LTV: Diamonds, Silver and Commodities Under Capitalism

So the labor theory of value has had various criticisms over the years and I've struggled with it myself with my limited understanding. If economic value comes from socially necessary labor required to produce it then why does, on average, silver cost less than diamonds? Silver is notoriously difficult to mine. The obvious answer is forced scarcity enforced by diamond monopolies along with generations of marketing reinforcing made-up social "norms" involving diamonds. But this belies how supply and demand can influence value. So how does one rectify this with the LTV? Also any literature recomendations are appreciated.

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Labour theory of value has nothing to do with value as everyone else uses it. It's badly named.


LTV describes demand, not cost.

already said, but to be more precise, there is a difference between value and market price.

See the transformation problem.


the labor of advertisers and mercenaries is what you're neglecting

Price ==/== value

As I understand it, LTV talks about equilibrium price,which is when supply and demand is in perfect balance. So diamonds could have a lower value then silver (takes less socially necessary labour time to produce then silver) but by artificially lowering supply of diamonds and raising demand the market price of diamonds becomes higher then silver.

In Ricardo's theory, maybe, but not in Marx's.

From Capital:

LTV assumes a somewhat competative market

So I understand how the Labor theory of value is actually about Socially Necessary Labor, and that digging a ditch and filling it doesn't actually do anything, but something still irks me about it. Most things require some amount of natural resources to be produced; x amount of labor won't just create a smartphone out of thin air, because you also need a bunch of metals and electricity to do so, both of which are scarce resources (electricity less so assuming renewables, but there's still a limit). Shouldn't the value of an object best be described as both the labor and the materials involved in its most efficient known mode of creation?

The materials need labour too, the metal won't just spring out of the mountain and present itself in an usable form at the factory.

In the most widespread mode of creating. That's the SNLT.

I understand that, but simultaneously it's not like there's a limitless amount of metal until we start space mining. Moreover, I feel like any real notion of value should attempt to explain wealth, and wealth often arises not from human labor but naturally. Most imperialism was done and continues to be done for the sake of natural resources moreso than labor; this is because obtaining natural resources means you obtain wealth.

I think already covered that with
The key word here would be "obtaining". This is a necessary prerequisite to generation of wealth from resources, and is only expressed through labor.

LTV doesn't in any way preclude supply and demand - which can still augment prices - it is a theory of the base value of things before market forces take effect.
This is the reason why, no matter what happens to supply and demand, some things are generally expensive and some generally cheap.

didn't mean to SAGE

What I'm trying to get at is that natural resources are not homogeneous stand-ins for lumps of SNLT. If I mine some tungsten, it matters that it's tungsten I mined and I didn't spend the same amount of time mining tin or farming wheat instead, since tungsten, tin, and wheat are all distinct natural resources with different use-values.

Matter is used to be reformed into new forms of matter, and occasionally our choice of matter must be select. However their still exists a transformation point from a lump of Aluminum ore to the fuselage of an aircraft, and this is bridged by labor. Sometimes aluminum can be substituted (with all be it less quality), however, the reality of labor remains the same

PS got to temporarily dip on this excellent convo, lunch break is over, sorry :^(

But they are. You can say x kilograms of tungsten = y kilograms of tin = z kilograms of wheat because they are all lumps of SNLT. If they were treated as use-values you couldn't compare them like this.

Oh, never mind, I see what you're trying to get at. You're saying that all production should be considered in terms of what it takes to produce from scratch; the process of making a pencil includes the process of collecting the wood, graphite, et cetera. I don't think this way of looking at things is accurate, however. For instance, even though under communism the idea of creating gold jewelry and other objects as a sign of wealth would probably die or at least be greatly diminished, the process currently used for the extraction of gold is nevertheless useful because gold is a useful resource for electronics and the like. I think separating the overall production into segments like that is useful.

Moreover, like I was saying earlier, only a certain amount of natural resources can be extracted from the Earth per unit of time. This amount (which I'll refer to as the "budget") is much lower if you want to preserve the environment, and having this amount be low is useful to my point so I'm going to assume we're doing so.

The game we're trying to play is, given a bunch of people with the capacity to do labor and a finite amount of both manmade and natural capital (the latter meaning land in different climates, mines of different metals, etc.), produce the goods that will optimize some value of "goodness" (average human happiness is the obvious measurement, but there's problems with that so I'll leave what we're optimizing for abstracted). This is a very expensive computational problem to compute, but I'd argue a great first step would be to assume we're going to use certain instruments of capital that have proven themselves in the past to be exceptionally useful to the greatest extent possible. From there, it makes sense to consider the output of those instruments as "givens" for use elsewhere in the creation of our plan; these givens would be distinct from labor, as we cannot generate any more of them.

Also, as automation advances to a greater extent, we'll be able to draw upon greater quantities of more of our budgets without inputting any labor at all, meaning the calculation I'm talking about will be even more in terms of the givens and less in terms of labor. Eventually, "fully automated luxury communism", our goal, will completely dispense with the need for human labor altogether and economic deliberation will be entirely in terms of natural resources and choosing what should be produced with them, not in terms of labor.

LTV describes equilibrium prices at its core and wasn't invented by Marx. It was a normal theory at the time and he used it to show how capitalism was unstable, even when using the very models used by the defenders of capitalism.

As for diamonds, there is a monopoly on it by a diamond cartel, there isn't perfect competition, which is what LTV assumes to exist for there to be equilibrium prices.

The exchange value is necessarily not proportional to the labour value because the prices aren't in equilibrium.

Something else I noticed: it's thoroughly possible and reasonable to consider human labor itself as one of the resources, just one whose use happens to have the side effect of lowering the "goodness" quantity. Planned economies in the past, through the tactic of full employment, have treated this quantity too as a given.

Moreover, this forms an objection to capitalism; private property rights mean some instruments of capital end up not being used (if someone owns property and everyone able to produce is unwilling to be exploited, it goes unused, but if they were willing to be exploited, the surplus value taken from them either goes into luxury goods and goes effectively unused or spirals around until someone else spends it on luxury goods, going unused), meaning less is produced than ought to be.

I see this a being able to fall under the umbrella of SNLT. The requirement of gold is what makes the actual harvesting of it valuable, be it purely for aestheticism or for practical use.

I agree that quantity and quality of resource will hold effect on the outcome of labor. However, I don't necessarily see how this relates to what we where discussing prior?

I'm not so sure about that LTV equilibrium-price claim. I thought Marx proposed prices of production as the long-term tendency of where prices go.

Yes, value is not "equilibrium price" for Marx, see>>1993027.
Prices of production are closer to the concept of "equilibrium price" - more precisely, they are the prices that theoretically occur when (perfect) competition causes the profit rates of all industries to become the same.

Link didn't work. Here it is:

And diamond is notoriously difficult to find, let alone the mining.

I agree 101% with all that, but this shouldn't be just ignored. Seems like the placeholder assumption is also the keystone to the ethical underpinnings of what you are doing - anw what you should be allowed to be doing.