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)