Jump to content
Objectivism Online Forum
Sign in to follow this  
KALADIN

Ending the Labor Theory of Value

Rate this topic

Recommended Posts

This is an essay of sorts and extended version of a post I made here almost half a year ago and which dissapointingly elicited no responses or remarks. Hopefully this time there will be more than none. Shoutout again to Grames for my partly mixed usage of his formulations on value in the "Introducing Objectivist Axiology" section.

___

Setting The Stage:

In writing Capital and in seeking to split up the conflation of value and exchange-value, Marx held one Samuel Bailey's Critical Dissertation as an object of refutation. Bailey held that exchange-value was accidental: a thing's value is merely the amount of another thing for which it is exchanged. Contra Bailey, Marx conceived of and argued for exchange-value as being distinct from value proper, and that the former represents merely a “mode of expression” of a commodity's intrinsic value. He writes "... exchange value, generally, is only the mode of expression, the phenomenal form, of something contained in it, yet distinguishable from it" (emphasis mine).

Marx wished to show that a commodity's value belongs not to that which it exchanges for (not to the manifold bodies being the objects of the end of exchange) but to itself and that the act of exchange does not determine value but rather brings about the expression of values that commodities have prior to and independent of this act. Marx's essential aim in the beginnings of Capital is not so much to present a “labor theory of value” as it is to present a real and persistent divorce between value and exchange-value in order to rectify the divorce of a commodity's value from itself.

It is important to mention that while Marx does indeed consider value an intrinsic property of the commodity itself he does not consider value to be absolute. He does not consider value to be a trans-historical, immutable reality. Rather value, for Marx, is and is determined by the socially necessary labor-time to engender the creation of (and is eventually embodied by or "crystallized" within) any one marketable commodity. Let us now critically take on Chapter One, Section One of Capital.

Analyzing Capital:

"[o]ur investigation must therefore begin with the analysis of a commodity."

Marx treats the commodity as the unit of capitalist production and so begins his analysis of the latter by investigating the former. We shall do the same later on.

"A commodity is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another."

Some Austrian (economic school) commentators have advanced spurious critiques against the labor theory of value (hereafter LTV) by first pointing to things which exist outside market relations - which presupposes production directed towards satisfying consumer wants, real or conceived - or outside social relations at all (desert island scenario) and in saying that these things demanded labor in production yet are found to be useful to no one or have deteriorated beyond use the LTV is rendered impotent. But Marx has imported into his characterization of a commodity that it must be capable of presently satisfying human wants of some kind - that it is useful - or as he says later on in a different context, "[l]astly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value." Additionally Marx, in his analysis of a commodity as subject, takes the nature and use of human wants (whether they spring from "the stomach or fancy" and satisfy ends directly or as a means) as irrelevant to his project.

"The utility of a thing makes it a use value. But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity. A commodity, such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use value, something useful. This property of a commodity is independent of the amount of labour required to appropriate its useful qualities."

Marx here admits that utility does not exist apart from a commodity, the material "bearer" of useful, physical properties. But there is in fact at least one other thing the existence of utility can not do without and which I will identify and expand on later. This is only to say that even if utility as a property of the commodity is independent of the amount of labor necessary to utilize that utility, the commodity itself is not sufficient for the existence of utility (again, I will get very much into this later).

"Exchange value, at first sight, presents itself as a quantitative relation, as the proportion in which values in use of one sort are exchanged for those of another sort, a relation constantly changing with time and place."

Exchange value or value in exchange is quantitative insofar as it can be expressed as a ratio involving other values ("two gizmos for six gadgets"). This relation or ratio is hardly constant. It seems readily obvious that exchange value is not constant and that both persons and place factor largely in the ultimate determination of exchange value. Recall from the outset that Marx wanted to distinguish between value and exchange value and to show value proper as non-accidental. This latter goal would hardly be consistent with a conception of value wherein the persons and place can have a decisive role in the determination of value; a non-accidental account would permit no flux.

 Marx recognizes this:

"Hence exchange value appears to be something accidental and purely relative, and consequently an intrinsic value, i.e., an exchange value that is inseparably connected with, inherent in commodities, seems a contradiction in terms. Let us consider the matter a little more closely." (all emphasis mine)

Let's. And we now turn to the prime object of refutation in this essay: Marx's third-thing argument. I will go ahead and put the uninterrupted substance of his argument below first before obliterating it.

"A given commodity, e.g., a quarter of wheat is exchanged for x blacking, y silk, or z gold, &c. – in short, for other commodities in the most different proportions. Instead of one exchange value, the wheat has, therefore, a great many. But since x blacking, y silk, or z gold &c., each represents the exchange value of one quarter of wheat, x blacking, y silk, z gold, &c., must, as exchange values, be replaceable by each other, or equal to each other. Therefore, first: the valid exchange values of a given commodity express something equal; secondly, exchange value, generally, is only the mode of expression, the phenomenal form, of something contained in it, yet distinguishable from it.”

“Let us take two commodities, e.g., corn and iron. The proportions in which they are exchangeable, whatever those proportions may be, can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron: e.g., 1 quarter corn = x cwt. iron. What does this equation tell us? It tells us that in two different things – in 1 quarter of corn and x cwt. of iron, there exists in equal quantities something common to both. The two things must therefore be equal to a third, which in itself is neither the one nor the other. Each of them, so far as it is exchange value, must therefore be reducible to this third."

Marx is not asking here what allows commodities to be exchanged as many Austrian economists have presumed. He is only analyzing the commodity. He is not asking how or why commodities exchange but as what do commodities exchange. Marx derives the existence of intrinsic value from a postulated exchange of equivalents, not equivalent exchange from a postulated existence of intrinsic value (if this latter claim was true we could accuse Marx of an egregious circularity). He establishes that commodities exchange as bearers of intrinsic value, a 'third thing' present in each. 
Before attacking this argument in its entirety head-on, a (perhaps lengthy) tangent on the nature of value is necessary.

Introducing Objectivist Axiology:

What is the context of the concept of "value"? How is it formed and where does it come from? Ayn Rand, building on a thesis of conditionality inspired by Aristotle’s Nicomachean Ethics, defines value as merely that which one acts to gain and/or keep and delimited the scope of application of the concept of value to living organisms. In order to understand why she does this let us consider the conceptual hierarchy on which "value" rests. Rand writes,

"'[v]alue’ presupposes an answer to the question: of value to whom and for what? ‘Value’ presupposes a standard, a purpose and the necessity of action in the face of an alternative. Where there are no alternatives, no values are possible."

The first thing here to note is that value is a relational phenomenon. The existence of value demands both the existence of a valuing subject - a "whom" - and the existence of an end to which the value is a means - a "for what". Valuation can not be undertaken in the absence of any goal lest the impetus for action be nonexistent and it can not exist without a subject, something to do the valuing. To show the falsehood of axiological intrinsicism (the thing I accuse Marx of and who we will return to in just a bit) it is necessary only to show that this supposed intrinsic attribute is actually a relational one, i.e. to demonstrate the impossibility of existents being preferentially valenced per se. It is true that physically there are observably intrinsic attributes like mass so it can not be argued that intrinsic attributes do not exist. The issue is merely whether or not value is such an attribute or instead relational. There can be no demonstration of intrinsic value because such a demonstration would necessarily entail exhibiting a relation, of seating it in the context of a subject and end, so there can be no possibility of ever disentangling value from a relation.

Now Rand also writes value presupposes "a standard, a purpose, and the necessity of action in the face of an alternative". A standard is merely the end of action, the ultimate value to which all lesser values are the means. No stranger to Aristotelian formulations, Rand identifies valuation as needing to culminate in some end, a standard of value. Value demands a "for what" so we see that value is fundamentally an instrumental phenomenon and take the form of action towards some goal. Should our values be means to some end (say education) which is itself a means to some other end (money) which is itself a means some still other end (livelihood) we find that if this sequence does not terminate in some ultimate value, some standard, then the sequence can not start either (we would never "get off the ground" so to speak). Value-judgements and actions on them do not spring from a vacuum and can not float away and apart from the axiological lattice binding all values as instruments to a standard or ultimate value. For the sake of space and of time I will have to omit a discussion of Rand's "necessity of action in the face of an alternative" qualification save for my mentioning that in the absence of alternatives (which is not the same as saying the outcome is metaphysically given; alternative does not imply choice) there is no basis for assigning the outcome a place in the "axiological lattice" I mentioned above precisely because it has been made necessary that some entity's action is unnecessary or necessarily ineffective; valuation is utterly distinct from passivity and even when the metaphysically given processes are what animate an entity in imitation of a process of valuing the distinction still holds. This distinction ultimately turns on the phenomenon of self-generated action, a phenomenon Rand held in conjunction with self-sustaining, and goal-directed action as partly essential characteristics of the living organism. Rand admitted (or stressed) even things like some non-conscious cellular actions and phototrophic processes as instances of valuation, of valuing (the "telos" in both cases being preservation or the active maintenance of bodily integrity and of life). When we look out into the world we find few things capable of instantiating goal-directed action - of acting to gain and/or keep things. Most entities surrounding us in our everyday lives are inert and unconscious. Most things simply do not engage in goal-directed action or act to gain and/or keep anything. While we can subsume the falling of any body under the concept of "action" the relevant sense employed here is specifically self-generated action; what must be stressed is not merely that a thing participates in action but that it instantiates it. This insistence on self-generation is not to deny the existence of external, efficient causation but merely to regard it as indecisive and in fact incessantly mitigated by the actions of organisms whose generation we can locate within internal structures be it information from the nucleus to internally held energy structures to conscious decision making. Of course no organism can create its own energy as all energy ultimately derives from external sources and even fully deterministic, biochemical reactions would qualify as instances of self-generated action so long as the immediate source of energy can be located within the organism. In fact, the vast majority of internally-generated action is a response to external stimuli but while that stimulus may be responsible for triggering certain action it does not power it. There even exist structures "designed" to ignore external stimuli almost entirely and operate only by intrinsically generated movement such as in the neuronal structures responsible for circadian rhythmic patterns. Going back to alternatives for a bit I'd like to quote Rand once more:

"There is only one fundamental alternative in the universe: existence or non-existence-and it pertains to a single class of entities: to living organisms. The existence of inanimate matter is unconditional, the existence of life is not; it depends on a specific course of action. Matter is indestructible, it changes its forms, but it cannot cease to exist. It is only a living organism that faces a constant alternative: the issue of life or death."

As I implied the beginning of this section, Rand ultimately couples the existence of values with the existence of life. It is the constant conditionality of the form of life that gives rise to the need of values and to the need of acting to secure and keep things instrumental to an organism’s' preservation. To make clear the distinction between the destruction of the inanimate (and its forms) and the cessation of life insofar as both relate to the notion of a fundamental alternative, it is necessary to point out that the inanimate is not presented with the immediate alternative of death, that both its form and the material processes which underscore it are a given, and that its destruction or change (in form) is ultimately, save for external interference, a matter of nothing but deterioration. Life is utterly distinct from this - its continued existence requires active, goal-seeking and achieving processes by the organism as a whole, as an integrated unit in opposition to the disconnected, disintegrated, and given courses of its ultimate material constituents in isolation. While inanimate matter merely is and will be for time without end the animate can become inanimate. Life, as a constant process of action, stands as the value-generating phenomenon; it is the only phenomenon which is gained and kept by gaining and keeping it and thus may serve as an inclusive end (a standard) and terminating/starting point for the axiological lattice I mentioned earlier. In anticipation of the ever-common objections that both immortal entities or robotic ones could have values I will mention only here that an insistence on the first betrays a misunderstanding of the role of purpose in serving as the impetus for action and that to sever conditionality from life is to sever the end to which an impetus would necessarily have to be seated within in order to be effective and even causal. As for the second example, it is necessary only to mention that the derivative algorithms which underscore the action employed by robots are precisely that - their genesis is not in themselves but in actual living things (human programmers and engineers), quite unlike the self-generated, goal-directed action of living organisms (of course all the stuff about the non living being incapable of valuing applies here too). But even if you did want to expand the scope of "value" to subsume the two kinds of entities mentioned above the essential point which I wish to have made with this section and which I will iterate now is the agent-relative character of value. More specifically, the literal nonsensicality of disentangling value from a valuing subject, of holding value to inhere in anything at all and in our case, a commodity. It is finally time to turn back to Marx's third-thing argument.

Ending The LTV:

Back to Marx's argument,

"But since x blacking, y silk, or z gold &c., each represents the exchange value of one quarter of wheat, x blacking, y silk, z gold, &c., must, as exchange values, be replaceable by each other, or equal to each other. Therefore, first: the valid exchange values of a given commodity express something equal..."

This last proposition is an egregious non sequitur. The "replaceability" Marx speaks of here means merely the interchangeability of exchange values for a given commodity. And in this sense they are equal, qualitatively, in serving as exchange values but this does not imply in any way, shape, or form a kind of axiological equality precisely because in framing those exchange values as replaceable the subjects involved in the exchange are omitted, and what constitutes a "valid exchange value" can likewise not be understood in the absence of an exchanging (valuing) subject. This will be greatly expanded on shortly.

"Let us take two commodities, e.g., corn and iron. The proportions in which they are exchangeable, whatever those proportions may be, can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron: e.g., 1 quarter corn = x cwt. iron."

In characterizing the act of exchange as an equation it can probably be objected quite effectively here that Marx begs the question insofar as he sets out to demonstrate later on that commodities exchange as equalities, as material bearers of his "third thing", and while this criticism would be damning I will not pursue it in the slightest here.

"What does this equation tell us? It tells us that in two different things – in 1 quarter of corn
and x cwt. of iron, there exists in equal quantities something common to both. The two things must therefore be equal to a third, which in itself is neither the one nor the other. Each of them, so far as it is exchange value, must therefore be reducible to this third."

In exchange, this “third thing” is not actually a thing at all, but a disposition, a relation between exchangers and the objects of exchange. Exchange is not, by itself, predicated on and nor does it evince any kind of say about the objects of exchange per se, but only about the relation they hold to the exchangers; each exchanger values what he is exchanging for more than what he is exchanging lest the impetus for exchange be nonexistent. The ONLY “qualitatively equal” part is the concomitance of interests' of exchangers, not a concomitance or even existence of intrinsic values. The “third thing” is to be found in and is the relationship all exchangers hold toward what they are exchanging for: perceived gain (whether or not any party "actually" gains is irrelevant since the dispositions - not the effective content or eventual results - of the party members is all that matters). Just as Marx omits the conceptual necessity of a valuer for the existence of values, so he omits the necessity of the relationship the valuer must play in order for values to be exchanged. There is no third thing, just as there are no intrinsic values. The existence of intrinsic value is not and can not be demonstrated or derived from a postulated exchange of equivalents because value does not inhere in any commodities. The determination of equivalency and the fruition of exchange depends on the very phenomenon Marx has omitted entirely -the valuer.

Marx goes on to try and defend his argument:

"A simple geometrical illustration will make this clear. In order to calculate and compare the areas of rectilinear figures, we decompose them into triangles. But the area of the triangle itself is expressed by something totally different from its visible figure, namely, by half the product of the base multiplied by the altitude. In the same way the exchange values of commodities must be capable of being expressed in terms of something common to them all, of which thing they represent a greater or less quantity."

If anyone was ever in doubt about Marx's fundamental commitment to axiological intrinsicism this passage is all she would need. This illustrative analogy fails for the same reason Marx's basic analysis of the commodity fails; value is not an intrinsic but a relational phenomenon. Area is an intrinsic attribute of two-dimensional figures and is "decomposable" into different and dissimilar figures each containing their own respective areas. Area is a self-contained phenomenon but value is NOT. The existence of a calculating subject is not necessary for the existence of area but only its determination. The existence of a valuing subject is necessary for both the existence of value and its determination.

Andrew Kliman, a prominent Marxist academic and creator of the Temporal Single System Interpretation (TSSI), an object of some of the essays included in this collaborative project, has said this of Marx's argument,

"It seems to me that this conclusion follows necessarily once one grants Marx’s initial premise... he succeeds in showing that the wheat in fact ‘has many exchange values instead of one', that each of these exchange-values is an interchangeable expression of the same thing, the wheat’s ‘exchange’-value, and that they thus ‘express something equal’. Any challenge to this conclusion must therefore challenge the initial premise. One must argue that, although the wheat exchanges for other commodities, it does not (in any other sense) ‘have’ an exchange-value."

While Kliman is abjectly wrong in his agreeing with Marx that there is any expression of axiological equality for reasons mentioned above it is important to point out that I have indeed challenged the initial premise that commodities "have" values which inhere within them (to which exchange value is its mere expression) by totally invalidating the idea of intrinsic value.

 Kliman continues later on,

"...in this society, it is a fact that even apart from and prior to any exchange of our wheat we think and say that it ‘has a value (or price) of, ‘is worth’, so much money. Moreover, we act on this basis. We compute ‘the value of ’ our assets and our ‘net worth’, we decide to buy items if they ‘are worth’ more than the sticker price, etc., and we do so before we exchange and whether or not we exchange."

What Kliman fails to consider here is that these judgments are made not on a basis antecedent to exchange, but on the basis of antecedent exchanges. Consider for instance the failure of unlearned and primitive peoples to "properly" asses the value of things like gold, money, furs, and most especially land. It is precisely because they are not familiarized with the objects with which they exchange and for which they exchange that their assessments seem utterly alien and strange to people of a more industrial character - people who have been familiarized again and again with such objects.

Conclusion:

Marx proceeds from his “third thing” argument to inquiring as to what the third things is and by abstracting away all the superficial attributes of commodities and in leaving out a consideration of the use value of commodities ends up with answer, “that of being products of labor”. But as we have seen, there is actually no such thing as this third thing. Indeed, while many have launched promising attacks on the Marxist labor theory of value (especially regarding the contradiction involved in leaving out a consideration of use value in the determination of Marx's "common substance" but his saying later on that labor is not labor if it is not useful; this is perhaps another variation of the problems involved in omitting the valuing subject), very few if any commentators have gone deep enough and refuted the very idea that value could inhere in anything. And that whether or not one chooses to locate the determination of intrinsic value in socially-necessary labor-time or anything else is irrelevant because the nonexistence of intrinsic value is all that is relevant. 
Marx, who speaks of the alienation of the value from producer (a term actually more appropriately delimited to entrepreneurs and capitalists) alienates the very conceptual roots which make the phenomenon of value possible. Marx, who speaks of the inversion of subject and object, of value taking on an objective and autonomous role in the commodity, undercuts the very recognition of objectivity – an epistemological product of the interaction between subject and object (but Marx has done away with the subject in his axiological analysis) – and denies the attribute and even existence of the one truly autonomous entity in this relation – the individual valuer.

What my conclusions and the fundamentality of the errors I indicate spell for the entire structure of the orthodox Marxist ethos I leave to the judgment of the reader.

 

Share this post


Link to post
Share on other sites
22 hours ago, KALADIN said:

Marx wished to show that a commodity's value belongs not to that which it exchanges for (not to the manifold bodies being the objects of the end of exchange) but to itself and that the act of exchange does not determine value but rather brings about the expression of values that commodities have prior to and independent of this act. Marx's essential aim in the beginnings of Capital is not so much to present a “labor theory of value” as it is to present a real and persistent divorce between value and exchange-value in order to rectify the divorce of a commodity's value from itself.

I don't think that this uncovers the premise(s) upon which Marx based his Labor Theory of Value.  Any discussion of the validity/invalidity of LTV would need to get to the root of the issue.  How do you think Marx arrived at the LTV?  What were his premises?

Share this post


Link to post
Share on other sites
23 hours ago, KALADIN said:

Marx, who speaks of the inversion of subject and object, of value taking on an objective and autonomous role in the commodity, undercuts the very recognition of objectivity – an epistemological product of the interaction between subject and object (but Marx has done away with the subject in his axiological analysis) – and denies the attribute and even existence of the one truly autonomous entity in this relation – the individual valuer.

This is well stated, but why did he do this?

Share this post


Link to post
Share on other sites

Of course, the labor that goes into a widget is ALL the labor, including labor that goes into mining the ore, transportation, buildings, governments.

The price of an object can be less than the labor that went into it, because the buyer doesn't want it that much, but the price of an object cant be MORE than the labor that goes into it, otherwise you could pay for the labor to make another one.

You spent a hundred hours making a tire, but I don’t think it's that great so I'm only willing to give you a dollar for it.

If you buy a laptop computer, you are paying for the labor that went into making it. You could make one yourself instead of buying one from the factory, but inefficiencies would increase your labor to a lot more than the factory that makes them. So you buy it from the laptop factory instead.

The price of anything can range from zero up to the cost it would take to make another one.

Share this post


Link to post
Share on other sites
22 minutes ago, DAR said:

Of course, the labor that goes into a widget is ALL the labor, ...

What's the bottom line though? 

I mean, everything takes labor. However, the labor theory of value says that value of an output is based on the quantity of the labor input.

A casual observer would point out that that is false if one uses the terms in a normal way. Most adults know two workers who can take the same amount of time, one producing a lot of value, and the other less than half of the former. To get around this, an economist has to define "labor" in some special way. However, that special way becomes begging the question: the idea itself has no explanatory value if the term is being morphed to fit a previous explanation.

And, even with those contortions, a casual observer would kill the theory by pointing out that the value of the very same thing can change over time, with zero additional labor applied to it. To counter this, Adam Smith or Marx (both of whom backed the labor theory of value) have to redefine value to mean something other than value to a valuer. They have to treat value as some intrinsic fact about (say) a horse-whip, with no relationship to the context in which it exists and the purpose it serves.

Edited by softwareNerd

Share this post


Link to post
Share on other sites
6 minutes ago, softwareNerd said:

However, the labor theory of value says that value of an output is based on the quantity of the labor input.

I would solve that problem by saying, the value of that widget is not the labor that went into that widget, but is the lowest amount of labor that could get a widget like that. (provided anyone needs or wants the thing)

Besides, I'm talking about price. Economics is about price. Value in Objectivism is more in the field of Ethics.

Share this post


Link to post
Share on other sites
21 hours ago, DAR said:

I would solve that problem by saying, the value of that widget is not the labor that went into that widget, but is the lowest amount of labor that could get a widget like that. (provided anyone needs or wants the thing)

Besides, I'm talking about price. Economics is about price. Value in Objectivism is more in the field of Ethics.

But, there is no "problem" to solve. Just because Adam Smith and Marx put out a labor theory of value, does not mean we have to find a way to justify it.

Also, talking about price does not remove the issue of value, because value is a factor in price. But, let's say we can ignore value for now. Even that does not change things: price is not driven by input, labor or otherwise. Input is one factor, value is another, and there are additional factors as well.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

×