Even among Marx-friendly economists, the labor theory of value has fallen out of favor. But its technical validity is less important than the core message: workers are exploited because the value they create is undemocratically taken by capitalists.
by Ben Burgis
Part 1
In 1865, Karl Marx filled out a questionnaire. We thus know, for example, his favorite color (red), his favorite food (fish), and his favorite names (Jenny and Laura, those of his wife and daughter). He left the line for “figure in history you dislike the most” blank (my best guess is that he had trouble narrowing down the list) and listed two for “your hero” — Johannes Kepler and Spartacus.
Those latter choices tell you everything about how Marx understood his theoretical project. Kepler assimilated the study of the heavens into mundane physics by discovering laws of planetary motion. Spartacus led a slave revolt.
Those latter choices tell you everything about how Marx understood his theoretical project. Kepler assimilated the study of the heavens into mundane physics by discovering laws of planetary motion. Spartacus led a slave revolt.
Marx’s collaborator, Friedrich Engels, called their project “scientific socialism.” The idea wasn’t that social science by itself could tell you that socialism was better than capitalism. The “science” — Marx’s drive to uncover the “laws of motion” of capitalist economies — was an engineering science, one meant to understand how capitalism worked in order to overcome it and thus, in Marx and Engels’ eyes, remove arbitrary economic obstacles to human flourishing.
In his magnum opus, Capital, Marx used the most advanced economic theory of his day to decipher the structure of capitalist exploitation. Like David Ricardo and other previous nonsocialist economists, Marx thought that the value of a commodity was a product of the labor time it took to produce — the “labor theory of value.” Sharpening Ricardo’s analysis with his own insights, Marx conceived of value as the “congealed” result of average socially necessary labor time.
In his magnum opus, Capital, Marx used the most advanced economic theory of his day to decipher the structure of capitalist exploitation. Like David Ricardo and other previous nonsocialist economists, Marx thought that the value of a commodity was a product of the labor time it took to produce — the “labor theory of value.” Sharpening Ricardo’s analysis with his own insights, Marx conceived of value as the “congealed” result of average socially necessary labor time.
If you think of “value” in this way, the traditional socialist charge that workers are exploited under capitalism is easy to understand: workers produce value but capitalists control how much of it is returned to them in wages.
Like every other area of empirical inquiry, though, economics has changed a lot since Capital was published in 1867. Today, most economists — including many who are committed Marxists — reject the labor theory of value (LTV).
Like every other area of empirical inquiry, though, economics has changed a lot since Capital was published in 1867. Today, most economists — including many who are committed Marxists — reject the labor theory of value (LTV).
But does the apparent obsolescence of the LTV mean capitalism is innocent on the charge of exploitation? Not quite. As the Marxist philosopher G. A. Cohen demonstrated, Marx’s core insight about exploitation can be reformulated in an even simpler way if you drop his nineteenth-century assumptions about value and prices. The key point is that workers are the source of the products that have value and capitalism systematically forces them to surrender some of that value to the boss.
That’s a complicated proposition. So let’s walk through it, starting with Marx’s original formulation.
That’s a complicated proposition. So let’s walk through it, starting with Marx’s original formulation.
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