What about objects that have the same uses but are inferior in quality, clearly use has no determination in their price.
Antique cars vs. modern cars comes to mind. Some antique cars fetch 100, 000’s of dollars while a modern car, which is superior in every concievable quality, would only cost $20,000. How does the mention of their use have any thing to do with price?
This is another fine example thank you. In this case, it took much more labour in the older days to make such an antique car than nowadays where things are more automated.
Paper is much much more useful than gold. If use value determines exchange value then surely paper would cost a lot more than gold ! But this is not the case.. The only reason I can think of that would make gold more costly than paper is that it takes longer to produce (to dig up etc). Paper, despite being extremely useful, is produced in large quantities relatively quickly. This leads me to believe that marx is right and that use value doesnt affect exchange value..
Hi btw :]
What about objects that have the same uses but are inferior in quality, clearly use has no determination in their price.
Antique cars vs. modern cars comes to mind. Some antique cars fetch 100, 000’s of dollars while a modern car, which is superior in every concievable quality, would only cost $20,000. How does the mention of their use have any thing to do with price?
"This is another fine example thank you. In this case**, it took much more labour in the older days to make such an antique car than nowadays where things are more automated."**
That is such a clowning answer.
No one has mentioned psychic income. Use-value and subjective value being equivelant we all agree on.
The $60,000 pen could have been a pen that JKF signed a bill with and that’s what gives it its “value” whether it is ‘social’ or “use” if it is not meant to be written with anymore, then the labor that went into it becomes irrelevant. Then it has no “use-value” as Marx/Pizza describe it. SCARCITY is where its value comes from, not labor in this instance. Value to Marx sounds like social psychic income (total social value) to me. His argument relies on what appears to be an arbitrary distinction of ‘value’ and ‘use-value’ as everyone has pointed out. Marx’s ‘value’ seems aimed at the social value (a psychic manifestation), but merges that concept with total utility, as derived, supposedly, through the exchange value of the good, as where the use-value is derived upon usage of the owner and what that usage can do for further production (marginal/subjective).
We’d do better to be reading John Stuart Mill to get an understanding of the kind of welfare functions that Marx is attempting to Dr. Frankenstein into his goofy obfuscations..
Further, i don’t know why we would do Vol. 1 and not 3. I don’t know why we wouldn’t just skip Marx, except to laugh at his proof, and get straight to Hilferding. At least he refuted some of the Autrians points of view. It is a straight fact that Marx himself did not ever refute the Austrian point of view.
And the advancements in economic thinking that happened in the 1870/80’s revolutionized economics away from the core principles that made Marx, Mill, Ricardo, Malthus, and Smith. Namely, objectivity. Which is where Marx based the concept of value. A vague cloud of social objectivity. By defintion society is equated with objectivity. but that is not always true in practice…because…of…umm…mar…marginal…marginal utility, which..leads..tooo..uhhhmmm…sub…jective …subjective value.
(Marx is wide-eyed, "LUcccyy in the skyyyy with diooomandsss)
Hilferding complimented Menger and Bohm-Bawerk for not being pawns of the bourgeios economists and for not simply sticking up for their interests,m but being honest intellectuals, as to where Marx didn’t understand the concepts yet and referred to them as “vulgar.”
Hello. I’m interested in this thread, as I didn’t really ‘get’ Capital when I read it once, and while that may just be because there isn’t much to get, it’s probably worthwhile not to be too close-minded unless you are correct, and when it comes to economics I’m still not entirely convinced that I understand the important questions completely. I suppose that this would at least allow some comprehension of the historical context in which later economists such as the Austrians wrote. In that case, I suppose that I’ll just ask some questions and see what happens.
"Use-value is often referred to by Marx as qualitative. It is the physical properties of a commodity, Marx also tells us that use-values are what constitute the “substance of wealth.”
So then a use-value is a commodity’s physical body, basically? I’ve always found the term a bit confusing, as it suggests that it refers to some form of value, which is quantitative, or amount of utility, but Marx seems to use it as a noun in order to refer to useful things in general.
“Exchange-value is characterised as being quantitative, and an abstraction from use-value (with no use-value there is no exchange-value).”
What do you mean by saying that it’s an abstraction from use-value, if it can only exist because of use-value? I guess it makes sense to say that exchange-value isn’t something inherent to a commodity, but is rather subjective and only exists in human exchange, so that it can’t be reducible to the physical properties of an object by itself. I’m not sure that it ‘abstracts’ from it, though, as after all doesn’t whether people exchange something at all depend upon its physical body? I’m also not sure what it means to say that exchange-value is ‘quantitative’, since clearly a thing can only exchange for something else which is qualitative, and people will decide what to exchange for based on the quality of the thing, not only the quantity. I may prefer to buy a single house to fifty pens, for example.
“The idea that labour is the substance of value comes out more clearly when we examine the historical preconditions for the existence of value relations. For individuals to produce exchange-values, the products they produce must be use-values not to themselves but to other individuals, that is, social use-values. Labour which creates social use-values is social labour, and presupposes a social division of labour which forces individuals to rely on the production of society to satisfy their needs. However, only in certain instances of the social division of labour do the products of society appear as exchangeable values. These instances are where the various branches of the social division of labour carry out production independently of one another and for private account. In such instances, the products of labour become social through the medium of the value-form.”
From what I understand, what you are saying is that basically when producing for the market people produce due to self-interest, but at the same time produce things which are consumed by others? I’m not sure what you mean by the ‘value-form’ here, though. I suppose that it seems correct to say that if something is produced for exchange, a person has to give it up to somebody else in order for it to be exchanged. In order to make demand effective, something must be supplied to the rest of society, or something of the sort. Even in that case, though, it seems that there is a subjective element, since a person has to decide how much to produce in order to exchange, based on what they want to exchange for. I suppose that there is also an objective element, since you would have to produce and sell something objective in order to buy something else, but it’s not clear how that leads to objective value?
Come to think of it, though, maybe you mean that people have to exchange because they produce, as previously said, things for private self-interest which are consumed by other people, so that they have to exchange their products for something else in order to fulfill their self-interest? I remember that Marx said that exchange-value was the ‘value-form’, or something like that, so that could be what you mean. Still, I’m not sure what that has to do with value being crystallized labour or anything of the sort. I know that some economists have tried to prove that prices correlate with labour-time through empirical evidence, but I’m not sure that they’ve explained why, and the whole transformation problem would seem to mean that Marx didn’t share this view anyway. In that case, how is price a ‘form of appearance’ of labour-time? In fact, if they can be measured separately, which they can, then doesn’t that mean that they’re different things? I mean, if the pressure and temperature of an ideal gas are correlated, then this doesn’t make one into a form of appearance of the other.
Is what Marx is saying somewhat similar to what von Mises says here?
What is to be produced, and how it is to be produced, is decided in the first place by the owners of the means of production, who produce, however, not only for their own needs, but also for the needs of others, and in their valuations take into account, not only the use-value that they themselves attach to their products, but also the use-value that these possess in the estimation of the other members of the community.
“Value serves as the substance which undertakes the natural necessity common to every society of apportioning out the labour-time of society to different branches of production in order to serve social wants.”
Isn’t that done by supply and demand, and such negotiation on the market?
“Marx expands this to show the origin of money in that all other commodities take the place of the relative role in this equation, and one other commodity becomes the equivalent, and thus money.”
Could you explain how he does this, though?
“In this particular section, Marx is assuming all other things being equal. All other things being equal, if something costs less time to produce, it will be cheaper.”
What things are equal, however? Isn’t the transformation problem basically that Marx holds that this isn’t actually the case? In fact, Marx stated even here that, “The possibility, therefore, of a quantitative incongruity between price and magnitude of value, i.e. the possibility that the price may diverge from the magnitude of value, is inherent in the price-form itself.” So then it would seem that the theory of value doesn’t necessarily hold that prices will follow labour-time. But then it’s still not clear what exactly it means.
“What a shock, when confronted with what Marx actually said, you guys have nothing to say. Namely because there are no strawmen here to tear down.”
Perhaps you should be more respectful, since you are after all the guest here. In fact, I think that if this thread is going to be at all productive, or readable at that, it could help to try to avoid bickering and put-downs, since really all that could be said when it comes to why Marxists or Austrians are bad people, idiots, blatant and silly ignorants, or whatever else has probably already been said in Youtube comments.
My little ole blog has an article on this:
http://smilingdavesblog.blogspot.com/2011/07/karl-marx-made-easy.html
The easiesy way to summerize Marx’s various value defitions is someting like this:
use-value: utility “what an object can do for you”
exchange-value: What a commodity fetches on the open market, ie. price
Value: The “labor cost” of a commodity, provided that that commodity has utility. That is, mud-pies don’t have “value” because they have no use.
The problem is that this is a half-baked concept of value. I’ll quote myself from another thread to save time:
My understanding is that use-value is a seperate “property” of a commodity, and “value” is the amount of labor required to produce that commodity. This is what Marx is talking about in the first pages of Capital, vol 1. when he talks about comparing corn and iron. That is, say, one bushel of corn exchanges for 10 kg of iron, and the “common element” at the base of this exchange rate must be labor. This is regardless of use-value, and according to Marx creates an equilibirium exchange-value. He then later talks about how supply and demand can have the price (which is different than value) fluctuate around this equilibrium. But “if supply and demand and reletively balanced”, the price will equal, or be very near to, the shared labor-value of the two commodities.
…
Poking around on Wikipedia regarding this, I found this quote from Engles on the Surplue Value page:
“Whence comes this surplus-value? It cannot come either from the buyer buying the commodities under their value, or from the seller selling them above their value. For in both cases the gains and the losses of each individual cancel each other, as each individual is in turn buyer and seller. Nor can it come from cheating, for though cheating can enrich one person at the expense of another, it cannot increase the total sum possessed by both, and therefore cannot augment the sum of the values in circulation. (…) This problem must be solved, and it must be solved in a purely economic way, excluding all cheating and the intervention of any force — the problem being: how is it possible constantly to sell dearer than one has bought, even on the hypothesis that equal values are always exchanged for equal values?” "
The bolded part is one of the big problems with the LTV. The idea is that exchanges occur when values are equal, rather than the marginalist/subjective view where exchanges occur when both parties value the other’s goods more highly than the seller. This is, I believe, why so many of Marx’s criticis focus on his lack of attention paid to time, and how it affects the utility, and therefore prices. Since, for Marx, exhange is a zero-sum game, if one party is to prosper, it is at the expense of the other, rather than a mutally beneficial exchange.
In reality, due to marginal utility, wants, needs, etc, every successful trade increases the overal “psychic profit” (as Rothbard puts it in MES) of the system. Marxism, to my knowledge, doesn’t address this, which is why they balk at the idea that a worker can “benefit” from being paid in wages now rather than waiting to sell the “full product” later, if they did all the work themselves and accumulated thier own capital.
Very interesting thread, lots of ideas and back and forth.
My take on the OP’s excellent explication of the Labor Theory of Value in this blog post:
http://smilingdavesblog.blogspot.com/2011/07/enter-dragon-aka-labor-theory-of-value.html
schmul posted:
You need to read up on marginal utility. The reason paper costs less than gold is for a variety of reasons. One, gold is actually very useful currently, much moreso than paper, as gold can be exchanged for currency which can be exchanged for basically anything, including paper. It has value in exchange.
Secondly, as I said you need to check up on marginal utility, here’s a very simple introduction to it, provided by one of our forums members:
Human Action Comics vol 3, Marginal Utility Theory:
http://picasaweb.google.com/Lilburne2/HumanActionComics3?feat=directlink#5399235837419616130
pizza,
So put aside labor at the moment. If we did that, then exchange-value is also subjective. X lbs of wheat = Y sheets of paper but this exchange-value is one in many where it is up to individual actors to determine the exchange value presently, yes?
Question for “Pizza von Marx”:
Do you see capitalism as capitalism no matter what, or do you think there`s a difference between state capitalism and laissez-faire capitalism?
To be fair, you are right, I was wrong with that answer, it was late/early.
Labour is not actually embodied in Commodities, value is determined by how much labour it would take to make a Commodity, RIGHT NOW. The reason the car is so expensive is supply and demand, but we’re far from that.
But alas, this is not the case at all. The pen was not used by “JKF” nor, even if it was, does this rule out the labour theory of value. You are using a very specific example, we are dealing with Commodities. Commodities are a general sample of their species, a specific pen used by a specific person, is NOT a general sample of its species.
Actually, it would still have such a use-value given your assumptions.
Why does labor expended matter in the price of an object? How do we determine labor expended? Is it simply temporal or is a combination of several factors?
“Commodities are a general sample of their species, a specific pen used by a specific person, is NOT a general sample of its species.”
That’s all well and good for your arguments, but say I want to define a commodity as anything that sells on the market?
Labour is not actually embodied in Commodities, value is determined by how much labour it would take to make a Commodity, RIGHT NOW.
How much labour it would take whom to make a commodity right now? I would probably take me more time to build a car than somebody experienced in the field. In addition, isn’t the Marxist position precisely that labour is crystallized in commodities?
In addition, I was just skimming through my old copy of Capital, and it seems that Marx says that products are ‘commodity values’, rather than just having value. However, it’s not clear how a thing can be a value. Can you explain this?
But alas, this is not the case at all. The pen was not used by “JKF” nor, even if it was, does this rule out the labour theory of value. You are using a very specific example, we are dealing with Commodities. Commodities are a general sample of their species, a specific pen used by a specific person, is NOT a general sample of its species.
But in the situation described, would you agree that the value of the pen was determined subjectively?
Essentially, yes. Use-value is anything about a commodity that makes it useful.
Lets look at it this way. A tailor preforms a specific concrete labour. More abstractly, he preforms general human labour. The former is what characterises use-value, the latter Value/exchange-value.
In a sense. The commodity must be useful in order to be exchangeable.
In the same way that “weight” is quantitative. We measure weight by numbers and such, as we do with exchange-value (namely price).
Correct, in order to sell on the market you have to make something other people want, it must be a social use-value.
Value-form is just the form of how social labour is distributed in society. Under slavery, it was forcefully distributed from the slaves to the slave-owners. Now it is transferred via an exchange of equivilants.
What you call “subjective” here I would call the Anarchy of the market. You have to guess, at first, of how much of a commodity to create in order to satisfy demand.
I explained the differences between Value and Price earlier in this thread.
Value is our ideal theoretical standard that is, amount of labour-time.
Price is the actual realisation of this. It can, on individual cases, differ from Value, but total value will always equal total price. But we’re way ahead of ourselves. So I will say no further.
More or less it looks like it.
Supply and demand negotiate the price. Price is the actual mechanism for distribution in a Capitalist society. As I said earlier, under slave society, human labour was forcefully taken, no price mechanism needed. But under Capitalism you must meet with other individuals who all share the same human rights in order to exchange your commodities. These relationships are called Value relationships.
Honestly he just recounts some history.
As things started exchanging more and more frequently, it became tedious to exchange 1 corn for 3 wheat in order to get the paper because the paper guy only want 3 wheat. So there arose a socially agreed upon commodity that would serve the equivilant role in the elementary equation on value. It would be tradeable for all other commodities.
I probably did a poor job at explaining it because I don’t really find this part particularly interesting, I’d recommend reading the chapter 1 section on this for a better analysis.
We’re assuming demand rose in proportion to the supply.
We’ll get to that one later mate 
Certainly, but total value will equal total price, but again way ahead of ourselves.
My apologies.
This seems to miss the point. A commodity is a single unit.
Exchange-value =/= Price
Value is not the same thing as Price.
You’ve extrapolated quite far here. We’re working with basics and you jump straight to commodity futures. There are additional factors we will consider later, we are merely on Chapter 1.
Ehh not quite. Use-value doesn’t determine exchange-value at all. There I was just talking about what exchange-value is, not how to determine it.
If we put aside labour, we are left with raw materials scattered across the earth, so everything is free. I don’t really know what you mean when you say that.
The analysis set forth in Capital is for Capitalism in general. Capitalism can take specific and varying forms that each have unique properties you are correct.