Basically it is nonsense.
Is this statement true?
We value shoe shiners because we value shiny shoes. We don't value shiny shoes because we value shoe shiners.
I think you answered the question for yourself!
The labor theory of value posits that the value of goods on the market is determined by the quantity (and in some sense, quality) of the labor provided in the manufacture of the good.
In this sense, a pair of shoes which requires an expert shoe-maker 2 hours to make has the same value as heart surgery which requires an expert cardiologist 2 hours to perform.
This system fails on both an empirical and theoretical basis.
How do compare like goods made with different processes? Would the same shoe, made at two different rates, have the same value or different values? How would we compare them? How can we price used items?
The labor theory of value ignores the role of loss in the profit-and-loss system. Under the labor-value system, there is no loss, and thus no way to direct resources to their most necessary ends.
Oh, and the wikipedia article on the labor theory of value needs some serious attention.
It reads like a forum argument between an Austrian and a Marxist rather than just an encyclopedia entry.
That's not how it works. Goods are valued according to average socially necessary labor time, not actual labor time, and a surgeon's labor time is worth more than a shoemaker's.
Socially necessary? lol
socially necessary
Who gets to decide that for everyone else? You, I suppose?
As I understand it, the basic concept in the labor theory of value is that man-hours are fungible. A pair of boots is worth 30 hours of wages because if I had to make my own boots, it would take me 30 hours, assuming I had been born under the same star as someone who learned a skill like bootmaking. And when new means of production make the price go down to 5 hours of labor per pair, then the bootmaker still earned the same amount of money. Meaning the value of the means of production is counted for the laborer, not the capitalist. It is a muddled way of attempting to objectify value in terms of labor-worship. It can also be used to disprove all sorts of communist ideas. For example, the amount of time it takes me to hire a worker is about 15 minutes if I want to put an ad in the paper. So no worker should be worth any more than about a quarter hours wages. Now, if I were to build a lathe or any other machine tool, it would take me about a year, working by myself. So if I structure my company where the workers are independent contractors, and they rent-to-own the means of production, because I am a syndicalist at heart, and they pay me this rent in products, well then I am up to my eyeballs in parts and the labor still works his ass off for a pittance. The most important means of production in many firms is the capitalist. Since the communists completely ignore her contributions, and they consider humans to be fungible, we can classify her as a means of production that took 40 years to produce. Obviously the amount of labor involved is far more than other products, therefore her value is much higher.
The easiest way to disprove the labor theory of value is to establish tha value is subjective and cannot be objectively calculated. Try selling oxygen to a man trapped in an airlock...who is suicidal.
inquisitiveteenager:Basically it is nonsense. Is this statement true?
Yes
Bingo. Look at it this way. I just saw an episode of Pawn Stars yesterday. A guy brought in a glass sword that he spent 3 years working on. The pawn shop owner ended up not even making an offer on it, because he knew there was virtually no market for it...no one would want to buy it. It makes no difference how long the man spent making it, and how much work and skill went into it. That doesn't make it worth anything. Not only that, but it is considered the only one of its kind. It's as rare as things come. And yet it's still not worth anything to a reseller.
Input labor does not determine the value of a product. Not even does rarity determine the value of a product. The only thing that determines value is the subjective notions of an owner and those of a potential buyer.
There was actually a Mises Daily about this:
"Economic Lessons from the Pawn Shop"
"Socially necessary" means the amount of time, with current levels of technology and an average laborer, that is necessary to make a product. It isn't decided by anybody, it's ultimately market competition that determines goods are not worth more than their socially necessary labor time. Thus it can be seen that the actual labor it takes to produce something is not necessarily the same as its value--if I take a week to make a bicycle that it takes a factory 30 minutes to produce, the value of the two bicycles is still exactly the same."Labor time" is an abstraction, the labor of a surgeon produces as much value in an hour as the labor of an unskilled laborer produces in, say, 20 hours.
bzfgt:In the case of a glass sword nobody wants, however, on the basis of Marx we could safely say it has no value whatsoever, no matter how long it took to produce it.
You just got though telling us that what you're willing to pay "has nothing to do with how much you 'value' the item" (I would love to hear an explanation of that), and that "it's (partially) determined by the cost of producing each item."
If both of those things are true, why is a sword that cost 3 years worth of labor not worth anything?
When you're starting out, the most important thing to know about Marx's labor theory of value is that Labor =! Price. He's not saying that. It's about how the product of the total sum of the fruits of humanity's labor at any one point are distrubuted. There's some good in there, but his justifications for crisis, the immiseration of the worker, and the accumulation of capital are entirely mislead.
bzfgt: "Labor time" is an abstraction, the labor of a surgeon produces as much value in an hour as the labor of an unskilled laborer produces in, say, 20 hours.
"Labor time" is an abstraction, the labor of a surgeon produces as much value in an hour as the labor of an unskilled laborer produces in, say, 20 hours.
How would one use LTV to calculate the value produced by an average surgeon smashing up an average car with an average hammer for one hour?
In order to have value, an item must be "valued" by someone, in other words someone must be willing to by it. Again, there are two senses of the word 'value' here--if nobody will buy something, it has no value. But if the only reason cars cost 30,000 dollars is that people want them, competition would eventually drive the price much lower. Marx's sense of value is as a limit that prices fluctuate around. It is the number that, if competition drove the price too far below, the seller would not make money, and if the seller tried to charge too much above, competitors would undersell him thus driving the price back down toward the value of the item.
The fact that somebody spends a lot of time on something does not give it value. Society as a whole, through the individual choices made on the market, decides what has value and what does not. The price of something is not identical to its value (or is only rarely and, as it were, by accident), but value limits the fluctuations of price.