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> > companies today hire workers to make money from their labor. In other words, they generate profit because they pay their employees less than they’re worth.

> > companies today hire workers to make money from their labor. In other words, they generate profit because they pay their employees less than they’re worth. If everyone could trade their labor for exactly the amount of money it was worth, the corporations that employ them would have a much harder time making money. Instead, in modern corporations the shareholders and the executive team - again, the central planning committee we so despise - make the majority of the money It's frustrating to see so many thinkpieces keep basing themselves upon the Labour Theory of Value, while it has been long debunked. To use a stretched analogy, it's like a blog on vaccines basing themselves off Andrew Wakefield's work. It should not be taken seriously. > The labor theory of value leads to obvious problems theoretically and in practice. One critique is that it is possible to expend a large quantity of labor time on producing a good that ends up having little or no value. However, a closer reading points to the fact that commodities conforming to the LTV would have both a use-value and an exchange-value, and be reproduceable. Therefore something that has no demand in the market or with little or no use-value would not be considered a commodity according to the LTV. The same would go for a unique object such as a work of fine art, which would too be excluded. It may take one person longer than another to produce some commodity. Marx's concept of socially necessary labor time does also get around this problem. > A second critique is that goods that require the same amount of labor time to produce often have widely different market prices on a regular basis. Moreover, the observed relative prices of goods fluctuate greatly over time, regardless of the amount of labor time expended upon their production, and often do not maintain or tend toward any stable ratio (or natural price). According to the labor theory of value, this should be impossible, yet it is an easily observed, daily norm. Source: https://www.investopedia.com/terms/l/labor-theory-of-value.asp https://www.investopedia.com/terms/l/labor-theory-of-value.a...

thiagoharry 2y ago
> The labor theory of value leads to obvious problems theoretically and in practice. One critique is that it is possible to expend a large quantity of labor time on producing a good that ends up having little or no value. However, a closer reading points to the fact that commodities conforming to the LTV would have both a use-value and an exchange-value, and be reproduceable. Therefore something that has no demand in the market or with little or no use-value would not be considered a commodity according to the LTV. The same would go for a unique object such as a work of fine art, which would too be excluded. It may take one person longer than another to produce some commodity. Marx's concept of socially necessary labor time does also get around this problem. This critique mixes the concepts of "individual value", "social value" and "price". These are entirely different things for Marx, but the comment acts as if they are the same thing. If you take too much time and effort creating something, the individual value created is wasted because the basis for exchange in society is the social value, based on the time and effort socially needed to create the item given the current technology and social organization. This is a very naive critique, answered on the first chapters of Das Kapital. Moreover, unique items can have a price, even if they do not have value (the honesty of a corrupted cop have a price if he accepts bribes, but has no value). > A second critique is that goods that require the same amount of labor time to produce often have widely different market prices on a regular basis. Moreover, the observed relative prices of goods fluctuate greatly over time, regardless of the amount of labor time expended upon their production, and often do not maintain or tend toward any stable ratio (or natural price). According to the labor theory of value, this should be impossible, yet it is an easily observed, daily norm. This critique is valid only for naive labor theory of value. Marx spent most of third volume in Das Kapital talking about this, and agreeing that the prices are not equal the value: these two things would be equal only if the capitalist economy was composed just by a single industry, or if the composition of different types of capital were the same for all industries. In a complex economy, with many different industries, the competition between capitalists and their search for profits causes some products to be sold below their value and others above it, as a consequence of the tendency to equalize profit rates that this competition generates. This paragraph criticizes the naive LTV from Smith and Ricardo, but not the Marxist one.

thiagoharry 2y ago

> The labor theory of value leads to obvious problems theoretically and in practice. One critique is that it is possible to expend a large quantity of labor time on producing a good that ends up having little or no value. However, a closer reading points to the fact that commodities conforming to the LTV would have both a use-value and an exchange-value, and be reproduceable. Therefore something that has no demand in the market or with little or no use-value would not be considered a commodity according to the LTV. The same would go for a unique object such as a work of fine art, which would too be excluded. It may take one person longer than another to produce some commodity. Marx's concept of socially necessary labor time does also get around this problem. This critique mixes the concepts of "individual value", "social value" and "price". These are entirely different things for Marx, but the comment acts as if they are the same thing. If you take too much time and effort creating something, the individual value created is wasted because the basis for exchange in society is the social value, based on the time and effort socially needed to create the item given the current technology and social organization. This is a very naive critique, answered on the first chapters of Das Kapital. Moreover, unique items can have a price, even if they do not have value (the honesty of a corrupted cop have a price if he accepts bribes, but has no value). > A second critique is that goods that require the same amount of labor time to produce often have widely different market prices on a regular basis. Moreover, the observed relative prices of goods fluctuate greatly over time, regardless of the amount of labor time expended upon their production, and often do not maintain or tend toward any stable ratio (or natural price). According to the labor theory of value, this should be impossible, yet it is an easily observed, daily norm. This critique is valid only for naive labor theory of value. Marx spent most of third volume in Das Kapital talking about this, and agreeing that the prices are not equal the value: these two things would be equal only if the capitalist economy was composed just by a single industry, or if the composition of different types of capital were the same for all industries. In a complex economy, with many different industries, the competition between capitalists and their search for profits causes some products to be sold below their value and others above it, as a consequence of the tendency to equalize profit rates that this competition generates. This paragraph criticizes the naive LTV from Smith and Ricardo, but not the Marxist one.