Visit ground.news/unlearningeconomics to check out Ground News for a better way to stay informed about current events around the world.

Wasn't expecting Jesse Pinkman to be so hard into economics.

I'm slightly disappointed you aren't a cartoon melting book in real life, but apart from that this was a great video

Argument by Citation is such a good way of putting it. Too many times people just search the literature for something that sounds good and right and then stops critically engaging with the ideas. They just assume they've found the answers and if the critic would just read more they'd find the answer too.

Weird that they picked soil. In a lot of western indigenous societies they viewed water as the source of all value. Without water the soil doesn't produce, but the opposite isn't true because fishing exists.

Glad to know your transformation into a breadtube influencer/gaming youtuber is complete. Now that you have enough personal clout and a cult-like following you can stop making videos in your area of expertise, and instead start releasing 4 hour long Derridean ramblings every 8-9 months about video games design, personal drama (and trauma!) and the relationship between mid '00s cartoons and fascism. Or you could also kickstart an acting career or drop a mixtape. Your choice really.

This channel makes over hour videos reviewing economics articles and theories and is still very entertaining, even funny at parts. that must be some kind of record.

Haha did not expect the surprise face reveal!! Very cool.

"Economic Value - What the Sh*tting hell is it?!" Finally - Someone asking the right questions in the right way

YOOO FACE REVEAL

Marx didn't call capital proper constant capital. In the first volume where he outlines what you are attempting outline, he refers to two forms of productive capital, constant and variable. At this point constant refers not just to machines and tools, but also to raw materials, although in volume 2 he goes on to make further distinctions between fixed and circulating capital in response to both Smith and Ricardo. He also distinguishes and relates constant, variable, fixed and circulating capital to show where Smith and Ricardo were confused in various ways concerning conflating, say, fixed and constant capital. And in the third volume he talks more explicitly about total capital denoted by a capital C, rather than the lower case c denoting constant capital. This is where I think you're getting the idea of how he characterizes what capital is. Nevertheless, for Marx capital isn't an object but a relation. As he says time and time again, at one point money or commodities can be capital, yet at another they cease to function as such. When money is carried in the pocket of even a capitalist it isn't functioning as capital because it isn't being set into motion through either the production or circulation process. Money has existed long before capitalism as a system has. Just like how although a commodity is characterized by both being an exchange value and a use value it cannot ever be both simultaneously and once the exchange has been carried out it ceases to be an example of Capital. Nevertheless, this analysis appears to me to be more of a response to a specific trend of what has been called "analytic" Marxism than of Marx' analysis itself. Marx' whole point is to show how capitalist social relations produce a mystical anthropomorphizing of relations between objects whilst inversely objectifying human relations. A simple everyday example will demonstrate this. A worker does not see the product of their own labour as that, but rather the possession of another (the boss) and vice versa the capitalist sees what in reality is the fruits of others effort as their own. This is a simple, perhaps oversimplified, example of what Marx is driving at by distinguishing between appearance and reality. It isn't mystical or inexplicably metaphysical at all. Most people around the world are intimately in tune with exactly what Marx is more explicitly and systematically outlining. I'll have write down and organize my thoughts in greater detail in order to provide a more comprehensive response.

33:10 Marx explains this in Capital: Labor created the speakers. Any piece of capital, when you break it down, is created by labor--all the way down to the moment the raw materials were extracted through labor.

Love supporting this channel. With so many news stories about inflation and our current economic situation this video couldn't come at a better time. If you have any questions about Ground News and how it works, feel free to drop them in the comments and our team will respond.

Price doesn't equal labor even in your simplified deer-beaver example. It depends on the demand for deer and beavers, because if beavers were far more sought-after than deer, they could command a higher price even if less labor was required to hunt them. That's why Marx was careful to specify "socially-necessary labor-time." If there's no demand for something, it doesn't have value no matter how much labor is used to produce it. If the quantity produced exceeds the market demand, then some of the labor used to create the excess is wasted (i. e. it fails to create value).

Fantastic video! I consider myself a Marxist and a Communist. I'm a member of the communist party in my country. I greatly value Marxist and Communist thinkers. One thing I'd like to comment on that isn't the focus of your vide--and so understandably missing--is the Marxist tradition to focus on the class-based nature of our modern capitalist societies, and the disadvantaged position the labouring class is in relative to the owning class (propertied class, ruling class, capitalist class etc.). Marx's focus on the social relations that characterize capitalism has, at least for me, been one of the most insightful aspects of his writing and way of thinking. To me it was really powerful to realize that modern politics, despite it's simplistic presentation, is more than one party wanting less government and another wanting more, or one wanting less taxes and one wanting more taxes, or one wanting more guns and another wanting greater regulation of guns, etc., especially considering when both parties are greatly entangled with, socialized by, and materially aligned with the same upper class, despite sometimes representing seemingly contradictory or opposed goals. This is the aspect that has kept me reading Marxian literature and trying to learn from it. I read Capital volume one when I was in university, and it was really intriguing to me. It did, as you mentioned in your video, feel like I was discovering some hidden secret wrt the LTV lol, however, as I read more literature, it became something I realized required far more investigation and a greater understanding on my part and is something I sort of put on the back burner for a while. Now, after having read more, I'm returning to learn about it and have started rereading Capital and plan to read the other two volumes. This was a really great video and definitely serves as a great starting point. Thank for your work, you make excellent videos!

I think you touched on something in your conclusion without acknowledging it, which is dialectical materialism; it’s the philosophical foundation that Marx based his theories on and personally I believe is a more important concept to understand then the theory of value. If true to this philosophy Marx would change his theory of value given the empirical evidence and would agree with you that his interpretations and theories were a product of his own experiences and the environment in which he existed. I’m not simping for Marx, but any Marxist knows that these insights are not infallible doctrine, but merely guides to present a starting point to build upon. While making predictions, just like any economists, it always needs to be taken with a grain of salt that there are always unknown variables. It’s not physics, it’s sociology. You can’t predict the future.

Marx’s Refusal of the Labour Theory of Value David Harvey March 1, 2018 It is widely believed that Marx adapted the labour theory of value from Ricardo as a founding concept for his studies of capital accumulation. Since the labour theory of value has been generally discredited, it is then often authoritatively stated that Marx’s theories are worthless. But nowhere, in fact, did Marx declare his allegiance to the labour theory of value. That theory belonged to Ricardo, who recognized that it was deeply problematic even as he insisted that the question of value was critical to the study of political economy. On the few occasions where Marx comments directly on this matter,1 he refers to “value theory” and not to the labour theory of value. So what, then, was Marx’s distinctive value theory and how does it differ from the labour theory of value? The answer is (as usual) complicated in its details but the lineaments of it can be reconstructed from the structure of the first volume of Capital.2 Marx begins that work with an examination of the surface appearance of use value and exchange value in the material act of commodity exchange and posits the existence of value (an immaterial but objective relation) behind the quantitative aspect of exchange value. This value is initially taken to be a reflection of the social (abstract) labour congealed in commodities (chapter 1). As a regulatory norm in the market place, value can exist, Marx shows, only when and where commodity exchange has become “a normal social act.” This normalization depends upon the existence of private property relations, juridical individuals and perfectly competitive markets (chapter 2). Such a market can only work with the rise of monetary forms (chapter 3) that facilitate and lubricate exchange relations in efficient ways while providing a convenient vehicle for storing value. Money thus enters the picture as a material representation of value. Value cannot exist without its representation. In chapters 4 through 6, Marx shows that it is only in a system where the aim and object of economic activity is commodity production that exchange becomes a necessary as well as a normal social act. It is the circulation of money as capital (chapter 5) that consolidates the conditions for the formation of capital’s distinctive value form as a regulatory norm. But the circulation of capital presupposes the prior existence of wage labour as a commodity that can be bought and sold in the market (chapter 6). How labour became such a commodity before the rise of capitalism is the subject of Part 8 of Capital, which deals with primitive or original accumulation. The concept of capital as a process - as value in motion - based on the purchase of labour power and means of production is inextricably interwoven with the emergence of the value form. A simple but crude analogy for Marx’s argument might be this: the human body depends for its vitality upon the circulation of the blood, which has no being outside of the human body. The two phenomena are mutually constitutive of each other. Value formation likewise cannot be understood outside of the circulation process that houses it. The mutual interdependency within the totality of capital circulation is what matters. In capital’s case, however, the process appears as not only self-reproducing (cyclical) but also self-expanding (the spiral form of accumulation). This is so because the search for profit and surplus value propel the commodity exchanges, which in turn promote and sustain the value form. Value thereby becomes an embedded regulatory norm in the sphere of exchange only under conditions of capital accumulation. While the steps in the argument are complicated, Marx appears to have done little more than synthesize and formalize Ricardo’s labour theory of value by embedding it in the totality of circulation and accumulation as depicted in Figure 1. The sophistication and elegance of the argument have seduced many of Marx’s followers to thinking this was the end of the story. If this was so then much of the criticism launched against Marx’s theory of value would be justified. But this is not the end. It is in fact the beginning. Ricardo’s hope was that the labour theory of value would provide a basis for understanding price formation. It is this hope that subsequent analysis has so ruthlessly and properly crushed. Marx early on understood that this was an impossible hope even as he frequently slipped (I suspects for tactical reasons) from values to prices in his presentations as if they were roughly the same thing. In other instances he studied systematic divergences. In Volume 1 Marx recognizes that things like conscience, honour and uncultivated land can have a price but no value. In Volume 3 of Capital he explores how the equalization of the rate of profit in the market would lead commodities to exchange not at their values but according to so-called “prices of production.” But Marx was not primarily interested in price formation. He has a different agenda. Chapters 7 through 25 of Volume 1 describe in intricate detail the consequences for the labourer of living and working in a world where the law of value, as constituted through the generalization and normalization of exchange in the market place, rules. This is the famous transition, at the end of chapter 6, where Marx invites us to leave the sphere of circulation, “a very Eden of the rights of man” where “alone rule Freedom, Equality, Property and Bentham.’ And so we dive into “the hidden abode of production” where we shall see “not only how capital produces but, how capital is produced.” It is only here, also, that we will see how value forms. The coercive laws of competition in the market force individual capitalists to extend the working day to the utmost, threatening the life and well-being of the labourer in the absence of any restraining force such as legislation to limit the length of the working day (chapter 10). In subsequent chapters, these same coercive laws push capital to pursue technological and organizational innovations, to mobilize and appropriate the labourers’ inherent powers of cooperation and of divisions of labour, to design machinery and systems of factory production, to mobilize the powers of education, knowledge, science and technology, all in the pursuit of relative surplus value. The aggregate effect (chapter 25) is to diminish the status of the labourer, to create an industrial reserve army, to enforce working conditions of abject misery and desperation among the working classes and to condemn much of labour to living under conditions of social reproduction that are miserable in the extreme. This is what Diane Elson, in her seminal article on the subject, refers to as “the value theory of labour.” It is a theory that focuses on the consequences of value operating as a regulatory norm in the market for the experience of labourers condemned by their situation to work for capital. These chapters also explain why Bertell Ollman considers Marx’s value theory to be a theory of the alienation of labour in production rather than a market phenomenon.3 But the productivity and intensity of labour are perpetually changing under pressures of competition in the market (as described in the later chapters of Capital). This means that the formulation of value in the first chapter of Capital is revolutionized by what comes later. Value becomes an unstable and perpetually evolving inner connectivity (an internal or dialectical relation) between value as defined in the realm of circulation in the market and value as constantly being re-defined through revolutions in the realm of production. Earlier in the Grundrisse (pp. 690-711), Marx had even speculated, in a famous “fragment on machines,” that the embedding of human knowledge in fixed capital would dissolve the significance of value altogether unless there were some compelling forces or reasons to restore it.4 In Volume 3 of Capital Marx makes much of the impact of technological changes on values leading to the thesis on the falling rate of profit. The contradictory relation between value as defined in the market and value as reconstructed by transformations in the labour process is central to Marx’s thinking.

The speakers at the concert example can be explained by the fact that someone had to build the speakers, and someone had to rig them up for the concert. The extra value came from those workers. Just because the value is delivered after the workers have done their work, and not during, doesn't mean it doesn't exist. This is similar to a worker making a chair from wood. The value delivered by the chair is over a long period of time, but it still comes from the worker.

One of my majors in philosophy and something I appreciate a lot is how you put concepts into context and hold them in a “neutral” space -a space where you can investigate and interrogate different models. You’re not internalizing it. I’ve seen a lot of people stumble across different theories of ethics and then just…identify with it? It’s like no guys, our objective is to identify the argument and see it’s weak points, see how it would be applied, etc. You get a lot better at spotting straight up trash and what’s worth interrogating a bit more. I think this blindness is driven by this concept of finding “THE ONE OBJECTIVE TRUTH.” Not to mention how alluring that is.

There is a sense in which a lot of theories of value sort of revert back into a kind of existential observation (euphemistically called "opportunity cost"). If we burn up time doing this, that or the other, that's time we will never get back, which is precious to us because we are mortal beings. So "value" often reflects our desire to make the most out of our lives, which also includes this optimization problem of using some of that time to meet material needs so we don't prematurely run out our clock via starvation, dehydration or exposure. Sometimes when I'm feeling particularly esoteric I can't help but feel that the thing humans truly value the most is some sort of cure to uncertainty itself, and why people who claim to see the future (either paranormally or through the secularized astrology of financial speculation) have always wielded such enormous cultural power in human societies. Cool content dude, thank you for sharing.

Whenever I try and read modern economists, I get flashbacks from my days in a philosophy department -- i.e. there's a lot of talking around certain key concepts, accompanied by rhetorical claims of their own technical rigor and clarity, implying anyone who doesn't understand the muddled conversation just isn't smart enough to get these complicated subjects. It took me years to figure out how mundane many of these supposedly difficult topics were. Anyway, I'm grateful to you for explaining the marginal theory of value in a manner which only someone who has suffered through the field's hazing process can.

Loved collaborating with you on this one!

35:43 it is very different. Marx, throughout Capital assumes that equivalents are exchanged (he makes the point that of course, equivalents are not always exchanged like in the apple corn example but then, no value is created since the apple seller is losing while the corn seller is winning). This means that when the Labour power of the worker is exchanged for the ‘means of subsistence’ equivalents are exchanged. The crucial point for Marx is that Labour power has a special USE value which is that it can add more value then it possesses (clear in his articulation of the two fold character of value). Last point, for Marx, value cannot be created in the sphere of exchange but only in the sphere of production where Labour power is consumed. This is also why the apple corn example is stupid because of course merchants, by selling cheap and buying dear make a profit but no value is created because either the merchant pays under value or sells over value so equivalents are not exchanged.

1:07:00 I'm not through with the whole video but I would argue, the speakers give surplus value by proxy of the labor that brought them there. Someone had to design them, think of them as a good way to amplify the music, mine the materials, create them and then move them to a place coordinated with other who organized the gig. I'd argue, you never pay for things and things don't inherently have value on their own, but you pay for the time every person proportionally put into the thing you are buying from its creation and all the creation of all of its parts to the point in time, you are buying it.

A lot to take in on one watch, but this treatment of the subject is what I've been waiting for. Will definitely return and go through this more slowly.

I'm soooo glad this video exists and that I've watched it. It's very informative, and actually often when hearing about labour theory of value I was asking myself how does it hold up under some scrutiny. Thank you a lot for your work!

@55:00 I read that whole section in Marx as him saying that those "counterveiling tendencies" must exist, because otherwise the theoretically deduced tendency would have to hold true even in the short term. So the use of the theory is to explain that and how capitalists have to escape the tendency of the rate of profit to fall, and that they would face crisis if they fail to do so. Edit: Oh yeah I see, you were getting there. :D Great video by the way, thanks for that. I had a chuckle at you mentioning Ricardo.

I'd very much like to put another comment just to remind you that I highly appreciate your moderate, skeptical, concise, and well researched videos. I learn a lot, efficiently, and with sources.

Hey, as a reader of Capital vol 1 & 2 (and currently 3…) I really enjoyed this video and I agree with your overall point. I could nitpick a few of the examples you brought up-although not being an economist I'm assuming that I misunderstood them (for instance from what I remember of Marx, the dear/beaver hunting example doesn't quite work, as I don't think you're supposed to just assume value happens from pure labour: it is a meeting of tools, their degradation, human effort, previous production, etc. so pure hours of hunting are actually not equivalent to other pure hours. Similarly the apple/corn example is pre-capitalist exchange C-M-C, not capitalist M-C-M, and let alone M-C…P…C'-M') I guess a question I'd like to ask you is: why do you think price is a better, more tangible metrics than value (which, mind, I agree is ethereal as a concept)? Beyond the fact that you pay for things with it, one could point out the myriad of ways the prices of products and services shift drastically, are decided by companies for various reasons (at a loss for Amazon Fire reader in order to flood the market), or maybe I should have paid £15.95 for something but got away with only paying £15.50 because of my lack of change, or the fact that I exchange products with friends and family all the time without carefully caring about the price of things, etc. And that's without pointing out the historical precedents of a handful of nails to pay for something (very widespread in Great Britain in the XIXth century), or other ways to evoke the value of a purchased product rather than a specific currency price. And I agree those examples are not all rock solid as a systemic analysis, but I believe they are of the level of the dear/beaver and apple/corn arguments. From my limited understanding, there's actually a great deal of metaphysical mysticism around price, and I feel your bias in its favour might come from the fact that it feels really tangible for an economist like you (not a dig I swear :D), and econometrics tools for instance? Is there something I'm fundamentally missing?

Unlearning, your early videos may not have been particularly valuable in monetary terms or had much of an effect on GDP, but they were infinitely valuable within the ony market that matters - the marketplace of ideas 💰💰💰

I don't understand the concert example. Sure, the speakers generated surplus value but...a worker had to carry those speakers to the stage. Another worker had to build those speakers, and another worker had to design those speakers. And they only work with electricity, which comes from...you get the idea. So it's no different than an automatic machine doing the job of a labourer - it produces value, but ONLY when labour is put into it.

Very happy to have you in this space of creators!

"I've run out of charlatans" is a pleasant turn of phrase.

These videos are dope companion pieces to me taking an econ 101 class. I get the basic frameworks from the class, and then Unlearning articulates all the gaping holes I saw in them. Win/Win.

Finally, new edited content, and on a very interesting topic. I will have to wait until the weekend to watch this due to time constraints, but I'm really looking forward to it.

it's hilarious that time goes on and on and still every response to marx's theory of value just brings points he rebutes in the first chapter

This is a very well done video UE! The editing does very much help me with parsing the video.

Having been burning down my brain over a PhD thesis (inter alia) trying to understand value, I have to say I really enjoyed your video. My conclusion, for what is worth, is quite similar with yours: Questions of value are worth exploring for their own sake. They force us to generate powerful stories, from which we can learn more about the world we live in, what we may have got wrong, and, potentially, how we can transcend to a better one. Essentially all theories of value are normative and elemental in shaping the assumptions upon which our decisions are based on all levels. Also, along the lines of your conclusion, I'm currently planning the next steps of my research work around the relationship between value and the systematic understanding of social needs, as it's impossible to understand the one without the other. A great inspiration to me has been D. Graeber's Anthropological theory of value and R. Heilbroner's essay on the Problem of value in the constitution of economic thought - both highly recommended in case you haven't delved into them. Also, for leftist thought there is great virtue in the so-called "alternative reading" of the marxian theory of value, deriving from the famous interpretations of I.I. Rubin's essays - which most orthodox marxists don't take into account (F.H. Pitts has done a great job describing it in his recent book simply called "Value"). It is of course impossible to cover the entirety of thought on value (which in most times was not the task of any field alone), so the above are mere recommendations from my personal journey on value rather than critique of your overall very educating and enjoyable video. In case you have still room for further theoretical discussions on value, you may also check out my humble contribution to the topic here - definitely less enjoyable than a video essay: www.thecommonsjournal.org/articles/10.5334/ijc.1153. My research is situated within the broader field of the governance and the commons, so my proposition on value is based on that.

This was a fantastic video, and incredibly helpful. For anyone who wants a more anthropological angle to similar notions of labour and value, I'd highly recommend "Work: A Deep History, from the Stone Age to the Age of Robots" by James Suzman. One caveat is that he falls back on some linear progression/evolutionary narratives that modern anthropology has sort of left behind. However the book is, in general, fantastic.

I really can’t underestimate how crucial your videos are for making sense of the world we live in.

The irony of watching UKposts equating to reading theory right after the entire section about the labor value/price issue. So good.

On the falling rate of profit: it seems weird to me that barely anyone seems to suggest the idea that the reason suppressed wages would cause the rate of profit to go down is because workers are both producers *and* consumers in an economy. Workers *need* their wages to buy the products and services that their collective labor produces, and without sufficient wages companies can't maintain or increase their sales. That seems like such an obvious solution to the puzzle, and even allows room for factors like credit disturbing the relationship between these factors. I stumbled onto this consideration when trying to figure out why robots would be different from human workers in terms of creating value, and the answer is simply that none of their costs are externalized (maintenance and power use are completely factored in) whereas workers have political power through collective structures (note: slaves and robots are identical in this regard; all their costs are factored into the production process). Workers take their wages into the wider economy, and the capitalist can't factor in how much *demand* that wider economy will generate for their goods and/or services. In short, if workers can't afford to buy what they produce, capitalists don't have demand for their supply. Hence, rates of profit fall as wages do; barring extenuating circumstances such as the introduction of more debt into the system, the breaching of new resources (to drive down costs) or high-impact innovations that increase productivity and offset the downturn. That's my suspicion on the issue anyway; what do you think?

Way to put yourself out there and try new things, great informative video!

Interesting fact regarding the moral point of view in German and how the everyday language is mixed with moral imperatives: We say someone "verdient" x amount of money for his work. Verdienen can be translated into just "is getting", as well as in "is deserving".

Totally worth the camera work, loved the orange bit. Loved it all, very informational. Thank you for uploading. Cheers from Guatemala!

I come for the Simpsons references, I stay for the economic education.

@Unlearning Economics. Great video as always. One comment regarding the concept of abstract labor: not that I think this will make Marx's arguments for the LTV more empirically testable relative to the transformation problem, but you didn't really mention that for Marx, the theory relies on what he calls 'abstract homogenous labor,' not the concrete labor of individuals. (This is related to but NOT identical with the concept of socially necessary labor-time). If we take this notion on board, it's not surprising that value can't be correlated with price on an individual level. You might see this as another checkmark against the theory, but as it's pretty crucial for his argument overall, I am surprised you didn't address it. Any thoughts? Lastly, a theory having non-empirically testable metaphysical suppositions does not, automatically, make it unscientific. (Not that you suggested this specifically, but I think your video could be misconstrued). You cannot empirically test the assumption of the causal closure of physical systems is statistical mechanics--but it is required to derive entropy as a measure in those systems. In many cases (in fact in most, if not all finite empirically real cases) that closure is demonstrably false, but thermodynamics is none the worse for it. By comparison, it would be a mistake to look for entropy in the movements of individual particles--you could never find it there--just as it may be a mistake to look for 'value' in the concrete labor-expenditure of individuals. What the ensemble behavior of a system of particles is to the one, social form may be to the other. Of course, in the case of the thermodynamics, we know the precise mechanism by which the microphysical dynamical laws aggregate into macrophysical properties of systems. In the case of value, the system seems to be much more complex, and it's not even clear that the same kind of reduction should be expected, because we are not yet sure whether value is even a completely coherent notion. Thanks!

Always looking forward to your videos. After 10 minutes, this is one is already my favourite one, so far. Great work!

Great video as always - and nice to put a face on that that great voice of yours! Thank you for all the work you put in to these videos. It's much appreciated!

1:05:30 Yes! While the voice-over style is definitely easier, the in-person stuff is much easier to follow, at least for me. The drop in audio quality, while noticable, was well worth it and didn't significantly degrade the quality of the video.

Hey there's a munecat in here! Cool to see the colab. Love both of your channels.

Thank you, this is the best video I've ever seen. I've been daydreaming about this subject for years.

love this topic, i think about value all the time, it seems to be on of those mysteries that keeps us thinking

Reading about LtV it was always obvious to me that it was model specifically about class dynamics. It was a model seeking to explain how a class forced to sell its labor for subsistence and one which can seek rent on capital accumulated primitively. It never seeked to describe the inherent value in something, there are just too many variables to account for. Even a coat loses value in your eyes the more coats you own and the same goes for money. 60 bucks for a worker is a lot but for a billionaire it's nothing. I agree with the sentiment that people have tried to extrapolate too much out of the LtV

literally every major rebounce in the falling rate of profit graph coincides with major government intervention to protect profit.

One of the best channels I've discovered this year. Cheers!

51:43 note Hakim is a doctor from Iraq not an economist, he is biased because of his field of expertise. I appreciate you acknowledgeing that macroeconomics doesn't always make sense. The falling rate of profit might refer to the destruction of competition and the unability for small business to last as long...

The transformation problem, according to Marx I mean, isn't merely that of a mismatch between prices and value. This is closer to Smith. For Marx the problem is a matter of accounting for how anything is converted into anything else along the lines of capitalist logic. Or in other words, how say raw materials become marketable objects and furthermore how more is gained out of this transaction than what was put into it....and of course the answer is labour. But not merely working in the base scientific sense of an expenditure of energy. It's a matter of how labour appears (I would italicize appears here if I could) as a commodity. Or, how working itself comes to appear as something outside of 'itself'. People work everyday and produce value, ie the possibility of continued subsistence amongst the greater population, without receiving their due. This is called being paid below their value. It's not merely an exception, it's generally a rule. A grocery store worker is paid a wage in order to manage, in one way or another, the stored commodity capital of a capitalist (until it is sold and converted into a useful object Viz consumption). They are never paid what is the value they put out, otherwise, and here's the noteworthy part, there would be no point as a capitalist couldn't make a surplus of their labour. And in a society in which this weren't the case, well we couldn't call this capitalism. Everyday said grocery store worker shows up to a building they don't own, to take orders from someone they share no kinship with, in order to handle goods that aren't there's! All the while they sacrifice their ability to do anything else, not out of the goodness of their heart or because they feel themselves bound to a cause, but because of a structurally determined necessity which says if they don't, they won't be able to subsist. What they engage in during this time, wage labour, is the conversion of what would otherwise be the free use of their bodies to do whatever, into being a mechanism for the accumulation of wealth for whomever happens to own the institution they are set to work in. The labour theory of value seeks to outline this imbalanced relationship, not merely between prices and value, but to account for those who do the producing and those who benefit from it. Only a modern economics student could misunderstand this in such a profound manner!

I will always maintain that cleaners are the most important workers of most companies. If the CEO is gone for a month, things might pile up that are big and important, sure. But if the cleaners don't work for a week, a building becomes unlivable and nobody will be able to work anymore. There's so much nuance to any of these things. Thanks for making this video.

I quite liked the example in starship troopers ‘So you have, dough, apples, spices and sugar. These things are useful and valuable, but if someone makes a good apple pie, they’re even better. But imagine someone can’t cook, and so makes a bad apple pie. By by the labor theory of value, he put the work in, so he should get paid, even paid the same as the cook that makes a good apple pie, even though he ruined the ingredients’ Heavily paraphrased of course. Free market’s all about letting you pick what’s worth the most to you.

That was interesting what we talked about. Thanks for the great video, face reveal was unexpected, but suited your style of video so well.

Maybe the true theory of value are the friends we made along the way

Nice! I´m really glad that you´ve covered this topic!

I often do a lecture which is similar (though much less eloquent) to this video. I also like to talk about the equally circular but more mathematically consistent utility theory of value.

I have to thank you for making me for the first time not feel like a complete idiot in regards to economics. The labour theory of value always felt weird to me but I don't have the technical knowledge to really break down why

Great video. Love the inclusion of people like Munecat...and yes, "Destiny has a point" is as hard to say as it is to hear.

The reason why the value of a commodity is determined by (socially necessary) labor, according to Marx is because labor is the only thing that is common in all commodities. What else but labor can provide value? The misinterpretation of this video is that Marx talks of value not as the Metaphysical worth of a thing, but as that what underlies price and dermines the relationship of items traded. It cannot be empirically disproven or proven. The question concerning the LTV is not whether or not it is true or not true but whether it is useful.

Really interesting video. I’m currently working my way through Capital and this has been really interesting, and will help to recontextualize what I’m reading. I’d love for you to do a video on decommodification if you can, especially with respect to things like healthcare, which don’t seem to respond to market incentives the way other things do. Cheers!

56:47 The point is that you can predict major crises. They happen when profit hits zero. Ernest Mandel did this in his long wave book, which got a lot of attention when he turned out to be right. Anwar Shaikh also says that he predicted 2008 using this theory. I think predicting the timing of major crises is, well, pretty convincing, although yes there are few data points.

It's fairly easy to see why labor is said to produce value but not capital. A factory with zero workers produces nothing. A worker with zero factories still produces something. A factory (capital) is therefore not a source of value, but an amplification of value of the worker. You can always express the value of the factory as a multiplying factor of the worker, but you cannot express a worker as a multiple of a factory. The factory itself has a value as utility to the workers, but is also a product of other workers labor. It is labor creating tools to amplify the labor of others.

I wouldn't admit this to any of my family or friends, but I find your series fascinating. My fascination maybe because I don't know shit about economics so there is not a lot I need to "unlearn," and I recognise the value of challenging accepted or established thought on any given subject. My fields of study are urban planning and urban design and I would dearly love to see a series titled "Unlearning Urban Planning" or "Unlearning Urban Design." Both subjects are rife with commonly accepted fallacies, misconceptions and pointless assertions based on useless data or speculation. As an urban planner I question our ability to make urban land more productive in a way that is increasingly efficient, and as an urban designer I question our ability to interface with the urban environment and the natural environment so that we mortals are more productive and more efficient. This means I might have a greater interest in the subject of economics than I would like to admit. Thank you for your efforts on my behalf.

I would never in my life have seen this, if i needed to read it. Thank you for opening this subject, in video-form it is more digestable for me.

I always love it when it turns out the YTers I like have a face

I loved the video and clarifications so much, very cathartic but also made me think! However, I think you may have missed a few points out of punctuality. I thought I was above leaving big youtube comments, but I think there's a chance you might see this and I really liked the video sooo. In the Marxist tradition, those who were immediately inspired by Marx came out with strong ideological convictions to the labor theory of value put forward by him, which led to several clarifications by Marx. The most famous comes from Gothakritik in his response to the statement that "labor is the source of all wealth": Labor is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labor, which itself is only the manifestation of a force of nature, human labor power. the above phrase is to be found in all children's primers and is correct insofar as it is implied that labor is performed with the appurtenant subjects and instruments... The bourgeois have very good grounds for falsely ascribing supernatural creative power to labor; since precisely from the fact that labor depends on nature it follows that the man who possesses no other property than his labor power must, in all conditions of society and culture, be the slave of other men who have made themselves the owners of the material conditions of labor. He can only work with their permission, hence live only with their permission. I really think it was a let down to miss out on one of the biggest counterfactuals to this so-called "marxist labor theory of value." I'd also like to add a few more points for consideration. You mention that value is just as much about ethics, and is historically transient like ethics is. I think that, in the context of political economy, the point is that, just as individuals can come to a set of operational ethics out of an internal set of logic and assumptions, so may a unique economic organization, sort of like if society as a whole was a brain, where the whole structure of cognition is only given by zooming out from all the neurons to see the forest. For example, in capitalist society, even if it may not be the case absolutely that all value is made from labor (like Marx states above), the logic of capitalists and of the market leads to the system computing wealth in that overall sense. The system as a whole, like AI, may come to intuitions or judgements which are wholely divorced from our individual perceptions or prescriptions of utility. Of course, capitalists in their immediate focus are not concerned in TRPF in terms of value, only profit. That is clear as record dividends are made in the midst of crises. However, the example of a real GDP vs a nominal GDP shows that price can be a facade. Even if GDP increases, productivity (e.g. value) may not increase unless adjusted for accordingly. Value has more to do with what is physically realized, a perceived utility which can constrain or determine the path of the economy, while price just matters to the immediate transaction. Value is a direct window into whether an economy can grow, and has the ability to continue to grow and consume, while price is subject to all the quirks of distribution in the market. We might say, quite reasonably, that attempts to subsidize agriculture (and the limitation of its productivity to preserve a fixed price) in the US is an example of trying to insulate the circuit of capital from the fluctuations of competitive price and halt TRPF, so that it may continue to produce exchange-value even through crisis and prevent the obsolescence of capitalist exchange-value which makes it possible at all for the holders of capital to gain wealth from agriculture in the long-term, notwithstanding even immediate price. I think this also provides insight into how and why neoliberalism became a hegemony. I think its also uncharitable to say that "curtailing forces" makes it unfalsifiable. This is only true insofar as we just leave it at "curtailing forces" but of course Marxists have a list. If the rate of profit grew in the absence of any significant amount of the forces, then that would be falsifying the theory. If someone is just coming up with new excuses, we'll know it. A final thought is that I don't think you indict marxists on this, but I wish you made the situation far clearer: the lack of good samples to test value theories comes from the youthfulness of capitalism and the lack of good data. In situations like these, it is not that the theories of value are proven wrong, but that they can't be directly concluded.

Thanks for the dense and thoughtful content! I really dig the humor as well.

Hot take: value is no one specific thing. Value is a social construct we arbitrarily assign meaning to. As far as I'm concerned, value is a number of different things all working together to improve and advance human welfare and standard of living. Everything is connected. Investment has value, labor has value, land has value, water has value, property has value, education has value, medicine has value, research has value, everything has value.

Thanks for the video! The animations do help to follow the arguments. Hope that, for balance, the next one will uphold the immortal science of marxism-leninism… Jokes aside, I'm always surprised by the severity with which we read Marx, a special treatment which seems reserved for him alone. As you said, Adam Smith defending the labour theory of value has never stopped libertarians from reading him (well, quoting him, mostly) and I don't see people going back to his theories with the intent to show how the falsity of the LTV undermines every paragraph of his economic writings. Mill has earned his place in the Hall of Fame of Liberalism, his inept economic theories are never held against him. Most people blabbering on about "Pareto efficiency" have not read even two pages from his Cours d'économie politique, and so on and so forth for every other theorician -- absolute coherence is hardly the first priority, in mainstream economics or in their critics, when looking for insights in the theoricians of the past. It might be argued it happens in response to marxists defending his system as a rigourous chain of scientific reasoning, but he is hardly the only economist, even in this video, having claimed that. (As a gesture of peace towards the wicked marginalists, I have to say on their behalf: you do not present them in the fairest way either! An interesting angle if you come back to them in a future video would be the fact that even though most of them have built their systems as an explicit attack against socialist doctrines [trying to save the conclusions of classical economics while destroying their foundations from which marxism had been built, including the LTV] their calculations ironically work even best when optimizing state monopolies, think the french electric grid after Marcel Boiteux, or how it echoes the positions of Kantorovitch or Novojilov in heated soviet debates about the remuneration of capital...) 42:55 The fact that capitalists do not use a marxist analysis in their understanding of value, is, if not a moot point, one that cannot really take a marxist by surprise, as it is part of Marx's critique of capitalism : the capitalists do not know what they are doing, nor their true place in the system. As they rely on false notions of how profit is extracted they make decisions that benefit them in the short run but harm the capitalist class as a whole on the long term. (classical case being an individual capitalist investing in heavier machinery, increasing its share of fixed capital and lowering the rate of profit, as investment have to increase to follow, which then generalize in the field, squeezing the rate of profit as a whole) See when he writes things like "The individual capitalist may imagine (and for his accounts it serves as well) that […] but […]" like here in the Grundrisse www.marxists.org/archive/marx/works/1857/grundrisse/ch07.htm Since before that you quoted David Ellerman criticizing the tendency of Marx and Marxists to "unveil", "reveal", the true nature of things (33:56) which veers away from empirical analysis, adding then Steedman arguing that his theories are bad (because the true criteria of truth is echoing the models capitalists use to guide their actions) doesn't really feel like a gotcha, but rather a bit like complaining both that the food is awful and that the rations are too small. Marx tries to go beyond common capitalist discourse, it's one thing to say he failed, it's another to imply it shouldn't even be tried by putting these quotes back to back. (your conclusion goes against such implication as well) In any case, we're only scratching the surface here, there would be other ways of defending the LTV on the transformation problem, but most people do not want to read book III from the Capital, and in a way, I agree that there are probably better uses of your time than proving by the powers of quantic dialectical materialism that actually Marx was right. (even when Marx IS right, how does it matter? Will you really convince anybody with your 2000 pages discussion proving the LTV? Saying Marx was wrong is more demobilizing than proving him right is mobilizing.) 54:12 Yes instead of squinting at MARXISTS graphs let's squint at FRED graphs, that's how you know we're in science territory. 1:03:39 "Having an eye for the fact that labour has less bargaining power; that there are monopolies and those things are bad; that crises happen and that there is an environmental crisis - none of these things require you to buy into the labour theory of value." Somewhat, I agree, but don't you undermine the point of your channel? This point could be extended to any and all economic theories, research papers or wikipedia pages you have discussed previously, I don't need any of them to vaguely know monopoly bad, labour power crushed, crises happen and climate change.

Great video. I guess I naively thought that the labour theory of value was about the fact that nothing gets done without labour whereas it's not the case for capital. I didn't realise that value was supposed to predict prices in a similar way that GDP doesn't measure raising children, caring for family, or volunteering in the community. All of which is valuable.

@7:00 I love that you actually got a handful of dirt for this point.

Hey, I love your videos and we need more like them! You mentioned how raising interest causes gdp to rise. It measures as a good thing by our narrow, capitalist economic thermometers, despite overall being a red flag. I've thought about this a bunch, as people struggle more, they have to work more jobs, eat out more, but a second car, pay for a daycare, etc... So gdp booms as working class struggles. This would be a great video for you to tackle, because I'm sure there's plenty of ways capitalism thrives off of our struggle.

This was so good. I’ve had questions about the labor theory of value for a long time because of the high wealth of people whose sole function seems to be “hype machine” - like elon musk. I wouldn’t say that the value of his companies has anything to do with the value of the products produced, much less with the amount of labor that created it. The amount of vaporware that makes incredible amounts of money before tanking is depressing but also instructive. That’s why i’ve left the realm of objectively verifiable theories of value behind and now subscribe to a “vibes”-based theory of value 😂

Good video - I wish you’d mentioned that the strict conditions where the marginal productivity theory is correct, is ironically the same conditions where the simple LTV holds - equal interindustrial organic compositions of Capital.

best video so far, from the editing to the content, ots so good

Favorite economics channel just dropped another banger

I think the problem with value is, its subjectivity. The things that are important to me will not be necessarily important to you; and even if we agree to value a certain object there is no outside mechanism that will objectively price the object, the price will always remain subjective to our thoughts. If you ask me Value comes from our thoughts. It gets complicated when we price the value. It's a choice in which we should all agree upon.

Constant capital is a congealed form of labor. It takes labor to create constant capital in the first place. That's why labor is special, to answer your question at 33:29.

WOW new video !!! love it!!! thanks for the work again!!

Your videos are so excellent. Really good work. I love the channel

I mean, I've always considered that value is ultimately completely subjective, but that it's pretty evidently clear that most of the subjective value added to an item is added by workers, rather than by capitalists or even (most of the time at least) by capital itself, and workers should own capital regardless of whether it is capital, labor, or something else that provides value. I don't think anyone has ever made a super thorough or non-confusing explanation of how value is added or grows, but in the end it doesn't actually matter that much when considering most of the important questions in economics/political economy.

54:00 you can't do that because that only applies to the US. You'd have to compute this for the whole world, since it might mean that while the rate of profit in the whole world could fall, it could increase for the US alone (say, by stealing resources)

This video was very informative. More than that, it was one of the funniest videos I've seen in a long time. The jokes kept coming completely out of nowhere. I would watch this anyway, but I have to admit that the fact that I found myself laughing hard every few minutes really made the video worthwhile.

Really loved this one! I'd love to hear your thoughts about 'The Limits to Growth' and other similar work on ecological economics.

I'm not well versed in any theory, but the point of capital producing value illustrated by the speakers is a bit odd to me. To me it seems like it presupposes private property rights and assumes capital as something material, instead of the social contract and the process of ownership it is. Its the work of building those speakers, the work of moving those speakers, the work of producing electricity for them and the work of feeding them with a signal that create the extra value. All of those are necessary to extract the said value. If any of them is missing, the value is not created. Ayone individually owning, ie. them being privately owned capital, is not. Given the said work is put in to materialise the speakers, they'll produce the value regardless. No matter if they're owned individually, collectively or even exist without the concept of ownership whatsoever.

The mad man has done it... keep up the great work

33:10 "evidence I have touched grass" Got a hearty chuckle out me

This was very good -- I was under the impression that the falling rate of profit wasn't especially controversial, so this is eye-opening. IMO, if value is inherently subjective, then it seems like theories of value are more appropriately used to critique (or justify) prices than they are to predict them.

I've personally started to think in terms of "convenience," though calling it a theory would be wildly overstating it. It would, in a way, be the difference between the labor value and the utility. "How difficult will it be to acquire this thing, and how much will it make my life better?" If something is easy to acquire, but does little to improve my life -- like, say, the old example of the child making mud pies -- I will not value it very well. This becomes complicated when you start factoring in the difference in peoples' own skills. A carpenter who has the skill to produce their own furniture will place less value on furniture they can buy from someone else -- if the price is to high, why not make it themselves? Conversely, they will place *more* value on a raw material like lumber that they can make things from than someone who has no skill in carpentry would. Basically everything boils down to how much you want something and how much you're willing to pay someone else to get it for you. I like this because it very easily accommodate service-sector jobs that don't leave a tangible product behind afterwards: we are paying for the convenience of having someone else perform a task for us that we would rather not, or simply cannot, do ourselves. "How much do I want a cheeseburger, and how much am I willing to pay McDonalds for it?" is going to be a very different question for an accomplished chef with a fully-equipped kitchen than it will for, say, a single parent with three rambunctious kids to feed and not much spare time for cooking. Heck, in a way it turns physical products into one very long and complex chain of service jobs -- paying someone to acquire the raw materials, refine, and assemble them into a finished product rather than putting in the time and effort to do it yourself. Making modern technological devices without paying anyone else for anything would lead to epic, decades-long quests to find, gather, refine, and assemble all the materials necessary to create a single iPhone, when instead that endeavor could be broken up and distributed among many hundreds, thousands, or even millions of people. This retains some of Marx's critique of capital, because having extra intermediary parties which do not contribute to the production of the item or the performing of the task -- like, say, the owner of the business -- serves only to drive up the price for something while its convenience stays the same. A party who pays someone to do something, then turns around and charges another for access to that product or service, is purely a drain on the system.

Incredible, an economist doing economics. Man after my own heart ❤

Thank you so much for making these videos. I have had such an issue with finding a channel that will look at economic withba critical lens, not like the sensational left/right stuff you see. Please keep up the good work.

I was unsure if I liked the videos more with the book avatar or with your face, but when I saw the orange I was positive this is better, amazing