Labor Theory of Value

Description

Maurice Dobb:

"The great importance of Marx's idea of the difference between the value of labor-power and the value of labor's product, Dobb wrote,

- lay precisely in its enabling him to show how there could be inequality and non-equivalence in "equivalent exchange"--or exploitation and appropriation of what was created by the producers consistently with the theory of value (i. e., demonstrating how "profits are derived by selling them at their values"). Labour-power, converted into a commodity by the historical process whereby a proletariat was created and from thenceforth freely bought and sold on the market, acquired a value like other commodities in terms of the amount of labour that its production (or reproduction) cost." (http://mutualist.org/id58.html)

Discussion

A Third Way 'Mutualist' Interpretation of LTV

Kevin Carson:

"The question remains: if labor is the source of normal exchange-value for reproducible goods, and the natural wage of labor in a free market is its full product, what is the explanation for profit in "actually existing capitalism"?

A central point of contention between Marx and the utopians was the extent to which the labor theory of value was a description of existing commodity exchange, or a prescription for rules of exchange in a reformed system. Marx criticized the utopians for erecting the law of value into a normative standard for a utopian society, rather than a law descriptive of existing capitalism. For him, the law of value described the process of exchange under capitalism as it was; the law of value was fully compatible with the existence of exploitation. His generalizations about exploitation assumed that commodities were exchanged according to their labor value; far from making profits impossible, exchange according to the law of value was presupposed as the foundation for surplus-value. Profit resulted from the difference in value between labor-power, as a commodity, and the labor-product; this was true even (or rather, especially) when all commodities exchanged at their value.

Some "utopians" (including Proudhon, the Owenites, and some Ricardian socialists), it is true, saw the labor theory as a call for a mandated set of rules (like Labor Notes, or modern proposals for government backing of a LETS system). For these, the law of value ruled out exploitation; but rather than seeing it as an automatically operating law of the market, they saw it as requiring the imposition of egalitarian "rules of the game."

But besides these two opposing theories, there was a possible third alternative that differed significantly from the first two. This third alternative considered all exploitation to be based on force; and the exploitative features of existing society to result from the intrusion of the element of coercion. Unlike utopianism, the third theory treated the law of value as something that operated automatically when not subject to interference. Unlike Marxism, it believed the unfettered operation of the law of value to be incompatible with exploitation. This school included, especially, the market-oriented Ricardian socialist Thomas Hodgskin, and the later individualist anarchists in America; they saw capitalism as exploitative to the extent that unequal exchange prevailed, under the influence of the State. Without such intervention, the normal operation of the law of value would automatically result in labor receiving its full product. For them, exploitation was not the natural outcome of a free market; the difference between the value of labor power as a commodity and the value of labor's product resulted, not from the existence of wage labor itself, but from state-imposed unequal exchange in the labor market. For them, the law of value was both the automatic mechanism by which a truly free market operated, and at the same time incompatible with exploitation.

It followed that the law of value was not something to be surpassed. Unlike the Marxists, who looked forward to an economy of abundance based on a principle of "from each according to his ability, etc.," the individualists and market Ricardians saw the link between effort and reward as fundamental to distributive justice. The defining feature of exploitation was the benefit of one party at the expense of another's labor.

...

Given the moral basis of the labor theory of value, as understood by the petty bourgeois socialists, in the principle of self-ownership and ownership of one's labor product, it followed that payment according to work was not a holdover from capitalist society, but the rightful basis of a future socialist order. It was no more acceptable for the collective to appropriate the product of the individual's labor for general use, than for the landlord and capitalist to appropriate it for their own use.

...

By definition, a system of free contract excludes unequal exchange enforced by state intervention in the market. To the extent that such politically-enforced unequal exchange prevailed, the economic system was not "a regime of 'normal values.'" The questions remain: to what extent was the actual economy of the nineteenth century a system of privilege, and a departure from the free market; and to what extent was this departure the main cause of profit on capital?" (http://mutualist.org/id58.html)

Marx’s Refusal of the Labour Theory of Value

David Harvey:

"It is widely believed that Marx adapted the labour theory of value from Ricardo as a founding concept for his studies of capital accumulation. Since the labour theory of value has been generally discredited, it is then often authoritatively stated that Marx’s theories are worthless. But nowhere, in fact, did Marx declare his allegiance to the labour theory of value. That theory belonged to Ricardo, who recognized that it was deeply problematic even as he insisted that the question of value was critical to the study of political economy. On the few occasions where Marx comments directly on this matter, he refers to “value theory” and not to the labour theory of value. So what, then, was Marx’s distinctive value theory and how does it differ from the labour theory of value?

The answer is (as usual) complicated in its details but the lineaments of it can be reconstructed from the structure of the first volume of Capital.

Marx begins that work with an examination of the surface appearance of use value and exchange value in the material act of commodity exchange and posits the existence of value (an immaterial but objective relation) behind the quantitative aspect of exchange value. This value is initially taken to be a reflection of the social (abstract) labour congealed in commodities (chapter 1). As a regulatory norm in the market place, value can exist, Marx shows, only when and where commodity exchange has become “a normal social act.” This normalization depends upon the existence of private property relations, juridical individuals and perfectly competitive markets (chapter 2). Such a market can only work with the rise of monetary forms (chapter 3) that facilitate and lubricate exchange relations in efficient ways while providing a convenient vehicle for storing value. Money thus enters the picture as a material representation of value. Value cannot exist without its representation. In chapters 4 through 6, Marx shows that it is only in a system where the aim and object of economic activity is commodity production that exchange becomes a necessary as well as a normal social act. It is the circulation of money as capital (chapter 5) that consolidates the conditions for the formation of capital’s distinctive value form as a regulatory norm. But the circulation of capital presupposes the prior existence of wage labour as a commodity that can be bought and sold in the market (chapter 6). How labour became such a commodity before the rise of capitalism is the subject of Part 8 of Capital, which deals with primitive or original accumulation.

The concept of capital as a process – as value in motion – based on the purchase of labour power and means of production is inextricably interwoven with the emergence of the value form. A simple but crude analogy for Marx’s argument might be this: the human body depends for its vitality upon the circulation of the blood, which has no being outside of the human body. The two phenomena are mutually constitutive of each other. Value formation likewise cannot be understood outside of the circulation process that houses it. The mutual interdependency within the totality of capital circulation is what matters. In capital’s case, however, the process appears as not only self-reproducing (cyclical) but also self-expanding (the spiral form of accumulation). This is so because the search for profit and surplus value propel the commodity exchanges, which in turn promote and sustain the value form. Value thereby becomes an embedded regulatory norm in the sphere of exchange only under conditions of capital accumulation." (http://davidharvey.org/2018/03/marxs-refusal-of-the-labour-theory-of-value-by-david-harvey/)

More Information

• summary of 'classic' LTV, by Kevin Carson, http://mutualist.org/id48.html