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According to the Labor Theory of Value, a good is worth as much as the labor put into it. We might then go further and assume that the labor put into it was as valuable as the goods used to fuel that labor (and so on and so on). How then can a theory of exploitation be maintained? Since laborers by definition receive the worth of their labor as subsistence wages?

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The whole point of the (specific) Labor Theory of Value that you apparently refer to, is that, what Labor "injects" as value into goods produced, is more than what Labor needs to consume in order to survive. This is a fundamental assumption/argument, in order to answer the question "how profits come about?".

Then, since the theory argues that profits spring solely from Labor, it follows that they should not be appropriated by the holders of capital (the holders of capital should only get the value of capital etc that goes into the goods produced, a value that does not "inject more" than what it already is). Simply put, after paying third parties for purchases etc out of Sales, and calculating depreciation (which is what the holders of capital should receive), the rest, that would appear as profits, should be distributed to the workers (because it is the workers that created this surplus, not the capital) and not retained by the capital holders. But because they are not thus distributed, the theory of exploitation emerges.

Even more simply, I need to eat one Kgr of bread to produce two Kgr of bread, in which production other goods, equipment etc have participated, whose value amounts to only half-Kgr of bread. I take as wage the one Kgr of bread, and all other factors of production take their half-Kgr of bread. Another half-Kgr of bread remains. It is taken by the owner of the bread business as "profits". It should be given to me, because it materialized solely because of the participation of my labor in the production process -or so the theory argues.

Therefore the phrase in the question

"We might then go further and assume that the labor put into it was as valuable as the goods used to fuel that labor (and so on and so on)"

negates the fundamental premise of this theory, and leads to some other theory, one apparently incorporating a general principle of "preservation of value" (which by the way, is what the Accounting discipline is based on).

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  • $\begingroup$ If labor "injects" greater value than itself, where then is the labor theory of value? Surely the premise would then have to become "goods are worth MORE than the labor required to produce them". So then if the workers attempted to appropriate the full value of their produce, they would be the parasitic class. $\endgroup$ – IHaveNoMovieAndIMustScream Aug 24 '15 at 21:27
  • $\begingroup$ @QuantumLeapfrog I am not following you. Labor produces more goods than the amount of goods that it needs to survive. The theory is called "Labor" theory of value, because it argues that all value comes from labor (and the value of goods and equipment is "dead labor"). So apart from compensating the owners of "dead labor", all the rest should go to Labor alive - the workers. And "all the rest" are what the workers need to survive, plus the profits. If you get what -according to the theory- you are solely responsible for creating, you cannot be "parasitic". $\endgroup$ – Alecos Papadopoulos Aug 24 '15 at 21:51
  • $\begingroup$ So according to you, the value of goods is labor, but the value of labor is not goods (and thus labor)? Or do you mean to imply that labor increases in value from minute to minute, so that the labor expended on baking bread last night is worth less than the frozen/congealed/dead labor of the finished bread of today? $\endgroup$ – IHaveNoMovieAndIMustScream Aug 24 '15 at 22:17
  • $\begingroup$ @QuantumLeapfrog I will try once more, but I am afraid I won't succeed. I would suggest to forget the concept of "value" it is not very well defined anyway. Think quantities. As labor(time, skills) is absorbed in the productive process, the quantity produced (say in one day) equals the sum of the following three things 1) The quantity needed to reproduce goods, equipment services etc that also were absorbed into the day's production 2) The quantity needed for the workers to survive one day 3) A surplus quantity, over and above the previous two. (CONTD) $\endgroup$ – Alecos Papadopoulos Aug 25 '15 at 3:47
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    $\begingroup$ @QuantumLeapfrog Nomenclature is also a matter of historical precedent and origins. But certainly, the main conclusion is that what we understand as "profits" in the everyday sense of the word, is created solely by Labor (to which any managerial services of the businessman as a person are included). $\endgroup$ – Alecos Papadopoulos Aug 25 '15 at 19:31

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