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Comment by mpax | Hacker News Reader

The fact that expected utility theory isn't nearly as scrutinized as the labor theory of value, whilst being at least as flawed, tells you something about the "value free" nature of modern econ.

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Expected utility theory, if anything, is more scrutinized than the labor theory of value. They gave Kahneman the econ Nobel for (among other things) documenting empirical failings of expected utility.

It... is? The difference is that the labor theory has been thrown out as unsalvageable, whereas expected utility theory is useful enough in some theoretical applications to stick around.

The question is whether the grounds upon which it was thrown out (which relate to specific problems) are therefore sufficient for it to be "unsalvageable". Nonetheless, as I already mentioned, the pretension that economics lacks normative content gives the false impression that ideas must be discarded because they are not scientifically valid rather than for ideological reasons.

That's the thing, though -- the labor theory isn't just "not scientifically valid." It clearly doesn't describe what is -- it's not how people value things, and it doesn't make sense as a description of what ought to be.

The LTV was never intended as a description of what "ought to be" (in fact, Marx cautions against such use), and it was intended to describe how things are. The idea is that people do value things according to their socially necessary labour content, and that this mechanism works "behind the backs" of all members of society. I'm curious in what way it isn't scientifically valid.

The LTV wasn't thrown out because it fails to describe how things are, because soon enough marginalists realize that the same criticisms actually apply to their own theory. It was thrown out (mostly by Samuelson and his pals) of specific issues: the transformation problem, the generalized commodity exploitation theorem, and by extension the Okishio theorem, all of which have been addressed in the Marxian economic literature.

LTV is clearly normative, and it's why people still try to revive it. The idea that factory owners are exploiting their workers has a certain intuitive appeal as a moral proposition.

The LTV wasn't exactly thrown out -- there are situations where marginalism and the LTV exactly coincide -- but it was superseded because outside a narrow sphere it becomes incoherent. The classic example is technological substitution -- if you have two ways of making something, one that is capital-intensive and one that is labor-intensive, then you will probably pick the one that's cheaper. So you can't calculate the labor content of a good independently of prices.

The specific issues you enumerate are issues within Marxist economics in general. The LTV was superseded well before Samuelson's paper on the transformation problem.

Spoken like someone who truly doesn't know the history of the economic field.

The history of value theory is well explained in this paper by economist Alan Freeman: https://mpra.ub.uni-muenchen.de/48646/1/MPRA_paper_48646.pdf

It seems like an ok reading of the history on first glance but it is the Marxist perspective. I suppose necessary to understand the heterodox viewpoint.

> So central to capitalist reality is this motor of growth that it lies behind both imperialist conquest and the launching of those periodic prolonged booms of which the Belle Époque and the post-war Golden Age are the most recent examples.

This is a pretty ridiculous conclusion that is demonstrably false.

I don't know much about the examples myself. I'm interested in why the author is wrong.

Marxist value theory basically died out in the 70s, which Freeman basically concedes in the "The Marxists Divide" section. His TSSI is an attempt to resusitate the theory, but it has found few adherents.

It is worth noting that the TSSI isn't the only one around any more, though - nor is the strictly quantitative interpretation of value theory. The TSSI was constructed as an interpretation to solve the transformation problem, but there's Dumenil's New Interpretation now and Fred Moseley's Macro-Monetary Interpretation. It is not surprising that Freeman would make such a concession as an economist rather than as a philosopher, where Marxian value-form theory flourished in Germany and Japan during the 70s and 80s and still to this day.

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