Karl Marx's Labor Theory of Value Debunked

13 days ago

I debunk Karl Marx's labor theory of value.

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Transcript

Karl Marx’s Labor Theory of Value Debunked

Communist Karl Marx once said,

"The value of a commodity is determined by the quantity of labour contained in it, or required for its production under normal conditions."

This statement, quoted from his book, Capital, Volume One, has been termed the “labor theory of value.”

It’s been taken to mean that value is determined by the amount of labor someone performs to produce something.

But is this true?

And does this idea hold up when we look closely at human behavior?
The simple answer is:

No.

But to get there, we first must define our terms and ground ourselves, philosophically, so we can unpack the language.

“Value” is a condition of desirability that human beings ascribe to certain goods or services.

If there were no human beings, then “value” would not be self-ascribing.

Things like water, gold, trees, and animals do not self-enact value signals on their own.

It requires a human being to observe something and to then make a judgement about their desires for that thing to reach a “valuation” by that human.

And this valuation is subjective to each person.

Take for example, a controversial item: pineapple pizza.

Some people may love the taste of pineapple on pizza while others absolutely loathe it.

Some will pay extra to load their pizza up with the pineapple, whereas others couldn’t be paid enough to eat pineapple pizza because they would gag at the first taste.

That one person may value a certain food item, while another doesn’t value it at all, showcases how value is always in context of individuals choosing what they want based on their subjective preferences.

And these preferences are metered in the context of time.

Think about another example to see why.

Imagine a man dying of thirst in a dry desert many miles away from the nearest town.

The man needs to drink water soon or else, he may die of dehydration.
Another man walks by during this dire situation and offers the thirsty man a choice:

Option A: the thirsty man can have a 1-ounce gold coin now or,
Option B: the thirsty man can have a 1-gallon jug of purified water.

While the 1-ounce gold coin might later sell for an amount that would enable the thirsty traveler to buy thousands of jugs of water, having a gold coin, in a moment of near-death dehydration, would not save him in time to make use of the gold coin.

In this specific moment in time, the water present is far more valuable than the coin to the man whose near-death situation requires immediate hydration to live.
It does not matter that water may be available elsewhere.

All that matters, to the affected, parched man, is he gets enough water to avoid death.

This example demonstrates how people make value judgments within a unique window of time for personal needs.

That a person may value buying a certain food item today does not mean that they will also have that same desire for it the next day.

In fact, a person could be in the mood for a hot dog one day, but, after eating one, feel as if they would not want to eat a hot dog for another week.

Each person’s subjective value fluctuates in total picture of subjective demands in time, and those things change with shifting life circumstances.

For another example, a woman may have just gotten her paycheck and may want to use some of that paycheck to buy a new TV.

On her way to the store, her car hits a nail in the road and gets a flat tire.
Sadly, she now needs to spend her money on a tow truck and a new tire instead of the TV she was about to buy.

The unexpected harm shifted her order of values based on the new total circumstances, and the priority of valuing the TV became subservient to the desire to fix the car, because the car is what enables her to make it to work and other key appointments.

Individual values not only matter for what is most desired, but also for when something is not desired by anyone at all.

It’s a reminder that labor is not valued without someone to value it.

To see this, look at another example: someone who decides to dig a hole in a park, fill it back in, and repeat this process several times over.

That a person may have labored to dig a hole then cover it back up again does not mean that anyone valued that labor.

If this person were digging a hole because they were exposing underground cables for a repair, that might be something valued by a power company contracted to make a repair.

But the abstract act of digging holes and filling them back in, when no one demanded that, does not suddenly make the labor valuable to anyone.

The value of the service or good will always be tied to meeting the wants and needs of at least one other person, without whom, there is no valuation to take place in a market exchange.

So, next time someone tries to tell you that something is valuable because it was “labored for,” remind them that value is subjective, and people assign value by their market choices based on their own preferences in time.

That’s the beauty of the free market.