{"id":244378,"date":"2023-09-18T12:00:33","date_gmt":"2023-09-18T11:00:33","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=244378"},"modified":"2023-09-16T06:12:48","modified_gmt":"2023-09-16T05:12:48","slug":"what-every-child-should-know-about-marxs-theory-of-value","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2023\/09\/what-every-child-should-know-about-marxs-theory-of-value\/","title":{"rendered":"What Every Child Should Know about Marx\u2019s Theory of Value"},"content":{"rendered":"

September 2023<\/em> – The law of value works in mysterious ways. For some Marxists, it underlies everything we need to know about capitalism.1<\/sup><\/a> But, just as Karl Marx claimed he was not a Marxist, so too might he have said, \u201cthat\u2019s not my law of value.\u201d<\/p>\n

\"\"<\/a><\/p>\n

\n

It Is All about the Allocation of Labor<\/h2>\n

“Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society\u2019s aggregate labour.”<\/em><\/p>\n

\u2014Karl Marx<\/span>2<\/sup><\/a><\/p>\n<\/blockquote>\n

Every child in Marx\u2019s day might have heard about Robinson Crusoe. That child might have heard that on his island Robinson had to work if he was not to perish, that he had \u201cneeds to satisfy.\u201d To this end, Robinson had to \u201cperform useful labours of various kinds\u201d: he made means of production (tools), and he hunted and fished for immediate consumption. These were diverse functions, but all were \u201conly different modes of human labour,\u201d his labor. From experience, he developed Robinson\u2019s Rule: \u201cNecessity itself compels him to divide his time with precision between his different functions.\u201d Thus, he learned that the amount of time spent on each activity depended upon its difficulty\u2014that is, how much labor was necessary to achieve the desired effect. Given his needs, he learned how to allocate his labor in order to survive.3<\/sup><\/a><\/p>\n

As it was for Crusoe, so it is for society. Every society must allocate its aggregate labor in such a way as to obtain the amounts of products corresponding to the differing amounts of its needs. As Marx commented, \u201cIn so far as society wants to satisfy its needs, and have an article produced for this purpose, it has to pay for it.\u2026 It buys them with a certain quantity of the labour-time that it has at its disposal.\u201d4<\/sup><\/a> It must allocate \u201cdiffering and quantitatively determined\u201d amounts of labor to the production of goods and services for direct consumption (Department II) and a similarly determined quantity of labor for the production and reproduction of means of production (Department I).<\/p>\n

To ensure the reproduction of a particular society, there must be enough labor available for the reproduction of the producers\u2014both directly and indirectly (for example, in Departments II and I, respectively)\u2014based upon their existing level of needs and the productivity of labor. This includes not only labor in organized workplaces, which produce particular material products and services, but also necessary labor allocated to the home and community and to sites where the education and health of workers are maintained. Every society, too, must allocate labor to what we may call Department III, a sector that produces means of regulation, and may contain institutions such as the police, the legal authority, the ideological and cultural apparatus, and so on.<\/p>\n

In addition to the labor required to maintain the producers, in every class society a quantity of society\u2019s labor is necessary if those who rule are to be reproduced. Thus, the process of reproduction requires the allocation of labor not only to the production of articles of consumption, means of production, and the particular means of regulation, but, ultimately, to the production and reproduction of the relations of production themselves.<\/p>\n

\"\"<\/a>

Michael Lebowitz – LinkedIn<\/p><\/div>\n

Reproduction of a Socialist Society<\/h2>\n

Consider a socialist society\u2014\u201can association of free [individuals], working with the means of production held in common, and expending their many different forms of labour-power in full self-awareness as one single social labour force.\u201d5<\/sup><\/a> Having identified the differing amounts of needs it wishes to satisfy, this society of associated producers allocates its differing and quantitatively determined labor through a conscious process of planning. In this respect, it follows Robinson\u2019s Rule: it apportions its aggregate labor \u201cin accordance with a definite social plan [that] maintains the correct proportion between the different functions of labour and the various needs of the associations.\u201d6<\/sup><\/a><\/p>\n

The premise of this process of planning is a particular set of relations in which the associated producers recognize their interdependence and engage in productive activity upon this basis. \u201cA communal production, communality, is presupposed as the basis of production.\u201d Transparency and solidarity among the producers, in short, underlie the \u201corganization of labour\u201d in the socialist society with the result that productive activity is consciously \u201cdetermined by communal needs and communal purposes.\u201d7<\/sup><\/a> The reproduction of society here \u201cbecomes production by freely associated [producers] and stands under their conscious and planned control.\u201d8<\/sup><\/a><\/p>\n

To identify their needs and their capacity to satisfy those needs, the producers begin with institutions closest to them\u2014in communal councils, which identify changes in the expressed needs of individuals and communities, and in workers\u2019 councils, where workers explore the potential for satisfying local needs themselves. Those needs and capacities are transmitted upward to larger bodies and ultimately consolidated at the level of society as a whole, where society-wide choices need to be made. On the basis of these decisions (which are discussed by the associated producers at all levels of society), the socialist society directly allocates its labor in accordance with its needs both for immediate and future satisfaction.<\/p>\n

Driving this process is \u201cthe worker\u2019s own need for development,\u201d \u201cthe absolute working-out of his creative potentialities,\u201d \u201cthe all-around development of the individual\u201d\u2014the development of what Marx called \u201crich\u201d human beings.9<\/sup><\/a> This goal is understood as indivisible: it is not consistent with significant disparities among members of society. In the words of the Communist Manifesto<\/i>, \u201cthe free development of each is the condition for the free development of all.\u201d10<\/sup><\/a> Accordingly, given the premise of communality and solidarity, this socialist society allocates its labor to remove deficits inherited from previous social formations. The socialist society, in short, is \u201cbased on the universal development of individuals and on the subordination of their communal, social productivity as their social wealth.\u201d11<\/sup><\/a><\/p>\n

Conscious planning\u2014a visible hand, a communal hand\u2014is the condition for building a socialist society. This process does more, however, than produce the so-called correct plan. Importantly, it also produces and reproduces the producers themselves and the relations among them. What Marx called \u201crevolutionary practice\u201d (\u201cthe simultaneous changing of circumstances and human activity or self-change\u201d) is central. Every human activity produces two products: the change in circumstances and the change in the actors themselves. In the particular case of socialist institutions, the labor-time spent in meetings to develop collective decisions not only produces solutions that draw upon the knowledge of all those affected, but it is also an investment that develops the capacities of all those making those decisions. It builds solidarity locally, nationally, and internationally. Those institutions and practices, in short, are at the core of the regulation of the producers themselves (Department III activity). They are essential for the reproduction of socialist society.12<\/sup><\/a><\/p>\n

\"\"<\/a>

CIRCA 1865: Karl Marx (1818-1883), philosopher and German politician.
(Photo by Roger Viollet Collection\/Getty Images)<\/p><\/div>\n

Reproduction of a Society Characterized by Commodity Production<\/h2>\n

But what about a society that is not characterized by communality, a society marked instead by separate, autonomous actors? Such a society\u2019s essential premise is the separation of independent producers.13<\/sup><\/a> Rather than a community of producers, there is a collection of autonomous property owners who depend for satisfaction of their needs upon the productive activity of other owners. \u201cAll-around dependence of the producers upon one another\u201d exists, but theirs is a \u201cconnection of mutually indifferent persons.\u201d Indeed, \u201ctheir mutual interconnection\u2014here appears as something alien to them, autonomous, as a thing.\u201d Yet, if these \u201cindividuals who are indifferent to one another\u201d do not understand their connection, how does this society go about allocating its \u201cdiffering and quantitatively determined amounts of society\u2019s aggregate labour\u201d to satisfy its \u201cdiffering amounts of needs\u201d?14<\/sup><\/a><\/p>\n

Obviously, such a society does not utilize Robinson\u2019s Rule: it cannot directly allocate its aggregate labor in accordance with the distribution of its needs. \u201cOnly when production is subjected to the genuine, prior control of society,\u201d Marx pointed out, \u201cwill society establish the connection between the amount of social labor-time applied to the production of particular articles, and the scale of the social need to be satisfied by these.\u201d15<\/sup><\/a> Although the application of Robinson\u2019s Rule is not possible, its function remains. As Marx commented, those simple and transparent relations set out for Robinson Crusoe \u201ccontain all the essential determinants of value.\u201d16<\/sup><\/a> In particular, the \u201cnecessity of the distribution of social labour in specific proportions\u201d remains.<\/p>\n

The necessary law of the proportionate allocation of aggregate labor, Marx insisted, \u201cis certainly not abolished by the specific form of social production.\u201d Only the form<\/i> of that law changes. As Marx wrote to Ludwig Kugelmann, \u201cthe only thing that can change, under historically differing conditions, is the form<\/i> in which those laws assert themselves.\u201d In the commodity-producing society, the form taken by this necessary law is the law of value. \u201cThe form in which this proportional distribution of labour asserts itself in a state of society in which the interconnection of social labour expresses itself as the private exchange<\/i> of the individual products of labour, is precisely the exchange value<\/i> of these products.\u201d17<\/sup><\/a><\/p>\n

Since the allocation of society\u2019s labor embedded in commodities is \u201cmediated through the purchase and sale of the products of different branches of industry\u201d (rather than through \u201cgenuine, prior control\u201d by society), however, the immediate effect of the market is a \u201cmotley pattern of distribution of the producers and their means of production.\u201d18<\/sup><\/a> Yet, this apparent chaos sets in motion a process by which the necessary allocation of labor will tend to emerge. In simple commodity production, some producers will receive revenue well above the cost of production; others will receive revenue well below it. Assuming it is possible, producers will shift their activity\u2014that is, they will show a tendency for entry and exit. An equilibrium, accordingly, would tend to emerge in which there is no longer a reason for individual commodity producers to move. Through such movements, the various kinds of labor \u201care continually being reduced to the quantitative proportions in which society requires them.\u201d<\/p>\n

In short, although \u201cthe play of caprice and chance\u201d means that the allocation of labor does not correspond immediately to the distribution of needs as expressed in commodity purchases, \u201cthe different spheres of production constantly tend towards equilibrium.\u201d19<\/sup><\/a> Through the law of value, labor is allocated in the necessary proportions in the commodity-producing society. In the same way as \u201cthe law of gravity asserts itself,\u201d we see that \u201cin the midst of the accidental and ever-fluctuating exchange relations between the products, the labour-time socially necessary to produce them asserts itself as a regulative law of nature.\u201d20<\/sup><\/a> There is a \u201cconstant tendency on the part of the various spheres of production towards equilibrium\u201d precisely because \u201cthe law of the value of commodities ultimately determines how much of its disposable labour-time society can expend on each kind of commodity.\u201d21<\/sup><\/a><\/p>\n

Can that equilibrium, in which labor is allocated to satisfy the needs of society, be reached in reality<\/i>? If we think of a society characterized by simple commodity production, equilibrium occurs when all commodity producers receive the equivalent of the labor contained in their commodities. In fact, however, there are significant barriers to exit and entry: the particular skills and capabilities that individual producers possess will not be easily shifted to the production of differing commodities. Indeed, this process might take a generation to occur, in which case producers in some spheres will appear privileged for extended periods.<\/p>\n

In the case of capitalist commodity production\u2014the subject of Capital<\/i>\u2014the individual capitalist \u201cobeys the immanent law, and hence the moral imperative, of capital to produce as much surplus-value as possible.\u201d22<\/sup><\/a> Accordingly, there is a \u201ccontinuously changing proportionate distribution of the total social capital between the various spheres of production\u2026continuous immigration and emigration of capitals.\u201d23<\/sup><\/a> Equilibrium here occurs when all producers obtain an equal rate of profit on their advanced capital for means of production and labor power. This tendency \u201chas the effect of distributing the total mass of social labour time among the various spheres of production<\/i> according to the social need.\u201d24<\/sup><\/a> However, here again there is an obstacle to the realization of equilibrium\u2014the existence of fixed capital embedded in particular spheres does not permit easy exit and entry.<\/p>\n

Nevertheless, for Marx, the law of value (the process by which labor is allocated in the necessary proportions in capitalism) operates more smoothly as capitalism develops. Capital\u2019s \u201cfree movement between these various spheres of production as so many available fields of investment\u201d has as its condition the development of the credit and banking system. Only as money-capital does capital really \u201cpossess the form in which it is distributed as a common element among these various spheres, among the capitalist class, quite irrespective of its particular application, according to the production requirements of each particular sphere.\u201d25<\/sup><\/a> In its money-form, capital is abstracted from particular employments. Only in money-capital, in the money-market, do all distinctions as to the quality of capital disappear: \u201cAll particular forms of capital, arising from its investment in particular spheres of production or circulation, are obliterated here. It exists here in the undifferentiated, self-identical form of independent value, of money.\u201d26<\/sup><\/a><\/p>\n

Equalization of profit rates \u201cpresupposes the development of the credit system, which concentrates together the inorganic mass of available social capital vis-\u00e1-vis<\/i> the individual capitalist.\u201d27<\/sup><\/a> That is, it presupposes the domination of finance capital: bankers \u201cbecome the general managers of money capital,\u201d which now appears as \u201ca concentrated and organized mass, placed under the control of the bankers as representatives of the social capital in a quite different manner to real production.\u201d28<\/sup><\/a><\/p>\n

Marx\u2019s Auto-Critique<\/h2>\n

There is no better way to understand Marx\u2019s theory of value than to see how he responded to critics of Capital<\/i>. With respect to a particular review, Marx commented to Kugelmann in July 1868 that the need to prove the law of value reveals \u201ccomplete ignorance both of the subject under discussion and of the method of science.\u201d Every child, Marx here continued, knows that \u201cthe amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society\u2019s aggregate labour.\u201d How could the critic not see that \u201cIt is SELF-EVIDENT that this necessity<\/i> of the distribution<\/i> of social labour in specific proportions is certainly not abolished by the specific form<\/i> of social production!\u201d29<\/sup><\/a> Similarly, answering Eugen D\u00fchring\u2019s objection to his discussion of value, Marx wrote to Frederick Engels in January 1868 that \u201cactually, no form<\/i> of society can prevent the labour time at the disposal of society from regulating production in ONE WAY OR ANOTHER.\u201d30<\/sup><\/a> That was the point: in a commodity-producing society, how else<\/i> could labor be allocated\u2014except by the market!<\/p>\n

Although Marx was clearer in these letters on this point than in Capital<\/i>, he was transparent there in his critique of classical political economy on value and money. In contrast to vulgar economists who did not go beneath the surface, the classical economists (to their credit) had attempted \u201cto grasp the inner connection in contrast to the multiplicity of outward forms.\u201d But they took those inner forms \u201cas given premises\u201d and were \u201cnot interested in elaborating how those various forms come into being.\u201d31<\/sup><\/a> The classical economists began by explaining relative value by the quantity of labor-time, but they \u201cnever once asked the question why this content has assumed that particular form, that is to say, why labour is expressed in value, and why the measurement of labour by its duration is expressed in the value of the product.\u201d32<\/sup><\/a> Their analysis, in short, started in the middle.<\/p>\n

This classical approach characterized Marx\u2019s own early thought. It is important to recognize that Marx\u2019s critique was an auto-critique, a critique of views he himself had earlier accepted. In 1847, Marx declared that \u201c[David] Ricardo\u2019s theory of values is the scientific interpretation of actual economic life.\u201d33<\/sup><\/a> In The Principles of Political Economy<\/i>, Ricardo had argued that \u201cthe value of a commodity\u2026depends on the relative quantity of labour which is necessary for its production.\u201d By this, he meant \u201cnot only the labour applied immediately to commodities,\u201d but also the labor \u201cbestowed on the implements, tools, and buildings, with which such labour is assisted.\u201d Accordingly, relative values of differing commodities were determined by \u201cthe total quantity of labour necessary to manufacture them and bring them to market.\u201d This was \u201cthe rule which determines the respective quantities of goods which shall be given in exchange for each other.\u201d34<\/sup><\/a><\/p>\n

Marx followed Ricardo in his early work. \u201cThe fluctuations of supply and demand,\u201d Marx wrote in Wage Labour and Capital<\/i>, \u201ccontinually bring the price of a commodity back to the cost of production\u201d (that is to say, to its \u201cnatural price\u201d). This was Ricardo\u2019s theory of value: the \u201cdetermination of price by the cost of production is equivalent to the determination of price by the labour time necessary for the manufacture of a commodity.\u201d Further, this rule applied to the determination of wages as well, which were \u201cdetermined by the cost of production, by the labour time necessary to produce this commodity\u2014labour<\/i>.\u201d35<\/sup><\/a> The same point was made in the Communist Manifesto<\/i> in 1848: \u201cthe price of a commodity, and therefore also of labour, is equal to its cost of production.\u201d36<\/sup><\/a><\/p>\n

In the 1850s, however, Marx began to develop a new understanding. In the notebooks written in 1857\u201358, which constitute the Grundrisse<\/i>, he began his critique of classical political economy. Marx concluded the Grundrisse<\/i> by announcing that the starting point for analysis had to be not value (as Ricardo began), but the commodity, which \u201cappears as unity of two aspects\u201d\u2014use value and exchange value.37<\/sup><\/a> The commodity and, in particular, its two-sidedness is the starting point for his critique and how he begins both his Contribution to the Critique of Political Economy<\/i> (1859) and Capital<\/i>.38<\/sup><\/a><\/p>\n

The Best Points in Capital<\/i><\/h2>\n

The law of value as a \u201cregulative law of nature\u201d was not one of the best points in Capital<\/i>, nor one of the \u201cfundamentally new elements in the book.\u201d After all, if the law of value is the tendency of market prices to approach an equilibrium in the same way as \u201cthe law of gravity asserts itself,\u201d then this \u201cregulative law of nature\u201d was already present in Ricardo.<\/p>\n

Rather, what Marx argued in Capital<\/i> is that classical political economy did not understand value<\/i>. \u201cAs regards value in general, classical political economy in fact nowhere distinguishes explicitly and with a clear awareness between labour as it appears in the value of a product, and the same labour as it appears in the product\u2019s use value.\u201d39<\/sup><\/a> But that distinction, Marx declared to Engels in August 1867, is \u201cfundamental to all<\/i> understanding of the FACTS\u201d! That \u201ctwo-fold character of labour<\/i>,\u201d he indicated, is one of the \u201cbest points in my book\u201d (and indeed, the best point in the first volume of Capital<\/i>).40<\/sup><\/a><\/p>\n

Marx made the same point in the first edition of the first volume of Capital<\/i> about the two-fold character of labor in commodities: \u201cthis aspect, which I am first to have developed in a critical way, is the starting point upon which comprehension of political economy depends.\u201d41<\/sup><\/a> Writing again to Engels in January 1868, Marx described his analysis of the double character of the labor represented in commodities as one of the \u201cthree fundamentally new elements of the book.\u201d All previous economists having missed this, they were \u201cbound to come up against the inexplicable everywhere. This is, in fact, the whole secret of the critical conception.\u201d42<\/sup><\/a><\/p>\n

The secret of the critical conception, the starting point for comprehension of political economy, the basis for all understanding of the facts\u2014what made the revelation of the two-fold character of labor in commodities so important? <\/i>Very simply, it is the recognition that actual, specific, concrete labor, all those hours of real labor that have gone into producing a particular commodity, in themselves have nothing to do with its value<\/i>. You cannot add the hours of the carpenter\u2019s labor to the labor contained in consumed means of production and come up with the value of the carpenter\u2019s commodity. That specific labor, rather, has gone into the production of a thing for use, also known as a use value<\/i>. Further, you cannot explain relative values by counting the quantity of specific labor contained in separate use values. If you do not distinguish clearly between the two-fold aspects of labor in the commodity, you have not understood Marx\u2019s critique of classical political economy.<\/p>\n

Marx\u2019s Labor Theory of Money<\/h2>\n

\u201cWe have to perform a task,\u201d Marx announced,<\/a> \u201cnever even attempted by bourgeois economics.\u201d43<\/sup><\/a> That task was to develop his theory of money\u2014in particular, to reveal that money is the social representative of the aggregate labor in commodities. For this, Marx demonstrated that (1) the concept of money is latent in the concept of the commodity and (2) that money represents the abstract labor in a commodity and that the manifestation of the latter, its only<\/i> manifestation, is the price of the commodity.<\/p>\n

If adding up the hours of concrete labor to produce a commodity does not reveal its value, what does? Nothing, if we are considering a single commodity. \u201cWe may twist and turn a single commodity as we wish; it remains impossible to grasp as a thing possessing value.\u201d44<\/sup><\/a> We can approach grasping the value of a commodity only by considering it in a relation<\/i>. The simplest (but undeveloped) form of this relation is as an exchange value\u2014the value of commodity A is equal to x<\/i> units of commodity B, where B is a use value. We always knew A as a use value but now we know the value<\/i> of A from its equivalent in B. (If we reverse this, we would say the value of B is equal to 1\/x<\/i> units of A, and here A is the equivalent.) The second commodity, the equivalent, is a mirror for the value in the first commodity. It is through this social relation that we may grasp the commodity as something possessing value.<\/p>\n

Having established that the value of a commodity is revealed through its equivalent, Marx logically proceeds step-by-step to establish the existence of a commodity that serves as the equivalent for all<\/i> commodities\u2014that is, is the general form of value<\/i>. It is a mini-step from there to reveal the monetary form of value<\/i>: money as the universal equivalent, money as the representative of value.45<\/sup><\/a> In short, once we begin to analyze a commodity-exchanging society, we are led to the concept of money. This is what Marx identifies as his task: <\/a>\u201cWe have to show the origin of this money form, we have to trace the development of this expression of value relation of commodities from the simplest, almost imperceptible outline to the dazzling money form. When this has been done, the mystery of money will immediately disappear.\u201d46<\/sup><\/a> But this was a closed book to the classical economists; \u201cRicardo,\u201d Marx commented years later, \u201cin fact only concerned himself with labour as a measure of value-magnitude<\/i> and therefore found no connection between his value-theory and the essence of money.\u201d47<\/sup><\/a><\/p>\n

But what is money? To understand money, we need to return to the two-fold character of labor in commodities, that point upon which comprehension of political economy depends. We know that concrete, specific labor produces specific use values. Insofar as labor is concrete, we cannot compare commodities containing different qualities of labor. But we can compare them if we abstract from their specificities<\/i>\u2014that is, consider them as containing labor in general, abstract labor, \u201cequal human labour, the expenditure of identical human labour power.\u201d48<\/sup><\/a> The aggregate labor of society is a composite of many \u201cdifferent modes of human labour\u201d: \u201cthe completed or total form of appearance of human labour is constituted by the totality of its particular forms of appearance.\u201d49<\/sup><\/a> That \u201cone homogeneous mass of human labour power,\u201d that universal, uniform, abstract, social labor in general, \u201chuman labour pure and simple,\u201d enters into each commodity.50<\/sup><\/a><\/p>\n

Think about the aggregate labor in commodities as so-called jelly labor, as made up of a number of identical, homogeneous units. A certain amount of this jelly labor goes into each commodity. The value of a commodity is determined by how much of this jelly labor\u2014how much homogeneous, universal, abstract labor, that common \u201csocial substance\u201d\u2014it contains. Obviously, we cannot add up jelly labor simply, as we might attempt for concrete labor. How, then, can we see the value of a commodity? We have answered that already.<\/i> The value of a commodity (that is, the homogeneous, general, abstract labor in the commodity) is represented by the quantity of money, which is its equivalent. Indeed, the only<\/i> form in which the value of commodities can manifest itself is the money-form.<\/p>\n

Every society obtains the amounts of products corresponding to the differing amounts of its needs by devoting a portion of the available labor time to its production. As noted above, \u201cin so far as society wants to satisfy its needs, and have an article produced for this purpose, it has to pay for it\u2026[and] it buys them with a certain quantity of the labour-time that it has at its disposal.\u201d51<\/sup><\/a> How do we satisfy our needs within capitalism? We buy them with the representative<\/i> of the total social labor in commodities\u2014money.<\/p>\n

Ignorance both of the Subject under Discussion and of the Method of Science<\/h2>\n

As Michael Heinrich writes, \u201cmany Marxists have difficulties understanding Marx\u2019s analysis.\u201d Like bourgeois economists, \u201cthey attempt to develop a theory of value without reference to money.\u201d52<\/sup><\/a> It is a bit difficult to understand why, however, given Marx\u2019s criticisms of classical political economy about this very point. Ricardo, Marx commented, had not understood \u201cor even raised as a problem\u201d the \u201cconnection between value, its immanent measure\u2014i.e., labour-time\u2014and the necessity for an external<\/i> measure of the values of commodities.\u201d Ricardo did not examine abstract labor, the labor that \u201cmanifests itself in exchange values\u2014the nature<\/i> of this labour. Hence he does not grasp the connection of this labour<\/i> with money<\/i> or that it must assume the form of money<\/i>.\u201d53<\/sup><\/a><\/p>\n

That is why Marx undertook his task \u201cto show the origin of this money form\u201d and to solve \u201cthe mystery of money,\u201d a task \u201cnever even attempted by bourgeois economics.\u201d We need to understand the nature of money, and how we move from value directly to money. As he explained in chapter 10 of the third volume of Capital<\/i>:<\/p>\n

in dealing with money we assumed that commodities are sold at their values; there was no reason at all to consider prices that diverged from values, as we were concerned simply with the changes of form which commodities undergo when they are turned into money and then transformed back from money into commodities again. As soon as a commodity is in any way sold, and a new commodity bought with the proceeds, we have the entire metamorphosis before us, and it is completely immaterial here whether the commodity\u2019s price is above or below its value. The commodity\u2019s value remains important as the basis, since any rational understanding of money has to start from this foundation, and price, in its general concept, is simply value in the money form.54<\/sup><\/a><\/p><\/blockquote>\n

To understand why Marx felt it was essential to solve the mystery of money, it helps to understand his method of dialectical derivation. Like G. W. F. Hegel, upon examining particular concepts, he found that they contained a second term implicitly within them; he proceeded then to consider the unity of the two concepts, thereby transcending the one-sidedness of each and moving forward to richer concepts. In this way, Marx analyzed the commodity and found that it contained latent within it the concept of money, the independent form of value\u2014and that the commodity differentiated into commodities and money. Further, considering that relation of commodities and money from all sides, Marx uncovered the concept of capital.55<\/sup><\/a><\/p>\n

The concept of capital, in short, does not drop from the sky. It is marked by the preceding categories. Since money is the representative of abstract labor, of the homogeneous aggregate labor of society, capital must be understood as an accumulation<\/i> of homogeneous, abstract labor. By understanding money as latent in commodities, we reject the picture of money juxtaposed externally to commodities as in classical political economy and therefore recognize that abstract labor is always present in the concept of capital.<\/p>\n

However, all accumulations of abstract labor are not capital. For them to correspond to the concept of capital, they must be driven by the impetus to grow and must have self-expanding value (i.e., M-C-M<\/span>\u00b4<\/span>). How is that possible, however, on the assumption of exchange of equivalents? Where does the additional value, the surplus value, come from? The two questions express the same thing: in one case, in the form of objectified labour; in the other, in the form of living, fluid labor.56<\/sup><\/a><\/p>\n

The answer to both is that, with the availability of labor power as a commodity, capital can now secure additional (abstract) labor. This is not because of some occult quality of labor power, but, because by purchasing labor power, capital now is in a relation of \u201csupremacy and subordination\u201d with respect to workers, a relation that brings with it the \u201ccompulsion<\/i> to perform surplus labour<\/i>.\u201d57<\/sup><\/a> That compulsion, inherent in capitalist relations of production, is the source of capital\u2019s growth.<\/p>\n

Let us consider absolute surplus value by focusing upon \u201cliving, fluid labor.\u201d The value of labor power, or necessary labor, at any given point represents the share of aggregate social labor that goes to workers. The remaining social labor share is captured by capitalists. When capital uses its power to increase the length or intensity of the workday, total social labor rises; assuming necessary labor remains constant, capital is the sole beneficiary. The ratio of surplus labor to necessary labor\u2014the rate of exploitation\u2014rises.<\/p>\n

Alternatively, let the productivity of labor be increased. To produce the same quantity of use values, less total labor is required. Accordingly, increased productivity brings with it the possibility of a reduced workday (a possibility not realized in capitalism). If, conversely, aggregate social labor remains constant, who would be the beneficiary of such an increase in productivity? Assuming the working class is atomized and capital is able to divide workers sufficiently, capital obtains relative surplus value because necessary labor falls. Alternatively, to the extent that workers are sufficiently organized as a class, they will benefit from productivity gains with rising real wages as commodity values fall. In Capital<\/i>, this second option is essentially precluded because, following the classical economists, Marx assumed that the standard of necessity is given and fixed.58<\/sup><\/a><\/p>\n

In short, we need to understand money if we are to understand capital, and for that we need to grasp the two-fold character of labor that goes into a commodity. Unfortunately, many Marxists fail to grasp the distinction \u201cbetween labour as it appears in the value of a product, and the same labor as it appears in the product\u2019s use value\u201d\u2014the distinction Marx considered \u201cfundamental to all<\/i> understanding of the FACTS.\u201d As a result, they offer a \u201ctheory of value without reference to money,\u201d what Heinrich calls \u201cpre-monetary theories of value,\u201d which I consider to be pre-Marxian theories of value or Ricardian theories of value.59<\/sup><\/a><\/p>\n

Ricardian Marxists do not grasp Marx\u2019s logic, or how Marx logically moves from the abstract to the concrete. The problem is particularly apparent when it comes to the so-called transformation problem. What those who attempt to calculate the transformation from values to prices of production fail to understand is that, rather than transforming actually existing values, prices of production are simply a further logical<\/i> development of value.60<\/sup><\/a> The real<\/i> movement is from market prices to equilibrium prices, that is, prices of production. As we have seen, this is how the law of value allocates aggregate labor in commodities, similar to a law of gravity. The failure of these Marxists to distinguish between the logical and the real demonstrates their \u201ccomplete ignorance both of the subject under discussion and of the method of science.\u201d<\/p>\n

Notes<\/h2>\n
    \n
  1. \u21a9<\/a> In his fine introduction and interpretation of Capital<\/cite>, Michael Heinrich criticizes traditional and worldview Marxism in An Introduction to the Three Volumes of Karl Marx\u2019s<\/cite><\/a> Capital<\/a> (New York: Monthly Review Press, 2012). Heinrich further expounds the early sections of the first volume of Capital<\/cite> intensely in Michael Heinrich, How to Read Marx\u2019s Capital (New York: Monthly Review Press, 2021).<\/li>\n
  2. \u21a9<\/a> Karl Marx and Frederick Engels, Collected Works<\/cite> (New York: International Publishers, 1975), vol. 43, 68.<\/li>\n
  3. \u21a9<\/a> Karl Marx, Capital<\/cite>, vol. 1 (London: Penguin, 1977), 169\u201370.<\/li>\n
  4. \u21a9<\/a> Karl Marx, Capital<\/cite>, vol. 3 (London: Penguin, 1981), 288.<\/li>\n
  5. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 171.<\/li>\n
  6. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 172.<\/li>\n
  7. \u21a9<\/a> Karl Marx, Grundrisse<\/cite> (London: Penguin, 1973), 171\u201372.<\/li>\n
  8. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 173.<\/li>\n
  9. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 772; Marx, Grundrisse<\/cite>, 488, 541, 708; Karl Marx, Critique of the Gotha Programme<\/cite> in Marx and Engels, Selected Works<\/cite>, vol. 2 (Moscow: Foreign Languages Press, 1962), 24.<\/li>\n
  10. \u21a9<\/a> Marx and Engels, Collected Works<\/cite>, vol. 6, 506.<\/li>\n
  11. \u21a9<\/a> Marx, Grundrisse<\/cite>, 158\u201359.<\/li>\n
  12. \u21a9<\/a> On this view of socialist society, see Michael A. Lebowitz, The Socialist Alternative: Real Human Development<\/cite><\/a> (New York: Monthly Review Press, 2010) and Michael A. Lebowitz, Between Capitalism and Community<\/cite><\/a> (New York: Monthly Review Press, 2020).<\/li>\n
  13. \u21a9<\/a> Discussion of the individual commodity producer applies as well to collective or group commodity producers (as in the case of cooperatives).<\/li>\n
  14. \u21a9<\/a> Marx, Grundrisse<\/cite>, 156\u201358.<\/li>\n
  15. \u21a9<\/a> Marx, Capital<\/cite>, vol. 3, 288\u201389.<\/li>\n
  16. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 170.<\/li>\n
  17. \u21a9<\/a> Marx and Engels, Collected Works<\/cite>, vol. 43, 68.<\/li>\n
  18. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 476. It is important to keep in mind the distinction between the aggregate labor in commodities and the aggregate labor in society as a whole.<\/li>\n
  19. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 476.<\/li>\n
  20. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 168.<\/li>\n
  21. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 476.<\/li>\n
  22. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 1051.<\/li>\n
  23. \u21a9<\/a> Marx, Capital<\/cite>, vol. 3, 895.<\/li>\n
  24. \u21a9<\/a> Karl Marx, Theories of Surplus Value, Part II<\/cite> (Moscow: Progress Publishers, 1968), 209.<\/li>\n
  25. \u21a9<\/a> Marx, Capital<\/cite>, vol. 3, 491.<\/li>\n
  26. \u21a9<\/a> Marx, Capital<\/cite>, vol. 3, 490. We are describing here so-called jelly capital.<\/li>\n
  27. \u21a9<\/a> Marx, Capital<\/cite>, vol. 3, 298.<\/li>\n
  28. \u21a9<\/a> Marx, Capital<\/cite>, vol. 3, 528, 491.<\/li>\n
  29. \u21a9<\/a> Marx and Engels, Collected Works<\/cite>, vol. 43, 68.<\/li>\n
  30. \u21a9<\/a> Marx and Engels, Collected Works<\/cite>, vol. 42, 515.<\/li>\n
  31. \u21a9<\/a> Karl Marx, Theories of Surplus Value, Part III<\/cite> (Moscow: Progress Publishers, 1971), 500.<\/li>\n
  32. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 173\u201374.<\/li>\n
  33. \u21a9<\/a> Marx and Engels, Collected Works<\/cite>, vol. 6, 121, 123\u201324.<\/li>\n
  34. \u21a9<\/a> David Ricardo, The Principles of Political Economy and Taxation<\/cite> (Homewood: Richard D. Irwin, Inc., 1963), 5\u20136, 12\u201313, 42.<\/li>\n
  35. \u21a9<\/a> Karl Marx, Wage Labour and Capital<\/cite> in Marx and Engels, Collected Works<\/cite>, vol. 9, 208\u20139.<\/li>\n
  36. \u21a9<\/a> Marx and Engels, Collected Works<\/cite>, vol. 6, 491. Here, Marx accepted Ricardo\u2019s symmetry in the production of hats and men, and he continued to hold that position in Capital<\/cite>. For a criticism, see Lebowitz, \u201cThe Burden of Classical Political Economy\u201d in Lebowitz, Between Capitalism and Community<\/cite>, chapter 6.<\/li>\n
  37. \u21a9<\/a> Marx, Grundrisse<\/cite>, 881.<\/li>\n
  38. \u21a9<\/a> By the time of the writing of Capital<\/cite>, however, Marx had moved to identify that two-fold nature of the commodity as use value and value<\/cite> and explained that exchange value is merely the necessary form<\/cite> that value takes.<\/li>\n
  39. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 173n.<\/li>\n
  40. \u21a9<\/a> Marx and Engels, Collected Works<\/cite>, vol. 42, 407.<\/li>\n
  41. \u21a9<\/a> Albert Dragstedt, Value: Studies by Karl Marx<\/cite> (London: New Park Publications, 1976), 11.<\/li>\n
  42. \u21a9<\/a> Marx and Engels, Collected Works<\/cite>, vol. 42, 514.<\/li>\n
  43. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 139.<\/li>\n
  44. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 138.<\/li>\n
  45. \u21a9<\/a> In classical political economy and in Marx\u2019s time, gold was the money-commodity; however, Marx\u2019s theory of money only requires social acceptance as the universal equivalent.<\/li>\n
  46. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 139.<\/li>\n
  47. \u21a9<\/a> Karl Marx, \u201cMarginal Notes on Adolph Wagner\u2019s Lehrbuch der Politschen Oekonomie<\/cite>\u201d in Dragstedt, Value<\/cite>, 204.<\/li>\n
  48. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 129.<\/li>\n
  49. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 157.<\/li>\n
  50. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 129.<\/li>\n
  51. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 288.<\/li>\n
  52. \u21a9<\/a> Heinrich, An Introduction to the Three Volumes of Karl Marx\u2019s<\/cite> Capital, 57, 63\u201364.<\/li>\n
  53. \u21a9<\/a> Marx, Theories of Surplus Value, Part II<\/cite>, 164, 202.<\/li>\n
  54. \u21a9<\/a> Marx, Capital<\/cite>, vol. 3, 294\u201395.<\/li>\n
  55. \u21a9<\/a> See the discussion of the derivation of capital in Michael A. Lebowitz, Beyond <\/cite>Capital: Marx\u2019s Political Economy of the Working Class<\/cite> (New York: Palgrave Macmillan, 2003), 55\u201360.<\/li>\n
  56. \u21a9<\/a> \u201cThe rate of surplus-value is therefore an exact expression for the degree of exploitation of labour power by capital, or of the worker by the capitalist.\u201d Marx, Capital<\/cite>, vol. 1, 326.<\/li>\n
  57. \u21a9<\/a> Marx, Capital<\/cite>, vol. 1, 1026\u201327.<\/li>\n
  58. \u21a9<\/a> See Lebowitz, Between Capitalism and Community<\/cite>, chapter 7.<\/li>\n
  59. \u21a9<\/a> Heinrich, An Introduction to the Three Volumes of Karl Marx\u2019s <\/cite>Capital, 57, 63\u201364.<\/li>\n
  60. \u21a9<\/a> As Heinrich indicates, the transformation of values \u201crepresents a conceptual advancement of the form-determination of the commodity.\u201d Heinrich, An Introduction to the Three Volumes of Karl Marx\u2019s <\/cite>Capital, 148\u201349.<\/li>\n<\/ol>\n

    _________________________________________________<\/p>\n<\/section>\n

    2023<\/em><\/a>, Volume 75, Number 04 (September 2023)<\/a><\/em><\/span><\/p>\n

    \n

    Michael A. Lebowitz<\/span> was a professor of economics at Simon Fraser University in Vancouver until his death on April 19, 2023. For information on his life and work, see the \u201cNotes from the Editors,\u201d Monthly Review, July\u2013August 2023.<\/em><\/p>\n

    The present manuscript was first submitted to Monthly Review in March 2023.<\/em><\/p>\n<\/div>\n

    Go to Original – monthlyreview.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    September 2023 – The law of value works in mysterious ways. For some Marxists, it underlies everything we need to know about capitalism. But, just as Karl Marx claimed he was not a Marxist, so too might he have said, \u201cthat\u2019s not my law of value.\u201d<\/p>\n","protected":false},"author":4,"featured_media":244380,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[194],"tags":[232,907,1041,1022,870,874],"class_list":["post-244378","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-socialism-marxism","tag-capitalism","tag-communism","tag-karl-marx","tag-marxism","tag-reviews","tag-socialism"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/244378","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=244378"}],"version-history":[{"count":3,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/244378\/revisions"}],"predecessor-version":[{"id":244383,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/244378\/revisions\/244383"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media\/244380"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=244378"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=244378"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=244378"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}