Wishful, Rational, and Political Thinking: The Labor Theory of Value as Rhetoric

As social science, the labor theory of value (LTV) has embarrassed both Marxists and marginalists alike. In the words of Jon Elster (1986), a sociologist committed to rationally working through the core tenets of Marxism, the LTV under close examination "becomes difficult to defend, or even to state coherently" (p. 64). It is not hard to understand Elster's reservations. In its many formulations, the LTV yields neither an objective account of nor a technocratic apparatus to explain the cause and the measure of value. Instead, classical and Marxian economics offered a series of complex arguments that each combusted when held to rational or empirical fires. It is no wonder, then, that the theory of marginal utility could so easily sweep the LTV aside in the late nineteenth century. Nevertheless, why such a seemingly wrong-headed idea persisted for so long remains a major question for both economists and rhetoricians. Why was (and is) the LTV persuasive? We argue that the source of the LTV's deficiency results from efforts to distinguish social-scientific reasoning from political appeal. The LTV persuaded classical economists and Marxists not because of its logical rigor, though a good bit of logical argumentation contributed to its appeal. Following James Aune (2001, pp. 22-24) and Chaim Perelman and Lucie Olbrechts-Tyteca (1969, p. 194), we call such argumentation "quasi-logical modeling." The LTV persuades because it appeals to an ideal of justice. In the predominantly rhetorical analyses to follow, we trace the LTV's origins and its three major instantiations (in the works of Adam Smith, David Ricardo, and Karl Marx), each an effort to prove that capitalist society is (or is not) just because it does (or does not) uphold every person's right to the fruits of his or her labor. This appeal to justice is, in many ways, an appeal to a deeper ethical commitment to reciprocity. Justice-as-reciprocity is integral to the Marxian charge of exploitation (Cohen, 1981, p. 207). Smith, Ricardo, and Marx, while appealing to justice, employ some degree of wishful thinking (hope that capitalism will not violate a person's right to his or her labor), or some rational thinking (models to show that capitalism does or does not uphold a person's right to his or her labor). All are political thinking, rhetorical efforts to move the audience towards participation in or condemnation of free-market capitalism. Our analysis of three labor theories of value as arguments extends the project that Aune began with Selling the Free Market--that is, analyzing economic arguments as arguments, not as social science but as "the process of justifying decisions under conditions of uncertainty" (p. 4). Judged as political thinking, the writings of Smith, Ricardo, and Marx all retain some merit, if not as proven or valid social science, then as potent and tested public argument. Judged as rational thinking, the LTV looks like a failed effort at exploring objectively the cause and measure of value. When the rational and the political appeals combine, we can see why the LTV succeeded rhetorically. PRE-HISTORY OF THE LTV: JOHN LOCKE AND WILLIAM PETTY Two suppositions with a classical pedigree set the pre-historical stage for the LTV: an Aristotelian dissociation between value-in-use and value-in-exchange and a medieval association of use-value with labor (Spiegel, 1991, p. 32). Separating use-value from exchange-value not only dissociates the two "independent elements," bringing about what Perelman and Olbrechts-Tyteca (1969) called a "profound change in the conceptual data that are used as the basis of an argument"; but that separation also modifies "the very structure of those elements" (p. 412). If use-value and exchange-value are both associated, then a commodity's price undoubtedly reflects its worth. But if the two are dissociated, then the price appears unjust when it seems to veer wildly and dangerously away from use-value. The writings of two seventeenth-century political economists exhibit key suppositions about use- and exchange-value. …