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re: The Labor Theory of Value
Posted on 12/4/25 at 2:16 pm to 4cubbies
Posted on 12/4/25 at 2:16 pm to 4cubbies
Agreed.
He was wrong.
I'm not going to read the whole thread, but Eugen Von Bohm Bawerk
demolished the living shite out of the LTV over 120 years ago.
He steel-manned all of the arguments for it, then obliterated those arguments.
Why do some paintings cost more than others? Why do coats tend to cost more in the winter? And if labor is where value is determined, then who gets to decide what that labor is worth? Even the very foundation of the idea suggests it's subjective.
He was wrong.
I'm not going to read the whole thread, but Eugen Von Bohm Bawerk
demolished the living shite out of the LTV over 120 years ago.
He steel-manned all of the arguments for it, then obliterated those arguments.
Why do some paintings cost more than others? Why do coats tend to cost more in the winter? And if labor is where value is determined, then who gets to decide what that labor is worth? Even the very foundation of the idea suggests it's subjective.
2
Posted on 12/4/25 at 2:19 pm to 4cubbies
Hi Cubbies.
Labor does not create value, bawette. The value makes the thing worth doing or not. A kid could spend 12 hours a day working on a mud pie fort but nobody cares enough for that to give it any value.
My take- the value of a thing doesn’t come from the amount of labor one puts into it, it comes from what another person is willing to pay for the thing. I can do all kinds of difficult laborious things and it has very little value to others. Meanwhile, someone like Taylor Swift can fart in a jar and some Saudi Sheikh would pay her five million dollars for it.
The source of value is in what the Austrian school calls marginal utility. Rothbard, Hayak, Sowell etc all discuss this endlessly. A thing is worth the value any other person places on it. Von Mises talked a lot about how employees are paid and that is based on projections of what someone might pay in the future for what they produce. I pay my assistant based on what I expect my profit to be obviously, not based on the difficulty of her labor.
Employers also allocate investment and labor where they anticipate a commensurate return - not how hard a person works. The value projection comes first, and then the labor calculations.
All of this is just the primacy of human nature- what we call the real world- over ideological “ solutions “- the reality of individuals making trillions of economic decisions every day on what they value- what they should focus on producing and consuming.
Labor does not create value, bawette. The value makes the thing worth doing or not. A kid could spend 12 hours a day working on a mud pie fort but nobody cares enough for that to give it any value.
My take- the value of a thing doesn’t come from the amount of labor one puts into it, it comes from what another person is willing to pay for the thing. I can do all kinds of difficult laborious things and it has very little value to others. Meanwhile, someone like Taylor Swift can fart in a jar and some Saudi Sheikh would pay her five million dollars for it.
The source of value is in what the Austrian school calls marginal utility. Rothbard, Hayak, Sowell etc all discuss this endlessly. A thing is worth the value any other person places on it. Von Mises talked a lot about how employees are paid and that is based on projections of what someone might pay in the future for what they produce. I pay my assistant based on what I expect my profit to be obviously, not based on the difficulty of her labor.
Employers also allocate investment and labor where they anticipate a commensurate return - not how hard a person works. The value projection comes first, and then the labor calculations.
All of this is just the primacy of human nature- what we call the real world- over ideological “ solutions “- the reality of individuals making trillions of economic decisions every day on what they value- what they should focus on producing and consuming.
Posted on 12/4/25 at 2:19 pm to 4cubbies
quote:
, although it originally appeared in the theories of earlier classical economists such as Adam Smith and David Ricardo, and later in anarchist economics. Smith saw the price of a commodity as a reflection of how much labor it can "save" the purchaser.
Sigh....
Posted on 12/4/25 at 2:19 pm to 4cubbies
quote:
I think it makes more sense for bartering. Like one dozen eggs = one gallon of milk.
Even in that case, though, the value is entirely subjective.
If I am lactose intolerant, for example, milk has no value for me at all.
That's my point. The subjective nature of value renders the entire concept of tying value to labor or anything else relatively useless.
Posted on 12/4/25 at 2:20 pm to stuntman
quote:
And if labor is where value is determined, then who gets to decide what that labor is worth? Even the very foundation of the idea suggests it's subjective.
This.
This is my point.
Posted on 12/4/25 at 2:21 pm to 4cubbies
quote:
it's for school, not pleasure.
Posted on 12/4/25 at 2:26 pm to Lsupimp
quote:
Labor does not create value, bawette.
Chubbies is a woman? Didn't know that. Makes a little more sense now. Not even being sarcastic or "mean". Women just tend to empathize a lot more than men do. Men tend to systematize a lot more than women do. It's why libertarians are almost entirely dudes. Empathy is a blip on the radar to us when it comes to anything government.
Posted on 12/4/25 at 2:26 pm to 4cubbies
Funny. Saw a video on social media today where Milei was blowing this theory away.
Posted on 12/4/25 at 2:28 pm to Aubie Spr96
That man is incredible. What I wouldn't give to somehow clone him and make him emperor of the US.
Posted on 12/4/25 at 2:37 pm to Lsupimp
quote:
Labor does not create value, bawette. The value makes the thing worth doing or not.
These kids who have studied at the feet of Marxists miss the entire point. In a centralized, planned, bottom up system (i.e. Marxism), you do better if you suck up to the political, decision-making central authority. That's why corruption is king there, busy work is rewarded and appearances are everything.
In capitalism, you have to have results. The thing you make/the service you provide must win on one or more factors of: cost, convenience, "premium" value, speed, strength, variety, customization, etc. And then the things/services that make the most profit draw talent and resources.
The demand model is always going to produce better results than the push model.
Posted on 12/4/25 at 2:44 pm to 4cubbies
quote:
I always smile when I see you replied to one of my threads
quote:
Yep. I considered "value" to be synonymous with "price."
It's easy to do. Smith and Ricardo would blur the lines a bit, but when looking back at their work we have to remember that back then they didn't have much to base their stances beyond the limited economic scopes they could see. It would be decades after them before the Marginalist Revolution, and much longer before the likes of Friedman, Williams, Sowell or Mises.
quote:
Isn't that what currency is?
Excellent question!
Yes... and no (at least not how we view currency).
It's a representation of hours worked. As such, it never increases nor decreases in what it can purchase (unless the hours needed to make a given good increases or decreases).
Let's say you work a 40-hour week. You get a labor certificate for 40 hours.
Let's also say it's determined that it takes 10 hours to make a shirt, it takes 4 hours to make a pair of socks and 20 hours to make a jacket.
So in the Marxist economy, your 40 labor hours certificate means you could buy up to 4 shirts, up to 10 pairs of socks or up to 2 jackets (or whatever combination thereof, as long as it doesn't exceed 40 hours).
This also means that 2 shirts = 1 jacket , etc.
In the Marxist economy, machinery can transfer value, but it cannot create value. What it can do is remove value (since value is really just labor time). So now your 40 labor hour certs mean you can buy 60 shirts or 3 jackets, right? Meanwhile, where is the trade-off for having to maintain the new processing equipment? Are the shirts of any better quality or less?
Along with these short-comings, you can add the "mudpie argument" (ie: you can spend 1,000 hours making a mudpie and it's still worthless regardless of Value).
Posted on 12/4/25 at 3:14 pm to stuntman
quote:
Eugen Von Bohm Bawerk
demolished the living shite out of the LTV over 120 years ago.
Thanks. Maybe I can use his theories in this paper.
Posted on 12/4/25 at 3:19 pm to Ace Midnight
What is economics really but billions of people making trillions of decisions per day, big and small about the most efficient way to allocate their resources. Anything that places itself between buyer and seller is likely to cause horrible inefficiencies that screw everything up.
Posted on 12/4/25 at 3:20 pm to 4cubbies
quote:
Curious what y’all think.
You don't understand economics. It's pointless to discuss it with you.
Posted on 12/4/25 at 3:26 pm to Lsupimp
quote:
Labor does not create value, bawette.
I’m not claiming that it does. I’m saying that the theory Young relies on claims that. The point is not whether LTV is right or wrong. The point is that she needs an objective, structural definition of value to make “exploitation” a measurable economic process instead of just “bad deals.” That is why she defaults to LTV.
quote:
I pay my assistant based on what I expect my profit to be obviously, not based on the difficulty of her labor.
Right, and this is exactly where LTV breaks down in a service-based economy like ours. LTV only makes sense in a commodity production system where labor time maps onto value creation in a predictable way. Once you shift to services, branding, intellectual property, and experience goods, subjective valuation dominates.
My issue is not that your examples are wrong. They actually illustrate my original point. LTV can’t really account for Taylor Swift or tech or consulting or licensing. It only makes sense within the classical industrial context Young is drawing from.
So my question remains:
Is LTV still analytically useful in 2025 even if it cannot explain most modern forms of value creation?
That is what I’m trying to figure out.
And thanks for participating
This post was edited on 12/4/25 at 3:28 pm
Posted on 12/4/25 at 3:27 pm to lsuguy84
Posted on 12/4/25 at 3:34 pm to wackatimesthree
quote:
That's my point. The subjective nature of value renders the entire concept of tying value to labor or anything else relatively useless.
Right. I'm not making an argument in support of LVT, in case that wasn't clear.
Posted on 12/4/25 at 3:43 pm to Lsupimp
quote:
What is economics really but billions of people making trillions of decisions per day, big and small about the most efficient way to allocate their resources.
Sometimes, its just about what people desire and has nothing to do with efficiency.
Posted on 12/4/25 at 3:44 pm to 4cubbies
quote:
Sometimes, its just about what people desire and has nothing to do with efficiency
For instance?
Posted on 12/4/25 at 3:45 pm to Lsupimp
Spa services.
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