Where do profits come from?
). Kropotkin’s rejection of the LTV is based on the fact that, within capitalism, “[v]alue in exchange and the necessary labour are not proportional to each other” and so “Labour is not the measure of Value.” [Op. Cit., p. 91] Which is, of course, true under capitalism. As Proudhon (and Marx) argued, under capitalism (due to existence of capitalist profit, rent and interest) prices could not be proportional to the average labour required to produce a commodity (“Wherever labour has not been socialised, — that is, wherever value is not synthetically determined, — there is irregularity and dishonesty in exchange.” [Proudhon, Op. Cit., p. 128]) Only when the rate of profit is zero could prices directly reflect labour values (which is, of course, what Proudhon and Tucker desired — “Socialism . . . extends its [“that labour is the true measure of price”] function to the description of society as it should be, and the discovery of the means of making it what it should be.” [Tucker, The In
