The Labor Theory of Property and Marginal Productivity Theory

Abstract

After Marx, dissenting economics almost always used 'the labor theory' as a theory of value. This paper develops a modern treatment of the alternative labor theory of property that is essentially the property theoretic application of the juridical principle of responsibility: impute legal responsibility in accordance with who was in fact responsible. To understand descriptively how assets and liabilities are appropriated in normal production, a 'fundamental myth' needs to be cleared away, and then the market mechanism of appropriation can be understood. On the normative side, neoclassical theory represents marginal productivity theory as showing that (a metaphorical version of) the imputation principle is satisfied ('people get what they produce') in competitive enterprises. Since that shows the moral commitment of neoclassical economics to the imputation principle, the labor theory of property is presented here as the actual non-metaphorical application of the imputation principle to property appropriation. The property-theoretic analysis at the firm level shows how the neoclassical (and much heterodox) analysis in terms of 'distributive shares' wholly misframed the basic questions. Finally, the paper shows how the imputation principle (modernized labor theory of property) is systematically violated in the present wage labor system of renting persons.

Keywords: labor theory of property, responsibility, imputation principle, appropriation, whole product, labor theory of value

JEL Classification: D23, D63, J54, K11, P13