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John Locke and the Labor Theory of Value

John Locke and the Labor Theory of Value

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JOHNLOCKE
AND
THE
LABOR THEORY
OF VALUE
KAREN
I.
VAUGHN
Deparlmenr o/ Economics, George Mason University
It is taken for granted by most economists andpolitical philosophers that John Locke was insome sense a precursor of the labor theories ofvalue of the nineteenth century British ClassicalSchool and of Karl Marx, yet there is a widedivergence of opinion on how Locke's work an-ticipated and influenced the work of laterpolitical economists. In large part this dif-ference of opinion stems from a disagreementamong historians of economic thought overhow to interpret Locke himself on the subjectof labor and economic value. The only point ofagreement is that, in his major political essay,the Second Treatise of Government,[" Lockedeveloped a theory of property which showedsome relationship between labor and economicvalue. Historians of economic thought cannotagree on the significance of this relationship oron how Locke's ideas on labor and value arerelated to his supply and demand theory ofmarket price in his economic writings. It hasbeen argued, for example, that Locke had thebeginnings of a theory of the exploitation oflabor, that he provided a labor theory of valuein the long run to supplement his supply and de-mand theory of price in the short run, that hepresented the "metaphysical justification" forthe nineteenth century labor theory of value,and that he had no labor theory of value atall.'"What is characteristic of these and mostother evaluations of Locke's statements aboutlabor and economic value is that they aregenerally brief mentions of this aspect ofLocke's thought in the context of larger workson much broader topics. There has been nodetailed analysis to discover whether or notLocke can be said to have had a labor theory ofvalue in any sense of the term. While in thehistory of ideas, what a man actually said maynot always be as important as how he was laterinterpreted, we must discover the former inorder to accurately understand and appreciatethe latter. Hence, in the following pages I willattempt to supply the missing detailed analysisof John Locke's "labor theory of value".It is not surprising that there should be such avariety of interpretations on the subject ofLocke and the labor theory of value. On theone hand, Locke himself was ambiguous aboutwhat he meant by both value and labor in theSecond Treatise (as we shall see below), and onthe other, there is no uniform agreement amongeconomists as to what constitutes a labor theoryof value and who, if anyone, ever espousedsuch a theory.[31 t seems appropriate, then, todefine how the term labor theory of value willbe used in this paper.There are three possible meanings of a labortheory of value that are relevant to Locke'swritings:
a
labor theory of value may identifylabor as the source of use-value or utility (thereason people desire a good in the first place), itmay attempt to explain the determination ofrelative prices (the exchange value of goods)based on some measure of labor inputs, or itmay claim that labor provides the onlyjustifiable claim to receiving the exchange valueof the goods it produces.
A
labor theory ofvalue in the first sense states that the usefulnessof goods and services demanded and consumedby individuals is created either exclusively orprincipally by the labor that goes into produc-ing them. Almost all economists would identifylabor as a contributor to the use-value of com-modities, but the idea that labor is solelyresponsible for this use-value is unusual andprobably only found in the writings of KarlMarx.[" While explanations of the ultimatecause of value have concerned economists for
 
312
KAREN
I.
VAUGHN
two thousand years, when most economistsdiscuss a labor theory of value, it is
as
a theory inthe second sense. That is, a labor theory ofvalue most often means a theory about the rela-tionship between the relative value of one com-modity to another and the quantity of laborwhich has gone into producing each of them.Such a theory tries to establish an exclusiverelationship between the effort (or time) of thelaborer and relative price of the commodity heproduces. The most obvious (and perhaps only)example of a pure labor theory of exchangevalue is found in Adam Smith's beaver
-
deerexample in the Wealth of Nations,151 where inthe absence of scarce land and capital, the ex-change rate of a beaver and deer is equal to theinverse of the labor time which has gone intohunting them. It is also possible to construct alabor theory of value that admits capital as aproductive agent but still shows changes inrelative prices to be determined by changes inlabor as, some argue, did David Ricardo.[']The third sense in which a labor theory ofvalue is often understood is different from theother two, being normative rather thanpositive. A normative labor theory of valuemight hold, for example, that two goods whichtake the same amount of labor to produceshould exchange for each other, and any pat-tern of prices that deviates from this norm isunjust. Or, it might instead attempt to definethe just reward for the services of the labor thatgoes into producing a product, where the justreward depends upon the price at which theproduct is sold. While the ethical questions ofthe just price and the just wage are not uniqueto labor theories of value, these ethical ques-tions have been closely associated with Lockeand the labor theory of value in both theeconomics and political philosophy literature.Indeed, it is this normative form that most non-economists mean when they speak of a labortheory of value at all, and it was in this nor-mative sense that the Ricardian
socialist^^'^
andKarl Marx read Lo~ke.'~'ence, although it isnot strictly a question of economic theory, theethical implications of Locke's ideas on laborand value will be a major concern of this paper.The following pages will attempt to show (a)that Locke did identify labor as the primarysource of use-value, (b) that he did not connectthe determination of price in either the long runor the short run with the labor used to producea product, and
 
313OHN LOCKE AND THE LABOR THEORY OF VALUE
Natural law dictated that all men had commonaccess to God's earthly resources, and that eachman had a natural right to self ownershipwhich, when coupled with his right and duty tosurvive, permitted him to create private proper-ty where none previously existed:
Though the Earth, and all inferior creatures
k
com-mon to all men, yet every man has a property in hisown person. This no body has any right to buthimself. The labor of his body, and the work of hishands. we mav sav. are orooerlv his. Whatsoever
..
...
then he removes out of the state that nature hathprovided. and left it In, he hath mixed
h~s
abor with.and joyned to it something that is his own, andthereby makes it his property. It king by himremoved from the common state nature placed it in.it hath by his labor something annexed to it, that
ex-
cludes the common right of other men. For thislabor being the unquestionable property of thelaborer, no man but he can have a right to what thatis once joyned to, at least where there is enough, andas good left in common for others. [pp. 305 -3061
Although the above passage seems to implythat private property is justified through hardwork (this is the usual connotation of the word"labor"), Locke makes clear that he means"labor" to include any act of appropriation ofnatural resources, from the simple act of ben-ding over and picking up acorns which havefallen to the ground, to the launching of a com-plicated process of production which involvesowning the land itself. [pp. 308-3091 Anytimeany human effort, no matter how trivial, is ex-pended in purposeful action, it is defined aslabor. While this very general definition oflabor was necessary to justify all types of ac-quisition of unowned resources in the state ofnature, it had important implications forLocke's view of economic value.
LABOR AS THE SOURCE OF VALUE
Those who have interpreted Locke's labortheory of property as implying some kind oflabor theory of value usually support their in-
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