5 Minute Marx: The Labour Theory of Value

Cockshott's Paper:

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5 Minute Marx
Marx
Marxism
LTV
Labour Theory of Value
Labor theory of value
Labour
Labor
Premier
Liles
Premier Liles

[rainerlippert]

Hi,
the classic interpretation of LTV is flawed: value cannot be produced. Value is a social relationship, i.e. a relationship between people, value specifically between buyer and seller.
One can only produce the prerequisites of value relationships and thus the prerequisites for values and surplus value payments.
Value is formed on the market and the buyer and seller allocate equal amounts to both the commodity and the value equivalent (usually money).

This can be proven:
a) Marx's value formula describes the formation of value: W = c + v + s. According to Marx, value is composed of the production costs c + v and the surplus value.

But on the production side of commodity society there is still no surplus value. The buyer pays for the surplus value on the market.
Assuming a product costs 400 € to manufacture and provide (example: c = 300 €, v = 100 €). The seller (simple case: the entrepreneur) expects an surplus value of 50 €. Then he offers the product with the expected value of 450 € on the market. The expected value is linked to the work product as an offer price.

There is a buyer on the market who buys this product at the asking price of €450. He does this because he likes the product so much that he buys it under these conditions. In this case, the purchase price is identical to the expected value.
However, this does not result in an surplus value of 450 € that is added to the production costs. Rather, the production costs are fully reimbursed and the buyer pays an additional 50 € of surplus value. However, he does not add the surplus value to the production costs, but to his replacement of the production costs. If he were to add the 50 € as surplus value to the production costs, he would not have to pay the “remaining” 400 €, but only 50 € in total.
The value formula must therefore be specified more precisely:
W|real = c|replacing cost factor + v|replacing cost factor + s|real.
So it is visible that the value is not formed directly on the basis of the production costs, but on the replacement of these. That happens in the market.

Surplus value means "more value" above a value below it. The underlying value is the reimbursement of the production costs - the surplus value is "more" above it. I call the value below the surplus value the base value.
If the entrepreneur comes too late with his product on the market and his product is somewhat outdated, he may still be able to reimburse the production costs. But he can no longer realize any added value.
The purchase price would then only be €400. The current offer price could be identical to this and thus deviate from the original offer price.
These 400 € represent any only the reimbursement of the production costs c + v. The 400 € then reflects the base value.
There would then be no so-called “unpaid working time”, the entire working time would be socially necessary. In this case, therefore, there would be no capitalist exploitation.

If, for example, stocks are to be sold later, the entrepreneur may only be able to sell the product at 300 €.
But even these 300 € are not an surplus value, but a partial reimbursement of the production costs:
W|real = c|cost factor, 3/4 replaced + v|cost factor, 3/4 replaced + s ≙ base value + surplus value;
W|real = 225 € + 75 € + 0 € = 300 €.

Only 3/4 of the work put in is recognized as socially useful, the work for 1/4 of the work remains with the status private (the proportionate work is done in the entrepreneur's private sphere and the proportionate work results also remain there, he cannot sell them). The entrepreneur must give away the results of private work if he wants at least part of the costs to be reimbursed.
The base value is then only formed in the amount of 300 €.

b) If a car manufacturer cannot sell 10, 000 cars, then the expected values of those 10, 000 cars should not be included in the total amount of all goods to be distributed economically and thus in the amount of goods that goes into the values of the labour force.

Incidentally, that was the case in the socialist countries. There, Marx's theory of value was the basis of the economy. That could not work, because the funds were brought into circulation to match the supposedly "produced values". This not only led to an enormous shortage economy, but above all it was not possible to determine what was produced and used how efficiently. So this economic system had to collapse.

More details – see
2022-01-20 Value and surplus value briefly explained

What is wrong with the LTV – How the value is really formed

2021 04 04 Value short version

[johnnynick]

Take one thousand everyday workers and put them in a big open empty factory and give them the keys. How long do you think it would take them to make a pencil?

Marx's concept of value created by labor is idiotic. Mules do labor. Leave them alone in an open field with a plow and see how productive they are.

If you are smart enough to create something, and you work really hard to earn the capital required to build a factory to make it...there is STILL no guarantee you will be successful. You then need to risk all your capital and time and energy...all in the hope that you will succeed. That is why successful business owners deserve every dime they earn.

Workers don't risk anything. They don't invest in a business. They don't spend countless hours figuring out how to make the business work. They sell their labor for a guaranteed payment. That is all they deserve. You want more? Do what the business owner had to do...earn it?

[tunnisus]

background animations a/ videos are good, but you talk too fast to make this really stick. Also putting rap with actuall rapping as background music is not good idea. There is you talking then there is rap lyrics being heard too. If you would just slowdown and change the background music to instrumental instead of vocal this video would be more professional. Can't really watch this high fast tempo video with distracting music being on it.

[eskimofo]

Great video. The background music became distracting when the rapping began.

[lordyabol]

the 10/2 = 100/20 part is great also if you wanted to segue into how Marx talks about money, the labour embodied in gold and occurences of two currencies in circulation at the same time


very good video


@edit I'm not sure if you would like input from viewers but I feel the rate of surplus value and surplus value in general is a vital (if not the most important) concept in marxism and one that is often poorly understood and not explained nearly enough

[AkashRathod-bkkw]

Dawg! why is there a music video playing behind?!!

[mianfeng]

The problem with the Labor Theory of Value is that it leaves out at least 50% of the process of making anything. Economics 101 discusses the "Factors of Production" the resources required for a business. Those are Labor, Capital, Land and Entrepreneurship. If the discussion of how a 'widget' is made from start to finish, we have to go back to the beginning of the Means of Production.
It must be remembered at the time of the writing of the Communist Manifesto, Marx has no experience of running or starting a business. If he did, he would know that it is an unbelievable amount of work.

Acquiring Capital, land and being the entrepreneur are an incredible amount of work and take a significant amount of money. This is why the average person never starts a business. The means of production does spring out of the ground fully formed with all the permits, licenses and equipment. Without these in place, nothing will be made and worker will starve or turn to crime. There will be nowhere for the worker to go to work.

Marx never factors in the labor and capital (which represents more labor) of the business His analysis is flawed and incomplete. Profit is not plunder. Capitalism can be abused along with everything form of business. Capitalism does not automatically equate to exploitation. If Marx had ever ran or started a business, he would know that.

[Mark-zkgu]

"there exists 6 homes for every homeless person" this is a brilliant quote

[ikesinachibrendan]

You said that value is only determined in those things society deems as useful, and no matter the effort put into it what matters is that society does in fact deem them useful.
Yeah that's the subjective theory of value bro.

[zman]

Your talking to fast it's hard to understand/study ngl

[munkvob]

What’s your response to the argument that marginal utility and collectibility change the value of commodities?

[fcvgarcia]

That's a misunderstanding: amount of labor is only the measure of value, not value itself. To understand value you will have to read Marx.

[kiwichippie]

How is the coat more valuable than the linen? What if it's extremely hot outside or someone prefers the linen? Could you help me understand some of these issues

[cjgennaro]

You cannot correctly quantify labor anymore than you can quantify love, friendship, or tastiness of food.

Reducing value down to labor time being the measure is a gross oversimplification. Value is not a univariate model with one factor. This view is largely blind to how people truly operate.

An hours work here does not equal an hour there. Time, place, environment, emotions, skill all play a part in determining the value of anything. You cannot compare my labor to your labor. A person's complete circumstance in life go into them determining what an hour of their life is worth.

Only the laborer knows what effort he is willing to put out for a certain reward and only the buyer knows what they would give to satisfy their desire. And there individual plans in life guide them in making these decisions. This is common sense.

Both Marx and Adam Smith make these glaringly misguided assumptions. It always serves the theorizer to simplify reality to fit his models or equations. This is the fallacy of the academic.

Don't settle for these explanations. Think through it and it's not hard to see why the labor theory is incorrect.

[montana]

I can’t focus on what you are saying and what is on the video at the same time. When you are throwing numbers around and speaking about concepts there is nothing directly related to them on the screen so it’s very easy to get lost in what you are saying, I would suggest using a visualization software like doodly to make cartoons about what you are saying so that people can follow along easier.