[Note--I believe I sent this to John Hull instead of to the list. I
apologize. If it's already been posted, my apologies for the duplication as
well]
I think they're operating on the same variant of the labor theory of value
that inspired the labor note systems of the Owenites and Josiah Warren.
One of the best critics of this variant, believe it or not, was Karl Marx.
According to Marx, the law of value worked *through* the market price
system, and depended on it for its realization. It was only through the
feedback of prices that the producer could determine whether his labor was
socially necessary; it was only through the entry and exit of market actors,
in response to price signals, that price was caused to approximate
labor-value. The labor theories of both Marx and Ricardo did not merely
implicitly assume price fluctuation, but depended on it. It was only
through the process of competition over time, and the response of suppliers
and buyers to the fluctuating market price, that continually caused
equilibrium price to gravitate around labor value. And Marx said as much
explicitly.
Marx and Engels were in complete agreement with the classical political
economists on the role of competition in regulating the law of value.
Engels, in his Preface to Marx's Poverty of Philosophy, ridiculed the
utopian socialist notion of making labor the basis of a medium of exchange.
The market forces of supply and demand were needed to inform the producer of
the social demand for his product, and to establish the normal amount of
social labor necessary for the production of a given commodity. So the
deviation of price from value at any given time was not a violation of the
law of value, but its driving mechanism:
In modern capitalist society each industrial capitalist produces on his own
account what he likes, how he likes, and as much as he likes. The quantity
socially demanded is for him an unknown magnitude, and he does not know the
quality of objects demanded any more than their quantity Ultimately
demand is satisfied in some fashion, ill or well, and generally production
is definitely regulated by the objects demanded. How is the reconciliation
of this contradiction effected? By competition. And how does that arrive
at this solution? Simply by depreciating below their labor value the
commodities which are by reason of their quality or quantity useless or
unnecessary, ...and in making the producers feel, ...that they have
manufactured articles absolutely useless or unnecessary, or that they have
manufactured a superfluity of otherwise useful articles. From that two
things follow:
First, the continual deviation of the price of commodities in relation to
the value of commodities is the necessary condition by which alone the value
of commodities can exist. It is only by the fluctuations of competition,
and following that, of the price of commodities, that the law of value
realizes itself in the production of commodities and that the determination
of value by the labor time socially necessary becomes a reality In a
society of producers of exchangeable commodities, to wish to determine value
by labor time by interdicting competition from establishing this
determination of value in the simple form by which it can do this--in
influencing its price, is to show, at least in this connection, the habitual
utopian misunderstanding of economic laws
It was only by the market price system, and its laws of supply and demand,
that the production of isolated producers [was] accomodated to the total
social demand
Marx made very much the same argument in the main body of The Poverty of
Philosophy: it was market price that signalled the producer how much to
produce, and thus regulated price according to the law of value.
It is not the sale of any product whatever at the price of its cost of
production which constitutes the relation of proportion of supply and
demand, or the proportional quota of this product relatively to the whole of
production; it is the variations of demand and supply which fix for the
producer the quantity in which it is necessary to produce a given product in
order to get in exchange at least the cost of production. And as these
variations are continued, there is also a continual movement of withdrawal
and of application of capitals with regard to the different branches of
industry
Competition realises the law according to which the relative value of a
product is determined by the labor time necessary to produce it.
Neither the classicals nor Marx, however, were very clear on *why* labor
should create exchange-value: the subjective disutility of labor for the
laborer.A lump of coal does not have to be persuaded to bring its
services to market, by being offered a price that (in its estimation) makes
it worth while. A laborer does.
I have dealt with these issues fairly intensively in the (very rough) draft
chapters of Mutualist Economics at
From: john hull [EMAIL
