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 Post subject: Empirical proof of the labour theory of value
PostPosted: Thu Aug 11, 2016 4:51 pm 
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This will maybe be the last topic I make as a response to something on reddit without having made a topic dedicated to discussing the downfalls of reddit as a platform.

So, the poser of this question ponders if there is an empirical proof of the labour theory of value, and if there is why on earth is it so distrusted?

I gave them this teaser response which I will elaborate upon further now.

"You can't empirically prove the LTV because the distorting effects of capitalist production modify value in to the form of prices of production and cost prices as evidenced in Volume 3 of Capital. Instead the LTV must be understood through the mechanism of abstraction."

I will follow that quote with another quote to get us started on an understanding of the labour theory of value.

Zanthorus wrote:
The idea that labour is the substance of value comes out more clearly when we examine the historical preconditions for the existence of value relations. For individuals to produce exchange-values, the products they produce must be use-values not to themselves but to other individuals, that is, social use-values. Labour which creates social use-values is social labour, and presupposes a social division of labour which forces individuals to rely on the production of society to satisfy their needs. However, only in certain instances of the social division of labour do the products of society appear as exchangeable values. These instances are where the various branches of the social division of labour carry out production independently of one another and for private account. In such instances, the products of labour become social through the medium of the value-form. Value serves as the substance which undertakes the natural necessity common to every society of apportioning out the labour-time of society to different branches of production in order to serve social wants. As the medium through which labour becomes social labour, we can see clearly that the essence of value is labour. In fact, to say that the substance of value becomes a tautology, which is equivalent to saying that the substance of social labour is social labour.


To put it briefly, every society must apportion human labour, value is that mechanism in capitalism. In fact, it may be more appropriate to call it the value theory of labour rather than the labour theory of value.

But this direct identity of value with social labour gets us nowhere, it must be made manifest somehow, it must have a form of appearance or expression. The first of which Marx investigates is exchange-value which is the given numerical proportion in which any two given commodities exchange. The proportionality is determined by the amount of value in each commodity, we cannot see hear taste touch etc. the value in a "pure" form, we can only see how it expresses itself. Value, of course, does not only express itself in exchange-value. Eventually a single commodity begins to function as the universal equivalent to which all other commodities are compared. This commodity becomes money as it gains social acceptance, and the exchange-value other commodities have with this money-commodity is known as price.

From this we can see that price is determined by value, or, more pointedly, by the social labour, required to produce it, and therefore the price of a commodity depends upon the circumstances in which it was produced.

The circumstances in which commodities are produced today is that of capitalism, whereby workers generate surplus value above and beyond what they are paid to work, and so the value of produced commodities is greater than that which went in to their production. But this is a capitalism that does not care about following the law of value, and instead cares about gaining the most possible value, and so we have capitalist competition which causes the prices of produced commodities to be converted into prices of production whereby each capitalist receives an equal profit relative to the amount of capital advanced by them.

The only thing that capitalists can see is prices of production and cost prices (price of production less profit), value can only be "observed" by abstracting from prices of production to prices to exchange-value and then to value.

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 Post subject: Re: Empirical proof of the labour theory of value
PostPosted: Mon Aug 15, 2016 7:15 pm 
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The original poser of this question had the follow up question.

"What would you say to mainstream economists who say that the LTV is invalid or outdated?"

For starters I probably wouldn't give a mainstream economist the time of day, but for you I'll answer.

It should be pretty apparent that every human society requires the distribution of human labour, so its pretty absurd to call the LTV 'invalid' or 'outdated.'

Generally, mainstream economists hold to a marginal view of value, which means it is entirely determined by supply and demand, which is the real position we should call invalid, because it lacks the ability to explain why prices settle where they do (Marx's own view of interest is much the same as this actually, and I've been curious to see if there isn't some determinant to the interest level).

Hope that helps, and I encourage you to sign up and discuss/post/etc.

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 Post subject: Re: Empirical proof of the labour theory of value
PostPosted: Sun Aug 28, 2016 5:04 pm 
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Alright, the subject of labour vouchers has come up and I've decided to use this topic as a base since we've already got a good working understanding of what on earth value is from the OP, so that will get us started to understand what labour vouchers are.

As we've already seen, value can only exist in a society which has a division of production where production is controlled by individuals. But in a communist economy production is decidedly not controlled by individuals but by society as a whole. As such the existence of value and value-relations such as money which can be used to purchase the means of production (land, labour, or machinery etc.) is a dead give away that a given society is NOT one in which production is controlled by society as a whole, i.e. not a communist society.

Where does that leave us with labour vouchers? To start with, it is important to understand that the function of labour vouchers is to act as a method of distribution of the products of society, but we've already established that production will be controlled by society, so that rules out a lot of potential items for distribution. Any sort of equipment that could be used for mass production could not be obtained with labour vouchers, nor could the purchase of another humans' labour be done with labour vouchers. This essentially leaves us with items for personal consumption. Why is it important to point this out? It highlights the fact that labour vouchers are symptomatic of a fundamentally different organisation of production than the one we currently live under. We've also explicitly said that the purchase of labour-power cannot happen with labour vouchers, and yet the way you obtain labour vouchers is by working.

This apparent contradiction is easily reconciled when we step back to observe the whole productive apparatus. Production is consciously planned by society, the inputs and outputs are fairly well known in advance. We should contrast this to production under capitalist society which is pretty well characterised by this quote.

Adam Smith wrote:
The right to use and abuse, freedom of exchange, and arbitrary competition – these three economic moments, which form one unit, entail the following consequences; each produces what he wishes, as he wishes, when he wishes, where he wishes, produces well or produces badly, produces too much or not enough, too soon or too late, at too high a price or too low a price; none knows whether he will sell, to whom he will sell, how he will sell, when he will sell, where he will sell. And it is the same with regard to purchases. The producer is ignorant of needs and resources, of demand and supply. He sells when he wishes, when he can, where he wishes, to whom he wishes, at the price he wishes. And he buys in the same way. In all this he is ever the plaything of chance, the slave of the law of the strongest, of the least harassed, of the richest.... Whilst at one place there is scarcity, at another there is glut and waste. Whilst one producer sells a lot or at a very high price, and at an enormous profit, the other sells nothing or sells at a loss.... The supply does not know the demand, and the demand does not know the supply. You produce, trusting to a taste, a fashion, which prevails amongst the consuming public. But by the time you are ready to deliver the commodity, the whim has already passed and has settled on some other kind of product.... The inevitable consequences: bankruptcies occurring constantly and universally; miscalculations, sudden ruin and unexpected fortunes, commercial crises, stoppages, periodic gluts or shortages; instability and depreciation of wages and profits, the loss or enormous waste of wealth, time and effort in the arena of fierce competition.


Thus it becomes more clear that the acquisition of labour vouchers is not akin to a trade, but more akin to the calculated apportioning out of resources. Fundamentally the difference lies in the fact that wages are connected to alienated labour, i.e. labour that does not belong to the labourer, whereas labour vouchers are connected to a consciously planned labour that is applied in such a way that the products of this labour belong directly to the labourer.

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