Labor theory of value - Revision history

Artistosteles at 21:59, 13 November 2024

2024-11-13T21:59:09Z

← Previous revision		Revision as of 21:59, 13 November 2024
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	Bichler and Nitzan argue that this amounts to converting prices into values and then determining if they correlate, which the authors argue proves nothing since the studies are simply correlating prices with themselves.<ref name="bnarchives.yorku.ca"/><ref name="Nitzan, Jonathan 2009, pp.93-97"/> [[Paul Cockshott]] disagreed with Bichler and Nitzan's arguments, arguing that it was possible to measure abstract labour time using wage bills and data on working hours, while also arguing Bichler and Nitzan's claims that the true value-price correlations should be much lower actually relied on poor statistical analysis itself.<ref>{{cite journal \|last1=Cottrell \|last2=Cockshott \|last3=Baeza \|url=https://www.econstor.eu/bitstream/10419/157802/1/bna-496_cockshott_cottrell_valle_baeza_2014.pdf \|hdl=10419/157802 \|archive-url=https://web.archive.org/web/20190224020013/http://pdfs.semanticscholar.org/50df/717e676f9cdfd0c6476c8777a76038ba9e07.pdf \|archive-date=24 February 2019\|title=The empirics of the labour theory of value: Reply to Nitzan and Bichler \|journal=Investigación Económica \|volume=73 \|number=287 \|pages=115–134 \|year=2014 \|s2cid=54996687}}</ref> Most Marxists, however, reject Bichler and Nitzan's interpretation of Marx, arguing that their assertion that individual commodities can have values, rather than prices of production, misunderstands Marx's work.<ref>Hansen, Bue Rübner. "Review of ''Capital as Power'', p. 151. "For Nitzan and Bichler, the concept ‘abstract labour’ is materialist in a way most Marxists		Bichler and Nitzan argue that this amounts to converting prices into values and then determining if they correlate, which the authors argue proves nothing since the studies are simply correlating prices with themselves.<ref name="bnarchives.yorku.ca"/><ref name="Nitzan, Jonathan 2009, pp.93-97"/> [[Paul Cockshott]] disagreed with Bichler and Nitzan's arguments, arguing that it was possible to measure abstract labour time using wage bills and data on working hours, while also arguing Bichler and Nitzan's claims that the true value-price correlations should be much lower actually relied on poor statistical analysis itself.<ref>{{cite journal \|last1=Cottrell \|last2=Cockshott \|last3=Baeza \|url=https://www.econstor.eu/bitstream/10419/157802/1/bna-496_cockshott_cottrell_valle_baeza_2014.pdf \|hdl=10419/157802 \|archive-url=https://web.archive.org/web/20190224020013/http://pdfs.semanticscholar.org/50df/717e676f9cdfd0c6476c8777a76038ba9e07.pdf \|archive-date=24 February 2019\|title=The empirics of the labour theory of value: Reply to Nitzan and Bichler \|journal=Investigación Económica \|volume=73 \|number=287 \|pages=115–134 \|year=2014 \|s2cid=54996687}}</ref> Most Marxists, however, reject Bichler and Nitzan's interpretation of Marx, arguing that their assertion that individual commodities can have values, rather than prices of production, misunderstands Marx's work.<ref>Hansen, Bue Rübner. "Review of ''Capital as Power'', p. 151. "For Nitzan and Bichler, the concept ‘abstract labour’ is materialist in a way most Marxists
	would consider vulgar, and a positive concept that can be understood in isolation from		would consider vulgar, and a positive concept that can be understood in isolation from
	monetary relation".</ref> For example, Fred Moseley argues Marx understood "value" to be a "macro-monetary" variable (the total amount of labor added in a given year plus the depreciation of fixed capital in that year), which is then concretized at the level of individual [[prices of production]], meaning that "individual values" of commodities do not exist.<ref>{{Cite book \|last=Moseley \|first=Fred \|title=Money and Totality: A Macro-monetary Interpretation of Marx's Logic in Capital and the End of the 'transformation Problem' \|publisher=[[Brill Publishers\|Brill]] ~~\|date=2015~~}}</ref>		monetary relation".</ref> For example, [[Fred Moseley (economist)\|Fred Moseley]] argues Marx understood "value" to be a "macro-monetary" variable (the total amount of labor added in a given year plus the depreciation of fixed capital in that year), which is then concretized at the level of individual [[prices of production]], meaning that "individual values" of commodities do not exist.<ref>{{Cite book \|last=Moseley \|first=Fred \|author-link=Fred Moseley (economist) \|title=Money and Totality: A Macro-monetary Interpretation of Marx's Logic in Capital and the End of the 'transformation Problem' \|date=2015 \|publisher=[[Brill Publishers\|Brill]]}}</ref>

	The theory can also be sometimes found in non-Marxist traditions.<ref group=note>Confer: Weizsäcker, Carl Christian von (2010): A New Technical Progress Function (1962). German Economic Review 11/3 (first publication of an article written in 1962); Weizsäcker Carl Christian von, and Paul A. Samuelson (1971): A new labor theory of value for rational planning through use of the bourgeois profit rate. [[Proceedings of the National Academy of Sciences]] [https://www.ncbi.nlm.nih.gov/pmc/articles/PMC389151/ (facsimile)].</ref> For instance, [[Mutualism (economic theory)\|mutualist]] theorist [[Kevin Carson]]'s ''[[Studies in Mutualist Political Economy]]'' opens with an attempt to integrate [[marginalist]] critiques into the labor theory of value.<ref>{{cite book \|first=Kevin A. \|last=Carson \|author-link=Kevin Carson \|url=http://www.mutualist.org/id112.html \|title=Studies in Mutualist Political Economy \|archive-url=https://web.archive.org/web/20110415135834/http://www.mutualist.org/id112.html \|archive-date=15 April 2011 \|chapter=1–3}}</ref>		The theory can also be sometimes found in non-Marxist traditions.<ref group=note>Confer: Weizsäcker, Carl Christian von (2010): A New Technical Progress Function (1962). German Economic Review 11/3 (first publication of an article written in 1962); Weizsäcker Carl Christian von, and Paul A. Samuelson (1971): A new labor theory of value for rational planning through use of the bourgeois profit rate. [[Proceedings of the National Academy of Sciences]] [https://www.ncbi.nlm.nih.gov/pmc/articles/PMC389151/ (facsimile)].</ref> For instance, [[Mutualism (economic theory)\|mutualist]] theorist [[Kevin Carson]]'s ''[[Studies in Mutualist Political Economy]]'' opens with an attempt to integrate [[marginalist]] critiques into the labor theory of value.<ref>{{cite book \|first=Kevin A. \|last=Carson \|author-link=Kevin Carson \|url=http://www.mutualist.org/id112.html \|title=Studies in Mutualist Political Economy \|archive-url=https://web.archive.org/web/20110415135834/http://www.mutualist.org/id112.html \|archive-date=15 April 2011 \|chapter=1–3}}</ref>
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	* {{citation \|last=Marx \|first=Karl \|author-link=Karl Marx \|editor-first=Friedrich \|editor-last=Engels \|editor-link=Friedrich Engels \|others=[[Samuel Moore (translator of Das Kapital)\|Samuel Moore]] and Edward Aveling \|title=Capital \|volume=1 \|url=http://www.marxists.org/archive/marx/works/1867-c1/ \|access-date=July 5, 2006 \|year=1867 \|isbn=978-0-394-72657-1 \|via=[[Marxists Internet Archive]]}} ([Internet edition: 1999] [1887 English edition]).		* {{citation \|last=Marx \|first=Karl \|author-link=Karl Marx \|editor-first=Friedrich \|editor-last=Engels \|editor-link=Friedrich Engels \|others=[[Samuel Moore (translator of Das Kapital)\|Samuel Moore]] and Edward Aveling \|title=Capital \|volume=1 \|url=http://www.marxists.org/archive/marx/works/1867-c1/ \|access-date=July 5, 2006 \|year=1867 \|isbn=978-0-394-72657-1 \|via=[[Marxists Internet Archive]]}} ([Internet edition: 1999] [1887 English edition]).
	* {{citation \|last=Marx \|first=Karl \|author-link=Karl Marx \|others=Ben Fowkes \|title=Capital: A Critique of Political Economy \|title-link=Das Kapital \|volume=1 \|year=1976 \|orig-year=1867 \|publisher=[[Penguin Books]]}}		* {{citation \|last=Marx \|first=Karl \|author-link=Karl Marx \|others=Ben Fowkes \|title=Capital: A Critique of Political Economy \|title-link=Das Kapital \|volume=1 \|year=1976 \|orig-year=1867 \|publisher=[[Penguin Books]]}}
	* Moseley, Fred. (2016). [http://resistir.info/livros/money_and_totality.pdf ''Money and Totality''] Leiden, Netherlands: Brill.		* [[Fred Moseley (economist)\|Moseley, Fred]]. (2016). [http://resistir.info/livros/money_and_totality.pdf ''Money and Totality''] Leiden, Netherlands: Brill.
	* Murray, Patrick. (2016). [https://www.scribd.com/document/362588085/Patrick-Murray-The-Mismeasure-of-Wealth-Essays-on-Marx-and-Social-Form-Brill-2016 ''The Mismeasure of Wealth : Essays on Marx and Social Form''] Leiden, Netherlands: Brill.		* Murray, Patrick. (2016). [https://www.scribd.com/document/362588085/Patrick-Murray-The-Mismeasure-of-Wealth-Essays-on-Marx-and-Social-Form-Brill-2016 ''The Mismeasure of Wealth : Essays on Marx and Social Form''] Leiden, Netherlands: Brill.
	* Ormazabal, Kepa M. (2004). [http://www.ehu.es/kormazabal/SmithOnLaborValue.pdf ''Smith On Labour Value''] Bilbo, Biscay, Spain: University of the Basque Country Working Paper.		* Ormazabal, Kepa M. (2004). [http://www.ehu.es/kormazabal/SmithOnLaborValue.pdf ''Smith On Labour Value''] Bilbo, Biscay, Spain: University of the Basque Country Working Paper.

Kku: link circular reasoning

2024-11-02T09:20:20Z

link circular reasoning

← Previous revision		Revision as of 09:20, 2 November 2024
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	Steve Keen argues that Marx's idea that only labor can produce value rests on the idea that as capital depreciates over its use, then this is transferring its exchange-value to the product. Keen argues that it is not clear why the value of the machine should depreciate at the same rate it is lost. Keen uses an analogy with labor: If workers receive a subsistence wage and the working day exhausts the capacity to labor, it could be argued that the worker has "depreciated" by the amount equivalent to the subsistence wage. However this depreciation is not the limit of value a worker can add in a day (indeed this is critical to Marx's idea that labor is fundamentally exploited). If it were, then the production of a surplus would be impossible. According to Keen, a machine could have a use-value greater than its exchange-value, meaning it could, along with labor, be a source of surplus. Keen claims that Marx almost reached such a conclusion in the ''[[Grundrisse]]'' but never developed it any further. Keen further observes that while Marx insisted that the contribution of machines to production is solely their use-value and not their exchange-value, he routinely treated the use-value and exchange-value of a machine as identical, despite the fact that this would contradict his claim that the two were unrelated.<ref>{{cite journal \|first=Steve \|last=Keen \|url=https://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Jhet_use.PDF \|title=Use-Value, Exchange Value, and the Demise of Marx's Labor Theory of Value \|journal=[[Journal of the History of Economic Thought]] \|volume=15 \|number=1 \|date=Spring 1993 \|pages=107–121\|doi=10.1017/S1053837200005290 \|s2cid=18950248 }}</ref> Marxists respond by arguing that use-value and exchange-value are incommensurable magnitudes; to claim that a machine can add "more use-value" than it is worth in value-terms is a [[category error]]. According to Marx, a machine by definition cannot be a source of ''human'' labor.<ref>Marx, Karl. Capital, Vol. I, p. 141, Penguin edition</ref><ref>D'Arcy, Jim, [https://www.marxists.org/archive/darcy-jim/1974/socecon4machines.htm "Socialist Economics 4: Do Machines Produce Surplus Value?"], ''Socialist Standard'', 1974</ref> Keen responds by arguing that the labor theory of value only works if the use-value and exchange-value of a machine are identical, as Marx argued that machines cannot create surplus value since as their use-value depreciates along with their exchange-value; they simply transfer it to the new product but create no new value in the process.<ref>Keen, Steve. ''Debunking Economics''. ZED Books Limited, 2011, pp. 436–438 {{ISBN?}}</ref> Keen's machinery argument can also be applied to [[slavery]] based modes of production, which also profit from extracting more use value from the laborers than they return to laborers.<ref>Kara, Siddharth (2008). ''Sex Trafficking – Inside the Business of Modern Slavery''. Columbia University Press. {{ISBN\|978-0-231-13960-1}}. {{page?\|date=July 2024}}</ref><ref>{{Cite web \|url=http://eh.net/encyclopedia/slavery-in-the-united-states/\|title=Slavery in the United States \|website=eh.net \|access-date=2020-01-30}}</ref>		Steve Keen argues that Marx's idea that only labor can produce value rests on the idea that as capital depreciates over its use, then this is transferring its exchange-value to the product. Keen argues that it is not clear why the value of the machine should depreciate at the same rate it is lost. Keen uses an analogy with labor: If workers receive a subsistence wage and the working day exhausts the capacity to labor, it could be argued that the worker has "depreciated" by the amount equivalent to the subsistence wage. However this depreciation is not the limit of value a worker can add in a day (indeed this is critical to Marx's idea that labor is fundamentally exploited). If it were, then the production of a surplus would be impossible. According to Keen, a machine could have a use-value greater than its exchange-value, meaning it could, along with labor, be a source of surplus. Keen claims that Marx almost reached such a conclusion in the ''[[Grundrisse]]'' but never developed it any further. Keen further observes that while Marx insisted that the contribution of machines to production is solely their use-value and not their exchange-value, he routinely treated the use-value and exchange-value of a machine as identical, despite the fact that this would contradict his claim that the two were unrelated.<ref>{{cite journal \|first=Steve \|last=Keen \|url=https://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Jhet_use.PDF \|title=Use-Value, Exchange Value, and the Demise of Marx's Labor Theory of Value \|journal=[[Journal of the History of Economic Thought]] \|volume=15 \|number=1 \|date=Spring 1993 \|pages=107–121\|doi=10.1017/S1053837200005290 \|s2cid=18950248 }}</ref> Marxists respond by arguing that use-value and exchange-value are incommensurable magnitudes; to claim that a machine can add "more use-value" than it is worth in value-terms is a [[category error]]. According to Marx, a machine by definition cannot be a source of ''human'' labor.<ref>Marx, Karl. Capital, Vol. I, p. 141, Penguin edition</ref><ref>D'Arcy, Jim, [https://www.marxists.org/archive/darcy-jim/1974/socecon4machines.htm "Socialist Economics 4: Do Machines Produce Surplus Value?"], ''Socialist Standard'', 1974</ref> Keen responds by arguing that the labor theory of value only works if the use-value and exchange-value of a machine are identical, as Marx argued that machines cannot create surplus value since as their use-value depreciates along with their exchange-value; they simply transfer it to the new product but create no new value in the process.<ref>Keen, Steve. ''Debunking Economics''. ZED Books Limited, 2011, pp. 436–438 {{ISBN?}}</ref> Keen's machinery argument can also be applied to [[slavery]] based modes of production, which also profit from extracting more use value from the laborers than they return to laborers.<ref>Kara, Siddharth (2008). ''Sex Trafficking – Inside the Business of Modern Slavery''. Columbia University Press. {{ISBN\|978-0-231-13960-1}}. {{page?\|date=July 2024}}</ref><ref>{{Cite web \|url=http://eh.net/encyclopedia/slavery-in-the-united-states/\|title=Slavery in the United States \|website=eh.net \|access-date=2020-01-30}}</ref>

	In their work ''Capital as Power'', Shimshon Bichler and Jonathan Nitzan argue that while Marxists have claimed to produce empirical evidence of the labor theory of value via numerous studies which show consistent correlations between values and prices, these studies<ref group=note>Examples of such studies include: Wolff, Edward N. 1975. "The Rate of Surplus Value in Puerto Rico". ''Journal of Political Economy'' 83 (5, October): 935–950. Ochoa, E. 1989. "Values, Prices and Wage-Profit Curves in the U.S. Economy". ''Cambridge Journal of Economics'' 13 (3, September): 413–430. Freeman, Alan. 1998. "The Transformation of Prices into Values: Comments on the Chapters by Simon Mohum and Anwar M. Shaikh". In Marxian Economics. A Reappraisal. Volume 2: Essays on Volume III of Capital: Profit, Prices and Dynamics, edited by R. Bellofiore. London: Mcmillan, pp. 270–275. Cockshott, Paul, and Allin Cottrell. 2005. "Robust Correlations Between Prices and Labour Values: A Comment". ''Cambridge Journal of Economics'' 29 (2, March): 309–316.</ref> do not actually provide evidence for it and are inadequate. According to the authors, these studies attempt to prove the LTV by showing that there is a positive correlation between market prices and labor values. However, the authors argue that these studies measure prices by looking at the price of total output (the unit price of a commodity multiplied by its total quantity) and do these for several sectors of the economy, estimate their total price and value from official statistics and measured for several years. However, Bichler and Nitzan argue that this method has statistical implications as correlations measured this way also reflect the co-variations of the associated quantities of unit values and prices. This means that the unit price and unit value of each sector are multiplied by the same value, which means that the greater the variability of output across different sectors, the tighter the correlation. This means that the overall correlation is substantially larger than the underlying correlation between unit values and unit prices; when sectors are controlled for their size, the correlations often drop to insignificant levels.<ref name="bnarchives.yorku.ca">Cockshott, Paul, Shimshon Bichler, and Jonathan Nitzan. [http://bnarchives.yorku.ca/308/2/20101200_cockshott_nitzan_bichler_testing_the_ltv_exchange_web.htm "Testing the labour theory of value: An exchange."] (2010): 1-15.</ref><ref name="Nitzan, Jonathan 2009, pp.93-97">Nitzan, Jonathan, and Shimshon Bichler. [http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf ''Capital as power: A study of order and creorder'']. Routledge, 2009, pp. 93–97, 138–144</ref> Furthermore, the authors argue that the studies do not seem to actually attempt to measure the correlation between value and price. The authors argue that, according to Marx, the value of a commodity indicates the abstract labor time required for its production; however Marxists have been unable to identify a way to measure a unit (elementary particle) of abstract labor (indeed the authors argue that most have given up and little progress has been made beyond Marx's original work) due to numerous difficulties. This means assumptions must be made and according to the authors, these involve circular reasoning:<ref name="bnarchives.yorku.ca"/><ref name="Nitzan, Jonathan 2009, pp.93-97"/>		In their work ''Capital as Power'', Shimshon Bichler and Jonathan Nitzan argue that while Marxists have claimed to produce empirical evidence of the labor theory of value via numerous studies which show consistent correlations between values and prices, these studies<ref group=note>Examples of such studies include: Wolff, Edward N. 1975. "The Rate of Surplus Value in Puerto Rico". ''Journal of Political Economy'' 83 (5, October): 935–950. Ochoa, E. 1989. "Values, Prices and Wage-Profit Curves in the U.S. Economy". ''Cambridge Journal of Economics'' 13 (3, September): 413–430. Freeman, Alan. 1998. "The Transformation of Prices into Values: Comments on the Chapters by Simon Mohum and Anwar M. Shaikh". In Marxian Economics. A Reappraisal. Volume 2: Essays on Volume III of Capital: Profit, Prices and Dynamics, edited by R. Bellofiore. London: Mcmillan, pp. 270–275. Cockshott, Paul, and Allin Cottrell. 2005. "Robust Correlations Between Prices and Labour Values: A Comment". ''Cambridge Journal of Economics'' 29 (2, March): 309–316.</ref> do not actually provide evidence for it and are inadequate. According to the authors, these studies attempt to prove the LTV by showing that there is a positive correlation between market prices and labor values. However, the authors argue that these studies measure prices by looking at the price of total output (the unit price of a commodity multiplied by its total quantity) and do these for several sectors of the economy, estimate their total price and value from official statistics and measured for several years. However, Bichler and Nitzan argue that this method has statistical implications as correlations measured this way also reflect the co-variations of the associated quantities of unit values and prices. This means that the unit price and unit value of each sector are multiplied by the same value, which means that the greater the variability of output across different sectors, the tighter the correlation. This means that the overall correlation is substantially larger than the underlying correlation between unit values and unit prices; when sectors are controlled for their size, the correlations often drop to insignificant levels.<ref name="bnarchives.yorku.ca">Cockshott, Paul, Shimshon Bichler, and Jonathan Nitzan. [http://bnarchives.yorku.ca/308/2/20101200_cockshott_nitzan_bichler_testing_the_ltv_exchange_web.htm "Testing the labour theory of value: An exchange."] (2010): 1-15.</ref><ref name="Nitzan, Jonathan 2009, pp.93-97">Nitzan, Jonathan, and Shimshon Bichler. [http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf ''Capital as power: A study of order and creorder'']. Routledge, 2009, pp. 93–97, 138–144</ref> Furthermore, the authors argue that the studies do not seem to actually attempt to measure the correlation between value and price. The authors argue that, according to Marx, the value of a commodity indicates the abstract labor time required for its production; however Marxists have been unable to identify a way to measure a unit (elementary particle) of abstract labor (indeed the authors argue that most have given up and little progress has been made beyond Marx's original work) due to numerous difficulties. This means assumptions must be made and according to the authors, these involve [[circular reasoning]]:<ref name="bnarchives.yorku.ca"/><ref name="Nitzan, Jonathan 2009, pp.93-97"/>
	{{Blockquote\|The most important of these assumptions are that the value of labour power is proportionate to the actual wage rate, that the ratio of variable capital to surplus value is given by the price ratio of wages to profit, and occasionally also that the value of the depreciated constant capital is equal to a fraction of the capital’s money price. In other words, the researcher assumes precisely what the labour theory of value is supposed to ''demonstrate''.<ref>Nitzan, Jonathan, and Shimshon Bichler. [http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf ''Capital as power: A study of order and creorder'']. [[Routledge]], 2009, pp. 96</ref>		{{Blockquote\|The most important of these assumptions are that the value of labour power is proportionate to the actual wage rate, that the ratio of variable capital to surplus value is given by the price ratio of wages to profit, and occasionally also that the value of the depreciated constant capital is equal to a fraction of the capital’s money price. In other words, the researcher assumes precisely what the labour theory of value is supposed to ''demonstrate''.<ref>Nitzan, Jonathan, and Shimshon Bichler. [http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf ''Capital as power: A study of order and creorder'']. [[Routledge]], 2009, pp. 96</ref>
	}}		}}

BenKovitz: /* Relation between values and prices */ rm {{empty section}} tag

2024-10-07T01:32:15Z

Relation between values and prices: rm {{empty section}} tag

← Previous revision		Revision as of 01:32, 7 October 2024
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	Smith argues that labor values are the natural measure of exchange for direct producers like hunters and fishermen.<ref name="ormazabal">{{cite web \|last=Ormazabal \|first=Kepa M. \|date=2006 \|title=Adam Smith on Labor and Value: Challenging the Standard Interpretation \|url=https://www.ehu.eus/documents/2276258/2294671/il2006_26.pdf \|publisher=[[University of the Basque Country]]}}</ref> Marx, on the other hand, uses a measurement analogy, arguing that for commodities to be comparable they must have a common element or substance by which to measure them,<ref name="marxprofit" /> and that labor is a common substance of what Marx eventually calls ''commodity-values''.{{sfn\|Marx\|1867}}		Smith argues that labor values are the natural measure of exchange for direct producers like hunters and fishermen.<ref name="ormazabal">{{cite web \|last=Ormazabal \|first=Kepa M. \|date=2006 \|title=Adam Smith on Labor and Value: Challenging the Standard Interpretation \|url=https://www.ehu.eus/documents/2276258/2294671/il2006_26.pdf \|publisher=[[University of the Basque Country]]}}</ref> Marx, on the other hand, uses a measurement analogy, arguing that for commodities to be comparable they must have a common element or substance by which to measure them,<ref name="marxprofit" /> and that labor is a common substance of what Marx eventually calls ''commodity-values''.{{sfn\|Marx\|1867}}

	{{Empty section\|date=February 2024}}

	== Labor process ==		== Labor process ==

TheAnnalyst: /* Karl Marx */ Fix grammar

2024-10-02T22:16:40Z

Karl Marx: Fix grammar

← Previous revision		Revision as of 22:16, 2 October 2024
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	=== Karl Marx ===		=== Karl Marx ===
	Contrary to popular belief Marx never used the term "~~Labor~~ theory of value" in any of his works but used the term [[~~Law~~ of value]],<ref>cf [[E F Schumacher]],''[[Small Is Beautiful]]'', Pt 1, ch 1. Mike Beggs, "Zombie Marx and Modern Economics, or How I Learned to Stop Worrying and Forget the Transformation Problem." ''Journal of Australian Political Economy'', issue 70, Summer 2012/13, p. 16 [http://australianpe.wix.com/japehome#!current/c1cok]; Gary Mongiovi, "Vulgar economy in Marxian garb: a critique of Temporal Single System Marxism." In: ''Review of Radical Political Economics'', Vol. 34, Issue 4, December 2002, pp. 393–416 [398].</ref><ref>{{Cite journal \|last=Beggs \|first=Mike \|date=Summer 2012 \|title=Zombie Marx and Modern Economics, or How I Learned to Stop Worrying and Forget the Transformation Problem \|url=https://search.informit.com.au/documentSummary;dn=042280767799732;res=IELBUS \|journal=Journal of Australian Political Economy \|issue=70 \|at=pp. 11{{ndash}}24, at p. 16 \|via=}}</ref><ref>{{Cite journal \|last=Mongiovi \|first=Gary \|date=Autumn 2002 \|title=Vulgar economy in Marxian garb: a critique of Temporal Single System Marxism \|url=https://www.sciencedirect.com/science/article/abs/pii/S0486613402001766 \|journal=[[Review of Radical Political Economics]] \|volume=34 \|issue=4 \|at=pp. 393{{ndash}}416, at p. 398 \|doi=10.1016/S0486-6134(02)00176-6 \|via=Elsevier Science Direct}}</ref> Marx opposed "ascribing a supernatural creative power to labor", arguing as such:		Contrary to popular belief, Marx never used the term "labor theory of value" in any of his works, but used the term [[law of value]];<ref>cf [[E F Schumacher]],''[[Small Is Beautiful]]'', Pt 1, ch 1. Mike Beggs, "Zombie Marx and Modern Economics, or How I Learned to Stop Worrying and Forget the Transformation Problem." ''Journal of Australian Political Economy'', issue 70, Summer 2012/13, p. 16 [http://australianpe.wix.com/japehome#!current/c1cok]; Gary Mongiovi, "Vulgar economy in Marxian garb: a critique of Temporal Single System Marxism." In: ''Review of Radical Political Economics'', Vol. 34, Issue 4, December 2002, pp. 393–416 [398].</ref><ref>{{Cite journal \|last=Beggs \|first=Mike \|date=Summer 2012 \|title=Zombie Marx and Modern Economics, or How I Learned to Stop Worrying and Forget the Transformation Problem \|url=https://search.informit.com.au/documentSummary;dn=042280767799732;res=IELBUS \|journal=Journal of Australian Political Economy \|issue=70 \|at=pp. 11{{ndash}}24, at p. 16 \|via=}}</ref><ref>{{Cite journal \|last=Mongiovi \|first=Gary \|date=Autumn 2002 \|title=Vulgar economy in Marxian garb: a critique of Temporal Single System Marxism \|url=https://www.sciencedirect.com/science/article/abs/pii/S0486613402001766 \|journal=[[Review of Radical Political Economics]] \|volume=34 \|issue=4 \|at=pp. 393{{ndash}}416, at p. 398 \|doi=10.1016/S0486-6134(02)00176-6 \|via=Elsevier Science Direct}}</ref> Marx opposed "ascribing a supernatural creative power to labor", arguing as such:
	<blockquote>Labor is not the source of all wealth. Nature is just as much a source of use values (and it is surely of such that material wealth consists!) as labor, which is itself only the manifestation of a force of nature, human labor power.<ref name="Critique of the Gotha Program">{{cite book \|chapter-url=http://www.marxists.org/archive/marx/works/1875/gotha/ch01.htm \|title=[[Critique of the Gotha Program]] \|chapter=1 \|via=[[Marxists Internet Archive]] \|first=Karl \|last=Marx \|author-link=Karl Marx \|date=1875}}</ref></blockquote>		<blockquote>Labor is not the source of all wealth. Nature is just as much a source of use values (and it is surely of such that material wealth consists!) as labor, which is itself only the manifestation of a force of nature, human labor power.<ref name="Critique of the Gotha Program">{{cite book \|chapter-url=http://www.marxists.org/archive/marx/works/1875/gotha/ch01.htm \|title=[[Critique of the Gotha Program]] \|chapter=1 \|via=[[Marxists Internet Archive]] \|first=Karl \|last=Marx \|author-link=Karl Marx \|date=1875}}</ref></blockquote>

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	The Marxist labor theory of value has been criticised on several counts. Some argue that it predicts that profits will be higher in labor-intensive industries than in capital-intensive industries, which would be contradicted by measured empirical data inherent in quantitative analysis. This is sometimes referred to as the "Great Contradiction".<ref name="ReferenceA">Böhm von Bawerk, "Karl Marx and the Close of His System" [[Karl Marx and the Close of His System]]</ref> In volume 3 of ''Capital'', Marx explains why profits are not distributed according to which industries are the most labor-intensive and why this is consistent with his theory. Whether or not this is consistent with the labor theory of value as presented in volume 1 has been a topic of debate.<ref name="ReferenceA"/> According to Marx, [[surplus value]] is extracted by the capitalist class as a whole and then distributed according to the amount of total capital, not just the variable component. In the example given earlier, of making a cup of coffee, the constant capital involved in production is the coffee beans themselves, and the variable capital is the value added by the coffee maker. The value added by the coffee maker is dependent on its technological capabilities, and the coffee maker can only add so much total value to cups of coffee over its lifespan. The amount of value added to the product is thus the amortization of the value of the coffeemaker. We can also note that not all products have equal proportions of value added by amortized capital. Capital intensive industries such as finance may have a large contribution of capital, while labor-intensive industries like traditional agriculture would have a relatively small one.<ref>{{cite book \|last1=Ekelund \|first1=Robert B. Jr.\|first2=Robert F. \|last2=Hebert \|date=1997 \|edition=4th \|title=A History of Economic Theory and Method \|pages=239–241}}</ref> Critics argue that this turns the LTV into a macroeconomic theory, when it was supposed to explain the exchange ratios of individual commodities in terms of their relation to their labour ratios (making it a microeconomic theory), yet Marx was now maintaining that these ratios must diverge from their labour ratios. Critics thus held that Marx's proposed solution to the "great contradiction" was not so much a solution as it was sidestepping the issue.<ref>{{cite journal \|last=Temkin \|first=Gabriel \|title=Karl Marx and the economics of communism: anniversary recollections \|journal=Communist and Post-Communist Studies \|volume=31 \|number=4 \|date=1998 \|pages=303–328 (321–322)\|doi=10.1016/S0967-067X(98)00014-2 }}</ref><ref>{{cite book \|last=Sesardić \|first=Neven \|title=Marxian Utopia \|date=1985 \|work=Centre for Research into Communist Economies \|isbn=0948027010 \|pages=14–15}}</ref>		The Marxist labor theory of value has been criticised on several counts. Some argue that it predicts that profits will be higher in labor-intensive industries than in capital-intensive industries, which would be contradicted by measured empirical data inherent in quantitative analysis. This is sometimes referred to as the "Great Contradiction".<ref name="ReferenceA">Böhm von Bawerk, "Karl Marx and the Close of His System" [[Karl Marx and the Close of His System]]</ref> In volume 3 of ''Capital'', Marx explains why profits are not distributed according to which industries are the most labor-intensive and why this is consistent with his theory. Whether or not this is consistent with the labor theory of value as presented in volume 1 has been a topic of debate.<ref name="ReferenceA"/> According to Marx, [[surplus value]] is extracted by the capitalist class as a whole and then distributed according to the amount of total capital, not just the variable component. In the example given earlier, of making a cup of coffee, the constant capital involved in production is the coffee beans themselves, and the variable capital is the value added by the coffee maker. The value added by the coffee maker is dependent on its technological capabilities, and the coffee maker can only add so much total value to cups of coffee over its lifespan. The amount of value added to the product is thus the amortization of the value of the coffeemaker. We can also note that not all products have equal proportions of value added by amortized capital. Capital intensive industries such as finance may have a large contribution of capital, while labor-intensive industries like traditional agriculture would have a relatively small one.<ref>{{cite book \|last1=Ekelund \|first1=Robert B. Jr.\|first2=Robert F. \|last2=Hebert \|date=1997 \|edition=4th \|title=A History of Economic Theory and Method \|pages=239–241}}</ref> Critics argue that this turns the LTV into a macroeconomic theory, when it was supposed to explain the exchange ratios of individual commodities in terms of their relation to their labour ratios (making it a microeconomic theory), yet Marx was now maintaining that these ratios must diverge from their labour ratios. Critics thus held that Marx's proposed solution to the "great contradiction" was not so much a solution as it was sidestepping the issue.<ref>{{cite journal \|last=Temkin \|first=Gabriel \|title=Karl Marx and the economics of communism: anniversary recollections \|journal=Communist and Post-Communist Studies \|volume=31 \|number=4 \|date=1998 \|pages=303–328 (321–322)\|doi=10.1016/S0967-067X(98)00014-2 }}</ref><ref>{{cite book \|last=Sesardić \|first=Neven \|title=Marxian Utopia \|date=1985 \|work=Centre for Research into Communist Economies \|isbn=0948027010 \|pages=14–15}}</ref>

	Steve Keen argues that Marx's idea that only labor can produce value rests on the idea that as capital depreciates over its use, then this is transferring its exchange-value to the product. Keen argues that it is not clear why the value of the machine should depreciate at the same rate it is lost. Keen uses an analogy with labor: If workers receive a subsistence wage and the working day exhausts the capacity to labor, it could be argued that the worker has "depreciated" by the amount equivalent to the subsistence wage. However this depreciation is not the limit of value a worker can add in a day (indeed this is critical to Marx's idea that labor is fundamentally exploited). If it were, then the production of a surplus would be impossible. According to Keen, a machine could have a use-value greater than its exchange-value, meaning it could, along with labor, be a source of surplus. Keen claims that Marx almost reached such a conclusion in the ''[[Grundrisse]]'' but never developed it any further. Keen further observes that while Marx insisted that the contribution of machines to production is solely their use-value and not their exchange-value, he routinely treated the use-value and exchange-value of a machine as identical, despite the fact that this would contradict his claim that the two were unrelated.<ref>{{cite journal \|first=Steve \|last=Keen \|url=https://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Jhet_use.PDF \|title=Use-Value, Exchange Value, and the Demise of Marx's Labor Theory of Value \|journal=[[Journal of the History of Economic Thought]] \|volume=15 \|number=1 \|date=Spring 1993 \|pages=107–121\|doi=10.1017/S1053837200005290 \|s2cid=18950248 }}</ref> Marxists respond by arguing that use-value and exchange-value are incommensurable magnitudes; to claim that a machine can add "more use-value" than it is worth in value-terms is a [[category error]]. According to Marx, a machine by definition cannot be a source of ''human'' labor.<ref>Marx, Karl. Capital, Vol. I, p. 141, Penguin edition</ref><ref>D'Arcy, Jim, [https://www.marxists.org/archive/darcy-jim/1974/socecon4machines.htm "Socialist Economics 4: Do Machines Produce Surplus Value?"], ''Socialist Standard'', 1974</ref> Keen responds by arguing that the labor theory of value only works if the use-value and exchange-value of a machine are identical, as Marx argued that machines cannot create surplus value since as their use-value depreciates along with their exchange-value; they simply transfer it to the new product but create no new value in the process.<ref>Keen, Steve. ''Debunking Economics''. ZED Books Limited, 2011, pp. 436–438 {{ISBN?}}</ref> Keen's machinery argument can also be applied to [[slavery]] based modes of production, which also profit from extracting more use value from the laborers than they return to laborers.<ref>Kara, Siddharth (2008). ''Sex Trafficking – Inside the Business of Modern Slavery''. Columbia University Press. {{ISBN\|978-0-231-13960-1}}. {{page?}}</ref><ref>{{Cite web \|url=http://eh.net/encyclopedia/slavery-in-the-united-states/\|title=Slavery in the United States \|website=eh.net \|access-date=2020-01-30}}</ref>		Steve Keen argues that Marx's idea that only labor can produce value rests on the idea that as capital depreciates over its use, then this is transferring its exchange-value to the product. Keen argues that it is not clear why the value of the machine should depreciate at the same rate it is lost. Keen uses an analogy with labor: If workers receive a subsistence wage and the working day exhausts the capacity to labor, it could be argued that the worker has "depreciated" by the amount equivalent to the subsistence wage. However this depreciation is not the limit of value a worker can add in a day (indeed this is critical to Marx's idea that labor is fundamentally exploited). If it were, then the production of a surplus would be impossible. According to Keen, a machine could have a use-value greater than its exchange-value, meaning it could, along with labor, be a source of surplus. Keen claims that Marx almost reached such a conclusion in the ''[[Grundrisse]]'' but never developed it any further. Keen further observes that while Marx insisted that the contribution of machines to production is solely their use-value and not their exchange-value, he routinely treated the use-value and exchange-value of a machine as identical, despite the fact that this would contradict his claim that the two were unrelated.<ref>{{cite journal \|first=Steve \|last=Keen \|url=https://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Jhet_use.PDF \|title=Use-Value, Exchange Value, and the Demise of Marx's Labor Theory of Value \|journal=[[Journal of the History of Economic Thought]] \|volume=15 \|number=1 \|date=Spring 1993 \|pages=107–121\|doi=10.1017/S1053837200005290 \|s2cid=18950248 }}</ref> Marxists respond by arguing that use-value and exchange-value are incommensurable magnitudes; to claim that a machine can add "more use-value" than it is worth in value-terms is a [[category error]]. According to Marx, a machine by definition cannot be a source of ''human'' labor.<ref>Marx, Karl. Capital, Vol. I, p. 141, Penguin edition</ref><ref>D'Arcy, Jim, [https://www.marxists.org/archive/darcy-jim/1974/socecon4machines.htm "Socialist Economics 4: Do Machines Produce Surplus Value?"], ''Socialist Standard'', 1974</ref> Keen responds by arguing that the labor theory of value only works if the use-value and exchange-value of a machine are identical, as Marx argued that machines cannot create surplus value since as their use-value depreciates along with their exchange-value; they simply transfer it to the new product but create no new value in the process.<ref>Keen, Steve. ''Debunking Economics''. ZED Books Limited, 2011, pp. 436–438 {{ISBN?}}</ref> Keen's machinery argument can also be applied to [[slavery]] based modes of production, which also profit from extracting more use value from the laborers than they return to laborers.<ref>Kara, Siddharth (2008). ''Sex Trafficking – Inside the Business of Modern Slavery''. Columbia University Press. {{ISBN\|978-0-231-13960-1}}. {{page?\|date=July 2024}}</ref><ref>{{Cite web \|url=http://eh.net/encyclopedia/slavery-in-the-united-states/\|title=Slavery in the United States \|website=eh.net \|access-date=2020-01-30}}</ref>

	In their work ''Capital as Power'', Shimshon Bichler and Jonathan Nitzan argue that while Marxists have claimed to produce empirical evidence of the labor theory of value via numerous studies which show consistent correlations between values and prices, these studies<ref group=note>Examples of such studies include: Wolff, Edward N. 1975. "The Rate of Surplus Value in Puerto Rico". ''Journal of Political Economy'' 83 (5, October): 935–950. Ochoa, E. 1989. "Values, Prices and Wage-Profit Curves in the U.S. Economy". ''Cambridge Journal of Economics'' 13 (3, September): 413–430. Freeman, Alan. 1998. "The Transformation of Prices into Values: Comments on the Chapters by Simon Mohum and Anwar M. Shaikh". In Marxian Economics. A Reappraisal. Volume 2: Essays on Volume III of Capital: Profit, Prices and Dynamics, edited by R. Bellofiore. London: Mcmillan, pp. 270–275. Cockshott, Paul, and Allin Cottrell. 2005. "Robust Correlations Between Prices and Labour Values: A Comment". ''Cambridge Journal of Economics'' 29 (2, March): 309–316.</ref> do not actually provide evidence for it and are inadequate. According to the authors, these studies attempt to prove the LTV by showing that there is a positive correlation between market prices and labor values. However, the authors argue that these studies measure prices by looking at the price of total output (the unit price of a commodity multiplied by its total quantity) and do these for several sectors of the economy, estimate their total price and value from official statistics and measured for several years. However, Bichler and Nitzan argue that this method has statistical implications as correlations measured this way also reflect the co-variations of the associated quantities of unit values and prices. This means that the unit price and unit value of each sector are multiplied by the same value, which means that the greater the variability of output across different sectors, the tighter the correlation. This means that the overall correlation is substantially larger than the underlying correlation between unit values and unit prices; when sectors are controlled for their size, the correlations often drop to insignificant levels.<ref name="bnarchives.yorku.ca">Cockshott, Paul, Shimshon Bichler, and Jonathan Nitzan. [http://bnarchives.yorku.ca/308/2/20101200_cockshott_nitzan_bichler_testing_the_ltv_exchange_web.htm "Testing the labour theory of value: An exchange."] (2010): 1-15.</ref><ref name="Nitzan, Jonathan 2009, pp.93-97">Nitzan, Jonathan, and Shimshon Bichler. [http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf ''Capital as power: A study of order and creorder'']. Routledge, 2009, pp. 93–97, 138–144</ref> Furthermore, the authors argue that the studies do not seem to actually attempt to measure the correlation between value and price. The authors argue that, according to Marx, the value of a commodity indicates the abstract labor time required for its production; however Marxists have been unable to identify a way to measure a unit (elementary particle) of abstract labor (indeed the authors argue that most have given up and little progress has been made beyond Marx's original work) due to numerous difficulties. This means assumptions must be made and according to the authors, these involve circular reasoning:<ref name="bnarchives.yorku.ca"/><ref name="Nitzan, Jonathan 2009, pp.93-97"/>		In their work ''Capital as Power'', Shimshon Bichler and Jonathan Nitzan argue that while Marxists have claimed to produce empirical evidence of the labor theory of value via numerous studies which show consistent correlations between values and prices, these studies<ref group=note>Examples of such studies include: Wolff, Edward N. 1975. "The Rate of Surplus Value in Puerto Rico". ''Journal of Political Economy'' 83 (5, October): 935–950. Ochoa, E. 1989. "Values, Prices and Wage-Profit Curves in the U.S. Economy". ''Cambridge Journal of Economics'' 13 (3, September): 413–430. Freeman, Alan. 1998. "The Transformation of Prices into Values: Comments on the Chapters by Simon Mohum and Anwar M. Shaikh". In Marxian Economics. A Reappraisal. Volume 2: Essays on Volume III of Capital: Profit, Prices and Dynamics, edited by R. Bellofiore. London: Mcmillan, pp. 270–275. Cockshott, Paul, and Allin Cottrell. 2005. "Robust Correlations Between Prices and Labour Values: A Comment". ''Cambridge Journal of Economics'' 29 (2, March): 309–316.</ref> do not actually provide evidence for it and are inadequate. According to the authors, these studies attempt to prove the LTV by showing that there is a positive correlation between market prices and labor values. However, the authors argue that these studies measure prices by looking at the price of total output (the unit price of a commodity multiplied by its total quantity) and do these for several sectors of the economy, estimate their total price and value from official statistics and measured for several years. However, Bichler and Nitzan argue that this method has statistical implications as correlations measured this way also reflect the co-variations of the associated quantities of unit values and prices. This means that the unit price and unit value of each sector are multiplied by the same value, which means that the greater the variability of output across different sectors, the tighter the correlation. This means that the overall correlation is substantially larger than the underlying correlation between unit values and unit prices; when sectors are controlled for their size, the correlations often drop to insignificant levels.<ref name="bnarchives.yorku.ca">Cockshott, Paul, Shimshon Bichler, and Jonathan Nitzan. [http://bnarchives.yorku.ca/308/2/20101200_cockshott_nitzan_bichler_testing_the_ltv_exchange_web.htm "Testing the labour theory of value: An exchange."] (2010): 1-15.</ref><ref name="Nitzan, Jonathan 2009, pp.93-97">Nitzan, Jonathan, and Shimshon Bichler. [http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf ''Capital as power: A study of order and creorder'']. Routledge, 2009, pp. 93–97, 138–144</ref> Furthermore, the authors argue that the studies do not seem to actually attempt to measure the correlation between value and price. The authors argue that, according to Marx, the value of a commodity indicates the abstract labor time required for its production; however Marxists have been unable to identify a way to measure a unit (elementary particle) of abstract labor (indeed the authors argue that most have given up and little progress has been made beyond Marx's original work) due to numerous difficulties. This means assumptions must be made and according to the authors, these involve circular reasoning:<ref name="bnarchives.yorku.ca"/><ref name="Nitzan, Jonathan 2009, pp.93-97"/>

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	* {{citation \|last=Dussel \|first=Enique \|title=The four drafts of '"Capital" \|journal=Rethinking Marxism \|volume=13 \|issue=1 \|year=2002 \|page=10 \|url=http://www.mtholyoke.edu/~fmoseley/Dussel.pdf \|access-date=August 3, 2006 \|doi=10.1080/089356901101241569 \|citeseerx=10.1.1.201.4415 \|s2cid=145603007 \|archive-date=November 7, 2006 \|archive-url=https://web.archive.org/web/20061107234029/http://www.mtholyoke.edu/~fmoseley/Dussel.pdf \|url-status=dead }}		* {{citation \|last=Dussel \|first=Enique \|title=The four drafts of '"Capital" \|journal=Rethinking Marxism \|volume=13 \|issue=1 \|year=2002 \|page=10 \|url=http://www.mtholyoke.edu/~fmoseley/Dussel.pdf \|access-date=August 3, 2006 \|doi=10.1080/089356901101241569 \|citeseerx=10.1.1.201.4415 \|s2cid=145603007 \|archive-date=November 7, 2006 \|archive-url=https://web.archive.org/web/20061107234029/http://www.mtholyoke.edu/~fmoseley/Dussel.pdf \|url-status=dead }}
	* Eldred, Michael (1984). [http://www.arte-fact.org/ccfbdspf.html ''Critique of Competitive Freedom and the Bourgeois-Democratic State: Outline of a Form-analytic Extension of Marx's Uncompleted System'']. With an Appendix 'Value-form Analytic Reconstruction of the Capital-Analysis' by Michael Eldred, Marnie Hanlon, Lucia Kleiber and Mike Roth, Kurasje, Copenhagen. Emended, digitized edition 2010 with a new Preface, lxxiii + 466 pp. {{ISBN\|87-87437-40-6\|978-87-87437-40-0}}.		* Eldred, Michael (1984). [http://www.arte-fact.org/ccfbdspf.html ''Critique of Competitive Freedom and the Bourgeois-Democratic State: Outline of a Form-analytic Extension of Marx's Uncompleted System'']. With an Appendix 'Value-form Analytic Reconstruction of the Capital-Analysis' by Michael Eldred, Marnie Hanlon, Lucia Kleiber and Mike Roth, Kurasje, Copenhagen. Emended, digitized edition 2010 with a new Preface, lxxiii + 466 pp. {{ISBN\|87-87437-40-6\|978-87-87437-40-0}}.
	* Ellerman, David P. (1992) Property & Contract in Economics: The Case for Economic Democracy. Blackwell. Chapters 4,5, and 13 critiques of LTV in favor of the labor theory of property.		* Ellerman, David P. (1992) Property & Contract in Economics: The Case for Economic Democracy. Blackwell. Chapters 4, 5, and 13 critiques of LTV in favor of the labor theory of property.
	* Engels, F. (1880). [http://www.marxists.org/archive/marx/works/1880/soc-utop/ ''Socialism: Utopian and Scientific''].		* Engels, F. (1880). [http://www.marxists.org/archive/marx/works/1880/soc-utop/ ''Socialism: Utopian and Scientific''].
	* Freeman, Alan: ''Price, value and profit – a continuous, general treatment''. In: Alan Freeman, Guglielmo Carchedi (editors): ''Marx and Non-equilibrium Economics''. [[Edward Elgar Publishing]]. Cheltenham, UK, Brookfield, US 1996. {{ISBN\|978-1-85898-268-7}}.		* Freeman, Alan: ''Price, value and profit – a continuous, general treatment''. In: Alan Freeman, Guglielmo Carchedi (editors): ''Marx and Non-equilibrium Economics''. [[Edward Elgar Publishing]]. Cheltenham, UK, Brookfield, US 1996. {{ISBN\|978-1-85898-268-7}}.

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	== Relation between values and prices ==		== Relation between values and prices ==
	While the LTV posits that value is primarily determined by labor, it recognizes that the actual price of a commodity is influenced in the short-term by the profit motive<ref>{{Cite report \|url=https://econpapers.repec.org/bookchap/oettbooks/prin7.htm \|title=Human Society and the Global Economy \|last=Taylor \|first=Kit Sims \|date=2001 \|publisher=SUNY-Oswego, Department of Economics \|quote=Value lies at the core of the economic adjustment process. If the actual price of something were above the value, the extra profits to be made would attract more firms into that industry leading to a greater supply and - eventually - lower prices; conversely, if the actual price of something were below the value, the losses - or sub-normal profits - would drive firms out of that industry leading to a smaller supply and - eventually - higher prices.}}</ref> and market conditions, including supply and demand<ref>{{Cite web \|last=Marx \|first=Karl \|title=Economic Manuscripts: ~~VALUE~~, ~~PRICE~~ ~~AND~~ ~~PROFIT~~ \|url=https://www.marxists.org/archive/marx/works/1865/value-price-profit/ch01.htm \|access-date=2024-01-28 \|website=www.marxists.org \|quote=You would be altogether mistaken in fancying that the value of labour or any other commodity whatever is ultimately fixed by supply and demand. Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for the value itself. Suppose supply and demand to equilibrate, or, as the economists call it, to cover each other. Why, the very moment these opposite forces become equal they paralyze each other, and cease to work in the one or other direction. At the moment when supply and demand equilibrate each other, and therefore cease to act, the market price of a commodity coincides with its real value, with the standard price round which its market prices oscillate. In inquiring into the nature of that VALUE, we have therefore nothing at all to do with the temporary effects on market prices of supply and demand. The same holds true of wages and of the prices of all other commodities.}}</ref><ref>{{Cite book \|last=Rubin \|first=Isaak Ilyich \|url=https://books.google.com/books?id=moJGEAAAQBAJ&q=supply+demand+%22socially+necessary%22&pg=PA57 \|title=Essays on Marx's Theory of Value \|date=2020~~-10-22~~ \|publisher=Pattern Books \|isbn=978-3-0340-0472-5 \|language=en \|quote="...even though the quantity of socially-necessary labor required for the production of one pair of shoes did not change, because of the excessive supply the shoes are sold according to a market price which is below the market-value determined by the socially-necessary labor. The interpreters of Marx ...establish... an 'economic' concept of necessary labor i.e., recognizing that socially-necessary labor changes not only in relation to changes in the productive power of labor but also in relation to changes in the balance between social supply and demand."}}</ref> and the extent of monopolization.<ref>{{Cite web \|title=Ernest Mandel: The Labor Theory of Value and "Monopoly Capitalism" (1967) \|url=https://www.marxists.org/archive/mandel/1967/03/ltv-mcap.htm \|access-date=2024-01-29 \|website=www.marxists.org \|quote=The labor theory of value implies that, in terms of value, the total mass of surplus value to be distributed every year is a given quantity. It depends on the value of variable capital and on the rate of surplus value. Price competition cannot change that given quantity (except when it influences the division of the newly created income between workers and capitalists, i.e. depresses or increases real wages, and thereby increases or depresses the rate of surplus value)...It means that the distribution of the given quantity of surplus value is changed, in favor of the monopolists and at the expense of the non-monopolized sectors....Under monopoly capitalism as under “competitive capitalism” the two basic forces explaining capital accumulation remain competition between capitalists (for appropriating bigger shares of surplus value) and competition between capitalists and workers (for increasing the rate of surplus value)."}}</ref> Adherents to the LTV conceptualize value (i.e., socially necessary labour time) as a "center of gravity" for price over the long-term.<ref>Cogliano, Jonathan F., et al. [https://qmro.qmul.ac.uk/xmlui/bitstream/handle/123456789/52466/Veneziani,%20Aug%202018%20MarxBook_2018_06_19_Processed.pdf?isAllowed=y&sequence=1 ''Value, competition and exploitation: Marx's legacy revisited''.] Edward Elgar Publishing, 2018.</ref>{{sfn\|Marx\|1867}}		While the LTV posits that value is primarily determined by labor, it recognizes that the actual price of a commodity is influenced in the short-term by the profit motive<ref>{{Cite report \|url=https://econpapers.repec.org/bookchap/oettbooks/prin7.htm \|title=Human Society and the Global Economy \|last=Taylor \|first=Kit Sims \|date=2001 \|publisher=SUNY-Oswego, Department of Economics \|quote=Value lies at the core of the economic adjustment process. If the actual price of something were above the value, the extra profits to be made would attract more firms into that industry leading to a greater supply and – eventually – lower prices; conversely, if the actual price of something were below the value, the losses – or sub-normal profits – would drive firms out of that industry leading to a smaller supply and – eventually – higher prices.}}</ref> and market conditions, including supply and demand<ref>{{Cite web \|last=Marx \|first=Karl \|title=Economic Manuscripts: Value, Price and Profit \|url=https://www.marxists.org/archive/marx/works/1865/value-price-profit/ch01.htm \|access-date=2024-01-28 \|website=www.marxists.org \|quote=You would be altogether mistaken in fancying that the value of labour or any other commodity whatever is ultimately fixed by supply and demand. Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for the value itself. Suppose supply and demand to equilibrate, or, as the economists call it, to cover each other. Why, the very moment these opposite forces become equal they paralyze each other, and cease to work in the one or other direction. At the moment when supply and demand equilibrate each other, and therefore cease to act, the market price of a commodity coincides with its real value, with the standard price round which its market prices oscillate. In inquiring into the nature of that VALUE, we have therefore nothing at all to do with the temporary effects on market prices of supply and demand. The same holds true of wages and of the prices of all other commodities.}}</ref><ref>{{Cite book \|last=Rubin \|first=Isaak Ilyich \|url=https://books.google.com/books?id=moJGEAAAQBAJ&q=supply+demand+%22socially+necessary%22&pg=PA57 \|title=Essays on Marx's Theory of Value \|date=2020 \|publisher=Pattern Books \|isbn=978-3-0340-0472-5 \|language=en \|quote="...even though the quantity of socially-necessary labor required for the production of one pair of shoes did not change, because of the excessive supply the shoes are sold according to a market price which is below the market-value determined by the socially-necessary labor. The interpreters of Marx ...establish... an 'economic' concept of necessary labor i.e., recognizing that socially-necessary labor changes not only in relation to changes in the productive power of labor but also in relation to changes in the balance between social supply and demand."}}</ref> and the extent of monopolization.<ref>{{Cite web \|title=Ernest Mandel: The Labor Theory of Value and "Monopoly Capitalism" (1967) \|url=https://www.marxists.org/archive/mandel/1967/03/ltv-mcap.htm \|access-date=2024-01-29 \|website=www.marxists.org \|quote=The labor theory of value implies that, in terms of value, the total mass of surplus value to be distributed every year is a given quantity. It depends on the value of variable capital and on the rate of surplus value. Price competition cannot change that given quantity (except when it influences the division of the newly created income between workers and capitalists, i.e. depresses or increases real wages, and thereby increases or depresses the rate of surplus value)...It means that the distribution of the given quantity of surplus value is changed, in favor of the monopolists and at the expense of the non-monopolized sectors....Under monopoly capitalism as under “competitive capitalism” the two basic forces explaining capital accumulation remain competition between capitalists (for appropriating bigger shares of surplus value) and competition between capitalists and workers (for increasing the rate of surplus value)."}}</ref> Adherents to the LTV conceptualize value (i.e., socially necessary labour time) as a "center of gravity" for price over the long-term.<ref>Cogliano, Jonathan F., et al. [https://qmro.qmul.ac.uk/xmlui/bitstream/handle/123456789/52466/Veneziani,%20Aug%202018%20MarxBook_2018_06_19_Processed.pdf?isAllowed=y&sequence=1 ''Value, competition and exploitation: Marx's legacy revisited''.] Edward Elgar Publishing, 2018.</ref>{{sfn\|Marx\|1867}}

	In Book 1, chapter VI, Adam Smith writes:		In Book 1, chapter VI, Adam Smith writes:

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Criticism

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	== Criticism ==		== Criticism ==
	{{main article\|Criticisms of the labour theory of value}}		{{main article\|Criticisms of the labour theory of value}}
	The Marxist labor theory of value has been criticised on several counts. Some argue that it predicts that profits will be higher in labor-intensive industries than in capital-intensive industries, which would be contradicted by measured empirical data inherent in quantitative analysis. This is sometimes referred to as the "Great Contradiction".<ref name="ReferenceA">Böhm von Bawerk, "Karl Marx and the Close of His System" [[Karl Marx and the Close of His System]]</ref> In volume 3 of Capital, Marx explains why profits are not distributed according to which industries are the most labor-intensive and why this is consistent with his theory. Whether or not this is consistent with the labor theory of value as presented in volume 1 has been a topic of debate.<ref name="ReferenceA"/> According to Marx, [[surplus value]] is extracted by the capitalist class as a whole and then distributed according to the amount of total capital, not just the variable component. In the example given earlier, of making a cup of coffee, the constant capital involved in production is the coffee beans themselves, and the variable capital is the value added by the coffee maker. The value added by the coffee maker is dependent on its technological capabilities, and the coffee maker can only add so much total value to cups of coffee over its lifespan. The amount of value added to the product is thus the amortization of the value of the coffeemaker. We can also note that not all products have equal proportions of value added by amortized capital. Capital intensive industries such as finance may have a large contribution of capital, while labor-intensive industries like traditional agriculture would have a relatively small one.<ref>{{cite book \|last1=Ekelund \|first1=Robert B. Jr.\|first2=Robert F. \|last2=Hebert \|date=1997 \|edition=4th \|title=A History of Economic Theory and Method \|pages=239–241}}</ref> Critics argue that this turns the LTV into a macroeconomic theory, when it was supposed to explain the exchange ratios of individual commodities in terms of their relation to their labour ratios (making it a microeconomic theory), yet Marx was now maintaining that these ratios must diverge from their labour ratios. Critics thus held that Marx's proposed solution to the "great contradiction" was not so much a solution as it was sidestepping the issue.<ref>{{cite journal \|last=Temkin \|first=Gabriel \|title=Karl Marx and the economics of communism: anniversary recollections \|journal=Communist and Post-Communist Studies \|volume=31 \|number=4 \|date=1998 \|pages=303–328 (321–322)\|doi=10.1016/S0967-067X(98)00014-2 }}</ref><ref>{{cite book \|last=Sesardić \|first=Neven \|title=Marxian Utopia \|date=1985 \|work=Centre for Research into Communist Economies \|isbn=0948027010 \|pages=14–15}}</ref>		The Marxist labor theory of value has been criticised on several counts. Some argue that it predicts that profits will be higher in labor-intensive industries than in capital-intensive industries, which would be contradicted by measured empirical data inherent in quantitative analysis. This is sometimes referred to as the "Great Contradiction".<ref name="ReferenceA">Böhm von Bawerk, "Karl Marx and the Close of His System" [[Karl Marx and the Close of His System]]</ref> In volume 3 of ''Capital'', Marx explains why profits are not distributed according to which industries are the most labor-intensive and why this is consistent with his theory. Whether or not this is consistent with the labor theory of value as presented in volume 1 has been a topic of debate.<ref name="ReferenceA"/> According to Marx, [[surplus value]] is extracted by the capitalist class as a whole and then distributed according to the amount of total capital, not just the variable component. In the example given earlier, of making a cup of coffee, the constant capital involved in production is the coffee beans themselves, and the variable capital is the value added by the coffee maker. The value added by the coffee maker is dependent on its technological capabilities, and the coffee maker can only add so much total value to cups of coffee over its lifespan. The amount of value added to the product is thus the amortization of the value of the coffeemaker. We can also note that not all products have equal proportions of value added by amortized capital. Capital intensive industries such as finance may have a large contribution of capital, while labor-intensive industries like traditional agriculture would have a relatively small one.<ref>{{cite book \|last1=Ekelund \|first1=Robert B. Jr.\|first2=Robert F. \|last2=Hebert \|date=1997 \|edition=4th \|title=A History of Economic Theory and Method \|pages=239–241}}</ref> Critics argue that this turns the LTV into a macroeconomic theory, when it was supposed to explain the exchange ratios of individual commodities in terms of their relation to their labour ratios (making it a microeconomic theory), yet Marx was now maintaining that these ratios must diverge from their labour ratios. Critics thus held that Marx's proposed solution to the "great contradiction" was not so much a solution as it was sidestepping the issue.<ref>{{cite journal \|last=Temkin \|first=Gabriel \|title=Karl Marx and the economics of communism: anniversary recollections \|journal=Communist and Post-Communist Studies \|volume=31 \|number=4 \|date=1998 \|pages=303–328 (321–322)\|doi=10.1016/S0967-067X(98)00014-2 }}</ref><ref>{{cite book \|last=Sesardić \|first=Neven \|title=Marxian Utopia \|date=1985 \|work=Centre for Research into Communist Economies \|isbn=0948027010 \|pages=14–15}}</ref>

	Steve Keen argues that Marx's idea that only labor can produce value rests on the idea that as capital depreciates over its use, then this is transferring its exchange-value to the product. Keen argues that it is not clear why the value of the machine should depreciate at the same rate it is lost. Keen uses an analogy with labor: If workers receive a subsistence wage and the working day exhausts the capacity to labor, it could be argued that the worker has "depreciated" by the amount equivalent to the subsistence wage. However this depreciation is not the limit of value a worker can add in a day (indeed this is critical to Marx's idea that labor is fundamentally exploited). If it were, then the production of a surplus would be impossible. According to Keen, a machine could have a use-value greater than its exchange-value, meaning it could, along with labor, be a source of surplus. Keen claims that Marx almost reached such a conclusion in the [[Grundrisse]] but never developed it any further. Keen further observes that while Marx insisted that the contribution of machines to production is solely their use-value and not their exchange-value, he routinely treated the use-value and exchange-value of a machine as identical, despite the fact that this would contradict his claim that the two were unrelated.<ref>{{cite journal \|first=Steve \|last=Keen \|url=https://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Jhet_use.PDF \|title=Use-Value, Exchange Value, and the Demise of Marx's Labor Theory of Value \|journal=[[Journal of the History of Economic Thought]] \|volume=15 \|number=1 \|date=Spring 1993 \|pages=107–121\|doi=10.1017/S1053837200005290 \|s2cid=18950248 }}</ref> Marxists respond by arguing that use-value and exchange-value are incommensurable magnitudes; to claim that a machine can add "more use-value" than it is worth in value-terms is a [[category error]]. According to Marx, a machine by definition cannot be a source of ''human'' labor.<ref>Marx, Karl. Capital, Vol. I, p. 141, Penguin edition</ref><ref>D'Arcy, Jim, [https://www.marxists.org/archive/darcy-jim/1974/socecon4machines.htm Socialist Economics 4: Do Machines Produce Surplus Value?], ''Socialist Standard'', 1974</ref> Keen responds by arguing that the labor theory of value only works if the use-value and exchange-value of a machine are identical, as Marx argued that machines cannot create surplus value since as their use-value depreciates along with their exchange-value; they simply transfer it to the new product but create no new value in the process.<ref>Keen, Steve. Debunking economics. ZED Books Limited, 2011, pp.436-438</ref> Keen's machinery argument can also be applied to [[slavery]] based modes of production, which also profit from extracting more use value from the laborers than they return to laborers.<ref>Kara, Siddharth (2008). Sex Trafficking – Inside the Business of Modern Slavery. Columbia University Press. {{ISBN\|978-0-231-13960-1}}.</ref><ref>{{Cite web \|url=http://eh.net/encyclopedia/slavery-in-the-united-states/\|title=Slavery in the United States \|website=eh.net \|access-date=2020-01-30}}</ref>		Steve Keen argues that Marx's idea that only labor can produce value rests on the idea that as capital depreciates over its use, then this is transferring its exchange-value to the product. Keen argues that it is not clear why the value of the machine should depreciate at the same rate it is lost. Keen uses an analogy with labor: If workers receive a subsistence wage and the working day exhausts the capacity to labor, it could be argued that the worker has "depreciated" by the amount equivalent to the subsistence wage. However this depreciation is not the limit of value a worker can add in a day (indeed this is critical to Marx's idea that labor is fundamentally exploited). If it were, then the production of a surplus would be impossible. According to Keen, a machine could have a use-value greater than its exchange-value, meaning it could, along with labor, be a source of surplus. Keen claims that Marx almost reached such a conclusion in the ''[[Grundrisse]]'' but never developed it any further. Keen further observes that while Marx insisted that the contribution of machines to production is solely their use-value and not their exchange-value, he routinely treated the use-value and exchange-value of a machine as identical, despite the fact that this would contradict his claim that the two were unrelated.<ref>{{cite journal \|first=Steve \|last=Keen \|url=https://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Jhet_use.PDF \|title=Use-Value, Exchange Value, and the Demise of Marx's Labor Theory of Value \|journal=[[Journal of the History of Economic Thought]] \|volume=15 \|number=1 \|date=Spring 1993 \|pages=107–121\|doi=10.1017/S1053837200005290 \|s2cid=18950248 }}</ref> Marxists respond by arguing that use-value and exchange-value are incommensurable magnitudes; to claim that a machine can add "more use-value" than it is worth in value-terms is a [[category error]]. According to Marx, a machine by definition cannot be a source of ''human'' labor.<ref>Marx, Karl. Capital, Vol. I, p. 141, Penguin edition</ref><ref>D'Arcy, Jim, [https://www.marxists.org/archive/darcy-jim/1974/socecon4machines.htm Socialist Economics 4: Do Machines Produce Surplus Value?], ''Socialist Standard'', 1974</ref> Keen responds by arguing that the labor theory of value only works if the use-value and exchange-value of a machine are identical, as Marx argued that machines cannot create surplus value since as their use-value depreciates along with their exchange-value; they simply transfer it to the new product but create no new value in the process.<ref>Keen, Steve. Debunking economics. ZED Books Limited, 2011, pp.436-438</ref> Keen's machinery argument can also be applied to [[slavery]] based modes of production, which also profit from extracting more use value from the laborers than they return to laborers.<ref>Kara, Siddharth (2008). Sex Trafficking – Inside the Business of Modern Slavery. Columbia University Press. {{ISBN\|978-0-231-13960-1}}.</ref><ref>{{Cite web \|url=http://eh.net/encyclopedia/slavery-in-the-united-states/\|title=Slavery in the United States \|website=eh.net \|access-date=2020-01-30}}</ref>

	In their work ''Capital as Power'', Shimshon Bichler and Jonathan Nitzan argue that while Marxists have claimed to produce empirical evidence of the labor theory of value via numerous studies which show consistent correlations between values and prices, these studies<ref group=note>Examples of such studies include: Wolff, Edward N. 1975. The Rate of Surplus Value in Puerto Rico. Journal of Political Economy 83 (5, October): 935-950. Ochoa, E. 1989. Values, Prices and Wage-Profit Curves in the U.S. Economy. Cambridge Journal of Economics 13 (3, September): 413-430. Freeman, Alan. 1998. The Transformation of Prices into Values: Comments on the Chapters by Simon Mohum and Anwar M. Shaikh. In Marxian Economics. A Reappraisal. Volume 2: Essays on Volume III of Capital: Profit, Prices and Dynamics, edited by R. Bellofiore. London: Mcmillan, pp. 270-275. Cockshott, Paul, and Allin Cottrell. 2005. Robust Correlations Between Prices and Labour Values: A Comment. Cambridge Journal of Economics 29 (2, March): 309-316.</ref> do not actually provide evidence for it and are inadequate. According to the authors, these studies attempt to prove the LTV by showing that there is a positive correlation between market prices and labor values. However, the authors argue that these studies measure prices by looking at the price of total output (the unit price of a commodity multiplied by its total quantity) and do these for several sectors of the economy, estimate their total price and value from official statistics and measured for several years. However, Bichler and Nitzan argue that this method has statistical implications as correlations measured this way also reflect the co-variations of the associated quantities of unit values and prices. This means that the unit price and unit value of each sector are multiplied by the same value, which means that the greater the variability of output across different sectors, the tighter the correlation. This means that the overall correlation is substantially larger than the underlying correlation between unit values and unit prices; when sectors are controlled for their size, the correlations often drop to insignificant levels.<ref name="bnarchives.yorku.ca">Cockshott, Paul, Shimshon Bichler, and Jonathan Nitzan. [http://bnarchives.yorku.ca/308/2/20101200_cockshott_nitzan_bichler_testing_the_ltv_exchange_web.htm "Testing the labour theory of value: An exchange."] (2010): 1-15.</ref><ref name="Nitzan, Jonathan 2009, pp.93-97">Nitzan, Jonathan, and Shimshon Bichler. [http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf Capital as power: A study of order and creorder]. Routledge, 2009, pp.93-97, 138-144</ref> Furthermore, the authors argue that the studies do not seem to actually attempt to measure the correlation between value and price. The authors argue that, according to Marx, the value of a commodity indicates the abstract labor time required for its production; however Marxists have been unable to identify a way to measure a unit (elementary particle) of abstract labor (indeed the authors argue that most have given up and little progress has been made beyond Marx's original work) due to numerous difficulties. This means assumptions must be made and according to the authors, these involve circular reasoning:<ref name="bnarchives.yorku.ca"/><ref name="Nitzan, Jonathan 2009, pp.93-97"/>		In their work ''Capital as Power'', Shimshon Bichler and Jonathan Nitzan argue that while Marxists have claimed to produce empirical evidence of the labor theory of value via numerous studies which show consistent correlations between values and prices, these studies<ref group=note>Examples of such studies include: Wolff, Edward N. 1975. The Rate of Surplus Value in Puerto Rico. Journal of Political Economy 83 (5, October): 935-950. Ochoa, E. 1989. Values, Prices and Wage-Profit Curves in the U.S. Economy. Cambridge Journal of Economics 13 (3, September): 413-430. Freeman, Alan. 1998. The Transformation of Prices into Values: Comments on the Chapters by Simon Mohum and Anwar M. Shaikh. In Marxian Economics. A Reappraisal. Volume 2: Essays on Volume III of Capital: Profit, Prices and Dynamics, edited by R. Bellofiore. London: Mcmillan, pp. 270-275. Cockshott, Paul, and Allin Cottrell. 2005. Robust Correlations Between Prices and Labour Values: A Comment. Cambridge Journal of Economics 29 (2, March): 309-316.</ref> do not actually provide evidence for it and are inadequate. According to the authors, these studies attempt to prove the LTV by showing that there is a positive correlation between market prices and labor values. However, the authors argue that these studies measure prices by looking at the price of total output (the unit price of a commodity multiplied by its total quantity) and do these for several sectors of the economy, estimate their total price and value from official statistics and measured for several years. However, Bichler and Nitzan argue that this method has statistical implications as correlations measured this way also reflect the co-variations of the associated quantities of unit values and prices. This means that the unit price and unit value of each sector are multiplied by the same value, which means that the greater the variability of output across different sectors, the tighter the correlation. This means that the overall correlation is substantially larger than the underlying correlation between unit values and unit prices; when sectors are controlled for their size, the correlations often drop to insignificant levels.<ref name="bnarchives.yorku.ca">Cockshott, Paul, Shimshon Bichler, and Jonathan Nitzan. [http://bnarchives.yorku.ca/308/2/20101200_cockshott_nitzan_bichler_testing_the_ltv_exchange_web.htm "Testing the labour theory of value: An exchange."] (2010): 1-15.</ref><ref name="Nitzan, Jonathan 2009, pp.93-97">Nitzan, Jonathan, and Shimshon Bichler. [http://bnarchives.yorku.ca/259/2/20090522_nb_casp_full_indexed.pdf Capital as power: A study of order and creorder]. Routledge, 2009, pp.93-97, 138-144</ref> Furthermore, the authors argue that the studies do not seem to actually attempt to measure the correlation between value and price. The authors argue that, according to Marx, the value of a commodity indicates the abstract labor time required for its production; however Marxists have been unable to identify a way to measure a unit (elementary particle) of abstract labor (indeed the authors argue that most have given up and little progress has been made beyond Marx's original work) due to numerous difficulties. This means assumptions must be made and according to the authors, these involve circular reasoning:<ref name="bnarchives.yorku.ca"/><ref name="Nitzan, Jonathan 2009, pp.93-97"/>