Forget the labor theory of value and fall in love with economics.

The grim economist wrote a post about value as ether. The reasoning is correct, but it seems to me that there is one rather important and remarkable detail here, which often goes unnoticed by the public, which does not understand the issue, but loves to reason.

I often hear that there is a labor theory of value, and there is a theory of marginal utility, which still oppose each other. And not for life, but for death. The gloomy economist even notes, they say, this opposition occurs at the ontological level: materialism (LTOV ) - idealism (MU).

But if we talk about how economists look at all these problems today, we can say that they are not interested in cost issues at all. And there has been no war in this regard for a long time. Instead of cost, economists talk about prices, and prices are the result of compromises between agents on the demand side and agents on the supply side. There is no ether, no essence, which is the true nature of value, just as there is no value itself. And what is?

And there is an understanding that people prefer one good to another. There is a method of analysis using marginal values - that is, finding the optimum by comparing increments of benefits and costs. Moreover, the method is universal, it works for both demand and supply. And there is also a price - an agreed result, a compromise between the interaction of agents, each of which seeks to achieve its own goal (more details 1, 2, 3 4, 5, 6 ).

If people's incomes increase and the other components stay the same, economists understand what will happen to prices. If the government sets a price floor or price ceiling in a competitive market, economists can easily predict the consequences. If we have progress in technology, other things being equal, we can also easily say what will happen to prices.

This is a pure positive analysis, where the overall alignment can change both the factors on the demand side and the factors on the supply side. No ethers, no essentialist reasoning, no true nature of value. Just a thought experiment and reliance on data.

In general, the labor theory of value is a very interesting intellectual exercise and a normative philosophical theory that deserves attention. However, LTOV is unlikely to have a place in modern positive scientific discourse. In this regard, I like the position of the analytical Marxist Jun Elster, who concluded that “[labor value] theory is useless at best, harmful and misleading at worst,” and Marxist economics itself is almost completely dead. And instead of pouring from empty to empty, modern Marxists could well deal with real problems using relevant tools.

But few people do this. It is much easier to discuss 100500 times what Marx wrote there in the book, the first volume of which was published already in 1867. To anyone who wants to deal with Marxist issues, but at the same time remain in line with modern science, I recommend taking a closer look at analytical Marxists, and choosing Labor economics as a field, the toolkit of which, without any reasoning about cost, allows you to find the problems of exploitation. But the consequences will be completely non-Marxist: we need to increase the competitiveness of labor and product markets, create inclusive trade unions where necessary, and develop sustainable rules of the game.

In general, we are moving away from false dichotomies. The dispute between the LTOV and the MU was more than 100 years ago. It's time to move on (although economics has been doing this for quite some time now).

Grigory Bazhenov 2022-10-06