I've been reading up on the LTV for a while now and I came across some people saying that it's outdated and that marginalism is a superior theory. I.E. people bringing up the Diamond-Water paradox.
Redpill me on Marginalism and why people say it BTFOs the LTV.
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Cockshott already proved the LTV using input-output tables of country's economies. The correlation between labor time and value added is like 95%.
Meanwhile "supply and demand" can't be empirically proved, it's just a theory.
LTV is a scientific fact. Read Capital.
kek, according to wikipedia (a bourgeois source so it should be accurate on this) the big conundrum is that since water is more useful to more people than diamonds, why doesn't it cost more??? LTV already explains this perfectly, water doesn't take much labor to "produce".
Neoclassical Economics is literally fucking magic, it has basically 0 real empirical evidence supporting half of it's assertions, which isn't surprising when you realise that almost all of the theories are based on models which are abstracted from reality by several orders of magnitude, and then defended as such because "they wouldn't work if they conformed to the real world", in other words, completely unscientific idealist nonsense. Read Marx, Cockshott & Shaikh.
Marginalist analysis isn't a logical opposite of the view that prices of things produced in a competitive environment tend to be strongly influenced by necessary labor. The diamond-water "paradox" was brought up by Adam Smith to make the case for the labor-cost view. The work required to deliver these products explained it. Explained. I put that in the past tense because today artificial diamonds have made the example outdated, but you can replace them with gold and keep the rest of the story (that this isn't done shows what unoriginal/braindead/lazy fucks economy pundits are). What does scarce mean? What is scarce to a bird might not be scare to a fish. What is scarce to us humans depends on our ability to obtain that, which brings us back to labor costs.
It doesn't :'-)
Because a lot of people have been hoodwinked by capitalist economics for a while now.
I'm just going copy paste something I wrote somewhere else (reddit, I know, I know, so sure me) because I don't want to write it again.
Here Goes:
t's simply beyond me how people consider Marxism falsified when I have yet to see a single research article that has actually presented evidence that value as described by Marx (i.e. that the statistical expectation value of prices within a society is proportional to labour-time content) is not in effect. What evidence i have seen confirms this. Regarding marginal value theory on the other hand, I have yet to see any formulation of it that is in any way statistically falsifiable. Bourgeois economics is literally a religion. If Marx is to be falsified then give me the fucking data instead of repeating ad naseum that he has been falsified without actually doing the work.
Rebuttal:
What exactly is the "statistical expectation value of prices"?
How would you formulate marginalism charitably (assuming that's what you mean by "marginal value theory")?
My Follow up:
I realize that I slightly misswrote. Expected value, not expectation value. I haven't done any stat course in english so I apologize for missuesd terminollogy. In a Bell Curve it would be the mean, i.e. the statistically most likely value. Prices fluctuate over time due to different factors, among them supply and demand. A bell-curve distribution is probably the best model of price variation, and as you probably know a bell curve can essentially be reduced to two values: variance and mean. What Marx's value theory attempts to explain is this distribution in regards to the price of freely reproducible goods. The variance can be easily and obviously explained by supply and demand etc, but what explains the mean? The mean would according to a Marxian view be explained by way of the socially necessary labour time required for the free reproduction of the commodity. If there is a strong correlation between these two magnitudes, then the Marxian view holds, if it does not then it is falsified.
Now if bourgeois economists were scientists they would do what scientists do and attempt to falsify this hypothesis. I have yet to see a successful attempt at doing so. Because most of the data inquiring into the subject seem to coroborate the usefulness of such a model. Here's what I base it on
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These are all the studies I have found that empirically investigate the Labour theory of Value. All of them coroborate it. If you can find me a similar study with a different conclusion you are more than welcome to share it with me.
As for marginal utility I base my understanding on it on Keynes so let's just quote the man.
"The classical theory of employment—supposedly simple and obvious—has been based, I think, on two fundamental postulates, though practically without discussion, namely:
I. The wage is equal to the marginal product of labour That is to say, the wage of an employed person is equal to the value which would be lost if employment were to be reduced by one unit (after deducting any other costs which this reduction of output would avoid); subject, however, to the qualification that the equality may be disturbed, in accordance with certain principles, if competition and markets are imperfect. II. The utility of the wage when a given volume of labour is employed is equal to the marginal disutility of that amount of employment. That is to say, the real wage of an employed person is that which is just sufficient (in the estimation of the employed persons themselves) to induce the volume of labour actually employed to be forthcoming; subject to the qualification that the equality for each individual unit of labour may be disturbed by combination between employable units analogous to the imperfections of competition which qualify the first postulate. Disutility must be here understood to cover every kind of reason which might lead a man, or a body of men, to withhold their labour rather than accept a wage which had to them a utility below a certain minimum."
Please do note the supreme idealism of this quote. First off these ideas are dubbed "postulates". I.e. these ideas are taken for certain and defined as true. Taking any idea outside the realm of mathematics as a postulate, when these ideas are by no means free from scrutiny is supreme arrogance and akin to religious apologetics. "We assume I'm right therefore I am right". As for the first "postulate" you should note that it entirely assumes away of the possibility that exploitation in fact exists and that a person can be paid less than the value of their labour. Simply assuming that your opponent is wrong is not an argument.
In the second "postulate" we jump from intellectual dishonesty to the simply unscientific. We are told that the value of labour derives from "utility" and "disutility". Pray tell what is the unit of measurement of "utility"? How would one go about measuring it? How would one go about comparing any form of correlation between "utility" and price? How would I be able to falsify this? Oh wait, we aren't supposed to because it's a "postulate" (aka "it's magic, I ain't gotta explain shit")
Added to this is the whole idea of the "Demand curve" and "Supply Curve" and where they intersect you find the price of a commodity at equilibrium. This again is entirely unscientific as it firstly fails Occam's Razor (Entities are not to be multiplied beyond necessity) by invoking two separate unobserved phenomena to explain a single observed (price). I have yet to see a rigorous description of these two curves based on data from the external world, merely diagrams conjured up from the imagination. The Marxian view on the other hand takes two observable quantities (price, socially necessary labour time) and hypothesizes that these two quantities are correlated. That is scientific. Bourgeois economics lie in the realm of religious presuppositionalism.
I've been told that Cockshott study was not valid and that, and I quote "of course labor correlates with price, but that does not prove anything"
Claiming someone is "not valid" while not engaging with the arguments is retarded, and if socially necessary labour is linearly correlated with average market price then LTV holds and the economy isn't just subjective woo-woo.
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Also, since fresh water is becoming more and more scarce, they might as well find something more abundant.
Why do you bring up Adam Smith as if he was a marginalist. He was a classical economist, i.e. he had a labour theory of value. Him bringing up the diamond-water paradox is not an example of a marginalist appealing to labour costs.
That's not claimed there. Re-read the post.
That's exactly the point of that post. The usual mediocre econ101 teacher brings up the diamond-water story to explain the prices by appealing either to marginally diminishing utiltiy of consumption or some notion of scarcity that isn't made precise. They either don't know that the story is already in Smith or claim he was puzzled by that "paradox". But Smith brought up the comparison exactly to show that prices don't relate much to usefulness and that they relate to labor cost.
Marginal utility is just a fancy way to spell "consumer behavior". It has nothing to do with actual political economy so I don't think it's worth addressing.
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But you see my dear sensible friend, in the magic world of subjective economics it's obvious that labor hours would correlate with prices. The harder it is to make something the more people value it, it's just obvious. The LTV is simply wrong because value is subjective. CHECKMATE!
Now excuse me, I have my afternoon "marxism is unfalsifiable" shouting session now.
Correlation =/ causation is basically the point. You can *highly* correlate a few things to price: energy, etc. This, then, seems to prove nothing other than that the factor you correlate is highly relevant, but is it THE fundamentally determining factor of the general concept of value as such?
In Capital Vol. 3 Marx shifts accounts towards prices of production and rates of profit to explain market prices, and labor-time itself is left with little to explain other than a long run price which appears as the average of price fluctuations since this is the only way value cashes out as something around which price fluctuates.
Everyone rides the Capital Vol. 1 simple LTV model here, yet almost no one has any idea how the thing even works out in the end. If labor-time as value is not what determines the market prices in competition itself, which are determined by rates of profit, then what does the LTV actually do?