Lew Rockwell attacks LTV: I reply.

Following my debates with “anarcho”-capitalists and my participation in the anti-ancap FAQ, I have been somewhat of a defender of the Labour Theory of Value against its dogmatic, intellectually bankrupt opposition.

Recently, Lew Rockwell, the rabid Christian capitalist, has published an article by Glenn Jacobs, professional wrestler and RonPaulite, who tries to body slam the Labour Theory of Value but ends up biting the mat. I am going to look at the theoretical claims against LTV in that article.

We’ve all heard the phrase “equal pay for equal work.” Many of those who habitually repeat this mantra may not realize that it is simply a variation of the discredited labor theory of value (LTV), which is generally associated with Marxian economics. According to the LTV, the value of a product is related to the labor needed to produce it.

Apart from the “discredited” slur, I agree with everything so far. But I would go a lot farther than that: I would simply say, equal pay for work, period. Not including the particular costs of a given job (such as the education needed), all hours of work should be paid the same. One hour of labour is equal to one hour of labour.

The marginalists proved that value is not the result of a product’s inputs, but the result of the subjective judgment of individuals.

This is an obvious logical fallacy, but hard for most people to see, so I will take this opportunity to explain the main reason why STV is fallacious (those of you who have read the FAQ will not need to read this). Usually STV is expressed in manner similar to this:

“How much we value any product differs from time to time and from scenario to scenario, and the same is true for any other individual, therefore the value of the product is subjective.”

This is a fallacy of equivocation on the word “value.” The first part of the argument refers to the person’s values (which are moral, relative to that person, and cannot be otherwise), and the second part of the argument refers to the value of the product, which is a property of the object itself (and is therefore not relative to any person).

By using one meaning of “value,” and then switching to another meaning of “value,” they are using equivocation, which is nothing but a fraudster’s shell game, and can only work by confusing people. And yet this is the very basis of STV.

To come back to our article, I have to give credit to Jacobs for not using the equivocation and using “subjective judgment” instead of “value” to designate moral values. But this only shows the error even more clearly. What relation can there possibly be between “subjective judgment,” which is clearly relative to the person, and the value of a product, which is not relative to the person? How does any amount of “subjective judgment” change the facts of reality? The simple answer is that it doesn’t.

Saying that “value is… the result of the subjective judgment of individuals” is as nonsensical as saying that “color is… the result of the subjective judgment of individuals” or “volume is… the result of the subjective judgment of individuals.” Facts must be processed by the individual in order to be understood, but facts in themselves do not depend on the individual in order to exist. To argue otherwise is to plunge oneself headlong into solipsism, which is patent pseudo-philosophical nonsense. Facts exist regardless of our capacity to understand them.

Unfortunately, it was the convoluted logic of the LTV that led President Obama to sign the Lilly Ledbetter Fair Pay Act on January 29.

According to the right-wingers, Obama is a “socialist” and therefore must subscribe to LTV. In fact, anyone who saw how fanatically Obama defended the bailouts would know that he is a capitalist through and through. No socialist politician would ever be permitted to run for president.

Despite rhetoric to the contrary, jobs are not the property of the employee. Unions will state that the positions which they hold are “their jobs”; protectionist anti–free-traders will claim that immigrants are stealing “American jobs.” The fact is that the job is the property of the employer. There is a very simple way to logically prove this fact. If an employee worked for a single individual and that individual died would the employee still receive remuneration? Would the employee still have a job? Of course not; the job has died with the employer. But if, on the other hand, the employee died, the job would still exist.

This reasoning is plainly a circular fallacy, since it implies the truth of property theory, which of course will lead one to a capitalist view.

If a capitalist owner can legitimately claim the means of production as his property, and can legitimately make a contract with another person wherein the latter surrenders his production to him in exchange for a wage, then we can say that the capitalist owner “owns the job” and that, like any other property, the link dissipates only at his death or as he wills (i.e. fires the employee and hires no one). But these ifs completely depend on property rights being coherent.

But property rights are incoherent for many different reasons. For one, property rights depend on the premise that owned objects are productive agents and participate in someone else’s product. That is the theoretical basis for usury (for money, interest; for land, rent; for means of production, profit). Since objects are not animated and do not produce in and of themselves, they are not productive agents, and the owner is not owed any usury for someone else’s use of them. Therefore the very concept of an employee, being defined as a person who uses someone else’s means of production and thus owes him his production, is nonsense.

(Note that this is only one argument against property: in his book What is Property, Proudhon gives many such arguments, some of which I have quoted in the past)

Freedom of contract – the ability of individuals to bargain freely without government interference – is the bedrock of a free-market economy and was a fundamental part of American legal doctrine until the late 1930s.

I’m gonna let Proudhon field this one:

“The negro who sells his wife for a knife, his children for some bits of glass, and finally himself for a bottle of brandy, is not free. The dealer in human flesh, with whom he negotiates, is not his associate; he is his enemy.

The civilized laborer who bakes a loaf that he may eat a slice of bread, who builds a palace that he may sleep in a stable, who weaves rich fabrics that he may dress in rags, who produces every thing that he may dispense with every thing, — is not free. His employer, not becoming his associate in the exchange of salaries or services which takes place between them, is his enemy.

The soldier who serves his country through fear instead of through love is not free; his comrades and his officers, the ministers or organs of military justice, are all his enemies.

The peasant who hires land, the manufacturer who borrows capital, the tax-payer who pays tolls, duties, patent and license fees, personal and property taxes, &c., and the deputy who votes for them, — all act neither intelligently nor freely. Their enemies are the proprietors, the capitalists, the government.”

To this I will only add that anyone who actively promotes the absurd joke of a “freedom of contract” in an unfree society such as ours is in the pockets of our enemies, whether he is conscious of it or not.

Another common misconception about employment is that the employer is buying the employee’s labor. However, the employer is not buying the employee’s labor per se; he is buying the employee’s productive ability. In general, the goal of a businessman is to maximize production while minimizing cost, thereby maximizing revenue and profits.

How does explaining the rationalization for exploitation in the capitalist system go anywhere towards refuting LTV? The rest of the article simply veers off the tracks and turns into a RonPaulite denunciation of government intervention, which ironically was necessary in the development of American, British and Japanese capitalism, and all the other bloated corporate networks of the world. Very few of the corporations we know would even exist without government salvation.

The Ledbetter Act is aimed at equality. But individuals are not equal. We all have different talents, resources, interests, abilities, educations, and backgrounds.

Another argument that gets trotted our every time a propertarian wants to make any point. You can’t give them much credit for originality.

That being said, inequality of abilities does not bring us to the conclusion of inequality of wages. In fact, that would only make sense if there was equality of jobs, that is to say, if all jobs required an equal level of all abilities. In that case, however, the opposite from STV would obtain: people with less abilities should be paid more, since they would be forced to expand more energy or to risk their physical health for the same output.

But that is not what we observe. In fact, there is a great inequality of jobs. Some jobs require some skills, some require other skills, in greater or lesser quantity. Insofar as there is a parity between the inequality of abilities and the inequality of jobs (being that jobs are filled by people who can fill them), there must therefore be equality of wages.

This is a logical conclusion based on sound reasoning, and therefore it will likely escape the grasp of most capitalists.