I was led to consider again the Marxist Labour Theory of Value recently, and to tell the truth, I can kind of see its point. Or more generally, I feel like the economic left and the economic right have fundamentally different notions of value, which the theory attempts to capture. Let me see if I can explain.
To the economic right, the value of a thing is how much the market will pay for it. This makes a lot of sense – it’s based in the idea that among a population, there will be varying levels of desire for any given product, and those whose desire is strongest will be willing to pay more. Therefore products end up in the hands of those who want them most. What could possibly be fairer?
To the economic left, the value of a thing is indeed more like the sum of the efforts invested in its creation. This is based in the idea that no one’s life and time is truly more precious than anyone else’s. People may choose to spend their time as they please, so products end up in the hands of those who wish to create them. What could possibly be fairer?
From this it follows that right and left will see exchanging goods and services differently. Again I will try to explain.
To the economic right, the nature of an exchange is a positive sum trade. If either party were receiving things they valued less than what they were giving up, they would simply not make the exchange. Since both parties exchange something they want less for something they want more, they effectively exploit the differences in their personal valuations of products to generate value. In this sense, the glass seems half-full.
To the economic left, the nature of an exchange is a negative sum compromise. If either party wanted what they were receiving more than what they were giving up, they would have made the other thing instead. However, by whatever mechanism, both have ended up in a situation where they must have what the other has instead. They must find an intermediate state that they can agree on – “A good compromise is when both parties are dissatisfied.” In this sense, the glass seems half-empty.
At this point it is traditional for the two sides to talk past each other for a while, and maybe call each other names.
To the economic right, it seems like the left refuses to accept that, say, someone who needs a medication for toxoplasma actually just really badly wants it – after all, their life depends on it. How is it unfair to ask them to pay a high price commensurate with the strength of their desire?
To the economic left, it seems like the right refuses to accept that, say, an artist who labours for a year to create a painting that by luck of artistic fashion no one wants to buy has still created something of great value – after all, they gave a year of their life to it. How is it unfair of them to ask a high price commensurate with the expenditure of their labour?
And so on and so forth.