LTV?

Justin Schwartz jschwart at freenet.columbus.oh.us
Sat Oct 29 08:17:58 MDT 1994


On Sat, 29 Oct 1994, wesley david cecil wrote:

> Thanks Justin for that post, I agree with all of your points and you picked
> the passages to which I was referring in Capital.  My point is that none
> of this is very helpful.  Socially necessary labor will, by definition,
> vary widely from society to society and the question of just what
> "necessary"
> means will be  open to debate.

I'm not defending the LTV, as should be clear from previous posts, but you
have to attack in in the right way. This isn't it. Marx is presenting an
idealized economic model--indeed, that's what the core of Capital consists
of, a series of such models. So for analytical purposes he can ignore
intersocial variation or assume the existence of a world market.
"Necessary" is actually a well-defined term. Here it means the average
amount of time required to produce an x given the prevailing technology,
so that a hand-made Toyota won't be more valuable than a factory made one
just because it embodies more actual labor time.

  The problem of "wants and needs" is, as
> marx so aptly pointed out, enmeshed with the fact that wants and needs
> are created by society.  So the socially necessary labor to produce a
> product to fulfill a need will depend on what a given society defines as
> necessary as well as how particualar needs are created within that
> society.

No, no. Assume for the moment a given set of needs which can be satisfied
by certain goods, which is what Marx does here. The model so far treats
preferences as exogenous. Of course they're not, but again, analytical
convenience.

  The question of use-value in Marx, as generally noted, is a
> complete wreck,

Noted by whom? What's the difficulty with observing that things have
properties which satisfy wants?

 and exchange value can be, as Marx argues, very much
> divorced from a close tie with the amount of labor involved in producing
> an item(hence a Van Gogh painting can sell for 10's of Millions of
> dollars while a house can sell for a few tens of thousands).

A house sell for a few tens of thousands? Where do you live, Detroit?

OK, Marx knows this, but these are complications he tries to address in
later models: the prices of production model in C2 and the differential
rent model in C3. His purpose in C1 is a bit different. he wants to show,
there, that if we assume the law of value, that goods exchange at value,
that you can nonetheless show that there will be profits.

 So, while I
> find the labor theory of value a great place to explore ideological
> questions concerning how soieties organize and measure productivity, it
> seems a rather poor place to look for an econometric principle( a
> tendency I note in many of the posts concerning LTV).

I agree. I also think thank Marx agreed, which puts me in a minority of
four of whom I know--Diane Elson, Arthur Ripstein, Peter King, and me.

But that does not mean that the model in C1 is a bad model for the narrow
and specific purpose for which it is designed or that its terms are
ill-defined. In fact Marx does not express himself clearly in manner of a
modern economist. But as Morishima and Desai have shown, his ideas can be
given precise formulation.

That does not, in my view, save the LTV as a quantitative theory of price.

--Justin Schwartz




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