Above is a video explaining why socialism sucks in the most straightforward terms I could create. It’s like an easily digestible set of things to say next time someone tries to tell you real communism has never been tried. In this article, I want to tackle one element of why socialism is terrible: the labour theory of value.
All of socialism rests on the labour theory of value being true. Problem is, it isn’t true. In fact, it’s so demonstrably false, a fairly bright seven-year-old could refute it just by using a few common sense examples plucked out of thin air. Basic logic proves it incorrect, every time.
First, an explanation of what the labour theory of value is. It’s a remarkably easy theory to explain: basically, all value derives from labour. So, the value of any good or service depends on how much work went into it. If you worked for 40 hours, it should be worth x, if you worked on it for 400 hours, it should be worth 10x.
Marx didn’t invent the labour theory of value completely, but he greatly expanded its use and application. It underpins all of Marxist theory - the amount that capitalists make in profit is simply the mark up on a good’s “real” value, that real value being the cost of labour. Profit is simply the capitalists scraping something off the top for themselves, goes Marxism.
While rent seeking is indeed an aspect of capitalism (or indeed, any economic system ever tried by human beings, but I digress), to say that labour is the total sum of anything’s value is, well, sorry to be blunt here, but painfully idiotic.
Let’s say you get a random person on the street to write you a 50,000 word novella. Then, you get Stephen King to write you a 50,000 word novella. You say to them both that they can only spend a 100 hours writing it. The idea that if both of those people, random person one and Stephen King, spent the same amount of time writing such a thing that both would be of precisely equal value, monetary and artistic, is obviously absurd.
A better, easier example: let’s say I open two factories, one manufacturing a completely useless product that no one would want to buy, another making a product that is a proven seller. The first factory would make a substantial loss, the other a healthy profit. Yet in both factories, I had the same number of people working the same number of hours. Their labour wasn’t any more or any less in either location. Yet the output of one is vastly more valuable than the output of the other.
The idea that if you just work hard, you are creating value, is a dangerous one. For a start, it leaves out how much of what value is relates to innovation, creating new and better products, or finding more efficient ways of producing existing ones. That is the bit that is entirely missing from Marx.
Next time a socialist tells you that you just need to understand the labour theory of value in order to transform into a socialist, pity them for their poor grasp of reality.
This analysis completely ignores the fact that the labour theory of value places a secondary emphasis on supply and demand as well as its primary emphasis on labour, meaning that your examples are completely worthless as an object with no demand, such as the "completely useless product" defined above would have no value under the labour theory of value because there would be no demand ascribed to it.
Marx himself acknowledges this in the first chapter of Capital:
"Lastly, nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value".
🤷♂️ A rather dumb explanation of a political theory. Look up socialism in a dictionary and have another run at it.