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 3 - G. A. Cohen’s Analysis of Exploitation
In his 1989 book History, Labour, and Freedom, socialist philosopher G. A. Cohen points out that while most economists (including many contemporary Marxist economists) reject the labor theory of value, rank-and-file socialists often talk as if the LTV is obviously true. What explains the disconnect?
The LTV, as Marx inherited it from Ricardo and sharpened it with his own analytic contributions, may or may not be true, but it certainly isn’t obvious. To begin with, the relationship between value and price that Marx postulated is complicated. A whole series of facts about competition and supply and demand pressures can carry the actual market price of a commodity far away from its underlying value. Nevertheless, Marx thinks, prices are still a kind of distorted reflection of labor-time value.
The LTV, as Marx inherited it from Ricardo and sharpened it with his own analytic contributions, may or may not be true, but it certainly isn’t obvious. To begin with, the relationship between value and price that Marx postulated is complicated. A whole series of facts about competition and supply and demand pressures can carry the actual market price of a commodity far away from its underlying value. Nevertheless, Marx thinks, prices are still a kind of distorted reflection of labor-time value.
This view isn’t as easy to refute as many barstool libertarians seem to believe. Marx doesn’t think, for example, that products have more value if they’re made by particularly slow workers. Marx sees value as stemming from the social average in necessary labor time at a particular time and place.
Still, even the non-strawman version doesn’t persuade most contemporary economists. As economist and Jacobin contributing editor Mike Beggs notes, economists today think in terms of supply and demand schedules rather than supply and demand as forces operating on commodities — which makes Marx’s argument that something must account for prices when these forces are in balance much less compelling.
Still, even the non-strawman version doesn’t persuade most contemporary economists. As economist and Jacobin contributing editor Mike Beggs notes, economists today think in terms of supply and demand schedules rather than supply and demand as forces operating on commodities — which makes Marx’s argument that something must account for prices when these forces are in balance much less compelling.
But Cohen believed that rank-and-file socialists who think the LTV is obvious are moved by something other than Marx’s technical claims about value. Instead, what moves them is something like a “labor theory of things that have value,” which is very obviously true! Regardless of what value is, no commodity that has value has ever been the product of anything except some combination of (a) the nonhuman natural world and (b) human labor.
And once that’s in place, the entire analysis in the previous section still applies. I faithfully reproduced several of Marx’s key arguments in Capital there, but nothing I’ve said presupposes the technical details of the LTV.
And once that’s in place, the entire analysis in the previous section still applies. I faithfully reproduced several of Marx’s key arguments in Capital there, but nothing I’ve said presupposes the technical details of the LTV.
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