The problem is that the LTV was created as an absolute argument to answer an absolute argument - the argument that the market is always fair, if at a distance. As an argument that gets us a bit closer to the economic truth, the LTV is great. As an absolute argument, it fails and has caused a lot of poor decisions.
Value = Labor hours * U, where "U" is a constant representing a measure of "social necessity". This simple-seeming algebra actually illustrates the problem well. "Value" and "social necessity" are not mutually exclusive concepts. In fact, they refer to the same thing. In effect, "social necessity" should be on both sides of the equation.
This makes sense, in that the economy is a self-referential thing built on recursive processes. So the big problem with the LTV is that it makes people think that a self-referential thing with a high degree of randomness can be planned like one would design a watch. But a system where the value of a product or service is so variable - individual to individual, depending on context, over time, and by pure chance - can't be designed like a watch because it just has too many random parts that depend on each other.
What we can say, as a political and mathematical matter, is that if value is uncertain then it makes sense to consult the largest number of people in the process of deciding what to produce. We can also say that there is no particular reason to over-reward actors in the economy with both goods AND power, because the people we all really depend on are the workers and not the owners. We all depend on those who produce.
There is value that machines produce and luck produces and change produces and even capitalists produce, but those things will not combine and sustain us. We depend on our fellow workers. What the LTV does, for me, is not to suggest some algebraic argument. I think the real, underlying math of the economy is far, far too hard for me. Multifractals are not my thing. The LTV suggests to me that we need to look at the problem differently, take out this independent notion of "value" and replace it with the formula:
Labor Hours Needed * Social Necessities of Production = Labor Hours Expended * Social Necessities of Consumption, or at least it should be equal. The idea of "social necessities of consumption" is new, but just think of it as "overhead".
So labor hours needed time technology available equals labor hours expended (always larger than what's needed due to inefficiency) times overhead. Clearly, capitalists inflict greater overhead costs. They also force unreasonable distribution so that liquidity is a problem. They also do much to solve the liquidity problems they create, and in so doing create value by making distribution of goods and information much faster. But their intrinsic role - as owners - makes them an intrinsic problem.
> One does not need to be educated at all to see the stupidity of a model
> which presupposes the absence of human labour. Why should I spend my time
> answering an ijits puzzle? Take the model you gave and substitute computers
> for highly skilled labour, for gold semi-skilled labour and for wheat (with
> all due respect to my farming family) unskilled labour and what do you have?
> An economy in which living labour is the alpha and omega! I grow so tired
> and weary of this debate. As if it were primarily about logical proofs
> based in real abstractions of the world in which we live. The neo
> ricardians, if you will permit my French, can go fuck themselves. I much
> prefer the neoclassical universe in which real people make shit; ie,
> capitalists, workers and entrepreneurs. That the Sraffian debate is carried
> out at the level of commodities reproducing themselves suggests a regression
> both of logic, history and indeed historical analysis. False premises
> precisely stated remain exactly that: false premises exactly stated.
> The purpose of my rather unfinished example to woj was simply that in the
> Marxian frame warehousing and transport were value additive. Which was
> against his other worldly puzzle of how a shirt priced at 50$ could have an
> initial production cost of 2$. As if initial production costs were all that
> figured into the Marxist understanding of value added (SV). Perhaps if you
> had read Marx you would understand this (do not be upset it is just the same
> poisoned arrow directed back). I am sure we will reach a compromise.
>
> But to answer you directly; no, I have never been convinced by a model which
> purports to show that SV arises without reference to living labour. How
> could I there is a definitional taughtology involved here. Profits of
> enterprise for sure. In fact I do not need a model, I can go buy my cookies
> at the supermarket to figure this one out.
>
> Moreover, yes I do want to stay above the debate. What a waste of talent.
> How many brilliant Marxists have gotten sucked into this swamp? And for
> what? You either think sv and therefore ultimately profits originate with
> the exploitation of labour or you don't. No amount of self referential (ie
> in relation to initial premises) is going to move the debate. Some people
> think corn is the alpha, others entrepreneurs; and yet others who think that
> it is labour which raises and transforms corn and the ambitions of
> entrepreneurs into use values and thereby exchange values. I will leave it
> with you and your logical exercises to solve the puzzle. As for me I have
> six pins dancing on the head of a ferry to feed and no furry left to turn
> the wheel in this rather sullen exercise.
>
> In Sol,
>
> Travis
>
> ____________________________________
> Travis W Fast
> From: "Rakesh Bhandari" <bhandari at berkeley.edu>
> To: <lbo-talk at lbo-talk.org>
> Sent: Tuesday, December 12, 2006 10:37 PM
> Subject: [lbo-talk] technical conditions approach
>
>
> > Trevor,
> > I don't think you have much respect for the Sraffian alternative to
> > Marxian value theory, but I don't as of yet know how you would
> > respond to (or understand) its criticisms. And I am interested in
> > your views.
> >
> >
> > The total automation example is just meant as a logical exercise, a
> > sort of ridiculous indication of why unpaid labor time may not be the
> > cause of profit/rent/interest. I just included it because I had it at
> > hand and it seemed impolite to talk about a theory on a public list
> > without giving any indication of what it is.
> > Wanted to do more than just throw around names.
> >
> >
> > As you must know, one can certainly build examples with direct labor
> > still employed and still say that profits and prices can (or even
> > must) be determined without reference to labor values (though there
> > is a question whether a technical conditions approach should be
> > allowed data on the abstract direct labor hours required for each
> > industry--how are various kinds of concrete labor abstracted into
> > qualitatively identical hours before and through the actual
> > commensuration in exchange, ask the followers of II Rubin and Alfredo
> > Saad Filho in the highly recommended Value of Marx
> > http://www.socialistworker.co.uk/article.php?article_id=6598).
> >
> > Just not yet clear on what your criticism is. All I am getting is the
> > sense that you want to fly high above the theoretical debate, and I
> > am interested in what you have to say about the strongest versions of
> > Sraffa or Samuelson or Steedman or Hodgson beyond whose views you say
> > Justin has not advanced.
> >
> > I'm also not sure what all the mark up talk of others is supposed to
> prove.
> >
> > If certain brands enjoy mark ups, this does not increase surplus
> > value for capital as a whole; it is only redistributes it unevenly.
> >
> > If there are brands that escape commodity pressure, this is surely
> > not true of most commodities.
> >
> > Whether Walmart or Bloomingdale's achieves a kind of hybrid
> > monopsony/putting out system towards industrial capitals abroad and
> > succeeds in redistributing to itself most of the surplus value does
> > not seem to me to speak against the labor theory of value.
> >
> > I couldn't follow what the break down of costs was supposed to prove.
> > Why the wage differentials or differentials in value added along the
> > chain? Please explain
> >
> > Truly interested in your views.
> >
> > Rakesh
> >
> > ___________________________________
> > http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
>
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