MovieChat Forums > The Treasure of the Sierra Madre (1948) Discussion > Howard's Labor Theory Of Value.

Howard's Labor Theory Of Value.

posted 12 years ago by rmax304823
14 replies | jump to latest

In the flop house, Walter Huston explains why gold is valuable. It ain't good for nothing except making jewelry and putting into men's teeth. It's the work of the thousand men who have tried and failed to find it that makes it valuable.

That's the labor theory of value in a nut shell. The work that's gone into getting (and processing) something is what makes ANYTHING valuable. The idea was endorsed by people as otherwise varied as John Locke, Karl Marx, and Adam Smith.

Howard's analysis could be applied to anything, including refrigerators or houses. The lumber that goes into a house must be found and shaped before it's put to use. Of course suitable timber is easier to find than gold. That's why lumber costs less than gold. It takes less labor to make it available for use.

If a commodity is easy to find and available to everyone, it costs nothing. That's why we don't pay to breathe air -- unless it has been compressed (labor) and comes in cans or in rubber tubes at the gas station, then we have to pay for it because of the work that's gone into the getting of it.

[–] telegonus 12 years ago

Nice analysis of Howard the philosopher, Max. He was also an environmentalist as well, definitely a "green guy", as he insisted on putting the mountain back together (so to speak) after they were finished with their digging. He felt they owed it that much. The old boy was also a gifted natural healer, got "adopted" by an Indian (excuse me, Native American) tribe after saving one of their children. A pretty multi-talented fellow for a toothless old prospector, I'd say.

[–] kbarada 12 years ago

Some say that he found the real treasure of the Sierra Madre.

[–] rmax304823 12 years ago

Hey, reading your comment (with which I agree) just reminded me of something. Last night I had a dream involving you. We were going over some notes on movies together. Don't ask. It's curious what the aging mind will bring forth. I'm waiting to wake up next to Athena some morning, which is okay with me as long as she's in a good mood.

[–] telegonus 12 years ago

Now that's a strange one, Max.

One of my first college papers if not the first was titled The Function Of Athena In the Odyssey; and she does serve a function, as I recall, close to being the patron saint of Odysseus, who needed all the help he could get. The Greeks (ancient kind, I mean, not the gyro kind) were, quite frankly, satyrs or satyriacal (whatever). They were phallocentric to an extreme and this respect they resemble us, I mean as of the cultural revolution of the 60s and its continuance into the age of Viagra. The major difference is that they did other things, were creative, used sex wisely (and often), weren't led astray by it (so to speak) as uptight Christians and Jews are, thus they maintained their mental health, as we have not. There seems no going back to that happy time, as we still live in an age of "slave religions", as Nietzsche described the great monotheisms; and I wholly agree with him.

WTF! How did I get here? The Sierra Madre, elderly prospectors, gold fever, dreams, Athena, Greenk antiquity...

[–] rmax304823 12 years ago

You were led astray by your "affective relationships" and losing your "value relations". From Nietzsche. I think. PS: Maybe.

The best thing to do with our phallicism, which is as unhealthy as the Greeks' was tolerant, is to wait until you get a bit older. Then none of it matters. Currently everyone is tearing his or her hair out over whether a nymphomaniacal seventeen-year-old should get the morning-after pill without a scrip. Apollo and his kind were the worst thing that's ever happened to the human race.

Cordially,
Dionysius.

[–] telegonus 12 years ago

It's been a while since I read the Great Man. Some of his books I read more than once. The Birth Of Tragedy, several times.

Indeed, phallicism, if that's the right word for it, does seem to be on our minds a good deal. It seems that one can't watch television or listen to the radio without hearing an ad for some e.d. treatment.

As to Apollo, would we have medicine without him? I've always had a fondness for snakes so I have a liking for Apollo and things Apollonian.

On the other hand, in our time, the modern age, Apollonianism has metamorphosed into a kind of pan-puritanism that can mean anything censorious, right or left, and seems a kind of code word, to my way of thinking, for people with one track minds. I despise "fixed thinking", can't abide people with no appreciation for ambiguity, who never doubt or question the authority of whatever system it is they ascribe to.

I see modern "Apollonians" is people without imagination or curiosity.

[–] dannieboy20906 8 years ago

It works fine as a personal philosophy, it flops as economic analysis, and it's dangerous as a political ideology.

The best diplomat I know is a fully charged phaser bank.

[–] nutsberryfarm 8 years ago

profound. 

"Hipness is not a state of mind, it's a fact of life!" - Cannonball Adderley

[–] dannieboy20906 8 years ago

Not really, just muddle headed Marxism that was discredited as factually, logically, and socially wrong over a hundred years ago.

The best diplomat I know is a fully charged phaser bank.

[–] rj-27 8 years ago

That's the labor theory of value in a nut shell. The work that's gone into getting (and processing) something is what makes ANYTHING valuable. The idea was endorsed by people as otherwise varied as John Locke, Karl Marx, and Adam Smith.

The question unasked though, is why would someone put any amount of labor into procuring a good, or commodity? It isn't valuable simply because someone puts their time and effort into it.

My butterfly collection took years and no small amount of effort to put together. What would you be willing to pay for it should I decide to sell it? The same amount of capital that it took to mine an ounce of gold? Not bloody likely. While valuable to me personally, you probably would have no interest in owning it at all, and neither would most of the population.

It is scarcity plus desirability that makes any commodity, good or service valuable and nothing else. And gold fits that definition, and has, for millennia.

Democracy is the pathetic belief in the collective wisdom of individual ignorance. H.L. Mencken

[–] rmax304823 8 years ago

Scarcity, yes. That's why nobody cares about free air.

And you're right about there being more to desirability than just the work that's gone into producing something. YOu've put a lot into your butterfly collection but few others might be interested. It's like a wedding ring. It's valuable to the owner but it has little "market value," as the econs call it.

For something to be universally thought of as valuable, that fact -- that the thing is valuable -- needs to be agreed on by everybody. Value is bestowed on something by society at large, not by individual admiration.

It can have intrinsic value too. The Aztecs used cocoa beans as currency. If you didn't want to buy something at the market, you could grind them into chocolate. The Yurok Indians of Norther California used razor clams as currency. If you didn't spend them, you could eat them.

It's not until you reach a kind of currency that has NO intrinsic value or only a little -- like filling teeth -- that scarcity and added-value become important.

I won't give any more examples because I'll wind up doing an essay on a subject I don't know much about. So let me just say, you're right that scarcity and desirability are important. Then I'd add that labor is important too.

It's not my theory, by the way. I was just framing Howard's argument the way Karl Marx and Friedrich Engels would have translated it.

[–] rj-27 8 years ago

It's not my theory, by the way. I was just framing Howard's argument the way Karl Marx and Friedrich Engels would have translated it.

I understand. These guys were appalled by what they considered to be the exploitation of labor by businessmen who benefited by that labor, but appeared unwilling to compensate the workers in a just manner for the labor that made them rich.

Limiting the definition of value to the labor applied to achieve a desired end is flawed - as demonstrated by my butterfly example.

Maybe a better example of labor and its value (and its "exploitation" by a rich man) is supplied by none other than Charles Dickens and his "A Christmas Carol".

Bob Cratchett is a bookkeeper for a commodities dealer, Ebenezer Scrooge. Scrooge is portrayed as ripping off Cratchett by grossly underpaying him for his work. Cratchett's labor has value - that is why he is being paid a wage for it. The question is, is he underpaid, overpaid, or paid exactly what he is worth?

Question: how long would Cratchett keep on working for Scrooge if he could apply his abilities elsewhere for more money? Answer: only for as long as it took him to secure a better position. Question: so why doesn't he? Answer: because the market has more than enough of laborers with his skills that better positions are not to be had.

Conclusion: Cratchett is being paid exactly what he is worth to Scrooge. If someone else in need of Cratchett's skills came along with a better offer, Scrooge might well match it, or find another bookkeeper to replace Cratchett. Either way, the market determines the value of labor, not the individual supplying it.

Democracy is the pathetic belief in the collective wisdom of individual ignorance. H.L. Mencken

[–] rmax304823 8 years ago

I understand your reasoning. What would concern me is that there might be 50 commodity brokers in London and 5,000 laborers with Cratchett's skills. Suppose the 50 brokers got together over some port and agreed to never raise any salaries beyond a pre-defined maximum. What would the 5,000 Cratchett's be able to do?

[–] rj-27 8 years ago

Would the brokers confine their collusion to bookkeepers only, or for the entire labor force? Would they agree everyone gets the same pay, or would there be a sliding scale for skilled vs unskilled labor? Would they be in competition with other businesses beside their own, or could they isolate their collusion to their own industry?

Business men are a self interested lot, just like all of us. Commodity brokers, bankers, accountants, millery shops, and everyone else in the retail trade business would have need of someone with Cratchett's bookkeeping ability. And as such, they have to be willing to pay for it. To think that all of goods and supply service companies could collude in such a fashion, even if they wished to, stretches credibility past the breaking point.

But it does happen on smaller scales - labor unions form associations for the purposes of collective bargaining. Sometimes it works out for them, and sometimes they price themselves out of the market from outside competition...US auto manufacturers vs Japanese imports from the 70's being Exhibit A.

Bob Cratchett is always free to seek employment with whoever would hire him. He is free to get better educated, move to a more desirable location for better wages, or start his own bookkeeping/accounting business. If Bob doesn't do these things, it is because the cost of pursuing them outweighs the cost of staying put. But that is his decision to make.

Free and open markets are still the best and only means to determine fair wages and prices for labor and what it produces.

Democracy is the pathetic belief in the collective wisdom of individual ignorance. H.L. Mencken