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Adam Smith's labour theory of value hasn't been used in modern economics. And has tons of problems with it. That and Ricardos version is probably the basis of t

Adam Smith's labour theory of value hasn't been used in modern economics. And has tons of problems with it. That and Ricardos version is probably the basis of the Marx version. They we're the popular interpretations at the time and he was probably inspired by them. The marginal revolution happened in economics and a lot of those problems disappeared. A lot the things they couldn't explain suddenly could be using marginal economics and subjective preferences. Marx simply didn't have the modern tools we have now. In fact if he was around afterwords it is likely he would never came up with Marxian LTV. Frankly the only reason for it's popularity now, is because of it's association with communism. It provides the moral basis for it. As a result you've had a lot of people desperately trying to get it work in modern economic models as well without much luck. But you can critique market economics using marginal theory of value. It just means markets have failures, not they are morally wrong at the core.

dredmorbius 6y ago
My principle point is to show that labour theory of value is not inherently or originally Marxist as is often presumed or implied. My own view is that the entire value discussion is tremendously muddled, confuses multiple issues, and is used to justify or support any number of spurious or specious arguments, generaally over policy. The marginalists mistake price for value. Most orthodox economics does likewise.
- UK-Al05 6y ago
  Really? Because value and market price are separate things in marginalism. Using the rational model somebody will only purchase something when it's price is below how much the person values the object. It's related to consumer surplus. To make it measurable we use money as an approximate judge to work out much somebody values it. But the market price and how much somebody values something are different things in marginalism at the core.
  - dredmorbius 6y ago
    It may depend on who you talk to, but Isee much equivocation between concets of price and value, in both micra ('wealth creation" / 'wealth creator") and macro (GDP) domains. But yes, costs, price, and value are three distinct, though connected, concepts.
    - UK-Al05 6y ago
      You have to understand most writing is aimed towards the layman, so they use market price as a proxy. I hate the term wealth creator as well. But it certainly is possible to create to wealth. If you take things that people don't value that much, use them in a way to provide something that people do value. You have created wealth.
- davidivadavid 6y ago
  I'm curious what you mean by that, because it seems to me the exact opposite. Orthodox Economics 101 introduces consumer surplus precisely to separate price from value.
  - dredmorbius 6y ago
    That would be a more correct view. In much debate and discussion I see "market value" substituted for "value". Often the implication is a vague one, as withmuch equivocation. pg's argumentventures there. Keep in mind that Smith, Ricardo, and Marx each commit this error, including in the Smith passage I quoted. So do the Marginalists, or at leaast most of them. Mariana Mazzucato may be an exception. (I've just discovered her, still going through her work.) https://www.ted.com/talks/mariana_mazzucato_what_is_economic_value_and_who_creates_it https://www.ted.com/talks/mariana_mazzucato_what_is_economic...
    - UK-Al05 6y ago
      Separating value and price is 101 of marginal economics. There couldn't be consumer surplus without it. I don't know how you could be marginalist and believe market price = value for user.
      - naravara 6y ago
        In theory. In practice just about every quantitative method or metric used to measure social welfare or individual well being falls back on price. And since our culture has a fetish for positivism and anything that looks like “math” those are the fixed assumptions that guide our decision making.
      - dredmorbius 6y ago
        The fundamental principle of marginalism is, er, marginalism: that the derivative of supply or demand functions is what determines market price (not to be confused with "value", though it often is). The marginal cost or value.

dredmorbius 6y ago

My principle point is to show that labour theory of value is not inherently or originally Marxist as is often presumed or implied. My own view is that the entire value discussion is tremendously muddled, confuses multiple issues, and is used to justify or support any number of spurious or specious arguments, generaally over policy. The marginalists mistake price for value. Most orthodox economics does likewise.

UK-Al05 6y ago
Really? Because value and market price are separate things in marginalism. Using the rational model somebody will only purchase something when it's price is below how much the person values the object. It's related to consumer surplus. To make it measurable we use money as an approximate judge to work out much somebody values it. But the market price and how much somebody values something are different things in marginalism at the core.
- dredmorbius 6y ago
  It may depend on who you talk to, but Isee much equivocation between concets of price and value, in both micra ('wealth creation" / 'wealth creator") and macro (GDP) domains. But yes, costs, price, and value are three distinct, though connected, concepts.
  - UK-Al05 6y ago
    You have to understand most writing is aimed towards the layman, so they use market price as a proxy. I hate the term wealth creator as well. But it certainly is possible to create to wealth. If you take things that people don't value that much, use them in a way to provide something that people do value. You have created wealth.
davidivadavid 6y ago
I'm curious what you mean by that, because it seems to me the exact opposite. Orthodox Economics 101 introduces consumer surplus precisely to separate price from value.
- dredmorbius 6y ago
  That would be a more correct view. In much debate and discussion I see "market value" substituted for "value". Often the implication is a vague one, as withmuch equivocation. pg's argumentventures there. Keep in mind that Smith, Ricardo, and Marx each commit this error, including in the Smith passage I quoted. So do the Marginalists, or at leaast most of them. Mariana Mazzucato may be an exception. (I've just discovered her, still going through her work.) https://www.ted.com/talks/mariana_mazzucato_what_is_economic_value_and_who_creates_it https://www.ted.com/talks/mariana_mazzucato_what_is_economic...
  - UK-Al05 6y ago
    Separating value and price is 101 of marginal economics. There couldn't be consumer surplus without it. I don't know how you could be marginalist and believe market price = value for user.
    - naravara 6y ago
      In theory. In practice just about every quantitative method or metric used to measure social welfare or individual well being falls back on price. And since our culture has a fetish for positivism and anything that looks like “math” those are the fixed assumptions that guide our decision making.
    - dredmorbius 6y ago
      The fundamental principle of marginalism is, er, marginalism: that the derivative of supply or demand functions is what determines market price (not to be confused with "value", though it often is). The marginal cost or value.