Question

How does Marx use the labor theory of value to critique capitalism?

Answer 1

The labor theory of value is a major pillar of traditional Marxian economics, which is evident in Marx’s masterpiece. The theory’s basic claim is simple: the value of a commodity can be objectively measured by the average number of labor hours required to produce that commodity.

If a pair of shoes usually takes twice as long to produce as a pair of pants, for example, then shoes are twice as valuable as pants. In the long run, the competitive price of shoes will be twice the price of pants, regardless of the value of the physical inputs. Marx claimed that his criticism of capitalism was based on the latest developments in science.

So the labor theory of value was not unique to Marxism. Marx did attempt, however, to turn the theory against the champions of capitalism, pushing the theory in a direction that most classical economists hesitated to follow. Marx argued that the theory could explain the value of all commodities, including the commodity that workers sell to capitalists for a wage. Marx called this commodity labor power.

Capitalists, enjoy a privileged and powerful position as owners of the means of production and are therefore able to ruthlessly exploit workers. Although the capitalist pays workers the correct wage, the capitalist makes workers work more hours than are needed to create the worker’s labor power. If the capitalist pays each worker five dollars per day, he can require workers to work, say, twelve hours per day. Hence, if one labor hour equals one dollar, workers produce twelve dollars’ worth of products for the capitalist but are paid only five. The bottom line: capitalists extract surplus value from the workers and enjoy monetary profits. Classical economists failed to adequately explain capitalist profits.

Marx condemned capitalism as a system that alienates the masses. His reasoning was as follows: although workers produce things for the market, market forces, not workers, control things. People are required to work for capitalists who have full control over the means of production and maintain power in the workplace. Work, becomes degrading, monotonous, and suitable for machines rather than for free, creative people. In the end, people themselves become objects robotlike mechanisms that have lost touch with human nature, that make decisions based on cold profit-and-loss considerations, with little concern for human worth and need. Marx concluded that capitalism blocks our capacity to create our own humane society.

The entire capitalist system with its private property, money, market exchange, profit-and-loss accounting, labor markets, and so on must be abolished, thought Marx, and replaced with a fully planned, self-managed economic system that brings a complete and utter end to exploitation and alienation.