I have a theory that is superior to the Marxist labour theory of value (LTV). It’s called the Sun Theory of Value.
We all know the LTV: the value of a commodity is determined by the abstract socially necessary labour time required to produce it. A unit of abstract socially necessary labour time is homogeneous, and of course it needs to be homogeneous to be able to aggregate the heterogeneous types of labour in human societies.
But how on earth do you properly formulate abstract socially necessary labour time? How do you meaningfully aggregate the work of a surgeon, mathematician, lawyer, bricklayer, or janitor? There is a terrible aggregation problem for Marx’s LTV. We have a problem here almost as bad as aggregating interpersonal subjective utilities.
And then there is the problem: why aren’t slaves or animals considered to be capable of creating labour value? And, if that isn’t enough, in volume 1 of Capital we are told that abstract socially necessary labour does determine the prices of real individual commodities, but by the time of volume 3 of Capital apparently it doesn’t do this anymore, but only in a ridiculous aggregate sense, rather like an ingenious but blatantly dishonest accounting gimmick. Furthermore, the theory has no real explanatory power and adds nothing to economic science.
A pretty worthless and empirically irrelevant theory, no?
Well, I can go one better than Comrade Marx.
I propose a “Sun Theory of Value.”
The source of most energy that reaches the earth is clearly the sun. Without the sun and the energy it provides, there wouldn’t be any production of any kind.
Energy can be embodied in raw materials and we can measure human work as energy expended and machine work in terms of energy expended too. So therefore all commodities must have a “physically-necessary sun energy” value. All commodities are just embodiments of the “physically-necessary sun energy” required to produce them. We can even – unlike the hopeless Marxists – use a real homogenous unit to calculate energy straight from the natural sciences: the joule.
Therefore all prices must really just be reducible to and determined by “physically-necessary sun energy.”
Clearly all people from workers to capitalists are ruthlessly exploiting the poor, oppressed and innocent sun. The real theft in sale of commodities is from the sun. We should offer all commodities to the sun, and that way the sun will grant us a utopian socialist paradise on earth where the state will wither away.
This is my theory.
Of course, I don’t have any convincing empirical evidence to support it, but naturally, well, I believe it all the more passionately.
I also expect you to believe it as well, and anyone who doesn’t must be an anti-sun reactionary – and will be immediately intellectually and morally suspect to me.
Although I haven’t as yet written three interminably boring, 1000-page-long books defending the Sun Theory of Value or Sun worship, I think I can give you a foundational text: this video below by George Carlin (who, admittedly, in his passion for sun worship uses some rather... colourful language).
So people of the world let us throw aside all other economic theories – particularly the idiotic Marxist labour theory of value – and adopt Sun worship, Sun economics and the Sun Theory of Value. We have nothing to lose but our chains. Or something like that.
These posts on LTV are all great ... However, how are you reconciling Marx from The Critique of the Gotha Programme ...
ReplyDelete"Labor is not the source of all wealth. Nature is just as much the source of use values (and it is surely of
such that material wealth consists!) as labor, which itself is only the manifestation of a force of nature,
human labor power."
??? I'm most likely missing something though. Perhaps I missed a post where you addressed this. Apologies if so. Again, thank you!
Marx opinion evolved over time. At the time of volume 1 of capital, he was arguing that labor creates all *profits*, not all wealth, when economy is at "equilibrium". Later on he realized error and tried to redefine the word "value" in some other way.
DeleteLK, there is also some energy within the earth. So it's not true that any energy comes from Sun. But the energy within earth can be used only *because* of the sun. Therefore the sun is the key and true source of value.
ReplyDeleteUgh, I leave you alone for 36 hours and you produce the single most dunderheaded post I've maybe ever seen.
ReplyDeleteBut how on earth do you properly formulate abstract socially necessary labour time? How do you meaningfully aggregate the work of a surgeon, mathematician, lawyer, bricklayer, or janitor? There is a terrible aggregation problem for Marx’s LTV. We have a problem here almost as bad as aggregating interpersonal subjective utilities.
No, it's really not a problem. It is literally done every day in the real economy, for real, by businesses. And seeing as Marx's "value" is value specifically to the perspective of capital, the accounting in the process of capital accumulation suffices to demonstrate this.
I hate to see you over here scouring your navel in vain for a metaphysical referent of "value," when the answer is right in front of your face. It's sad, like watching a baby guinea pig fail to find the bit of carrot you've left in its dish.
More generally: A concrete, finite number of hours are worked every year by a concrete, finite number of workers, and a concrete, finite portion of that total goes towards each of the things produced in said year. Sorry, but it's not even a little bit controversial.
And then there is the problem:
"Reading comprehension," apparently.
A pretty worthless and empirically irrelevant theory, no?
No, but then again your care for empirical relevance is empirically nonexistent.
Clearly all people from workers to capitalists are ruthlessly exploiting the poor, oppressed and innocent sun. The real theft in sale of commodities is from the sun. We should offer all commodities to the sun, and that way the sun will grant us a utopian socialist paradise on earth where the state will wither away.
Yeah, you're not much of a theorist.
Of course, I don’t have any convincing empirical evidence to support it, but naturally, well, I believe it all the more passionately.
...Nor a satirist, it seems.
Maybe stick to grandiloquent displays of willful ignorance? Those seem to be working.
(1) this post is mainly humour and satire. But perhaps years of Marxism has left you with no sense of humour.
Delete(2) " It is literally done every day in the real economy, for real, by businesses.
Really? Do explain how.
1) Yes, I detected that. It just wasn't very good humor, nor satire. Making arguments others have made (unironically) while using the exact rhetoric and specific charges you've been making all along — this rings more of someone being contradicted and backpedaling with "TROLLING LOL."
Delete2) Already answered: By paying wages (in concert with the standard capitalist practice of keeping costs low). Serving tables, doing data-entry temp work, lifeguarding, modeling, performing manicures and cleaning bathrooms are heterogeneous, incommensurable tasks, but in the abstract sense, in the books, they all look like "$7.25."
It is extraordinary that you think you explained anything with that gibberish in (2).
DeleteE.g., people who exert massive physical labour for long work days 5 days a week (and how hence would surely be doing more SNLT) get low wages while someone who sits on a company board and basically just turns up at board meeting once month for a hour or so gets paid a vast sum (so he does very little SNLT compared to the manual labourer). This is utterly incompatible with the LTV.
Gibberish? Which sentence was unclear? One contained a list; did you get lost in the commas? I do tend to overuse them (and I'm working on that), but I think all those were warranted.
DeleteAnd your example appears to be asserting that the existence of exploitation contradicts the theory. "I bet Marx never considered that some people do basically no work and live like sultans." What?
To disprove a theory you only need one example of its fallacy.
ReplyDeleteMr Fisherman takes his boat into the ocean on Monday and casts his net. Total time spent fishing: 6 hours. Total value of catch: 1000 dollars. Mr Fisherman takes his boat into the ocean on Tuesday and casts his net. Total time spent fishing: 6 hours. Total value of catch 2,000 dollars.
Labor Theory of Value is wrong: QED
Yes, but the Marxists will complain that it is not raw labour hours you have to count but socially necessary labour time.
DeleteSo what is the average labour required in a country to catch x amount of fish? But even here of course the output of fishing is variable: you just can't guarantee you catch x amount in y time (no matter how you define SNLT), so, yes, they have serious problems explained labour value in fish.
The finite supply of fish is another problem. It might take 100 hours of labor to catch $10,000 worth of fish but 200 hours of labor to catch $12,000 worth of fish, because it's harder to catch them when stocks are depleted. Conversely, it might take only 50 hours of labour to catch the first $8,000 worth of fish. The relationship is clearly non-linear! Has any Marxist proposed a non-linear labor theory of value? Haha.
Delete(1) Yep, good point.
DeleteOf course when you point things like this out, they'll complain that Marx never meant the LTV to explain individual commodity prices!!! Supposedly, all the TV is meant to do is explain how labour value = price at some weird aggregate level.
(2) And, yes, how does the LTV deal with industries where there are diminishing returns to scale?
That's why classical economists invented equilibrium conception. Purpose was precisely to ignore this kind of fluctuations. Problems of LTV are that 1) it's incompatible with classical rate of profit equalization and 2) it's probably incompatible with empirical data.
DeleteAnd by the way, prices in aggregate are meaningful only when analyzing the monetary unit.
DeleteLK you should correct your anonymous contributors when they argue that value differing from price, a basic empirical starting point of the theory, in any way disproves it. You've demonstrated that you know better.
DeleteThis is some motte and bailey stuff happening right here.
Irrelevant. We could restate the example with numbers of fish rather than dollars worth of fish and the labor theory of value is still disproved. Thus:
Delete"It might take 100 hours of labor to catch 10,000 fishes but 200 hours of labor to catch 12,000 fishes, because it's harder to catch them when stocks are depleted. Conversely, it might take only 50 hours of labour to catch the first 8000 fishes."
Sorry, missed your reply.
DeleteFor that to disprove anything, the theory would need some insistence that value remain static over time. I'm not aware of any such requirement. You're describing a condition in which the value rises on the margin — each additional fish requires more social labor to catch, with sort of a hockey-stick curve. I don't see the problem.
The value of each fish does not rise on the margin. A fish does not become more valuable just because you've already caught a lot of them. However the labor required to catch each fish changes with the level of fish stocks in the ocean. You can labor for hundreds of years in an ocean empty of fish and not catch anything. Hence labor does not explain value.
DeleteIf the costs associated with catching a fish rise, ceteris paribus its value rises. Its price is a separate consideration. If price remains the same but value rises, then without a rise in unpaid labor (surplus value), less profit is realized.
DeleteI don't know what theory you're arguing against, but it's not Marx's.
My theory (which is mine) is that Hedlund is Bob Murphy in disguise, attempting to play a Marxist.
Deleteinteresting theory!
DeleteJust thought of another example. Among the most valuable commodities western capitalist economics are pop songs. To speak of the SNLT required to create a hit single is utterly meaningless because they are the product of one person's inspiration. No amount of labor time can create the song except the labor time of the specific songwriter. Furthermore, the value of the songs written by one songwriter are not even related to the writer's own labor time.
ReplyDeleteConsider the song 'That's Entertainment' by The Jam. According to the the songwriter, Paul Weller, "I wrote it in 10 mins flat, whilst under the influence. I'd had a few, but some songs just write themselves." Yet is by far the most successful song produced by the group!
"To speak of the SNLT required to create a hit single is utterly meaningless because they are the product of one person's inspiration. No amount of labor time can create the song except the labor time of the specific songwriter."
DeleteThis is very good point. Unique labour produces things that are not reproducible.
But, again, Marxists might reply: since these pop songs are not readily reproducible commodities by labour (which actually is not true since you can copy MP3s offered for sale and CDs without limit!), the LTV doesn't explain them.
In volume 3 of Capital, Marx says: the prices of things which “cannot be reproduced by labour, such as antiques, works of art by certain masters, etc. … may be determined by quite fortuitous combinations of circumstances” (Marx 1991: 772).
But with popular music, isn't this false? The actual music when played and recorded of the same song can be reproduced without end.
Presumably the CD is a different commodity from the song. It's similar to the difference between computer software and computer hardware. But the value created by the song (the social output) clearly depends on the number of people who copy it onto their iPod or buy a CD. This is in no way linked to the labor involved in creating the song. Its value to society depends on the subjective preferences of music listeners. This same basic point can of course be applied to any other commodity.
DeleteYou're a bit late to the party, LK.
ReplyDeleteGold as the semen of the fire God Agni was proposed in the ancient Vedic texts around 700BCE - around the same time coinage emerged.
I reckon you'd love Bataille on this. He talks about the energy of the sun being the primal exuberance in his theory of general economy. He said that this idea was an attempt to answer the problem of Keynes' bottles. As I'm sure you're aware Bataille influenced Foucault and Derrida and I know you're a massive fan of their work.
The Sun is God !
hahaha -- priceless.
DeletePlease tell me he's kidding about you being a Derricault fan!
DeleteOh, I'm no fan of Postmodernism. Totally despise it. It's probably the worst garbage you'll find in the academy these days.
DeleteHaven't you seen my posts attacking PoMo?:
http://socialdemocracy21stcentury.blogspot.com/2015/02/foucaults-view-of-truth.html
http://socialdemocracy21stcentury.blogspot.com/2015/02/nonsense-and-postmodernist-writing.html
http://socialdemocracy21stcentury.blogspot.com/2015/03/the-utter-bankruptcy-of-foucaults-truth.html
http://socialdemocracy21stcentury.blogspot.com/2015/03/foucaults-what-is-author-critique.html
Good to hear.
DeletePomo:Left :: Fundamentalism:Right
I will look at a few of these.
"Its value to society depends on the subjective preferences of music listeners"
ReplyDeleteAnd how subjective preferences turn into the price? 1 utils = 1 cent?
It doesn't turn into the price, it turns into a purchase. The more purchases, the more output.
DeleteIn some very complex manner. Neoclassical economics is in fact an attempt to reconcile "objective" and "subjective" theories of prices. But it's a failed attempt because both the demand and the supply side are far more complex than it's assumed.
DeleteAnd how purchases turn into a specified price ?
ReplyDeleteIt doesn't. The seller sets the price and the buyer decides whether to buy or not. But the seller will try to set a price that will attract many buyers, otherwise he will not make a profit.
DeleteBut on what basis the seller sets its price?
DeleteSeveral factors. The price must cover the seller's costs. The price must not be too much higher than the prices of other similar goods, otherwise the number of buyers will be small. The seller must judge what consumers will consider to be a fair price. Business people make such decisions every day. It would be better to ask them directly rather than theorising!
ReplyDeleteNot to mention they can jack up the mark-up prices by clever advertising, celebrity endorsement etc.
Delete"But how on earth do you properly formulate abstract socially necessary labour time? How do you meaningfully aggregate the work of a surgeon, mathematician, lawyer, bricklayer, or janitor? There is a terrible aggregation problem for Marx’s LTV. We have a problem here almost as bad as aggregating interpersonal subjective utilities."
ReplyDeleteEm, maybe ask Keynes? This is what he does in Chapter 4 of the General Theory after all...
https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch04.htm
Here you go:
"For, in so far as different grades and kinds of labour and salaried assistance enjoy a more or less fixed relative remuneration, the quantity of employment can be sufficiently defined for our purpose by taking an hour’s employment of ordinary labour as our unit and weighting an hour’s employment of special labour in proportion to its remuneration; i.e. an hour of special labour remunerated at double ordinary rates will count as two units. We shall call the unit in which the quantity of employment is measured the labour-unit; and the money-wage of a labour-unit we shall call the wage-unit. Thus, if E is the wages (and salaries) bill, W the wage-unit, and N the quantity of employment, E = N.W."
Keynes argues that this was a better analytical approach than using fairly arbitrary price indices. I am inclined to agree.
All of this is in Joan Robinson's essay on Marx. There are much stronger criticisms of the LTV than this. In using labour hours for economic analysis Marx (and Smith and Ricardo) were actually onto something.
https://fixingtheeconomists.wordpress.com/2013/08/13/marx-hegel-the-labour-theory-of-value-and-human-desire/
I think you are wrong to say there is no aggregation problem here. But at least Keynes doesn't base his whole theory on an mystical LTV.
DeleteIt seems to me in Keynes this is just a rough attempt to measure things in terms of wages.
Keynes:
"defined for our purpose by taking an hour’s employment of ordinary labour as our unit and weighting an hour’s employment of special labour in proportion to its remuneration; i.e. an hour of special labour remunerated at double ordinary rates will count as two units."
But Marx needs far more than this. Marx needs to reduce every and all labour to real meaningful homogeneous units AND explain exchange values/prices in terms of this.
But how do you reduce complex labour like brain surgery, mathematics work, creative work (music writing), proofreading, comedy writing, etc. to homogeneous units of simple labour"?
It is like trying to aggregate capital as homogeneous putty.
Yes. For Keynes labour hours are the best numerical standard. The alternative are price indices and the aggregation problems with these are far worse. So I'm with Keynes on this and one day hope to see NIPA accounts using labour hours.
DeleteMarx is looking for something metaphysical. Keynes is looking for something like a 'standard price' to use as a statistical starting point. Marx is interested in something far deeper with his notion of 'value'.
But this is the case of all non-relativistic value theories. They all seem somewhat cultic and mystic when you drill down. I made this point a few years back.
http://www.nakedcapitalism.com/2011/12/philip-pilkington-libertarianism-and-the-leap-of-faith-%E2%80%93-the-origins-of-a-political-cult.html
Please LK, I implore you. Don't give Gene Callahan ideas.
ReplyDeleteWhy? Has he been posting on Marx?
DeleteWell he has but mostly he's obsessed with science-cant-answer-that-down-with-Occams-razor-praise-god these days. (Click on my name and look at my recent blog entry) I mostly meant another unfalsifiable religious idea he can swallow whole and run with.
DeleteOops Clicking my name no workee
Deletehttp://kenblogic.blogspot.com/2015/03/answering-callahans-visions.html
"Since Gene Callahan has stopped posting my comments on his blog I'll reply here."
DeleteOh no!!!
You see, Ken B, how this is the price of calling out B.S. when you see it and no matter who says it. Pretty soon you have people lining up for block to (verbally) fight you -- or shunning you.
With me, it means when out call out the B.S. of Marxists, Poststructuralists, and Postmodernists -- even though I am on the left -- I get the endless comments here showing the same extraordinary lack of reason that you will find on Bob Murphy's comments section.
Yes. I seem to mostly respect people on the web I disagree politically with ( you for example) more than the ones "on my side". There are exceptions -- I think highly of Landsburg -- but not nearly enough.
Delete