Academic journal article World Review of Political Economy

Did Marx Have a Labour Theory of Value?

Academic journal article World Review of Political Economy

Did Marx Have a Labour Theory of Value?

Article excerpt

1. Introduction

Did Marx have a labour theory of value?

It seems absurd that one has to answer this question.

It was so thoroughly answered by previous generations of economists in the affirmative (Meek 1956), that it would seem unnecessary even to examine the issue. But David Harvey (2018) has recently posted a short article claiming that Marx was an opponent of the labour theory,

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. On the few occasions where Marx comments directly on this matter, he refers to "value theory" and not to the labour theory of value. So what, then, was Marx's distinctive value theory and how does it differ from the labour theory of value?

Later he writes,

Marx appears to have done little more than synthesize and formalize Ricardo's labour theory of value by embedding it in the totality of circulation and accumulation . . . The sophistication and elegance of the argument have seduced many of Marx's followers to thinking this was the end of the story. If this was so then much of the criticism launched against Marx's theory of value would be justified. But this is not the end. It is in fact the beginning. Ricardo's hope was that the labour theory of value would provide a basis for understanding price formation. It is this hope that subsequent analysis has so ruthlessly and properly crushed. (Harvey 2018)

Harvey claims that the labour theory of value is generally discredited. But in what sense?

In what way has subsequent analysis "ruthlessly and properly crushed" the labour theory of value?

It is correct to say that the theory is not viewed with favour in economics departments, but that is for political reasons-the labour theory of value came, since Gray and Marx, to be associated with socialism. Since academic economists in general did not want to be tainted with the socialist label they were at pains to distance themselves from the theory. But none of them ever adduced any empirical evidence to refute it. It was socially discredited but not empirically refuted.

If one wants to refute a theory about the world you have to show that the theory makes incorrect empirical predictions. Eratosthenes refuted the theory that the Earth was flat and confirmed the theory that it is round by observing that when the sun was overhead in Syene it was at an angle to the vertical in Alexandria, implying that the earth was curved with a circumference of 25,000 miles. If the earth had been flat the angle of the sun would not have varied as you went north.

2. Evidence

The labour theory of value predicts that the prices of commodities will vary proportionately with their labour content. Refuting this should be easy, just show that in fact their prices do not vary with labour content in this way. Did the economists opposed to the labour theory of value do this?

Did they hell! They did not even bother to collect the data to do the tests. So, for a century after Marx, the theory was "discredited," but never empirically refuted.

As soon as economists started to collect data to test the theory, which depended on reasonably good economic statistics of whole economies, what did they find?

They found that Ricardo and Marx had been right all along. A whole bunch of studies (Gintis and Bowles 1981; Petrovic 1987; Ochoa 1989; Cockshott, Cottrell, and Michaelson 1995; Cockshott and Cottrell 1997a, 1997b; Shaikh 1998; Zachariah 2004, 2006; Fröhlich 2013; Shaikh 2016; Tsoulfidis and Paitaridis 2016) since the 1980s have shown that the labour theory of value is very good at predicting prices. …

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