The Labour Theory of Value
Sir,
I have not read in the Socialist Standard an explanation of the Labour Theory of Value, and since it is a theory to which objections are frequently made may I put to you the following four points.
(1) It is a basic .and apparently reasonable law of economics that when demand exceeds the supply the price of a commodity rises, and conversely, when supply exceeds demand, the price then falls. What role therefore does supply and demand play in determining value?
(2) Following from this it is suggested that if all the commodities used by man were supplied by nature either the intervention of human labour, and in the same proportions as they are now produced, then they would have the same exchange value as now. In other words if meteorites which occasionally fall, were really diamonds and could be picked up off the streets once in a lifetime, they would still have the same value, providing they were just as rare and could be obtained in no other way.
(3) Why should the value of works of art rise to such heights? An estimate of the value of the Mona Lisa puts its worth at nearly £36 million, and this can only be due to the painting’s rarity — the fact that it is unique, and the demand for it — the fact that it is one of the world’s most coveted treasures. The original labour involved was fixed for all time, and ought not therefore to have altered the value.
(4) Finally, does the capitalist by anticipating demand, and matching supply to demand. thereby reducing waste and needless expenditure of socially necessary labour, not contribute to the value of the commodity?
K. McCormack.
Belfast, 15.
Reply:
It would be helpful to make a few definitions and give a brief outline of the Marxian Theory of Value before dealing with the points raised. By economics we mean the study of wealth production and distribution under capitalism. By wealth we understand useful goods and services (use values) produced by the application of human energies to the nature-given material of the earth. Under capitalism wealth is produced for sale with a view to profit, its unit being a commodity which in addition to use value also has exchange value. This form of society has not existed for all time but is the result of a long process of evolution. From the simple societies of pre-history where little or no exchange took place to the complex society of the 20th Century where activities are nothing but a continuous series of exchange transactions. Under capitalism the means of production are run co-operatively by the propertyless majority of the population whilst being owned and controlled by a non-working minority. The Labour theory of value not only shows what regulates the proportion in which commodities exchange but also the source of income of the owning capitalist minority.
As exchange is a social act value, which regulates this, is defined as a relationship between people which shows itself as a relationship between things. It has nothing to do with the physical properties (weight, colour, size, etc.) of commodities. It is the social labour embodied in commodities that gives them the common social property by which they may be compared. The value of a commodity is the amount of socially necessary labour required to produce it. Price is the monetary expression of value.
It is the working class who create value at the point of production. In order to get the necessities of life, they sell their labour power (skills and energies) to the capitalist. On average they get the value of their labour power: enough of the things needed to maintain themselves and their families (i.e. to produce and reproduce their labour power). But the value created by workers in production is more than the value of the labour power they have sold. This excess is known as surplus value and forms the source of the capitalist class’s income in the form of rent, interest and profit.
This brings us to the answer to question (4). A capitalist is someone who lives off rent, interest and profit. The capitalist does not play a role in trying to match supply and demand. This is done by workers, such as statisticians and market researchers, whose efforts are concerned with selling and maximising profits. Capitalism generates enormous waste over which neither capitalist or worker have any control. The only way a capitalist could contribute to the value of a commodity would be through being engaged in productive activities but as such would not be acting as a capitalist.
(1) It is price that varies according to supply and demand. When supply and demand are in equilibrium price and value are equal. Value varies according to the amount of socially necessary labour required to produce a commodity. Factors affecting value are the productivity of labour, and natural conditions like the fertility of the soil and ease of access to mineral wealth.
(2) This is an assumption we cannot accept. There is no commodity (wealth for sale with a view to profit) supplied by nature without the intervention of human labour. Air for instance is most useful to man and it is provided by nature without the intervention of human labour. It has no value or price and is not a commodity and is not private property. If everything were available from nature in the same way they would not be commodities.
As for meteorites, we know of none that have delivered anything useful that cannot be obtained here. For the sake of argument if it happened that a meteorite delivered “once in a lifetime" some useful material not previously known to man, there would be no means of applying theories of price or value (which deal with here everyday experience of capitalist production and distribution) to this. No doubt efforts would be made to reproduce the material synthetically. If successful, then the question of value would arise as we would be back to the familiar ground of labour power being expended in production. In the case of diamonds, efforts have been made to reproduce artificially what nature has produced naturally. For the capitalist it has proved better (cheaper) to have workers mining for diamonds, than making them artificially. If diamonds were to fall regularly as meteorites then their value would fall to the socially necessary labour spent in collecting them.
(3) As already explained the theory of value deals with everyday experiences of production in capitalist society. A commodity is not only produced once but is continuously reproduced. Works of art are unique and the prices put on them cannot be explained by economic theory. [That capitalism has to foul the things it finds most beautiful by putting prices on them is to be condemned.] The ‘Mona Lisa’ is no more rare than other paintings having much lower prices say the £500,000 recently paid for a Van Gogh. It will no more help us, if we could explain the conundrum of a price of £36 millions, than if we know the reason for Lisa's enigmatic smile!
Editorial Committee
Beyond Wages
Sir,
Among the multitude of wage and salary slaves, there are few indeed who look beyond striking for higher wages and salaries to a solution of their problems. Truly, that hypocritical slogan “A Fair Day’s Work for a Fair Day's Pay” has a lot to answer for!
Does our modern wage slave, crawling painfully into the Seventies really think he has “won” or yet "broken even” at the end of his day ?
On the contrary, he has "lost” on each occasion he accepts his wages. Why do we say this? Once a worker has worked — once his labour power has been expended, it has created a value greater than its own. But what he has produced this concealed labour within a given commodity, is the legal property of his employer, the capitalist, who thus has increased his original capital with the surplus-value donated by the sellers of the labour power generated in their carcases.
Despite these facts, we daily witness appeals for higher wages as the be-all and end-all of working class aspirations.
Certainly they must strike to protect their living standards, so long as capitalism remains, but if they desire to put an end to their status as suckers for the capitalist class, they must organise for the abolition of the wage system and the establishment of world Socialism. This will be an overdue end to human beings hawking their abilities, which is a degrading business.
G. R. Russell
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