It’s the 100th anniversary of the Bolshevik Revolution, give or take a few weeks, so this week will be dedicated to a critique of critical elements of Marxist thought, starting with the labor theory of value.
To my knowledge, there are three theories of value that have predominated throughout the centuries:
- The “just price,” which bases the value of goods on religious principles.
- What you could call the “free market” basis of value, which is simply what a buyer is willing to pay for an item in an arm’s length transaction in a free market.
- The labor theory of value, which substantially predates Marx, but is an integral part of his thinking.
The labor theory of value works very well for examples involving hunters and gatherers. After that, it doesn’t work at all. How do you apply it to goods manufactured by machines? How do you apply it to the labor of animals? How does it account for inflated prices for rare stamps and coins that were produced with the same amount and same kind of labor as the mainstream items? Is intellectual property the product of labor in the same sense as a manufactured product? If so, is the value based on the amount or the quality of the intellectual activity that created it? If the latter, how would you measure it?
“Just price,” on the other hand, presupposes religious principles that are, to say the least, not self-evident. The only theory of value that works consistently is #2.