Date: Thu, 24 Oct 1996 10:59:16 -0600 (MDT)
Subject: M-TH: Foley on LTV


Below is Duncan Foley in response to Brewer on the LTV.  The section is 
titled:
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"Labor Theory of Value an Exploitation" (HOPE, 1995, pp. 160-1).

Marx took the labor theory of vlaue from Ricardo and Smith as the 
accepted, dominant economic theory of his time.  He made a few clarifying 
emendations to Ricardo, emphasizing, for example, that value is 
determined by socially necessary labor-time, so that commodities produced 
by backward and wasteful techniques have the same value as similar 
commodities produced by up-to-date techniques, and that only labor 
expended to produce commodities for exchange ('social labor' in Marx's 
language) could be regarded as producing exchange value, as well as 
use-value.  He felt, as far as I can see, no need to prove the labor 
theory of value.  (I interpret his remarks about equalization of 
commodities in exchange showing that they have some property in common as 
aimed pedagogically at helping the reader to understand how value works 
conceptually rather than as an attempt to justify the theory itself.)  
Marx saw the scientific importance of the labor theory of value not in 
contrast to marginalist theories but in contrast to earlier theories of 
'just price' and physiocratic theories attributing all value added to 
agricultural production.  Marx seems quite 'modern' in this respect.  He 
saw value as an ongoing expression of the market regulation of resource 
allocation and thus as an expression of the humanity activity underlying 
production.
	Above all, Marx was interesed in the labor theory of value as a 
way linking capitalist forms of economic organization with earlier class 
forms of organization such as slavery and serfdom.  He saw in Ricardo's 
theory of distribution a direct representation of the appropriation of a 
social surplus product in the form of a surplus value by capitalists as 
a class.  Thus for Marx the labor theory of value is important as an 
account of the production of value added at the social level and its 
distribution among classes, not as a theory of the prices of particular 
commodities.  He did rather ingeniously and successfully show the general 
method by which apparent anomalies to the labor theory of value (land 
rent, taxes, interest on the public debt, deviations of price from labor 
values) could be reconciled logically with the theory by considering 
them as redistributins of a given flow of surplus value.
	All modern criticisms of the labor theory of value, including the 
versions Brewer puts forward, assume a model in which the endowment of 
resources is taken as given and indict the labor theory of value for 
coming to erroneous conclusions within this framework.  There are, 
however, serious conceptual problems with the notion of the total social 
endowment of resources: for example, could it be defined and measured 
operationally even in principle?  Without a well-defined endowment of basic 
resources, marginalist methods cannot determine realtive prices.  Thus 
I, for one, am not convinced that the admittedly partial logic of Marx's 
and Ricardo's approach is more defective than the logic of marginalist or 
general equilibrium solutions to the problem of price determination at 
this very high level of abstraction.  
	There is no arguing with the fact that economics refounded itself 
conceptually in the late-nineteenth-century marginalist revolution, 
abandoning the labor theory of value for a different paradigm and that, as 
a result, little further work has been done developing Marx's and 
Ricardo's theory.  I myself suspect (but leave it to more knowledgeable 
students of econmic thought to prove) that Marx's reinerpretation of 
Ricardo's theory as a theory of exploitation had an important negative or 
'dialectical' influence on the development of marginalist thinking, 
precisely because of the marginalists' ideological rejection of 
exploitation theories and their need to find an alternative and 
ideologially more comfortable way to represent capitalist social relations.

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