assume two things: 1) the author has never really read the text s/he's trying to critique; 2) the author is willfully distorting her/his source material. In this case, the author is one Donald C. Ernsberger and, from the quality of his entire analysis, I'm almost certain he's an economics undergraduate. Like a typical undergraduate, his paper sets up a weak and distorted version of the theory he is trying to attack so that his argument against it will look strong.

But the analysis above is completely wrong. This binary between labour theory of value and market-exchange theory is not so simplistic. For one thing, Marx was against the entire notion that value (namely exchange-value, and I doubt that Ernsberger really understood Marx's division between use-value or exchange-value properly) was inherent in objects like a Platonic essence. A commodity's "intrinsic" value is social, not supernatural, and value here does not mean "price" as Ernsberger's paper seems to imply (that comes later, the transformation problem). A commodity is valued as a commodity because it has been produced by human labour. A commodity would not exist without human labour - that is its "intrinsic" value.

Human labour, therefore, is what gives things value. As I asserted in my earlier entry, if there were no humans to make things (or to make the things that make things, or to make the things that make the things that make things, etc.) then there would be nothing to exchange. Value, especially exchange-value which is the prime value of capitalism, is not something that is intrinsic in an object and Marx did not believe this as Ernsberger assumes. Value is always socially and historically determined and the Labour Theory of Value premises value upon human agency and production because humans produce society and themselves historically and socially.

Nor did Marx ignore the fact that supply and demand (the supposed origin of value for Ernsberger's "market-exchange theory") existed and connected to value. His point that labour was the source of value. Again, it's really illogical to believe that exchange - the market's judgement and consumer desires - is the source of value if there was nothing created and produced in the first place. If exchange-value is not produced by human labour there is no exchange. Exchange just doesn't appear in nature without people exchanging: this was Lukacs' point about reification. As the authors of Fundamentals of Political Economy, the Marxist textbook designed during the Cultural Revolution, put it:
"Because Marx's labour theory of value provided theoretical guidance to proletarian revolutionary struggles, bourgeois economists tried their best to establish all sorts of anti-scientific theories of value in a vain attempt to separate the relations between value and labour… [One] popular theory among the bourgeois vulgar economists was a supply-demand theory of value. [...] The supply-demand theorists of value simply cannot explain what determines the value of a commodity when supply is equal to demand; neither can they explain why, in the changing relations between supply and demand for various commodities, some commodities are consistently more expensive than others." (Fundamentals of Political Economy, pp. 70-71)
In any case, by establishing a simplistic and weak version of the labour theory of value, the bourgeois economist Ernsberger (who is just a paradigmatic example of so many other simple-minded and parascientific bourgeois economists) is able to make all sorts of absurd arguments. For example, he argues that the labour theory of value is wrong because that would mean that all attempts at labour produce value (effort = value) when this is clearly not the case. And yet Marx clearly argued that the labour process in capitalism was also important, that the rules of the mode of production are the context in which exchange-value thrives, and that all value produced by labour is only realized, under capitalism, in the exploitative confines of the labour process. I may value the mug I created by myself out of clay - it does possess some sort of use-value for me because I use it to drink my coffee - but it is not realized as VALUE under capitalism, that is EXCHANGE-VALUE, because it is not being exchanged on the market. What Marx is demonstrating, here, is that we produce all sorts of value because we are value-producing creatures (and we also evaluate and make judgments), but that we live in a society where only one sort of value is socially realized: exchange-value.

Ernsberger's claim that "[t]o equate labor with the automatic creation of value is to fallaciously imply that all human effort is infallible and constantly productive" not only misses the point of Marx's critique but actually proves Marx's point. Human beings are productive and creative, it's just that the only value that is recognized is exchange-value and Ernsberger, a typical capitalist, presumes this fact without questioning his assumptions. Thus what I labor to produce outside of the capitalist production process (i.e. my clay mug or a piece of art) is utterly worthless for Ernsberger because he is incapable of recognizing any value outside of market exchange. His entire essay, according to his own logic, is valueless not because it is poorly reasoned garbage but because it's being offered for free on a random libertarian site rather than being exchanged according to the "eternal laws" of supply and demand.

At the very least, the Ernsbergers in the world understand that Marx's labour theory of value is fundamental to his theory of revolution. Unlike the pseudo-lefties who reject the labour theory of value because of the transformation problem (a red herring), the Ernsbergers understand what's at stake. Ernsberger rightly claims that if the labour theory of value is wrong "virtually all of Marx's economic theory is wrong." He also claims that it is "violently anti-consumer," which is apparently a bad thing because he believes, like all idiot libertarians, that consuming and exchanging equals freedom. In fact, he is honest enough to actually equate freedom and the market by stating that "[t]he labor theory also means the end of all economic freedom." For those of us who believe that the capitalist market is antithetical to freedom, then it is necessary to accept the labour theory of value as the basis for our scientific critique of capitalism.
"Labour is the creator of all values. It alone gives the products found in nature value in the economic sense. Value itself is nothing else than the expression of the socially necessary human labour materialised in an object." (Freidrich Engels, Anti-Duhring, p. 186)

Comments

  1. Hey JMP,
    Donald Ernsberger is definitely and scarily enough not an undergraduate student. He ran for the US House of Representatives as a Libertarian in the 1988 and for the Senate in 1994. He lost both times very badly (he got 1.7% of the vote in 1994). Whats terrifying is that apparently he teaches college classes on economics!

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  2. Yeah, I realize that. His credentials are even at the end of his article. The comment was meant as sarcastic scorn; I really need to start using emoticons, or making literal asides to reveal the lame irony!

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  3. I've been paying attention to this site and before I comment on Marx's Labour Theory of Value, I want to thank you for taking the time to provide your theoretical insights.


    One day, on the jobsite (a nickel mine) a group of workers including myself got into a discussion about value. Who determines it? What determines it? Are there different types of value?
    The best I could come up with (I'm an electrician not nearly as theoretically strong as you)was pointing to a pile of muck (nickel ore) and stating "that rock had no value until we dug it from the ground. Without our labour, it is valueless". I'll never forget the looks on the faces of my co-workers. It was as if the truth that encompasses all truth had been spoken (no exageration). It's difficult for me to explain. What I can say is that something in their faces stated that they new the ramifications of the social relationship between themselves and "the company", not to mention the capitalist system. There was actually some uncomfortable shuffling of feet and nervous glances. Someone did the math and even said "well yeah, but there's nothing we can do about that" (no, I did not agree).

    Workers know the score, but too many are scared stiff to come to the only conclusion that makes sense. Some are so scared they buy into the "economic" rubbish you mention in your post. In my estimation a worker libertarian is a wistler in the dark, a fear mongerer, and a potential wrecker. Even without Marx, a "dumb electrician" like me can see that.

    Thanks again,

    RRH

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  4. Thanks for the comment, I'm glad you enjoy the site. And as for "dumb electrician"... well there are plenty of "dumb academics" out there, and often willfully dumb...

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  5. Yawn. Marxist rubbish and question-begging. Seriously, you really don't understand main critiques of marginalism. You think you do, but as you don't appear to have taken a single "bourgeouis" economics class in your life, perhaps you should be a lot less certain of your own understanding.

    The Labour Theory of Value makes some very broad claims which are just not true. Here's just a few examples.

    1) "Socially necessary labour" for a commodity is a concept that falls apart under the reality of labour exclusivity, non-transitivity and heterogeneity. It can't be meaningfully expressed as a scalar (if you understand maths).
    2) Supply shocks retropectively and instantaneously destroy and create commodity value regardless of actual quantities in existence.
    3) Demand has no impact on value (saying a commodity has to have "exchange value" is just begging the question of WHY some things have "exchange value" and others don't.)
    4) Social capital (aka trust, insurance and all futures markets aka "ficitious capital" that Marx disparaged)
    5) No saturation effects in trade
    6) Constant marginal value of labour / overtime
    7) "use value" and "exchange value" are unrelated
    8) Labour intensive industries have higher profits
    9) No exchange value exists without labour (so no good views, fruit on wild bushes, whitewater rafting sites etc).
    10) Total Worker compensation is a declining portion of capital.

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    Replies
    1. And you don't understand "question-begging"––it appears you have never taken a course in logic in your life. Your claims about what is "not true" about the LTV completely dodge the question, and the way I recentered it in this piece. As is your claim that your analysis has something to do with math. Mathematicians mock pure economics, or any notion that your kind of economics are mathematical. In fact, most of your points don't even address the fundamental basis of the LTV. Do you actually believe that there would be any value created without labour? Does it just drop from the sky, produced by pure laws of capital? Your point (9) is a massive dodge: is there some value on the examples you have given that are not a social construction, imposed by capital, that is independent in nature. And as for point three, what would be a commodity that doesn't have an exchange value? It wouldn't be a commodity, now, would it because it wouldn't be commodified. You speak about my supposed certainty of something I don't understand and yet it is clear that you lack a fundamental understanding of reality. Here is a fact that has easily been demonstrated historically, and the reason why people believe in the LTV: if every worker was to go out on a general strike the market would halt because its basis of value would have ceased generating value––this is one of the ultimate points of the LTV and it has been demonstrated, time and time again, whenever there is even a small strike. Capitalists need workers; workers don't need capitalists. So *yawn* back: tell me some more of your parascientific nonsense.

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    2. Albert McRealnameJune 7, 2014 at 2:46 AM

      I just learned about the LTV and I'm trying to understand it better. You say value is created by labour, but that doesn't seem right to me. I have some questions:

      Suppose there's a lake that someone claims is his, and he's armed. Suppose there's a wild berry bush someone else claims is his, and he is also armed. Suppose I have a dollar. Suppose I'm a bit hungry but very thirsty. Suppose the bush-man offers to let me eat some berries for my dollar, while the lake-man offers to let me drink from the lake for a dollar. I choose to pay the lake-man for the water. Doesn't this show that the lake water is more valuable to me than the berries? Isn't there a real world effect of this value: that the lake-man ends up with a dollar more than the bush-man? Isn't this value being created without labour?

      Suppose a man spends hundreds-of-thousands of hours making a complex wood sculpture. Suppose he's doing it for artistic fun, and after he's done with it he doesn't care about it at all and tries to sell it. Suppose everyone finds it very ugly and people are only willing to buy it at the price of a log of wood, because they intend to burn it. Does the LTV hold that this sculpture is worth more than a log of wood, even though everyone values it as such?

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    3. We're talking about the value of a commodity under capitalism, primarily exchange value. You are talking about valuing in general, and thus use-value.

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    4. Albert McRealnameJune 7, 2014 at 1:35 PM

      I'm even more confused now, lol.

      So when you say labour is the source of value you mean specifically the value of a commodity under capitalism, and not value in general?

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    5. What do you mean "value in general"? The LTV specifically has to do with the concept of value as it exists under capitalism. Of course it can be attached to "value in general" in the larger sense in that humans attach value to things based on the ways they interact with the world (i.e. labour), but since the concept of exchange-value is only valorized with capitalism, and thus there is debate around the foundations of price, the LTV only emerges as a theory to explain this problem.

      Returning to your original example, then, it is makes no sense. Only under capitalism would your "lake man" have the means to claim a lake. How? By just telling someone the lake is his? The example is ludicrous because it would require a situation in which someone believes in the concept of private property, i.e., capitalism. If this is the case, then it would also require an entire network of labour in order to privatize the lake. That is, what is to stop someone from drinking from the lake if they could just overpower your "lake man" who claimed it was his? An entire apparatus of activity, that is production, which would range from people working under your "lake man" to secure the lake or a complex industry, also composed of labourers. Otherwise it would come down to a fight between the "lake man" and the potential consumer who, without these other labourers and a system (of production) that would convince this consumer to believe that the lake belongs to the "lake man". And even in this case, the labour power of the "lake man" (i.e. sheer force, which is also work) would determine whether or not he can call the lake his.

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