Ask Prof Wolff: Criticizing Critics of Marx's Labor Theory of Value

A patron of Economic Update asks: "I'm hoping you can provide insight on the following question: In defense of the Marxian labour theory of value, how should one respond to the critique, such as that provided by Yaron Brook among others, that *ideas* are the true source of value and it is therefore the entrepreneur who rightly deserves the bulk of the rewards generated from productive activity orbiting around the "idea"?"

This is Professor Richard Wolff's video response.

_________________________________________________________________________

Stuck Nation: Can the United States Change Course on Our History of Choosing Profits Over People?

“Hennelly brilliantly analyzes our capitalist crises and how individuals cope with them, tragically but often heroically. He helps us draw inspiration and realistic hope from how courageous Americans are facing and fixing a stuck nation.”
- Richard D. Wolff
_________________________________________________________________________
Follow Wolff ONLINE:

[mibar]

I'm just here feeding the algorithm for the 🐺

[evandrolima]

I had plenty of ideas as employee that was used by my employers. Never got rewarded for it.

[dr.detroit]

Another risk employees take, is getting injured, maimed or killed on the job. The employer then dumps the employee and any responsibility, and puts the burden to take care of the former employee on society to pay for, such as Social Security disability and Medicaid.

[stevemora]

He took a risk... That's one they love to continually use! 😂

[rubenrodriguez]

Great job at countering that "whoever comes up with the "idea" is entitled to most profits" argument, Dr. Wolff. It never ceases to amaze me the enourmous capacity to rationalize exploitation that so many defenders of "free market" use to justify and defend the status quo. Predictably, virtually every economic and political commentator or "expert" I see in the media are either capitalist entrepreneurs, or people who are paid or connected to capitalist entrepreneurs.

[burningpile]

Risks taken by little people whether they own a bar or go to work for somebody else are very different from the risks taken by rich people whether they own an online retail monopoly or are CEO's of banks or polluter industries. If you're not rich, you are in a precarious situation no matter what you do.

[strongfp]

I think what people tend to get confused on the subject of 'value' is that the value of a service or a good, commodity, etc etc. is settled with what ever currency exists. Labor theory of value does not take into account any sort of currency, because an economy can run on any sort of currency and goods, commodities etc might not even have a value with money, but a service might, or vice a versa.
Value, debt, and money is a complex subject... I highly recommend to anyone to read David Greaber's history of debt.

[alandoane]

Brilliant! Thank you, as always, Professor Wolff. I wish I had had professors as clear and passionate about their subjects as you are about Marxism and economics.

[LongDefiant]

If you believe in the price theory of value you have to admit that it's impossible to tax workers or consumers. If value is created at the point of sale the OWNERSHIP TRANSFER MOMENT is the only source of value. Therefore owners are the only entities that can be taxed, all other taxes are theft from entities that never produced value.

[garrettgutierrez]

I feel like your refutation of the "risk" argument here is underdeveloped and based more on ideology than fact. You construct in your mind an employee who moved into town specifically for that job, who has a mortgage, who is financially stuck if that company goes under, etc., but I think that if you look at the average worker, the amount of risk they take on is minimal compared to the capital owner.

In order to evaluate risk associated with an endeavor, you have to compare it to the alternative. Say someone is considering accepting a job offer. This offer will allow them to pay a home mortage, start and feed a family, and generally buy things that they would like to have. What is the alternative to accepting the job offer? Being unemployed. Not having a home. Not being able to feed their family. Not being able to buy things they enjoy. Sure, they will have a lot of free time, but no money to enjoy it with. So how, then is, is employment anything but a boon to them? Even if the company goes under, they will have made money in the time that it was operational. Sure, if they have to sell their house, they may do it at a loss. If they moved to work there, they may have moving costs. But, again, you are comparing these costs to literal unemployment.

Compare this to the risk taken on by the capitalist. Many small businesses are made possible by proprietors taking out loans with their homes as collateral. This means that if the business goes under, they may lose their home. If their loans are extreme enough, they may have to go bankrupt. Combine this with the failure rates of small businesses. 20% fail in the first year. Do 20% of employees have to suffer their employer going out of business within the first year? No. So not only are the consequences of failure more sigificant for the employer, but their chance of failure is too. This all calculates in much higher risk for the employer compared to the employee.

[theresasanders]

Prof. Wolff, please turn your volume up higher! We can always turn it down. This is a chronic problem on your casts!

[rugbyfrlife]

2:00 "all the tools that went into production, they all hadideas as well."

And yeah, the people who came up with those tools made a lot of money as they should. He literally proved himself wrong.

[artrock]

I've said it before and I'll say it again: Dr. Richard Wolff NEEDS to appear on Joe Rogan's podcast.

Especially after Peters Schiff (a horrible human being) has appeared more than once spreading his disgusting ideas and misrepresenting himself as an "expert" economist. Joe Rogan's core beliefs are more in line with Dr. Wolff's core beliefs. This would be one of the most efficient ways to share information with a large audience. The counter arguments against him appearing on the show, I believe, are insignificant compared to the constructive benefits of Dr. Wolff appearing on the show. Joe would approve of Dr. Wolff's stance. The last thing WE (humanity) needs is hundreds of millions of people thinking Peter Schiff, a man who sympathizes with slave owners (his Tweet still exists on this topic), calls for the abolishment of the FDA and EPA, actively campaigns against the working class while campaigning for his "clients" he feels are entitled to free money and handouts, and a man who says the 99% are STEALING from the 1%, is the ONLY option available.

And another podcast to appear on, if the goal is efficient use of time and energy educating the masses, would be Logan Paul's podcast. Peter Schiff has already been on that podcast. Logan Paul TOOK Peter's advice on relocating to Puerto Rico as a tax evasion technique. So the millions of young impressionable fans of Logan Paul, who knew nothing about economics prior to Peter Schiff's appearance on Logan Paul's podcast, now think the only way to do things is the "Peter Schiff" way (🤮).

Those two podcasts would create a larger change in a smaller period of time than staying away from media the masses tune into on a regular basis. Based on Dr. Wolff's great track record of throwing himself into the "wolves den" to educate people, he'd have no problems talking with both Joe or Logan. And it will let their audiences know there are other options available other than the "Greed is good", capitalist cult member mentality. I would hope anyone who is sincere in their desire for change would support the idea I've presented on more than one occasion.

[andrewl]

Toyota is exponentially more effective than US manufacturers due to their idea systems in which improvements from the workers on the line are appropriately raised to the managers in charge of the decisions to alter practices.

[authenticallysuperficial]

You admit that the "Labor Theory Of Value" is not a theory at all, not falsifiable or testable in any way, simply a choice about how you want to characterize reality, what story you want to tell.
Just like all of Marx's *characterization* of human society as a series of class struggles. It's just a story, a politically motivated story for propaganda, and you admit that here in part 3 of this video.

[mattiaspersson]

The risk of the investors cannot be compared to a risk of the workers. If the product goes bad the workers doesn’t loose anything but their job. And they haven’t risked anything. The investor looses everything. The worker didn’t put any stake into the investment. He or she works and gets paid. If a workers defers salary we are talking risk.

The risk of loosing their job is reflected in their salaries. Cannot be compared to investing….

[devinfaux]

Whenever I hear the "risk" argument come up, I'm reminded of a line from Mel Brooks' "Blazing Saddles, " as the villain addresses his henchmen before the big fight:

"Now you will only be risking your lives, whilst I will be risking an almost-certain Academy Award nomination for Best Supporting Actor."

I also hear narratives about small-business owners who scrape together every penny, mortgage their house, put in so-and-so many hours, and all other manner of bootstrap-pulling. What this misses is that this is all towards the goal of moving that small business owner from the working class to the owning class, and of course that's hard; the owning class has deliberately made it as hard as possible.

[MrIzzyDizzy]

Ideas deserve the outsized portion? That is not how it works, if it did the inventors and scientist would be the wealthiest people. The thing about ideas /inventions/math and science discoveries are they are mostly founded on what has come before. No one in 1900 had the idea of a hand sized wireless phone combined with a computer and flat screen monitor connected to the internet. Inventions don't make leaps like that. Inventions are mostly collaborations and many times new inventions and discoveries occur simultaneously among different creators, because everyone is working with the same new understandings. So the smartphone would have to wait for IBM in 1994, because none of it was feasible, if even imaginable in 1900. Even then smartphones didn't really take off until Apple (previously having stole Xerox pc ideas) made one. Which made Steve Jobs and many Apple stockholders a lot of money. Did the actual workers who created it get rich? no. The capitalist owners got rich(er).
If you look at Jobs, Gates, Zuckerberg, Bezos, Musk and other touted rich inventors personally invented almost nothing, They make their wealth the old fashioned way. Take a good idea, take credit, add a few upgrades, market it well, mix in some unfair trade practices, and then exploit workers. If you look at Apple workers committing suicide rather than keep working, or Amazon workers being rushed to the hospital for heat stroke because, its cheaper to call 911 than put in AC, you see that inventions, (certainly not their own) are not how they got ahead.

[hansfrankfurter]

So the first part of your vid about ideas wasn't all that convincing tbh, the "ideas" of the workers is already paid for as part of their contract and is to some extent well defined (I'd grant that in some jobs it isn't and should be compensated). The ideas that went into the tools and capital of the business is kind of irrelevant, because ppl are referencing the ideas of the entrepreneur vs the workers.

The 2nd part of your vid made more sense, its true that workers also take a risk, but one can argue that for many start up businesses the burden of risk is much heavier on the owners. It really depends on the case.

[brewtarski]

I’m no expert on Marx. But I’ve always been troubled by the lack of consideration for the role of the entrepreneur. The entrepreneur adds value to the organization. Prof Wolff didn’t help me much with his sarcastic dismissal of that contribution. So, does that mean that the entrepreneur is entitled to all the cookies? Not for me. I like Prof Wolf’s ideas a about the democratization of the workplace. Labor needs a bigger piece of the pie and a greater voice in the management of the organization. Perhaps a Marxian perspective helps advance that idea, even if it has some holes?