3 ms·

Looks like we've reached the max comment depth. I think we agree that labor is a source of value - discovering, creating, transforming inputs to add value - an

Looks like we've reached the max comment depth. I think we agree that labor is a source of value - discovering, creating, transforming inputs to add value - and capital is surplus value from previous labor. I think we disagree that socially necessary hours of labor is a useful "objective measure" of the value of the product. I think too many variables have to be hand-waved away by that "socially necessary" qualifier, such that it completely hides any value (ahem) of the measure. We've identified that we have to qualify socially necessary labor hours by - average skill and diligence of the workers currently available in the region - efficiency of the production processes for this item and all capital goods and materials used in production - level of technological advancement for all of the above - availability of competing products That's a very abstract measure casually described as hours of labor, and seems to have little descriptive power, much less predictive power to help decide what will be worth producing. Frankly, I'm not sure if it can be calculated at all for any commercial product. "The value of a commodity can be objectively measured by the hours of socially necessary labor required to produce it." Can anyone cite the hours of socially necessary labor required to produce any single product? (See "I, pencil" for an example of the complexity)

deciplex 3y ago
Agree on the first three of your four bullet points. You're kinda missing the point on that last one: if you can correctly identify the value of the labor (again, including capital goods) that go into making a product, then what you have is the minimum value that a product will sell for in the long term. And, importantly, in a free market the price of the good should tend to be around that value. I kind of alluded to it in my previous post but didn't quite spell it out completely I think. Effectively, it is the value at which you get zero profit from the sale. All else being equal, competitors will not be able to go any lower either (until and unless they gain some technical advantage) without selling at a loss. Exactly as you point out: there are various factors that can reduce that value - Marx points this out as well of course and I think it's sort of meant to be among the main contributions capitalism makes to historical economic development. But, for any interval of time over which there are no major technical advancements in the industry in question, in theory at least (i.e. in a more-or-less "pure" market with rigorous competition) the price of the product on the market will approach the point at which profit is minimized i.e. the value of the labor required to produce the good. Looked at another way: the real value of capital goods (in an economic sense, anyway) is not in the production they enable, but that they allow for more efficient use of future labor time. If, and only if, the savings a capital good provides in labor time to produce a product, is greater than the value in labor required to produce the capital good in the first place, is it "worthwhile" to produce the capital good and put it to use. You might hire someone with a sophisticated ditch-digging machine to dig your ditches for you, but would you still do it if you knew that producing that one ditch-digging machine took 500 men working 10-hour days for a month? And it was only good for digging 10 miles of ditches before breaking? Probably not, and the labor theory of value does a good job explaining why, IMO. All that said, of course that's not at all how our market functions especially nowadays, and there is a Marxist approach to analyzing that as well - but that's out of scope of this thread.

deciplex 3y ago

Agree on the first three of your four bullet points. You're kinda missing the point on that last one: if you can correctly identify the value of the labor (again, including capital goods) that go into making a product, then what you have is the minimum value that a product will sell for in the long term. And, importantly, in a free market the price of the good should tend to be around that value. I kind of alluded to it in my previous post but didn't quite spell it out completely I think. Effectively, it is the value at which you get zero profit from the sale. All else being equal, competitors will not be able to go any lower either (until and unless they gain some technical advantage) without selling at a loss. Exactly as you point out: there are various factors that can reduce that value - Marx points this out as well of course and I think it's sort of meant to be among the main contributions capitalism makes to historical economic development. But, for any interval of time over which there are no major technical advancements in the industry in question, in theory at least (i.e. in a more-or-less "pure" market with rigorous competition) the price of the product on the market will approach the point at which profit is minimized i.e. the value of the labor required to produce the good. Looked at another way: the real value of capital goods (in an economic sense, anyway) is not in the production they enable, but that they allow for more efficient use of future labor time. If, and only if, the savings a capital good provides in labor time to produce a product, is greater than the value in labor required to produce the capital good in the first place, is it "worthwhile" to produce the capital good and put it to use. You might hire someone with a sophisticated ditch-digging machine to dig your ditches for you, but would you still do it if you knew that producing that one ditch-digging machine took 500 men working 10-hour days for a month? And it was only good for digging 10 miles of ditches before breaking? Probably not, and the labor theory of value does a good job explaining why, IMO. All that said, of course that's not at all how our market functions especially nowadays, and there is a Marxist approach to analyzing that as well - but that's out of scope of this thread.