Date: Thu, 24 Oct 1996 13:54:07 -0400 (EDT)
From: Justin Schwartz <jschwart-AT-freenet.columbus.oh.us>
Subject: Re: M-TH: value theory


On 24 Oct 1996, jc mullen wrote:

> Why do you think value theory turned out to be a dead end. I'm not an expert
> economics, but it seesm to me that the advantage of the labour theory of value
> is that it allows economic theory to be linked to a vision of whatthe world
> really looks like : that is there are clearly more and more products available
> to make human life more comfortable and interesting. Capitalism is the system
> that allowed this to happen. What is new about capitalism in this respect ?
> Surely it is that labour is more efficiently applied... it seems to me that the
> idea that labour creates value is intuitively satisfying in a way that
> alternative theories are not, whatever the mathematical difficulties it
> presents.

OK, first, grant that capitalism produces more goodies and with less labor
input per unit than feudalism. (The second must be what you mean by more
efficient.) You certainly don't need the LTV to explain this. The
existence of competitive markets, in which labor is a commodity (with a
price) and a cost (and therefore something to be reduced) allows for a
perfectly good market-based explanation of these outcomes.

Second, I'd like an account of the way you think appeal to labor values
does offer an explanation of these phenomena, intuitive or otherwise. One
reason (Sraffa's via Steedman's) to think it doesn't is thatw hile you can
construct a value-theoretic story about "the production of commodities by
means of commodities," it's epiphenomenal. It's a fifth wheel, adding
nothing to an account based on price. Value theoery in a mathetmatical
sense ios supposed to explain something deep and hidden about the price
system. That it does so has not been shown.

Third, the mathematical difficulties are very significant. If, when one
states a theory precisely, it turns ouyt to be either internally
inconsistent or to depend on a very special, restrictive, and narrow as
well as quite unrealistic set of assumptions to make it consistent, there
are problems with that theory. If it's inconsistent, it fails right there.
If its assumptions are narrow and unrealistic, one has to wonder what it
tells us about the realw orld. All formalizations of the LTV with which I
am familiar suffer from one or another of these two defects.

I do not think Marx was mistken to use the dominant economic paradigm of
his time and to develop it to its fullest articulation. I think thaat he
provided a great many profound insignts into the way capitalism works in
doing so. But I think there are limitations to his approach if taken as an
exercise in economic model building, limitations that have not been shown
to be transcended despite more than a century of hard work by first rate
scholars. See Howard and King, History of Marxist Economics, vol II for a
survey. 

I further think that, perhaps less than fully articulately, Marx
sawe some of these limitations and provides the elements for a critique of
the LTV in his own work. It seems crystal clear tome that he thought of it
as the framework for a model and not as true in any simple sense; rather,
he conceived it as useful and illuminating. I will go with him on that,
but I think that we can now see that the illumination he got from it may
be had without adherence to and use of that model.

--Justin




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