labour theory of value


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labour theory of value

the doctrine, in classical economics (and especially in MARXIST ECONOMICS), that labour alone is the source of VALUE and that the value and price of commodities is directly related to the labour-time embodied in their production. On this formulation CAPITAL represents past or ‘dead’ labour, and this, together with new labour and land, is combined in the process of production. Apart from general arguments for and against Marxism, debates also exist within Marxism over the extent to which empirical prices, profits, etc. bear a systematic and calculable relation to value in its theoretical sense. Often it is accepted that they do not, but that nevertheless the general concept of labour values is useful in indicating levels of ‘exploitation’, tendencies to crisis, etc. within capitalism (e.g. see Wright, 1981,1985,1989). On the other hand, even within Marxism, there are arguments that the labour theory of value is unjustified (see Steedman et al, 1981). Both Pierre Sraffa (1960), in a so-called ‘neo-Ricardian’ analysis, and Roemer (1982), using a game-theory approach, have elaborated the technical reasons for this. Sraffa, for example, argues that the standard of absolute ‘value’ cannot be ‘labour’ in the way that both Ricardo and Marx suggested, but must instead be the ‘standard commodity’ (in which the proportions in which commodities enter net outputs is assumed equal to that in which they enter the aggregate means of production); this standard commodity includes labour, but not labour exclusively. It can be argued, as by Hodgson (1982), that: ‘the extent to which the propositions of Capital depend on the labour theory of value has been over estimated by both supporters and opponents of Marxian analysis’, and that this analysis remains a powerful tool for the analysis of capitalist societies and capitalist economic relations, especially in its focus on production, forms of PROPERTY, and on inequalities – see also CAPITALIST LABOUR CONTRACT, EXPLOITATION, CONTRADICTORY CLASS LOCATIONS. Against this, there exist very real problems for Marxism from any detachment from the labour theory of value, not least an undermining of the LAW OF VALUE and doctrines of an inherent tendency to final crisis in capitalism that have been central, at least to 'S cientistic’ forms of Marxism (see CRISES OF CAPITALISM, ORGANIC COMPOSITION OF CAPITAL, TENDENCY TO DECLINING RATE OF PROFIT). Accordingly, the account of capitalism provided by contemporary Marxism is far less determinate than that given previously
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