Law of Value - Theorizing The Value of Labour-products

Theorizing The Value of Labour-products

The "law of value" is often equated with the "labour theory of value" but this is strictly speaking an error, for five reasons.

• The law of value only states a general regulative principle about the necessary and inevitable relationship between the trading values of commodities, and the socially average labour-time required to supply them.
• The labour theory of value in economics aims to explain how that determination actually works, what kinds of causal relationships are involved, how the law of value interacts with other economic laws, etc.
• For Marx himself, the "labour theory of value" referred only to the theory of value upheld by some of the classical political economists from William Petty to David Ricardo, who regarded human labour as the real substance of product value. For most of the 19th century, some kind of labour theory of value was still being assumed by most of the leading political economists, even if they quibbled about the exact details of the theory or combined it with other principles of value. When Marx affirmed that labour is the real substance of economic value, he wasn't saying anything new.
• Marx's own value theory is not a theory of all value, but only of the value-system involved in commodity production and commodity trade. He did not deal systematically with the housing market, specific labour markets, the trade in stocks, currency and securities, consumer spending and public finance. He did not really intend to create "a new theory of value", but to sift critically through the existing theories of political economy to create a new theory of "capital".
• Marx never referred to his own theory as a "labour theory of value"; his own critique of the political economists was, that they all failed to explain satisfactorily how the determination of product-value by labour-time actually worked - they assumed it, but they did not explain it consistently (see below). Thus, Marx often regarded himself as perfecting a theory which had already existed for a long time, but which had never been consistently presented before. For example, in 1862 Marx wrote to Engels that he aimed to prove in his theory of land rents "the possibility of absolute rent, without violating the law of value"; Ricardo, he said, had denied this possibility, but "I maintain that it exists."

Nevertheless, in the Marxist tradition, Marx's theory of product-value is conventionally labelled "the labour theory of value" - while controversy persists about how much Marx's theory actually differs from that of the classical political economists.

In resolving the theoretical problems of classical political economy - this is the real point - Marx ended up putting the capitalist system in a very different light. He "reframed" the whole way of looking at the capitalist economy, and what it meant for people's lives. For some interpreters, Marx's theory therefore departs very radically and absolutely from any "conventional" economics; for other interpreters, Marx's theory features both continuities and discontinuities with previous economic thought (academics still debate about what these continuities and discontinuities were).