107
If sandcastles are made by labor,
why don’t they have any value?
Marx’s response was that not
everything made by labor has
value—labor can still be wasted
on goods no one wants.How can an artistic masterpiece
be valued from the amount of
labor hours used to make it?
The defense to this critique is that a
great work of art is an exception to the
rule because it is unique. Therefore,
there is no average quantity of labor
from which to derive a price.How do vintage wines stored for
10 years increase in value without
any additional labor input?
The defense here is that an additional
cost does accrue to labor—that of
waiting for the wine to mature.See also: Agriculture in the economy 39 ■ The paradox of value 63 ■ Marxist economics 100–05 ■ Utility and satisfaction
114 –15 ■ Supply and demand 108–13 ■ Opportunity cost 133 ■ Central planning 142–47
INDUSTRIAL AND ECONOMIC REVOLUTIONS
Labor and cost
Marx’s idea was that the amount
of labor used to produce a good is
proportional to its value. The theory
is often justified by the following
argument. If a haircut involves half
an hour of labor, at $40 per hour,
the haircut has $20 of value. If it
also needs the use of scissors and
brushes that cost a total of $60, and
lose $1 of their value (through wear)
on each haircut, the total value of
the haircut is $21. Of the tools the
scissors themselves cost $20
because they took 45 minutes of
labor to forge from a lump of steel—
costing $12.50—into the pair of
scissors. The same reasoning can
be applied to explain why the lump
of steel cost $12.50, tracing time
and costs for producing steel from
iron ore. It is possible to trace the
expenditure on all the intermediate
inputs until we arrive back at the
original natural resources, which
are free—so all the value has been
created by labor.
Marx pointed out that it is too
difficult to calculate the value of
any good in this way, so value
should be determined by the
“congealed” lump of labor that the
good contains. He also said that
value is determined by the “normal”
amount of labor we expect its
production to take. An inefficient
hairdresser may take an hour to cut
someone’s hair, but the haircut’s
cost should not then rise by $20.
Marx did not deny that supply and
demand in the marketplace would
influence the value or price of
goods in the short run, but said that
in the long run the basic structure
and dynamics of the value system
must come from labor. ■Happiness in work
Karl Marx argued that people
are driven by a desire to be
connected to other humans, and
this is what makes us happy. We
show this desire through work.
When a person makes
something, that product
represents his or her personality.
When someone else buys that
item, the maker is happy
because not only has he or she
satisfied the need of another
person, but the buyer has also
confirmed the “goodness” of the
personality of the producer.Capitalism destroys this essence
of humanity, Marx claimed,
because it alienates the workers
from what they produce. People
no longer control their output;
they are merely hired to produce
a product in which they have
had little creative input and are
unlikely to consume or even
trade. The cooperative nature
of society is lost because people
are isolated in the competition
for jobs. Marx argued that it is
this separation from our work
that makes us unhappy.All commodities,
as values, are realized
human labor.
Karl MarxWhen the labor theory of value
dominated economic thought, it faced
a number of critiques based on
paradoxical questions: