Saturday, March 28, 2015

Marx’s Labour Theory of Value and Rothbard’s Homesteading Property-Rights Theory: Peas in a Pod

Marx in the first volume of Capital makes it quite clear that human labour is the sole, fundamental source of value:
“But the value of a commodity represents human labour pure and simple, the expenditure of human labour in general. And just as, in civil society, a general or a banker plays a great part but man as such plays a very mean part, so, here too, the same is true of human labour. It is the expenditure of simple labour-power, i.e. of the labour-power possessed in his bodily organism by every ordinary man, on the average, without being developed in any special way. Simple average labour, it is true, varies in character in different countries and at different cultural epochs, but in a particular society it is given; More complex labour counts only as intensified, or rather multiplied simple labour, so that a smaller quantity of complex labour is considered equal to a larger quantity of simple labour. Experience shows that this reduction is constantly being made. A commodity may be the outcome of the most complicated labour, but through its value it is posited as equal to the product of simple labour, hence it represents only a specific quantity of simple labour.” (Marx 1982: 135).

“Let us now look at the residue of the products of labour. There is nothing left of them in each case but the same phantom-like objectivity; they are merely congealed quantities of homogeneous human labour, i.e. of human labour-power expended without regard to the form of its expenditure.” (Marx 1982: 128).

Human labour-power in its fluid state, or human labour, creates value, but is not itself value.” (Marx 1982: 142).

“We know that the value of each commodity is determined by the quantity of labour materialized in its use-value, by the labour-time socially necessary to produce it.” (Marx 1982: 293).
This is how Marx is conventionally interpreted too: that economic value is created only and solely by human labour.

Also, for Marx, there is a mystical element to labour value that manifests itself in the goods produced:
“A use-value, or useful article, therefore, has value only because abstract human labour is objectified [vergegenständlicht] or materialized in it.” (Marx 1982: 129).
Elsewhere, Marx speaks of the value of all goods as “merely congealed quantities of homogeneous labour” (Marx 1982: 135–136).

Since workers have created the value in commodities and indeed the commodities themselves appear to be materialised human labour, capitalists exploit them by robbing them of it. Everyone is familiar with this Marxist idea.

But look at how absurd its foundation is. It makes sense to say that labour produces commodities that are useful or that create subjective utility. Labour is an act or activity. Commodities are the product of labour. It makes no sense to say that labour is somehow magically transferred into commodities and “objectified” or “materialised” in them. This is so blatantly like a religious statement, it’s embarrassing. It’s like the opening of the Gospel of John: “In the beginning was the Word , and …. The Word became flesh” (John 1:1, 1:14). In Marx, human labour is “incarnated” in commodities. We are dealing with mysticism here.

Next, let us look at Rothbard’s justification for absolute ownership of external objects or external property rights by homesteading:
“Let us take, as our first example, a sculptor fashioning a work of art out of clay and other materials; and let us waive, for the moment, the question of original property rights in the clay and the sculptor’s tools. The question then becomes: Who owns the work of art as it emerges from the sculptor’s fashioning? It is, in fact, the sculptor’s ‘creation,’ not in the sense that he has created matter, but in the sense that he has transformed nature-given matter—the clay—into another form dictated by his own ideas and fashioned by his own hands and energy. Surely, it is a rare person who, with the case put thus, would say that the sculptor does not have the property right in his own product. Surely, if every man has the right to own his own body, and if he must grapple with the material objects of the world in order to survive, then the sculptor has the right to own the product he has made, by his energy and effort, a veritable extension of his own personality. He has placed the stamp of his person upon the raw material, by ‘mixing his labor’ with the clay, in the phrase of the great property theorist John Locke.” (Rothbard 2006 [1973]: 36–39).

“Put this starkly, there are very few people who would deny the monstrous injustice in either a group or the world community seizing ownership of the sculpture. For the sculptor has in fact ‘created’ this work of art — not of course in the sense that he has created matter, but that he has produced it by transforming nature-given matter (the clay) into another form in accordance with his own ideas and his own labor and energy. Surely, if every man has the right to own his own body and if he must use and transform material natural objects in order to survive, then he has the right to own the product that he has made, by his energy and effort, into a veritable extension of his own personality. Such is the case of the sculptor, who has placed the stamp of his own person on the raw material, by ‘mixing his labor’ with the clay. But if the sculptor has done so, then so has every producer who has ‘homesteaded’ or mixed his labor with the objects of nature.” (Rothbard 2002: 48).
The mysticism in Rothbard’s homesteading property rights argument lies in the idea that homesteading involves “mixing your labour” with some materials or land and the result is a “veritable extension” of your “own personality” such that some mysterious, universal, absolute cosmic right to property is created. This argument is plainly unsound, untrue and reeks of mysticism.

For Rothbard, labour on materials by a person involves “mixing of labour” with objects and makes the goods produced “a veritable extension of his own personality,” while for Marx the “abstract human labour [sc. by workers] is objectified or materialized” in commodities produced. In both cases, the people who produce goods have some kind of mystical or natural right to the goods produced or their value.

The Marxist labour theory of value and of worker exploitation is the mirror image of the Rothbardian notion of absolute property rights by homesteading. They are two sides of the same coin, but the coin is the same quasi-religious nonsense.

Perhaps Marxists and Rothbardians should put aside their differences and join together in one economic school. After all, the classical Marxists’ ultimate aim is a stateless, utopian paradise, and Rothbardians want the same thing. They just have to put aside their differences on how to get there.

We could call the new faith “Marxbardianism” – and at the same time it would save us all the trouble of having to refute the Marxists and Rothbardians separately in their two mirror image schools.

Marx, Karl. 1982. Capital. Volume One. A Critique of Political Economy (trans. Ben Fowkes). Penguin Books, Harmondsworth, England.

Rothbard, M. N. 2002. The Ethics of Liberty. New York University Press, New York, N.Y. and London.

Rothbard, M. N. 2006 [1973]. For a New Liberty: The Libertarian Manifesto (rev. edn), Ludwig von Mises Institute.


  1. Interesting post. If there was an award for "quirky post of the year" this might win.

    I actually like the idea of commodities as “objectified” labor" even though it doesn't hold up to close scrutiny, it certainly doesn't seem absurd.

    I think Rothbard and Marx are actually sides of the same coin. They both think that the creators of commodities should get the full fruits of their labors.

    I think they err in difference directions though

    Marx forgets that the capital goods used in the production of commodities are the product of saving via "non consumption" in the past and the people who did the savings need to be motivated and rewarded via future interest payments to do the savings if the system is to be viable.

    Rothbard forgets (or fudges the fact) that these capital goods also contain inputs attributable to land and raw materials and that capitalist claims to ownership of (and profit from) these resources are far from clear cut.

    Marx underestimates the just return to capital over labor and Rothbard overestimates it.

  2. Also, for Marx, there is a mystical element to labour value that manifests itself in the goods produced

    It's not mystical, dude. Not even a little. It's just a rhetorical flourish. Saying "x average hours of labor are embodied in this spoon" is the same as saying "it takes x average hours of labor to produce this spoon." It doesn't affect the mathematics, nor the relations, nor the mechanics that he goes on to describe. If you're down to just nitpicking his choices of figurative speech, I don't imagine there's much more to talk about.

    (Also, not for nothing, but Marx & Engels held nothing but contempt for utopian socialists.)

    It seems to me that you went into this whole Marx tangent with your conclusions pre-formed, and have since let your confirmation bias run the show. I've been a regular reader since you started this blog, and over the years I'd come to expect a much higher degree of care than you've demonstrated over the last few days. If you don't mind my asking: Why is this such a fraught topic for you? Why are you willing, before you criticize, to read and make sure you correctly comprehend Mises, but not Marx?

  3. This is lazy twinning on LK's part. Trotsky blasted this exercise quite well, he pointed out how to the liberal the communist and fascist are kin but to the fascist the liberal and communist are kin.
    But really he exploits idiocy on Rothbards part to attack Marx. Private property in goods? I think Marxists, that includes me, have a different definition involving something called the means of production.

    1. So you don't think labour output with exchange value belongs to the workers because the sole source of value is labour, and when capitalist take the surplus value they exploit workers?

    2. Exploitation is a descriptive account, not a prescriptive. Marx himself is explicit that surplus value belongs to the capitalist. Baumol illustrates this in his essay, "Marx and the Iron Law of Wages," under section II. (Source: The American Economic Review, Vol. 73, No. 2, Papers and Proceedings of the 95th Annual Meeting of the American Economic Association (May, 1983), pp. 303-308)

      Not that you've shown any interest in any of the sources I've provided. And, lately, you're not even bothering to respond to my questions or comments, however polite or constructive.

      I guess that's one way to deal with critics. Very popular among neoclassicals over the last century, especially.

      Consider this long-time reader extremely disappointed.

    3. The idea that it is solely descriptive and not at all prescriptive is at best specious, and more generally nonsensical. It is both descriptive and prescriptive. The prescriptive ideas are coupled to his description of his 'ideal' society. From "A critique of the Gotha program":

      "In a higher phase of communist society, after the *enslaving subordination* of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the *narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!"*

      If there are no prescriptions here, or in Marx's work on communism, no absolute moral values, and only the circumstances of a historical period, the whole Marxist enterprise is devoid of reason. Why should one care about the "enslaving subordination of the individual to the division of labor", much less care about changing it? Why should one work to achieve a meritocracy defined by "to each according to his ability, to each according to his needs"? Why bother caring about "crossing" the "narrow horizons of bourgeois right"? There is no reason to do so, unless exploitation is *wrong*.

      If exploitation is not wrong, if it has no moral status one way or the other, there is no reason to bother ending it or to care about it. There is no reason to care about communism. To say Marx believed there is no reason to bother ending or caring about worker exploitation and did not believe communism was a morally better form of society than capitalism means he spent his life on a pointless intellectual exercise, and irrationally supported a political movement, since there is no rational reason to support a political movement you don't care about.

    4. The idea that it is solely descriptive and not at all prescriptive is at best specious, and more generally nonsensical. It is both descriptive and prescriptive.

      Two completely separate ideas. One of them says "here's what happens" and another says "here's how I feel about it." If you can't separate them, that's on you. Go read the Baumol piece I referenced. It shows handily M&E's contention that surplus value rightfully belongs to the capitalist, merely describing the norms of the social status quo. The fact that they morally objected to said status quo is a separate point.