- Capitalism and Alternatives -


Posted by: Red Deathy ( Socialist Party, UK ) on October 29, 1999 at 12:03:21:

In Reply to: Labor theory of value again posted by Gee on October 26, 1999 at 16:20:05:

: Even the tools which the factory owner provided were, according to Marx, necessarily produced by other workers subjected to their own exploitation.

Tools don't *add* value, they simply transfer it from themselves to the commodity, thus only Labour is *adding* value.

Thats tehd ifference between constant and variable capital.

: 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.

Right, but lets examine this idea: I walk into a shop, I see a bottle of whiskey. How much do I want to pay? Nothing. Thats right, as a rational consumer, I want it for free. That is a constant for all consumer desire on all products. I can't have it for free, though. Imagine the exchange.
Me: I'd like to have that whiskey for nowt.
Shop-bloke: But it cost me £15.

The base line for shop-bloke is the amount he paid for it, which is in turn set by the amount the whole-sailer paid for it, in turn set by the production costs. To focus on desire is eroneous, because it focusses on the end of the production process, and not on, say, the whole-saler, whose desire (use-value) for the commodity is nil, except as potential exchange value.

Lets look at it another way- lets turn to Von Mises monetary calculation argument.

Imagine we could make a widget, we can make it (with identical quality and use value) three ways:
a) 1K Rubber, 2K Wood, 5K Aluminium.
b) 3K Rubber 2K Wood 2K Aluminium.
c) 2K Rubber 3K Wood 2K Aluminium.

Whish is the most economically efficient way? Well, we can elminate (a) because obviously thats too much aliminium. But how, if there is no qualitative difference, do we choose between (b) & (c)? Its important to choose, because the differences in units would show massively if we made 15,000 such widgets (either 45,000K of rubber or 30,000K).

We must have some form of comparison by which to judge the economic value of each. If money is simply an index of desire, then we cannot have such a judgement, and a rational approach to economics becomes impossible.

: The value of a product is determined by the amount which other people wish to trade for it. The worker who receives the results of his 'labor value' according to marx is subject to this potential variation in wage - self employed people are often very familiar with this phenonomen of market exchange affecting their income.

Eitehr way, you can't escape the fact that the workers alone add value that can be realised in the market place- no matter what form that value takes.

: Labor cannot be the cause of value in the above - the same work was done yet the value changed.

No, the *price* has changed, price is distinct from value, and fluctuates around value- hence people get a bargain when they think a good is sold below value.

: Not all economically active 'poducts' are created by labor, nice weather areas being popular and driving up house prices is not the result of labor.

Thats land, which is subject to laws of rent, Marx himself made this point in the 'Critique of the gotha programme' correcting the error of that rpogramme which stated all value comes from labour. plus, that above is *use* value.

: The labor theory also ignores the importance of time and position. A 20-year-old wine is far more enjoyable than one-year-old wine. Oil in a desert is a potentially valuable resource, but oil in the local reservoir or in the middle of a farmer's field is a hazard.

Use-value, marx discusses use-value and its relation to exchange value in Capital.

: One can only assume that Marx secretly intended for all individuals to be self employed. Ofcourse the intent was for some kind of socialist utopia - the essential premises of which I made clear here.

Marx intended for the abolition of money altogether.

: Even worse, the entire labor theory is unproven. In the entire first volume of Das Capital, where Marx proposed the labor theory, there is not one "positive proof". Rather Marx offers a fallacious "negative proof" in which he argues:

The proof is deductive: If Value must represent a point of comparison between commodities, then it must be based on something common to all commodities, the only constant in commodities is labour time, thus labour time is the source of value. now might be the time to remark on Adam Smith's problem of Water and Diamonds once more...

: Premise 1 – some factor in the production of a good gives it value [true];

: Premise 2 – only those goods to which man has applied labor have value [false];

Exchange value, true- you try and get a good that has not had human labour applied to it (even land, land registry creates exchangeable units of land- land registry is labour).

: Marx proclaims that two types of capital exist in production, only one of which can produce "surplus value". Thus exchange of items of equal value can have uneven mixtures of these two types of capital, implying that labor alone is not the sole determinant of value.

Constant and Variable capital- only labour adds value, but machinery and raw material transfers value from itself to the product.

We've been through this before gee, and I've refuted these exact points before.

Follow Ups:

The Debating Room Post a Followup