Abstract
This article presents the marginal approach to the labor theory of value. The difficulties of the classical and Marxian labor theory of value are overcome when labor value is understood as marginal labor value analogously to marginal cost. Marginal labor value is the reciprocal of the marginal productivity of labor. Under perfect competition, relative prices are equal to the ratio of marginal labor values; indeed, Pareto-optimality implies the validity of the labor theory of value but in general, even in a Pareto-optimal state, there is exploitation. It is shown that in principle, a capitalist system can never be in a Pareto-optimal state. To assure a maximum productivity of labor and therefore minimum socially necessary labor values, society has to assure the socially necessary accumulation of capital and to organize the formation and control over capital democratically and collectively, a Pareto-optimum without exploitation.
Highlights
It is a widespread belief that the labor theory of value is inconsistent and in contradiction with modern economic theory
Could orthodox economic theory really be so powerful in guiding the organization of society without having a labor theoretical foundation? In this article, we present the development of the labor theory of value using marginal analysis as it has been done historically
Unlike ours, was meant to serve directly to explain the capitalist system, and his analysis of the working day is basically correct as it remains true that the laborer is working part of the day to produce the value of his labor power and another part of the day to produce surplus value appropriated by the capitalist. Here he found something difficult to explain: he did not know the concept of a production function and could not perceive marginal labor value and that there is a social cost of using capital which has to be taken account of, he did mention in his Critique of the Gotha Programme that there is a social need for augmenting the means of labor, that is capital accumulation
Summary
It is a widespread belief that the labor theory of value is inconsistent and in contradiction with modern economic theory. Marginal analysis is a mathematical method to determine optima, e.g., maximum profits, minimum cost, etc., a method extremely important in particular for socialist economists Those Western economists, orthodox or Marxist, who are opposed to the marginal analysis of labor values are obviously opposing more than that: they have been and are opposing real existing Socialism all together. The economic system must assure that marginal costs equal prices This is well known from the debates on the feasibility of a Socialist economy among Oskar Lange, Abba Lerner, and others. The basic failure of Marxism after Marx was to have abandoned the labor theory of value by defending the concept of the transformation of values into prices, known as the transformation problem. We discuss the concept of labor value as it is by no means obvious what has to be understood by labor values
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