Just what is a labour value anyway?

This week I attended a workshop on input-output and multi-sectoral analysis organised by Andrew Trigg and Ariel Wirkierman. Input-output analysis stretches back to Francois Quesnay’s “Tableau Economique” (1758), which is perhaps the earliest work to model an economy as a circular flow.

I presented a talk on my position paper, “the general theory of labour value“. The paper is maths heavy, and assumes the reader already knows a fair amount of classical economics, input-output theory, linear algebra and differential equations. So it’s a pretty technical read.

I therefore wanted to give a talk that was as simple as possible, and focus on a single but important point. I decided to focus on explaining why the classical definition of labour value does not measure the actual labour supplied to produce commodities.

Why does this matter? It matters because this fact has gone unnoticed, and also is the underlying root cause of all the major problems of the classical labour theory of value.

Once we recognise that classical labour values don’t measure what we think we measure, then we immediately reveal a more general definition of labour value that does measure the labour supplied to produce commodities. I call these the super-integrated labour values. And, in this more general setting, all the major problems of the classical theory resolve in a straightforward and clarifying manner.

Almost every modern school of Marxist economics can be traced back to an initial stance or reaction to Marx’s transformation problem. The problem was first identified, in the early 1900s, by Ladislaus Bortkiewicz using a multi-sector input-output framework.

Some Marxists reject the input-output formalisation of Marx’s theory. Other Marxists accept it. I won’t step into this interpretative debate here. But for those that accept the formalisation then I show that, contrary to over a century or more of debate, there are no grounds for rejecting a labour theory of value within this framework. And for those that reject the formalisation then my work may be viewed as an internal critique of rejections of a labour theory of value based on results from linear production theory. Either way, I reveal a hitherto hidden, yet essential, duality between prices and labour values (or, more generally, between monetary and real cost structures).

But a more important issue is at stake here. Input-output modelling has a long and deep history of empirical work (see especially Wassily Leontief‘s contributions). And whenever we measure something — such as the labour time supplied to produce a commodity — it’s essential to have conceptual clarity regarding the theoretical concept we intend to operationalise. Hence, for straightforward scientific reasons, we need to know what classical labour values do, or do not, measure.

In my talk I answer that question, in a simple and straightforward a way as I can. I avoid mathematics and instead draw flows on production graphs, which I hope is more intuitive. I explain what coexisting labour is, how it relates to Marx’s ideas, and the process of vertical integration in a step-by-step manner. And I also explain how to really measure the total labour supplied to produce a commodity (in the institutional circumstances of a capitalist economy).

The paper.

The talk:


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