17.01.2019

Subjective and objective value

Arthur Bough insists that value is labour and has therefore existed in every form of society

In his recent article John Bridge confuses value and exchange-value (‘Value is a human creation’, November 8 2018). However, replace the term ‘value’ with ‘exchange-value’, and what he says would be more or less correct!

According to Marx, equating value and exchange-value opened the door to the proponents of theories of subjective value.¹ That is because value/exchange-value cannot exist without exchange - rather than exchange merely being the means by which value is manifested. Subjectivists say that value is the product of exchange and therefore has no objective basis: it is an expression of how much of one commodity can be obtained for a quantity of some other commodity, varying according to the preferences of those involved.

John would say that the objective basis lies in the amount of social labour required for the production of those commodities, but that is a determination of their value, not their exchange-value - two logically different and historically divergent concepts. The definition of exchange-value first requires the definition of value. Value is measured - absolutely and intrinsically - in terms of a quantity of labour-time, whereas exchange-value is measured - relatively and externally - as a quantity of some other use-value. Say the value of a metre of linen is 10 hours of labour, whilst its exchange-value is one litre of wine, or one gram of gold. I can only express the value of the linen as an exchange-value if first I know the value of one litre of wine and one gram of gold, and the equality of these exchange-values only exists because each commodity has equal value. Marx says that value/labour is the necessary third term which must pre-exist before exchange-value comes into existence:

In order that this can happen, the values of the commodities must already be presupposed. The commodity which measures as well as that to be measured must have a third element in common. In the second case, this identity itself is first established; later it is expressed in the price - either money price or any other price.²

And:

The term ‘invariable’ expresses the fact that the immanent measure of value must not itself be a commodity, a value, but rather something which constitutes value and which is therefore also the immanent measure of value (ibid).

Besides ‘use-value’, ‘value’ and ‘exchange-value’,Marx uses ‘individual value’, which is crucial in his analysis. At a basic level, it refers to the labour expended by an individual producer - at a more developed level to the labour of one group of producers, as opposed to another. At an even more developed level, it refers to the value of output of one capital, as opposed to that of another, making possible surplus profits.

John quotes Isaak Rubin as saying: “... the product of labour has ‘value’ in the sense of utility, use-value, but it does not have ‘value’.” This is wrong, unless ‘value’ here means ‘exchange-value’. Marx writes:

Value is labour .... ‘the’ labour, which is no more than an abstraction and, taken by itself, does not exist at all, or, if we take that which is behind it, the productive activity of human beings in general, by which they promote the interchange with nature, divested not only of every social form and well-defined character, but even in its bare natural existence, independent of society, removed from all societies, and as an expression and confirmation of life which the still non-social man in general has in common with the one who is in any way social.³

Marx writes that, under communism, value, and its direct measurement in labour-time, will become even more important.⁴

Value, whether of a product of a primitive commune or under communism, or as a commodity in a commodity-producing economy, is nothing more than an expression of the labour-time required for its reproduction. That value can only be expressed as a quantity of labour-time. It takes different forms in different societies. What distinguishes commodity production is not that only then does value come into existence, but that only then value takes the form of exchange-value. Marx says:

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 labour asserts itself, in the state of society where the interconnection of social labour is manifested in the private exchange of the individual products of labour, is precisely the exchange-value of these products.

Unless the law of value applies to all societies, why make this distinction? The value of products prefigures exchange-value, making it possible for exchange-value to arise. Only because products have objectively determined values can they be brought into an exchange relation with other products - as commodities, for the purpose of exchange - and the rate of exchange calculated.

John quotes Yevgeni Preobrazhensky: “... the law of value begins to operate wherever the production relations of commodity and commodity capitalist economy appear.”

However, Engels says, in his supplement to Capital Vol 3: “Thus, the Marxian law of value has general economic validity for a period lasting from the beginning of exchange, which transforms products into commodities, down to the 15th century of the present era.”

Taking Engels literally here then, the law of value does not apply from the 15th century, and the start of capitalist production. Does Engels mean that? No. He means that, from the 15th century commodities do not exchange on the basis of their values, as determined by the law of value. Capitalistically produced commodities sell at prices of production, not their exchange-value. If we take Preobrazhensky to mean that the law of value - understood in Engels’ sense, as the exchange of commodities according to their exchange-values, and as then modified by the emergence of prices of production - operates during this period, then there is no disagreement.

Marx defines use-value as something providing utility. It need be neither a commodity nor a product. The air we breathe is a use-value, but not a product. It is not produced by labour. It has no value, but the reason it has no value is because it is not produced by labour, not because it is not a commodity. A product, by contrast, is a use-value that is a free product of nature, but also the product of free human labour. Its use-value is determined by its qualities, as provided freely by nature and by the concrete labour used in its production. It does have value, as a consequence of the labour used in its production, not considered from its concrete nature, but as general social labour, which is why a chair produced by a good carpenter will not only have more use-value than that produced by a bad carpenter, but the labour used in its production will represent more value than that created by a bad carpenter. Each product has an ‘individual value’, determined by the labour embodied in its production.

Robinson Crusoe might take one hour to catch a fish, but only half an hour to catch the next. He learns to value his production by how long it takes to catch a fish on average. The individual value of his production of fish is simultaneously their social value, because his labour constitutes social labour in his society. When Friday joins him, it is the average of their combined labour-time that determines the value of their output. This labour provided by Robinson and Friday is already, therefore, abstract social labour. Not only is its concrete nature subsumed in its general nature as labour, but the specific differences in the labour of Robinson and that of Friday are also subsumed. Robinson and Friday only take into account their total production of different products.

This is value, not exchange-value. The fish are produced for direct consumption, not exchange. Exchange-value, here, is only that implied in the amount of some other product that they have to give up. That is the basis for determining the exchange-values of different products, as products become commodities, and value takes the form of exchange-value. Within a primitive communist society, some members are more adept at fishing than hunting, etc. These calculations of value enable them to allocate labour-time efficiently, via division of labour. It is the basis of comparative advantage.

Value is absolute, measured in abstract labour-time. The value of a gram of gold can only be expressed as a quantity of labour-time. But exchange-value is relative. It expresses the value of one commodity as a quantity of some other commodity, its equivalent form of value, which as money takes the form of the universal equivalent form of value.

John says:

Marx is certainly not trying to establish that Crusoe produced commodities with a value corresponding to his labour inputs. The ‘value’ that concerns Crusoe is utility: in other words, use-value. Exchange-value is but a fading memory.

If Marx is saying that the only ‘value’ that Crusoe is concerned with is use-value, how could this example provide us with all we need to know about the determination of value? It shows the continual tension between value and use-value. If value played no part in his consideration, he would quickly find that, though he did not wish to treat with value, value would treat with him. He would find that there was a severe limit on his ability to maximise use-value imposed by the law of value: ie, by the amount of labour-time required for the production of those use-values!

In John’s Anti-Dühring quote, Engels’ reference to value is to exchange-value. He uses ‘value’ as shorthand for exchange-value. It is the same as Marx says, in relation to communism:

… after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail, in the sense that the regulation of labour-time and the distribution of social labour among the various production groups - ultimately the book-keeping encompassing all this - become more essential than ever.⁵

Value does not cease to exist, but money prices cease to exist! Value and exchange-value are two different things, and the former logically and historically precedes the latter, and subsists without it.

Marx notes:

Moreover here he [Adam Smith] confuses - as Ricardo also often does - labour, the intrinsic measure of value, with money, the external measure, which presupposes that value is already determined; although he and Ricardo have declared that labour is “the foundation of the value of commodities”, while “the comparative quantity of labour which is necessary to their production” is “the rule which determines the respective quantities of goods which shall be given in exchange for each other” ...⁶

Exchange-value is only possible, once value exists and has been quantified in relation to the commodities being exchanged. The “intrinsic” measure of value is labour-time. The measure of exchange-value is money, which is merely an “external measure”. It is impossible to determine exchange-value, and measure it in terms of money prices, unless “that value is already determined”: ie, unless the “intrinsic” value of commodities is already determined.

John says:

These selected extracts serve to show that there is a broad consensus within post-Marx Marxism - ie, the Marxism after the deaths of Marx and Engels - that ‘value’ refers to the exchange of socially necessary labour-time through the purchase and sale of commodities.

Then that consensus is obviously wrong. Marx and Engels are quite clear that value refers to the immediate, intrinsic measurement based upon labour-time, whilst it is only exchange-value that is expressed relatively in terms of exchange relations between commodities, and specifically money.

John quotes Anti-Dühring:

The quantity of social labour contained in a product need not then be established in a roundabout way; daily experience shows in a direct way how much of it is required on the average. Society can simply calculate how many hours of labour are contained in a steam-engine, a bushel of wheat of the last harvest, or a hundred square yards of cloth of a certain quality.

John has already admitted that Marx was saying that labour is the only creator of value, and its measure is labour-time. So Engels here is saying what they have said several times. Under commodity production, value is measured indirectly, as exchange-value, and under capitalism as prices of production. Marx calls it an external, indirect measurement of value, as opposed to the intrinsic, direct measurement which is labour-time. Engels repeats Marx’s comment, in Capital Vol 3, chapter 49, that, in a communist society, it will be possible to calculate value directly in labour-time, and so allocate labour-time accordingly, so as to maximise use-value/welfare.

People can choose whatever words they wish as labels, but, having accepted that only labour creates value, and that its measurement is labour-time - which incidentally contradicts John’s argument directly, because exchange-value is not measured by labour-time - he should tell us, when such a communist society directly calculates that it will take one million hours of social labour-time to build a hospital, what name he wants to give to this other than the ‘value’ of the hospital. Marx and Engels pointed out that it is necessary to have these ‘values’ in front of us, in choosing how to use this available one million hours of social labour-time, to decide whether to obtain the use-value of the hospital rather than five schools, and so on.

The values of the hospital and of the five schools do not take the form of exchange-values. The allocation of labour-time is determined directly, rather than via exchange. But if value is created only by labour, and its measure is labour-time, it seems that, to quote John, “There is the risk of generating more heat than light ... and for no good purpose at that”. To then refuse to accept that the thing that has been calculated in measuring this required labour-time is the value of the hospital, school, etc!

Notes

1. K Marx Theories of surplus value Moscow 1969, chapter 20, p155.

2. Ibid.

3. K Marx Capital Vol 3, chapter 48.

4. K Marx Capital Vol 3, chapter 49.

5. Ibid.

6. K Marx Theories of surplus value Moscow 1969, chapter 15.