What kind of theory is Marx's Labour Theory of Value? A critical realist inquiry

Capital & Class, Spring 2001 by Fleetwood, Steve

This paper uses critical realism to reflect upon the issue of theory in Marx's Labour Theory of Value (LTV). Like any theory, the LTV is rooted in a mode of theorisation. Rooting the LTV in an inappropriate (deductivist) mode of theorisation encourages the formulation of (quantitative) versions of the LTV that (a) have severe problems and (b) lack explanatory power. Conversely, rooting the LTV in an appropriate (causal-explanatory) mode encourages the formulation of (qualitative) versions of the LTV that (a) lack such problems and (b) have explanatory power.

Introduction

WHILST MUCH INK HAS BEEN SPILLED discussing the nature of 'labour' and 'value' in Marx's Labour Theory of Value, the nature of 'theory' has often been neglected.1 Methodological questions such as 'What kind of theory should the LTV be?' are hardly ever asked. This is a serious omission. If, as seems likely, substantive theory can be positively influenced by being rooted in an appropriate method or mode of theorisation then it can be negatively influenced by being rooted in an inappropriate mode. As a substantive theory, the Labour Theory of Value (LTV) is no different. Rooting the LTV in an inappropriate (deductivist) mode of theorisation has a negative influence in the sense that it encourages the formulation of (quantitative) versions of the LTV that (a) have severe problems and (b) lack explanatory power. Rooting the LTV in an appropriate (causal-explanatory) mode, by contrast, has a positive influence in the sense that it encourages the formulation of (qualitative) versions of the LTV that (a) lack such problems and (b) have explanatory power. The mode of theorisation one employs, therefore, has a strong influence upon the version of the LTV one ends up with.

Now, given the fact that there are not only numerous versions of the LTV, but also numerous methodological approaches, I employ two generalising devices. First, I use Sweezy's distinction between quantitative and qualitative versions of the LTV, placing all versions in one or other of these categories. Second, I use the critical realist argument that, basically, there are only two modes of theorisation, namely the deductivist and what I call the causal explanatory, placing all modes of theorisation in one or other of these categories. The combinations of theories and modes of theorising can be schematised thus:

Format

The paper consists of two distinct parts. Part I focuses on methodology. It opens with an introduction to the deductivist mode of theorisation before turning to critical realism to (a) establish a critique of this mode and (b) elaborate upon the alternative encouraged by critical realism, namely the causal-- explanatory mode of theorisation. Part 2 applies the conclusions from the discussion of methodology to value theory. It opens with an exposition of the quantitative versions of the LTV and explains why they can be conceived of as rooted in the deductivist mode of theorising. It then turns to critical realism to (a) establish a critique of these quantitative versions of the LTV and (b) elaborate upon the alternative qualitative versions of the LTV encouraged by the causal-explanatory mode of theorisation. In this way, methodological arguments emanating from the critical realist perspective, generate both the critique of, and the alternative to, quantitative versions of the LTV, and facilitate an answer to the question: 'What kind of theory should the LTV be?'

PART 1: METHODOLOGY

1.1 Deductivist mode of theorising

Critical realists like Lawson (1997) argue that the dominant mode of explanation in economics is the deductivist mode,2 wherein to 'explain' something is to deduce a statement about that something from a set of initial conditions, assumptions, axioms, and a law, and/or some other form of constant conjunction of events. Advocates usually claim that the deductivist mode offers more than just explanation. Amongst their claims (justified or not) are the following:

Deductivism allows consistent behaviour to be deduced or predicted from antecedents. Some, but not all, advocate the empirical testing of hypotheses via predictive power.

Deductivism allows our thoughts to be presented systematically, with clarity and with the (spurious?) precision of mathematics.

Deductivism, because it presents an idealised version of reality, allows the relationships between certain important variables to be expressed simply and free from the 'clutter' of other, less important variables.

Deductivism allows one to understand pathological states (i.e. disequilibrium) by comparing them to hypothetical non-pathological states (i.e. equilibrium).

Proving the existence of a unique solution or an equilibrium, under simplified conditions, gives economists a reason to believe that they are 'on the right track' as Hausman (1992; 100-1) puts it. (Cf. Lawson 1998; chapter 8).

Generally speaking, then, and for reasons that are almost never spelled out, economists appear to believe they have demonstrated something important about the real world when they can consistently deduce a set of conclusions from a set of initial premises.3 In virtue of the slightly wider nature of these claims I refer to this mode as the deductivist mode of theorising, rather than mode of explanation.