It is often erroneously assumed that Marx was a proponent of what’s known as the “labor theory of value” (LTV). Thus, we see people who incorrectly believe themselves to be criticizing Marx making claims like these:
According to Marx, then, the value of wares is determined by the amount of labour necessary on the average to produce them. (Philip Wicksteed, “Das Kapital: A Criticism,” 1884)
As dismissive as many of us would like to be toward Marx’s labor theory of value, however, it still holds currency among today’s budding socialists. (Bradley Thomas, “Three Arguments Debunking Marx’s Labor Theory of Value,” 2019)
Shortly after Marx wrote, his underlying economic theory was rejected by essentially the entire field and superseded by a better theory. Virtually no one who studies the subject (outside of oppressive Marxist [sic] regimes) believes the labor theory of value anymore. (Michael Huemer, “Studies in Irrationality: Marxism,” 2019).
Writers who authoritatively assert that Marx promoted and made use of LTV never provide a citation to Marx actually advocating LTV, which makes sense, since Marx not only never (ever, not once) advocated LTV, he was a fierce critic of LTV. A good test for whether anyone discussing Marx (positively or negatively) has even the faintest idea what they’re talking about is whether they claim Marx advocated LTV. Because, again, Marx never advocated LTV.
I’m not entirely sure where writers who take themselves to be critics of Marx got the idea that Marx was a proponent of LTV—it certainly wasn’t from actually reading Marx (perhaps it’s from reading and citing one another?). But even if actually reading Marx is too daunting (he did write a lot, I get it), plenty of contemporary Marxists are unequivocal about Marx’s rejection of LTV. For example, David Harvey, perhaps the most famous living Marxist academic, in his eminently readable “Marx’s Refusal of the Labor Theory of Value” (2018) states the following in the very first paragraph:
It is widely believed that Marx adapted the labour theory of value from Ricardo as a founding concept for his studies of capital accumulation. Since the labour theory of value has been generally discredited, it is then often authoritatively stated that Marx’s theories are worthless. But nowhere, in fact, did Marx declare his allegiance to the labour theory of value. That theory belonged to Ricardo, who recognized that it was deeply problematic even as he insisted that the question of value was critical to the study of political economy.
It can’t get much clearer than that.
LTV holds that the economic value of a good or service is entirely determined by the total socially valuable labor necessary to produce that good or service. Notice how different LTV is from our current system of economic value, which holds that the economic value of a good or service is entirely determined by the subjective valuing activity of relevant market participants in buying and selling that good or service (if you have a book and I want that book and you and I agree that I will give you $10 and you will give me the book, the value of the book is $10). LTV is supposed to make economic value objectively determined (rather than our current system of subjective value determination) outside of the market. LTV was developed before Marx was even on the intellectual scene, by economists Adam Smith and David Ricardo. And Marx, who had read Smith and Ricardo, thought LTV was unworkable—and said so often in his writings.
According to Marx, the unworkable LTV is a result of a conflict present in bourgeois capitalism—the conflict between two different types of economic value: use value and exchange value. LTV is an attempt to remedy this conflict. However, says Marx, the conflict is a result of capitalism itself, and so the problems with LTV are problems that can’t be solved by simply restructuring parts of the capitalist system while leaving capitalism in place. No amount of modifications to the monetary system, the banking system, markets, etc. would fix a conflict that arose out of the fundamental structure of capitalism itself.
For example, in his Grundrisse (published posthumously in 1939), Marx says:
Just as it is impossible to suspend the complications and contradictions which arise from the existence of money alongside the particular commodities merely by altering the form of money (although difficulties characteristic of a lower form of money may be avoided by moving to a higher form), so also is it impossible to abolish money itself as long as exchange value remains the social form of products. It is necessary to see this clearly in order to avoid setting impossible tasks, and in order to know the limits within which monetary reforms and transformations of circulation are able to give a new shape to the relations of production and to the social relations that rest on the latter.
Notice how badly a person would have needed to misunderstand Marx in order to believe that Marx was a proponent of LTV: Marx’s entire socioeconomic analysis was both structuralist and materialist. Any issues that arise because of a socioeconomic structure (for example, capitalism) can only be solved by changing the structure itself (for example, turning capitalism into non-capitalism). Socioeconomic structures can only be changed by changing the underlying material conditions that give rise to those structures. To think that Marx was a proponent of LTV would be to think that (i) Marx embraced a theory that he called unworkable (i) Marx embraced the capitalist conditions that he said gave rise to LTV, and (iii) Marx believed that socioeconomic change is made at the ideological (i.e., non-material) level via the reconceptualization of academic models of value. Said a slightly different way: Marx is obsessed with making sense of socioeconomic facts in terms of what he calls “social relations”—capitalism is a set of social relations, socialism is a set of social relations, capital itself is a set of social relations. Now, LTV is a result of capitalist social relations, and so the problems with LTV can only be solved by changing the underlying social relations.
Some writers who take themselves to be critics of Marx further claim that Marx’s famous concepts of alienation, exploitation, surplus value, and wage slavery are dependent on LTV, and since these writers erroneously claim that Marx was a proponent of LTV (usually while criticizing LTV in an ironically Marxian way), Marx must be wrong about pretty much everything—if LTV falls, so must everything Marx believed. But since Marx did not embrace LTV, and since Marx’s analytical and critical project was a response to issues such as the falsity of LTV, in no way are Marx’s other insights affected by the falsity of LTV.
Then what was Marx’s theory of economic value if not LTV? The simple answer is: It’s not clear that Marx even had a theory of economic value. Marx occasionally makes reference to a general theory of value, although it’s not clear that he ever endorsed any such theory. This would make perfect sense, in terms of Marx’s overall picture of socioeconomic facts. Value, and any theory of value, are a result of material conditions, and so there is no “one ultimate condition-independent theory of value.” Making sense of economic value is done as a result of the economic conditions and social relations, a contingent enterprise embedded within contingent socioeconomic facts.
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