What is Value? | Smith, Ricardo, Marx | Keyword

In this episode, I explain value through the work of Smith, Ricardo, and Marx.

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[ClayShentrup]

warning: the presenter's background is in critical theory and social justice, not math or engineering.

[thomasrivet]

And the value of this video? Very high.
Thanks for the thorough and thoughtful explanation of the term, David.
Welcome to Montreal ... the land of detours and construction. Charming, nonetheless.
See you on the flip side!

[iridule]

not sure if this is a new type of video you’re doing, T&P, but videos under a theme are a great idea. keep up the good work!

[prernamunshi]

Thanks for the brilliant summation. All the labour that you have put in this and in every other video of yours is just commendable

[florianfelix]

You could read David Graebers work on this –– toward an anthropological theory of value. It’s not covered as much as other books, but it is pretty much his entry work.

[JoyPrin]

Mariana Mazzucato's book 'The Value of Everything: Making and Taking in the Global Economy provides a very detail explanation and description of the evolution of 'value', as well as the effects around it.

[fernandov]

Would you consider doing a follow up video on Menger's subjective theory of value?

[detectiveofmoneypolitics]

Economic investigator Frank G Melbourne Australia is following this content cheers Frank

[alamagoddystyle]

17:20 Value is Subjective to desirability.

[rainerlippert]

From my point of view

Value definition – working hypothesis
Value reflects a quantified, abstract usefulness that must be recognized in a socially relevant way by exchanging it for a value equivalent and is assigned the same amount to the exchange goods.

Causes of value are weighted needs for goods.
These goods are produced, formed, shaped, designed, performed and provided with the help of paid human and machine labour, as well as parts of nature that are also used as labour.

Value is formed in connection with the non-free availability of goods.
The non-free availability has its roots in the paid workers who take care of the production and provision of the goods or in the ownership of these goods.

Addition
With the sale of their labor power, human workers acquire a right to means of subsistence. In the case of mechanical workers or the parts of nature that are used as workers, the owners or tenants must provide for their means of subsistence.
The rights to means of subsistence correspond to the values of the labor force. Their entitlements to means of subsistence are proportionately linked to the products of work as a right to compensation.
Likewise, ownership, e.g. of natural goods, lead to value relationships and thus to values (in Marx Rentiers) through the right to compensation when they are handed over.

Through the value-equivalent exchange, these claims are more than completely (with added value - usual), completely or only partially compensated, whereby the exchange for a value equivalent leads to value formation in any case.



Justification in brief
The formation of value can be explained with Marx's theory of value, but not on the basis of its classical interpretation.

* The classical interpretation of Marx's theory of value is flawed
Marx assumes that value is created through production.
Professor Heinrich sees things differently.

Marx contradicts himself in Capital.
Based on the value formula that Marx set up for the formation of value, one can see that value is formed on the market.

* Value is a social relationship
Such is formed between people and works only between people. Value is therefore not a singularity, but something two-sided. Something like that cannot be produced like a lamp.

As a social relation, value must contain an objective element that goes beyond the individual and is objectively given to society. This is the common value that buyers and sellers agree on. In the bazaar this happens in dialogue, in the department store through the unilateral adaptation of the buyer to the buyer's specifications.
If there is no common value, there will be no exchange - the purchase contract / invoice cannot contain a sales price and a different purchase price.

The subjective parts of the value are the subjective reflections of the common value in the consciousness processes of the exchange partners. Before the exchange, these are usually different. In addition, the exchange itself is a subjective act. A quantity that shows the subjective value particularly clearly is the surplus value. This can neither be derived from the production costs nor from the working time or the like. Its size is estimated by suppliers and in many cases negotiated between producers and retail chains.

* Value formula by Marx
For Marx, value arises after
W = c + v + s.
W value
c constant capital (buildings, raw materials, electricity, ancillary products, at Marx machines, etc.)
v variable capital (in Marx only the human labor force)
s surplus value

Marx applies this formula to the production side of commodity society, since for him the market has no meaning for the formation of value.
But there is still no surplus value on the production side. The buyer has to pay for the surplus value on the market. On the production side, there is only one expected surplus value. Since surplus value is part of value, there can only be one expected value.

* Qualified value formula for the production side
The value formula needs to be adjusted for the production side of commodity society:
W|expected = c|cost factor, replacement expected + v|cost factor, replacement expected + s|expected.

If the value were formed, as is supposed to be the case according to the classic interpretation of Marx's theory of value, then the buyer would only have to pay for the surplus value, because the costs c + v are already given.

In reality, only a buyer in the market will pay the surplus value, if at all.
But in order to be able to pay surplus value, he must first fully compensate the costs c + v.
This means that the surplus value is not paid on the costs, but on the reimbursement of the costs.
The value formula also needs to be adjusted for the market:
W|real = c|cost replacing + v|cost replacing + s|real.
Note: "Reimbursing costs" does not necessarily mean that the costs must be reimbursed in full.

This makes it clear that the value does not arise directly with the work, i.e. the costs c + v, but only with the reimbursement of the costs. That happens in the market.
This is also formulated by Marx (among other things, a product of labor only becomes a commodity when it becomes a use value for others through exchange; it is not the work directly performed that creates value, but the work that is socially necessary on average).

* There is something right about Marx's formulation of the value formula
The objective component of the value also includes the fact that on average the costs must be fully reimbursed with the sale of the products and an surplus value that the manufacturer considers sufficiently large must be paid if production is to be continued and expanded as far as possible.

There is much more to say about Marx's theory of value.

[ckpchaudhari]

It may be more appropriate to consider the concept of transubstantiation in the context of exchange value. In this framework, the physical matter remains constant while the underlying essence undergoes a transformation.

[minerbroEDI]

You should cover value form theorists.

[gwennygwen]

Can you expand on where and why you are moving? My tingle needs require me to inquire.

[alamagoddystyle]

4:11 Money is actually a commodity that functions as a "store of value" and "medium of exchange". Bitcoin fits into this definition well. and nothing has any intrinsic value, it's all subjective and perceived, and I think all lay people conceived it better than economists throughout history.

[lizicadumitru]

Can these collapses not be the equalizers that Smith and Ricardo spoke of?

[serenaguida]

i’ve started reading ricardo a few days ago, and i find it extremely interesting. it seems to me that the labour theory of value does not state at all that ‘labour is the source of value’, but rather that the only rule to describe the (virtual) proportions at which any good is exchanged for another is the proportion between the quantities of labour needed to produce the goods. what i find interesting is that i’m not really able to pin down the incompatibility with subjective theory of value when both are applied to the real world… (ultimately in competitive markets, prices should approximate costs, and it might make sense to think of cost proportions as proportions of labour -especially when you assume homogeneous wages, and allow for deviations due to variations in wages over time mediated by machinery).

[marifkhan]

hi please What are the similarities and differences among adam smith, david ricardo and marx Labour theory of value?

[cmbr]

You are right, big topic. If you fail to perceive Smith and Ricardo accurately, there will be no need to read Marx. Wasn’t it Marx’s point that economics as theorized failed to understand the value of labor as a social class at all. Do I give Marx too much credit in thinking his work was a critique of an economic system that resulted in recurring wars? Communism is a philosophical system, I think, that suggested wealth creation without a proper consideration for the proletariat, slave, wage worker or wife would create insurmountable social inequalities and war. If that is not his conclusion, it should have been because that’s what has evolved. If Marx did not perceive those premises who can we give credit too; certainly, not Jesus. Jesus was not a proper philosopher, never totaled figures and by all accounts gave all the money to Caesar. So it was Marx whom successfully critiqued western ideas regarding wealth creation and maintenance. I’ll go listen to your Smith and Ricardo reviews, but I’ll be looking specifically at how either of those two colonizers valued labor if at all.

[Yomamaissoo]

I have a question. Let’s say I have a business that only relies on machines and I am still making profit. How would Marx explain this since there is no labor involved in it?

[drydessert]

In practice, price has nothing to do with the resources that went into it (one of those resources being work). Price is only determined by demand versus cost (cost being resistance to purchase).
Of course, value is something different than price. Calculating price based on labor is only necessary in a totalitarian system.