The Labor Theory of Value and Self-Ownership

August 31st, 2010   Submitted by Sima Qian

The axiom of self-ownership is fundamental to anarcho-capitalistic and voluntaryist philosophies. Hans-Hermann Hoppe argues that the act of arguing itself requires the arguer to have accepted the axiom of self-ownership. I suggest that if someone has reasons for arguing, their reasons will be reflected in the assumptions they make about “reality.” These reasons compel them to argue, the very act of which Hoppe has shown to contain an assumption of self-ownership. We would therefore expect the assumptions arguers make about reality to contain at least one concerning self-ownership. In this essay I debunk the Marxist notion of the exploitation of the laborer even if we, for the sake of argument, concede the labor theory of value, and then I show how this relates back to an assumption about the right to self-ownership.

One of the fundamental fallacies of Marxism is the use of the labor theory of value. Because Marxists use this doctrine instead of the subjective theory of value, they fail to see how in the labor market both the capitalist and the worker benefit from trade. Because the Marxists insisted value comes from labor they argued that the profit derived from entrepreneurial activity comes solely from the laborer. It is unjustified theft for the capitalist to make anything from the operation. Even when we, for the sake of argument, assume the labor theory of value is correct, the Marxian position is wrong.

I should reiterate that I am not defending the labor theory of value against the subjective theory of value. The work of Menger and Bohm-Bawerk so totally exploded the labor theory of value that not even laymen casually acquainted with praxeology will espouse its merits. I am attempting to show that even if we admit to the Marxists their fallacious theory of value they still must admit that the capitalist is justified in taking part of the profits from business activity.

In chapter seven of Capital, The Labor-Process and the Process of Producing Surplus-Value Marx is inconsistent in his application of the labor theory of value. He states that

“The labour required for the production of the cotton, the raw material of the yarn, is part of the labour necessary to produce the yarn, and is therefore contained in the yarn. The same applies to the labour embodied in the spindle, without whose wear and tear the cotton could not be spun.”


While what is asserted for the cotton is true within previously expressed doctrines, Marx’s assertions concerning the spindle, the means of production, is not. The machine confronts the laborer as a congealment of past labor-power which today is able to perform labor. Marx asserts that this is “Dead labor” as opposed to the laborer’s “Living labor.” But so what? Marx admits that the skill involved in the production of the desired good is not contained in the labor of the worker, but rather in the labor of the machine. To assert that the value of the labor performed by the machine is equal to the value of the replacement cost of wear and tear in the machine is as fallacious as asserting that the value of the labor exerted by the worker is equal to the cost involved in making sure the laborer’s life is sustained at a level at which the worker can perform his assigned task. Marx rejects this for the laborer and therefore must reject it for the machine as well.

We are then confronted with two sources of labor in any process: The labor of the laborer and the labor of the capital. The labor of capital is, unless the capitalist stole the capital, the congealed labor of the capitalist. Because the labor of the capitalist continues to do labor it must be that it is the capitalist who is performing this labor through the medium of his previously expended labor power. This implies that while the laborer is working with the capitalist’s means of production, under the labor theory of value, both the capitalist and the laborer are adding their labor power to the commodities being manipulated.

Neither one would be able to perform the specific task without the other. The machine would not be able to function without the aid of the worker, nor would the worker be able to perform the specific task, for instance, pounding tons of metal into a perfectly flat sheet in the blink of an eye, without the help of the machine. How can we determine the value of each one’s labor compared with the other’s? This is actually quite simple as the worker accepts a wage. This wage must (under the assumption of equal values in trades which the labor theory of value uses) be equal to the value of the laborer’s labor. The value of the labor performed by the machine is therefore the price of the final good minus the value of the laborer’s labor minus the value of the labor embodied in the non-capital commodities used in the production of the final good. Because the capitalist ultimately performed the labor performed by the machine, it is the capitalist who should rightfully get this surplus.


All this comes from an assumption about self-ownership. The value in commodities comes from labor, and therefore determining whose labor also determines who added this value. Yet without the assumption of self-ownership this question would not and perhaps could not arise. If the laborer were owned by the capitalist then the labor performed by laborer would, rightly considered, have come from the capitalist in the same way that the labor performed by the machine came from the capitalist. When the communists hypocritically ignored the capitalist’s right to self-ownership by denying the contribution done by his congealed labor power, which, within the labor theory of value is an extension of his self, we can see the results of ignoring self-ownership. Rather than seeing the truth of the matter: that the capitalist has succeeded in transforming the various means of production into the finished product. The communist only sees the laborer. Any other factors were contributed by “the state” or “society.”

Hoppe showed that the act of arguing itself implies self-ownership. The reasons that compel a person to argue should therefore contain certain assumptions about self-ownership. The Marxists assume that the labor theory of value is correct. Even if we concede this for the sake of argument, it can still be shown that the capitalist does not exploit the worker, but rather, pays a fair wage and that the income the capitalist receives is also just. The reason for this is that the labor theory of value contains an assumption about self-ownership, the fundamental assumption in anarcho-capitalism and voluntaryism.

10 Responses to “The Labor Theory of Value and Self-Ownership”

  1. JRuinedNo Gravatar says:

    How do you counteract pseudo-fascists/ fascists with this argument? It seems like you are focusing more on a socialist agenda, but in the world which we reside there is a definite corporate agenda that veils itself as a socialist one (which is much more seductive on the surface to the populace) but plays directly into the crony-capitalism with which most people on the planet have ingested.

    Please take your argument further.

  2. Sima QianNo Gravatar says:

    Yes, this argument is specifically aimed at Marxists. I suspect that a similar argument may be able to be made against fascists; however, as Polanyi points out in The Essence of Fascism, fascism is a specifically inti-individual ideology. I’d like to re-read Schmitt’s The Crisis of Parliamentary Democracy before responding to your proposal, but I unfortunately don’t have it with me atm. 🙁

  3. RNo Gravatar says:

    Though it seems that you are misreading the bit of Marx you’ve quoted:

    “The same applies to the labor embodied in the spindle {meaning “The labour required for the production of the [spindle][…] is part of the labour necessary to produce the yarn, and is therefore contained in the yarn.},

    without whose wear and tear {“wear and tear” being a periphrasic construction for “use”} the cotton could not be spun.”

  4. KyleNo Gravatar says:

    The wage doesn’t have to be equal in value to the labourer’s labour under the labour theory of value. The labour theory of value states that a commodity’s value is related to how much labour went into producing it. The labourer’s commodity that he sells to a capitalist is his labour-power. The labour that went into producing his labour-power is the value of all that keeps the labourer alive and able to work: his food, education, clothes etc.

    The wage covers these costs, so the exchange of labour-power for wages is fair and in accordance to the labour theory of value. However, it is the peculiar nature of the labour-power commodity which is the interesting bit. The use-value of Labour-power is that it creates value, i.e. in using up this commodity, value is created. No other commodity does this (in accordance with the labour theory of value).

    If the capitalist is ‘lucky’, the labour-power he bought (at its true and fair value) will create more value than went in to producing it. This is where surplus value, the capitalist’s profit, comes in. There is no theft involved involved in this extraction.

    In generally, you have failed to read Marx properly.

  5. PenchanskyNo Gravatar says:

    “We are then confronted with two sources of labor in any process: The labor of the laborer and the labor of the capital. The labor of capital is, unless the capitalist stole the capital, the congealed labor of the capitalist. Because the labor of the capitalist continues to do labor it must be that it is the capitalist who is performing this labor through the medium of his previously expended labor power. This implies that while the laborer is working with the capitalist’s means of production, under the labor theory of value, both the capitalist and the laborer are adding their labor power to the commodities being manipulated.”

    This is completely wrong. Firstly capital accumulation is rarely done through hard work. However we shall assume that a capitalist has worked for the money that paid for the machines in their factory. Under those circumstances the machine represents their congealed labour. However any work done using those machines is not the work of the capitalist. Marx calls machines constant capital, this means that they don’t add any value. The value of the machine slowly over time transfers itself into the value in the commodities. The total value put into the commodity equals the total value of the machine. All that the owner of the machine is owed is any depreciation in value that occurs through the manufacturing process.

    • Sima QianNo Gravatar says:

      /Firstly capital accumulation is rarely done through hard work.

      Actually, this is rather interesting. As this is an anarchist site, may I ask that you find many examples of capital accumulation that both didn’t involve hard work and didn’t involve the state?

      (Longer reply below, but I don’t know if the site will send an email to you unless the reply is addressing your comment directly.)

      (Also, inheritance doesn’t quite work because the parents did the accumulation, presumably either through hard work or else through the state.)

  6. Sima QianNo Gravatar says:

    I think I left reply to this a bit long. xD This is apparently still receiving comments, so I thought I might make a clarification (which will probably not be complete). If I re-wrote this article today I would make many, many changes, but it stands as what it is. I will try to address some of the points brought up, but I certainly don’t think I will be able to address them in a way that would convince someone who accepts the labor theory of value as actually true.

    This article was not meant to be entirely consistent with Marxism as a whole. I wanted to take one aspect of it, and perhaps show how it could be argued, even though the labor theory of value is ENTIRELY fallacious (as in, has absolutely nothing to do with reality), that despite conceding an aspect of Marxism, if we disregard some of the other fallacious arguments it (Marxism) might not be the worst thing in the world.

    So, all the points about “mis-reading Marxism”: Yes, that was the point of this article. To concede one aspect of Marxism and then disregard the rest.

    /All that the owner of the machine is owed is any depreciation in value that occurs through the manufacturing process.

    What I am saying in this article is that this is exactly equivalent to saying that all the laborer is owed is the cost of sustenance required to continue the manufacturing process.


    To assert that the value of the labor performed by the machine is equal to the value of the replacement cost of wear and tear in the machine is as fallacious as asserting that the value of the labor exerted by the worker is equal to the cost involved in making sure the laborer’s life is sustained at a level at which the worker can perform his assigned task. Marx rejects this for the laborer and therefore must reject it for the machine as well.

    This is the hinge moving away from Marxism. Everything after that is an attempt to work out the logical consequences of considering the “labor” of capital on equal footing with the “labor” of the worker. I think If I were to re-write this I would put much more emphasis on the way in which Capital confronts the laborer, so for instance, wherein capital reflects the skill necessary to do the job rather than the laborer etc.

    /meaning “The labour required for the production of the [spindle][…] is part of the labour necessary to produce the yarn, and is therefore contained in the yarn.

    Yes. Even the labor theory of value concedes that not all labor is equal. If we concede the labor theory of value then we must admit that there’s something particular about labor that goes into creating capital, in that it makes it possible to get so much more stuff out of the “same” amount of “work.” Which then means that an important type of work is determining when it makes sense to work on capital and when it makes sense to work on production. (This is then an attempt to get at Mises’s concepts about more round-about processes of production and entrepreneurs.) And that’s what capitalists do, so we don’t have to kill a couple hundred million people. Sweet.

    /The wage doesn’t have to be equal in value to the labourer’s labour under the labour theory of value.

    You’re right, but Marx doesn’t like that workers were often paid the bare minimum needed for sustenance. If labor shouldn’t be paid the bare minimum for sustenance capital shouldn’t be paid the bare minimum to keep up capital.

    /The labour theory of value states that a commodity’s value is related to how much labour went into producing it.

    And the quality of the labor.

    /The use-value of Labour-power is that it creates value, i.e. in using up this commodity, value is created. No other commodity does this (in accordance with the labour theory of value).

    And my argument in this is: Except capital. The reply would be something to the effect of, “But the value of capital comes from the labor that’s expended into it, which wears away over time.” But then why isn’t that true for laborers, where the value of the labor of a laborer would be the value of the labor needed to keep a laborer alive?

    Clearly, the work involved in production is worth more than the required labor to produce the inputs, or else the production wouldn’t be profitable, and no one would do it. BUT that sentence is PRECISELY what a Marxist cannot say because then the whole thing (Marxism, and the related destruction of life and liberty) becomes an argument for the free market, which is my point.

    /In generally, you have failed to read Marx properly.

    Again, that was the point of the article.

    /This is completely wrong.
    Yes. Anything that mentions, “The labor theory of value” is completely wrong. Value is subjective and ordinal.

    /Firstly capital accumulation is rarely done through hard work.
    Actually, this is rather interesting. As this is an anarchist site, may I ask that you find many examples of capital accumulation that both didn’t involve hard work and didn’t involve the state?

    I doubt my replies will convince anyone. I’m basically saying, “Yes, I’m mis-reading Marx. That was the point. Marx was wrong” and “the capitalist has succeeded in transforming the various means of production into the finished product.” I figured it might be interesting to find some common ground with Marxists and try to, staying within the bounds of what was conceded, move toward an understanding of the labor theory of value that would still allow for something resembling property rights.

    Cheers.

  7. KyleNo Gravatar says:

    “The Marxists assume that the labor theory of value is correct. ***Even if we concede this for the sake of argument***, it can still be shown that the capitalist does not exploit the worker, but rather, pays a fair wage and that the income the capitalist receives is also just.”

    You’re contradicting yourself