Marx claims that labor is the source of all (economic) value, that value is labor and that its quantity is determined by socially necessary labor-time, and one hears Marxists parrot this claim endlessly. Part of it is because Marx said it, and part of it is because we’re so ready to take Marx’s word for it and consider our understanding incomplete first rather than considering he was just wrong. While this is the proper attitude of a beginning student, this is not the attitude proper to someone who has taken up the theory and submits it to show its logical truth.
I here intend to offer a critique, albeit not an immanent one. The claim that economic value is based merely on labor should make us question it merely based on nothing more than the experience of valuing as something far more general and subjective, and further, we must question the logical veracity of Marx’s formulation in making labor-time the determiner of value. To say that Marx was wrong about value is, however, not to say that we can throw away his entire economic work as irrelevant or misguided, far from it. Capital is and remains the greatest economic theory to be developed, and its power lies in its necessary conceptual unity and self-generation.
This is the first part of a multi-part critique, the second being in immanent consideration. Value is more general than economic value and cannot be treated independently from subjective valuations. Many Marxists commit a simple mistake in considering use value as irrelevant to their conceptions of capital, a mere footnote to exchange value. There is, of course, a difference between value (general) and Value (economic), however, the determination of both in relation to each other is peculiar. It can be the case that Value determines value such as we see today, yet it can also be the case that value determines Value such as we see in minor everyday exchange activities as well as non-economic realities of value. Social values put a determinate limit on the reality of Value, but Value also may put a determinate limit on non-economic values.
Labor As a Transcendental Condition of Society
Labor is the source of all (economic) Value, says Marx, because it is the ground of all possible economic values. Labor is the material and basic ground level of all human existence, providing for the production of our arbitrary needs and desires as well as the maintenance of individuals and the reproduction of the species. This is why Marx once responded to a question from a friend asking him what the proof of his theory of value was with this:
Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish. Every child knows, too, that the masses of products corresponding to the different needs required different and quantitatively determined masses of the total labor of society. That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance, is self-evident. No natural laws can be done away with. What can change in historically different circumstances is only the form in which these laws assert themselves. And the form in which this proportional distribution of labor asserts itself, in the state of society where the interconnection of social labor is manifested in the private exchange of the individual products of labor, is precisely the exchange value of these products.
—Letter from Marx to Kugelmann, 11 July 1868, MECW, vol.43, pp.68-69.
This is a simple transcendental argument Marx is making. Of course labor is the source of all Value when labor is the condition for possibility of the very existence of the economy. However! . . A condition of possibility is not the equivalent of that which it makes possible. Certainly, all things produced require a certain amount of labor-time to produce, yet this has no necessary connection to Value as a quantity or ratio. All that one needs to see this disconnection is the simple moment of exchange and contract where many factors come into the very actualization of Value, and where the reality is ultimately determined by the agreement of two wills.
But what of the uniformity of prices and their correlation with labor?!—What of them? You can spend all the labor time you want on making a blender that costs $200 in parts and labor. It’s a nice blender, it works great, but there aren’t many people who will be buying it at its cost of production—they like a good blender, just not enough to shell out that money. If labor-time is the determiner of Value, why do people not value your $200 blender at its Value? As good time management goes those $200 tend to cost people a certain amount of hours of labor, and even the wealthy are spendthrifts sometimes. Why buy a top of the line blender when a middle line one works well enough? You may sell a few, but not enough to make a consistent business of it. The market has spoken: your labor-time was unnecessary and not truly valuable, but why? Because at the end of the day the issue is truly this: people neither want it nor need it. One can work as little or as much as one wants, this labor alone does not determine the actual Value of anything. At best all that we may provide with labor-time is a ground floor of prices in a minimal cost of production as already determined wages to ensure the reproduction of labor, yet this itself has no power to determine the Value of anything if 1) no one desires it, or 2) no one desires it enough, or 3) you can offer the impression of value which has nothing to do with labor, but with other factors—prestige, exclusivity, etc.
To say that labor is the source of all Value in this way is simply to dismiss answering the question of determination in the sphere of economics. Yes, ultimately productive labor grounds everything from buying that rare Magic card with a Value of $1,000, buying a TV, and even having fun for a few hours—but it only grounds it in the fact that someone has to make the food, drill the oil, and do the labor which materially undergirds society. Someone ultimately has to make things everyone else needs—food, shelter, knowledge, and technology—yet this is true before capitalism and after it; thus, it is nothing specifically unique to capital and Marx says as much. Even a billionaire must have money eventually trickle into production if they are to use their money at all, but this ‘material’ labor is only some of what value actualizes, it is not all money can realize. Value exists as price—any price gate—such as social access and influence on things which themselves merely are but are not produced, e.g. a date with a ‘high class’ courtesan, a meeting with an ex-president, an autograph from your favorite not-theoretician. The entire economy is an economy of time in its concrete material reality, yet the consumption of this time is not all at once nor is it symmetrical in the labor-time shifted in exchanges. An hour of labor is not exchanged for an hour of labor.
But, you may counter, Marx already takes note of this and shows it as irrelevant. For one, use-value is already recognized as modifying price through supply and demand. Second, it is made clear that price, also in the simpler equality form (the Value of 1 coat is 2 boots), is not value. If price was Value, then economics would be a simple science, yet the problem of Value was central to Classical economics, the relation of prices to Value nothing so simple. The answer to this issue is something I cannot get into here, but will be covered in another blog concerning an immanent critique of this problem in particular. The short and unsatisfactory response is this: it is in the very concept of Value that it is in itself indeterminate. To demand that Value be determined prior to its determination in the process of exchange is to misunderstand the nature of Value as the universal identity of the quantities exchanged. Value is 1 coat and 2 boots. Value is 20 yards of linen and $60. It is in price that Value as such is determined and existent in opposition to its material forms as if prior to exchange, i.e. price is precisely the existence of Value in determinate form. To think that there is determinate Value before exchange, however, is to fall into commodity fetishism in believing that there is objective Value, i.e. inherent Value, yet this is an absurdity when confronted with the reality of exchange. Nothing at all can possibly determine Value in exchange other than the will of those who exchange, or are we to think that commodities exchange themselves among themselves? Marx clearly laughs at such absurdity, yet he himself falls into this absurdity when he posits that Value is determined in production before exchange has taken place. This positing makes exchange a mere epiphenomenon in the economy, unnecessary for knowing what is in fact socially desired and wanted enough to pay the price. Against Marx’s own claims it reveals Value to be nothing essentially social, but only contingently so. It is as if those who cannot sell at their price of production are forced to adjust prices to recoup failure, and the price at which such commodities sell is an undervaluing in sale, but this is ridiculous. No undervaluing in economic terms can happen in such an abstract scenario even if it is a waste in material terms. The phenomenon of undervaluing would only make sense in the comparison of a general price which one falls below yet could sell at.
Marx’s answer that labor is the transcendental necessity of the economy is a dodge to the question he was asked: Why are we to believe Value is only labor (or labor-time to be more exact)? The question is not about what the condition of the possibility of value is—life, energy, and nature are just as much necessary conditions and can just as much be correlated with the reality of price fluctuations. Why not, as modern physiocrats claim, energy as value? It has a significant correlation to prices just as labor-time does. Why is it that labor-time alone should explain the determination of value when it comes to exchange? Capital’s expansion requires a qualitative side to it, and this is in the realm of desires—of value which is prior to and logically beyond Value. It is a truism that that which is not desired, “socially necessary,” cannot have Value, but this leaves the nature of value still hidden.
Labor As the Third Thing
In Capital Vol. 1 Marx offers a different reason for labor being Value: it is the only objective character/property universal to commodities. According to Marx all commodities are products of labor.
If then we leave out of consideration the use value of commodities, they have only one common property left, that of being products of labour. . . . Let us now consider the residue of each of these products; it consists of the same unsubstantial reality in each, a mere congelation of homogeneous human labour, of labour power expended without regard to the mode of its expenditure. All that these things now tell us is, that human labour power has been expended in their production, that human labour is embodied in them. When looked at as crystals of this social substance, common to them all, they are – Values.
—Marx, Capital Vol. 1, Chp.1 §1
This is, with very little argument, patent nonsense. Not only do we find that logically there is nothing implied in commodities which requires their being products, for all that is required is the establishment and mutual respect of property right, but we also find this to be the empirical reality precisely with things Marx cannot explain: that which has a price yet is not a product of labor. The objectification and reification of things which are immaterial brings forth a whole can of worms with just what the nature of commodities is, yet one need not go so far out. All we need is to consider simple things like the reality of prices of undeveloped lands.
Here there is a BIG problem with Marx’s LTV: it cannot in fact give us a general determination of value regarding its reality in prices, for Marx is forced to bite the bullet and concede that there is a disconnect between price, labor-time/Value, and thus the nature of the commodity is dirempted from Value. Marx dares to say that all that has a price does not necessarily have value (undeveloped land, bribes, etc). This is beyond strange. How can things have prices but no Value? Isn’t it logically the case that any exchange necessarily implies value and that which is exchanged (commodity)? Yes, it is. If we are to accept Marx’s arbitrary distinction in order to save face for the LTV we are forced to undermine the entire necessary link which he so arduously details in logical development from commodities to money. If there are things which have prices yet have no Value then it is logically entailed that commodities and Value are not intrinsically linked at all, but Marx himself has done the work that shows this is nonsense.
How is it that value and price are distinct? What do they actually represent? What is value anyway? I here shall focus on the general concept of value, not as Marx defines it, for definition is no basis for conceptual construction, but rather as it is defined by human action. It is through how we enact relations of value that we come to know what value is.
Value in General
Value. What is it? In economics value is… well, what we value, what we want in an exchange. There is a muddle brought in by the term because it is so multifaceted. In regular life we have many values: ideals such as morals, specific objects, people, animals, etc. Value is clearly tied to desire as wanting, yet what is it that makes anything valuable, that is, desirable? There is a whole philosophical discipline around these questions called value theory and answering the question of value is important for disclosing the nature of economic value.
Desire and value seem strange because they are intimately related, yet also considered different. We say we desire things because they are valuable. Are we not warranted in inverting this belief and saying that things are valuable because we desire them? For desire its object is what is valuable, thus we must not confuse value to be desire itself, rather, value is desiring reified and frozen as an object. The ‘Good’ is only valuable insofar as we desire it, and our families, our morals, and our ideals are only valuable in the same way. Desire and value are a unity—they come together. Value does not precede desire, nor does desire precede value; they mutually arise and determine each other. In our experience we find that this unity seems disconnected, such that we have vague desires and find value in that which determinately corresponds to this vague desire. Likewise, we find that valuable things precede our personal desiring and evoke it in us by our acknowledgement that such things are valuable.
But what of the belief that things could have inherent value, that is, objective value? The philosophers of old pondered the question of that which is valuable in itself, what is good for its own sake and none other—meaning, it was what we should desire if we desired the truly good as such, whatever it may be. The value of the Good, however, seemed impotent to make us desire it. Inherent objective value is something that has arisen in modern society in economic form, and it is to this conception that I now turn to consider in more detail.
It is clear from the notion of general value why political economy and later economics took the term for their own use: they had to. In the exchange of commodities there are clearly actions and relations of desire and its object (value) taking place. These are, obviously, subjective valuations. The uniqueness of economic’s own sub-notion of value, however, is that desire and value are split apart in different individuals in a system respecting property rights as base. Those who desire do not have what they value, it is always in someone else’s possession and will not be relinquished without agreement of the holder. Thus, in order for one individual to be satisfied and acquire what is valuable to them they must find what is valuable to the other that holds what the first values. Exchange becomes the only way in which desire can acquire what it values, what it really has a desire and use for, but in so doing a secondary value has been generated: the desire for what can be exchanged, that is, a desire for exchange-value itself because it is useful.
In this manner what originally was a non-economic value, a desire for objects and the satisfaction of desire without capacity or need to exchange (which can be private and singular or social) is made necessarily social and fundamentally transformed into the desire for the secondary objects (values for others, exchange-values) which enable the acquiring of primary objects (use-values for me). In order to find my own satisfaction I must satisfy another at all turns. I necessarily must desire to satisfy the desire of another in the very process of exchange even if I have no interest or care for the other as individual.—Thus, one of Marx’s earlier dreams of the unalienated communist future is corrupted in capitalism: that humans may find their personal satisfaction in satisfying others, that is, in social production as such.
When this need to satisfy others arises, this secondary value of exchangeablity is now itself indistinguishable from a primary value other than by differentiating types of values and their moments in various hands. Exchangeable items of no personal use to me suddenly do have personal use for me in their capacity to be exchanged for what is of primary use-value to me. I do want what I myself do not want. I am incentivised to hoard things I do not need on the belief that I may need them not for my own personal consumption, but for exchange. This has a certain form in the small historical reality of petty commodity trade, but it is quickly superseded by commodity money. The logic only becomes more pronounced with pure fiat money.
According to Marx, when we value a commodity, there is its use-value, its utility for us, what we desire of it as a specific satisfaction of personal consumption. This covers everything from valuing an autograph from a hero of ours, that old plush toy you’ve had since you were a child, or that pin up poster on a wall. This particular category of value seems irrelevant to capital itself, but is in fact not irrelevant to it or the system of economics as a whole. What people have a use for is very important for capital to succeed—indeed, capital itself has a use-value as well—albeit capital as such cares little as to what or why so long as it serves the expansion of value. Capital is very interested in what use-values people desire, and it spends a lot of money on generating if not predicting future desires. The use-value of a commodity is a double one: its use for me is to exchange it, and its use for someone else is to consume it or exchange it again if they like; a commodity is never a consumptive use-value to me, for then it is only an object to satisfy me.
Use-value seems to us obvious and needing no elaboration, but that is a deceptively easy and erroneous judgment. Use-value is determined in many ways, many personally contingent, but also quite a few that are culturally set as the ends of purpose and not just instrumental utility. What society values determines what capital produces and how it produces; thus, general value has a determining character on Value’s reality as the process of capital. When society refuses to bend its values for the sake of capital, values such as religious holidays or festivals, then capital must bend to these boundaries as a set back, but often it retools itself to integrate its obstacles if allowed. Capital likewise can bend social values for its purposes: no prayer breaks, no traditional siesta or tea break, etc.
The second value of a commodity is its exchange-value, the capacity to exchange a commodity for another, and this is what Marx is interested in most. It is the exchangeability of one commodity for another, but for Marx it is more determinately the measured value as another commodity(s). Marx opposes use-value and exchange-value as completely opposite moments of a commodity which cannot be had at the same moment. He says:
As use values, commodities are, above all, of different qualities, but as exchange values they are merely different quantities, and consequently do not contain an atom of use value.
If we have the use-value we do not have the exchange-value and vice versa. The reasoning is simple and initially convincing. If the commodity in question is an orange, its use-value is consuming it in whatever way we will, but its exchange-value may be 3 strawberries or any other commodity(ies). This split of the values of a commodity as mutually excluding moments, however, is interestingly false. It was already hinted at in the doubledness of use-value that the economic meaning of use-value is not to be confused with non-economic forms of it, i.e. the use-value of commodities is not to be confused with what is simply of use to me in immediate personal consumption. We can and do have both values at once in any commodity we hold by virtue of its very being a commodity. In fact, if this was not true we never could explain the phenomenon of commodities and capital in the first place, for the contradiction of the commodity would not be immanent nor would the commodity have any necessity to move in exchange. If we could have commodities without their exchange we would simply not be talking about commodities.
The Unity of Use & Exchange Value
Use-value as object desired seems to precede exchange-value as a first threshold in exchange. If only one desires what the other has, but the other does not desire what we have, then there is no exchange unless the proper object is offered to entice the exchange by the other. If neither desire, there is no exchange. The mutual desire for exchange must be there for exchange to even happen, thus exchangeability of a use-value for another must be a use-value for both to assure the exchange. Exchange is ultimately a double movement of desire and what it values, the desire to acquire something else and the desire to get rid of something we have for it (the commodity). Because of this, already we have problems arise from a notion that things can have value in an economic sense prior to our desiring them and judging for ourselves what and how much we are willing to exchange for it.
But what about money? Isn’t this a clear split of use-value and exchange-value? Isn’t it pure exchange-value? Not at all, as matter of fact money is where the unity of a commodity’s dual values is most explicit. Money’s use-value is its universal exchange-value. The one with an object must find use-value in your money before they bother taking it just as much as you must find use-value in their object. You may have money in hand, but if it’s a Euro and you’re in the US you’re out of luck because it’s useless currency there. An amazing amount of Marxists miss Marx’s own statements to the fact that money is a commodity. They think that by this Marx is speaking of ‘commodity money’, e.g. gold, and Marx certainly seems to make an effort to explicitly only say this much, but there is implicit in the very logic of money the interesting truth of its being and nature: money is simply the eternal and inextinguishable form of commodities, i.e. endlessly circulating value in which its consumption is merely its regeneration.
People tend to miss this tied duality of commodities because they forget that personal use for us of what we already hold, or desire for things which none have any capacity to aid in procuring, is not of economic interest or meaning. Use-value here cannot be referring to the consumptive usefulness for me of a thing I already own, but must refer to usefulness as an exchange-value for myself and a use-value as consumptive to someone else at the same time. From the other’s side the role of use is the same, thus the commodities of others have personal use for me, but this is economic insofar as it drives us to exchange. If a commodity in my possession were only useful for my personal consumption it would not be a commodity at all, and its use-value would not be the same as the economic category. If it was not useful to others it also would be no commodity at all, for I could not exchange it even if I desired to. A commodity has use for me as exchangeable, and for the one who wants it it has use for personal consumption (non-economic) or exchange again (merchanting). Thus, a commodity is economic use-value twice over even including its non-economic use by way of mediating it. Consumption which would eliminate a commodity as commodity becomes economic consumption through its mediation by exchange-value, that is, I must enter the economic sphere for non-economic ends and as such transform the non-economic into an economic factor.
To make a final important point on this duality of economic values: a commodity is its entire economic being only in our hands as a commodity. Once exchanged, if both parties never intend to exchange them again they are no longer commodities; thus, they lose their economic role entirely. No use-value, no exchange-value. These items return to the realm of general value; they are valuable to us because we desire them, but they no longer function as economic values.
In summary: The two values of a commodity are had at once for the holder and opposing exchanger. A commodity I hold has use-value for me as an exchange-value, its value for me is to get rid of it for something else, and the consumption of this use-value is the act of exchange itself. Things are only commodities in exchange which confirms they indeed were use-values for both partaking in the exchange. My money’s use-value is to exchange, and the use-value of your commodity is for you the same. Among all other commodities money has a special place, however, as the permanent and universal commodity, its use-value is always to exchange for any commodity and its consumption is only its regeneration as a universal commodity.
Objective Economic Value
While use and exchange value are a unity of subjective psychological conditions of desire, once these are met a new value arises in exchange itself, a value which is objective and unintended. This new value is according to classical political economy and modern economy alike the genuine value of interest to economics as such. In the exchange of commodities we cannot help but notice implied a third substance in relation to our commodities themselves. Being that the commodities traded are qualitatively different, for no one trades a quality for the same quality in different amounts (such as one orange for three oranges), and that these exchanges can also be quantitatively different, logically something is equated despite clear inequality of real commodities.
This third in the relation is an immaterial substance, and this is termed value (from here on value means economic value unless qualified otherwise) as such. This is a subset of value in general, but it is different from use-value and exchange-value—it is general economic value. Use and exchange value are determinate: we have a specific use for things, and we exchange for definite other things in specific ratios. Value, as that which is implicit in the consumption of exchange-value, first appears as an abstract equivalence determinate only in the relation of commodity exchanges. For example: 1 coat for 4 shoes, etc., show value determined both as 1 coat and 4 shoes depending on which commodity we hold in the relation. Value is the equality of ratios, but in itself is left indeterminate and must be redetermined in every exchange only to reiterate the tautology of its self-equivalence in these objects.
With value as an objective relation and thing (as money), we find the extreme inversion of the actuality of general value. While there are cases prior to money in which what is valuable is taken as what generates desire, money takes this fetishism to a whole new reality—a wholly rationalized one at that. In the market system taken to its expanded limit, money is not just a utility but a near absolute necessity of life. Existence itself becomes dependent on it, and it gains a level of social power beyond what any single item could have. Though we ourselves may find no value in money itself, it is nonetheless something valuable to others, and insofar as they will not exchange with us except for money, it becomes valuable to us via their desire. We end up desiring money because it is valuable, because others desire it. The inversion is not fictitious, it is real, and it is entirely rational from the logical social standpoint of necessity in the economic system which has subsumed all production and relations of property. Insofar as we deal with others to satisfy our needs, money’s value for others generates its value for us. Money, as objective value given a universal body, forces or draws forth our desiring and enforces itself. Money, though it is the highest form of economic value in general, is not absolute in function and necessarily has its counterparts in material goods. Not unlike the Good of ancient philosophy, value is believed to be that which is valuable in-itself by the vast majority today. Its inherent desirability in truth is simple: it is that which is desired for its own sake in that it is desirable because others desire it. As money it is the realization and corruption of absolute desire and is absolute commodity.
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To summarize: labor’s failure to account for and determine value and Value shows the falsehood of Marx’s claim that labor is the determinant of economic value ratios and prices insofar as we remain within the realm of economic consideration. When we shift levels like Marx does and head into the material undergurding of economic life we no longer are speaking of economic categories and their determinations. Further, what we mean by value and Value is not fully accounted by any materialist notion. The ways we comport ourselves in engaging or relating to all forms of value has to do with desires and values which while being intricately tied to economic value do not neatly get subsumed under it. Social values can and do overcome economic values, but this does not mean the destruction of economic value, for the historical case is that capital merely reconfigures itself in accord to higher order values when it fails to determine them in its abstract logic of expansion.