I've always had the question regarding if the labor theory of value's "Socially Necessary Labor Time" just bottoms out at opportunity cost at a societal level or not. Slowly watching the video right now - Edit 1 scientific theory of value : Words like value or productive are normative right? Is this really about trying to find a theory of value or trying to define value in some way that normatively suits? Edit 2: I always thought subjective value theory isn't about what people found useful but rather what people think are useful. This difference is massive as it is the difference between belief and truth. This seems to just occam's razor to the idea that the perceptions of an evolved being need not perfectly reflect reality. Also, usefulness scales with shit like intelligence and perception so that can't be objective either. Edit 3: Labor then can be a result of edit2's comment. What you are measuring therefore isn't what is objectively true value, but people's subjective beliefs about value. - Edit 4: uh, am I missing something or can the equation at the start of 'labor theory of value' can go negative, meaning workers can exploit employers for the employer's bad business decisions?... - Edit 5: I'm a bit lost at the "transformation problem" section of your video. It doesn't seem like value has been defined in such a way that it exists as a phenomenon of reality? Is "value" at this point just some moralized way to say "magic"? Edit 6: Your math section in the transformation section of your video doesn't address the difficulty in clearly defined Societies in "Socially Necessary Labor Time". If two small communities near each other differ on their production times due to say an abundance of different animals, then the math breaks. Start from two families, then scale up at every level because the same question applies. - Edit 7: Can't overproduction and economic problems simply be due to a mismatch between perception and reality mentioned in edits 2&3? This seems to must be the case if people bid on and gamble on investments of uncertain futures... which is every decision ever make o-o Edit 8: I was wondering what it means for "rate of profit to fall" in a reality that seems to grow not only endlessly, but speeding up as if trying to hit a singularity of infinite wealth in the foreseeable future assuming we don't nuke ourselves... and then you point out he defines "rate of profit"... I'm even more confused now. (by wealth, I'm pulling from the notion that there is either more shit, or higher quality shit, or new shit that does old shit better.) Edit 9: At this point are theories of value even economic theories? You make it sound like they're moral definitions tacked on to an already adequate understanding of things like money flow, perceptions and tendencies such as fear of missing out or sunk cost fallacy or bandwagoning. "What creates value" ... I'm at the end of the video and I still don't know what the working definition of value is. But if it's something like choosing one option over another, then isn't it redundant with things like psychology? And if you scale that up, don't you simply have the subjective theory of value? Edit 10: done with the video. Very confused :c
@@blazearmoru A) "Objective Value" is an oxymoron. B) Value for the individual emerges from the ability to rank the stuff around said individual by order of perceived importance at a given instance of time. C) Value for a group or society emerges from individuals comparing how they rank the stuff in the surrounding world. D) Certain things hold value over centuries , because most individual rank them in a similar way (e.g. land, gold, grain , coal, oil, etc. On the other endt of the value spectrum are things like fashionable clothes, songs, etc. which have a very volatile value because the individuals in the group/society can not agree on the value of those things or very quickly change their ranking.. 1) The term ""Socially Necessary Labor Time" demand further definitions for "WHO is the society?" and "HOW the level of necessity is estimated for said society?" it is a very bad way of thinking. Who is the society? We are free to look at the society and aggregate all employees into one Employee and all owners into one Owner. Ownership is a claim, not effort. The Owner makes the claim, then the Employee enters to protect and grow what has been claimed as owned by the Owner. All efforts are done by the aggregated Employee, the aggregated Owner just owns, nothing else, no effort what-so-ever. In short, The aggregated Employee invents and makes the products then sells the products to itself and then pays a fee called Profit to an 'Owner' for the permission to own the same products the aggregated Employee itself made and sold to itself. Ownership is not effort, it is a political claim. HOW the level of necessity is estimated for said society? Ultimately it is the aggregated owner deciding what is necessary, because the relationship between the aggregated owner and the aggregated employee is identical to the relationship between a farmer and a farm animal.
@@reasonerenlightened2456 Part1?: Nearly all the people I talk to who are into the theory of labor value talk about value as something objective and measurable through labor time. I'm part of the camp that thinks perception and reality necessarily differ, both due to evolved intentions and evolved shortcuts in computation... possibly other things but I never thought any deeper. So I don't have a stance regarding wether or not value is objective, subjective, or relative, but I did notice there's value convergence due to some things being impactful across a wide array of different goals. Part 2? "Who is the society? We are free to look at the society and aggregate all employees into one Employee and all owners into one Owner. Ownership is a claim, not effort. The Owner makes the claim, then the Employee enters to protect and grow what has been claimed as owned by the Owner. All efforts are done by the aggregated Employee, the aggregated Owner just owns, nothing else, no effort what-so-ever. In short, The aggregated Employee invents and makes the products then sells the products to itself and then pays a fee called Profit to an 'Owner' for the permission to own the same products the aggregated Employee itself made and sold to itself. Ownership is not effort, it is a political claim." Either I asked the wrong question entirely, or you answered a different question than the one asked. I can't tell which one is the case. I think the video said that "Socially Necessary Labor Time" is derived from the time on aggregate needed for a society to make a thing, so I pointed out that it was difficulty to just point at something and call it a society because hard boarders don't exist and these boarders not only define what is socially necessary but also trade between societies can generate wealth due to the disparity between societies. If you rough out everything and say "everything is a part of 'S'ociety" we have correlation problems regarding chains of interaction or lack of interaction between communities as both their values and prices differ based on environmental availability and other such things. I'm kinda struggling with how to think outside of this framework given the disparity both between different groups as well as different layers. I think you're saying to just mash everything together, but isn't that not only getting rid of the only relevant data, but also getting rid of the only relevant concern?
I mean when you’re tweaking balls on the best meth around chances of falling down a heavy economics rabbit hole for hours are fairly high. Some say Land snd Fisher’s early works can be cited souly by meth, (ccru, undoubtedly) 🫠😶🌫️
Argument by Citation is such a good way of putting it. Too many times people just search the literature for something that sounds good and right and then stops critically engaging with the ideas. They just assume they've found the answers and if the critic would just read more they'd find the answer too.
This right here is why I started scaling back on watching YTers that speak on areas they aren't educated on. I noticed this trend with a handful of peeps when I actually say down and read the articles they cited, realizing they clearly just glossed over it for confirmation bias.
i thought the exact same thing, I'm guilty of doing it myself from time to time, it's just so much easier to do than actually read it and critically engage with it, but I'm trying to grow and become less of an ideologue which is going to take conscious effort to engage critically with the assumptions that i hold
This channel makes over hour videos reviewing economics articles and theories and is still very entertaining, even funny at parts. that must be some kind of record.
Marx didn't call capital proper constant capital. In the first volume where he outlines what you are attempting outline, he refers to two forms of productive capital, constant and variable. At this point constant refers not just to machines and tools, but also to raw materials, although in volume 2 he goes on to make further distinctions between fixed and circulating capital in response to both Smith and Ricardo. He also distinguishes and relates constant, variable, fixed and circulating capital to show where Smith and Ricardo were confused in various ways concerning conflating, say, fixed and constant capital. And in the third volume he talks more explicitly about total capital denoted by a capital C, rather than the lower case c denoting constant capital. This is where I think you're getting the idea of how he characterizes what capital is. Nevertheless, for Marx capital isn't an object but a relation. As he says time and time again, at one point money or commodities can be capital, yet at another they cease to function as such. When money is carried in the pocket of even a capitalist it isn't functioning as capital because it isn't being set into motion through either the production or circulation process. Money has existed long before capitalism as a system has. Just like how although a commodity is characterized by both being an exchange value and a use value it cannot ever be both simultaneously and once the exchange has been carried out it ceases to be an example of Capital. Nevertheless, this analysis appears to me to be more of a response to a specific trend of what has been called "analytic" Marxism than of Marx' analysis itself. Marx' whole point is to show how capitalist social relations produce a mystical anthropomorphizing of relations between objects whilst inversely objectifying human relations. A simple everyday example will demonstrate this. A worker does not see the product of their own labour as that, but rather the possession of another (the boss) and vice versa the capitalist sees what in reality is the fruits of others effort as their own. This is a simple, perhaps oversimplified, example of what Marx is driving at by distinguishing between appearance and reality. It isn't mystical or inexplicably metaphysical at all. Most people around the world are intimately in tune with exactly what Marx is more explicitly and systematically outlining. I'll have write down and organize my thoughts in greater detail in order to provide a more comprehensive response.
I think the gist of what you tried getting across is that many commentators don't really understand the scope and reach of Marx's analysis as a political economist to whom the socio-economic laws of societies' inner workings were a more pressing matter than an actual economic application of his theory. Not to delve deeply into specifics, I think Marx work wasn’t nearly as all-encompassing as he’d have imagined, so we do need better theories today
What you've outlined here seems contradictory to me. What's the difference between outlining the socio economic laws at work and an "actual economic" analysis? What I am saying is that an actual economic analysis requires one do exactly what Marx did and what now passes for economics is a crude "empirical" abstraction that I would say heavily relies on a division of labour constructed and maintained by capitalist social relations themselves.
Also, the video claims to be a critique of Marx' take on the labour theory of value, however it also delves into other aspects: the transformation of various forms of value, the law of the decline of profit etc etc. In reality this video is an attempt at (falsely in my view) discrediting Marx' analyses in multiple areas. The tendency toward a decline in profit has to do with the increases in monopolization amongst capitalists and thus with the disparity between the rate of profit and the mass held by any given capitalist. This decline isn't a matter of a loss of total accumulated wealth, but a decline in the rate of said accumulation in relation to total wealth already held. Take any major bank. The mass of stored wealth after various banks have been amalgamated into a larger monolithic financial entity, after larger swaths of the globe have already been colonized and converted into centres of capitalist production, ensures that each year said bank or really any corporation will gain less in returns in relation to it's overall mass of accumulated wealth because the mass is so astronomical that the rate of accumulation couldn't even match it. Thus you have an inevitable tendency toward a decline in the rate of profit. In order to get to this point of the analysis though, you'd have to have read volume 3. However now, retroactively, it seems to me that this was common sense, yet it didn't appear to me to make sense prior to this.
Glad to know your transformation into a breadtube influencer/gaming youtuber is complete. Now that you have enough personal clout and a cult-like following you can stop making videos in your area of expertise, and instead start releasing 4 hour long Derridean ramblings every 8-9 months about video games design, personal drama (and trauma!) and the relationship between mid '00s cartoons and fascism. Or you could also kickstart an acting career or drop a mixtape. Your choice really.
Forgot the debate bro route. And everyone knows he would he would rolling in a Dylan burns panel with mood lights and some vague emote that references LVT
Weird that they picked soil. In a lot of western indigenous societies they viewed water as the source of all value. Without water the soil doesn't produce, but the opposite isn't true because fishing exists.
You can own land. You can claim to own a plot of sea but the sea moves, and your boat will move on the sea, where a house on land will stay put on your plot. Land ownership is easier to justify and enforce.
@@robinpage2730 I think that last part is the most important. That is, it's easier to "own" land because it's easier to enforce that ownership. If colonists could've found a way to feasibly claim plots of ocean then I'm certain they would have (and would've also created theories to justify that ownership).
One of my majors in philosophy and something I appreciate a lot is how you put concepts into context and hold them in a “neutral” space -a space where you can investigate and interrogate different models. You’re not internalizing it. I’ve seen a lot of people stumble across different theories of ethics and then just…identify with it? It’s like no guys, our objective is to identify the argument and see it’s weak points, see how it would be applied, etc. You get a lot better at spotting straight up trash and what’s worth interrogating a bit more. I think this blindness is driven by this concept of finding “THE ONE OBJECTIVE TRUTH.” Not to mention how alluring that is.
I do consider how truly possible it is to actually evaluate something from a "neutral" stance? Evaluating the usefulness of models and ideas requires determining their results. That's the problem! People evaluate for a specific purpose. There is a goal in mind, and different peoole have different goals. WHY are you evaluating ideologies? For what purpose? That purpose will always be subjective. If I wanted to determine an economic ideology solely based on the merits of wealth creation for my buddies and I, I'd choose capitalism, or perhaps a feudal system. Someone who desired freedom and liberation for all people and not just their clan, may arrive at communism, or socialism, or a library economy, etc. Do you see the problem? "Neutral" doesn't exist. There's always a purpose. Always an angle. Recognizing the futility of objectivity is of critical importance. We all want "the best". What that means is different for just about everyone.
Economic value is sweet nothings we whisper into our own ears as to not face the reality the the economy is a social phenomenon that really doesn’t make sense to treat as a hard science.
We Economists are STEMlords that realized that human society isn’t bound by the laws of the natural world and so tried to apply math to it through every more contrived means
@@jodinha4225 well if johnny has 4 vaguely defined unquantifiable phenomena and jane takes 6 of them, he has a clear deficit of two, thus proving that skeptical philisophical ramblings about commerce can be a hard science. I love economics!
@@robtye3333 Your 3rd paragraph makes no sense to me and the 4th appears to have nothing to do with anything else in this thread and is contradicted by the video. Perhaps you were paying insufficient attention.
Love supporting this channel. With so many news stories about inflation and our current economic situation this video couldn't come at a better time. If you have any questions about Ground News and how it works, feel free to drop them in the comments and our team will respond.
@@noneofyourbusiness4133 Good question. Ground News was founded by former NASA engineer, Harleen Kaur, and former biotech engineer, Sukh Singh. It was really started as a way to address their own challenges navigating news. It was inspired by a simple question - why do I have to have 10 tabs open in my browser to feel like I'm getting a well rounded view of current events? They built a product to make comparing news sources easier and wanted to add some data-driven analysis for of those sources including bias ratings, factuality ratings and ownership information. We are funded by a few independent investors with no ties to corporate media, big tech, or government affiliations. We are also funded by our subscribers. We do not sell any advertising on our platform.
I did a trial of Ground News. I really enjoyed seeing when a news story was ignored by one side of the political spectrum. How do you handle ideological drift of news sources over time? For example, CNN has been bought by a Trump fan who wants the editorial style to become more like Fox News. How do you track that change?
@@ground_news can I ask who those independent investigators are? And who develop your app? Since that and website hosting require a certain degree of technical know how.
@@BradyPostma Thanks for checking us out. Really glad you enjoyed the trial. We use 3 third-party news monitoring orgs to determine the bias rating: All Sides, AdFontes and Media Bias/Fact Check. Each have different methodologies you can read about on their website including blind bias surveys, crowd sourcing/community feedback and expert analysis. These evaluations happen on an ongoing basis so you will notice that the bias ratings for publishers will change - especially the major outlets like CNN which are evaluated the most. Hope this helps.
There is a sense in which a lot of theories of value sort of revert back into a kind of existential observation (euphemistically called "opportunity cost"). If we burn up time doing this, that or the other, that's time we will never get back, which is precious to us because we are mortal beings. So "value" often reflects our desire to make the most out of our lives, which also includes this optimization problem of using some of that time to meet material needs so we don't prematurely run out our clock via starvation, dehydration or exposure. Sometimes when I'm feeling particularly esoteric I can't help but feel that the thing humans truly value the most is some sort of cure to uncertainty itself, and why people who claim to see the future (either paranormally or through the secularized astrology of financial speculation) have always wielded such enormous cultural power in human societies. Cool content dude, thank you for sharing.
Interesting point. There's a theory called active inference that argues precisely for this conception of cognition. Our bodies are uncertainty reduction systems.
I think you touched on something in your conclusion without acknowledging it, which is dialectical materialism; it’s the philosophical foundation that Marx based his theories on and personally I believe is a more important concept to understand then the theory of value. If true to this philosophy Marx would change his theory of value given the empirical evidence and would agree with you that his interpretations and theories were a product of his own experiences and the environment in which he existed. I’m not simping for Marx, but any Marxist knows that these insights are not infallible doctrine, but merely guides to present a starting point to build upon. While making predictions, just like any economists, it always needs to be taken with a grain of salt that there are always unknown variables. It’s not physics, it’s sociology. You can’t predict the future.
Ridiculous. Ludicrous even. You haven't the slightest idea of dialectics, or even read Capital. The logic is laid out, and it's not a "product of his time" (Which, by the way, was as much capitalism then as it is capitalism now) but a law of capitalism from the fundamental nature of labor and exchange. You've dismissed him entirely with the same logic any other antimarxist does, which is neither dialectical nor materialist, and say that his ideas are dated. Complete bullshitter you are.
Marx was just a lazy drunk who only survived because of charity fron Engles (or marx was blowing him).he treated wis wife and kids like shit and got the maid pregnant
Fantastic video! I consider myself a Marxist and a Communist. I'm a member of the communist party in my country. I greatly value Marxist and Communist thinkers. One thing I'd like to comment on that isn't the focus of your vide--and so understandably missing--is the Marxist tradition to focus on the class-based nature of our modern capitalist societies, and the disadvantaged position the labouring class is in relative to the owning class (propertied class, ruling class, capitalist class etc.). Marx's focus on the social relations that characterize capitalism has, at least for me, been one of the most insightful aspects of his writing and way of thinking. To me it was really powerful to realize that modern politics, despite it's simplistic presentation, is more than one party wanting less government and another wanting more, or one wanting less taxes and one wanting more taxes, or one wanting more guns and another wanting greater regulation of guns, etc., especially considering when both parties are greatly entangled with, socialized by, and materially aligned with the same upper class, despite sometimes representing seemingly contradictory or opposed goals. This is the aspect that has kept me reading Marxian literature and trying to learn from it. I read Capital volume one when I was in university, and it was really intriguing to me. It did, as you mentioned in your video, feel like I was discovering some hidden secret wrt the LTV lol, however, as I read more literature, it became something I realized required far more investigation and a greater understanding on my part and is something I sort of put on the back burner for a while. Now, after having read more, I'm returning to learn about it and have started rereading Capital and plan to read the other two volumes. This was a really great video and definitely serves as a great starting point. Thank for your work, you make excellent videos!
I agree, just because something isn't THE truth doesn't mean there isn't truth in it. Marx is notable for explaining aspects of capitalist society that other economists rarely mention or purposely deny (class struggle, gender roles, imperialism, etc). The formal mathematical equations he came up with are frankly less important than his politics and philosophy, which I fear some people will dismiss because because the former aren't rigorous.
@@nathandrake5544 it's absolutely wild the sheer damage done, in part, by that delusion. Nearly the entire anglosphere is basically on the brink of self-inflicted political collapse
The speakers at the concert example can be explained by the fact that someone had to build the speakers, and someone had to rig them up for the concert. The extra value came from those workers. Just because the value is delivered after the workers have done their work, and not during, doesn't mean it doesn't exist. This is similar to a worker making a chair from wood. The value delivered by the chair is over a long period of time, but it still comes from the worker.
Yeah, I'm struggling to understand UE's point here. Even if the speakers weren't the product of any human labor (they just magically appeared before the concert), and the concert is qualitatively improved or tickets are valued more, the speakers aren't getting paid for their contribution, the organizers are. Conversely, if the concert gets rained out and everyone demands a refund, are the organizers supposed to demand compensation from the storm for its "anti"-labor, or is the revenue simply lost? What if the speakers materialized in a field where there was no concert? Sure, if a concert was held there, the speakers would improve it, but a bunch of speakers sitting in a field cannot in and of themselves organize a concert or sell tickets. A gold nugget in a riverbed is worthless until a human finds it and brings it to market. Natural resources can only modify the efficiency of labor, because natural resources cannot interact with the market independently of human labor. If somebody really thinks speakers at a concert that were installed by technicians, assembled by factory workers and transported by truck or train produce value independently of all the human labor that went into their production, then please explain why a pile of rare-earth sands, oil, and iron ore dumped on stage isn't just as good at playing music as a speaker, and what the point of "jobs" or "human activity" is, since the raw materials which comprise a speaker are present in nature regardless of what we do.
Yes but the speakers may well provide more value than what was put into them by labor. A pair of mass-produced speakers might need, say, 10 hours of labor time to produce and set up. But seeing as they can be used over and over again, and provide hundreds of people that listening experience every single time, it may well be the case that they produce more than 10 hours worth of value for the audience(s). The contention that Marx makes is not that capital doesn't add value, but that it doesn't add value beyond its cost of purchase.
@@ethanj5152 Yes, the owner of the speakers needs a band in order to have a concert. But that goes both ways: the band is going to want speakers in order to have a concert. They could purchase the speakers themselves, or try to have a concert without speakers, or they could chose to partner with someone who owns speakers and accept that the "speaker owner" is going to take a cut. The key phrase in this last paragraph is "beyond all the human labor that went into their production." Of course, a pile of all the raw materials that make-up a speaker would not add value to a concert. But the question is whether or not the value of the labor that was put into the speakers by laborers is always equivalent to the value that those speakers add to the concert. In the case of speakers, it might not be clear. Given that a band could hypothetically host a concert without speakers, and speakers presumably require a lot of 'socially necessary labor time' to create, it could be the case that their value add is equivalent to the labor required to create them. But in other cases- say a plumber using a basic tool like a wrench, it seems clear that the wrench is providing significantly more value than the labor that went into making that wrench. Especially given that the plumber could do exactly zero plumbing without the wrench, that wrenches require relatively little labor to create, and that wrenches last practically forever. This gets even more complicated when considering automation. A self-driving truck for example could hypothetically produce unlimited value all on its own, or at least more than the labor required to create it.
@@derpmansderpyskin Yes, it was a huge assumption by Marx, but certainly what doesn’t describe him is methodological laziness. He wasn’t interested with just surplus value, he was and later economists as well were interested in the “Constant” value of capital, which in their theory was assumed not to be arbitrary, but as a discounted against future value. And the size of this value was determined through its use value as means production being operated for a certain amount of time. If this value expressed as costs was calculated correctly by evaluating its perceived future productivity, than it wouldn’t add “new” value The limitation is though that it was assumed these costs weren’t only possible to calculate correctly, but they’re correct at all times at least as an aggregate in the economy as a whole. Hmmm, this requires a robust theory of interest rates which wasn’t really present at the Marx’s time. So, we’re back at square one
@@kosatochca This is the part I don't think I understand: If labor is the source of all value, how can the value of capital be determined by 'perceived future productivity'? Shouldn't the cost of everything be a function of socially necessary labor time?
33:10 Marx explains this in Capital: Labor created the speakers. Any piece of capital, when you break it down, is created by labor--all the way down to the moment the raw materials were extracted through labor.
He asked why the speakers cant produce surplus value. Here's an interesting thought experiement: Do tools save more labor than they cost? If so are they worth more (in $ or hours) than they cost to make (in $ or hours). If so, then it's pretty reasonable to say they produce surplus value. If you say instead, no they reduce the socially necessary labor time, you have to make an argument as to why a society wide reduction in hours is not "worth" anything, and how it is not equivalent, having been measured in the same units (labor hours) to that same amount of labor, thus being surplus labor, thus being surplus value.
35:43 it is very different. Marx, throughout Capital assumes that equivalents are exchanged (he makes the point that of course, equivalents are not always exchanged like in the apple corn example but then, no value is created since the apple seller is losing while the corn seller is winning). This means that when the Labour power of the worker is exchanged for the ‘means of subsistence’ equivalents are exchanged. The crucial point for Marx is that Labour power has a special USE value which is that it can add more value then it possesses (clear in his articulation of the two fold character of value). Last point, for Marx, value cannot be created in the sphere of exchange but only in the sphere of production where Labour power is consumed. This is also why the apple corn example is stupid because of course merchants, by selling cheap and buying dear make a profit but no value is created because either the merchant pays under value or sells over value so equivalents are not exchanged.
As long as you believe in competition, then everything must be paid it's value - because all profit goes to zero. If you don't believe in competition, then you can explain exploitation on monopoly power, and not have to worry about Marx at all.
@@shane_rm1025 They(industrial capitalists) sell their commodities cheaper to the merchant capitalists, the merchants then sell them at the "actual" value. They(merchant capitalists) take a cut of the total surplus-value created.
Labour does have a unique roll in the Marxist LTV, as its use value to capitalists is the value it creates, while its exchange value is just equal to the amount required for its reproduction. It's not clear to me that certain forms of capital cannot be thought of in a similar way. For example, you could think about the maintenance and upkeep of a machine or a building as their reproduction value while they generate value for capitalists in excess of this. Admittedly this logic is less applicable to apples but that was just an illustrative example, to my mind you can also have a model where apples generate more value than they are paid for by capitalists, which would just produce an alternative model to the LTV. Capitalism is after all based on capitalists harnessing things (land, capital, nature) to profitable ends. Keen (1993) goes into more detail on capital producing surplus value. In any case, what I was trying to get at is that no matter the justification for the unique role of labour, it is an assumption. I'm not saying Marx's theory is incoherent but I outright reject that any economic theory can be based on irrefutable logic. Austrians, mainstreamers, and MMTers do this all the time and it sucks. Theories are facts about the world which need to be explained, if the LTV is true then we need evidence for it (hence the subsequent sections). If it's not 'science' in the traditional sense then that's another conversation which I am more than willing to entertain.
Hey, as a reader of Capital vol 1 & 2 (and currently 3…) I really enjoyed this video and I agree with your overall point. I could nitpick a few of the examples you brought up-although not being an economist I'm assuming that I misunderstood them (for instance from what I remember of Marx, the dear/beaver hunting example doesn't quite work, as I don't think you're supposed to just assume value happens from pure labour: it is a meeting of tools, their degradation, human effort, previous production, etc. so pure hours of hunting are actually not equivalent to other pure hours. Similarly the apple/corn example is pre-capitalist exchange C-M-C, not capitalist M-C-M, and let alone M-C…P…C'-M') I guess a question I'd like to ask you is: why do you think price is a better, more tangible metrics than value (which, mind, I agree is ethereal as a concept)? Beyond the fact that you pay for things with it, one could point out the myriad of ways the prices of products and services shift drastically, are decided by companies for various reasons (at a loss for Amazon Fire reader in order to flood the market), or maybe I should have paid £15.95 for something but got away with only paying £15.50 because of my lack of change, or the fact that I exchange products with friends and family all the time without carefully caring about the price of things, etc. And that's without pointing out the historical precedents of a handful of nails to pay for something (very widespread in Great Britain in the XIXth century), or other ways to evoke the value of a purchased product rather than a specific currency price. And I agree those examples are not all rock solid as a systemic analysis, but I believe they are of the level of the dear/beaver and apple/corn arguments. From my limited understanding, there's actually a great deal of metaphysical mysticism around price, and I feel your bias in its favour might come from the fact that it feels really tangible for an economist like you (not a dig I swear :D), and econometrics tools for instance? Is there something I'm fundamentally missing?
Thanks for your comment, even if I'm only checking now. I don't think price is the correct metric for value FWIW, I was just going over how much trouble the LTV has predicting observables like price and output in a 'scientific' way. This may not be your only aim! Using abstract labour or even something else (like utils) may be a good way to approach the issue historically and philosophically. I'm just not sure about the statistical exercises 'proving' the labour theory of value. I also think the issue you raise at the start, which as I understand it relates to adjusted labour time or socially necessary labour time, is a valid critique of that example but also raises some big issues about circularity, since it's hard to define adjusted labour without reference to that which is being explained: surplus, output, price, etc.
@55:00 I read that whole section in Marx as him saying that those "counterveiling tendencies" must exist, because otherwise the theoretically deduced tendency would have to hold true even in the short term. So the use of the theory is to explain that and how capitalists have to escape the tendency of the rate of profit to fall, and that they would face crisis if they fail to do so. Edit: Oh yeah I see, you were getting there. :D Great video by the way, thanks for that. I had a chuckle at you mentioning Ricardo.
1:07:00 I'm not through with the whole video but I would argue, the speakers give surplus value by proxy of the labor that brought them there. Someone had to design them, think of them as a good way to amplify the music, mine the materials, create them and then move them to a place coordinated with other who organized the gig. I'd argue, you never pay for things and things don't inherently have value on their own, but you pay for the time every person proportionally put into the thing you are buying from its creation and all the creation of all of its parts to the point in time, you are buying it.
Exactly, within the framework of IVT a speaker gives value through the crystallized labour time that went into it. What UE is saying is that the framework itself is flawed because it’s attempting to draw conclusions about its own assumptions: namely that labour is the only thing that creates value. Once you assume that labour is the only thing that creates value you’re forced into bending over backwards to explain concepts like crystallized labour (which has many issues) and the transformation problem.
The socially neccessary labor cost of producing speakers doesn't seem to be related to the additional value which can be obtained by using them in the concert, so it's not clear why the value of constant capital should be accounted for in this way
@@threepoundsofflax8438 How much extra value do the speakers provide to your concert when they're in the venue storage? There is also the obvious answer, which is that they do not provide constant value. Setting up a speaker at a venue adds value, but once it's set up it becomes the norm. Eventually, the value of the speaker (reflected in price to go to the venue) will fall relative to inflation unless more labor is performed.
Whenever I try and read modern economists, I get flashbacks from my days in a philosophy department -- i.e. there's a lot of talking around certain key concepts, accompanied by rhetorical claims of their own technical rigor and clarity, implying anyone who doesn't understand the muddled conversation just isn't smart enough to get these complicated subjects. It took me years to figure out how mundane many of these supposedly difficult topics were. Anyway, I'm grateful to you for explaining the marginal theory of value in a manner which only someone who has suffered through the field's hazing process can.
Participating in philosophy conversation with philosophers can actually be bad for a layman's health. You could very well roll your eyes so hard you damage an optic nerve.
A lot to take in on one watch, but this treatment of the subject is what I've been waiting for. Will definitely return and go through this more slowly.
1:05:30 Yes! While the voice-over style is definitely easier, the in-person stuff is much easier to follow, at least for me. The drop in audio quality, while noticable, was well worth it and didn't significantly degrade the quality of the video.
Price doesn't equal labor even in your simplified deer-beaver example. It depends on the demand for deer and beavers, because if beavers were far more sought-after than deer, they could command a higher price even if less labor was required to hunt them. That's why Marx was careful to specify "socially-necessary labor-time." If there's no demand for something, it doesn't have value no matter how much labor is used to produce it. If the quantity produced exceeds the market demand, then some of the labor used to create the excess is wasted (i. e. it fails to create value).
But wouldn't people just make more beaver then, which would drop the prices again or increase the labour amount as the beaver raw material becomes rarer and takes more work to obtain?
The other thing that is completely missing is risk. If every time you hunt deer you have 1/100 chance to die - it may become A LOT more expensive. If it took 10 years to learn to hunt deer it may cost a lot more.
Having been burning down my brain over a PhD thesis (inter alia) trying to understand value, I have to say I really enjoyed your video. My conclusion, for what is worth, is quite similar with yours: Questions of value are worth exploring for their own sake. They force us to generate powerful stories, from which we can learn more about the world we live in, what we may have got wrong, and, potentially, how we can transcend to a better one. Essentially all theories of value are normative and elemental in shaping the assumptions upon which our decisions are based on all levels. Also, along the lines of your conclusion, I'm currently planning the next steps of my research work around the relationship between value and the systematic understanding of social needs, as it's impossible to understand the one without the other. A great inspiration to me has been D. Graeber's Anthropological theory of value and R. Heilbroner's essay on the Problem of value in the constitution of economic thought - both highly recommended in case you haven't delved into them. Also, for leftist thought there is great virtue in the so-called "alternative reading" of the marxian theory of value, deriving from the famous interpretations of I.I. Rubin's essays - which most orthodox marxists don't take into account (F.H. Pitts has done a great job describing it in his recent book simply called "Value"). It is of course impossible to cover the entirety of thought on value (which in most times was not the task of any field alone), so the above are mere recommendations from my personal journey on value rather than critique of your overall very educating and enjoyable video. In case you have still room for further theoretical discussions on value, you may also check out my humble contribution to the topic here - definitely less enjoyable than a video essay: www.thecommonsjournal.org/articles/10.5334/ijc.1153. My research is situated within the broader field of the governance and the commons, so my proposition on value is based on that.
Since you've done a PhD on it... Do you think that a good definition of "value" is even possible? If the search itself is what has provided utility, rather than actually providing an answer, then why that particular goal of explaining "value"?
@@Multihuntr0 Hi Brandon. As mentioned in my comment, questions on value are worth exploring for their own sake. It is a heuristic and hermeneutical framework that helps us understand and challenge our assumptions that define our world and how it functions. So, an all-encompassing definition on value that works for every society and all times cannot exist, and is also, arguably, dangerous. But this does not mean that a *good* definition of value is impossible. The question is, rather, good for whom?
I'm soooo glad this video exists and that I've watched it. It's very informative, and actually often when hearing about labour theory of value I was asking myself how does it hold up under some scrutiny. Thank you a lot for your work!
Unlearning, your early videos may not have been particularly valuable in monetary terms or had much of an effect on GDP, but they were infinitely valuable within the ony market that matters - the marketplace of ideas 💰💰💰
Finally, new edited content, and on a very interesting topic. I will have to wait until the weekend to watch this due to time constraints, but I'm really looking forward to it.
This was a fantastic video, and incredibly helpful. For anyone who wants a more anthropological angle to similar notions of labour and value, I'd highly recommend "Work: A Deep History, from the Stone Age to the Age of Robots" by James Suzman. One caveat is that he falls back on some linear progression/evolutionary narratives that modern anthropology has sort of left behind. However the book is, in general, fantastic.
I don't understand the concert example. Sure, the speakers generated surplus value but...a worker had to carry those speakers to the stage. Another worker had to build those speakers, and another worker had to design those speakers. And they only work with electricity, which comes from...you get the idea. So it's no different than an automatic machine doing the job of a labourer - it produces value, but ONLY when labour is put into it.
The point is that it produces surplus value. The machine or speakers don't just transfer parts of their own value to the product (as marx thought), thereby depreciating in value themselves, but add value above this and so bring a return on investment (profit) just from the machine itself. In other words, in principle, a capitalist could deploy machines that do not require labor input, and still turn a profit. This is something marx denied.
@@kvaka009 " In other words, in principle, a capitalist could deploy machines that do not require labor input" This isn't possible though, and you cannot point to any examples of it happening. Even if we're talking about some kind of 'ideal machine', it would still require electricity, which basically means it doesn't produce value unless attached to a long wire that has a worker on the other end of it.
@@DeoMachina hence the, "in principle" bit. The point is that it is theoretically possible, which contradicts marx. The main point is that the production process can in principle yield a profit even without labor input since constant capital adds surplus value in excess of the costs of production.
@@DeoMachina why isn't it theoretically possible? Watch the matrix if you need an imagination boost. The point is that it's a useful thought experiment to test LTV. If you'd like a better explanation of this important point, look up Stephen Keen. He's an amazing economist. There's a clip of him explaining the point somewhere.
54:56 I would suggest Anwar Shaikh on the rate of profit. He is econometrically extremely careful and his results are quite striking. I do find it strange that you omit mention of the fact that Smith and Ricardo also believed in the fall in the rate of profit.
After rewatching this video for the 3rd time, i have to tell you how much it expanded my view of economics. I studied social sciences and had many economics classes but none of them focused on theories of value. Only after watching this video i understood many of the theories i studied in university. I think it should have more views because so many debates about economic theory are happening without having this basic understanding of what produces value. Anyway, keep going and i hope you have a great year ahead!
On the falling rate of profit: it seems weird to me that barely anyone seems to suggest the idea that the reason suppressed wages would cause the rate of profit to go down is because workers are both producers *and* consumers in an economy. Workers *need* their wages to buy the products and services that their collective labor produces, and without sufficient wages companies can't maintain or increase their sales. That seems like such an obvious solution to the puzzle, and even allows room for factors like credit disturbing the relationship between these factors. I stumbled onto this consideration when trying to figure out why robots would be different from human workers in terms of creating value, and the answer is simply that none of their costs are externalized (maintenance and power use are completely factored in) whereas workers have political power through collective structures (note: slaves and robots are identical in this regard; all their costs are factored into the production process). Workers take their wages into the wider economy, and the capitalist can't factor in how much *demand* that wider economy will generate for their goods and/or services. In short, if workers can't afford to buy what they produce, capitalists don't have demand for their supply. Hence, rates of profit fall as wages do; barring extenuating circumstances such as the introduction of more debt into the system, the breaching of new resources (to drive down costs) or high-impact innovations that increase productivity and offset the downturn. That's my suspicion on the issue anyway; what do you think?
The debt point is a very interesting one. Offsetting a loss of wages with consumption via debt accrual is a clearly identifiable historical trend in developed countries. Correlating a rising debt with a stagnation or rise in the rate of profit would seem to me to be a fairly good indicator.
The falling rate of profit comes from the continuous increase in investment into capital for production! The rate of profit tends to increase in economic crisis, since workers are even more exploited during these times.
I'd very much like to put another comment just to remind you that I highly appreciate your moderate, skeptical, concise, and well researched videos. I learn a lot, efficiently, and with sources.
@Unlearning Economics. Great video as always. One comment regarding the concept of abstract labor: not that I think this will make Marx's arguments for the LTV more empirically testable relative to the transformation problem, but you didn't really mention that for Marx, the theory relies on what he calls 'abstract homogenous labor,' not the concrete labor of individuals. (This is related to but NOT identical with the concept of socially necessary labor-time). If we take this notion on board, it's not surprising that value can't be correlated with price on an individual level. You might see this as another checkmark against the theory, but as it's pretty crucial for his argument overall, I am surprised you didn't address it. Any thoughts? Lastly, a theory having non-empirically testable metaphysical suppositions does not, automatically, make it unscientific. (Not that you suggested this specifically, but I think your video could be misconstrued). You cannot empirically test the assumption of the causal closure of physical systems is statistical mechanics--but it is required to derive entropy as a measure in those systems. In many cases (in fact in most, if not all finite empirically real cases) that closure is demonstrably false, but thermodynamics is none the worse for it. By comparison, it would be a mistake to look for entropy in the movements of individual particles--you could never find it there--just as it may be a mistake to look for 'value' in the concrete labor-expenditure of individuals. What the ensemble behavior of a system of particles is to the one, social form may be to the other. Of course, in the case of the thermodynamics, we know the precise mechanism by which the microphysical dynamical laws aggregate into macrophysical properties of systems. In the case of value, the system seems to be much more complex, and it's not even clear that the same kind of reduction should be expected, because we are not yet sure whether value is even a completely coherent notion. Thanks!
Thanks for your comment. There are definitely some key distinctions to tease out that just weren't suited to the format. I recall Bertell Ollman using the concept of abstract labour quite effectively in his book on alienation - alienation being a Marxist concept I regard as crucial. One of my pet peeves with economics of all types is that unlike natural science, units aren't often well-defined. So it's true that entropy is a metaphysical concept but it does have units which pop out of the equations, whereas the abstractions in economics tend to be starting points. OTOH, if you just view LTV as a lens that gives us some insight into capitalism...I do not disagree. There are just other lenses, whether alternative or complementary.
I think "theories" of value should instead be called "interpretations", just like the varied and untestable interpretations of quantum mechanics. The divide between Marxian and subjectivist versions what "value" is, reminds me a lot of the divide between the Copenhagen, Bohm, and Many-worlds versions of what QM "really means".
@@TheShadowOfMars sorry, but wanted to add a perspective as a healthcare worker. We also have these kind of concepts, called lenses/perspectives/focus. They are usually not explicitly stated, but are a core influence of both clinical practice, public health, and related policies. I can't prove what health and disease are, i can declare what i view them as and then that will change my understanding of the world and practice. Its just a model Its not an absolut truth
I will always maintain that cleaners are the most important workers of most companies. If the CEO is gone for a month, things might pile up that are big and important, sure. But if the cleaners don't work for a week, a building becomes unlivable and nobody will be able to work anymore. There's so much nuance to any of these things. Thanks for making this video.
I feel like IT (as much as I hate IT guys) are probably more integral to the running of the company as cleanliness isn't an immediate issue and long term could be kept as a very minimal issue if the workers just clean the space they use, whereas most workers don't have the expertise to fix things when their computer system breaks down or they have a cyber security issue. But this is mainly because most companies nowadays rely so heavily on technology for most people's jobs, and this would affect some companies much more than others. For example cleaners are more important in a hospital than an office because the goals of the hospital require the cleanliness of the environment in a way that most workplaces don't. Although in a hospital I'd say the nursing staff are the most integral because they make up a large proportion of the work force and their duties are integral to the hospital running.
@@manolisiatrou5537 In this case, the effectiveness of value/surplus value. He justifies in the first chapter why he doesn't operate with exchange value again until the third book
@@yPGzRicardo yeah but are we gonna ignore how marx,qmong many others,completely glosses over the fact that value can absolutely be generated by machinery?
I don't feel like you addressed the labour theory of value very well in this video, because fundamentally the theory is about what prices are doing. You also said that people make decisions based on nominal prices, but that's not really true is it? It's about the relationship between nominal prices, their wealth, and their income - the price of their labour, income from investments, etc. You also shifted out of the SNLT framing you introduced from Marx when you started explaining the transformation problem. Marx's SNLT framing of the LTV captures some very interesting intuitions about what people are trying to do when making purchasing decisions and pricing goods. Firstly, if you can get the same thing via less work on your own part, that's the option you're going to choose: price directly affect how much job work we have to do at the work job in order to get something we want from the market. Secondly, everything enters the economic system via someone doing something. This includes capital. This is why the "do the loudspeakers create value??????? I don't know???" objection is so obnoxious. The loudspeakers are just human economic activity people made them in a factory. Yes, they do make things possible that would not be possible without speakers, that's why people bought them. I'm not saying that the LTV is 100% factmaxxed science excellence here, but just that I don't think you engaged what most leftcoms and people with a really specific enjoyment of capital vol 1 believe about value creation in capitalist economies, so it wasn't a persuasive presentation of the ideas. Furthermore, the alternative of accepting marginalism or abandoning theories of value all together is unappetising from a political standpoint. From the perspective of raw economic science, I can see why a post-keynesian focus on just price makes sense, but to say that the question of "who does all the work around here?" or the question of "what is this economy thing really organising" is impenetrable and unanswerable and it could have well just been the loudspeakers themselves that are responsible for the concert is like saying that the pots cooked my lunch and my lunch did my work, using me as a tool. Businesses are never so agnostic about how value is created in their internal processes. They have their own theories of value, some self-serving by justification of inequality, and some more for decision making, but you're not going to find many business people who tell you that they don't know where value comes from in their operations, it's an illusion and all that exists is price and here's why - people value things. Theories of value under capitalism and therefore about how the dominant mode of production affects what we value. Next time you go visit your mum and have dinner, you're not going to give your mum a bottle of dishwashing liquid and a sponge and say that she should wash the dishes now becauseit is unclear whether the value is in part created by the capital itself and you funded the capital. Here is what I think the debate is about: is the price paid for a good or service a function of the labour that went into producing it and the materials and capital used to make it. The transformation problem argument seems like a kind of mathematical strawman of the theory as a whole where we get various political economists who did a maths weird and bully them for making a maths goof like "haha if you add it it doesn't work you dingus" but if you actually go to a company and you look at their cost breakdowns, number of hours worked on the job is quoted as a substantial cost, and their suppliers will cost the materials, machines etc in a similar way. Maybe rents are the biggest factor that isn't just pure labour and that's where the disagreement actually happens: if the relative price renting a building goes up because the surrounding area was improved relative to other areas, do we attribute that price increase to the labour done to improve the surrounding area? I think that the answer is yes, but it's clearly a matter of opinion. However, these kinds of matters of opinion can be supported and disputed by facts and analysis and I believe that they should be taken seriously because the material consequences of who we as a society has the right to what are immense.
I wouldn't admit this to any of my family or friends, but I find your series fascinating. My fascination maybe because I don't know shit about economics so there is not a lot I need to "unlearn," and I recognise the value of challenging accepted or established thought on any given subject. My fields of study are urban planning and urban design and I would dearly love to see a series titled "Unlearning Urban Planning" or "Unlearning Urban Design." Both subjects are rife with commonly accepted fallacies, misconceptions and pointless assertions based on useless data or speculation. As an urban planner I question our ability to make urban land more productive in a way that is increasingly efficient, and as an urban designer I question our ability to interface with the urban environment and the natural environment so that we mortals are more productive and more efficient. This means I might have a greater interest in the subject of economics than I would like to admit. Thank you for your efforts on my behalf.
The idea that services don't create value is laughable. Imagine believing there is no value in the transportation of goods. Imagine believing that there is no value in saving someone's time. Imagine believing that there is no value in teaching meaningful skills to someone.
Yeah that'd be really silly... Which is why Marx had a whole section in capital talking about it 😑 I swtg 90% of anti Marxism is just people who don't know what they're talking about inventing an imaginary idiot Marx in their head
Thanks for the video! The animations do help to follow the arguments. Hope that, for balance, the next one will uphold the immortal science of marxism-leninism… Jokes aside, I'm always surprised by the severity with which we read Marx, a special treatment which seems reserved for him alone. As you said, Adam Smith defending the labour theory of value has never stopped libertarians from reading him (well, quoting him, mostly) and I don't see people going back to his theories with the intent to show how the falsity of the LTV undermines every paragraph of his economic writings. Mill has earned his place in the Hall of Fame of Liberalism, his inept economic theories are never held against him. Most people blabbering on about "Pareto efficiency" have not read even two pages from his Cours d'économie politique, and so on and so forth for every other theorician -- absolute coherence is hardly the first priority, in mainstream economics or in their critics, when looking for insights in the theoricians of the past. It might be argued it happens in response to marxists defending his system as a rigourous chain of scientific reasoning, but he is hardly the only economist, even in this video, having claimed that. (As a gesture of peace towards the wicked marginalists, I have to say on their behalf: you do not present them in the fairest way either! An interesting angle if you come back to them in a future video would be the fact that even though most of them have built their systems as an explicit attack against socialist doctrines [trying to save the conclusions of classical economics while destroying their foundations from which marxism had been built, including the LTV] their calculations ironically work even best when optimizing state monopolies, think the french electric grid after Marcel Boiteux, or how it echoes the positions of Kantorovitch or Novojilov in heated soviet debates about the remuneration of capital...) 42:55 The fact that capitalists do not use a marxist analysis in their understanding of value, is, if not a moot point, one that cannot really take a marxist by surprise, as it is part of Marx's critique of capitalism : the capitalists do not know what they are doing, nor their true place in the system. As they rely on false notions of how profit is extracted they make decisions that benefit them in the short run but harm the capitalist class as a whole on the long term. (classical case being an individual capitalist investing in heavier machinery, increasing its share of fixed capital and lowering the rate of profit, as investment have to increase to follow, which then generalize in the field, squeezing the rate of profit as a whole) See when he writes things like "The individual capitalist may imagine (and for his accounts it serves as well) that […] but […]" like here in the Grundrisse www.marxists.org/archive/marx/works/1857/grundrisse/ch07.htm Since before that you quoted David Ellerman criticizing the tendency of Marx and Marxists to "unveil", "reveal", the true nature of things (33:56) which veers away from empirical analysis, adding then Steedman arguing that his theories are bad (because the true criteria of truth is echoing the models capitalists use to guide their actions) doesn't really feel like a gotcha, but rather a bit like complaining both that the food is awful and that the rations are too small. Marx tries to go beyond common capitalist discourse, it's one thing to say he failed, it's another to imply it shouldn't even be tried by putting these quotes back to back. (your conclusion goes against such implication as well) In any case, we're only scratching the surface here, there would be other ways of defending the LTV on the transformation problem, but most people do not want to read book III from the Capital, and in a way, I agree that there are probably better uses of your time than proving by the powers of quantic dialectical materialism that actually Marx was right. (even when Marx IS right, how does it matter? Will you really convince anybody with your 2000 pages discussion proving the LTV? Saying Marx was wrong is more demobilizing than proving him right is mobilizing.) 54:12 Yes instead of squinting at MARXISTS graphs let's squint at FRED graphs, that's how you know we're in science territory. 1:03:39 "Having an eye for the fact that labour has less bargaining power; that there are monopolies and those things are bad; that crises happen and that there is an environmental crisis - none of these things require you to buy into the labour theory of value." Somewhat, I agree, but don't you undermine the point of your channel? This point could be extended to any and all economic theories, research papers or wikipedia pages you have discussed previously, I don't need any of them to vaguely know monopoly bad, labour power crushed, crises happen and climate change.
I agree that "Saying Marx was wrong is more demobilizing than proving him right is movilizing" though that can be said for any academic discussion, I think. Anti-intellectualism looks like is a thing, even if in this video is shown as a joke. (edit for grammar)
"Saying Marx was wrong is more demobilizing than proving him right is mobilizing." Exactly, it's like, why even do this? He disproves Paul Cockshott's graph and then doesn't go into whether any actual good research has been done into it. He zooms in on a graph to show that at the end of the 19th century the rate of profit was not falling; very similar arguments that climate change denialists use. And his conclusion is also very wrong. Yes, everyone knows monopolies are bad, but because of these theories we have an idea of what to do about it. Without it you can just advocate for nicer capitalism like a liberal. Or maybe less government regulations will actually solve it, like the libertarians say. And his ad shows a website which puts right-wing news on equal footing with left-wing news "to cover your blind spots". What is his goal here? I have the feeling he is not trying to unlearn any of the bourgeois economics he has learned.
Reading about LtV it was always obvious to me that it was model specifically about class dynamics. It was a model seeking to explain how a class forced to sell its labor for subsistence and one which can seek rent on capital accumulated primitively. It never seeked to describe the inherent value in something, there are just too many variables to account for. Even a coat loses value in your eyes the more coats you own and the same goes for money. 60 bucks for a worker is a lot but for a billionaire it's nothing. I agree with the sentiment that people have tried to extrapolate too much out of the LtV
Smith and Marx address this in their contrast of price, value in exchange, and value. One is of course free to disagree, but the critique has never made sense to me because it seems to assume the labour theory of value is the worst possible explanation extrapolated from a one sentence summary of what it is.
@@Cuthloch same, UEs examples specifically seem unfitting given most were not between employer and employee but two people of equal standing competing against eachother. It misses the point. A better example would be you need to eat atleadt half a deer to survive, the other person owns the full rights to the exploitation of the resources that are deers. They will allow you to hunt one deer per day as long as you give them the other half of the deer. Like the LtV was meant to describe the rent seeking on labor by restricting access to capital. Trying to use it to describe prices is like trying to fry eggs with a toaster to me
Great video. I guess I naively thought that the labour theory of value was about the fact that nothing gets done without labour whereas it's not the case for capital. I didn't realise that value was supposed to predict prices in a similar way that GDP doesn't measure raising children, caring for family, or volunteering in the community. All of which is valuable.
So you're not totally wrong. I'm trudging my way through Capital right now, and Marx does explicitly say that the thing that makes raw materials valuable is the labour that shapes them into something people want (a use-value). Without that labour, raw materials have no use-value, or are at best gifts of nature (like how air is just there to be breathed and water in a lake is just there to be drank, and these things don't TECHNICALLY require labour to breathe/drink). However, where Marx goes with this starting point to convert labour into price is where it gets complicate. Like UE says, it's an interesting framework, but it does rest on moral and metaphysical assumptions that are ultimately very circular...much like basically all theories of value...
Just to add on the important point I missed out: the reason Marx says that is because no one just wants iron by itself. They want a THING made of iron. So the fact that there is iron in the ground is not valuable to anyone. That's hos argument at least.
@@ProfDCoy It ignores that there is value in potential though. That the iron could be used one day is valuable in and of itself, which is why land with iron under it sells for more than land without iron under it.
@@shane_rm1025 you're not wrong, but un fairness to Marx, he wouldn't deny that it's "valuable" in some sense to have a lot of iron around. He just defines "use-value" as something bestowed only by labour. And "use-value" is not quite the same as "valuable". I've probably been very sloppy and outright wrong in explaining his theory, but that's because theories of value are complicated and metaphysical and because I struggle to understand Marx tbh. Reading Marx has been wild and enlightening - he's an incredibly dense thinker, in the most positive meaning of "dense", as in "thoughts per page"- but the density often feels like trying to hold a stream of water in your cupped hands: it's hard to hold onto it all. If Marx lent anything permanent to value theories, it wasn't the labour theory of value, imo, it was his meticulous analysis and critique of the theories that came before him. He basically showed that we have to be very, very, very careful when using words like "value" and "price" interchangeably. And I've probably already fallen into that trap. Tldr: Marx wouldn't have said iron isn't valuable; just that it's not a "use-value" (Would You Like To Know More?).
I loved the video and clarifications so much, very cathartic but also made me think! However, I think you may have missed a few points out of punctuality. I thought I was above leaving big youtube comments, but I think there's a chance you might see this and I really liked the video sooo. In the Marxist tradition, those who were immediately inspired by Marx came out with strong ideological convictions to the labor theory of value put forward by him, which led to several clarifications by Marx. The most famous comes from Gothakritik in his response to the statement that "labor is the source of all wealth": Labor is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labor, which itself is only the manifestation of a force of nature, human labor power. the above phrase is to be found in all children's primers and is correct insofar as it is implied that labor is performed with the appurtenant subjects and instruments... The bourgeois have very good grounds for falsely ascribing supernatural creative power to labor; since precisely from the fact that labor depends on nature it follows that the man who possesses no other property than his labor power must, in all conditions of society and culture, be the slave of other men who have made themselves the owners of the material conditions of labor. He can only work with their permission, hence live only with their permission. I really think it was a let down to miss out on one of the biggest counterfactuals to this so-called "marxist labor theory of value." I'd also like to add a few more points for consideration. You mention that value is just as much about ethics, and is historically transient like ethics is. I think that, in the context of political economy, the point is that, just as individuals can come to a set of operational ethics out of an internal set of logic and assumptions, so may a unique economic organization, sort of like if society as a whole was a brain, where the whole structure of cognition is only given by zooming out from all the neurons to see the forest. For example, in capitalist society, even if it may not be the case absolutely that all value is made from labor (like Marx states above), the logic of capitalists and of the market leads to the system computing wealth in that overall sense. The system as a whole, like AI, may come to intuitions or judgements which are wholely divorced from our individual perceptions or prescriptions of utility. Of course, capitalists in their immediate focus are not concerned in TRPF in terms of value, only profit. That is clear as record dividends are made in the midst of crises. However, the example of a real GDP vs a nominal GDP shows that price can be a facade. Even if GDP increases, productivity (e.g. value) may not increase unless adjusted for accordingly. Value has more to do with what is physically realized, a perceived utility which can constrain or determine the path of the economy, while price just matters to the immediate transaction. Value is a direct window into whether an economy can grow, and has the ability to continue to grow and consume, while price is subject to all the quirks of distribution in the market. We might say, quite reasonably, that attempts to subsidize agriculture (and the limitation of its productivity to preserve a fixed price) in the US is an example of trying to insulate the circuit of capital from the fluctuations of competitive price and halt TRPF, so that it may continue to produce exchange-value even through crisis and prevent the obsolescence of capitalist exchange-value which makes it possible at all for the holders of capital to gain wealth from agriculture in the long-term, notwithstanding even immediate price. I think this also provides insight into how and why neoliberalism became a hegemony. I think its also uncharitable to say that "curtailing forces" makes it unfalsifiable. This is only true insofar as we just leave it at "curtailing forces" but of course Marxists have a list. If the rate of profit grew in the absence of any significant amount of the forces, then that would be falsifying the theory. If someone is just coming up with new excuses, we'll know it. A final thought is that I don't think you indict marxists on this, but I wish you made the situation far clearer: the lack of good samples to test value theories comes from the youthfulness of capitalism and the lack of good data. In situations like these, it is not that the theories of value are proven wrong, but that they can't be directly concluded.
Marx’s Refusal of the Labour Theory of Value David Harvey March 1, 2018 It is widely believed that Marx adapted the labour theory of value from Ricardo as a founding concept for his studies of capital accumulation. Since the labour theory of value has been generally discredited, it is then often authoritatively stated that Marx’s theories are worthless. But nowhere, in fact, did Marx declare his allegiance to the labour theory of value. That theory belonged to Ricardo, who recognized that it was deeply problematic even as he insisted that the question of value was critical to the study of political economy. On the few occasions where Marx comments directly on this matter,1 he refers to “value theory” and not to the labour theory of value. So what, then, was Marx’s distinctive value theory and how does it differ from the labour theory of value? The answer is (as usual) complicated in its details but the lineaments of it can be reconstructed from the structure of the first volume of Capital.2 Marx begins that work with an examination of the surface appearance of use value and exchange value in the material act of commodity exchange and posits the existence of value (an immaterial but objective relation) behind the quantitative aspect of exchange value. This value is initially taken to be a reflection of the social (abstract) labour congealed in commodities (chapter 1). As a regulatory norm in the market place, value can exist, Marx shows, only when and where commodity exchange has become “a normal social act.” This normalization depends upon the existence of private property relations, juridical individuals and perfectly competitive markets (chapter 2). Such a market can only work with the rise of monetary forms (chapter 3) that facilitate and lubricate exchange relations in efficient ways while providing a convenient vehicle for storing value. Money thus enters the picture as a material representation of value. Value cannot exist without its representation. In chapters 4 through 6, Marx shows that it is only in a system where the aim and object of economic activity is commodity production that exchange becomes a necessary as well as a normal social act. It is the circulation of money as capital (chapter 5) that consolidates the conditions for the formation of capital’s distinctive value form as a regulatory norm. But the circulation of capital presupposes the prior existence of wage labour as a commodity that can be bought and sold in the market (chapter 6). How labour became such a commodity before the rise of capitalism is the subject of Part 8 of Capital, which deals with primitive or original accumulation. The concept of capital as a process - as value in motion - based on the purchase of labour power and means of production is inextricably interwoven with the emergence of the value form. A simple but crude analogy for Marx’s argument might be this: the human body depends for its vitality upon the circulation of the blood, which has no being outside of the human body. The two phenomena are mutually constitutive of each other. Value formation likewise cannot be understood outside of the circulation process that houses it. The mutual interdependency within the totality of capital circulation is what matters. In capital’s case, however, the process appears as not only self-reproducing (cyclical) but also self-expanding (the spiral form of accumulation). This is so because the search for profit and surplus value propel the commodity exchanges, which in turn promote and sustain the value form. Value thereby becomes an embedded regulatory norm in the sphere of exchange only under conditions of capital accumulation. While the steps in the argument are complicated, Marx appears to have done little more than synthesize and formalize Ricardo’s labour theory of value by embedding it in the totality of circulation and accumulation as depicted in Figure 1. The sophistication and elegance of the argument have seduced many of Marx’s followers to thinking this was the end of the story. If this was so then much of the criticism launched against Marx’s theory of value would be justified. But this is not the end. It is in fact the beginning. Ricardo’s hope was that the labour theory of value would provide a basis for understanding price formation. It is this hope that subsequent analysis has so ruthlessly and properly crushed. Marx early on understood that this was an impossible hope even as he frequently slipped (I suspects for tactical reasons) from values to prices in his presentations as if they were roughly the same thing. In other instances he studied systematic divergences. In Volume 1 Marx recognizes that things like conscience, honour and uncultivated land can have a price but no value. In Volume 3 of Capital he explores how the equalization of the rate of profit in the market would lead commodities to exchange not at their values but according to so-called “prices of production.” But Marx was not primarily interested in price formation. He has a different agenda. Chapters 7 through 25 of Volume 1 describe in intricate detail the consequences for the labourer of living and working in a world where the law of value, as constituted through the generalization and normalization of exchange in the market place, rules. This is the famous transition, at the end of chapter 6, where Marx invites us to leave the sphere of circulation, “a very Eden of the rights of man” where “alone rule Freedom, Equality, Property and Bentham.’ And so we dive into “the hidden abode of production” where we shall see “not only how capital produces but, how capital is produced.” It is only here, also, that we will see how value forms. The coercive laws of competition in the market force individual capitalists to extend the working day to the utmost, threatening the life and well-being of the labourer in the absence of any restraining force such as legislation to limit the length of the working day (chapter 10). In subsequent chapters, these same coercive laws push capital to pursue technological and organizational innovations, to mobilize and appropriate the labourers’ inherent powers of cooperation and of divisions of labour, to design machinery and systems of factory production, to mobilize the powers of education, knowledge, science and technology, all in the pursuit of relative surplus value. The aggregate effect (chapter 25) is to diminish the status of the labourer, to create an industrial reserve army, to enforce working conditions of abject misery and desperation among the working classes and to condemn much of labour to living under conditions of social reproduction that are miserable in the extreme. This is what Diane Elson, in her seminal article on the subject, refers to as “the value theory of labour.” It is a theory that focuses on the consequences of value operating as a regulatory norm in the market for the experience of labourers condemned by their situation to work for capital. These chapters also explain why Bertell Ollman considers Marx’s value theory to be a theory of the alienation of labour in production rather than a market phenomenon.3 But the productivity and intensity of labour are perpetually changing under pressures of competition in the market (as described in the later chapters of Capital). This means that the formulation of value in the first chapter of Capital is revolutionized by what comes later. Value becomes an unstable and perpetually evolving inner connectivity (an internal or dialectical relation) between value as defined in the realm of circulation in the market and value as constantly being re-defined through revolutions in the realm of production. Earlier in the Grundrisse (pp. 690-711), Marx had even speculated, in a famous “fragment on machines,” that the embedding of human knowledge in fixed capital would dissolve the significance of value altogether unless there were some compelling forces or reasons to restore it.4 In Volume 3 of Capital Marx makes much of the impact of technological changes on values leading to the thesis on the falling rate of profit. The contradictory relation between value as defined in the market and value as reconstructed by transformations in the labour process is central to Marx’s thinking.
The changing productivity of labour is, of course, a key feature in all forms of economic analysis. In Marx’s case, however, it is not the physical labour productivity emphasized in classical and neoclassical political economy that counts. It is labour productivity with respect to surplus value production that matters. This puts the internal relation between the pursuit of relative surplus value (through technological and organizational innovations) and market values at the center of Marx’s value theory. A first cut at Marx’s value theory, I conclude, centers on the constantly shifting and contradictory unity between what is traditionally referred to as the labour theory of value in the sphere of the market (as set out in the first six chapters of Capital) and the value theory of labour in the sphere of production (as analyzed in chapters 7 to 25 of Capital). But the materials presented in chapter 25 of Capital suggest that it is not only the experience in the labour process that is at stake in the value theory. Marx describes the conditions of social reproduction of all those demoted into the industrial reserve army by the operation of the general law of capital accumulation (the subject of chapter 25). He cites official reports concerning public health in rural England (most notably those by a certain Dr Hunter) and other accounts of daily life in Ireland and Belgium, alongside Engels’ account of The Condition of the English Working Class in 1844. The consensus of all these reports was that conditions of social reproduction for this segment of the working class were worse than anything ever heard of under feudalism. Appalling conditions of nutrition, housing, education, overcrowding, gender relations and perpetual displacement were exacerbated by punitive public welfare policies (most notably the Poor Laws in Britain). The distressing fact that nutrition among prisoners in jail was superior to that of the impoverished on the outside is noted (alas, this is still the case in the United States). This opens the path towards an important extension of Marx’s value theory. The consequences of an intensification of capitalist competition in the market (including the search for relative surplus value through technological changes) produce deteriorating conditions of social reproduction for the working classes (or significant segments thereof) if no compensating forces or public policies are put in place to counteract such effects. In the same way that the value theory of labour is foundational for Marx’s approach to value, so “a value theory of social reproduction” emerges as an important focus for study. This is the prospect that Marx opens up in the last sections of chapter 25 of volume 1 of Capital. This is the focus of those Marxist feminists who have worked assiduously over the past forty years to construct an adequate theory of social reproduction.5 Marx (Capital, Volume 1, p.827) cites an official report on the conditions of life of the majority of workers in Belgium who find themselves forced “to live more economically than prisoners” in the jails. Such workers “adopt expedients whose secrets are only known (to them): they reduce their daily rations; they substitute rye bread for wheat; they eat less meat, or even none at all, and the same with butter and condiments; they content themselves with one or two rooms where the family is crammed together, where boys and girls sleep side by side, often on the same mattress; they economize on clothing, washing and decency; they give up the diversions on Sunday; in short they resign themselves to the most painful privations. Once this extreme limit has been reached the least rise in the price of food, the shortest stoppage of work, the slightest illness, increases the worker’s distress and brings him to complete disaster; debts accumulate, credit fails, the most necessary clothes and furniture are pawned, and finally the family asks to be enrolled on the list of paupers.” If this is a typical outcome of the operation of the capitalist law of value accumulation then there is a deep contradiction between deteriorating conditions of social reproduction and capital’s need to perpetually expand the market. As Marx notes in Volume 2 of Capital, the real root of capitalist crises lies in the suppression of wages and the reduction of the mass of the population to the status of penniless paupers. If there is no market there is no value. The contradictions posed from the standpoint of social reproduction theory for values as realized in the market are multiple. If, for example, there are no healthy, educated, disciplined and skilled labourers in the reserve army then it can no longer perform its role. The dialectical relations between competitive market processes, surplus value production and social reproduction emerge as mutually constitutive but deeply contradictory elements of value formation. Such a framework for analysis offers an intriguing way to preserve specificities and differences at the theoretical level of value theory without abandoning the concept of the totality that capital perpetually re-constructs through its practices. Other modifications, extensions and elaborations of the value theory need to be considered. The fraught and contradictory relation between production and realization rests on the fact that value depends on the existence of wants, needs and desires backed by ability to pay in a population of consumers. Such wants, needs and desires are deeply embedded in the world of social reproduction. Without them, as Marx notes in the first chapter of Capital, there is no value. This introduces the idea of “not-value” or “anti-value” into the discussion. It also means that the diminution of wages to almost nothing will be counterproductive to the realization of value and surplus value in the market. Raising wages to ensure “rational consumption” from the standpoint of capital and colonizing everyday life as a field for consumerism are crucial for the value theory. What happens, furthermore, when the presumption of perfect competition gives way to monopoly in general and to the monopolistic competition inherent in the spatial organization of capital circulation poses another set of problems to be resolved within the value framework. I have recently suggested, following on some relevant formulations by Marx, that the usual acceptance of the idea of a single expression of value be replaced by recognizing a variety of distinctive regional value regimes within the global economy. Marx’s value form, I conclude, is not a still and stable fulcrum in capital’s churning world but a constantly changing and unstable metric being pushed hither and thither by the anarchy of market exchange, by revolutionary transformations in technologies and organizational forms, by unfolding practices of social reproduction, and massive transformations in the wants, needs and desires of whole populations expressed through the cultures of everyday life. This is far beyond what Ricardo had in mind and equally far away from that conception of value usually attributed to Marx.
This is nonsense. Marx never explicitly declared his allegiance to the labor theory of value because it was the only theory of value that existed in his time, it would have been superfluous. It was the consensus, you could safely presume any economist at the time, no matter their political leanings, accepted it.
A lot of words for "It doesn't matter that the LTV doesn't hold up to empirical scrutiny because who cares about that anyways? Marxism!" and to that I say: you should care more that your 'scientific' Marxism doesn't respond well to science.
Took me a little bit to get past Sam Smith teaching economics, but humour is once again on point and even the content that I don’t fully comprehend is still thought provoking:)
56:47 The point is that you can predict major crises. They happen when profit hits zero. Ernest Mandel did this in his long wave book, which got a lot of attention when he turned out to be right. Anwar Shaikh also says that he predicted 2008 using this theory. I think predicting the timing of major crises is, well, pretty convincing, although yes there are few data points.
This was so good. I’ve had questions about the labor theory of value for a long time because of the high wealth of people whose sole function seems to be “hype machine” - like elon musk. I wouldn’t say that the value of his companies has anything to do with the value of the products produced, much less with the amount of labor that created it. The amount of vaporware that makes incredible amounts of money before tanking is depressing but also instructive. That’s why i’ve left the realm of objectively verifiable theories of value behind and now subscribe to a “vibes”-based theory of value 😂
"Vibes" is kind of right though - humans have a bizarre ability to create value out of shared belief. That doesn't mean there is no material basis to those beliefs, but if enough people believe a thing it can and does affect our reality.
That's exactly an example of what Marx was predicting though: as more and more production gets automated, new desires have to be awakened in people as sources of profit. Thus, cd's instead of tapes, but thus also advertising and vaporware.
@Christopher Grant The point is that the "duping" as you call it is necessary for the system to function (thus also the blank check from the government for Silicon Valley). As for the cds vs tapes example, if quoted almost verbatim Rick Roderick's description of Marx, to be found here: ruclips.net/video/2MsNyR-epBM/видео.html
UE didn't explain the value theory in it's entirety, oversimplified part of it and misunderstood others. The "vibes" approach is a good one, and weirdly enough the one Marx subscribed to (kinda). Value is dialectical, for something to have value it needs to have use value, be produced by labor (nothing exist without labor), and be exchanged (also called exchange value). But the interaction between those three types of value vary greatly but one cannot exist without the others. Marx's equations are an attempt at quantifying some that isn't quantifiable, and he knows it. So yes the LTV is just a model, but is it really? Or is it just the "math part" that is? There's many more things to say about the LTV but it would be unreadable
@@alexart9504 Marx's claim wasn't that new desires among consumers had to be awakened in people as source of profit. His claim is that capitalists invest in capital goods as a way of boosting profits.
The transformation problem, according to Marx I mean, isn't merely that of a mismatch between prices and value. This is closer to Smith. For Marx the problem is a matter of accounting for how anything is converted into anything else along the lines of capitalist logic. Or in other words, how say raw materials become marketable objects and furthermore how more is gained out of this transaction than what was put into it....and of course the answer is labour. But not merely working in the base scientific sense of an expenditure of energy. It's a matter of how labour appears (I would italicize appears here if I could) as a commodity. Or, how working itself comes to appear as something outside of 'itself'. People work everyday and produce value, ie the possibility of continued subsistence amongst the greater population, without receiving their due. This is called being paid below their value. It's not merely an exception, it's generally a rule. A grocery store worker is paid a wage in order to manage, in one way or another, the stored commodity capital of a capitalist (until it is sold and converted into a useful object Viz consumption). They are never paid what is the value they put out, otherwise, and here's the noteworthy part, there would be no point as a capitalist couldn't make a surplus of their labour. And in a society in which this weren't the case, well we couldn't call this capitalism. Everyday said grocery store worker shows up to a building they don't own, to take orders from someone they share no kinship with, in order to handle goods that aren't there's! All the while they sacrifice their ability to do anything else, not out of the goodness of their heart or because they feel themselves bound to a cause, but because of a structurally determined necessity which says if they don't, they won't be able to subsist. What they engage in during this time, wage labour, is the conversion of what would otherwise be the free use of their bodies to do whatever, into being a mechanism for the accumulation of wealth for whomever happens to own the institution they are set to work in. The labour theory of value seeks to outline this imbalanced relationship, not merely between prices and value, but to account for those who do the producing and those who benefit from it. Only a modern economics student could misunderstand this in such a profound manner!
No, the transformation problem is about converting labor values into profit-rate equalizing prices, due to the assumption of classical political economy that continued in Marx's work that profit rates across capitalist industries tend to equalize. We know now that profit rates don't equalize and that more capital-intensive industries have lower profit rates, as predicted by the simple LTV. Since profit rates don't equalize, the transformation problem is moot. UE thinks the transformation problem is about converting labor values into standard prices because he didn't do his research.
Part 1/2 Thank you for this video! It encourages discussion! * What is the value? Definition value - working hypothesis Value reflects a quantified, abstract usefulness of exchange goods, which must be recognized as socially relevant by exchanging them for an equivalent value or for a commodity, and which is assigned to the exchange goods in the same amount by the exchange partners. 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. Prerequisites for value creation - The exchange goods must not be freely available. - For an exchange, the exchange partners must agree on a common value. - After agreeing on a common value, sufficiently strong weighted needs for these goods must lead to exchange. The non-free availability has its roots in the paid labor force responsible for developing, manufacturing and providing the goods, in the ownership of these goods or in the power of disposal over these goods. * A theory of value does not only apply to capitalism Value-equivalent exchange already existed in the Stone Age (there were mass production facilities for stone tools, among other things), in antiquity, in the Middle Ages and under socialism. * Do we need a theory of value? Yes, because value is essential for the functioning of the economy. Especially in the case of competing access to resources (Raw materials, transport, machinery, manpower, electricity, gas, etc.), it cannot be replaced by anything else if the economy is to function optimally for end customers and companies. But value is also important for all other weighted needs with which exchange must work in the economic sphere of society. * The main problem of Marx's theory of value (Labour Theory of Value) Marx assumes that value is produced or created with production, since the market has no meaning for him. He formulated the formation of value with a formula: W = c + v + s W value c constant capital (raw materials, supplier products, with Marx also machines, etc.) v variable capital (values of labor forces, with Marx only those of human labor forces) s "surplus value" (is created by human workers in the so-called "unpaid working time”; the entrepreneur appropriates the surplus value without compensation to the workers - the latter corresponds to capitalist exploitation) But there is still no surplus value on the production side. The entrepreneur can only estimate how much surplus value he could generate on the market with the product. The buyer has to pay for the real surplus value on the market. Since the surplus value is part of the value, there cannot yet be any value on the production side either. The cost c + v is associated proportionately with each product of work as a claim for compensation and the expected surplus value is added. The sum gives the expected value for the product is made visible as an offer price for potential buyers. The potential buyer and the potential seller meet at the market. For the exchange, they have to agree on a common value. In the bazaar this happens in dialogue, in the department store through the unilateral adaptation of the buyer to the seller's specifications. If, after agreement, the weighted need (absolute needs do not count in the economy, since individuals and companies only have limited value equivalents available for exchange) for the goods to be exchanged is still strong enough for both partners, an exchange takes place. If the exchange partners cannot agree, there will be no exchange - the purchase contract / invoice cannot contain a sales price and a different purchase price. The common magnitude of value is an objective component of value. Its reflection as the purchase price is objectively stated on the purchase contract and objectively the transfer of purchasing power from the buyer to the seller takes place at exactly this value. There's more. The money supply reflects a right to a percentage of all goods to be distributed economically. The reflections of the objective magnitude of value in the exchange partners are the subjective shares of value. Before the exchange, these are usually of different sizes.
@@thotslayer9914 I see that you have no idea about the Labor Theory of Value, you cannot grasp what is wrong or right about it, but you are making jokes here. You pose as a RUclips policeman in a ridiculous way, which also makes it clear that you completely overestimate yourself.
Good video - I wish you’d mentioned that the strict conditions where the marginal productivity theory is correct, is ironically the same conditions where the simple LTV holds - equal interindustrial organic compositions of Capital.
@@unlearningeconomics9021 Is it? Seems more like word soup that simply declares marginalism only works in the world of LTV, which is obviously not true.
This was very good -- I was under the impression that the falling rate of profit wasn't especially controversial, so this is eye-opening. IMO, if value is inherently subjective, then it seems like theories of value are more appropriately used to critique (or justify) prices than they are to predict them.
It's important to note that rates of profit are difficult to actually measure in economic terms, because economists include opportunity costs as real costs. The reason for that is simple... if you could make more doing something else, and the only point of doing this is to make money, why aren't you just doing that other thing instead? A higher investment requirement in the form of improved automation and more physical capital translates to an increased opportunity cost for firms. The reason for this is simple; those with less opportunity are being priced out of the market due to those higher investments. This in turn will lead to a desire for improved efficiency to recoup the higher risks. Those two factors create a system that feeds into itself, with the limiter on how much it can feed into itself being external forces rather than economic forces. In example, the finite limit to the effectiveness or availability of automation, or governmental coercion.
54:00 you can't do that because that only applies to the US. You'd have to compute this for the whole world, since it might mean that while the rate of profit in the whole world could fall, it could increase for the US alone (say, by stealing resources)
Ah yes, "left" media like CNN. Can't forget to balance that radical revolutionary analysis out with some Info Wars too, so I'll definitely check that bizarre liberal news app out.
The reason why the value of a commodity is determined by (socially necessary) labor, according to Marx is because labor is the only thing that is common in all commodities. What else but labor can provide value? The misinterpretation of this video is that Marx talks of value not as the Metaphysical worth of a thing, but as that what underlies price and dermines the relationship of items traded. It cannot be empirically disproven or proven. The question concerning the LTV is not whether or not it is true or not true but whether it is useful.
If it can't be proven or disproven, it is not scientific and not a theory. Again, it has clearly less predictive power over relationships of trade than actual price.
@@fellinuxvi3541 Unless you've found some solution to the problem of induction theories cannot be proven or disproven. They can merely better or worse fit a set of other ideas and empirical information, be better or worse articulated, or be more or less appealing. Unless you've got an answer to the problems involved in our understanding of causation I think a Popperian approach to "theory" is clearly ridiculous. Baring the idea that you've somehow disproven transcendental philosophy, we need to understand theory transcendentally. Of course economics isn't a science in the sense we mean "science" today to begin with, so that's an odd problem to raise with it. Finally I'm not sure why you're talking about price to discredit the labour theory of value. The labour theory of value is not about prices, it is about value in exchange. Nothing about the fact that prices are not value, and thus does different things than value, says anything about the topic at hand.
@@Cuthloch Theories cannot be proven or disproven conclusively, but they do fit with evidence. Evolution could, in theory, get disproven. General relativity could, in theory, get disproven. Although it's certainly true that they are not the same as scientific laws or observed past phenomena, they're still bound to some principles of falsifiability. Economics is not a *hard* science, but that does not mean it's free from proving it's theory (specially since Marx did claim his theory was scientific and based on the scientific method). Science is first and foremost a method of acquiring knowledge, and while some areas of human understanding like art are not subservient to it, most forms of acquiring knowledge are. Theories in social sciences must still fill some scientific requirements, like producing tentative knowledge and being falsifiable. I did not claim LTV was bad because it didn't predict prices, I said prices are more useful in determining exchange than the concept of "value" as understood by Marxists.
lol you 100% got me with "someone else who thought a lot about value... [five second pause]" me: marx "david ricardo" dammit, i literally knew that, why did i let you get me i guess i just didn't expect a suspenseful pause before name dropping ricardo LMAO
When you calculated the rate of profit over time, you focused on the US. The issue is that Lenin very well points out how the tendency of the rate of profit to fall leads to imperialism and the expansion of markets, thus the TRPF must be analyzed globally. Also, you claim that the labour value theory has "failed" to predict prices. This is page 5 type stuff, Marx never attempts to predict prices, and specifically differentiates prices from value, saying that prices will only be described with supply and demand
Yeah I'd like to know how other economic theories explain the US's nonstop wars (both direct and by proxy), why our economy regularly collapses every few years, or why the global south remains so impoverished, even now that colonization is supposedly over. Not being sarcastic here, I would genuinely like to know how other economists address this stuff.
It's fairly easy to see why labor is said to produce value but not capital. A factory with zero workers produces nothing. A worker with zero factories still produces something. A factory (capital) is therefore not a source of value, but an amplification of value of the worker. You can always express the value of the factory as a multiplying factor of the worker, but you cannot express a worker as a multiple of a factory. The factory itself has a value as utility to the workers, but is also a product of other workers labor. It is labor creating tools to amplify the labor of others.
Not quite - today, we have machines that act autonomously. They still need to be maintained by humans, but it's plausible that we'll create machines capable of self-repair in the future. But machines that can engage in production autonomously still don't generate value because they act at a constant rate and intensity, they are "constant capital" as Marx called them. It's the variable capacities of humans that allow us to add value in production, that's why Marx denoted human labor as "variable capital." Humans can work harder, longer, or smarter, but what you get from a machine is just what you paid for.
It is always funny the way American and European RUclipsrs excuse themselves for talking about Marx or socialism. It is almost like Americans/Europeans are allergic to socialism and have to take a pill before discussing these matters. I feel that in Latin America we are much more relaxed in this sense. Marx and socialism are much more respected here. I wonder why.
That's because in South America entire countries didn't have to endure socialism for tens of years! I lived in the GDR from 1952 to the end. It became very clear to me that such a social system cannot work.
@@rainerlippert The GDR was not socialist. State ownership of the means of production is not Socialism. GDR was not run by Workers, it was run by a bunch of unelected bureaucrats. Lol, Grandpa doesn't even understand Socialism.
@@darkbrandon8431 I realize that they obviously have no idea of reality! I lived in the GDR until 1990. That was 'real socialism'! Socialism cannot be otherwise! A few intellectuals seize power and, having no legitimacy beyond their ideology, they must spread a full-scale dictatorship! The gibberish about the "workers who own the factories" is hollow, because the workers have to work. Others steer. This can currently be seen very clearly in Germany: Intellectuals, without knowledge, without experience, just stuffed full of ideology, have seized power and, with the help of their completely one-sidedly oriented media and a comprehensive 'Cancel Culture', are spreading a dictatorship that no gives rise to opposing opinions. This is exactly how it will always go when ideologues wield power!
It's more America than Europe tbh. European creators normally do it because most of their audience is American. Marxian beliefs, socialism and communism are all viewed as inherently EVIL and diametrically opposed to democracy and freedom, regardless of what reality is. It's largely a result of all the red scare propaganda during the cold war, combined with a general "know who was a socialist? Hitler. He was a national SOCIALIST" misunderstanding of socialism, nationalism, and Nazis.
The single most important Economics channel and creator on the internet. Bootlickers get boosted by the Boots, we need to make sure this content get boosted as much by the crowd as possible.
I have to thank you for making me for the first time not feel like a complete idiot in regards to economics. The labour theory of value always felt weird to me but I don't have the technical knowledge to really break down why
Marxian Values are not unmeasurable quantities. You can show that marxian values are equivalent to Keynesian employment multipliers and can be calculated from input-output tables.
No, the labor theory of value is not "just a way of looking at things". It has been tested and proved to be right. And besides that, it serves an explanation for the phenomenon of the dropping rate of profit. It is the best theory we have. And if those words make you go "but that means that it is just a way of looking at things". THE truth does not exist indeed. If this are the criteria we are applying to things then Einstein's theory of relativity is just a way of looking at things. No, it's testable, it has been used to find new insights that have also been tested, all in all: it's a solid theory. The only reason it is not accepted as the leading theory in the field of economy, is because its consequences are controversial. And I feel like - in many of your videos - that you have been influenced a bit too much by studying bourgeois economics for years. Edit: I cannot go on for even a minute and you say something stupid again. Yes, the labor theory of value is a postulate; it cannot be proven by deduction, but it is assumed. But so is Newton's theory of force (F=m*a). This doesn't mean that any other theory of force is just as good. We have accepted this because it seems that everyone finds this theory to be in agreement with reality, and no one seemed to be able to find any example that contradicts this statement (until Einstein, but that just means that Newton's theory appeared to be a special case of Einstein's theory, a case that we all live in, so if we assume normal conditions, we can ignore this). The same is true for the labor theory of value. Marx does not claim that a pretty flower has no value, it's just not the value he's talking about; you cannot sell it *because it requires no labor to pluck a flower unless it's very rare.* The same with constant capital: Sure, without it the product cannot be made (or it will require much more labor), but Marx' claim is exactly that if constant capital grows, and variable capital as a result decreases, its value will drop. NOT the abstract concept of value, but the actual prices (assuming there's no inflation). And this explains the inclination of the rate of profit to drop. We see this *in real life.* It's NOT subjective.
I think the problem with value is, its subjectivity. The things that are important to me will not be necessarily important to you; and even if we agree to value a certain object there is no outside mechanism that will objectively price the object, the price will always remain subjective to our thoughts. If you ask me Value comes from our thoughts. It gets complicated when we price the value. It's a choice in which we should all agree upon.
@@maluse227 also an interesting thing about value is there are things in which we find valuable but are priceless; like love, kindness, honor they have intrinsic value but are often if not impossible to price.
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Value is in the eye of the beholder.
I've always had the question regarding if the labor theory of value's "Socially Necessary Labor Time" just bottoms out at opportunity cost at a societal level or not. Slowly watching the video right now
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Edit 1 scientific theory of value : Words like value or productive are normative right? Is this really about trying to find a theory of value or trying to define value in some way that normatively suits?
Edit 2: I always thought subjective value theory isn't about what people found useful but rather what people think are useful. This difference is massive as it is the difference between belief and truth. This seems to just occam's razor to the idea that the perceptions of an evolved being need not perfectly reflect reality. Also, usefulness scales with shit like intelligence and perception so that can't be objective either.
Edit 3: Labor then can be a result of edit2's comment. What you are measuring therefore isn't what is objectively true value, but people's subjective beliefs about value.
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Edit 4: uh, am I missing something or can the equation at the start of 'labor theory of value' can go negative, meaning workers can exploit employers for the employer's bad business decisions?...
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Edit 5: I'm a bit lost at the "transformation problem" section of your video. It doesn't seem like value has been defined in such a way that it exists as a phenomenon of reality? Is "value" at this point just some moralized way to say "magic"?
Edit 6: Your math section in the transformation section of your video doesn't address the difficulty in clearly defined Societies in "Socially Necessary Labor Time". If two small communities near each other differ on their production times due to say an abundance of different animals, then the math breaks. Start from two families, then scale up at every level because the same question applies.
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Edit 7: Can't overproduction and economic problems simply be due to a mismatch between perception and reality mentioned in edits 2&3? This seems to must be the case if people bid on and gamble on investments of uncertain futures... which is every decision ever make o-o
Edit 8: I was wondering what it means for "rate of profit to fall" in a reality that seems to grow not only endlessly, but speeding up as if trying to hit a singularity of infinite wealth in the foreseeable future assuming we don't nuke ourselves... and then you point out he defines "rate of profit"... I'm even more confused now. (by wealth, I'm pulling from the notion that there is either more shit, or higher quality shit, or new shit that does old shit better.)
Edit 9: At this point are theories of value even economic theories? You make it sound like they're moral definitions tacked on to an already adequate understanding of things like money flow, perceptions and tendencies such as fear of missing out or sunk cost fallacy or bandwagoning. "What creates value" ... I'm at the end of the video and I still don't know what the working definition of value is. But if it's something like choosing one option over another, then isn't it redundant with things like psychology? And if you scale that up, don't you simply have the subjective theory of value?
Edit 10: done with the video. Very confused :c
@@blazearmoru
A) "Objective Value" is an oxymoron.
B) Value for the individual emerges from the ability to rank the stuff around said individual by order of perceived importance at a given instance of time.
C) Value for a group or society emerges from individuals comparing how they rank the stuff in the surrounding world.
D) Certain things hold value over centuries , because most individual rank them in a similar way (e.g. land, gold, grain , coal, oil, etc. On the other endt of the value spectrum are things like fashionable clothes, songs, etc. which have a very volatile value because the individuals in the group/society can not agree on the value of those things or very quickly change their ranking..
1) The term ""Socially Necessary Labor Time" demand further definitions for "WHO is the society?" and "HOW the level of necessity is estimated for said society?"
it is a very bad way of thinking.
Who is the society?
We are free to look at the society and aggregate all employees into one Employee and all owners into one Owner. Ownership is a claim, not effort. The Owner makes the claim, then the Employee enters to protect and grow what has been claimed as owned by the Owner. All efforts are done by the aggregated Employee, the aggregated Owner just owns, nothing else, no effort what-so-ever.
In short, The aggregated Employee invents and makes the products then sells the products to itself and then pays a fee called Profit to an 'Owner' for the permission to own the same products the aggregated Employee itself made and sold to itself.
Ownership is not effort, it is a political claim.
HOW the level of necessity is estimated for said society?
Ultimately it is the aggregated owner deciding what is necessary, because the relationship between the aggregated owner and the aggregated employee is identical to the relationship between a farmer and a farm animal.
@@reasonerenlightened2456
Part1?: Nearly all the people I talk to who are into the theory of labor value talk about value as something objective and measurable through labor time. I'm part of the camp that thinks perception and reality necessarily differ, both due to evolved intentions and evolved shortcuts in computation... possibly other things but I never thought any deeper. So I don't have a stance regarding wether or not value is objective, subjective, or relative, but I did notice there's value convergence due to some things being impactful across a wide array of different goals.
Part 2?
"Who is the society?
We are free to look at the society and aggregate all employees into one Employee and all owners into one Owner. Ownership is a claim, not effort. The Owner makes the claim, then the Employee enters to protect and grow what has been claimed as owned by the Owner. All efforts are done by the aggregated Employee, the aggregated Owner just owns, nothing else, no effort what-so-ever.
In short, The aggregated Employee invents and makes the products then sells the products to itself and then pays a fee called Profit to an 'Owner' for the permission to own the same products the aggregated Employee itself made and sold to itself.
Ownership is not effort, it is a political claim."
Either I asked the wrong question entirely, or you answered a different question than the one asked. I can't tell which one is the case. I think the video said that "Socially Necessary Labor Time" is derived from the time on aggregate needed for a society to make a thing, so I pointed out that it was difficulty to just point at something and call it a society because hard boarders don't exist and these boarders not only define what is socially necessary but also trade between societies can generate wealth due to the disparity between societies. If you rough out everything and say "everything is a part of 'S'ociety" we have correlation problems regarding chains of interaction or lack of interaction between communities as both their values and prices differ based on environmental availability and other such things. I'm kinda struggling with how to think outside of this framework given the disparity both between different groups as well as different layers. I think you're saying to just mash everything together, but isn't that not only getting rid of the only relevant data, but also getting rid of the only relevant concern?
Value is created by the brain, if you trick the brain into thinking something has more value then it does... drugs are the answer to everything :V
I'm slightly disappointed you aren't a cartoon melting book in real life, but apart from that this was a great video
What does he mean with the melting Book anyway, are mainstream economics finally unpopular with Gen Z?🤤🤤
Smash enough oranges on his face, he'll get there.
Honestly this
@@aturchomicz821 No
@@castor9683 🤡🤡
Wasn't expecting Jesse Pinkman to be so hard into economics.
Don't know what you mean. This is clearly Barry Shitpeas.
Well, he *was* a drug dealer. I guess that's an entrepreneur?
well I mean... he was a pretty key player in operating a huge business
@@theMoporter 🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣 brilliant
I mean when you’re tweaking balls on the best meth around chances of falling down a heavy economics rabbit hole for hours are fairly high.
Some say Land snd Fisher’s early works can be cited souly by meth, (ccru, undoubtedly) 🫠😶🌫️
Argument by Citation is such a good way of putting it. Too many times people just search the literature for something that sounds good and right and then stops critically engaging with the ideas. They just assume they've found the answers and if the critic would just read more they'd find the answer too.
Absolutely. I feel like too many teachers even in college let students get away with this.
This right here is why I started scaling back on watching YTers that speak on areas they aren't educated on. I noticed this trend with a handful of peeps when I actually say down and read the articles they cited, realizing they clearly just glossed over it for confirmation bias.
i thought the exact same thing, I'm guilty of doing it myself from time to time, it's just so much easier to do than actually read it and critically engage with it, but I'm trying to grow and become less of an ideologue which is going to take conscious effort to engage critically with the assumptions that i hold
start looking for the Truth, whether or not it's what i happened to already believe
This channel makes over hour videos reviewing economics articles and theories and is still very entertaining, even funny at parts. that must be some kind of record.
Thank you
Marx didn't call capital proper constant capital. In the first volume where he outlines what you are attempting outline, he refers to two forms of productive capital, constant and variable. At this point constant refers not just to machines and tools, but also to raw materials, although in volume 2 he goes on to make further distinctions between fixed and circulating capital in response to both Smith and Ricardo. He also distinguishes and relates constant, variable, fixed and circulating capital to show where Smith and Ricardo were confused in various ways concerning conflating, say, fixed and constant capital. And in the third volume he talks more explicitly about total capital denoted by a capital C, rather than the lower case c denoting constant capital. This is where I think you're getting the idea of how he characterizes what capital is.
Nevertheless, for Marx capital isn't an object but a relation. As he says time and time again, at one point money or commodities can be capital, yet at another they cease to function as such. When money is carried in the pocket of even a capitalist it isn't functioning as capital because it isn't being set into motion through either the production or circulation process. Money has existed long before capitalism as a system has. Just like how although a commodity is characterized by both being an exchange value and a use value it cannot ever be both simultaneously and once the exchange has been carried out it ceases to be an example of Capital.
Nevertheless, this analysis appears to me to be more of a response to a specific trend of what has been called "analytic" Marxism than of Marx' analysis itself. Marx' whole point is to show how capitalist social relations produce a mystical anthropomorphizing of relations between objects whilst inversely objectifying human relations.
A simple everyday example will demonstrate this. A worker does not see the product of their own labour as that, but rather the possession of another (the boss) and vice versa the capitalist sees what in reality is the fruits of others effort as their own. This is a simple, perhaps oversimplified, example of what Marx is driving at by distinguishing between appearance and reality. It isn't mystical or inexplicably metaphysical at all. Most people around the world are intimately in tune with exactly what Marx is more explicitly and systematically outlining.
I'll have write down and organize my thoughts in greater detail in order to provide a more comprehensive response.
I think the gist of what you tried getting across is that many commentators don't really understand the scope and reach of Marx's analysis as a political economist to whom the socio-economic laws of societies' inner workings were a more pressing matter than an actual economic application of his theory.
Not to delve deeply into specifics, I think Marx work wasn’t nearly as all-encompassing as he’d have imagined, so we do need better theories today
You think I’m reading all that
@@KULTOFKYLE you just watched a 1 hour video on it
What you've outlined here seems contradictory to me. What's the difference between outlining the socio economic laws at work and an "actual economic" analysis?
What I am saying is that an actual economic analysis requires one do exactly what Marx did and what now passes for economics is a crude "empirical" abstraction that I would say heavily relies on a division of labour constructed and maintained by capitalist social relations themselves.
Also, the video claims to be a critique of Marx' take on the labour theory of value, however it also delves into other aspects: the transformation of various forms of value, the law of the decline of profit etc etc. In reality this video is an attempt at (falsely in my view) discrediting Marx' analyses in multiple areas. The tendency toward a decline in profit has to do with the increases in monopolization amongst capitalists and thus with the disparity between the rate of profit and the mass held by any given capitalist. This decline isn't a matter of a loss of total accumulated wealth, but a decline in the rate of said accumulation in relation to total wealth already held. Take any major bank. The mass of stored wealth after various banks have been amalgamated into a larger monolithic financial entity, after larger swaths of the globe have already been colonized and converted into centres of capitalist production, ensures that each year said bank or really any corporation will gain less in returns in relation to it's overall mass of accumulated wealth because the mass is so astronomical that the rate of accumulation couldn't even match it. Thus you have an inevitable tendency toward a decline in the rate of profit.
In order to get to this point of the analysis though, you'd have to have read volume 3. However now, retroactively, it seems to me that this was common sense, yet it didn't appear to me to make sense prior to this.
Glad to know your transformation into a breadtube influencer/gaming youtuber is complete. Now that you have enough personal clout and a cult-like following you can stop making videos in your area of expertise, and instead start releasing 4 hour long Derridean ramblings every 8-9 months about video games design, personal drama (and trauma!) and the relationship between mid '00s cartoons and fascism. Or you could also kickstart an acting career or drop a mixtape. Your choice really.
I'm excited to see videos addressing the allegations already
Don't forget posting about hating the term breadtuber and the very breadtuber fanbase that adhered to you because of the politics in your videos
My vote goes for mixtape
Forgot the debate bro route. And everyone knows he would he would rolling in a Dylan burns panel with mood lights and some vague emote that references LVT
@@junkiejesus5594 Excuse me, what does "LVT" stand for?
Weird that they picked soil. In a lot of western indigenous societies they viewed water as the source of all value. Without water the soil doesn't produce, but the opposite isn't true because fishing exists.
You can own land. You can claim to own a plot of sea but the sea moves, and your boat will move on the sea, where a house on land will stay put on your plot. Land ownership is easier to justify and enforce.
The counterargument against water is ore or earthly resources.
@@robinpage2730 I think that last part is the most important. That is, it's easier to "own" land because it's easier to enforce that ownership. If colonists could've found a way to feasibly claim plots of ocean then I'm certain they would have (and would've also created theories to justify that ownership).
1. Land is fixed in quantity and location.
2. Demand for land is inelastic.
@@TheTokkin inelastic? Interesting. How so?
Haha did not expect the surprise face reveal!! Very cool.
Loved collaborating with you on this one!
ayo eco boy growing up. brings a tear to the eye
Whoa! I heard Econoboi and got excited! Sir, you did a great job reading stuff. 👏👏👏
One of my majors in philosophy and something I appreciate a lot is how you put concepts into context and hold them in a “neutral” space -a space where you can investigate and interrogate different models. You’re not internalizing it. I’ve seen a lot of people stumble across different theories of ethics and then just…identify with it? It’s like no guys, our objective is to identify the argument and see it’s weak points, see how it would be applied, etc. You get a lot better at spotting straight up trash and what’s worth interrogating a bit more. I think this blindness is driven by this concept of finding “THE ONE OBJECTIVE TRUTH.” Not to mention how alluring that is.
I do consider how truly possible it is to actually evaluate something from a "neutral" stance?
Evaluating the usefulness of models and ideas requires determining their results. That's the problem! People evaluate for a specific purpose. There is a goal in mind, and different peoole have different goals.
WHY are you evaluating ideologies? For what purpose? That purpose will always be subjective.
If I wanted to determine an economic ideology solely based on the merits of wealth creation for my buddies and I, I'd choose capitalism, or perhaps a feudal system.
Someone who desired freedom and liberation for all people and not just their clan, may arrive at communism, or socialism, or a library economy, etc.
Do you see the problem?
"Neutral" doesn't exist. There's always a purpose. Always an angle. Recognizing the futility of objectivity is of critical importance.
We all want "the best". What that means is different for just about everyone.
"Economic Value - What the Sh*tting hell is it?!"
Finally - Someone asking the right questions in the right way
Sounds like a great book that UE should write
Economic value is sweet nothings we whisper into our own ears as to not face the reality the the economy is a social phenomenon that really doesn’t make sense to treat as a hard science.
We Economists are STEMlords that realized that human society isn’t bound by the laws of the natural world and so tried to apply math to it through every more contrived means
@@jodinha4225 well if johnny has 4 vaguely defined unquantifiable phenomena and jane takes 6 of them, he has a clear deficit of two, thus proving that skeptical philisophical ramblings about commerce can be a hard science. I love economics!
@@robtye3333 Your 3rd paragraph makes no sense to me and the 4th appears to have nothing to do with anything else in this thread and is contradicted by the video. Perhaps you were paying insufficient attention.
YOOO FACE REVEAL
I prefer to believe a talking, melting book suddenly became a real boy.
As I read this, Tony McClure appeared.
Turns out he's British economist Edward Norton
@@jbone877 I loved him in Fight Club and The Illusionist.
I bet jokes like that are why he kept anonymous for so long on RUclips.
I was so confused
Love supporting this channel. With so many news stories about inflation and our current economic situation this video couldn't come at a better time. If you have any questions about Ground News and how it works, feel free to drop them in the comments and our team will respond.
How are YOU guys funded and where did you get your start?
@@noneofyourbusiness4133 Good question. Ground News was founded by former NASA engineer, Harleen Kaur, and former biotech engineer, Sukh Singh. It was really started as a way to address their own challenges navigating news. It was inspired by a simple question - why do I have to have 10 tabs open in my browser to feel like I'm getting a well rounded view of current events? They built a product to make comparing news sources easier and wanted to add some data-driven analysis for of those sources including bias ratings, factuality ratings and ownership information. We are funded by a few independent investors with no ties to corporate media, big tech, or government affiliations. We are also funded by our subscribers. We do not sell any advertising on our platform.
I did a trial of Ground News. I really enjoyed seeing when a news story was ignored by one side of the political spectrum.
How do you handle ideological drift of news sources over time? For example, CNN has been bought by a Trump fan who wants the editorial style to become more like Fox News. How do you track that change?
@@ground_news can I ask who those independent investigators are? And who develop your app? Since that and website hosting require a certain degree of technical know how.
@@BradyPostma Thanks for checking us out. Really glad you enjoyed the trial. We use 3 third-party news monitoring orgs to determine the bias rating: All Sides, AdFontes and Media Bias/Fact Check. Each have different methodologies you can read about on their website including blind bias surveys, crowd sourcing/community feedback and expert analysis. These evaluations happen on an ongoing basis so you will notice that the bias ratings for publishers will change - especially the major outlets like CNN which are evaluated the most. Hope this helps.
There is a sense in which a lot of theories of value sort of revert back into a kind of existential observation (euphemistically called "opportunity cost"). If we burn up time doing this, that or the other, that's time we will never get back, which is precious to us because we are mortal beings. So "value" often reflects our desire to make the most out of our lives, which also includes this optimization problem of using some of that time to meet material needs so we don't prematurely run out our clock via starvation, dehydration or exposure. Sometimes when I'm feeling particularly esoteric I can't help but feel that the thing humans truly value the most is some sort of cure to uncertainty itself, and why people who claim to see the future (either paranormally or through the secularized astrology of financial speculation) have always wielded such enormous cultural power in human societies. Cool content dude, thank you for sharing.
Awesome, curing uncertainty itself like a doctor in futorology (a science I just made up)
Interesting point. There's a theory called active inference that argues precisely for this conception of cognition. Our bodies are uncertainty reduction systems.
I think you touched on something in your conclusion without acknowledging it, which is dialectical materialism; it’s the philosophical foundation that Marx based his theories on and personally I believe is a more important concept to understand then the theory of value. If true to this philosophy Marx would change his theory of value given the empirical evidence and would agree with you that his interpretations and theories were a product of his own experiences and the environment in which he existed. I’m not simping for Marx, but any Marxist knows that these insights are not infallible doctrine, but merely guides to present a starting point to build upon. While making predictions, just like any economists, it always needs to be taken with a grain of salt that there are always unknown variables. It’s not physics, it’s sociology. You can’t predict the future.
Ridiculous. Ludicrous even. You haven't the slightest idea of dialectics, or even read Capital. The logic is laid out, and it's not a "product of his time" (Which, by the way, was as much capitalism then as it is capitalism now) but a law of capitalism from the fundamental nature of labor and exchange.
You've dismissed him entirely with the same logic any other antimarxist does, which is neither dialectical nor materialist, and say that his ideas are dated.
Complete bullshitter you are.
ml brainrot
Marx was just a lazy drunk who only survived because of charity fron Engles (or marx was blowing him).he treated wis wife and kids like shit and got the maid pregnant
@@bantix9902 for emphasizing the notion that ideas arise from material conditions of the time in which they occur? how is that brain rot?
Fantastic video! I consider myself a Marxist and a Communist. I'm a member of the communist party in my country. I greatly value Marxist and Communist thinkers. One thing I'd like to comment on that isn't the focus of your vide--and so understandably missing--is the Marxist tradition to focus on the class-based nature of our modern capitalist societies, and the disadvantaged position the labouring class is in relative to the owning class (propertied class, ruling class, capitalist class etc.). Marx's focus on the social relations that characterize capitalism has, at least for me, been one of the most insightful aspects of his writing and way of thinking. To me it was really powerful to realize that modern politics, despite it's simplistic presentation, is more than one party wanting less government and another wanting more, or one wanting less taxes and one wanting more taxes, or one wanting more guns and another wanting greater regulation of guns, etc., especially considering when both parties are greatly entangled with, socialized by, and materially aligned with the same upper class, despite sometimes representing seemingly contradictory or opposed goals. This is the aspect that has kept me reading Marxian literature and trying to learn from it. I read Capital volume one when I was in university, and it was really intriguing to me. It did, as you mentioned in your video, feel like I was discovering some hidden secret wrt the LTV lol, however, as I read more literature, it became something I realized required far more investigation and a greater understanding on my part and is something I sort of put on the back burner for a while. Now, after having read more, I'm returning to learn about it and have started rereading Capital and plan to read the other two volumes. This was a really great video and definitely serves as a great starting point. Thank for your work, you make excellent videos!
People who asked about your connection with communist :
I agree, just because something isn't THE truth doesn't mean there isn't truth in it. Marx is notable for explaining aspects of capitalist society that other economists rarely mention or purposely deny (class struggle, gender roles, imperialism, etc). The formal mathematical equations he came up with are frankly less important than his politics and philosophy, which I fear some people will dismiss because because the former aren't rigorous.
@@ChadPANDA... people who asked you to give your input:
Thanks for signal boosting this important video btw
The idea that politics is about "more govt vs less govt" and not the actual nature of the state has done an untold amount of damage
@@nathandrake5544 it's absolutely wild the sheer damage done, in part, by that delusion. Nearly the entire anglosphere is basically on the brink of self-inflicted political collapse
The speakers at the concert example can be explained by the fact that someone had to build the speakers, and someone had to rig them up for the concert. The extra value came from those workers. Just because the value is delivered after the workers have done their work, and not during, doesn't mean it doesn't exist.
This is similar to a worker making a chair from wood. The value delivered by the chair is over a long period of time, but it still comes from the worker.
Yeah, I'm struggling to understand UE's point here. Even if the speakers weren't the product of any human labor (they just magically appeared before the concert), and the concert is qualitatively improved or tickets are valued more, the speakers aren't getting paid for their contribution, the organizers are. Conversely, if the concert gets rained out and everyone demands a refund, are the organizers supposed to demand compensation from the storm for its "anti"-labor, or is the revenue simply lost?
What if the speakers materialized in a field where there was no concert? Sure, if a concert was held there, the speakers would improve it, but a bunch of speakers sitting in a field cannot in and of themselves organize a concert or sell tickets. A gold nugget in a riverbed is worthless until a human finds it and brings it to market. Natural resources can only modify the efficiency of labor, because natural resources cannot interact with the market independently of human labor.
If somebody really thinks speakers at a concert that were installed by technicians, assembled by factory workers and transported by truck or train produce value independently of all the human labor that went into their production, then please explain why a pile of rare-earth sands, oil, and iron ore dumped on stage isn't just as good at playing music as a speaker, and what the point of "jobs" or "human activity" is, since the raw materials which comprise a speaker are present in nature regardless of what we do.
Yes but the speakers may well provide more value than what was put into them by labor. A pair of mass-produced speakers might need, say, 10 hours of labor time to produce and set up. But seeing as they can be used over and over again, and provide hundreds of people that listening experience every single time, it may well be the case that they produce more than 10 hours worth of value for the audience(s).
The contention that Marx makes is not that capital doesn't add value, but that it doesn't add value beyond its cost of purchase.
@@ethanj5152 Yes, the owner of the speakers needs a band in order to have a concert. But that goes both ways: the band is going to want speakers in order to have a concert. They could purchase the speakers themselves, or try to have a concert without speakers, or they could chose to partner with someone who owns speakers and accept that the "speaker owner" is going to take a cut.
The key phrase in this last paragraph is "beyond all the human labor that went into their production." Of course, a pile of all the raw materials that make-up a speaker would not add value to a concert. But the question is whether or not the value of the labor that was put into the speakers by laborers is always equivalent to the value that those speakers add to the concert. In the case of speakers, it might not be clear. Given that a band could hypothetically host a concert without speakers, and speakers presumably require a lot of 'socially necessary labor time' to create, it could be the case that their value add is equivalent to the labor required to create them.
But in other cases- say a plumber using a basic tool like a wrench, it seems clear that the wrench is providing significantly more value than the labor that went into making that wrench. Especially given that the plumber could do exactly zero plumbing without the wrench, that wrenches require relatively little labor to create, and that wrenches last practically forever.
This gets even more complicated when considering automation. A self-driving truck for example could hypothetically produce unlimited value all on its own, or at least more than the labor required to create it.
@@derpmansderpyskin Yes, it was a huge assumption by Marx, but certainly what doesn’t describe him is methodological laziness. He wasn’t interested with just surplus value, he was and later economists as well were interested in the “Constant” value of capital, which in their theory was assumed not to be arbitrary, but as a discounted against future value. And the size of this value was determined through its use value as means production being operated for a certain amount of time. If this value expressed as costs was calculated correctly by evaluating its perceived future productivity, than it wouldn’t add “new” value
The limitation is though that it was assumed these costs weren’t only possible to calculate correctly, but they’re correct at all times at least as an aggregate in the economy as a whole. Hmmm, this requires a robust theory of interest rates which wasn’t really present at the Marx’s time. So, we’re back at square one
@@kosatochca This is the part I don't think I understand: If labor is the source of all value, how can the value of capital be determined by 'perceived future productivity'? Shouldn't the cost of everything be a function of socially necessary labor time?
33:10
Marx explains this in Capital:
Labor created the speakers. Any piece of capital, when you break it down, is created by labor--all the way down to the moment the raw materials were extracted through labor.
Exactly, you can’t look at just the individual product, you have to look at the processes which produced it
idk how he missed something this obvious
@@lonesome_cowboyright?
He asked why the speakers cant produce surplus value. Here's an interesting thought experiement: Do tools save more labor than they cost? If so are they worth more (in $ or hours) than they cost to make (in $ or hours). If so, then it's pretty reasonable to say they produce surplus value. If you say instead, no they reduce the socially necessary labor time, you have to make an argument as to why a society wide reduction in hours is not "worth" anything, and how it is not equivalent, having been measured in the same units (labor hours) to that same amount of labor, thus being surplus labor, thus being surplus value.
@@RyanPeach what you are describing is socialized surplus value rather than privately extracted surplus value.
35:43 it is very different. Marx, throughout Capital assumes that equivalents are exchanged (he makes the point that of course, equivalents are not always exchanged like in the apple corn example but then, no value is created since the apple seller is losing while the corn seller is winning). This means that when the Labour power of the worker is exchanged for the ‘means of subsistence’ equivalents are exchanged. The crucial point for Marx is that Labour power has a special USE value which is that it can add more value then it possesses (clear in his articulation of the two fold character of value). Last point, for Marx, value cannot be created in the sphere of exchange but only in the sphere of production where Labour power is consumed. This is also why the apple corn example is stupid because of course merchants, by selling cheap and buying dear make a profit but no value is created because either the merchant pays under value or sells over value so equivalents are not exchanged.
Doesn't the example of the merchant here ignor the value of the service the merchant provides, by matching producer and consumer?
@@shane_rm1025 There is value in distribution, but by their nature, merchants are in a position to effect unequal exchange.
As long as you believe in competition, then everything must be paid it's value - because all profit goes to zero.
If you don't believe in competition, then you can explain exploitation on monopoly power, and not have to worry about Marx at all.
@@shane_rm1025 They(industrial capitalists) sell their commodities cheaper to the merchant capitalists, the merchants then sell them at the "actual" value. They(merchant capitalists) take a cut of the total surplus-value created.
Labour does have a unique roll in the Marxist LTV, as its use value to capitalists is the value it creates, while its exchange value is just equal to the amount required for its reproduction. It's not clear to me that certain forms of capital cannot be thought of in a similar way. For example, you could think about the maintenance and upkeep of a machine or a building as their reproduction value while they generate value for capitalists in excess of this. Admittedly this logic is less applicable to apples but that was just an illustrative example, to my mind you can also have a model where apples generate more value than they are paid for by capitalists, which would just produce an alternative model to the LTV. Capitalism is after all based on capitalists harnessing things (land, capital, nature) to profitable ends. Keen (1993) goes into more detail on capital producing surplus value.
In any case, what I was trying to get at is that no matter the justification for the unique role of labour, it is an assumption. I'm not saying Marx's theory is incoherent but I outright reject that any economic theory can be based on irrefutable logic. Austrians, mainstreamers, and MMTers do this all the time and it sucks. Theories are facts about the world which need to be explained, if the LTV is true then we need evidence for it (hence the subsequent sections). If it's not 'science' in the traditional sense then that's another conversation which I am more than willing to entertain.
Hey, as a reader of Capital vol 1 & 2 (and currently 3…) I really enjoyed this video and I agree with your overall point. I could nitpick a few of the examples you brought up-although not being an economist I'm assuming that I misunderstood them (for instance from what I remember of Marx, the dear/beaver hunting example doesn't quite work, as I don't think you're supposed to just assume value happens from pure labour: it is a meeting of tools, their degradation, human effort, previous production, etc. so pure hours of hunting are actually not equivalent to other pure hours. Similarly the apple/corn example is pre-capitalist exchange C-M-C, not capitalist M-C-M, and let alone M-C…P…C'-M')
I guess a question I'd like to ask you is: why do you think price is a better, more tangible metrics than value (which, mind, I agree is ethereal as a concept)? Beyond the fact that you pay for things with it, one could point out the myriad of ways the prices of products and services shift drastically, are decided by companies for various reasons (at a loss for Amazon Fire reader in order to flood the market), or maybe I should have paid £15.95 for something but got away with only paying £15.50 because of my lack of change, or the fact that I exchange products with friends and family all the time without carefully caring about the price of things, etc. And that's without pointing out the historical precedents of a handful of nails to pay for something (very widespread in Great Britain in the XIXth century), or other ways to evoke the value of a purchased product rather than a specific currency price. And I agree those examples are not all rock solid as a systemic analysis, but I believe they are of the level of the dear/beaver and apple/corn arguments.
From my limited understanding, there's actually a great deal of metaphysical mysticism around price, and I feel your bias in its favour might come from the fact that it feels really tangible for an economist like you (not a dig I swear :D), and econometrics tools for instance? Is there something I'm fundamentally missing?
Thanks for your comment, even if I'm only checking now. I don't think price is the correct metric for value FWIW, I was just going over how much trouble the LTV has predicting observables like price and output in a 'scientific' way. This may not be your only aim! Using abstract labour or even something else (like utils) may be a good way to approach the issue historically and philosophically. I'm just not sure about the statistical exercises 'proving' the labour theory of value. I also think the issue you raise at the start, which as I understand it relates to adjusted labour time or socially necessary labour time, is a valid critique of that example but also raises some big issues about circularity, since it's hard to define adjusted labour without reference to that which is being explained: surplus, output, price, etc.
I come for the Simpsons references, I stay for the economic education.
comrade badmouse
@55:00 I read that whole section in Marx as him saying that those "counterveiling tendencies" must exist, because otherwise the theoretically deduced tendency would have to hold true even in the short term. So the use of the theory is to explain that and how capitalists have to escape the tendency of the rate of profit to fall, and that they would face crisis if they fail to do so.
Edit: Oh yeah I see, you were getting there. :D Great video by the way, thanks for that. I had a chuckle at you mentioning Ricardo.
"I've run out of charlatans" is a pleasant turn of phrase.
1:07:00 I'm not through with the whole video but I would argue, the speakers give surplus value by proxy of the labor that brought them there. Someone had to design them, think of them as a good way to amplify the music, mine the materials, create them and then move them to a place coordinated with other who organized the gig.
I'd argue, you never pay for things and things don't inherently have value on their own, but you pay for the time every person proportionally put into the thing you are buying from its creation and all the creation of all of its parts to the point in time, you are buying it.
Yes I agree with this
Exactly, within the framework of IVT a speaker gives value through the crystallized labour time that went into it. What UE is saying is that the framework itself is flawed because it’s attempting to draw conclusions about its own assumptions: namely that labour is the only thing that creates value.
Once you assume that labour is the only thing that creates value you’re forced into bending over backwards to explain concepts like crystallized labour (which has many issues) and the transformation problem.
The socially neccessary labor cost of producing speakers doesn't seem to be related to the additional value which can be obtained by using them in the concert, so it's not clear why the value of constant capital should be accounted for in this way
Kinda disappointed, but understandable, he’s good at statistics, but not political philosophy.
@@threepoundsofflax8438
How much extra value do the speakers provide to your concert when they're in the venue storage?
There is also the obvious answer, which is that they do not provide constant value. Setting up a speaker at a venue adds value, but once it's set up it becomes the norm. Eventually, the value of the speaker (reflected in price to go to the venue) will fall relative to inflation unless more labor is performed.
Whenever I try and read modern economists, I get flashbacks from my days in a philosophy department -- i.e. there's a lot of talking around certain key concepts, accompanied by rhetorical claims of their own technical rigor and clarity, implying anyone who doesn't understand the muddled conversation just isn't smart enough to get these complicated subjects. It took me years to figure out how mundane many of these supposedly difficult topics were.
Anyway, I'm grateful to you for explaining the marginal theory of value in a manner which only someone who has suffered through the field's hazing process can.
Participating in philosophy conversation with philosophers can actually be bad for a layman's health. You could very well roll your eyes so hard you damage an optic nerve.
A lot to take in on one watch, but this treatment of the subject is what I've been waiting for. Will definitely return and go through this more slowly.
1:05:30 Yes! While the voice-over style is definitely easier, the in-person stuff is much easier to follow, at least for me. The drop in audio quality, while noticable, was well worth it and didn't significantly degrade the quality of the video.
Price doesn't equal labor even in your simplified deer-beaver example. It depends on the demand for deer and beavers, because if beavers were far more sought-after than deer, they could command a higher price even if less labor was required to hunt them. That's why Marx was careful to specify "socially-necessary labor-time." If there's no demand for something, it doesn't have value no matter how much labor is used to produce it. If the quantity produced exceeds the market demand, then some of the labor used to create the excess is wasted (i. e. it fails to create value).
Labor theory of value 🤮🤢🤢
But wouldn't people just make more beaver then, which would drop the prices again or increase the labour amount as the beaver raw material becomes rarer and takes more work to obtain?
@@SianaGearzif the material is at hand sure but doesn’t a higher demand for beaver imply a smaller supply of it already
The other thing that is completely missing is risk. If every time you hunt deer you have 1/100 chance to die - it may become A LOT more expensive. If it took 10 years to learn to hunt deer it may cost a lot more.
Its a simplified example to demonstrate what individual elements do to a system.
Having been burning down my brain over a PhD thesis (inter alia) trying to understand value, I have to say I really enjoyed your video. My conclusion, for what is worth, is quite similar with yours: Questions of value are worth exploring for their own sake. They force us to generate powerful stories, from which we can learn more about the world we live in, what we may have got wrong, and, potentially, how we can transcend to a better one. Essentially all theories of value are normative and elemental in shaping the assumptions upon which our decisions are based on all levels. Also, along the lines of your conclusion, I'm currently planning the next steps of my research work around the relationship between value and the systematic understanding of social needs, as it's impossible to understand the one without the other.
A great inspiration to me has been D. Graeber's Anthropological theory of value and R. Heilbroner's essay on the Problem of value in the constitution of economic thought - both highly recommended in case you haven't delved into them. Also, for leftist thought there is great virtue in the so-called "alternative reading" of the marxian theory of value, deriving from the famous interpretations of I.I. Rubin's essays - which most orthodox marxists don't take into account (F.H. Pitts has done a great job describing it in his recent book simply called "Value"). It is of course impossible to cover the entirety of thought on value (which in most times was not the task of any field alone), so the above are mere recommendations from my personal journey on value rather than critique of your overall very educating and enjoyable video.
In case you have still room for further theoretical discussions on value, you may also check out my humble contribution to the topic here - definitely less enjoyable than a video essay: www.thecommonsjournal.org/articles/10.5334/ijc.1153. My research is situated within the broader field of the governance and the commons, so my proposition on value is based on that.
Since you've done a PhD on it... Do you think that a good definition of "value" is even possible? If the search itself is what has provided utility, rather than actually providing an answer, then why that particular goal of explaining "value"?
@@Multihuntr0 Hi Brandon. As mentioned in my comment, questions on value are worth exploring for their own sake. It is a heuristic and hermeneutical framework that helps us understand and challenge our assumptions that define our world and how it functions. So, an all-encompassing definition on value that works for every society and all times cannot exist, and is also, arguably, dangerous. But this does not mean that a *good* definition of value is impossible. The question is, rather, good for whom?
I'm soooo glad this video exists and that I've watched it. It's very informative, and actually often when hearing about labour theory of value I was asking myself how does it hold up under some scrutiny. Thank you a lot for your work!
Unlearning, your early videos may not have been particularly valuable in monetary terms or had much of an effect on GDP, but they were infinitely valuable within the ony market that matters - the marketplace of ideas 💰💰💰
Finally, new edited content, and on a very interesting topic. I will have to wait until the weekend to watch this due to time constraints, but I'm really looking forward to it.
This was a fantastic video, and incredibly helpful. For anyone who wants a more anthropological angle to similar notions of labour and value, I'd highly recommend "Work: A Deep History, from the Stone Age to the Age of Robots" by James Suzman.
One caveat is that he falls back on some linear progression/evolutionary narratives that modern anthropology has sort of left behind. However the book is, in general, fantastic.
The irony of watching RUclips equating to reading theory right after the entire section about the labor value/price issue. So good.
This is a very well done video UE! The editing does very much help me with parsing the video.
I don't understand the concert example. Sure, the speakers generated surplus value but...a worker had to carry those speakers to the stage.
Another worker had to build those speakers, and another worker had to design those speakers. And they only work with electricity, which comes from...you get the idea.
So it's no different than an automatic machine doing the job of a labourer - it produces value, but ONLY when labour is put into it.
The point is that it produces surplus value. The machine or speakers don't just transfer parts of their own value to the product (as marx thought), thereby depreciating in value themselves, but add value above this and so bring a return on investment (profit) just from the machine itself. In other words, in principle, a capitalist could deploy machines that do not require labor input, and still turn a profit. This is something marx denied.
@@kvaka009 " In other words, in principle, a capitalist could deploy machines that do not require labor input"
This isn't possible though, and you cannot point to any examples of it happening.
Even if we're talking about some kind of 'ideal machine', it would still require electricity, which basically means it doesn't produce value unless attached to a long wire that has a worker on the other end of it.
@@DeoMachina hence the, "in principle" bit. The point is that it is theoretically possible, which contradicts marx. The main point is that the production process can in principle yield a profit even without labor input since constant capital adds surplus value in excess of the costs of production.
@@kvaka009 I don't think it's even theoretically possible, machines don't do anything by themselves.
@@DeoMachina why isn't it theoretically possible? Watch the matrix if you need an imagination boost. The point is that it's a useful thought experiment to test LTV. If you'd like a better explanation of this important point, look up Stephen Keen. He's an amazing economist. There's a clip of him explaining the point somewhere.
I always love it when it turns out the YTers I like have a face
I don't know if you know this, but most humans have faces.
Eta: and most YTers are human
@@unrightist Most RUclipsrs are human! How preposterous.
54:56 I would suggest Anwar Shaikh on the rate of profit. He is econometrically extremely careful and his results are quite striking. I do find it strange that you omit mention of the fact that Smith and Ricardo also believed in the fall in the rate of profit.
One of the best channels I've discovered this year. Cheers!
After rewatching this video for the 3rd time, i have to tell you how much it expanded my view of economics. I studied social sciences and had many economics classes but none of them focused on theories of value. Only after watching this video i understood many of the theories i studied in university. I think it should have more views because so many debates about economic theory are happening without having this basic understanding of what produces value. Anyway, keep going and i hope you have a great year ahead!
Maybe the true theory of value are the friends we made along the way
On the falling rate of profit: it seems weird to me that barely anyone seems to suggest the idea that the reason suppressed wages would cause the rate of profit to go down is because workers are both producers *and* consumers in an economy. Workers *need* their wages to buy the products and services that their collective labor produces, and without sufficient wages companies can't maintain or increase their sales. That seems like such an obvious solution to the puzzle, and even allows room for factors like credit disturbing the relationship between these factors. I stumbled onto this consideration when trying to figure out why robots would be different from human workers in terms of creating value, and the answer is simply that none of their costs are externalized (maintenance and power use are completely factored in) whereas workers have political power through collective structures (note: slaves and robots are identical in this regard; all their costs are factored into the production process). Workers take their wages into the wider economy, and the capitalist can't factor in how much *demand* that wider economy will generate for their goods and/or services.
In short, if workers can't afford to buy what they produce, capitalists don't have demand for their supply. Hence, rates of profit fall as wages do; barring extenuating circumstances such as the introduction of more debt into the system, the breaching of new resources (to drive down costs) or high-impact innovations that increase productivity and offset the downturn.
That's my suspicion on the issue anyway; what do you think?
The debt point is a very interesting one. Offsetting a loss of wages with consumption via debt accrual is a clearly identifiable historical trend in developed countries. Correlating a rising debt with a stagnation or rise in the rate of profit would seem to me to be a fairly good indicator.
The falling rate of profit comes from the continuous increase in investment into capital for production! The rate of profit tends to increase in economic crisis, since workers are even more exploited during these times.
Hey there's a munecat in here! Cool to see the colab. Love both of your channels.
I really can’t underestimate how crucial your videos are for making sense of the world we live in.
I'd very much like to put another comment just to remind you that I highly appreciate your moderate, skeptical, concise, and well researched videos. I learn a lot, efficiently, and with sources.
@Unlearning Economics. Great video as always. One comment regarding the concept of abstract labor: not that I think this will make Marx's arguments for the LTV more empirically testable relative to the transformation problem, but you didn't really mention that for Marx, the theory relies on what he calls 'abstract homogenous labor,' not the concrete labor of individuals. (This is related to but NOT identical with the concept of socially necessary labor-time). If we take this notion on board, it's not surprising that value can't be correlated with price on an individual level. You might see this as another checkmark against the theory, but as it's pretty crucial for his argument overall, I am surprised you didn't address it. Any thoughts? Lastly, a theory having non-empirically testable metaphysical suppositions does not, automatically, make it unscientific. (Not that you suggested this specifically, but I think your video could be misconstrued). You cannot empirically test the assumption of the causal closure of physical systems is statistical mechanics--but it is required to derive entropy as a measure in those systems. In many cases (in fact in most, if not all finite empirically real cases) that closure is demonstrably false, but thermodynamics is none the worse for it. By comparison, it would be a mistake to look for entropy in the movements of individual particles--you could never find it there--just as it may be a mistake to look for 'value' in the concrete labor-expenditure of individuals. What the ensemble behavior of a system of particles is to the one, social form may be to the other. Of course, in the case of the thermodynamics, we know the precise mechanism by which the microphysical dynamical laws aggregate into macrophysical properties of systems. In the case of value, the system seems to be much more complex, and it's not even clear that the same kind of reduction should be expected, because we are not yet sure whether value is even a completely coherent notion. Thanks!
Thanks for your comment. There are definitely some key distinctions to tease out that just weren't suited to the format. I recall Bertell Ollman using the concept of abstract labour quite effectively in his book on alienation - alienation being a Marxist concept I regard as crucial.
One of my pet peeves with economics of all types is that unlike natural science, units aren't often well-defined. So it's true that entropy is a metaphysical concept but it does have units which pop out of the equations, whereas the abstractions in economics tend to be starting points.
OTOH, if you just view LTV as a lens that gives us some insight into capitalism...I do not disagree. There are just other lenses, whether alternative or complementary.
I think "theories" of value should instead be called "interpretations", just like the varied and untestable interpretations of quantum mechanics. The divide between Marxian and subjectivist versions what "value" is, reminds me a lot of the divide between the Copenhagen, Bohm, and Many-worlds versions of what QM "really means".
@@TheShadowOfMars sorry, but wanted to add a perspective as a healthcare worker.
We also have these kind of concepts, called lenses/perspectives/focus. They are usually not explicitly stated, but are a core influence of both clinical practice, public health, and related policies.
I can't prove what health and disease are, i can declare what i view them as and then that will change my understanding of the world and practice.
Its just a model
Its not an absolut truth
Great video. Love the inclusion of people like Munecat...and yes, "Destiny has a point" is as hard to say as it is to hear.
Way to put yourself out there and try new things, great informative video!
Very happy to have you in this space of creators!
they weren't kidding when they called economics the alchemy of the social sciences
I will always maintain that cleaners are the most important workers of most companies. If the CEO is gone for a month, things might pile up that are big and important, sure. But if the cleaners don't work for a week, a building becomes unlivable and nobody will be able to work anymore.
There's so much nuance to any of these things. Thanks for making this video.
I feel like IT (as much as I hate IT guys) are probably more integral to the running of the company as cleanliness isn't an immediate issue and long term could be kept as a very minimal issue if the workers just clean the space they use, whereas most workers don't have the expertise to fix things when their computer system breaks down or they have a cyber security issue.
But this is mainly because most companies nowadays rely so heavily on technology for most people's jobs, and this would affect some companies much more than others. For example cleaners are more important in a hospital than an office because the goals of the hospital require the cleanliness of the environment in a way that most workplaces don't. Although in a hospital I'd say the nursing staff are the most integral because they make up a large proportion of the work force and their duties are integral to the hospital running.
@@alexjames7144i think IT is pretty vital yeah
All the software is bodged together so anything beyond a week without IT spells doom
The mind has it's way of creating meaning from meaninglessness
it's hilarious that time goes on and on and still every response to marx's theory of value just brings points he rebutes in the first chapter
sure thing bud,what points?
@@manolisiatrou5537 In this case, the effectiveness of value/surplus value. He justifies in the first chapter why he doesn't operate with exchange value again until the third book
@@yPGzRicardo yeah but are we gonna ignore how marx,qmong many others,completely glosses over the fact that value can absolutely be generated by machinery?
@@manolisiatrou5537 don't worry he didn't!!! that's chapter 5 of the first book
@@manolisiatrou5537 actually the whole first book is basically about this, really
I don't feel like you addressed the labour theory of value very well in this video, because fundamentally the theory is about what prices are doing. You also said that people make decisions based on nominal prices, but that's not really true is it? It's about the relationship between nominal prices, their wealth, and their income - the price of their labour, income from investments, etc. You also shifted out of the SNLT framing you introduced from Marx when you started explaining the transformation problem. Marx's SNLT framing of the LTV captures some very interesting intuitions about what people are trying to do when making purchasing decisions and pricing goods. Firstly, if you can get the same thing via less work on your own part, that's the option you're going to choose: price directly affect how much job work we have to do at the work job in order to get something we want from the market. Secondly, everything enters the economic system via someone doing something. This includes capital. This is why the "do the loudspeakers create value??????? I don't know???" objection is so obnoxious. The loudspeakers are just human economic activity people made them in a factory. Yes, they do make things possible that would not be possible without speakers, that's why people bought them.
I'm not saying that the LTV is 100% factmaxxed science excellence here, but just that I don't think you engaged what most leftcoms and people with a really specific enjoyment of capital vol 1 believe about value creation in capitalist economies, so it wasn't a persuasive presentation of the ideas.
Furthermore, the alternative of accepting marginalism or abandoning theories of value all together is unappetising from a political standpoint. From the perspective of raw economic science, I can see why a post-keynesian focus on just price makes sense, but to say that the question of "who does all the work around here?" or the question of "what is this economy thing really organising" is impenetrable and unanswerable and it could have well just been the loudspeakers themselves that are responsible for the concert is like saying that the pots cooked my lunch and my lunch did my work, using me as a tool. Businesses are never so agnostic about how value is created in their internal processes. They have their own theories of value, some self-serving by justification of inequality, and some more for decision making, but you're not going to find many business people who tell you that they don't know where value comes from in their operations, it's an illusion and all that exists is price and here's why - people value things. Theories of value under capitalism and therefore about how the dominant mode of production affects what we value. Next time you go visit your mum and have dinner, you're not going to give your mum a bottle of dishwashing liquid and a sponge and say that she should wash the dishes now becauseit is unclear whether the value is in part created by the capital itself and you funded the capital.
Here is what I think the debate is about: is the price paid for a good or service a function of the labour that went into producing it and the materials and capital used to make it. The transformation problem argument seems like a kind of mathematical strawman of the theory as a whole where we get various political economists who did a maths weird and bully them for making a maths goof like "haha if you add it it doesn't work you dingus" but if you actually go to a company and you look at their cost breakdowns, number of hours worked on the job is quoted as a substantial cost, and their suppliers will cost the materials, machines etc in a similar way. Maybe rents are the biggest factor that isn't just pure labour and that's where the disagreement actually happens: if the relative price renting a building goes up because the surrounding area was improved relative to other areas, do we attribute that price increase to the labour done to improve the surrounding area? I think that the answer is yes, but it's clearly a matter of opinion. However, these kinds of matters of opinion can be supported and disputed by facts and analysis and I believe that they should be taken seriously because the material consequences of who we as a society has the right to what are immense.
Fascinating how I can watch an hour long video and retain absolutely nothing.
10/10 would watch again
I wouldn't admit this to any of my family or friends, but I find your series fascinating. My fascination maybe because I don't know shit about economics so there is not a lot I need to "unlearn," and I recognise the value of challenging accepted or established thought on any given subject. My fields of study are urban planning and urban design and I would dearly love to see a series titled "Unlearning Urban Planning" or "Unlearning Urban Design." Both subjects are rife with commonly accepted fallacies, misconceptions and pointless assertions based on useless data or speculation. As an urban planner I question our ability to make urban land more productive in a way that is increasingly efficient, and as an urban designer I question our ability to interface with the urban environment and the natural environment so that we mortals are more productive and more efficient. This means I might have a greater interest in the subject of economics than I would like to admit. Thank you for your efforts on my behalf.
The idea that services don't create value is laughable. Imagine believing there is no value in the transportation of goods. Imagine believing that there is no value in saving someone's time. Imagine believing that there is no value in teaching meaningful skills to someone.
Yeah that'd be really silly... Which is why Marx had a whole section in capital talking about it 😑
I swtg 90% of anti Marxism is just people who don't know what they're talking about inventing an imaginary idiot Marx in their head
Thanks for the video! The animations do help to follow the arguments.
Hope that, for balance, the next one will uphold the immortal science of marxism-leninism…
Jokes aside, I'm always surprised by the severity with which we read Marx, a special treatment which seems reserved for him alone.
As you said, Adam Smith defending the labour theory of value has never stopped libertarians from reading him (well, quoting him, mostly) and I don't see people going back to his theories with the intent to show how the falsity of the LTV undermines every paragraph of his economic writings. Mill has earned his place in the Hall of Fame of Liberalism, his inept economic theories are never held against him. Most people blabbering on about "Pareto efficiency" have not read even two pages from his Cours d'économie politique, and so on and so forth for every other theorician -- absolute coherence is hardly the first priority, in mainstream economics or in their critics, when looking for insights in the theoricians of the past.
It might be argued it happens in response to marxists defending his system as a rigourous chain of scientific reasoning, but he is hardly the only economist, even in this video, having claimed that.
(As a gesture of peace towards the wicked marginalists, I have to say on their behalf: you do not present them in the fairest way either! An interesting angle if you come back to them in a future video would be the fact that even though most of them have built their systems as an explicit attack against socialist doctrines [trying to save the conclusions of classical economics while destroying their foundations from which marxism had been built, including the LTV] their calculations ironically work even best when optimizing state monopolies, think the french electric grid after Marcel Boiteux, or how it echoes the positions of Kantorovitch or Novojilov in heated soviet debates about the remuneration of capital...)
42:55 The fact that capitalists do not use a marxist analysis in their understanding of value, is, if not a moot point, one that cannot really take a marxist by surprise, as it is part of Marx's critique of capitalism : the capitalists do not know what they are doing, nor their true place in the system. As they rely on false notions of how profit is extracted they make decisions that benefit them in the short run but harm the capitalist class as a whole on the long term. (classical case being an individual capitalist investing in heavier machinery, increasing its share of fixed capital and lowering the rate of profit, as investment have to increase to follow, which then generalize in the field, squeezing the rate of profit as a whole)
See when he writes things like "The individual capitalist may imagine (and for his accounts it serves as well) that […] but […]" like here in the Grundrisse www.marxists.org/archive/marx/works/1857/grundrisse/ch07.htm
Since before that you quoted David Ellerman criticizing the tendency of Marx and Marxists to "unveil", "reveal", the true nature of things (33:56) which veers away from empirical analysis, adding then Steedman arguing that his theories are bad (because the true criteria of truth is echoing the models capitalists use to guide their actions) doesn't really feel like a gotcha, but rather a bit like complaining both that the food is awful and that the rations are too small. Marx tries to go beyond common capitalist discourse, it's one thing to say he failed, it's another to imply it shouldn't even be tried by putting these quotes back to back. (your conclusion goes against such implication as well)
In any case, we're only scratching the surface here, there would be other ways of defending the LTV on the transformation problem, but most people do not want to read book III from the Capital, and in a way, I agree that there are probably better uses of your time than proving by the powers of quantic dialectical materialism that actually Marx was right. (even when Marx IS right, how does it matter? Will you really convince anybody with your 2000 pages discussion proving the LTV? Saying Marx was wrong is more demobilizing than proving him right is mobilizing.)
54:12 Yes instead of squinting at MARXISTS graphs let's squint at FRED graphs, that's how you know we're in science territory.
1:03:39 "Having an eye for the fact that labour has less bargaining power; that there are monopolies and those things are bad; that crises happen and that there is an environmental crisis - none of these things require you to buy into the labour theory of value."
Somewhat, I agree, but don't you undermine the point of your channel? This point could be extended to any and all economic theories, research papers or wikipedia pages you have discussed previously, I don't need any of them to vaguely know monopoly bad, labour power crushed, crises happen and climate change.
I agree that "Saying Marx was wrong is more demobilizing than proving him right is movilizing" though that can be said for any academic discussion, I think. Anti-intellectualism looks like is a thing, even if in this video is shown as a joke.
(edit for grammar)
Awesome comment, I wish you were on the next streaming where you could argue somewhat directly with the guy about this stuff.
"Saying Marx was wrong is more demobilizing than proving him right is mobilizing."
Exactly, it's like, why even do this? He disproves Paul Cockshott's graph and then doesn't go into whether any actual good research has been done into it. He zooms in on a graph to show that at the end of the 19th century the rate of profit was not falling; very similar arguments that climate change denialists use. And his conclusion is also very wrong. Yes, everyone knows monopolies are bad, but because of these theories we have an idea of what to do about it. Without it you can just advocate for nicer capitalism like a liberal. Or maybe less government regulations will actually solve it, like the libertarians say. And his ad shows a website which puts right-wing news on equal footing with left-wing news "to cover your blind spots". What is his goal here? I have the feeling he is not trying to unlearn any of the bourgeois economics he has learned.
So impressed you actually did the orange juicing bit. 10/10
That was the highlight of the video for me
Some of that was hard to track, but I really love your videos. Your voice is quite satisfying to listen to as well.
Reading about LtV it was always obvious to me that it was model specifically about class dynamics. It was a model seeking to explain how a class forced to sell its labor for subsistence and one which can seek rent on capital accumulated primitively. It never seeked to describe the inherent value in something, there are just too many variables to account for. Even a coat loses value in your eyes the more coats you own and the same goes for money. 60 bucks for a worker is a lot but for a billionaire it's nothing. I agree with the sentiment that people have tried to extrapolate too much out of the LtV
Smith and Marx address this in their contrast of price, value in exchange, and value. One is of course free to disagree, but the critique has never made sense to me because it seems to assume the labour theory of value is the worst possible explanation extrapolated from a one sentence summary of what it is.
@@Cuthloch same, UEs examples specifically seem unfitting given most were not between employer and employee but two people of equal standing competing against eachother. It misses the point. A better example would be you need to eat atleadt half a deer to survive, the other person owns the full rights to the exploitation of the resources that are deers. They will allow you to hunt one deer per day as long as you give them the other half of the deer. Like the LtV was meant to describe the rent seeking on labor by restricting access to capital. Trying to use it to describe prices is like trying to fry eggs with a toaster to me
Looking forward to working in a field with you guys after the end of the world!
The fields will be dead, we shall head to the mountains where its cold enough to grow crops
Great video. I guess I naively thought that the labour theory of value was about the fact that nothing gets done without labour whereas it's not the case for capital. I didn't realise that value was supposed to predict prices in a similar way that GDP doesn't measure raising children, caring for family, or volunteering in the community. All of which is valuable.
So you're not totally wrong. I'm trudging my way through Capital right now, and Marx does explicitly say that the thing that makes raw materials valuable is the labour that shapes them into something people want (a use-value). Without that labour, raw materials have no use-value, or are at best gifts of nature (like how air is just there to be breathed and water in a lake is just there to be drank, and these things don't TECHNICALLY require labour to breathe/drink).
However, where Marx goes with this starting point to convert labour into price is where it gets complicate. Like UE says, it's an interesting framework, but it does rest on moral and metaphysical assumptions that are ultimately very circular...much like basically all theories of value...
Just to add on the important point I missed out: the reason Marx says that is because no one just wants iron by itself. They want a THING made of iron. So the fact that there is iron in the ground is not valuable to anyone. That's hos argument at least.
@@ProfDCoy It ignores that there is value in potential though. That the iron could be used one day is valuable in and of itself, which is why land with iron under it sells for more than land without iron under it.
It's not at all supposed to predict prices. Prices are set before value can be determined.
@@shane_rm1025 you're not wrong, but un fairness to Marx, he wouldn't deny that it's "valuable" in some sense to have a lot of iron around. He just defines "use-value" as something bestowed only by labour. And "use-value" is not quite the same as "valuable". I've probably been very sloppy and outright wrong in explaining his theory, but that's because theories of value are complicated and metaphysical and because I struggle to understand Marx tbh. Reading Marx has been wild and enlightening - he's an incredibly dense thinker, in the most positive meaning of "dense", as in "thoughts per page"- but the density often feels like trying to hold a stream of water in your cupped hands: it's hard to hold onto it all.
If Marx lent anything permanent to value theories, it wasn't the labour theory of value, imo, it was his meticulous analysis and critique of the theories that came before him. He basically showed that we have to be very, very, very careful when using words like "value" and "price" interchangeably. And I've probably already fallen into that trap.
Tldr: Marx wouldn't have said iron isn't valuable; just that it's not a "use-value" (Would You Like To Know More?).
33:10
"evidence I have touched grass"
Got a hearty chuckle out me
I loved the video and clarifications so much, very cathartic but also made me think! However, I think you may have missed a few points out of punctuality. I thought I was above leaving big youtube comments, but I think there's a chance you might see this and I really liked the video sooo. In the Marxist tradition, those who were immediately inspired by Marx came out with strong ideological convictions to the labor theory of value put forward by him, which led to several clarifications by Marx. The most famous comes from Gothakritik in his response to the statement that "labor is the source of all wealth":
Labor is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labor, which itself is only the manifestation of a force of nature, human labor power. the above phrase is to be found in all children's primers and is correct insofar as it is implied that labor is performed with the appurtenant subjects and instruments... The bourgeois have very good grounds for falsely ascribing supernatural creative power to labor; since precisely from the fact that labor depends on nature it follows that the man who possesses no other property than his labor power must, in all conditions of society and culture, be the slave of other men who have made themselves the owners of the material conditions of labor. He can only work with their permission, hence live only with their permission.
I really think it was a let down to miss out on one of the biggest counterfactuals to this so-called "marxist labor theory of value."
I'd also like to add a few more points for consideration. You mention that value is just as much about ethics, and is historically transient like ethics is. I think that, in the context of political economy, the point is that, just as individuals can come to a set of operational ethics out of an internal set of logic and assumptions, so may a unique economic organization, sort of like if society as a whole was a brain, where the whole structure of cognition is only given by zooming out from all the neurons to see the forest. For example, in capitalist society, even if it may not be the case absolutely that all value is made from labor (like Marx states above), the logic of capitalists and of the market leads to the system computing wealth in that overall sense. The system as a whole, like AI, may come to intuitions or judgements which are wholely divorced from our individual perceptions or prescriptions of utility.
Of course, capitalists in their immediate focus are not concerned in TRPF in terms of value, only profit. That is clear as record dividends are made in the midst of crises. However, the example of a real GDP vs a nominal GDP shows that price can be a facade. Even if GDP increases, productivity (e.g. value) may not increase unless adjusted for accordingly. Value has more to do with what is physically realized, a perceived utility which can constrain or determine the path of the economy, while price just matters to the immediate transaction. Value is a direct window into whether an economy can grow, and has the ability to continue to grow and consume, while price is subject to all the quirks of distribution in the market.
We might say, quite reasonably, that attempts to subsidize agriculture (and the limitation of its productivity to preserve a fixed price) in the US is an example of trying to insulate the circuit of capital from the fluctuations of competitive price and halt TRPF, so that it may continue to produce exchange-value even through crisis and prevent the obsolescence of capitalist exchange-value which makes it possible at all for the holders of capital to gain wealth from agriculture in the long-term, notwithstanding even immediate price. I think this also provides insight into how and why neoliberalism became a hegemony.
I think its also uncharitable to say that "curtailing forces" makes it unfalsifiable. This is only true insofar as we just leave it at "curtailing forces" but of course Marxists have a list. If the rate of profit grew in the absence of any significant amount of the forces, then that would be falsifying the theory. If someone is just coming up with new excuses, we'll know it.
A final thought is that I don't think you indict marxists on this, but I wish you made the situation far clearer: the lack of good samples to test value theories comes from the youthfulness of capitalism and the lack of good data. In situations like these, it is not that the theories of value are proven wrong, but that they can't be directly concluded.
Excellent points.
Nice! I´m really glad that you´ve covered this topic!
Marx’s Refusal of the Labour Theory of Value
David Harvey
March 1, 2018
It is widely believed that Marx adapted the labour theory of value from Ricardo as a founding concept for his studies of capital accumulation. Since the labour theory of value has been generally discredited, it is then often authoritatively stated that Marx’s theories are worthless. But nowhere, in fact, did Marx declare his allegiance to the labour theory of value. That theory belonged to Ricardo, who recognized that it was deeply problematic even as he insisted that the question of value was critical to the study of political economy. On the few occasions where Marx comments directly on this matter,1 he refers to “value theory” and not to the labour theory of value. So what, then, was Marx’s distinctive value theory and how does it differ from the labour theory of value?
The answer is (as usual) complicated in its details but the lineaments of it can be reconstructed from the structure of the first volume of Capital.2
Marx begins that work with an examination of the surface appearance of use value and exchange value in the material act of commodity exchange and posits the existence of value (an immaterial but objective relation) behind the quantitative aspect of exchange value. This value is initially taken to be a reflection of the social (abstract) labour congealed in commodities (chapter 1). As a regulatory norm in the market place, value can exist, Marx shows, only when and where commodity exchange has become “a normal social act.” This normalization depends upon the existence of private property relations, juridical individuals and perfectly competitive markets (chapter 2). Such a market can only work with the rise of monetary forms (chapter 3) that facilitate and lubricate exchange relations in efficient ways while providing a convenient vehicle for storing value. Money thus enters the picture as a material representation of value. Value cannot exist without its representation. In chapters 4 through 6, Marx shows that it is only in a system where the aim and object of economic activity is commodity production that exchange becomes a necessary as well as a normal social act. It is the circulation of money as capital (chapter 5) that consolidates the conditions for the formation of capital’s distinctive value form as a regulatory norm. But the circulation of capital presupposes the prior existence of wage labour as a commodity that can be bought and sold in the market (chapter 6). How labour became such a commodity before the rise of capitalism is the subject of Part 8 of Capital, which deals with primitive or original accumulation.
The concept of capital as a process - as value in motion - based on the purchase of labour power and means of production is inextricably interwoven with the emergence of the value form. A simple but crude analogy for Marx’s argument might be this: the human body depends for its vitality upon the circulation of the blood, which has no being outside of the human body. The two phenomena are mutually constitutive of each other. Value formation likewise cannot be understood outside of the circulation process that houses it. The mutual interdependency within the totality of capital circulation is what matters. In capital’s case, however, the process appears as not only self-reproducing (cyclical) but also self-expanding (the spiral form of accumulation). This is so because the search for profit and surplus value propel the commodity exchanges, which in turn promote and sustain the value form. Value thereby becomes an embedded regulatory norm in the sphere of exchange only under conditions of capital accumulation.
While the steps in the argument are complicated, Marx appears to have done little more than synthesize and formalize Ricardo’s labour theory of value by embedding it in the totality of circulation and accumulation as depicted in Figure 1. The sophistication and elegance of the argument have seduced many of Marx’s followers to thinking this was the end of the story. If this was so then much of the criticism launched against Marx’s theory of value would be justified. But this is not the end. It is in fact the beginning. Ricardo’s hope was that the labour theory of value would provide a basis for understanding price formation. It is this hope that subsequent analysis has so ruthlessly and properly crushed. Marx early on understood that this was an impossible hope even as he frequently slipped (I suspects for tactical reasons) from values to prices in his presentations as if they were roughly the same thing. In other instances he studied systematic divergences. In Volume 1 Marx recognizes that things like conscience, honour and uncultivated land can have a price but no value. In Volume 3 of Capital he explores how the equalization of the rate of profit in the market would lead commodities to exchange not at their values but according to so-called “prices of production.”
But Marx was not primarily interested in price formation. He has a different agenda. Chapters 7 through 25 of Volume 1 describe in intricate detail the consequences for the labourer of living and working in a world where the law of value, as constituted through the generalization and normalization of exchange in the market place, rules. This is the famous transition, at the end of chapter 6, where Marx invites us to leave the sphere of circulation, “a very Eden of the rights of man” where “alone rule Freedom, Equality, Property and Bentham.’ And so we dive into “the hidden abode of production” where we shall see “not only how capital produces but, how capital is produced.” It is only here, also, that we will see how value forms.
The coercive laws of competition in the market force individual capitalists to extend the working day to the utmost, threatening the life and well-being of the labourer in the absence of any restraining force such as legislation to limit the length of the working day (chapter 10). In subsequent chapters, these same coercive laws push capital to pursue technological and organizational innovations, to mobilize and appropriate the labourers’ inherent powers of cooperation and of divisions of labour, to design machinery and systems of factory production, to mobilize the powers of education, knowledge, science and technology, all in the pursuit of relative surplus value. The aggregate effect (chapter 25) is to diminish the status of the labourer, to create an industrial reserve army, to enforce working conditions of abject misery and desperation among the working classes and to condemn much of labour to living under conditions of social reproduction that are miserable in the extreme.
This is what Diane Elson, in her seminal article on the subject, refers to as “the value theory of labour.” It is a theory that focuses on the consequences of value operating as a regulatory norm in the market for the experience of labourers condemned by their situation to work for capital. These chapters also explain why Bertell Ollman considers Marx’s value theory to be a theory of the alienation of labour in production rather than a market phenomenon.3
But the productivity and intensity of labour are perpetually changing under pressures of competition in the market (as described in the later chapters of Capital). This means that the formulation of value in the first chapter of Capital is revolutionized by what comes later. Value becomes an unstable and perpetually evolving inner connectivity (an internal or dialectical relation) between value as defined in the realm of circulation in the market and value as constantly being re-defined through revolutions in the realm of production. Earlier in the Grundrisse (pp. 690-711), Marx had even speculated, in a famous “fragment on machines,” that the embedding of human knowledge in fixed capital would dissolve the significance of value altogether unless there were some compelling forces or reasons to restore it.4 In Volume 3 of Capital Marx makes much of the impact of technological changes on values leading to the thesis on the falling rate of profit. The contradictory relation between value as defined in the market and value as reconstructed by transformations in the labour process is central to Marx’s thinking.
The changing productivity of labour is, of course, a key feature in all forms of economic analysis. In Marx’s case, however, it is not the physical labour productivity emphasized in classical and neoclassical political economy that counts. It is labour productivity with respect to surplus value production that matters. This puts the internal relation between the pursuit of relative surplus value (through technological and organizational innovations) and market values at the center of Marx’s value theory.
A first cut at Marx’s value theory, I conclude, centers on the constantly shifting and contradictory unity between what is traditionally referred to as the labour theory of value in the sphere of the market (as set out in the first six chapters of Capital) and the value theory of labour in the sphere of production (as analyzed in chapters 7 to 25 of Capital).
But the materials presented in chapter 25 of Capital suggest that it is not only the experience in the labour process that is at stake in the value theory. Marx describes the conditions of social reproduction of all those demoted into the industrial reserve army by the operation of the general law of capital accumulation (the subject of chapter 25). He cites official reports concerning public health in rural England (most notably those by a certain Dr Hunter) and other accounts of daily life in Ireland and Belgium, alongside Engels’ account of The Condition of the English Working Class in 1844. The consensus of all these reports was that conditions of social reproduction for this segment of the working class were worse than anything ever heard of under feudalism. Appalling conditions of nutrition, housing, education, overcrowding, gender relations and perpetual displacement were exacerbated by punitive public welfare policies (most notably the Poor Laws in Britain). The distressing fact that nutrition among prisoners in jail was superior to that of the impoverished on the outside is noted (alas, this is still the case in the United States). This opens the path towards an important extension of Marx’s value theory. The consequences of an intensification of capitalist competition in the market (including the search for relative surplus value through technological changes) produce deteriorating conditions of social reproduction for the working classes (or significant segments thereof) if no compensating forces or public policies are put in place to counteract such effects.
In the same way that the value theory of labour is foundational for Marx’s approach to value, so “a value theory of social reproduction” emerges as an important focus for study. This is the prospect that Marx opens up in the last sections of chapter 25 of volume 1 of Capital. This is the focus of those Marxist feminists who have worked assiduously over the past forty years to construct an adequate theory of social reproduction.5
Marx (Capital, Volume 1, p.827) cites an official report on the conditions of life of the majority of workers in Belgium who find themselves forced “to live more economically than prisoners” in the jails. Such workers “adopt expedients whose secrets are only known (to them): they reduce their daily rations; they substitute rye bread for wheat; they eat less meat, or even none at all, and the same with butter and condiments; they content themselves with one or two rooms where the family is crammed together, where boys and girls sleep side by side, often on the same mattress; they economize on clothing, washing and decency; they give up the diversions on Sunday; in short they resign themselves to the most painful privations. Once this extreme limit has been reached the least rise in the price of food, the shortest stoppage of work, the slightest illness, increases the worker’s distress and brings him to complete disaster; debts accumulate, credit fails, the most necessary clothes and furniture are pawned, and finally the family asks to be enrolled on the list of paupers.” If this is a typical outcome of the operation of the capitalist law of value accumulation then there is a deep contradiction between deteriorating conditions of social reproduction and capital’s need to perpetually expand the market. As Marx notes in Volume 2 of Capital, the real root of capitalist crises lies in the suppression of wages and the reduction of the mass of the population to the status of penniless paupers. If there is no market there is no value. The contradictions posed from the standpoint of social reproduction theory for values as realized in the market are multiple. If, for example, there are no healthy, educated, disciplined and skilled labourers in the reserve army then it can no longer perform its role.
The dialectical relations between competitive market processes, surplus value production and social reproduction emerge as mutually constitutive but deeply contradictory elements of value formation. Such a framework for analysis offers an intriguing way to preserve specificities and differences at the theoretical level of value theory without abandoning the concept of the totality that capital perpetually re-constructs through its practices.
Other modifications, extensions and elaborations of the value theory need to be considered. The fraught and contradictory relation between production and realization rests on the fact that value depends on the existence of wants, needs and desires backed by ability to pay in a population of consumers. Such wants, needs and desires are deeply embedded in the world of social reproduction. Without them, as Marx notes in the first chapter of Capital, there is no value. This introduces the idea of “not-value” or “anti-value” into the discussion. It also means that the diminution of wages to almost nothing will be counterproductive to the realization of value and surplus value in the market. Raising wages to ensure “rational consumption” from the standpoint of capital and colonizing everyday life as a field for consumerism are crucial for the value theory.
What happens, furthermore, when the presumption of perfect competition gives way to monopoly in general and to the monopolistic competition inherent in the spatial organization of capital circulation poses another set of problems to be resolved within the value framework. I have recently suggested, following on some relevant formulations by Marx, that the usual acceptance of the idea of a single expression of value be replaced by recognizing a variety of distinctive regional value regimes within the global economy.
Marx’s value form, I conclude, is not a still and stable fulcrum in capital’s churning world but a constantly changing and unstable metric being pushed hither and thither by the anarchy of market exchange, by revolutionary transformations in technologies and organizational forms, by unfolding practices of social reproduction, and massive transformations in the wants, needs and desires of whole populations expressed through the cultures of everyday life. This is far beyond what Ricardo had in mind and equally far away from that conception of value usually attributed to Marx.
This is nonsense. Marx never explicitly declared his allegiance to the labor theory of value because it was the only theory of value that existed in his time, it would have been superfluous. It was the consensus, you could safely presume any economist at the time, no matter their political leanings, accepted it.
A lot of words for "It doesn't matter that the LTV doesn't hold up to empirical scrutiny because who cares about that anyways? Marxism!" and to that I say: you should care more that your 'scientific' Marxism doesn't respond well to science.
Took me a little bit to get past Sam Smith teaching economics, but humour is once again on point and even the content that I don’t fully comprehend is still thought provoking:)
56:47 The point is that you can predict major crises. They happen when profit hits zero. Ernest Mandel did this in his long wave book, which got a lot of attention when he turned out to be right. Anwar Shaikh also says that he predicted 2008 using this theory. I think predicting the timing of major crises is, well, pretty convincing, although yes there are few data points.
This nuance is a breath of fresh air.
This was so good. I’ve had questions about the labor theory of value for a long time because of the high wealth of people whose sole function seems to be “hype machine” - like elon musk. I wouldn’t say that the value of his companies has anything to do with the value of the products produced, much less with the amount of labor that created it. The amount of vaporware that makes incredible amounts of money before tanking is depressing but also instructive. That’s why i’ve left the realm of objectively verifiable theories of value behind and now subscribe to a “vibes”-based theory of value 😂
"Vibes" is kind of right though - humans have a bizarre ability to create value out of shared belief. That doesn't mean there is no material basis to those beliefs, but if enough people believe a thing it can and does affect our reality.
That's exactly an example of what Marx was predicting though: as more and more production gets automated, new desires have to be awakened in people as sources of profit. Thus, cd's instead of tapes, but thus also advertising and vaporware.
@Christopher Grant The point is that the "duping" as you call it is necessary for the system to function (thus also the blank check from the government for Silicon Valley). As for the cds vs tapes example, if quoted almost verbatim Rick Roderick's description of Marx, to be found here:
ruclips.net/video/2MsNyR-epBM/видео.html
UE didn't explain the value theory in it's entirety, oversimplified part of it and misunderstood others.
The "vibes" approach is a good one, and weirdly enough the one Marx subscribed to (kinda). Value is dialectical, for something to have value it needs to have use value, be produced by labor (nothing exist without labor), and be exchanged (also called exchange value). But the interaction between those three types of value vary greatly but one cannot exist without the others.
Marx's equations are an attempt at quantifying some that isn't quantifiable, and he knows it. So yes the LTV is just a model, but is it really? Or is it just the "math part" that is?
There's many more things to say about the LTV but it would be unreadable
@@alexart9504 Marx's claim wasn't that new desires among consumers had to be awakened in people as source of profit. His claim is that capitalists invest in capital goods as a way of boosting profits.
literally every major rebounce in the falling rate of profit graph coincides with major government intervention to protect profit.
The transformation problem, according to Marx I mean, isn't merely that of a mismatch between prices and value. This is closer to Smith. For Marx the problem is a matter of accounting for how anything is converted into anything else along the lines of capitalist logic. Or in other words, how say raw materials become marketable objects and furthermore how more is gained out of this transaction than what was put into it....and of course the answer is labour. But not merely working in the base scientific sense of an expenditure of energy. It's a matter of how labour appears (I would italicize appears here if I could) as a commodity. Or, how working itself comes to appear as something outside of 'itself'. People work everyday and produce value, ie the possibility of continued subsistence amongst the greater population, without receiving their due. This is called being paid below their value. It's not merely an exception, it's generally a rule. A grocery store worker is paid a wage in order to manage, in one way or another, the stored commodity capital of a capitalist (until it is sold and converted into a useful object Viz consumption). They are never paid what is the value they put out, otherwise, and here's the noteworthy part, there would be no point as a capitalist couldn't make a surplus of their labour. And in a society in which this weren't the case, well we couldn't call this capitalism.
Everyday said grocery store worker shows up to a building they don't own, to take orders from someone they share no kinship with, in order to handle goods that aren't there's! All the while they sacrifice their ability to do anything else, not out of the goodness of their heart or because they feel themselves bound to a cause, but because of a structurally determined necessity which says if they don't, they won't be able to subsist. What they engage in during this time, wage labour, is the conversion of what would otherwise be the free use of their bodies to do whatever, into being a mechanism for the accumulation of wealth for whomever happens to own the institution they are set to work in.
The labour theory of value seeks to outline this imbalanced relationship, not merely between prices and value, but to account for those who do the producing and those who benefit from it.
Only a modern economics student could misunderstand this in such a profound manner!
Oh, so we missed the labour for the prices!
No, the transformation problem is about converting labor values into profit-rate equalizing prices, due to the assumption of classical political economy that continued in Marx's work that profit rates across capitalist industries tend to equalize. We know now that profit rates don't equalize and that more capital-intensive industries have lower profit rates, as predicted by the simple LTV. Since profit rates don't equalize, the transformation problem is moot. UE thinks the transformation problem is about converting labor values into standard prices because he didn't do his research.
Part 1/2
Thank you for this video! It encourages discussion!
* What is the value?
Definition value - working hypothesis
Value reflects a quantified, abstract usefulness of exchange goods, which must be recognized as socially relevant by exchanging them for an equivalent value or for a commodity, and which is assigned to the exchange goods in the same amount by the exchange partners.
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.
Prerequisites for value creation
- The exchange goods must not be freely available.
- For an exchange, the exchange partners must agree on a common value.
- After agreeing on a common value, sufficiently strong weighted needs for these goods must lead to exchange.
The non-free availability has its roots in the paid labor force responsible for developing, manufacturing and providing the goods, in the ownership of these goods or in the power of disposal over these goods.
* A theory of value does not only apply to capitalism
Value-equivalent exchange already existed in the Stone Age (there were mass production facilities for stone tools, among other things), in antiquity, in the Middle Ages and under socialism.
* Do we need a theory of value?
Yes, because value is essential for the functioning of the economy. Especially in the case of competing access to resources (Raw materials, transport, machinery, manpower, electricity, gas, etc.), it cannot be replaced by anything else if the economy is to function optimally for end customers and companies.
But value is also important for all other weighted needs with which exchange must work in the economic sphere of society.
* The main problem of Marx's theory of value (Labour Theory of Value)
Marx assumes that value is produced or created with production, since the market has no meaning for him. He formulated the formation of value with a formula:
W = c + v + s
W value
c constant capital (raw materials, supplier products, with Marx also machines, etc.)
v variable capital (values of labor forces, with Marx only those of human labor forces)
s "surplus value" (is created by human workers in the so-called "unpaid working time”; the entrepreneur appropriates the surplus value without compensation to the workers - the latter corresponds to capitalist exploitation)
But there is still no surplus value on the production side. The entrepreneur can only estimate how much surplus value he could generate on the market with the product.
The buyer has to pay for the real surplus value on the market. Since the surplus value is part of the value, there cannot yet be any value on the production side either.
The cost c + v is associated proportionately with each product of work as a claim for compensation and the expected surplus value is added. The sum gives the expected value for the product
is made visible as an offer price for potential buyers.
The potential buyer and the potential seller meet at the market. For the exchange, they have to agree on a common value. In the bazaar this happens in dialogue, in the department store through the unilateral adaptation of the buyer to the seller's specifications.
If, after agreement, the weighted need (absolute needs do not count in the economy, since individuals and companies only have limited value equivalents available for exchange) for the goods to be exchanged is still strong enough for both partners, an exchange takes place.
If the exchange partners cannot agree, there will be no exchange - the purchase contract / invoice cannot contain a sales price and a different purchase price.
The common magnitude of value is an objective component of value. Its reflection as the purchase price is objectively stated on the purchase contract and objectively the transfer of purchasing power from the buyer to the seller takes place at exactly this value. There's more.
The money supply reflects a right to a percentage of all goods to be distributed economically.
The reflections of the objective magnitude of value in the exchange partners are the subjective shares of value. Before the exchange, these are usually of different sizes.
@@thotslayer9914
I assume you are unable to comment on my comment in a meaningful way?
@@thotslayer9914
Show me what's wrong with my view of value!
@@thotslayer9914
I see that you have no idea about the Labor Theory of Value, you cannot grasp what is wrong or right about it, but you are making jokes here.
You pose as a RUclips policeman in a ridiculous way, which also makes it clear that you completely overestimate yourself.
Thanks for the dense and thoughtful content! I really dig the humor as well.
Maybe the real value was the value we found along the way
Good video - I wish you’d mentioned that the strict conditions where the marginal productivity theory is correct, is ironically the same conditions where the simple LTV holds - equal interindustrial organic compositions of Capital.
Interesting
@@unlearningeconomics9021 Is it? Seems more like word soup that simply declares marginalism only works in the world of LTV, which is obviously not true.
The mad man has done it... keep up the great work
This was very good -- I was under the impression that the falling rate of profit wasn't especially controversial, so this is eye-opening.
IMO, if value is inherently subjective, then it seems like theories of value are more appropriately used to critique (or justify) prices than they are to predict them.
It's important to note that rates of profit are difficult to actually measure in economic terms, because economists include opportunity costs as real costs. The reason for that is simple... if you could make more doing something else, and the only point of doing this is to make money, why aren't you just doing that other thing instead? A higher investment requirement in the form of improved automation and more physical capital translates to an increased opportunity cost for firms. The reason for this is simple; those with less opportunity are being priced out of the market due to those higher investments. This in turn will lead to a desire for improved efficiency to recoup the higher risks. Those two factors create a system that feeds into itself, with the limiter on how much it can feed into itself being external forces rather than economic forces. In example, the finite limit to the effectiveness or availability of automation, or governmental coercion.
Totally worth the camera work, loved the orange bit. Loved it all, very informational. Thank you for uploading. Cheers from Guatemala!
54:00 you can't do that because that only applies to the US. You'd have to compute this for the whole world, since it might mean that while the rate of profit in the whole world could fall, it could increase for the US alone (say, by stealing resources)
Unequal exchange is a great point here. Do you recommend any global databases which I could use for some rookie investigation?
Ah yes, "left" media like CNN. Can't forget to balance that radical revolutionary analysis out with some Info Wars too, so I'll definitely check that bizarre liberal news app out.
The reason why the value of a commodity is determined by (socially necessary) labor, according to Marx is because labor is the only thing that is common in all commodities. What else but labor can provide value? The misinterpretation of this video is that Marx talks of value not as the Metaphysical worth of a thing, but as that what underlies price and dermines the relationship of items traded.
It cannot be empirically disproven or proven. The question concerning the LTV is not whether or not it is true or not true but whether it is useful.
If it can't be proven or disproven, it is not scientific and not a theory. Again, it has clearly less predictive power over relationships of trade than actual price.
He actually does talk about value in that sense, but, following Smith, he's actually concerned with "exchange value" or "value-in-exchange."
@@fellinuxvi3541 Unless you've found some solution to the problem of induction theories cannot be proven or disproven. They can merely better or worse fit a set of other ideas and empirical information, be better or worse articulated, or be more or less appealing. Unless you've got an answer to the problems involved in our understanding of causation I think a Popperian approach to "theory" is clearly ridiculous. Baring the idea that you've somehow disproven transcendental philosophy, we need to understand theory transcendentally.
Of course economics isn't a science in the sense we mean "science" today to begin with, so that's an odd problem to raise with it.
Finally I'm not sure why you're talking about price to discredit the labour theory of value. The labour theory of value is not about prices, it is about value in exchange. Nothing about the fact that prices are not value, and thus does different things than value, says anything about the topic at hand.
@@Cuthloch Theories cannot be proven or disproven conclusively, but they do fit with evidence. Evolution could, in theory, get disproven. General relativity could, in theory, get disproven. Although it's certainly true that they are not the same as scientific laws or observed past phenomena, they're still bound to some principles of falsifiability.
Economics is not a *hard* science, but that does not mean it's free from proving it's theory (specially since Marx did claim his theory was scientific and based on the scientific method). Science is first and foremost a method of acquiring knowledge, and while some areas of human understanding like art are not subservient to it, most forms of acquiring knowledge are. Theories in social sciences must still fill some scientific requirements, like producing tentative knowledge and being falsifiable.
I did not claim LTV was bad because it didn't predict prices, I said prices are more useful in determining exchange than the concept of "value" as understood by Marxists.
@7:00 I love that you actually got a handful of dirt for this point.
lol you 100% got me with "someone else who thought a lot about value... [five second pause]"
me: marx
"david ricardo"
dammit, i literally knew that, why did i let you get me
i guess i just didn't expect a suspenseful pause before name dropping ricardo LMAO
When you calculated the rate of profit over time, you focused on the US. The issue is that Lenin very well points out how the tendency of the rate of profit to fall leads to imperialism and the expansion of markets, thus the TRPF must be analyzed globally.
Also, you claim that the labour value theory has "failed" to predict prices. This is page 5 type stuff, Marx never attempts to predict prices, and specifically differentiates prices from value, saying that prices will only be described with supply and demand
How did you get so far into the video without noticing when he addresses either point?
While I agree with you I think you have definitely not paid attention to the video. He never says that.
@benman The distinction is addressed and criticised in the video.
Yeah I'd like to know how other economic theories explain the US's nonstop wars (both direct and by proxy), why our economy regularly collapses every few years, or why the global south remains so impoverished, even now that colonization is supposedly over. Not being sarcastic here, I would genuinely like to know how other economists address this stuff.
If Marx isn't trying to predict prices, then what's the point of LTV?
It's fairly easy to see why labor is said to produce value but not capital.
A factory with zero workers produces nothing. A worker with zero factories still produces something. A factory (capital) is therefore not a source of value, but an amplification of value of the worker. You can always express the value of the factory as a multiplying factor of the worker, but you cannot express a worker as a multiple of a factory.
The factory itself has a value as utility to the workers, but is also a product of other workers labor. It is labor creating tools to amplify the labor of others.
Not quite - today, we have machines that act autonomously. They still need to be maintained by humans, but it's plausible that we'll create machines capable of self-repair in the future. But machines that can engage in production autonomously still don't generate value because they act at a constant rate and intensity, they are "constant capital" as Marx called them. It's the variable capacities of humans that allow us to add value in production, that's why Marx denoted human labor as "variable capital." Humans can work harder, longer, or smarter, but what you get from a machine is just what you paid for.
this video sure has a lot of value
new unlearning economics? a good day
40:54 Is it me or have you forgotten that arrows also require labor to make?
Wait! Unlearning isn't actually a floating/ melting book with glasses? I feel betrayed!
It is always funny the way American and European RUclipsrs excuse themselves for talking about Marx or socialism. It is almost like Americans/Europeans are allergic to socialism and have to take a pill before discussing these matters. I feel that in Latin America we are much more relaxed in this sense. Marx and socialism are much more respected here. I wonder why.
That's because in South America entire countries didn't have to endure socialism for tens of years!
I lived in the GDR from 1952 to the end. It became very clear to me that such a social system cannot work.
@@rainerlippert The GDR was not socialist. State ownership of the means of production is not Socialism. GDR was not run by Workers, it was run by a bunch of unelected bureaucrats. Lol, Grandpa doesn't even understand Socialism.
@@darkbrandon8431
I realize that they obviously have no idea of reality!
I lived in the GDR until 1990. That was 'real socialism'!
Socialism cannot be otherwise! A few intellectuals seize power and, having no legitimacy beyond their ideology, they must spread a full-scale dictatorship!
The gibberish about the "workers who own the factories" is hollow, because the workers have to work. Others steer.
This can currently be seen very clearly in Germany: Intellectuals, without knowledge, without experience, just stuffed full of ideology, have seized power and, with the help of their completely one-sidedly oriented media and a comprehensive 'Cancel Culture', are spreading a dictatorship that no gives rise to opposing opinions.
This is exactly how it will always go when ideologues wield power!
@@rainerlippert Okay Boomer.
It's more America than Europe tbh. European creators normally do it because most of their audience is American. Marxian beliefs, socialism and communism are all viewed as inherently EVIL and diametrically opposed to democracy and freedom, regardless of what reality is. It's largely a result of all the red scare propaganda during the cold war, combined with a general "know who was a socialist? Hitler. He was a national SOCIALIST" misunderstanding of socialism, nationalism, and Nazis.
The single most important Economics channel and creator on the internet. Bootlickers get boosted by the Boots, we need to make sure this content get boosted as much by the crowd as possible.
Excellent content sir
I have to thank you for making me for the first time not feel like a complete idiot in regards to economics. The labour theory of value always felt weird to me but I don't have the technical knowledge to really break down why
Marxian Values are not unmeasurable quantities. You can show that marxian values are equivalent to Keynesian employment multipliers and can be calculated from input-output tables.
No, the labor theory of value is not "just a way of looking at things". It has been tested and proved to be right. And besides that, it serves an explanation for the phenomenon of the dropping rate of profit. It is the best theory we have. And if those words make you go "but that means that it is just a way of looking at things". THE truth does not exist indeed. If this are the criteria we are applying to things then Einstein's theory of relativity is just a way of looking at things. No, it's testable, it has been used to find new insights that have also been tested, all in all: it's a solid theory. The only reason it is not accepted as the leading theory in the field of economy, is because its consequences are controversial. And I feel like - in many of your videos - that you have been influenced a bit too much by studying bourgeois economics for years.
Edit: I cannot go on for even a minute and you say something stupid again. Yes, the labor theory of value is a postulate; it cannot be proven by deduction, but it is assumed. But so is Newton's theory of force (F=m*a). This doesn't mean that any other theory of force is just as good. We have accepted this because it seems that everyone finds this theory to be in agreement with reality, and no one seemed to be able to find any example that contradicts this statement (until Einstein, but that just means that Newton's theory appeared to be a special case of Einstein's theory, a case that we all live in, so if we assume normal conditions, we can ignore this). The same is true for the labor theory of value. Marx does not claim that a pretty flower has no value, it's just not the value he's talking about; you cannot sell it *because it requires no labor to pluck a flower unless it's very rare.* The same with constant capital: Sure, without it the product cannot be made (or it will require much more labor), but Marx' claim is exactly that if constant capital grows, and variable capital as a result decreases, its value will drop. NOT the abstract concept of value, but the actual prices (assuming there's no inflation). And this explains the inclination of the rate of profit to drop. We see this *in real life.* It's NOT subjective.
I think the problem with value is, its subjectivity. The things that are important to me will not be necessarily important to you; and even if we agree to value a certain object there is no outside mechanism that will objectively price the object, the price will always remain subjective to our thoughts. If you ask me Value comes from our thoughts. It gets complicated when we price the value. It's a choice in which we should all agree upon.
That's actaully an insanely good point/ way of looking at it.
@@maluse227 also an interesting thing about value is there are things in which we find valuable but are priceless; like love, kindness, honor they have intrinsic value but are often if not impossible to price.
Finally, we economists have to swallow the red pill and stop pretending economics is a science.
38:43 This example you found on Wikipedia is of course from David Ricardo!
Signal boost signal boost signal boost. The algorithm needs to promote this kind of content more. Make it happen.