New Socialism and the Labour Theory of Value

Originally Published: December 7th, 2016

Socialism and Marxism have essentially been equalized as terms. Marx’s revision of the labour theory of value has been a consistent central component of the socialist argument, with little to no deviation. Alongside this, time and time again the labour theory of value has shown to be short of the whole economic situation. However, the socialist argument has not necessarily proven to fall short in the same way, and can certainly stand independent of the labour theory of value.

It is evident that socialism is a rational opposition to the current capitalistic economic order. Its reactions are justified, capitalism has provided extreme wealth and land disparity, and an unequal balance of power rooted in economic inequality. Socialism’s ideological tenets sit in opposition to these concepts, and figures like Marx and Lenin and all of the rest have worked hard to rationalize this opposition. However, in doing so, they’ve done the contrary. Socialism has been convoluted by primitive concepts, and has since gone unquestioned by its followers simply out of fear of questioning its founders. Marx and Engels and the likes being treated as infallible is not an appropriate way of looking at the progression of socialism as a political theory, especially with all of the revolutions in the economic structure of the world that has occurred since their respective times. Marx’s contributions to the labour theory of value were important for their era, but now we have ways of handling mass amounts of data and statistics that has given us a new look into value’s relationship with price and how market systems act. With a change in our understanding of the economy, there is no reason that socialism cannot change to fit this as well.

While it is flawed, there are merits to the labour theory of value. It provides a solid base for the rest of Marxist theory, explaining the roots of capitalist exploitation and birthing scientific socialism. It is doubtful that the political theory would have gained ground without the value theory to solidify its position in academia. Even so, it is impossible to deny its lack of regard for the true intricacies of the wage’s relationship with commodity pricing. Diluting the concept to “lower wages with market prices gives the capitalist the surplus at the expense of the worker.” This blatant oversimplification of economics has crippled scientific socialism since its conception. Pricing has basis in both demand and labour costs, for one, and there are a number of supply-side contributors to price establishment. The labour theory of value as an integral component of socialism has been a step forward for the movement, but has been met with resistance that has forced the movement to take two steps back any time it is brought into question.

However, though the labour theory of value has provided an explanation of capitalist exploitation on a broader scale, is it truly necessary in order to do so? Wealth disparity, for instance, provides a basis for socialist reformation. The richest 62 people in the world own more wealth than that of half of the world’s population. People starve in third world countries and live paycheck to paycheck in first world countries while the well off revel in houses with 7 bathrooms and two inhabitants. Nobody should exist in a world where excessive wealth exists at the same time as excessive poverty. This statement has been at the base of socialism since its establishment. People who starve because of material or geographic circumstances cannot possibly be playing on the same field as those who have become successful as a result of material or geographic circumstances. Capitalism has different connotations in Nigeria than it does in the United States, and for good reason, and thus there is no level playing field in the free market; there are those destined to be prosperous, those destined to be exploited, and those destined to die.

An additional example of the necessity for socialism independent of the labour theory of value is actually ingrained in the theory itself: the concept that workers create the world’s wealth. Phony conceptualizations of value are not necessary to understanding that the hands which produce commodities that are sold by merchants and profited off of by capitalists are the hands which deserve these profits. The issue is Marx’s thought on the roots of profits, which he claimed to be surplus appropriation, when in reality the factors which go into profit are nearly uncountable. Still, without the idea of surplus appropriation, it is true that workers produce the goods which generate wealth. Why should the workers not be entitled to the fruits of their labor? Capitalism’s justification is in the effort of the middleman, claiming that the bourgeoisie have struggled in order to produce conditions for workers to labour and thus deserve compensation for their efforts. They do, however there is a clear point when this compensation becomes excessive and the disparity of wealth between business owners and their workers becomes exploitative. This profit-exploitation cycle is the root of the aforementioned world wealth disparity, alongside other factors, namely economic imperialism.

Capitalism’s roots in plundering the resources of others is not even deniable in this day and age. It was built on the slave trade and perpetuated by conquest, and socialism arose as a reaction to these facets of the economic system. Socialism’s historical role in the opposition to these capitalist injustices cannot be forgotten in the modern day, in the time where these injustices are less apparent to the commoner due to the veil drawn up by the elite class. This veil, we must not forget, was forced into use by socialists and anti-capitalist movements drawing the morality of this capitalist plundering into question. They interrogated the economic order so heavily that it became a common ideology to hold these actions as unjust, and thus the capitalist must hide these continued actions in order to prevent public outcry. They have failed.

It is important to understand that the labour theory of value hasn’t damaged socialism indefinitely, however it has committed the awful crime of not adapting. Today, the modern method by which wealth is accumulated rapidly is through modern rent systems and bureaucracies of corporate ownership. Patents and brand protection often draw more spending than that of production. The labour theory of value does not have any way of truly addressing this, nor investment gains, or most non-productive, rent-esque methods of accumulating wealth. The manipulation of money as a method of gaining more wealth is unjust, as it is most often carried out by those with the most disposable income, as this lowers the risk. Patents have also driven up the costs of pharmaceuticals and countless other brands. Consumerism has developed over brand competition, valuing some over others due to their logo or whatever celebrity has endorsed their product. The ability to observe these occurrences without having to account for the fact that the labour theory of value has failed to account for many of these new facets of corporate life is absolutely essential to an accurate new socialist theory.

It is clear that socialism does not necessarily need to be an ideology rooted in the labour theory of value. It should not be, the theory has been antiquated by the conceptualizations of Keynes and the likes in favor of a more supply-and-demand based economic outlook that is so widely held today, mostly because it has proven to be accurate through the genuine application that socialist theory has suffered over lacking. However, capitalist exploitation still represents itself in other ways. Wealth disparity, the standalone properties of labor’s relation to commodities and their sale as a component of the economic structure of capitalism, and economic imperialism propelled by capitalist interests are all manifestations of this exploitation and injustice. The economic root of exploitation does not lay in surplus appropriation, it lays in the exchanger’s relation to the life of the commodity, i.e., the exchanger’s role in production. If this exchanger’s role in production is purely as a middle man, as is such with merchants and salesmen and whatnot, then clearly he has little business profiting off of the other factors of the commodity’s life, like the work of the laborer.

The reaction to this concept of salesmen having no business is one of disgust, as “obviously salesmen bring skills to the table that no one else has!” This is true, however it in itself is a byproduct of historical trade. Merchants travelled the world reselling products they had picked up in certain areas in order to introduce new commodities to new areas. This tradition carried into the colonial period and through the industrial period to the modern age. Now, people attend universities and schools in order to practice sales skills. Why is this a specialized profession and not a component of being a worker or co-managing a production facility? Re-organization of the characteristics of business firms and approaches to business and trade-based education hold the potential to lead the world into an economy based around producers rather than the economy of today that is built around the movers of capital.

The case for a socialism without the labour theory of value is overwhelming. The concept has simply bogged down the modernity of the movement and cast its supporters into mindsets of economic antiquity. The progression of socialism relies upon adaptation, and pure Marxist theory as a basis for a modern movement would be nearly impossible due to historical perception and modern revelations in the economic field. We are at square one, and we mustn’t make the mistakes of our predecessors.


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