Labor-time calculation

{{Short description|Economic calculation of value based on labor time}}

{{About|a method of economic calculation|the alternative to money and currency|Labour voucher|}}

{{Use American English|date=September 2018}}

{{Socialism sidebar|Ideas}}

Labor-time calculation is a method of economic calculation that uses labor time as the basic unit of accounting and valuation. This method of calculation was advocated by the economists Otto Bauer, Helene Bauer and {{ill|Otto Leichter|de}} as an alternative to calculation in kind for a socialist economy.{{cite book |last= De Soto|first=Jesús Huerta|author-link=Jesús Huerta de Soto|title= Socialism, Economic Calculation and Entrepreneurship |publisher= Edward Elgar Publishing|date=July 2010|isbn= 978-1849800655|page = 132|quote= The author who most convincingly defended the claim that economic calculation in labor hours is possible was Otto Leichter (1923). Paradoxically, in this book, Leichter fiercely criticizes proposals of calculation in kind. His ideas were later developed and refined by Walter Schiff (1932).}} Otto Leichter criticized in-kind calculation on the basis that rational accounting required a general unit for comparing costs of heterogeneous goods.

The basis for labor-time calculation is found in Karl Marx's analysis of value in capitalism. However, Marx was vehemently opposed to any proposal for using labor-time as the basis for socialist calculation because his concept of socially necessary labor time was a conceptual framework for understanding and analyzing value in capitalism. In Marx's view socialism would operate according to its own economic "laws of motion" distinct from those of capitalism.{{cite book |last= Steele|first= David Ramsay |author-link=David Ramsay Steele|title= From Marx to Mises: Post Capitalist Society and the Challenge of Economic Calculation |publisher= Open Court|date=September 1999|isbn= 978-0875484495|pages = 148–150|quote= Marx is full of scorn for the proposal, advanced by some socialists during his lifetime, to arrange things so that commodities would actually exchange in proportion to the labor-time embodied in them.}}