Marx's Labour Theory of Value is Superior to Subjective Value Theory

My textbooks are getting good use. First, a point of clarification: intrinsic is never described in the literature as something that is “unchanging”, but concrete. This allows for value to be contingent. Moving forward… Concerns With The Resolution In regards to my critiques of the mandates the Pro defined (A. proving LTV is the “only” valid theory & B. “valid/invalid” are very ambiguous terms), Pro only addressed the validity concern. I will note that no challenge exists to my first critique, and that the Pro still has not provided any line of reasoning that dismisses other alternative theories so LTV can secure its place as the “only” valid theory. A look into the literature of neoclassical, intrinsic/labor, and contemporary economics actually shows that we often are dealing with mathematical equations. This means that economics is partially a quantitative science susceptible to the same standards of validity philosophers of science debate about all the time. I brought up Karl Popper’s Falsification as an example, but regardless of what standard, validity is often more than a simple appeal to a majority vote. The Phenomenon Under Study Pro argues that this scope ought to be narrowed to the phenomenon of price, or basically to figuring out how things achieve a certain price. To argue that Marx is “aiming to explain prices specifically” is problematic on two points. First, this ignores an overarching purpose of Marx’s Das Kapital, which the Pro actually touches on in the acceptance round: explaining the phenomenon of exploitation1,2. Second, Marx touches on two definitions of “price”: natural price (what an item is priced at due to cost of labor, materials, etc) and market price (what an item is sold for in the market place). As political philosopher, Robert Paul Wolff (1981) explains, “Marx, like Smith and Ricardo, seeks a theory of natural prices, not of market prices, although he has a good deal more to say than his predecessors about the dynamic processes by which capitalists, in responding to deviations of market from natural prices, take actions which cause the economy to grow and alter1. ” If the price of a commodity is our phenomenon, then it must be recognized that LTV was only intended to explain natural price, which will support my original argument that LTV ignores a bigger picture. Marx’s Use-Value In my critique of LTV being unable to account for diamonds having use-value to individuals, the Pro countered by clarifying that Marx’s notion of use-value includes the utility of an object’s properties to people’s subjective wants/desires. As he put it, diamonds can have use-value if people find them shiny. I embrace this definition, and apologize if my argument seemed to communicate otherwise. However, the Con’s characterization of the importance of use-value seems to contradict with the literature surrounding Marx’s theory. Contrary to the Pro’s interpretation that having a use-value was a prerequisite to being a salable commodity, Marx understood that while this was true, this sort of value was also much more2. Marx argued that exchange value and use-value were in a dialectical relationship3. Here’s my attempt at a layman’s (aka me) explanation: If I’m selling my car, Marx would argue that this car has an exchange value (an intrinsic value based off of the labor that was put into making it), and a use-value (how useful it is). Since I’m selling this car, it no longer has any use to me (except as a means of getting money) and therefore I’m giving up use-value. When I sell the car, I exchange the car for something of (ideally according to Marx) equal exchange-value. The buyer, however, pays for the exchange value, and inherits the use-value because the car is now useful to him. In essence, the buyer experiences a surplus of value, or an additional amount of value than I receive as the seller. Now, it’s important to realize two things from this example. First, as the seller I set (or negotiate) what would be considered the final market price. The usefulness of the car to me for getting money, and the usefulness of the car to seller as a means of transportation will both have a profound impact on the final market price. Second, this surplus of value becomes important when we become concerned with exploitation - as Marx is1,2. If we treat a worker’s ability to work (labor power) as a commodity, it becomes something he can sell in exchange for something else. This is the basic definition of having a job: I sell my ability to work to my employer in exchange for a wage. In this transaction, I’m merely exchanging my work for a wage at an equal value. The buyer (my employer) however is buying more: my employer gains the utility of my labor, which is the ability to make products or provide services that can be sold for profit. In short, the employer gets more value out of the transaction. In this example, once again the ultimate market price of the commodities made is left up the employers (employees generally have no input on what much products/services are sold for). In many ways, the ability to set the market price is a part of the utility he buys from his employees because without them, he would have nothing to price in the first place. The employer makes a profit by selling the employee’s production (products/services), pays back the exchange value (through wages) and keeps the surplus. It’s here that Marx finds the possibility of exploitation3. Part one of the take home message: use-value isn’t just a prerequisite for something to be sold, it’s the very reason natural prices deviate from market prices. If everything were sold at its natural price, no one would get anything but an equal transaction (somewhat of an ideal as described by Marx4). Profits wouldn’t exist. Part two: all of this demonstrates my point about LTV’s inability to see the “bigger picture” of what drives market prices. Considering that Marx was concerned with natural prices1, and understanding the exploitation of the working class1,2, there is a limited ability to describe why subjectivity affects market prices beyond physical characteristics that affect use-value. If we’re looking at the “only valid theory of value”, shouldn’t it be able to account for value on the other side of things as well? Let’s return to the De Beers example to demonstrate this. De Beers Revisited While it’s important to remember that according the sources I’ve cited, Marx wasn’t primarily focused on the market pricing/selling of diamonds, let’s look at the Pro’s use of the theory for this example. Pro argued that a Marxian analysis would agree that subjectivity played a role in increase sales, but not that the value of a diamond itself. Immediately, we can recognize this as flawed from Marx’s own writings as I discuss above: buyers are concerned with both exchange and use-value. Therefore, the value of the diamonds as a commodity did increase (once again under the Marxian view). Most importantly, the utility that N. Y. Ayer created fails to completely meet Marx’s definition of use-value. In the very tagline alone, the value of a diamond isn’t based on concrete characteristics: “A diamond is forever”… sure, but really? Is this a physical property? N. Y. Ayer created an entire brand around the company and its product, something that went well beyond the physical properties of the diamond’s surface. This is typical of any product or service: just think about why you buy Macs or Pcs, Cokes or Pepsis, etc. This is why I argue that, under Marx’s strict definition of use-value, the subjective value that N. Y. Ayer created around diamonds wouldn’t count. Labor & Common Denomination While I appreciate the Pro’s attempt at explaining the logical rationality of “labor” as a common denomination, current economic literature seems to disagree. As Steve Keen (1993) explains, “The conclusion that labor cannot be the only source of value has long ceased to be novel. As well as being fundamental to neoclassical economics, that conclusion has been asserted explicitly or implicitly by, among others, Sraffa 1960, Steedman 1977, Bose 1980, Hodgson 1980, Roemer 1983, Wolff 1981, Bandyopadhyay 1984, and Carling 1984. ” The Pro has failed to draw upon the theoretical foundations provided by the likes of Adam Smith and David Ricardo1, which not only gave a framework for Marx’s theory, but also try to provide some logic behind reducing a common denominator to just labor-time. Final Summary What I have presented are the limitations of LTV, according to the very literature that has come after (and includes) Marx’s Das Kapital. First, Pro continues to provide an in depth understanding of LTV, but hasn’t brought any arguments into effect in regards to it being the “only valid” theory of value. Second, the literature around LTV seems to contradict a few key points that Pro relies on: primarily the scope of the theory (natural vs market prices), the role of use-value, and the academic acceptance of “labor as the only common denominator”. Given that much of the Pro’s arguments involving supply & demand rely on these contradictions, I’ll await further clarification before addressing them if needed. Since the Pro hasn’t provided any critiques against STV, I will conclude and eagerly wait in anticipation for Pro’s final round. 1. “A Critique and Reinterpretation of Marx's Labor Theory of Value” by R. B. Wolff 2. “Use-Value, Exchange Value, and the Demise of Marx’s Labor Theory of Value” by S. Keen 3. “Marx’s Dialectic of Labor” by G. A. Cohen 4. “Das Kapital” by C. Marx