Karl Marx

Karl Marx (1818–1883) is the German political economist and revolutionary whose Capital (1867) gave the classical labor theory of value its most systematic form. For Marx the value of a commodity is an objective magnitude set by the labour embodied in it; this is the position the Austrian subjective theory of value was built to overturn, and which Böhm-Bawerk set out to refute.

The Labor Theory of Value

Marx opens Capital by analysing the commodity into use-value and value. Setting use-value aside, he argues that what remains common to all commodities, and what their exchange-value expresses, is that they are products of human labour in the abstract: a commodity “has value only because human labour in the abstract has been embodied or materialised in it.” The magnitude of that value is then fixed not by individual effort but by social average — “the amount of labour socially necessary, or the labour time socially necessary for its production.” Value, on this account, is a property the object has, deposited in it by production and measured in labour-time.

From this foundation Marx builds the theory of surplus value: labour-power is itself a commodity whose value is the labour-time needed to reproduce it, while in production it can be made to yield more value than it costs — the surplus appropriated by the capitalist. The objective, production-side determination of value is thus the root of the whole Marxian account of exploitation.

Place in This Wiki

Marx is the wiki’s reference foil for the Austrian theory of value. The Mengerian revolution of 1871 reverses Marx’s order of explanation — value flows from the subjective importance of want-satisfaction to the valuer, not from labour embodied in the object — and Böhm-Bawerk’s Karl Marx and the Close of His System presses the internal case that Capital Vol. III’s competitive “prices of production” cannot be reconciled with Vol. I’s labour-values. The head-to-head is drawn out in The Subjective Theory of Value vs. the Labor Theory of Value.

See Also

• Capital - Marx’s 1867 magnum opus and the primary statement of the labor theory of value
• The Subjective Theory of Value vs. the Labor Theory of Value - the head-to-head contrast with the Austrian account
• Karl Marx and the Close of His System - Böhm-Bawerk’s classic critique of Marx’s value theory
• Eugen von Böhm-Bawerk - the Austrian economist who refuted the labor theory of value
• Carl Menger - founder of the subjective-value tradition that displaced the labor theory
• Principles of Economics (Menger) - Menger’s 1871 founding text of the Austrian School: value is a subjective judgment of a good’s importance for satisfying needs, never a property inherent in the good

Sources

• Capital, Volume I — Chapter 1: Commodities (Full Text) - Marx’s own statement of the labor theory of value: use-value vs. value, abstract human labour, socially necessary labour-time
• Karl Marx and the Close of His System (Full Text Aggregate) - Böhm-Bawerk’s critique, used here for Marx’s place in the value-theory dispute