In economics, one of the central questions is: what should goods and services be priced at? The answer that generally works is “God knows but since He isn’t telling us by divine revelation, supply and demand will sort this out better than human beings can.” A competing theory is the “labour theory of value.” Like most bad theories, there are two versions of it: the one that people use, and the technical definition they fall back on when people point out how stupid the version they use is. Sometimes called a “Motte and Bailey fallacy,” this sort of thing comes up a lot whenever people want a conclusion that they can’t defend.

The popular version of the labor theory of value is that a thing’s value is the amount of labor that went into making it. This is ridiculously stupid (“if I pay you to dig a hole, I won’t pay you more because you used a spoon”), so when it is challenged, it tends to get redefined to Marx’s “socially necessary labor time.” In theory this is something along the lines the average amount of time workers currently take to produce something, or some such. It’s specifically defined in such a way as to be not rigorously computable. Its only real function is to give the labor theory of value sufficient wiggle room to get out of simple examples of how stupid it is.

One of the problems with stupid ideas is that, when people advance them, there isn’t anything to take seriously. This can become something of a defense for the person who advances it, since the only open question when an obviously false idea is put forward is, “why would a person ask me to believe something that he obviously doesn’t?” He can then retort with how you should consider the argument, not resort to ad-hominem fallacies. The basic problem is that much of the norms of civil discourse assume that all parties are acting in good faith. When someone does not act in good faith but lies and says that he is, the norms of civil discourse have to way of handling this.

That’s actually not true; it’s only true of the norms of civil discourse in the modern context. The context for which the norms of civil discourse originated relied very heavily upon a man’s reputation, which would be gravely harmed by propounding nonsense. In modern contexts, people do not have reputations and it is often considered bad form to consider them even if a person does have them. This is simply not a workable system; no civilization will survive where people have the unlimited right to waste the time of others.

The solution to this, by the way, is not any kind of censorship. It’s the restoration of taking into account reputation into discourse. I don’t mean ignoring an argument in favor of considering a reputation, but rather that the benefit of doubt is given on the basis of a person’s reputation. If a man makes a coherent argument from premises I accept, then I should consider his argument on its merits, because it stands only on the premises. The problem comes in when—as often happens—he makes it on the basis of premises I don’t know the truth value of, or invokes sub-arguments I’ve never heard of or considered. In these cases I cannot consider the argument on its own, but must do my own research, which may cost me significant time and effort. In that case, reputation is a very useful guide as to whether this time and effort would be well-spent.

When it comes to something like the labour theory of value, when someone will not present you with the arguments themselves but assures you that Marx laid this all out well if only you’ll go and read his books, the best thing to do is to decline to do this work and to assume he is just another in a long line of liars. You will not convince the Marxist this way, of course, but you weren’t going to do that anyway. You can’t argue a con-man into honesty.

“Oh, it’s so terrible that you just dismiss his arguments without considering them!” cries the pearl-clutching classical liberal.

No, that’s not what I did. I showed how the argument he actually put forward was demonstrably false. What I dismissed without consideration are the arguments which he did not put forward but assured me he could if only he cared to, but instead instructed me to go research. Is it possible he does in fact know of arguments he will not present, but I would find compelling if I spent the many hours involved in researching them for myself? Yes. Well, no, actually.

The just price of a good or service is determined both by the good that it can bring and also by the difficulty in obtaining it. A few minutes spent thinking about the topic makes that clear. If a good or service does no one any good, it doesn’t matter how hard it is to obtain, its just price is not high. If a thing brings great value but is very easy to obtain, its just price is low. If two things are easy to obtain and one brings more good than another, its just price is higher. This is complicated by the fact that a good or service may bring different amounts of good to different people, and thus the just price for each of them may be different. (E.g. Piano lessons are worthless to a person who does not want to learn piano, but may be valuable to one who does.)

Now, someone can assure me that there is some sufficiently complicated version of the labor theory of value which does not contradict this, but this can be of, at most, academic interest because this complicated version can’t do anything that a communist wants it to do. Is it possible that I’ve made some mistake and there really is a complicated version of the labour theory of value which legitimately points to a different system? Yes. It’s also possible that we’re all mistaken and the world really is flat, too. This kind of universal defeater can’t consistently be used without wasting everyone’s time and the selective use of a universal defeater is unprincipled. So for me to trust him when he tells me that he’s got something really good but can’t reveal it right now, I’m going to need some sort of reason to trust him like, for example, people that I trust telling me that he’s trustworthy.

That is, if someone I don’t know is going to ask me to trust him, he better have a reputation to back that up.

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P.S. The main reason people propound the labour theory of value is in order to claim that factory owners don’t provide any value but steal it all from the people who work for them. Since owning equipment is taking on risk (as well as the obligation to keep it in good repair) that most people don’t want to take on, this is false. This makes any attempt to justify some sort of double-complicated ultra-secret labor theory of value twice as presumptively a waste of time. There can’t be such a theory, and even if there was, it couldn’t do what they want.

There’s no reason to venture into the jungle to find a mythical train that doesn’t go anywhere.