How to Debate a Marxist?

Dear U: I think the best way to deal with this Marxist guy in a debate is to cut off his argument at the knees. You do well mentioning risk and time preference, but, maybe, an even better way is to quarrel with his “surplus value” claim at the outset. This is predicated on the labor theory of value, which has been trashed in the economic literature. See below on this:

From: u
Sent: Tuesday, January 23, 2018 8:43 AM
To: Walter Block
Subject: Re: FW: fan letter from Istanbul

Dear Prof. Block,

Thanks you so much for helping me publish my article.

I wanted to ask you for your expert opinion on something. I was debating a Marxist-leaning friend. He gave me the whole “capitalists must, by definition, appropriate the surplus value produced by the worker under the name of ‘profits’ so it’s an inherently exploitative system” routine. Being a good little Austrian I told him about time preference. Plus, I added, part of the profits should also be seen as a form of “risk premium” since the capitalist risks losing his entire investment. But my friend came back at me with a rebuttal that I was not prepared for.

He said, if this were so, the profit rate of businesses with a relatively longer production/distribution/sales process would be that much higher and the wages paid to their workers would be that much lower. And vice versa. The profit rate of businesses with a relatively shorter production/distribution/sales process would be lower by just that much and the wages paid to their workers would be higher by just that much as well. He added that the exact same logic applies to my “risk premium” argument.

So, he continued, the claim that wages depended on the relative time preferences and relative risk tolerances of owners vis-a-vis workers ignored the fact that wage earners, by definition, have already relinquished any claim or title on any surplus value (profit) that they help generate. So their wages do not track their relative time preferences or risk tolerances.

Being a good little austro-libertarian, I said that both parties are still better off since relinquishing any title or claim on profits in exchange for a certain, albeit smaller, paycheck at the end of each month was a voluntary choice on the part of the worker who would have not made that choice if he had better alternatives. But again my friend made a clever comeback. He said workers never make such a choice to begin with. For instance, they will almost never be offered a portion of the profits in exchange for a smaller upfront wage because those workers who accept such a deal would (given enough time) begin to mirror the owners in accumulating enough wealth to quit work. This would shrink the work force and drive up wages. Firms who engaged in this kind of profit-sharing arrangement would find their margins squeezed and finally get bought out by their competitors who didn’t share profits with their workers and we’d be back to square one. Therefore, wages are systematically kept from rising too far above the subsistence level.

I sarcastically asked how such a thing was “systematically’ ensured. As you know, he replied, prices are determined by supply and demand and an oversupply relative to demand drives down the price. So an oversupply of labor either comes about naturally or (if the birth rate doesn’t keep up) the flood gates of immigration (both legal & illegal) are opened. Either way a steady stream of more and more people looking for employment that isn’t growing at the same rate keeps wages from rising too far above subsistence level.

How do I answer this guy?

Thanks, U

Block, 2006; Bohm-Bawerk, 1884, 2011; Cantillon, 2011; Gordon, 1991; Hoppe, 1989; Maltsev, 1993; Mises, 1981; Murphy, 2006, 2011; Reisman, 2006; Steele, 1981, 1992; Stigler, 1958; Vaughn, 1978

Block, Walter E. 2006. “Kevin Carson as Dr. Jekyll and Mr. Hyde.” The Journal of Libertarian Studies; Vol. 20 Num. 1; http://mises.org/journals/jls/20_1/20_1_4.pdf

Bohm-Bawerk, Eugen. 1959 [1884]. Capital and Interest, South Holland, IL: Libertarian Press, George D. Hunke and Hans F. Sennholz, trans., see particularly Part I, Chapter XII, “Exploitation Theory of Socialism-Communism.”

Bohm-Bawerk, Eugen. 2011. Karl Marx and the Close of His System. CreateSpace Independent Publishing Platform

Cantillon, Richard. 2011. “The Value of Labor.” October 21;
https://mises.org/library/value-labor

Gordon, David. 1991, Resurrecting Marx: the Analytical Marxist on Exploitation, Freedom and Justice. Transaction Publishers

Hoppe, Hans-Hermann. 1989. A Theory of Socialism and Capitalism (Boston/Dordrecht/London: Kluwer Academic Publishers)

Maltsev, Yuri N. 1993. Requiem for Marx. CreateSpace Independent Publishing Platform

Mises, Ludwig von [1922] 1981. Socialism: An Economic and Sociological Analysis. Translated by J. Kahane. Indianapolis: Liberty Fund; http://mises.org/books/socialism/contents.aspx

Murphy, Robert P. 2006. “The Labor Theory of Value: A Critique of Carson’s Studies in Mutualist Political Economy.” The Journal of Libertarian Studies; Vol. 20 Num. 1; http://mises.org/journals/jls/20_1/20_1_3.pdf

Murphy, Robert P. 2011. “Problems with the Cost Theory of Value.” May 23; https://mises.org/library/problems-cost-theory-value

Reisman, George. 2006. “Freedom is Slavery: Laissez-Faire Capitalism is Government Intervention: A Critique of Kevin Carson’s Studies in Mutualist Political Economy.” The Journal of Libertarian Studies, Vol. 20 Num. 1; http://mises.org/journals/jls/20_1/20_1_5.pdf

Steele, David Ramsay. 1981. “Posing the Problem: The Impossibility of Economic Calculation Under Socialism,” The Journal of Libertarian Studies, Vol. V, No. 1, Winter, pp. 7-22; http://www.mises.org/journals/jls/5_1/5_1_2.pdf

Steele, David Ramsay. 1992. From Marx to Mises: Post Capitalist Society and the Challenge of Economic Calculation, La Salle, IL: Open Court

Stigler, George J.1958. “Ricardo and the 93 Per Cent Labor Theory of Value.” American Economic Review. Vol. 48, June, pp. 357-367.

Vaughn, Karen I., 1978, “John Locke and the labor theory of value,” The Journal of Libertarian Studies, Vol. 2, No. 4, Winter, pp. 311-325

The Best of Walter E. Block