The Source of Value (1967)

From the September 1967 issue of the Socialist Standard

This article was first printed in the Socialist Standard in 1910

The proofs adduced by Marx in support of his contention that the origin and rise of capital can be traced, distinctly and indisputably, to robbery, fraud and violence, form only a small part, and by no means the most important one, of his profound investigations into social wealth production. The portions of his work describing so lucidly the process of the reproduction and accumulation of capital are for the purposes of proletarian enlightenment of even greater value.

Marx’s evidence as to the reproduction and accumulation of capital bears out completely his theories of Value and Surplus-Value. According to them only two factors exist in wealth production – natural objects and social, co-operative labour. 

Capital is part of the social wealth, of which the workers have been robbed and which is invested by its owners for the purpose of further robbery. Social, co-operative human labour applied to natural objects being alone necessary to produce wealth, it follows that the reproduction and accumulation of capital – a portion of social wealth – can exclusively be traced back to the exploitation of human labour.

The development of capitalist production causes ever-extending co-operation and productivity of labour, resulting in a gradual cheapening of human labour-power. Hence the proletariat, who alone produce all wealth, grow increasingly poorer, since their sole source of income is the sale of their labour power; while the idle owners of the means of production are accumulating more and more social wealth. 

So soon as it is conceded that to-day social labour applied to natural objects is the only source of wealth, the claim to the means of production – capital in present-day Society – by its capitalist owners can only be sustained on the ground of heredity or privilege.

Now whenever the possessing class find themselves in the dilemma of being faced by the irrefutable facts of history or economics, they mostly succeed, by means of their wealth, in getting the services of the strongest and most cunning of economic and political prize-fighters. But with the growing enlightenment of the toiling masses the attitude and methods of these “intellectual” pugilists undergo continual change.

Until a few years ago it sufficed for the capitalist class to oppose to the Marxian theory of Value (that labour applied to natural objects is the source of all Value) the utility theory of Jevons – according to which the value of an article depends upon its final utility, that is, upon how useful to the community another article of the same kind would be.

But as this final utility twaddle was exploded by Marxian writers and speakers, the theory was superseded by another utility theory – that of the Austrian school – the theory of marginal utility, according to which “the value of an article is fixed when one is debating whether it is worth while to obtain it or not, the decision arrived at indicating the utility of an article on the margin of production, viz., on the margin of doubt whether it be worth while to produce it or not”.

These two value theories of utility have, however, with the aid of the Fabian theory of “the rent of ability”, fully blossomed out into the “directive ability” so crudely championed by the capitalist economist Mr. W.H. Mallock, (A Critical Examination of Socialism).

Now while Marx in his Capital (p. 322) shows that “directive ability” is only “a special kind of wage-labour”, the Fabians agree with Mr. Mallock that it is an entity apart from wage-labour, possessed by a class of “great men”. Mr. Mallock considers that class to be the capitalist class. The Fabians hold that this ability is possessed by another (strange to say a third) class in society.

Mr. Bernard Shaw in The Times (2.2.1910) made an absurd onslaught on Mr. Mallock because of the latter’s alleged distortion of the Fabian “rent of ability theory”. Shaw, ignorant of economics, cuts a comic figure when he endeavours to instruct others on the subject. But this time he out-Shawed Shaw. Here is one of his “up-to-date pearls of wisdom”, taken haphazard:

  This is not a question of the difference between the Socialist and the anti-Socialist: it is a question between the gentleman and the cad. Lord Landsdowne has not asked for the hundred millions he saved Europe by making our treaty with Japan, and Lord Charles Beresford, if the German fleet attacked ours, would not refuse to conduct our naval defence unless the country were to be given to him as prize-money when he had saved it.

In order to flatten Mallock, Shaw hashes up his old balderdash, “Socialism and Superior Brains” in pamphlet form, and therein (p. 57) he gives the following definition of the Fabian theory of the “rent of ability”:

  He (your skilled economist) does not romance about capitalists inventing Atlantic steamers: he shows you the capitalist and labourer running helplessly, the one with his money the other with his muscle, to the able man, the actual organiser and employer, who alone is able to find a use for mere manual deftness or for the brute strength or heavy bank balance which any fool may possess.

So ignorant is Shaw that he does not realise that his criticism of Mallock amounts only to the pot calling the kettle black, and therefore tends to still further confuse the issue between Socialist and anti-Socialist.

Now Mallock states his conception of the theory of “directive ability” (A Critical Examination of Socialism, p. 40) as follows:

  “Though labour is essential to the production of wealth even in the smallest quantities, the distinguishing productivity of industry in the modern world depends not on the labour, but on the ability with which the labour is directed, and in the modern world the primary function of capital is that of providing ability with its necessary instrument of direction”.

All this confusion as to what are the factors operating in wealth production and the functions of the capitalist, or whether “directive ability” is an entity apart from the labour-power of the working class, is dispelled, and the issues cleared up by Marx in Capital, particularly in those chapters dealing with “Co-operation, Machinery and Modern Industry”.

The main reason so many seekers after Socialist knowledge remain reformers is that they do not realise that man is a social product and that wealth production throughout human history has been based on co-operation. With a thorough grasp of these primary Socialist principles no proletarian can remain in ignorance of the meaning of social evolution and revolution. In his efforts to trace the history of man as a social product he will discover the fact that society is an organism with its own laws of development and that the various stages of such development are determined by the evolution in the tools of production. And in his endeavour to gather evidence of the existence of the co-operative principle in human society, the worker will learn that the condition of the wealth producers depends entirely upon the ownership of these tools of production, that is, upon whether they are owned by the users, or by another class, to whom such ownership gives the power of exploitation and domination. He will also come to realise that a change in the ownership of the means of production cannot be brought about by any evolutionary process, but, on the contrary, must be accomplished, by the propertyless class, by a political revolution.

In order to be able to show that “directive ability” does not exist apart from wage-labour it is necessary to briefly summarise and illustrate here what Marx has so minutely and exhaustively propounded in Capital, particularly in the chapters on “Co-operation, Manufacture and Modern Industry”. 

In perusing such classical writings as Ancient Society by Lewis Morgan, The Origin of the Family by Frederick Engels, The History of Politics by Jenks, and other works by avowed bourgeois authors we learn that the principle of co-operation has throughout history – under savagery, barbarism and civilisation – prevailed in the production of human sustenance. Already in primitive communist society – among the red Indians who lived mainly by the proceeds of the hunt, in the Indian village community that pursued principally agriculture for its maintenance, and in the patriarchal peasant family which produced its own means of subsistence – labour was organised on co-operative lines. Under chattel slavery, where the slave rendered personal service to his master, under feudalism, where the serf was attached to the land and worked part of his time for the maintenance of his master and the other part for himself, and under handicraft, when each handicraftsman used a set of tools of his own to produce an article right out, the principle of co-operation was not obliterated but concealed.

As each producer was only able to produce a particular article of wealth, but required a variety of such articles for his sustenance, exchange of commodities was necessary, and though the principle of co-operation was hidden in the process of production, it was clearly brought to light in the process of exchange. After all, each commodity was the embodiment of one man’s activities, and therefore by the exchange of one commodity for another the exchange of men’s activities was continually taking place.

A close examination into the history of wealth production convinces us that Mallock and his supporters are speaking altogether contrary to fact when they assert that with the development of modern Industry, the capitalists, the owners of the means of production have developed a new factor, possessed by them, namely, “directive ability”, to which can be traced the origin of the greater amount of wealth produced. The records of history prove just the contrary. 

Whether we take the evidence supplied by Marx and Engels on the one hand, or by Adam Smith, Thorold Rogers and De Gibbins on the other, we find it all supports the contention that the owner of the means of production is only performing the function of superintendent in production while the same is in its infancy, that is to say, while it is in the stage of manufacture, where production is carried on with small primitive tools and by means of ever growing division of manual labour. And the aforementioned historians and economists further agree that as soon as machinery, steam and electricity are introduced into production, resulting in what we term “Modern Industry”, the capitalists engage their superintendents of labour in the same way that they purchase ordinary labour-power. In the modern factory, workshop or other place of production, the average superintendent is not a capitalist but a wage-worker, commonly called a salaried official, who, having as a rule no property, is compelled to sell his labour power to the capitalist. It is true that the salary paid to such official contains not only the price of his labour-power as superintendent of production, but often includes his pay as “hustler”, of the producers.

Marx, far from denying the need for a directing authority in modern production, emphasises the fact of its indispensableness. He writes in Capital (p. 821):

  All combined labour on a large scale requires, more or less, a directing authority, in order to secure the harmonious working of the individual activities, and to perform the general functions that have their origin in the action of the combined organism, as distinguished from the action of its separate organs. A single violin player is his own conductor; an orchestra requires a separate on.

But wisely Marx does not ascribe the ever growing productivity of co-operatively used labour to the directing authority, which, after all, is only a single organ of the social organism, and like all others, a social product, which society has nourished, clothed, taught and trained for the position it occupies.

And on the other hand, Marx does not ascribe the increasing productivity to manual labour alone, but proves that all activities, physical and mental, combined in one social co-operative mass, contribute to the production of wealth in society. To single out individuals – even the cleverest and most capable – amounts to an allegation that a man can exist apart from and independent of society. These points are brilliantly explained in the following passages in Capital. On page 311 we read:

  “Capitalist production only then really begins, as we have already seen, when each individual capital employs simultaneously a comparatively large number of labourers; when consequently the labour-process is carried on on an extensive scale and yields, relatively, large quantities of products. A greater number of labourers working together, at the same time, in one place (or, if you will, in the same field of labour), in order to produce the same sort of commodity under the mastership of one capitalist, constitutes, both historically and logically, the starting-point of capitalist production.”

On pages 315-316 we are told:

  “Just as the offensive power of a squadron of cavalry, or the defensive power of a regiment of infantry is essentially different from the sum of the offensive or defensive powers of the individual cavalry or infantry soldiers taken separately, so the sum total of the mechanical forces exerted by isolated workmen differs from the social force that is developed, when many hands take part simultaneously in one and the same undivided operation, such as raising a heavy weight, turning a winch, or removing an obstacle. In such cases the effect of the combined labour could either not be produced at all by isolated individual labour, or it could only be produced by a great expenditure of time, or on a very dwarfed scale. Not only have we here an increase in the productive power of the individual, by means of co-operation, but the creation of a new power, namely, the collective power of masses.”

And on page 319 Marx says:

  “The combined working-day produces, relatively to an equal sum of isolated working-days, a greater quantity of use-values, and, consequently, diminishes the labour-time necessary for the production of a given useful effect.”

and further on:

  “When the labourer co-operates systematically with others, he strips off the fetters of his individuality, and develops the capabilities of his species.”

A cursory glimpse at capitalist production in modern times convinces us that the capitalist – the receiver of interest, profit and rent – has, as far as production is concerned, long ceased to fulfil any useful function whatsoever, and it is no exaggeration to allege that even the work of gathering in the interest, profit and rent is nowadays performed by paid menials – clerks, collectors or private secretaries. And if we occasionally find a capitalist seemingly engaged in work, closer enquiry always shows that his “work” amounts to nothing more or less than scheming how to more successfully exploit the workers. We possess, apart from the statistics of the enemy, practically no figures to prove how much surplus-value the capitalists are wringing from the toilers. The most recent census of production (1907) was taken deliberately to ascertain only the values produced and the number of workers employed in various trades. The Census Act particularly provided that salaries and wages were not to appear in the returns. But taking roughly the underestimated figures of capitalist statisticians for guidance, the surplus-value wrung from the workers in this country approximates 75 per cent of the wealth produced by them.

Now when we consider that the capitalists are not only useless members of society, but the worst of parasites on the social organism, with the result that millions of workers are either steeped in direct poverty or are on the brink of it, we see that the time has arrived when the toilers, realising their tremendous collective power both in the economic and political field, must consciously and revolutionarily organise for the overthrow of the parasite class and their own emancipation from wage slavery.

Hans Neumann

From the Socialist Standard, April 1910.