To what extent, if any, is Marx's labor theory of value relevant in current economics?

Marx's theory of value (derived from a neoclassical standpoint) has caused much controversy since its inception. Theories such as the Subjective Theory of Value have come to take over economics and even claim to disprove Marx. Is there any validity in Marx's analysis and how does it show? Thank you very much.

Official response from submitted

Marx's approach to analyzing capitalism had different objectives from those of his major predecessors, Adam Smith and David Ricardo. They loved capitalism, celebrated it and did their analysis within that framework. Marx was a critic of capitalism and approached it as a transitional system that could and should be gone beyond to something better. The classical and then later neo-classical economists made assumptions, used logics, and focused on empirical evidence that were all different from the assumptions, logic and empirical evidence that Marx deployed. Thus the issue is not (and never was) whether one approach is valid and another not - or one "more" valid than the other. These are different approaches using different methods to achieve different ends. Each theory illuminates different aspects of the economic system - capitalism - they seek to analyze. And which of the two theories you choose to learn and work with or how you make use of both of them, in what relation or balance will determine many of the conclusions you reach about capitalism. Of course, here in the US - where very few teachers expose their students to a systematic study of Marx's analysis - few people have the education needed to deploy Marxian analytic concepts - such as, for example, the labor theory of value, the theory of surplus value, and so on. This hobbles and narrows mainstream economics. In my view, knowing Marxian economics has always been a very helpful component of the tools of analysis I bring to my work. For a full, detailed analytical comparison among alternative economic theories, let me recommend R. Wolff and S. Resnick, Contending Economic Theories: Neoclassical, Keynesian and Marxian (Cambridge: MIT Press, 2012).

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  • Dan Langlois
    commented 2017-08-11 22:12:00 -0400
    Taking the question to be this: ‘Is there any validity in Marx’s analysis and how does it show?’ —I guess that one may answer ‘yes’ or ‘no’ or else that it is a loaded question.I take the answer to boil down to ‘it is a loaded question’, here. At the very least, though, I shall add an addendum to this, that the labour theory of value is generally reputed to be one of probably only a handful of economic theories, along with Francois Quesnay’s Tableau Economique, which have actually been completely abandoned over the past couple of centuries. I’m not sure this will seem relevant to a communist, but I will add that ‘actual’ mainstream economics is, in my opinion, interesting enough, in its own right.
  • Richard Wolff
    responded with submitted 2017-01-14 12:18:56 -0500
  • Isaac Peachey
    published this page in Ask Prof. Wolff 2017-01-14 05:10:07 -0500