Karl Marx is one of the most controversial figures more than a century since his death in the western world. It was as a result of his criticisms on capitalism as well as his consistent promise of a harmonious and inevitable socialist future that stimulated global proportions revolution. In the first half of the 20th century, the Marxist dream had started to become right with the Bolshevik revolution in Russia as well as the spread of communism across Eastern Europe but later on before the century ended, the dream collapsed. The reason for the collapse was because of the initiation and implementation of policy transition towards the market-exchange system as well as the private property rights, which still are occurring today (Fuchs, 2015). The general characteristics of Marxism, which includes social theory, its economics as well as the overall vision, helps to explain the aspects of Marxism that created the powerful revolutionary force as well as why Marxism collapsed. This paper tries to explain about Karl Marx's labor theory of value, which mainly focuses on Marxian economics.
The labor theory of value claims that a commodity's value can be measured objectively through the average number of hours of labor that is required to produce the product (Tucker, 2017). An example is that if the time taken to create a pair of shoes is twice the amount of time required to provide a pair of pants, then the shoes' value is considered to be twice as valuable as pants. Hence the price of shoes will always be twice that of pants irrespective of the physical inputs' value. Even though this theory is practically false, it triumphed through the mid-nineteenth century among the classical economists.
In the wealth of nations, Adam Smith flirted with this theory in classic defense of capitalism while David Ricardo in his principles of political economy, systematized the labor theory of value. The texts are still and have been studied by generations of free-market economists and therefore to Marxism, and the approach was not unique. However, Marx had attempted to turn the theory contrary to the champions of capitalism hence pushing it in a course that most classical economists wavered between taking.
According to Marx, the theory would describe all commodities' value, including those commodities that workers sell for a wage to the capitalists, and he called this labor power (Fuchs, 2015). The capacity of workers to produce goods and services is known as labor power. Marx argued that the labor power value has to depend on the average number of hours that a worker in the society takes to shelter, feed and clothe in the order he/she can have the capability to work. In simple terms, Marx tried to explain that the wage that workers receive will highly depend on the number of labor hours taken to produce a worker who is fit for work.
An example is when five hours is the only needed number of hours in order to protect, feed and clothe a worker in a day so that he/she will be fit for work the following morning, and each labor hour is equal to one dollar, then the collect wage for this worker will be five dollars per day. Marx wondered then of how capitalist get to enjoy profits even though all goods and services within a capitalist society are sold at wages and prices which reflect their real value, which is measurable through labor hours.
He wondered how capitalists could squeeze out profits between total costs and total revenue and therefore figured out that capitalist only enjoys a powerful and privileged position as the sole owners of production means and consequently they ruthlessly exploit workers. Even though these capitalists pay their workers the correct wages, Marx argued that the capitalists used them by making them work more hours than required to create the labor power of workers. When the capitalist pays workers a wage of five dollars in a day and yet he/she needs the workers to work for twelve hours during Marx's time and if one labor hour is equal to one dollar, then the workers are said to have produced products worth twelve hours for the capitalist and since the capitalist only pays five dollars, the excess seven dollars are enjoyed by the capitalist as monetary profits.
Even though Marx was trying to use the labor theory of value to fighting capitalism by stretching it towards its limits, he demonstrated the weakness of the underlying assumptions and the logic of the argument unintentionally. When he explained that the classical economists did not disclose the profits of capitalists adequately, Marx was correct but also failed. The economics profession rejected the labor theory of value by the late 19th century, and today mainstream economists believe that it is not as a result of exploiting workers that capitalists earn profits, but they make profits by organizing production, forgoing current consumption as well as by taking risks.
According to Marx, people are free and creative beings by nature who can transform the world total, but on the contrary, Marx saw that practically, the developed world technologically is beyond anyone's control (Huber, 2017). He condemned the free market claiming that it was being ungoverned or anarchic and maintained that the coordination of the market economy through the sale of private property and the spontaneous purchase which is dictated by the supply and demand laws blocked people's capability to take control of collective and individual destinies. Marx condemned capitalism system for alienating the masses.
His thought was that even though workers produce commodities for the market, it was the market forces that control the products and not the workers. People are therefore required to work for capitalists who maintain power and have full control over the production means in the workplace, a work that according to him becomes monotonous, degrading as well as suitable for machines and not for free as well as creative people. It is as a result of this system that people end up working as objects as well as robotlike mechanisms that have no touch with the nature of human beings and make decisions basing considerations on cold profits and losses with a very little concern for human need and worth. Marx, therefore, concluded that it is as a result of the capitalist system that most individuals are unable to create their humane society.
Marx hence argued that people are alienated because they have not yet established a society that is fully controlled and planned, one that has no private property, has no profits, a community without money, losses and competition, an organization that according to him will unavoidably appear as the world develops in history but what he forgot is that even the present computer technology advancements, people still cannot be able to create a system that is comprehensively planned and one that ends uncertainty and scarcity (Marx, 2015).
Fuchs, C. (2015). Digital Labor. The Routledge Companion to Labor and Media, 51. Retrieved from https://books.google.co.ke/books?hl=en&lr=&id=ZN8sCgAAQBAJ&oi=fnd&pg=PA51&dq=Karl+Marx-+Labor+of+Theory+of+Value&ots=uqNwpSIpe8&sig=5c5AY_6STAavMW6LOnsIyz0Lnl4&redir_esc=y#v=onepage&q=Karl%20Marx-%20Labor%20of%20Theory%20of%20Value&f=false
Fuchs, C. (2015). The digital labour theory of value and Karl Marx in the age of Facebook, YouTube, Twitter, and Weibo. In Reconsidering value and labour in the digital age (pp. 26-41). Palgrave Macmillan, London. Retrieved from https://link.springer.com/chapter/10.1057/9781137478573_2
Huber, M. T. (2017). Value, nature, and labor: A defense of Marx. Capitalism Nature Socialism, 28(1), 39-52. Retrieved from https://www.tandfonline.com/doi/abs/10.1080/10455752.2016.1271817
Marx, K. (2015). Alienated labour. In Working in America (pp. 21-28). Routledge. Retrieved from https://www.taylorfrancis.com/books/e/9781315631011/chapters/10.4324/9781315631011-8
Tucker, R. C. (2017). Philosophy and myth in Karl Marx. Routledge. Retrieved from https://www.taylorfrancis.com/books/9781315126364
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