Forums of the Libertarian Left

"Would you be willing to pay $100 for this iPod?"
"Yes, I would."
"How much labor went into making this iPod?"
"I have no idea."


That was easy.

To be clear, all valuing exists as a relationship between the valuer and the object being valued. Any "theory of value" should be an attempt to explain why people value things a certain way or to a certain degree.

While there may be interpretations of the LTV that are somewhat useful in certain contexts, it should be clear that, as a theory of why people value things a certain way or to a certain degree, it falls flat on its face.

Since the producer valued the I-pod at $100 dollars then he must feel that $100 dollars is adequate compensation for the disutility of his labour.

XOmniverse wrote:To be clear, all valuing exists as a relationship between the valuer and the object being valued. Any "theory of value" should be an attempt to explain why people value things a certain way or to a certain degree.

Yes, producers value their products because they spent their valuable (Or not so valuable) time and effort developing them, in other words they laboured to create them and the amount they sell their products for is, on the free market, equivalent to the amount that they feel is adequate compensation for their labour.

A lot of the problems people have with the LTV are based on ridiculous versions of it, things like the Mud pie example. Of course labour doesn't give anything any inherent value, that doesn't mean that it doesn't affect the value of things. I could quite easily turn this around and say that subjectively speaking I value that mudpie I made at a very large amount, but that wouldn't be based on any real understanding of the STV. The problem with the subjective theory of value as far as I can see is that it doesn't say why people value things at certain amounts. The labour theory resolves the problem by asserting that producers value their goods in accordance with the amount of labour they put into making them.

From all of this we can safely conclude that the bourgeois capitalists will continue to oppress the industrial proletariat and that eventually all of society will be dragged into either of these two classes necessitating a revolution against the oppressors followed by a glorious dictatorship which will be a transition period into communism which is the final stage of all human development

Yes, I agree the LTV is not by itself all that useful, but neither are the SVT. It costs a certain amount to produce an goods or service and you will be hard pressed to see someone sell their goods and services for less than cost unless they want to try to remedy a bad deal.

I think Kevin Carson has proposed that the cost of goods and services will go towards the cost that people value their labour as time goes by. And the workers will as time goes by earn a more fair representation of what the goods and services are valued at which they do not do at present because to the artificially extreme over-abundance of labour that exists in the market.

At the final moment of the trade however, the SVT kicks in and the real value is determines by the very act of the trade.

lordmetroid wrote:At the final moment of the trade however, the SVT kicks in and the real value is determines by the very act of the trade.

And what factors might determine how much people value their product at?

The Subjective Value theory as by the names suggests, the value is determines by subjective factors, all factors that contributes to the final value are all very personal, I couldn't say how many factors might determine how much people value a product at. The value is also of course different in different situations and at different times.

XOmniverse, I've gotta ask, have you read Kevin Carson's attempt at rehabilitating the LTV in his book "Studies in Mutualist Political Economy"?

I'm in the midst of reading the book now so I'll have to wait on any judgments of the efficacy of the LTV until I've read Carson's argument.

Subjective evaluation and what one might call a version of the 'LTV' are intertwined and influence eachother.

One crucial element in the production process is the factoring in of time. It takes time to produce a product, sometimes even years from the drawing board to actually being a consumable/usable commodity on the market. This involves a fair amount of speculation and a whole lot of calculation. One must calculate projected production costs for production time necessary plus account for risks. They also have to attempt to somewhat accurately measure what consumer demand will be like when the product is ready to be marketed.

Its not as simple as the producer just picking a price he believes is sufficient to compensate his production costs + profit. Only if his projections are accurate can he stick with a desired sell price but again , that sell price is also influenced by things outside of the producer's control. I.e. If it takes 5 years to produce product X , and the producer's prediction of consumer demand was wrong, then he may not be able to charge the price he wants. It could be the case that after 5 years time products like X have fell out of favor with the consumer base. The producer would then be forced to sell at a lower price than desired to meet consumer demand. This is why going into business is risky.

So back to the main point. Production resources are certainly factored into price formation on the condition that predictions about consumer demand are somewhat accurate. LTV doesn't really tell us much because it assumes that all exchange value of a product is endowed by the labor it took to create it. Labor is but one of the factors to consider in the entire production process and the value of labor itself is not necessarily related to the product but rather to other labor competing to perform the same or similar tasks.

Yes, of course, the chain of costs is values that the seller will take into account but there will be deal unless the buyer finds it valuable as well and the buyer doesn't care about the production costs. That is why the labor value theory and the subject theory of value compliments each other and the values would be closer to the raw costs in a freed market.

In political economic theory, there are three factors of production:

1. land
2. labor
3. capital

The "just" distribution of the return on these factors are:

land - economic rent
labor - wages
capital - economic interest

There is no "profit" to be found in the equation...

"Profit" is confusion over who deserves each of the returns on the factors of production...

But land and capital are produced originally through labour. That's the point of the LTV, if you take all the factors of production back far enough in time all that's left is human labour in the abstract.

Zanthorus wrote:But land and capital are produced originally through labour. That's the point of the LTV, if you take all the factors of production back far enough in time all that's left is human labour in the abstract.

The LAND?

Zanthorus wrote:But land and capital are produced originally through labour. That's the point of the LTV, if you take all the factors of production back far enough in time all that's left is human labour in the abstract.

I can anticipate an objection: land isn't "produced" at all.

Brainpolice wrote:

Zanthorus wrote:But land and capital are produced originally through labour. That's the point of the LTV, if you take all the factors of production back far enough in time all that's left is human labour in the abstract.

I can anticipate an objection: land isn't "produced" at all.

Is that an objection you're also making?

Copy cat.

Ardvark wrote:

Brainpolice wrote:

Zanthorus wrote:But land and capital are produced originally through labour. That's the point of the LTV, if you take all the factors of production back far enough in time all that's left is human labour in the abstract.

I can anticipate an objection: land isn't "produced" at all.

Is that an objection you're also making?

Copy cat.

Lo and behold, you made the objection just as I was writting it.

It is an objection I'd make, but I was more anticipating what Josiah would say.

Well I'd figure I'd bite and hear the claim out.

Ardvark wrote:The LAND?

Brainpolice wrote:I can anticipate an objection: land isn't "produced" at all.

Ok not 'produced' but there is labour involved in the acquistion of land and in the process of making any improvements that the landowner might make.

I follow Carson's lead in recognizing on a fundamental level that the LTV was NEVER intended by the original socialist economists to be a theory of spot prices. Value and price are not synonymous. Here's how I think of it:

The STV articulates the obvious mechanism of spot prices - a discrete transaction with a given good/service at a given time & place between two given parties. But this is not value in the sense that the original socialists meant it. Of course market prices are negotiated based on what the seller and buyer decide upon at the time of the transaction. But over the long run, the fluctuations in the price of a good/service resulting from temporary advantages on one side or the other will be evened out, and one can get clear on the long term "true price" or economic value of a thing.

From the mutualist perspective, cost is the valid limit of price. Setting out from this axiom - and it is an arbitrary axiom; you either accept it or you don't - the mutualist attempts to ascertain which costs contributed to the total value of a good/service. Material costs are pretty much fixed, at least in the sense that you can't change the cost of energy, or wood, or metal, or whatever that goes into a good/service. For the most part, it is what it is - you cannot convince coal to be easier to extract by waving a gun at it or threatening to withhold a salary from ti.

However, there is one cost that will respond to force and fraud; one cost you can convince to accept less than its due, and that is labor. So the key insight of the LTV is that it is the cost of labor that is most contested; it is the cost of labor that is either kept artificially down or excluded from rents accruing to goods/services that somehow exceed their costs (such as a monopoly). Moreover, it is the cost of labor that is often prevented from having its value determined on a free and open market - precisely by the STV mechanism. The actors who receive the unearned surplus (or surplus out of proportion with their contribution) are capitalists (bosses, managers, stockholders, etc.), and since their costs are at the very least inflated, they are usurpers of the value that should either be going to the laborer or the purchaser.

The STV and the LTV are two sides of the same coin, in this mutualist's POV. The STV determines the discrete transactions that comprise the trend; the trend determines the overall data pertaining to the value absent temporary, second-order deviations. Without the subjective mechanism, labor cannot calculate its spot market cost. But without the LTV, it's impossible to articulate the full drag of coercion and privilege on the productive class. Indeed, on this latter note the common capitalist retort is to abandon any analysis of the underlying justice of a transaction to "what the market will bear" at a given time and place. The mutualist answers this cop-out with a demand that the capitalist demonstrate their value-adding beyond mere rents or political privilege or naked force over the long run. Inevitably, this justification reduces to privilege in the end (at least, that's my argument). Add to this the fact that every economic good requires labor to make economically useful, and you have painted a picture of a dominated marketplace for work that motivates our opposition to privilege.

The utility of the LTV is as a long run indicator of labor justice, not in simply "explaining prices". To reduce the issues of political economy to merely explaining how prices are negotiated is shallow in the extreme. Outside spot fluctuations in price, the LTV is a frame for understanding the mechanism by which markets are perverted to the detriment of the non-political class BY the political/capitalist class. This may not be how others understand it, but it comprises my understanding.

To summarize: it is a labor theory of value because it recognizes that in labor is where the age old historical contest lies in determining the cost - and therefore, the proper value - of a good/service.

Zanthorus wrote:The problem with the subjective theory of value as far as I can see is that it doesn't say why people value things at certain amounts.

Very well said. I wish I could have been as concise as you!

Zanthorus wrote:The labour theory resolves the problem by asserting that producers value their goods in accordance with the amount of labour they put into making them.

To me this is a circular argument - well, then, what's the value of the labor itself? This is why I like Carson's synthesis: spot prices contribute to our determination of value, but one must look at the costs and price over the long run to identify a trend towards an uncompensated surplus extracted from labor. It is because value is subjective that labor always makes such a bad bargain with capitalists, after all - but value is more than just "price".

Zanthorus wrote:And what factors might determine how much people value their product at?

Typically, socialist economists have talked about value being determined by "socially useful labor". IIRC, Carson proposes a history of spot prices for finished goods/services as one mechanism by which people would value their socially useful contribution to a product. If portions of the final price of a product are going to people who did not contribute to its production, then the socially useful labor is being undervalued. QED.

jeremy6d wrote:Very well said. I wish I could have been as concise as you!

Thankyou. There's a mild irony in that I actually thought of that originally when reading Murray Rothbard. It seems to me that the subjective theory of value is totally incompatible with praxeology since praxeology asserts that human action is purposeful whilst the subjective theory holds that there is no particular reason that people value things apart from mere subjective whim. Although there may be something I'm missing.

To me this is a circular argument - well, then, what's the value of the labor itself? This is why I like Carson's synthesis: spot prices contribute to our determination of value, but one must look at the costs and price over the long run to identify a trend towards an uncompensated surplus extracted from labor. It is because value is subjective that labor always makes such a bad bargain with capitalists, after all - but value is more than just "price".

Ok

Zanthorus wrote:It seems to me that the subjective theory of value is totally incompatible with praxeology since praxeology asserts that human action is purposeful whilst the subjective theory holds that there is no particular reason that people value things apart from mere subjective whim.

That's a novel way of putting it! For a school of thought so interested in why humans act, they do seem to put on their blinders when an action crosses the sacred threshold of the market.

BTW, do you have any thoughts on how we could arrive at a value for one's labor - especially relative to others' labor? Marx and others had some interesting things to say about this IIRC.

Haven't read much of this thread, but thought I'd chime in anyway :D

I'll never understand why anyone cares about debating theories of value. It's boring, academic and mostly irrelevant to anarcho-theory. Both ancaps *and* ancoms reject the LTV, so what bloody difference does it make?

Cork wrote:Both ancaps *and* ancoms reject the LTV, so what bloody difference does it make?

Umm, I honestly don't mean this as a cop-out, but putting other objections aside... doesn't it make a difference if there are more perspectives than merely the ancap and the ancom? I consider mine not even close to either.

Cork wrote:Haven't read much of this thread, but thought I'd chime in anyway :D

I'll never understand why anyone cares about debating theories of value. It's boring, academic and mostly irrelevant to anarcho-theory. Both ancaps *and* ancoms reject the LTV, so what bloody difference does it make?

Hehe. Well, most of us reject some version of "the LTV," since so much smack gets talked on the subject. But ancoms certainly share the belief that it is human labor which is productive. They just sidestep all the considerations of price, and decide not to disentangle the various relations of production. And when it comes right down to it, lots of ancaps emphasize the extent to which market revenues are based in the actions of deserving agents and entrepreneurs. They tend to emphasize the quality of the labor, while the more literal LTV types emphasize its quantity, but often, I think, the difference doesn't run much deeper than that.

Zanthorus wrote:

Ardvark wrote:The LAND?

Brainpolice wrote:I can anticipate an objection: land isn't "produced" at all.

Ok not 'produced' but there is labour involved in the acquistion of land and in the process of making any improvements that the landowner might make.

This issue is mostly confusing to folks who are not Geo-Libs.

There would be no "purchase price" to acquiring land - just the obligation to share the "economic rent" with those you exclude in order to have exclusive use backed by force.

So the economic rent is the natural advantage provided by the location in question - it's proximity to the labor & services of those you exclude, natural landforms, and public infrastructure.

So Geo-Libs just draw blank stares when folks can't get this thru their heads - the labor landowners supposedly expend to "monetize" the economic rent to share with those they exclude (to uphold the exclude's absolute right of self-ownership) is NOT a violation of THE LANDOWNER'S self-ownership rights (by in the disbelievers words "being forced to labor") because the landowner - by definition - contribute no labor to the "unimproved land value".

It is just nothing more than the natural advantage of the location in question.

Any improvements made by the landowner is capital (improved land value) not economic rent (unimproved land value).