Repeating Marx's Mistakes
One of the worst economic fallacies around is the labour theory of value. Yet, libertarians, who pride themselves as having some understanding of the field, often advocate a labour of theory of value themselves. Nor is it the only Marxian fallacy adopted by libertarians. But it is a good one with which to start.
The labour theory of value is a simple fallacy but one which stumped economists for centuries until the late 1800s. In a nutshell it says that the value of a product is derived from the labour that is put into it. A chair has values because it takes labour to produce it.
The insight of the Austrian school of economics was that labour only had value because the end product of that labour, in this case the chair, was valued by consumers. It is the production that gives labour value and not the labour that gives the product value. The chair had value because people want it. And what people want, and what they are willing to pay for it, depends on their own subjective evaluation.
A chair is valuable because people want chairs. If you had a strange society where people felt chairs were a religious taboo and, being very religious, they shunned chairs then the chair would have zero value. When no one wants the product it has zero value. And all the labour that goes into producing it is valueless as well.
Consider this possibility: you want to have your house painted so you hire a house painter. At the end of the day you return home to find that he has not painted the house at all. But he did managed to smash several windows, smash some of the trim, and pull off the rain gutters. He assured you that he worked very hard and from the mess he made you can see it took a lot of effort. Would you pay him his daily fee?
Not likely. In fact, if anything, you would demand that he pay you for the damage he did. The value of his labour was negative. It is the end product that determines the value of the labour and not the labour that determines the value of the product. Marx had it completely backwards.
So what is the libertarian theory of value and how is it similar to the fallacy that Marx entertained so thoroughly?
The libertarian theory of value says that all libertarians ought to be active libertarians. They ought to be out there recruiting new libertarians, spreading the message, writing letters, running for office, etc. But they must labour for the cause.
The assumption in this is that every libertarian labouring adds value. But if they do, it is not because of their labour, but because of the results. And one libertarian may do a small amount of work and create great value while another could make a major effort and produce little value.
Some could be like the deranged housepainter I mentioned. They could work all day and then leave a mess that others have to clean up just to get back to where things were before this person got active.
Some libertarians have a negative value to their activism. But almost no libertarian I know acknowledges it. They may realise it but they don't talk about it and when they see it they look the other way.
Libertarianism, like any other endeavour, could lose ground the more some people work for it. We would be ahead if some activists stopped being active.
The belligerent libertarian who is always attacking, slicing, demeaning and ridiculing is a perfect example. They alienate so many people that they have a negative value. They often delude themselves into thinking that their level of activity is evidence that they are highly productive. That is a libertarian labour theory of value.
But it is wrong.
If a person has negative value then the more they do the worse off we are.
But when a group is a small group they seem to think that they need as many activists as possible. Again that is the labour theory of value. More activists mean more labour and more labour means more value. That's what they are thinking. So they don't want to tell the person to please be quiet. They just assume that extra hands are a value.
Yet, I've seen various libertarian organisations prosper when they cleared out some activists. Those activists had a negative value.
The second Marxian fallacy that libertarians have adopted was explained by Marx this way:
"In a communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, shepherd or critic." The Marxist, August Babel, described the Marxist woman: "At one moment a practical worker in some industry she is in the next hour educator, teacher, nurse; in the the third part of the day she exercises some art or cultivates a science; and in the fourth part she fulfils some administrative function."
Lenin advocated the "abolition of the division of labour among people... with an all-around development and an all-around training, people able to do everything."
The Marxists thought we could abolish the division of labour. Some libertarians think the same thing.
Not only do they assume that all labour has value but they assume that each activist, no matter the value of his labour, should be all things. So each libertarian ought to be out there writing letters to the editor, campaigning, running for office, making speeches. They advocate what Lenin called "an all-around development".
But Ludwig von Mises, the great libertarian economist, noted that a free society has division of labour because this is imposed on man by human nature. "Had the strength and abilities of all individuals and the external conditions of production been everywhere equal the idea of division of labour could never have arisen... No social life could have arisen among men of equal natural capacity in a world which was geographically uniform..."
The inequality of ability means that there is an inequality in the value of the labour of individuals doing the same thing. My value as a mechanic is virtually nil. If anything, let me repair your car and you will most likely find my labour has negative value. But there are things I do well.
Mises wrote: "Through cooperation men are able to achieve what would have been beyond them as individuals..."
Instead of trying to do everything, as so many libertarians expect, individuals who value liberty ought to do that for which they have a talent.
If you can't write a decent letter to the editor then don't. If you alienate people, get angry and insulting, when in conversation with people who differ with you then shut up! If you have no ability to speak and don't understand the issues then don't run for office.
This doesn't mean that you have no talent or can make no contribution. But maybe the contribution you can make is not the one you are attempting to make.
Maybe the best thing you can do is write letters but not run for office. Or perhaps you are better attuned to distributing leaflets but not public speaking.
The two fallacies I have mentioned are related to one another. That destructive housepainter might actually be a decent pianist. He might be an excellent science teacher. But he ought not be a painter.
We need the division of labour in the liberty movement. We need to discover what our individual strengths are and work on those while ignoring endeavours where we can not contribute as well or where our labour may have negative value.
Now some people can actually do most of these things well. But should they? No. As economists have still shown individuals, like nations, ought to concentrate on their area of comparative advantage. If you are a brilliant writer and a good campaigner you may still contribute more by writing full time rather than campaigning. Just because you can do numerous things well doesn't mean you ought to do all of them. Instead you ought to concentrate on that which you do best.
What if someone can't do any of these things well?
In the market there is usually something you can do otherwise you most likely would have starved by now. And there is undoubtedly something you can do. Maybe it's only stuffing envelopes or doing grunt work. But it is a contribution.
And consider this. If there is a good campaigner stuffing envelopes, because it has to be done, when he could be out campaigning, then your freeing him to do what he is best at, while stuffing the envelopes yourself, is a double win. Not only are you contributing the value of stuffing envelopes. But you are also contributing, by freeing this other activist to do something which you are not very good at doing yourself. You are contributing more than your normally could if you tried to do it yourself.
In the market we don't try to do all things. We don't try to be doctor, dentist, mechanic, gardener, grocery clerk, plumber, electrician, ad infinitum. We realise that the value of our labour is not equal in all those possible endeavours and thus concentrate on the one that is valuee the most. So should it be with the work of liberty.
Now there is one other question I want to address momentarily. That is whether you ought to make any contribution at all. Well, that depends on whether you value liberty.
Now many people say they value liberty but in reality they do not. How do we know? Well, I use something Ayn Rand said which I think is pretty accurate. She said a value is anything you act to gain or keep. The indication that you value something is the effort you make to obtain it or to keep it. The greater the effort the greater the value.
The libertarian who says he values liberty and limits his efforts to arguing with other libertarians is really not doing very much to gain or keep liberty. This is especially true if this is all he does.
But not everyone is equally talented. That I don't know how to fix my car doesn't mean I don't value a car that works properly. I do. But it does mean that I pay someone else to do the work instead. I do what I am good at to earn the money to pay him to do what he is good at. We both benefit from that arrangement.
If you value liberty you must do something. You ought to do something that has positive value and not assume that all effort has value. Recognise that you might have negative value in some fields. Specialise in those areas where you do well and ignore those where you do not. And if there are areas where others do better at activism than you do then do what you do in the market: hire someone to do the work you value.
Your labour for liberty may have value. But that doesn't mean you need to work directly for liberty yourself. Again use your comparative advantage. If you earn $200 an hour in your profession then why take a hour out of the day to stuff envelopes. For the one hour you are working you could pay someone to stuff the envelopes and hire someone else to do other pro-liberty work as well.
When I say "hire someone" I don't mean directly hire them. Though you could if you wanted. I mean hire them in the same sense that you hire all the professions from which you benefit. In the libertarian world that may mean contributing to a worthy cause. If you can put in your one hour and then donate $200 to a good venture that promotes liberty you have magnified your contribution several fold over taking the hour off to stuff envelopes.
I have known libertarians who have taken a day off work to hold a protest sign. The net value of this day of labour is close to zero. Far better, for them and liberty, to have worked and contributed one days income to a venture that is making a difference.
In a world of specialised labour you don't do all the work yourself. You find various individuals who are good at doing the things you are not able to do and you hire them. You do what you do best. They do what they do best and the movement is more profitable as a result.
All items in this journal reflect the personal opinions of the author and are not necessarily those of the Institute for Liberal Values or its Board members.
Previous (Radiation, welfare and Chernobyl) - Next (People should not fear their governments.)
Nannies to Right of Us, Nannies to the Left of Us.
Welcome Home: the journeys of David Mamet and George McGovern.
Dominion Post in needless panic
Does Liberalism Have a Heart?
The moral problems of state power in regards to war.
Kiwi health: spend more, care less
Hurricanes and hot air: the sequel
Morality and Consistency: Why Left and Right both threaten freedom.
Ageing, population and the welfare state.
The bankruptcy of conservatism.
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Institute for Liberal Values, Friday September 10th 2010. |
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