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Created: April 26, 2002
Latest Update: October 8, 2002
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The Labor Theory of Value
Copyright: Jeanne Curran and Susan R. Takata and Individaul Authors, April 2002.
"Fair use" encouraged.This POST BY ERIK DAVIS is based on a discussion on the labor theory of value as it is understood in the discipline of economics. We will need to discuss this theory, even though it is generally connected with economics. It matters in our discussion of Marx.A definition of the labor theory of value is given by Robert Vienneau on Post Keynesian Thought. Link added April 26, 2002.
On April 26, 2002, the following was posted: This will give you some idea of the kinds of discussions on social issues that grow from this material:
"The first sentence about Adam Smith and the labor theory of value is an interesting point, but Smith did not invent it. Actually, if you would like to take your point further, some economic historians have alleged that Marx ripped off David Ricardo. Smith, who wrote much earlier, wasn't very consistent in terms of applying the labor theory of value. It certainly predates even his work.
Regarding the rest of the post: most every contemporary economist actually thinks that the labor theory of value is a joke. Few take it seriously anymore. I don't mean this as a value judgment, merely a brute fact. The labor theory of value would be the last thing to survive--and, well, it really hasn't survived much at all.
The FUNDAMENTAL difference between the classical tradition from which Smith and Marx emerged and the neo-classical theory typically taught today (based on Menger, Jevons, and Walras) is that the former--classical tradition--had a tension between the (1) subjective and (2) labor theory of value, while the NEO-classicals have more clearly embraced the (1) subjective theory of value. They call this the marginalist revolution.
It is clear that neo-classical theory evidences how much of Adam Smith remains intact after more clearly embracing a subjective theory of value. At the same time, it is extremely unfortunate that the interdisciplinary sensibility of Smith's political economy, including especially his respect for cultural factors, was pretty much completely lost--mainly because it doesn't easily fit into the increasingly mathematical formalism that dominates contemporary economics.
Marx's theory displayed a tension between the two major theories of value, with Capital I displaying the most maniacal dedication to the (2) labor theory of value, and with Capital III (with more of Engels's influence) making considerable concessions to the (1) subjective theory of value. (This is in no small part because there were already some rather embarrassing critiques of the labor theory of value to be published by that time, for example, by Eugen von Bohm-Bawerk.) The question would be how much of Marx's theory remains intact without the labor theory of value.
The core of Marx's alleged critique--especially Capital I--assumes the validity of the labor theory of value and deduces the extraction of surplus value and exploitation accordingly. The theory of surplus value as Marx presented it simply stands or falls with the (2) labor theory of value, and to the degree that one embraces (2), the theory of surplus value and exploitation as presented by Marx necessarily follows--logically, that is.
However, we shouldn't ultimately care how much labor-time the Nazi's spent building Auschwitz, it doesn't make it any more valuable to me--it is a tragedy that should never have happened. Why should we value anything more simply because it involves more labor-time? Actually, the blindness of Nazi bureaucracy and labor is elucidated quite well by Zygmunt Bauman's MODERNITY AND THE HOLOCAUST. This would be the critical point. A similar point, though merely practical, can be made by simply putting two people together and having the second person destroy everything that the first person makes. Clearly, both persons will have expended labor-time, but nothing of value will have emerged. This would be the practical point. The labor theory of value is blind to fullfillment and communicative rationality in the exact way that perversely instrumental reason can be blind to its own ideology. A critique cannot even be made within the context of merely the labor theory of value--which was such a crucial tool for Marx's alleged exposure of liberal values as a sham.
We may hope that Marx merely wanted to ascribe the labor theory of value to a particularly limited understanding of "labor as such" that dominated the emerging capitalism of his time. However, the very thrust of his "critique" was based on the labor theory of value itself. So here we have a tragedy similar to the instrumental reason chasing instrumental reason found in THE DIALECTIC OF ENLIGHTENMENT.
In any case, the commodification-critical aspect of Marx's work was ultimately something worked out by others and wretched from the context of his work--and, especially in Habermas, completely disassociated with the labor theory of value (quite explicitly in THE THEORY OF COMMUNICATIVE ACTION, Vol. 2).
So the commodification thesis remains intact, the base-superstructure remains as well in terms of life-world and system, but the labor theory of value has been dropped.
This was in response to an earlier message by Rauno Huttunen.
The labour theory of value wasn't Marx invention - it was Adam Smith's theory. No economist dare to say that Smith's labour theory of value is a joke. we could skip surplus value or base-superstructure metaphore but labour theory of value remains.A definition of the labor theory of value is given of Robert Vienneau on Post Keynesian Thought. Link added April 26, 2002.