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An economic theory that stipulates that the value of a good or service is dependent upon the labor used in its production. The theory was first proposed by Adam Smith (1723-1790), the founder of modern economics, and was an important concept in the philosophical ideals of Karl Marx. The labor theory of value suggests that goods which take the same amount of time to produce should cost the same.
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Cardinal approach often referred to subjective value theory. This approach was developed in 1880 by three economists who work on their own, William Stanley Jevons of Britain, Leon Walras of France, and Karl Menger from Australia.
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Michael Heinrich has produced a “new interpretation” of labor theory that some argue removes any discussion of a theory of crisis implicit in Capital. In response to this alleged attempt to fundamentally revise labor theory, Andrew Kliman, Alan Freeman, Nick Potts, Alexey Gusev, and Brendan Cooney have published an essay purporting to defend the law of the tendency of the rate of profit to fall against Heinrich. Although it appears both sides are in conflict, I will show that actually both sides of this debate share fundamental agreement on the only real issue raised by Heinrich’s argument.
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An economic theory that stipulates that the value of a good or service is dependent upon the labor used in its production.
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David Harvey, the Marxist geographer, is working on a new book, The Seventeen Contradictions of Capitalism. He has a illuminating interview on this theme in Red Pepper, the UK political magazine. Several of his exchanges with the interviewer deal with key concerns of commoners, including the importance of protecting use value over exchange value, and the need for cultivating a “postcapitalist imagination.”
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It is fashionable these days for bourgeois economists and sociologists to refute the dialectical materialist method of analysis developed by Karl Marx.
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The conventional way of thinking about fundamental value is rooted in subjectivity. I am willing to part with my purchasing power because this object delivers me “utility”, which is a function of my individual tastes and preferences. This then allows us to distinguish between the value with a commodity obtains from its use, and the value which comes from a belief that it can be sold on in merely in virtue of the fact that it is believed to have value in the future.
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The Labour Theory of Value (LTV) states that the “value” of a commodity is determined by the “socially necessary labour time” embodied in it (“socially necessary” to avoid the nonsensical idea that somebody who makes something slowly will contribute more value than somebody who makes the same thing, but faster). To the extent that ‘capital’ (machines, raw materials etc) contribute toward this value, it is only in the necessary labour time required to produce that capital. Hence, only labour can ‘add’ value, and therefore surplus is produced by workers, while capitalists are parasitic, receiving profit only because they pay their workers less than the workers produce.
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The first half of the paper discusses what is wrong with Whig history and why it is wrong to distort the past. The author’s views are compared with those of noted historians of economics. This discussion provides motivation for the second half of the paper, which focuses on Whiggish accounts of the scientifically progressive character of mainstream Marxian and Sraffian economics that rest heavily upon ‘proofs’ of internal inconsistency in Marx’s own theories. The paper argues that the inconsistencies are actually products of Whiggish misinterpretation. Thus, it is not the case that progress has taken place through correction of error; mainstream Marxian and Sraffian theories are not corrections of the original theories, but alternatives to them.
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This paper presents a novel interpretation and affirmation of Marx’s initial arguments for the labour theory of value in Capital. The materialist principles that (i) powers are materially based, and (ii) ‘labour’ articulates nature and society, are developed so as to validate and emphasise Marx’s opening arguments. The argument is presented as a novel addition to existing critiques of ‘systematic dialectics’ and of ‘value form theory’. Though having some resemblance to critical realism, the materialist and dialectical underpinnings of the argument are drawn from the philosophy of E.V. Ilyenkov.
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Criticisms of the labour theory of value often arise from an economic criticism of Marxism. Adherents of neoclassical economics, the currently predominant school, employ the theory of marginalism, which holds that the value of any good or service is determined by its marginal utility, the utility of the "last" bought consumption good measured by its price, in satisfying a specific consumer's wants. While Marx emphasises profit maximisation, neoclassical economists view the maximisation of utility at the individual or societal level[1] as the driving force of the economy. Proponents of the labor theory of value (LTV) would reply that as capitalism only recognises demand backed by money—the price of a good is not simply measured by its usefulness but by the amount of money consumers own. It depends on a pre-existing set of relations of distribution. These relations of distribution in turn rest on a set of relations of production, which determine how consumers "earn" money, capitalists "earn" profits, workers wages, landlords rent, and so on. Consequently the price of an object depends not only on its usefulness but on the amount of money different consumers have - their different effective demands. It is unclear how if at all this differs from a wealth effect on demand that results directly from the individual's utility maximization problem. RT @stephen_tapp: 1/2 People sometimes forget that the "labour theory of value" has long been discredited: http://t.co/jC3SOUkZkA
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After a long period of being virtually a lone voice in the non-Marxist wilderness railing against neoclassical economics, its structure, assumptions, and ideas, Professor Steve Keen appears to finally be heard. The current crisis has dented much of public and scientific confidence alike in economic orthodoxy (as it should). Nothing illustrates this better perhaps than the story of the British Queen, Elizabeth II, writing to the colleagues of the London School of Economics and asking them the pointed question: how did you not see this coming, and if you could not, what are you being paid for? This is perhaps somewhat unfair, as the specifics of any particular crisis depend on many specific and contingent factors that the more general and imprecise nature of neoclassical (macro-)economics is barely equipped to address, and few other theories fare that much better. But Keen has rightly pointed out that he did predict this crisis, and also in its form as the collapse of a speculative bubble in real estate and finance, as he did in the previous edition of his excellent best-selling critique of political economy, Debunking Economics. This Cassandra position, now perhaps turned into one more akin to Tiresias, has given him occasion to publish a new and expanded version of this book – one I recommend all readers to buy for its excellent and systematic critiques of the inconsistency of much of the neoclassical framework beyond the sphere of mere applied mathematics.(1)
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"Theory of value" is a generic term which encompasses all the theories within economics that attempt to explain the exchange value or price of goods and services. Key questions in economic theory include why goods and services are priced as they are, how the value of goods and services comes about, and for normative value theories how to calculate the correct price of goods and services (if such a value exists). Theories of value fall into two main categories: Intrinsic (objective) theories Subjective theories Theory of value (economics) - Wikipedia, the free encyclopedia http://t.co/GTOdGeIkHz
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Curated by jean lievens
Economist, specialized in political economy and peer-to-peer dynamics; core member of the P2P Foundation
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Met P2P voorbij markt en staat: voor een progressieve coalitie rond de commons. Met nieuws over op p2p gebaseerde praktijken en hoe de overheid, de politiek en de zakenwereld ermee (kunnen) omgaan...
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on money and what it is
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From the Great White Way to the West-End and beyond
Peer2Politics
on peer-to-peer dynamics in politics, the economy and organizations
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Not TINA (There Is No Alternative) but TAPAS: THERE ARE PLENTY OF ALTERNATIVES
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