The Labor Theory of Property and Heterodox Economics
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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. The property-theoretic analysis at the firm level shows how the neoclassical (and much heterodox) analysis in terms of “distributive shares” wholly misframes the basic questions. Finally, the paper shows how the responsibility principle (modernized labor theory of property) is systematically violated in the present wage labor system of renting persons. The paper can be seen as taking up the recent challenge posed by Donald Katzner for a dialogue between neoclassical and heterodox microeconomics. Katzner argues that some of the non-property-theoretic heterodox critiques of neoclassical microeconomics are objectively invalid, but he ignores the property-theoretic analysis (e.g., the labor theory of property) which often seems to be as unknown to heterodox as to orthodox economics.