During a Martin Luther King Day discussion with the writer Ta-Nehisi Coates, Representative Alexandria Ocasio-Cortez, D-N.Y., made clear that she is not just a democratic socialist but a Marxian one. Evie Fordham of Fox Business has written a helpful summary of the remarks, including Ocasio-Cortez’s concise explanation of the Marxist theory of the exploitation of labor:
“No one ever makes a billion dollars. You take a billion dollars,” Ocasio-Cortez said, receiving applause. “I’m not here to villainize and to say billionaires are inherently morally corrupt. … It’s to say that this system that we live in, life in capitalism always ends in billionaires.” …
She addressed a hypothetical “widget” billionaire in her remarks.
“You didn’t make those widgets, did you? Because you employed thousands of people and paid them less than a living wage to make those widgets for you,” Ocasio-Cortez said. “You didn’t make those widgets. You sat on a couch while thousands of people were paid modern-day slave wages, and in some cases real modern-day slavery.”
When Rep. Ocasio-Cortez argues that her hypothetical billionaire did not make the widgets but rather that her employees did, she is making a particular claim about what a commodity is and where its value is derived. She is articulating a theory of value. The theory that the value of a commodity can be objectively measured by the labor which produces it is the labor theory of value.
The labor theory of value was the prevailing theory among many economists of the nineteenth century, most prominently David Ricardo and Karl Marx, and had its roots in the thought of Adam Smith himself. This theory was questioned by some economists in the nineteenth century, notably Frédéric Bastiat, and later definitively refuted by William Stanley Jevons, Carl Menger, and Léon Walras during the Marginal Revolution in economics. Marginalism introduced a subjective component into the theory of value, explaining that the value of a commodity is not determined solely by any property of the commodity itself – including the labor necessary to produce it – but by the value human persons impute to it as a means to achieve their ends.
This subjective theory of value was almost universally adopted by economists, because it better described the real world. It solved the famous paradox of “value in use” and “value in exchange.” It can explain why water, necessary to human life, demands a lower market price than diamonds, which are comparatively useless. Marxists were the only notable group to resist this new theory for, as the economist Eugen v. Böhm-Bawerk exhaustively argues in Capital and Interest, the notion that employees are “exploited” by employers is only true if the value of commodities is wholly derived from labor.
Rep. Ocasio-Cortez’s account of billionaires “taking” instead of “making” assumes away the risk, uncertainty, and time accounted for in the current subjective understanding of value to engage in nineteenth-century communist sloganeering. This sort of antiquarian argument, while ridiculous, can be a catalyst to learning more about the history and development of economics. Of no value is the crass materialism involved in excusing the alleged immorality of those whom she describes as “takers” being merely the product of “this system that we live in.”
It is precisely this crass materialism – Marx’s unique contribution that the anatomy of civil society is to be found in political economy – which is most disturbing. Rep. Ocasio-Cortez paints a picture of a world of degradation and exploitation for which no one is responsible. Nearly 60 years ago Lester DeKoster, in Communism & Christian Faith, presented a Christian alternative to this bleak vision of the world:
History has meaning in the sense that man’s acts have eternal significance. History has reality in the sense that it is sustained by the providence of God and directed by his will. Both aspects of the paradox must be grasped with equal tenacity, and both must be developed with equal emphasis, despite their logical incompatibility. It is Christian experience that, having sought and found his Lord, the Christian knows that all the while it was really his Lord who sought and found him.
Viewing history, then, “under the aspect of eternity,” Christian social criticism judges economic relationships first of all in their effect upon the spiritual well-being of employer and employee, and only after that in their effect upon production and distribution. Or, again, the Christian insists that economic law shall be subject to divine law.
Piety is no substitute for technique. Economics is important, public policy is important, but technique is only ever useful if it serves free and responsible persons whose ultimate destiny is eternal.
(Photo credit: nrkbeta. CC BY-SA 2.0.)