LTV and Causality

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gal Posted: Wed, Jul 23 2008 3:24 AM

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I think that I came up with a very simple refutation of the labour theory of value and I need your comments.

To say "punches always cause broken noses" is to say whenever there is a punch, a broken appears. but not the opposite (all broken noses caused by punches)

This is the major flaw of LTV. Marx wrote that all things that have value was created by labour, let's ignore the fact that this observation is simply wrong and agree with it for the argument.

The conclusion from this observation is not Labour causes value, it is value causes labour! Marx simply did not understand simple causality.

Is my argument is correct?

Is my argument is new or there were others that claimed that before?

BTW, sorry for my english, I'm not a native speaker.

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wowdavidp1 replied on Wed, Jul 23 2008 3:38 AM

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So, how does values cause labor?  If anything they are independent and one doesnt directly affect the other.

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gal replied on Wed, Jul 23 2008 3:57 AM

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example: people work hard to get diamonds because people are willing to pay a lot of money for them (value them high).

This conclusion is not always true because Marx's observation is wrong, but if you agree with the observation my conclusion must follow it and not Marx's

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banned replied on Wed, Jul 23 2008 4:21 AM

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wowdavidp1:

So, how does values cause labor?  If anything they are independent and one doesnt directly affect the other.

I don't think so.Labor is proformed out of one's personal marginal analysis. That means that an individual values what they get or could potentially get out of proforming labor more than their understood alternatives. A rational individual's greatest value is what decides they will proform labor.

Just don't make the flaw in applying aggregate values and thinking that people work because things are worth X on the market and they want X, because this is not always the case.

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Bo Zimmerman replied on Wed, Jul 23 2008 3:47 PM

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Hi Gal,

I'm sorry, I don't think so.

Taking your summary of Marx as so, i.e. "Marx wrote that all things that have value was created by labour", then Marx might say that, because Labor precedes, in time, the production of Valuable Things, that Labor Causes Valuable Things.  To suppose the opposite (Value produces Labor) would seem backwards to Marx, since a Cause cannot precede its Effect.

Marx's argument (as you present it) appears to be Post-Hoc ergo Propter Hoc at best. That is to say, that simply because two events precede each other in time, it does not logically imply a causal relation. E.G. Many singers take a drink of water before singing, therefore drinks cause singing.

This is not quite the Austrian complaint, however, since the Labor Theory of Value does not stop with the simple causal relationship you mention, but that the Amount of Value is a function of the Amount of Labor.  E.G. A stack of wood is more valuable than a piece of wood because it requires MORE labor to produce a whole stack than 1 piece, or more commonly, it takes more labor to extract a diamond than to make a loaf of bread, therefore a diamond must be more valuable. 

The Austrians adhere to the theory of subjective marginal utility, which is to say that the value that any one person puts on a given object is the subjective (personal) marginal (next use) utility (satisfaction of need) of the object to that person at that time.  Prices are then a function of an aggregate bidding war between everyone who values given goods on the market.  E.G. A single piece of bread being bid on by a full man and a starving man of equal means will likely be won by the starving man, since his personal next use value involves saving his very life, whereas the full man would derive only some momentary pleasure.  The bakers own valuations on his creation is also a factor in this bidding, but you get the idea.  Now imagine this situation going on on a massive scale, and you see where prices come from.

Now, I'm not sure the Austrians would agree simply that Value causes Labor, though I certainly think that sentiment is closer to the truth than the reverse.  If I value a swim on a hot day, I will likely go through all manner of means of production to get my body into a cold river.  :)  In a more sophisticated case, an observant entrepreneur seeing the great value people place on video games might very well calculate that it is in his interest to procede to labor to produce more of them.

Hope this helps.  Keep thinking and toying around with logical analysis as you are.  It's fun, and fruitful!

- Bo