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Labour theory of value: Difference between revisions
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The [[labour theory of value]] (“'''[[LTV]]'''”) argues that the ''economic'' value of a good or service is determined by the total amount of “socially necessary labour” required to produce it. A staple of Marxist theory, the [[LTV]] stands in contrast to the neoclassical model of [[value]] — the one typically subscribed to by venal capitalist running dogs etc. — that the value of a good or service is ''whatever someone else is prepared to pay for it''. | The [[labour theory of value]] (“'''[[LTV]]'''”) argues that the ''economic'' value of a good or service is determined by the total amount of “socially necessary labour” required to produce it. A staple of Marxist theory, the [[LTV]] stands in contrast to the neoclassical model of [[value]] — the one typically subscribed to by venal capitalist running dogs etc. — that the value of a good or service is ''whatever someone else is prepared to pay for it''. | ||
Cue long-winded diatribes, from either side, about those who know the ''price'' of everything, the ''value'' of nothing, and so forth | Cue long-winded diatribes, from either side, about those who know the ''price'' of everything, the ''value'' of nothing, and so forth. | ||
This beautiful dissonance is why economics is not a zero-sum game. As long as merchants are providing valuable [[consideration]] for their exchanges, there should be no tragedy on the commons.<ref>This is just one good argument for freely sharing intellectual property. It is not not an exhaustible resource. What other people do with your IP can benefit everyone.</ref> Price becomes an interesting factor only where it is the right side of value. If it is the wrong side, ''there is no trade''. | But it seems to me that “''price''” — an identifiable fact: the number at which you both arrived — and “''value''”: the buyer’s and seller’s respective opinions about the thing they have just bought and sold — ''cannot'' be the same thing; indeed the commercial world ''depends'' upon their very difference. The overall rationale for a transaction between rational merchants must be that the seller values the property ''below'' the agreed price, and the buyer ''above'' it. If [[monetisation|monetising]] an asset, or converting money into an asset<Ref>Why isn’t there a word like “monetisation” for the inverse process? And no, it isn’t “[[securitisation]]”. [[Securitisation]] is just monetisation using an [[espievie]].</ref> is some kind of phase transition, then the process involves a loss of energy, an increase in [[entropy]], and a rational agent would not [[monetise]] or [[assetisation|assetise]] at a price ''exactly equal'' to its own value assessment. Hence, rational agents will only transact when ''both'' of them believe they are creating value. | ||
This beautiful dissonance is why economics is not a [[zero-sum game]]. As long as merchants are providing valuable [[consideration]] for their exchanges, there should be no [[Tragedy of the commons|tragedy on the commons]].<ref>This is just one good argument for freely sharing intellectual property. It is not not an exhaustible resource. What other people do with your IP can benefit everyone.</ref> Price becomes an interesting factor only where it is the right side of value. If it is the wrong side, ''there is no trade''. | |||
This is not to say price and value are independent — that would be too easy. Merchants are greatly assisted by the irrational psychology of scarcity and desirability: some items — paintings, for example — become ''more'' desirable the higher their price. | This is not to say price and value are independent — that would be too easy. Merchants are greatly assisted by the irrational psychology of scarcity and desirability: some items — paintings, for example — become ''more'' desirable the higher their price. | ||
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In which [[JC|your correspondent]] no doubt goes over the front of his [[Skiing|ski]]s. But it seems to me, readers, that the information revolution presents our conventional model of value with a problem. For anything that can be automated can be replicated, algorithmatised, reverse-engineered and widely propagated without cost. However good it is, we know it can be generated cheaply, reliably, and non-exclusively. This is anti-scarcity: it necessarily affects our assessment of its value, and in any case where price is the right side of value that is not the end of it: then you must beat your competitors, all of whom have the same technology and the same ability to generate an equivalent product with minimal cost. | In which [[JC|your correspondent]] no doubt goes over the front of his [[Skiing|ski]]s. But it seems to me, readers, that the information revolution presents our conventional model of value with a problem. For anything that can be automated can be replicated, algorithmatised, reverse-engineered and widely propagated without cost. However good it is, we know it can be generated cheaply, reliably, and non-exclusively. This is anti-scarcity: it necessarily affects our assessment of its value, and in any case where price is the right side of value that is not the end of it: then you must beat your competitors, all of whom have the same technology and the same ability to generate an equivalent product with minimal cost. | ||
''To create value you have to put in some effort''. No one is going to turn up to watch a robot playing the guitar, | ''To create value you have to put in some effort''. No one is going to turn up to watch a robot playing the guitar, however technically fantastic an achievement that is. Would they show up to see a chap who records iPhone videos of himself playing jazz standards in a music store? | ||
Well, I would. | Well, I would. | ||