Marx on Value: Part 3

Alexander Douglas
Jul 1, 2020 · 8 min read
V is for Value

This is the third in a series of posts where I think out loud about Marx’s theory of value, provoked by some online conversations. The first two are:

Marx on Value

Marx, Value, Surplus Value

I’m trying to understand how the way that Marx thinks about value informs his understanding of exploitation. The claim that only labour creates value seems relevant, except that the notion of creating value is difficult to understand.

As Stanley Jevons pointed out, value as classically understood is a dimensionless quantity. Commodities exchange according to their value. Thus if 6000 ounces of butter exchange for 1 ounce of gold then the value of gold in terms of butter is 6000 oz / 1 oz. That is to say: the value of gold in terms of butter is 6000 oz/oz, whose units cancel out. So while we can give the value of one thing in terms of another, the quantity of value itself is dimensionless.

Marx’s classical analysis has the value of commodities determined by the ratios of socially necessary labour time required to produce them. So the value of a commodity that takes 10 hours to make, in terms of a commodity that takes 1 hour to make, will be 10. Again, this will be a dimensionless quantity; the units are hr/hr. This is why one and the same value can express a relation between labour times and a relation between weights or volumes of commodities.

What classical economists, including Marx, call the use-values of commodities (something distinct from the economic exchange values discussed above) are not dimensionless. They are expressed as units per quantity: ‘When treating of use value, we always assume to be dealing with definite quantities, such as dozens of watches, yards of linen, or tons of iron’ (Capital, Vol.1, ch.1, Section 1). The dimension of the use-value of a ton of iron will be units/ton. But it is commodities that exchange, not their use-values, so Marx is generally interested in the value of, say, an ounce of iron in terms of an ounce of gold, not the value of one unit of use-value-per-ounce of iron in terms of one unit of use-value-per-ounce of gold. The idea of use-value will reappear in the discussion of exploitation, but in an unexpected way.

Marx also seems to believe that capitalism requires the values of all commodities to be expressible in terms of a numeraire good: ‘A commodity only acquires a general expression of its value if, at the same time, all other commodities express their values in the same equivalent’ (Capital, Vol.1, Section 1, Ch.1, §3.C1). This is the form of commodity-money as general equivalent. But expressing value in terms of a general equivalent doesn’t stop it being dimensionless: if a commodity is worth $4, its value in terms of one dollar is 4$/1$, that is 4$/$, that is, simply 4.

To speak of the creation of value seems to confuse this dimensionless quantity with something that can be measured in units. A field can produce a ton of wheat; a person can spin a certain length of yarn; if we think of music literally creating pleasure in the listener we have to suppose something akin to a volume or intensity of pleasure that could be measured in units. But to create value is to create neither inches nor tons nor degrees of value, and I can’t make any sense out of this.

To appreciate what Marx wants to explain, let’s take a simplified case in which a capitalist runs a miraculous food factory that requires no fixed capital. He advances to the workers a wage fund of 100 units of food, and after a production period they produce 110 units of food. 10 units of food have been produced, but we can’t meaningfully say that value has been produced, since that would raise the question of how many units were produced, and to this we have no answer.

What is clear, however, is that the food produced by the workers has more value than the food consumed by them. Supposing uniform production techniques, if it took x hours to produce the food fed to the workers then it must have taken 1.1x hours to produce the food they produced. If the relation between capitalist and workers were one of exchange, this would be a violation of the principles that commodities exchange according to their values and values are determined by socially necessary labour time. It would, in other words, be a refutation of the classical theory of value. So what is going on here can’t be a case of exchange. What, then, is it a case of?

Marx explains the situation here as revealing that labour-power is ‘a source not only of value, but of more value than it has itself’ (Capital, Vol.1, Section 1, ch.7). This looks a bit like the confused idea of value-creation, but we can read it as simply expressing the fact mentioned above, that the commodity handed over to the capitalist at the end of the production period is worth more than the commodity paid to the workers during the production period. Marx explains this by pointing out that the capitalist purchases labour-power from the workers, and labour-power is a special sort of commodity:

The seller of labour-power, like the seller of any other commodity, realises its exchange-value, and parts with its use-value. He cannot take the one without giving the other. The use-value of labour-power, or in other words, labour, belongs just as little to its seller, as the use-value of oil after it has been sold belongs to the dealer who has sold it. The owner of the money has paid the value of a day’s labour-power; his, therefore, is the use of it for a day; a day’s labour belongs to him. The circumstance, that on the one hand the daily sustenance of labour-power costs only half a day’s labour, while on the other hand the very same labour-power can work during a whole day, that consequently the value which its use during one day creates, is double what he pays for that use, this circumstance is, without doubt, a piece of good luck for the buyer, but by no means an injury to the seller.

Deprived of the unhelpful notion of value-creation, however, it is difficult to make much sense of this. Applying it to our example: to say that the workers hand over the use-value of their labour-power is simply to say that they hand over a commodity worth 1.1x hours of socially necessary labour. To say that they are paid the value of their labour power is simply to say they are given a commodity worth x hours of socially necessary labour. This is the thing to be explained, and Marx hasn’t so much explained it as asserted it. If it is true, as he says, that the owner of labour-power can exploit its whole use-value, this just means that labour-power is a commodity worth the number of hours extracted from the workers during the production period.

The question is why the workers would give up a commodity worth this value for a commodity worth less (their wage-goods). The answer might be: they are forced to. But if they are forced to, then this is what we want to know, not that what their labour yields is the use-value of their labour power. Compare: if I trade you $10 for $5, the explanation of this might be that I was forced to make the trade, but then it is not an explanation to say that you purchased, for $5, an abstract commodity whose use-value consisted in the extraction from me of $10. Or at least that is a very convoluted expression of the true explanation, which needed no invention of an abstract commodity whose ‘use-value’ consists of an ability to extract wealth. You might as well just say that the wealth is extracted.

In any case, since the value of a commodity simply is the ratio at which it exchanges for others, it can’t be the case that workers exchange the products of their labour for the wages they are paid. Otherwise the products of their labour wouldn’t be worth more than their wages after all. This means that the key to Marx’s analysis is the assumption that while some of the allocation of resources under capitalism takes place through exchange, a great deal of it takes place through some other mechanism, which is the exploitation of workers by capitalists. This means, in turn, that Marx doesn’t explain exploitation in terms of the principles of value and exchange. Rather, he assumes exploitation as something that occurs outside of the domain governed by those principles. His critique of political economy amounts to pointing out a hole in its theory of value.

But this isn’t the only hole. Compare the case of the workers to a case of usurious lending. You need food now, so I give you 10 units this week if you promise to give me 11 next week. We could say that I have purchased your labour-power, whose use-value consists of your providing me with 11 units of food. But this isn’t really the point. You might repay me by stealing the 11 units; then is what I have purchased your theft-power? The question isn’t really what I have bought from you by paying 10 units of food. The question is why it’s worth more than 10 units.

What we’re seeking to explain is, of course, the 10% interest rate over the week. We can explain this in all the standard ways interest rates are explained, and these will depend on the specific case: your impatience versus my patience, the risk I take on by making you the loan, our unequal bargaining positions and information asymmetry, my monopoly position as a lender, etc.

The position of workers in Marx’s framework doesn’t seem any different from the position of borrowers in general. If the production process were instantaneous they would of course never hand over 110 units for 100 units; it is only because they need 100 units now that they are willing to produce and hand over 110 units in the future.

Take another case: a forward purchase. I give you 100 units of corn today, and you sign a contract promising 110 units next year. We could explain my profit on this deal in Marxist terms, by pointing out that the use-value of the contract exceeds its exchange-value. But then we will want to know why, and that will involve looking at the social conditions that determined the contract to be framed as it was.

In both cases, what seems to need explaining is debt. The principle that equivalents exchange for equivalents holds for spot trades; it doesn’t hold for forward trades. We can, as many ‘bourgeois economists’ do, preserve the theory of value intact by adding a temporal element into value. Then the value of A in terms of B, when A and B are delivered at different times, must be reckoned by applying some discount rate. Or we could treat all forward trades as violating the classical theory of value: commodities over time do not exchange according to their values. A critique of political economy will need to explain this, and what is needed to explain it is not a theory of worker-exploitation as such but a broader philosophy of debt including exploitation as a special case.

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