The labour theory of value is simply describing the cost of producing something. Whether people are willing to buy it as that price (which would be same as selling it at cost) is an entirely different matter.
beyond market settling times, what the delta between labor value and market value very likely indicates is some sort of mispricing in the market, often due to some external, malign manipulation (i.e., an application of force, or power). efficient markets should tend toward the labor value of production, that is, profits are minimized to that of idiosyncratic risk (like pandemics).
It isn't about what I think. When people make purchases they will typically try to buy as cheaply as possible. If someone is looking to make a purchase they will typically go to whoever is offering it cheapest, if other people want to compete they will either have to offer it at the same price or cheaper.
Are you claiming this isn't true? Because I have witnessed it with my own eyes. I used to work in a Petrol Station we were ones of the cheapest places around and we had a lot of custom.
Other places that were more expensive were empty at the same time on the same days because they were more expensive. There is of course exceptions to this (Head and Shoulders Shampoo being the classic example) but they are outliers.
The same with a labour market. The market rate for a C# programmer is approximately £350-450 a day in the UK. More specialist development roles pay more e.g. Angular JS developers which are typically £500-750 a day (the last time I looked). There is less Angular JS developers that are available (low supply) so to attract talent companies that wish to hire need to raise the rate. However C# developers in the UK are much more common (higher supply) so companies won't pay those high prices.
Are you telling me this isn't happening? Because you can go to total jobs yourself and put C# developer Manchester and you will see difference in market rate yourself.
> beyond market settling times, what the delta between labor value and market value very likely indicates is some sort of mispricing in the market, often due to some external, malign manipulation (i.e., an application of force, or power). efficient markets should tend toward the labor value of production, that is, profits are minimized to that of idiosyncratic risk (like pandemics).
Not true. You are making several assumptions:
1) That there is abundance of said product (high supply).
2) People are wanting or needing to make a purchase.
3) That there isn't other competitors which have improved their processes or paying their employees less.
Number 2 being the most important IMO as everything else is normally equal. If nobody wants to buy it at the cost (or higher) you will be selling it at a loss.
Recently because of panic buying of loo roll, there wasn't any loo roll available in the UK. On Amazon for a 12 pack of decent quality loo roll was selling at 4 times the price of what it would be normally and they became sold out.
You can lament about the ridiculous panic buying. However demand outstripped supply and the price reflected this. In normal circumstances they wouldn't have sold for these prices and people would have had to sell at the regular price.
Oil in some regions of the world literally seeps out of the ground (known as petroleum seep) and until the 19th century it wasn't really deemed to be something of value.
so this seems like a vindication of the LTV as I understand it.
Even if you didn't accept that as realistic. Sure competition would drive down the price. However people would be finding ways to produce it for cheaper. They may pay people less, they might find way of producing it with less people involved.
LTV can't explain any of this. The labour market itself is driven by market forces.
also yes, capitalism drives down the labor cost of things through innovation or lowering workers’ living conditions. yes that lowers their value (labor value) according to LTV. that’s fine and not only consistent with but essential to LTV and results in, yes, lower prices longterm.
two further things. first, yes, LTV doesn’t talk about temporary supply-demand price drops. that’s not the point of it or in its scope or what it’s useful for. that’s fine. it has many other different useful conclusions unrelated to determining the exact price of a commodity at a given time under given market conditions.
second: I mean this in good faith. you have expressed the same misconception a couple times now. Please read Wage Labour And Capital, it’s a short pamphlet written for 19th century working class people. It’s very readable and if after reading it, you still think LTV is invalid, you might be able to express why more clearly. However I think you might be surprised.
EDIT: as a caveat yes cartels can distort this and sell high and collect super profits. but really please just read the source material so I don’t have to go over everything like this! marx is a good writer!
No it isn't. You are constantly using the term value when you should be using the term cost. The monetary value of something is largely subjective and is dependant on whoever is purchasing, the cost of something is objective.
To someone that cycles everywhere the price of petrol is always too high because a bicycle doesn't need petrol.
For example there was Head and Shoulders shampoo. When they first introduced it nobody bought it because it was too cheap. People just assumed it didn't work. When they increased the price people started buying it. Tell me how the LTV explains that? It doesn't.
The LTV doesn't explain the price of Art, It doesn't explain the second hand market. There are all sorts of things the LTV doesn't explain.
> In your hypothetical, the price of oil would nosedive for a while as long as there was over investment in getting it out of the ground that would be wasted if it wasn’t sold low. This is just a higher supply. But at some point, the lower demand for plastics, etc would use that up, leading to a steady state - one in which oil would again be sold at its value, its labor cost. It can’t be sold for less long term because otherwise the people digging it up and selling it would make a loss on doing that.
What happens if plastic is replaced by something else?
> also yes, capitalism drives down the labor cost of things through innovation or lowering workers’ living conditions. yes that lowers their value (labor value) according to LTV. that’s fine and not only consistent with but essential to LTV and results in, yes, lower prices longterm.
Yes that is because the labour market itself is subject to supply and demand. If there was no oil tomorrow, there would be no need to pay for the oil derrick workers. Their worth in that market would be nothing. They would be out of a job.
As I said in another reply here. Go to Total Jobs in the UK (it just happens to be the site I use) and search for C# developer in Manchester. The going rate for ASP.NET developers in £350-450 per day. The rate for Angular JS is £500-750 per day (the last time I looked). Why is that? It is because many companies are building single page applications and there are less Angular JS developers. So to attract talent they have to raise their rates accordingly.
I can program in python. There isn't one single Python job in my area (that is advertised at least). If I knew only Python I wouldn't be able to get a contract because there is no demand for it.
> But at some point, the lower demand for plastics, etc would use that up, leading to a steady state - one in which oil would again be sold at its value, its labor cost. It can’t be sold for less long term because otherwise the people digging it up and selling it would make a loss on doing that.
The materials that produce plastic are a by product of crude oil refinery. So in this scenario plastic would get very expensive to produce, people wouldn't pay for it and manufacturers would just find another material to build things with. If it is uneconomic to drill for oil, they would just stop drilling for oil.
LTV doesn't explain any of this. Market forces do.
> two further things. first, yes, LTV doesn’t talk about temporary supply-demand price drops. that’s not the point of it or in its scope or what it’s useful for. that’s fine. it has many other different useful conclusions unrelated to determining the exact price of a commodity at a given time under given market conditions.
Right so it doesn't explain things accurately. When things aren't accurately described by theory, then the theory is incorrect and must be either modified or you have to find an alternative explanation.
LTV doesn't explain it (as you have admitted). Market forces do.
> second: I mean this in good faith. you have expressed the same misconception a couple times now. Please read Wage Labour And Capital, it’s a short pamphlet written for 19th century working class people. It’s very readable and if after reading it, you still think LTV is invalid, you might be able to express why more clearly. However I think you might be surprised.
I don't think I really need to. You have continually ignored that things are only worth what people are willing to pay for them and haven't addressed it. Additionally you can't seem to distinguish the difference between the price that something is sold for and the cost of its production.
This is ridiculous. Goodbye.