Value

The Representation of Labour in Capitalism

Diane Elson

• Publisher: Verso
• Year: 2015
• Print ISBN:
  9781784782290
• eBook ISBN:
  9781784782306
• Topic: Politics & International Relations
• Subtopic: Political Economy
• Index: Politics & International Relations

This influential collection of essays focuses on the elusive concept of "value," and aims to answer the question "Why is Marx's theory of value so important?" Aboo Aumeeruddy and Ramon Tortajada introduce the key interpretive debates surrounding "value form," leading to seminal essays by Jairus Banaji and Chris Arthur. The labour theory of value is interrogated by Geoffrey Kay and Athar Hussain, and Diane Elson concludes with an argument for the importance of Marx's "Value Theory of Labour." These incisive and erudite texts provide a crucial introduction to Marxist political economy, as well as advancing critical arguments for those already well versed in the field.

THE VALUE THEORY OF LABOUR

Diane Elson

WHAT IS MARX’S THEORY OF VALUE A THEORY OF?

1. The theory of value: a proof of exploitation?

Let us first consider the interpretation which is very widespread on the left, particularly among activists, that Marx’s theory of value constitutes a proof of exploitation. A good example of this position in CSE debates is that put forward by Armstrong, Glyn and Harrison. Their dogged defence of value rests on the belief that only by employing the category of value can the existence of capitalist exploitation be demonstrated and that to demonstrate this is the point of Marx’s value theory:

Any concept of surplus labour which is not derived from the position that labour is the source of all value is utterly trivial. (Armstrong, Glyn and Harrison, 1978, p. 21.)

Marx does not, however, seem to have shared this view:

Since the exchange-value of commodities is indeed nothing but a mutual relation between various kinds of labour of individuals regarded as equal and universal labour, i.e. nothing but a material expression of a specific social form of labour, it is a tautology to say that labour is the only source of exchange-value, and accordingly of wealth in so far as this consists of exchange-value … It would be wrong to say that labour which produces use-values is the only source of the wealth produced by it, that is of material wealth. (A Contribution to the Critique of Political Economy¹, p. 35-36.)

Capital did not invent surplus labour. Wherever a part of society possess the monopoly of the means of production, the worker, free or unfree, must add to the labour-time necessary for his own maintenance an extra quantity of labour-time in order to produce the means of subsistence for the owner of the means of production. (Capital, I, p. 344.)

Moreover to regard Marx’s theory of value as a proof of exploitation tends to dehistoricise value, to make value synonymous with labour-time, and to make redundant Marx’s distinction between surplus labour and surplus value. To know whether or not there is exploitation, we must examine the ownership and control of the means of production, and the process whereby the length of the working day is fixed. (See Rowthorn, 1974.) Marx’s concern was with the particular form that exploitation took in capitalism (see Capital, I, p. 325), for in capitalism surplus labour could not be appropriated simply in the form of the immediate product of labour. It was necessary for that product to be sold and translated into money. As Dobb comments:

The problem for Marx was not to prove the existence of surplus value and exploitation by means of a theory of value; it was, indeed to reconcile the existence of surplus value with the reign of market competition and of exchange of value equivalents. (Dobb, 1971. p. 12.)

The view that Marx’s theory of value is intended as a proof of exploitation does, however, have the merit of seeing that theory as a political intervention. The problem is that it poses that politics in a way that is closer to the ‘natural right’ politics of ‘Ricardian socialism’ or German Social Democracy, than to the politics of Marx. (See for instance Marx’s ‘Critique of the Gotha programme’, Marx-Engels, Selected Works, Vol.3; also, Dobb, 1973, p. 137-141.) Because of this it has no satisfactory answer to the claim that exploitation in capitalism can perfectly well be understood in terms of the appropriation of surplus product, with no need to bring in value at all. (See for instance Hodgson, 1976; Steedman, 1977.) But in rejecting this interpretation of Marx’s value theory we must be careful not to de-politicise that theory. The politics of the theory is a question we shall return to at the end of this paper.

2. The theory of value: an explanation of prices?

This approach may be found separately or combined with the one we have just considered. It is the interpretation offered by most Marxist economists in the Anglo-Saxon world, that Marx’s theory of value is an explanation of equilibrium or ‘natural’ prices in a capitalist economy.. As such it is one of a number of theories of equilibrium price, so that, for instance, in Dobb’s Theories of Value and Distribution, Marx’s theory of value can be examined alongside the theories of Smith, Ricardo, Mill, Jevons, Walras and Marshall, as if it were a theory with the same kind of object. Indeed the main distinction made by Dobb is

‘between theories that approach the determination of prices, or the relations of exchange, through and by means of conditions of production (costs, input-coefficients and the like) and those that approach it primarily from the side of demand.’ (Dobb, 1973, p. 31.)

For Dobb the great divide is between Smith, Ricardo and Marx who are in the first category, and the others, who are in the second. A similar interpretation is offered by Meek:

‘there is surely little doubt that he (Marx) wanted his theory of value … to do another and more familiar job as well — the same job which theories of value had always been employed to do in economics, that is, to determine prices.’ (Meek, 1977, p. 124.)

Of course, it is recognised, within this interpretation, that there are differences between Marx and other economists, even between Marx and Ricardo.

‘Marx’s theory of value was something more than a theory of value as generally conceived: it had the function not only of explaining exchange-value or prices in a quantitative sense, but of exhibiting the historico-social basis in the labour process of an exchange — or commodity — society with labour power itself become a commodity.’ (Dobb, 1971, p. 11.)

The way of noting these differences that has become most popular is the distinction between the quantitative-value problem and the qualitative-value problem, introduced by Sweezy. The former is the problem of explaining the quantitative exchange-relation between commodities; the latter is the problem of explaining the social relations which underlie the commodity form. For Sweezy,

‘The great originality of Marx’s value theory lies in its recognition of these two elements of the problem and in its attempt to deal with them simultaneously within a single conceptual framework.’ (Sweezy, 1962, p. 25.)

Or as Meek put it,

‘The qualitative aspect of the solution was directed to the question: why do commodities possess price at all? The quantitative aspect was directed to the question: why do commodities possess the particular prices which they do?’ (Meek, 1967, p. 10.)

It is clear that the object of Marx’s theory of value is taken, in this tradition, to be the process of exchange or circulation.

‘ … the study of commodities is therefore the study of the economic relations of exchange.’ (Sweezy, 1962, p. 23.)

Marx is interpreted as explaining this process in terms of a separate, more fundamental process, production. Dobb, for instance, writing an Introduction to Marx’s A Contribution to the Critique of Political Economy, suggests that Marx’s interest,

‘is now centred on explaining exchange in terms of production … Exchange relations or market ‘appearances’ could only be understood … if they were seen as the expression of these more fundamental relations at the basis of society.’ (Dobb, 1971, p. 9-10.)

According to Sweezy,

‘Commodities exchange against each other on the market in certain definite proportions; they also absorb a certain definite quantity (measured in time units) of society’s total available labour force. What is the relation between these two facts? As a first approximation Marx assumes that there is an exact correspondence between exchange ratios and labour-time ratios, or, in other words, that commodities which require an equal time to produce will exchange on a one-to-one basis. This is the simplest formula and hence a good starting point. Deviations which occur in practice can be dealt with in subsequent approximations to reality.’ (Sweezy, 1962, p. 42.)

It has generally been suggested that this ‘first approximation’ is maintained throughout the first two volumes of Capital, and relinquished in Volume III, where the category of prices of production is introduced and ‘values are transformed into prices.’ The adequacy of Marx’s ‘solution’ to the ‘transformation problem’, and the merits of various alternative solutions have until recently been the chief point of debate in this tradition of interpretation. (No attempt will be made here to review the lengthy literature. For references, see Fine and Harris, 1976.)

In what sense is it held that the labour-time required to produce commodities ‘explains’ or ‘determines’ their prices (either as a ‘first approximation’ or through some ‘transformation’)? I think two related arguments are deployed in the writings in this tradition. The ‘first approximation’ of prices to the labour-time required for production is supported by an argument that derives from Adam Smith’s example of the principle of equalisation of advantage in a ‘deer and beaver’ economy. (See, for instance, Sweezy, 1962, p. 45-46.) Suppose we consider two commondities (‘deer’ and ‘beaver’), one of which (‘deer’) takes one hour to produce, the other of which (‘beaver’) takes two hours; and suppose that on the market one deer exchanges for one beaver. The argument is that each producer will compare the time it takes him to produce the commodity (in this case by hunting) with its market price, expressed in terms of the other commodity. It is clear that you can get more beavers by producing deer and exchanging than for beaver, than by directly producing beaver. Therefore producers will tend to allocate their time to producing deer rather than beaver. This will increase the supply of deer, reduce the supply of beaver. Other things being equal, this will reduce the market price of deer and increase the market price of beaver. The movement of labour-time from beaver to deer will continue until the market price of deer in terms of beaver is equal to the relative amounts of labour required to produce the two commodities, i.e. until two deer exchange for one beaver. At this point the transfer of labour-time will stop, and the system will be in equilibrium, with prices equal to labour-time ratios.

A more complex argument is deployed to indicate how labour-time determines prices through a ‘transformation.’ Here labour-time and price of production are related through an equilibrium ‘model’ of dependent and independent variables. As Meek put it:

‘In their basic models, all three economists (i.e. Ricardo, Marx and Sraffa) in effect envisage a set of technological and sociological conditions in which a net product or surplus is produced (over and above the subsistence of the worker, which is usually conceived to be determined by physiological and social conditions.) The magnitude of this net product or surplus is assumed to be given independently of prices, and to limit and determine the aggregate level of the profits (and other non-wage incomes) which are paid out of it. The main thing which the models are designed to show is that under the postulated conditions of production the process of distribution of the surplus will result in the simultaneous formation of a determinate average rate of profit and a determinate set of prices for all commodities.’ (Meek, 1977, p. 160.)

The magnitude of the net product is measured in terms of the labour time socially required for its production.

The feature of both arguments which it is important to note is that they pose the socially-necessary labour-time embodied in commodities as something quite separate, discretely distinct from, and independent of, price. It is given solely in the process of production, whereas price is given solely in the process of circulation. The two processes are themselves discretely distinct, although they are of course linked. And it is in production that ‘the key causal factor’, ‘the relatively independent ‘determining constant” is to be found. (See Meek, 1967, p. 95; Meek, 1977, p. 151.) It follows that we can, in principle, calculate values (i.e. socially-necessary labour-time embodied in commodities) quite independently of prices, and deduce equilibrium prices from those values. The last possibility is often regarded as the indispensable guarantee of the scientific status of Marx’s value theory, of its distance from a metaphysical juggling of concepts. (Although, as writers in this tradition generally admit, in practice such a calculation would be impossible to make.)

The reading of Marx as a builder of economic models has been carried to its logical extreme in the recent work of some professional economists, perhaps most notably in the work of Morishima, in which,

‘the classical labour theory of value is rigorously mathematised in a familiar form parallel to Leontief’s inter-sectoral price-cost equations. The hidden assumptions are all revealed and, by the use of the mathematics of the input-output analysis, the comparative statical laws concerning the behaviour of the relative values of commodities (in terms of a standard commodity arbitrarily chosen) are proved. There is a duality between physical outputs and values of commodities, which is similar to the duality between physical outputs and competitive prices. It is seen that the labour theory of value may be compatible with the utility theory of consumers demand or any of its improved variations.’ (Morishima, 1973, p. 5.)

All politics is ruthlessly excised in the interests of making Marx a respectable proto-mathematical economist.²

‘(values) are determined only by technological coefficients … they are independent of the market, the class-structure of society, taxes and so on.’ (Morishima, 1973, p. 15.)

More important in CSE debates has been the development within this general line of interpretation of an approach which excises not politics as such, but value. Arguing from the same premises as the Sweezy-Meek-Dobb tradition, it has come to the conclusion that,

‘the project of providing a materialist account of capitalist societies is dependent on Marx’s value magnitude analysis only in the negative sense that continued adherence to the latter is a major fetter on the development of the former.’ (Steedman, 1977, p. 207; See also Hodgson and Steedman, 1975; Hodgson, 1976; Steedman, 1975a, 1975b.)

The quantity of socially-necessary labour-time embodied in a commodity has been found to be at best redundant to, at most incapable of, the determination of its equilibrium price. The so-called ‘Neo-Ricardians’ pose instead, as independent variables, the socially-necessary conditions of production and the real wage paid to workers, specified in terms of physical quantities of particular commodities. Unlike Morishima, Steedman does not take such quantities as purely technological: they are assumed to be determined socially and historically and reflect the ‘balance of forces’ between workers and capitalists in the work place.

There is no doubt that within its own terms this critique of the theory of value, as an explanation of equilibrium prices in terms of labour quantities, is quite correct. Attempts to preserve the traditional Anglo-Saxon version of the theory of value tend to dissolve into positions even more ‘Ricardian’ than that of the ‘Neo-Ricardians’ (a point made by Himmelweit and Mohun, 1978). This paper makes no attempt to rescue this traditional ‘labour theory of value’. Instead it argues for a quite different reading of Marx’s theory of value, in relation to which it is the Sraffa-based critique which is redundant, rather than value.

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Table of contents

• Cover Page
• Halftitle Page
• Title Page
• Copyright Page
• Contents
• Notes on Contributors
• Introduction
• Acknowledgements
• Reading Marx on Value: A Note on the Basic Texts
• From the Commodity to Capital: Hegel’s Dialectic in Marx’s Capital
• Why Labour is the starting point of Capital
• Dialectic of the Value-Form
• Misreading Marx’s Theory of Value: Marx’s Marginal Notes on Wagner
• Marx’s Theory of Market-Value
• The Value Theory of Labour