Why Marx’s critique of capitalism still matters (2026)

From the September 2026 issue of the Socialist Standard

Marx’s Capital is subtitled A critique of Political Economy. ‘Political Economy’ was an attempt to explain how capitalism works and how it might develop over time, Two of its main representatives were Adam Smith and David Ricardo and much of Capital is shaped by and addresses the works of those two thinkers. They shared a fundamental idea that we know as the Labour Theory of Value (LTV), but it had a major flaw: the inability to explain the source of capitalist profit. This flaw was only solved in Marx’s Capital. Below, we discuss issues around the theory.

Part I: The Ricardo problem

To understand Marx’s contribution, you first need to understand the problem he inherited from classical political economy.

The classical labour theory of value

Adam Smith and David Ricardo both worked with versions of the labour theory of value. The basic idea: the value of a commodity is determined by the amount of labour required to produce it. The greater the labour-time required, the greater the value of the commodity.

This made intuitive sense and seemed to explain a lot about how markets worked. But it had a fatal flaw that Ricardo acknowledged but couldn’t resolve. By the way, both of them treated ‘labour’ as the only commodity that the worker brings to market.

What Ricardo understood

Labour Theory of Value: Commodities exchange based on the labour time required for their production; labour is the source of value.

Class conflict: He recognised that capitalists, landlords, and workers have opposing interests; rising wages reduce profits and vice versa.

Where Ricardo stopped (and Marx went further)

1. Naturalisation of capitalism

Ricardo: ‘This is how economies function. Labour creates value, always has, always will.’

Marx: ‘Value is specific to capitalism. In other systems like feudalism, labour does not take the form of value.’

Value can be defined as the socially necessary labour-time spent reproducing commodities within the capitalist mode of production.

2. Inability to explain profit’s source

Ricardo’s dilemma: If labour creates all value and workers are paid for for their labour, where does profit arise? He couldn’t resolve this contradiction.

Marx’s solution: Workers are not paid for their labour; they are paid for their labour-power. Labour-power possesses a value, say 10,, reflecting the cost of reproducing the worker (food, shelter, etc.), but normally generates more value, say 12, when consumed. It is the only commodity which can do this, This extra value is the source of profit.

Historical context: Franklin, Smith, and Aristotle

Benjamin Franklin contributed to this discourse by asserting that the value of a commodity derives from the labour hours needed for its production from start to finish. Franklin never developed it into a theory. He was writing about legitimising paper currency.

Adam Smith maintained a contradictory attitude to value, shifting between LTV and a cumulative theory whereby value was determined by wages + profit + rent. He noted that commodities exchanged at equal ratios (one beaver = two deer) but couldn’t explain why this was so.

Aristotle was able to observe the LTV in action – he saw that commodities exchanged at stable ratios (5 beds = one house) but couldn’t explain why this should be so. Marx paid him a compliment writing: ‘Aristotle’s genius is shown by [the fact] that he discovered, in the expression of the value of commodities, a relation of equality’ (Capital volume 1 chapter 1) but the inequality inherent in a slave society blinded him to the source of that equality.

The profit paradox:

Here’s Ricardo’s problem: if, as he argued, commodities exchange at their value (determined by labour-time), and if labour itself is a commodity that exchanges at its value, then ‘where does profit come from?’

Let’s walk through it:

1. A capitalist buys raw materials at their value (say, $50 worth of cotton yarn).

2. The capitalist buys labour from the worker at its value (say, $50 for a day’s work).

3. The worker transforms the yarn into cloth.

4. The capitalist sells the cloth at its value (the combined labour-time of producing the yarn + weaving it into cloth).

Total cost: $100 (materials + labour)

Total revenue: $100 (value of the cloth)

Profit: $0

But capitalists do make profit. So either:

1. Capitalists are systematically cheating (buying below value, selling above value), or

2. There’s something wrong with the theory.

Ricardo couldn’t solve this. He acknowledged the problem but left it as an unresolved contradiction in his system. He died not being able to resolve it. He had his hand on the doorknob, but didn’t turn it and walk through the door. This wasn’t just an academic puzzle – it was the central question of political economy. Without solving it, you couldn’t explain how capitalism actually worked.

The moralistic detour

Some socialist thinkers – particularly Pierre-Joseph Proudhon – seized on this contradiction and concluded: ‘Capitalism is theft’. Workers are being cheated. The solution is to create fair systems of exchange where workers receive the full value of their labour.

Proudhon’s famous declaration – ‘Property is theft!’ – captured this moral outrage. His solution was mutualism: worker cooperatives, mutual credit banks, and systems of direct exchange that would eliminate the middleman capitalist.

But this was a dead end. Why? Because it misdiagnosed the problem. It assumed exploitation happened because of cheating – bad actors violating the principle of equal exchange. Marx would show that exploitation happens within equal exchange, as a structural feature of the system itself. This is the difference between scientific socialism and utopian reformism. Capitalists aren’t villains – they’re playing by the rules. The problem is the rules themselves. But on we go…

Part II: Marx’s breakthrough – Labour vs. Labour-Power

Marx’s genius was in recognising that Ricardo and Proudhon were asking the wrong question. The problem wasn’t that capitalists were cheating. The problem was that labour itself isn’t what workers sell.

The distinction

Marx distinguished between two concepts that everyone before him had conflated:

1. Labour-power: The capacity to work. This is what the worker sells to the capitalist – their ability to perform labour for a certain period of time.

2. Labour: The actual activity of working, which produces value when labour-power is consumed in the production process.

This distinction is subtle but revolutionary. Here’s why it matters:

Labour-power as a commodity

Like any commodity, labour-power has a value – determined by the labour-time required to reproduce it. But what does it mean to ‘reproduce’ labour-power?

It means: ‘the cost of reproducing the worker’.

To show up to work tomorrow, the worker needs: food, shelter, clothing, rest, healthcare, education or training.

The ‘value of labour-power’ is the socially necessary labour-time embodied in these necessities. In other words, it’s roughly the cost of keeping the worker alive, healthy and able to work. There is an additional component too that covers the cost of raising the next generation of workers

Let’s say all this costs $100 per day. That’s what the capitalist pays in wages.

Labour as value-creating activity

But here’s the key: when the capitalist consumes labour-power – when the workers actually work – they produce more value than the cost of their labour-power (Marx lays this out explicitly in Chapter 6 of Capital Volume I).

Let’s say the worker works an 8-hour day and produces commodities worth $200.

The capitalist pays: $100 (the value of labour-power).

The worker produces: $200 (the value created by labour).

The difference: $100 (surplus value, appropriated by the capitalist. It will then be split up into profit, interest and rent, but that is immaterial to the present discussion).

Why this solves the Ricardo problem

Notice what just happened: Exchange occurred at value. The capitalist paid the worker exactly what their labour-power is worth. No cheating. No violation of market principles.

And yet, the capitalist extracted surplus value. This doesn’t come from cheating – it comes from the unique nature of labour-power as a commodity.

Labour-power is the only commodity whose consumption produces more value than it costs.

This is the secret of capitalist accumulation. And it’s why Marx’s critique is fundamentally different from the moralistic critiques that came before. This is why socialists assert that class war originates in the employment process – the less a worker is paid, the more a capitalist accumulates in profit. It’s not about being greedy or evil, or being good or generous. It’s simply necessary to compete in the effort not to go out of business. The capitalist who refuses to extract maximum surplus value doesn’t stay a capitalist for long – they get driven out by competitors who do. The system selects for exploitation.

Part III: Why a moralistic critique is dangerous

Marx didn’t just disagree with Proudhon’s analysis – he considered it dangerous to the working-class movement. Why?

1. It misdiagnoses the problem

If you believe exploitation happens because capitalists are ‘cheating,’ your solution becomes: ‘Make capitalism fairer.’

This leads to reformist dead-ends:

1. Worker cooperatives that still must compete in capitalist markets

2. Ethical consumption campaigns

3. Appeals to capitalist conscience

4. Labour laws that tinker at the margins

These strategies don’t challenge the fundamental structure. Even the nicest, most ethical capitalist must extract surplus value to survive in competition. If they don’t, they go bankrupt.

Bad diagnosis = bad cure.

2. It lets capitalists off the hook

A moralistic critique says: ‘Capitalists are bad people doing bad things.’ This can lead to people organising to use violence and fantasising about using guillotines to get this or that capitalist, which will not solve any problems. The problem isn’t the capitalists themselves, it’s the system’s rules that require the capitalist to behave in a certain way.

A moralistic critique is easy to deflect:

1. ‘I pay above minimum wage!’

2. ‘I offer great benefits!’

3. ‘If you don’t like the wage, don’t take the job!’

Marx’s structural critique is much harder to escape: ‘Even if you’re the most generous capitalist in the world, you are still extracting surplus value. If you didn’t, you wouldn’t be a capitalist. The system requires exploitation to function, regardless of your personal morality.’

3. It divides the working class

If exploitation is about bad bosses, workers start thinking:

1. ‘My boss is actually pretty nice. Maybe I’m not exploited.’

2. ‘We just need to replace the greedy CEOs with ethical ones.’

This fractures class consciousness. Workers waste energy trying to find good employers instead of recognising that all wage labour involves surplus extraction.

3. It obscures the source of power

A moralistic critique makes exploitation seem psychological – a matter of individual greed.

Marx showed that it’s structural. Even a worker-owned co-op, operating in a capitalist market, must increase productivity and accumulate capital to survive. The system itself enforces exploitation.

Part IV: Conclusion: Why this still matters

Marx’s labour/labour-power distinction isn’t just an abstract theoretical point. It has profound implications for how we understand the economy and our place in it.

It explains profit without cheating

You don’t need to believe in conspiracy theories about greedy capitalists. The system works exactly as advertised – and still produces exploitation.

It reveals the structural nature of exploitation

This isn’t about bad individuals. It’s about a mode of production that requires the extraction of surplus value to function.

It clarifies strategy

If exploitation is structural, you can’t reform it away. You can’t create ‘ethical capitalism’ or ‘fair trade’ your way out of it. You need to change the fundamental relations of production. In other words, capitalism can’t be made nice – maybe nicer at the margins, but never nice. The extraction is baked into the structure.

It cuts through ideological mystification

When someone tells you ‘the market is fair’ or ‘you’re paid what you’re worth,’ you can ask: ‘Then where does profit come from?’

The labour/labour-power distinction gives you the tools to see through the illusion of equal exchange and recognise the hidden extraction at the heart of the system.

Dan Mullens

Daylight robbery. (1911)

 From the March 1911 issue of the Socialist Standard

We are frequently told by our more outspoken enemies that the workers are not robbed, and, there are members of the working class who actually believe it. But the following extract from a recent issue of the “Daily Telegraph” not only completely refutes the former, but may also enlighten the latter.

Under the heading “Census of Production” was given a list of industries concerned mainly with food, drink, and tobacco, and it was stated that the Board of Trade preliminary tables summarising the returns received in respect of those trades give the following results for twelve months:

Gross output from 13 divisions £257,215,000

Net                               „ „ „          £84,325,000

Persons employed                             407,830

The “Daily Telegraph” commented thus, upon the figures:

“The first column represents the gross output, that is the selling value or value of work done. The second shows the net sums realised after deducting the cost of the materials used. The figures denoting the net output express completely, and without duplication, the total amount by which the value of the products of the industries exceeded the value of the materials purchased from the outside, that is they represent the value added to the raw materials in the course of manufacture. This sum constitutes for any industry the fund from which wages, salaries, rents, royalties, rates, taxes, depreciation, advertisement and sales expenses, and all other similar charges, as well as profits, have to be defrayed.”

Now rents, profits, etc., are not paid to the working class, who benefit only under the item wages. On the other hand, no value can be added to raw material except by labour. It follows therefore that while the workers produce the whole of the £84,325,000 worth of wealth which figures as the net output, they are robbed of all that is not included in the term wages.

Now let us do a little sum in simple division. 

The net output, £84,000,000, divided among the 407,830 persons employed, gives over £275 per annum to each. The difference between this sum and the average wage of the workers in those trades shows the extent of the robbery as far as those particular industries are concerned. And if the average rate of wages in these industries is that of the whole country, then these workers are rolled of over three-fourths of their produce.

Criticus

Cooking the Books: No Marx without Adam Smith? (2026)

The Cooking the Books Column from the February 2026 issue of the Socialist Standard

Next month is the 250th anniversary of the publication of Adam Smith’s The Wealth of Nations. In the run-up to this, the Economist (18 December) carried an article by its ‘senior economics writer’, Callum Williams, in which he suggested that Smith had been ‘misinterpreted and his influence overstated’.

His case was that Smith wasn’t the originator of the ideas he expressed, that he copied from others and was a bad writer, and that he also made mistakes:

‘In the “Wealth of Nations”, he argued for the “labour theory of value” (the idea that the amount of work that goes into a product determines its price, rather than how useful that product is). This theory distracted economists for decades and laid the groundwork for Marxism. Exploitation, in Marx’s view, arose from the difference between how much workers had laboured to create a good and what they were paid for producing it. Without Smith, there could have been no Marx’.

The last sentence is ridiculous. There were others before Smith who put forward the view that the exchange-value of a product of labour depended on the amount of labour required to produce it. In a footnote early on in the opening chapter of Capital, Marx’s quotes Benjamin Franklin as having pointed out in 1729 that:

‘Trade in general being nothing else but the exchange of labour for labour, the value of all things is … justly measured by labour’.

Prior to Capital, in A Contribution to the Critique of Political Economy (1859), Marx credited Franklin as the person ‘who for the first time deliberately and clearly … reduces exchange-value to labour-time.’

In a podcast on the same subject on 1 January, Williams attempted to refute the labour theory of value by saying that, on the contrary, ‘what determines the price of a good is … how much demand there is for that good and how much of that good is supplied by the market’. This differs from what he had written in his article that a product’s price is determined by ‘how useful that product is’. That argument is easy to refute —there are a lot of things that are more useful than gold or diamonds yet gold and diamonds have a higher price; which, clearly, must have something to do with the fact that it is more difficult (takes more work and time) to produce gold and diamonds than it does to produce the other, more useful products.

Supply and demand determine the short-term market price but, in the longer term, supply will only continue if the suppliers — profit-seeking capitalist firms — cover their costs and make a profit. In bringing about the longer-term price the play of market forces will take into account the labour-time required to produce the product from start to finish.

Not that Marx did argue that under capitalism products exchanged at their labour-time value. He was well aware that the pursuit of profits resulted in this happening only accidentally but that the prices at which products sold could only be explained on the basis of a labour theory of value.

The reason why economists came to reject any labour theory of value (Smith’s as well as Marx’s) was that it led to the conclusion Marx reached who, said Williams, based ‘his entire theory of exploitation on the labour theory of value’. It was, he said, ‘precisely because Smith was so influential, his wrong-headedness about the labour theory of value was a big problem.’

This problem was solved, says Williams, when economic theory ‘gets wrestled back through the correct understanding of value by the marginalists at the end of the 19th century’. How convenient for the exploiters of labour, but it turned academic economics from a science into apologetics for capitalism.

Cooking the Books: Capitalist musings on money (2026)

The Cooking the Books column from the January 2026 issue of the Socialist Standard

Some capitalists have been philosophising recently on their favourite subject — money. One-time investment banker Matt Levine titled his ‘Money Stuff’ column in Bloomberg News (24 November) “Leave the Gold in the Ground”.

Gold is no longer used as the currency — what Marx called the ‘money commodity’ — as it was for millennia. It is, however, still a store of value. ‘Even now’, Levine pointed out, ‘gold is an important reserve asset, and people hold it in their financial portfolios in the form of gold futures, gold exchange-traded funds, etc’. What is being traded are titles to the ownership of gold. Those who buy and sell these are speculating on how the price of gold will move in the future. The gold itself is stored underground in a safe vault. When these titles are exchanged what happens is just that an entry of who it belongs to is changed in a database. The gold stays where it is.

Levine discusses the case of a group of capitalists who, noticing this, have come up with the idea of selling titles to gold that is still in the ground. They are either fools or knaves as they are assuming that unmined gold in the ground is as valuable as gold bars in a vault. But, of course, it is not. Unmined gold has no value precisely because it hasn’t been mined, though the land under which it lies will have a price based on what royalties might be received were it to be mined. Gold bars in an underground vault have value only because they have been mined, refined, made into bars and transported, their value reflecting the amount of labour that has had to go into doing all this.

What is perhaps surprising is that this is the explanation put forward in a news site for capitalists, surprising because it is an application of the labour theory of value that pro-capitalist economists teach is nonsense. After noting that ‘that modern finance creates layers of abstraction on top of real-world activity, and sometimes those abstractions become unmoored from the reality’, Levine applies this not just to titles to gold but to the shares in any business. As an example he takes Amazon:

‘A share of Apple Inc. stock encapsulates all of the labor and creativity that went into inventing the iPhone and manufacturing it and selling it and building app stores and everything else; all the factories and offices and decades of decisions are all reflected in the tradeable electronic token that is a share of stock’.

Another capitalist who has been philosophising on money is the richest person in the world himself, Elon Musk. Fox News reported him as telling a business forum on 17 November:

‘“If you go out long enough, assuming there’s a continued improvement in AI and robotics, which seems likely, the money will stop being relevant at some point in the future,” Musk said. He added there will still be constraints on power, such as electricity and mass. “The fundamental physics elements will still be constraints, but I think at some point currency becomes irrelevant,” Musk said’.

Musk seems to be embracing here the FALC — Fully Automated Luxury Communism — thesis. Improvements in AI and robotics will certainly make socialism easier but it is not that which will make money irrelevant. What will is only the conversion of the means of production from the private property of the few into common property of all. And that doesn’t have to wait for ‘full automation’, nor will it come about automatically through advances in technology.

Letter: Silent professor (1984)

Letter to the Editors from the December 1983 issue of the Socialist Standard

Silent professor

Dear Editors,

I have just been reading the introduction to The Communist Manifesto by A.J.P. Taylor. Some of the criticisms he uses against Marx and marxism 1 have come across before and I disagree with him. However, he claims that the Labour Theory of Value has been discredited (p.37 in the Introduction). Having read Volume I of Capital. I find it hard to believe that the value of a commodity is not created by the labour power of the workers.

Could you please let me know what theory/argument Mr Taylor has in mind when he says the Labour Theory of Value is no longer credible and whether or not it has any validity (which I doubt).

S H Lodwick 

Plymouth

Reply:

S.H. Lodwick has a point; where do famously learned people like A.J.P. Taylor find the evidence to support their sweeping condemnations of marxism and its explanation of the workings of capitalist society?

To try to answer this question we wrote to A.J.P. Taylor, some two months ago. telling him that we can't answer our correspondent's enquiry and asking for his help in finding the sources his opinions are based on. But on this point Professor Taylor, who is not famous for any reticence in publicising his views, remains mysteriously silent. We have not had a word from him. by way of reply or even acknowledgement. Readers can draw their own conclusions.

Editors.

Letter: Marx and economics (2002)

Letter to the Editors from the October 2002 issue of the Socialist Standard

Marx and economics

Dear Editors,

I purchased, and enjoyed, amongst others the pamphlet Marxism Revisited and Some Aspects of Marxian Economics. Now, thankfully, my understanding of economics isn’t all that strong, but I could just about follow what you were saying there. But could I just ask you to explain about socially necessary labour. I understand, that according to Marx, the value of a commodity is determined by the amount of socially necessary labour that is contained in it. But I always understood that this concept was no longer academically respectable. How can socialists still believe in this concept today?

In the Marxism Revisited pamphlet you talk of being opposed to all wars. Which is fine to take a principled stand but how could a socialist stand back and not take a stand in the Spanish Civil War or, in, what the Russians rightly call The Great Patriotic War, WWII. Surely socialists should have (did) support the Republic and should have been against fascism in WWII.

I just want to know how you could be opposed to the Republic fighting against Franco? Back then socialists should have urged Britain to join forces with the Spanish government instead of turning their backs and worse, by allowing the Italians and Germans to police the waters around Spain on the pretext to stop supplies to Franco. They damn well helped him!

That all said, I have enjoyed what I read, particularly the Market System Must Go. But there I detected a nostalgia for the Gold Standard, surely not!

Steven Johnston, 

Stockport

Reply:

Regarding socially necessary labour time (and the labour theory of value of which it is a key component) we do not really care whether it is academically respectable or not. Most concepts and theories which are academically respectable at some point – especially in the arts and social sciences – are not necessarily those which will stand the test of time. Indeed, academic respectability in these fields is largely a transient phenomenon which is far more reflective of ideological developments within capitalist society than it is of anything else.

Few disciplines demonstrate this more transparently than economics. Theories taken for granted thirty or forty years ago (the wholly beneficial effects of the Keynesian multiplier, the use of interest rates as a policy instrument for Balance of Payments control, the Phillips Curve, etc) are now oddities only to be found in textbooks of economic history. Much of monetarist theory (and even more recently, neo-classical theory) has been going the same way.

The ultimate test of any economic theory is whether it is able, over time, to accurately account for what happens in the real world. We contend that Marxian economics has been able to do this in a way none of the other theories have as the fashion for them has waxed and waned.

For over a century now, conventional economic theory has been unable to even remotely explain something as essential to the market economy as the prices at which various commodities sell. Demand and supply tells us why strawberries at local convenience stores are selling at £1.50 a punnet this week as opposed to £1.30 last week but it certainly doesn’t explain why a bicycle persistently costs more to buy than a strawberry, a car persistently costs many times more to buy than a bicycle and an oil tanker several more times again than a car. How could it?

Conventional demand and supply theory as found in modern economics textbooks certainly helps to explain short-term price movements for commodities, but to say that demand and supply determines commodity prices as a whole is like saying that the fluctuations of the waves on the sea determines the depths of the ocean.

The labour theory of value, with its concept of socially necessary labour time, is the only explanation that fits: commodities tend to exchange in certain value relationships because of the amount of labour time it takes to produce them from start to finish. It is around this value that prices tend to fluctuate, as influenced by demand and supply. You will no doubt have read in our pamphlets that because the labour theory of value also points to the fact that workers are exploited in capitalist society, giving unpaid labour (surplus value) to the capitalists when they produce commodities for them, it is a theory that the supporters of capitalism are happy to try and bury.

We might also add that it is through applying the labour theory of value that Marxian socialists have been able to explain the economic phenomenon of inflation which has beset the capitalist world since the Second World War. Our pamphlet The Market System Must Go – Why Reformism Doesn’t Work has more detail on this and other applications of Marxian economics, though we should add that we certainly have no nostalgia for the Gold Standard. While this had both advantages and disadvantages to the capitalists as an international trading system, we as revolutionary socialists are interested in the abolition of all the defining characteristics of the capitalist economy (wages, capital, prices, money, etc) including the paraphernalia of international trade.

Finally, you raise the issue of the Second World War and its precursor in Spain. The socialist position is that that worst thing the working class can do politically is put its class enemies in control of the machinery of government and the armed forces, as sooner or later they will be used against them. Both sides in the Spanish Civil War and both sides in the Second World War were pro-capitalist and anti-working class and socialists would not – and did not – support a capitalist government of either complexion. Socialists would of course prefer to operate under conditions of limited bourgeois political democracy than outright fascism and political dictatorship but history demonstrates that even elementary political democracy in capitalism cannot be defended through wars (for one thing, that is never their purpose – not in Iraq now, nor as in western Europe then).

If illustration of this is needed, how grateful the Spanish working class (including those elements struggling towards taking up socialist positions) must have been when the side of democracy won the war in 1945 . . . and then proceeded to protect and nurture the Franco dictatorship in Spain and the Salazar dictatorship in Portugal. They must have been almost as delirious as those freed from the yoke of the Nazi tyranny in Germany were when they were subsequently delivered into the hands of one of the worst police states in history (the mis-named German Democratic Republic) by those friends of the workers and arch-democrats themselves, F. D. Roosevelt, Winston Churchill and Joseph Stalin.

Editors.

The Labour Theory of Value - Part 2 (1937)

From the August 1937 issue of the Socialist Standard

(Continued from the July issue.)

Of course, it is only necessary labour which counts as value. If one uses old-fashioned methods or obsolete instruments, or wastes more time or energy or materials than is necessary compared with the generally prevailing knowledge and equipment, this unnecessary additional labour will give no additional value to the product. Society is the accountant, not the producer. The value of a commodity is determined by the amount of socially necessary labour required to produce it.

'

The objections of the orthodox economists, and their alternative theories mentioned above, are more significant than important. It is to be expected that they should be preoccupied with an explanation of "price," which is what chiefly concerns their employer, the capitalist. It is not to be expected that they should occupy themselves with a theory of value which strikes the capitalist where he can’t take it, as we shall see. What is important is that the capitalist substantiates the labour theory of value in actual practice. He acts upon it and it works. Not only does he pay more for skilled workers than for less skilled, according to the time and cost of producing that skill, but he constantly aims to reduce the value of his products by eliminating waste, improving methods and so on, while hoping either to go on selling at the old price and thus making an extra profit, or to reduce his price to the new value and smash his rivals. The means of production are thus continually being revolutionised in one industry or another by the constant competition to produce commodities at lower values. The capitalist demonstrates in practice what his economists cannot tell him in theory.

Since value, the quality peculiar to commodities, manifests itself only in exchange it is not surprising that the history of exchange is a large slice of human history. Beginning in primitive times with exchange, between tribes, of surplus products incidentally left over after their needs were satisfied, it initiated the production of surpluses purposely intended for exchange and not for use, the production of commodities, and soon came the need to set apart one of these commodities to serve as a common medium of exchange for all others; this commodity thus becoming— money. Tribal enemies captured in war were not now put to death, but made slaves for the production of surplus wealth. Accumulation of private property, class exploitation, and commodity production are an inseparable trinity. The slave civilisation of the ancient world, of Greece and Rome in particular, witnessed the death-struggles of tribal Communism and saw arise the new system based on private ownership and class exploitation. This under Mediterranean hot-house conditions. In Northern Europe a slower and vaster development of commodity-relationships awaited the coming of the world market. Ocean navigation, conquest and colonisation; conversion of feudal dues into money rents, influx of silver from newly-discovered mines, “enclosure” movements, which took away the peasants' lands, the power-machine factory movement, which pauperised the handicraftsmen—both classes bereft of any claim on the means of production and became proletarians, the working class, wage-slaves of a small class now in exclusive possession of the means of life: the capitalist. These were the processes by which the commodity came to maturity.

The commodity has come of age. For now the very source and content of value, labour-power is itself a commodity. Men are not men but hands in the labour market, hoping for a bidder, rotting without one.

It is here that the importance of the distinction between usefulness and value comes home. It is the distinction which earlier labour theories of value, notably that of Ricardo failed to make between labour and labour power. It is the secret of capitalist exploitation. The worker sells his labour power (his knowledge, skill, energy) for a price, his wages, salary, fees, commission, etc., which, on an average is its value. The worker gets the value of his labour power, the socially-necessary cost of reproducing it—the cost of living. The capitalist, having bought the commodity, proceeds to enjoy the use of it as fast as he can and as long as he dare. By lengthening the working day, or by speeding up, by fines and penalties, by regimentation and discipline, by team competition and pace-setting, by psychological research and cups of tea he squeezes from the worker a far greater quantity of labour than the value of his labour power. He extorts surplus value.

Marx’s analysis of the commodity unearthed a secret which will bury a society! “What capitalism produces above all things are its own gravediggers,” and this is the grim and glorious spadework for which the S.P.G.B. is organised. There are plenty of spades, fellow-workers, waiting but the hands to use them.

Frank Evans.

The Labour Theory of Value (1937)

From the July 1937 issue of the Socialist Standard

Everybody knows, by practical experience, what “matter" is, though few might care to offer a precise definition. Everybody knows, too, by experience, what “commodities" are without necessarily troubling to explain the term. Does a theoretical explanation matter, anyway? Does the long research of Marx upon the subject of the commodity help to solve any problem worth solving?

Take “matter" again. Our practical knowledge of matter, the physicist would say, is meagre, superficial, distorted, inaccurate. His truer concept of matter, his profounder knowledge of electrons, protons and neutrons has put a harness on nature and the bit in her mouth. We have machines, devices, productive forces that would have frightened our forbears into fits. And what the atom is to the physicist so the “commodity" is to the Socialist.

Let us take a few commodities. Take apples and amethysts, bread and barometers, cradles and coffins. What have they got in common which makes them all “commodities" ? They are all physical things and have a use, but so also with daisies and dewdrops. What distinguishes the things in the first group is not that they are useful, since this is common to both groups, but that they are the proceeds of human labour and are the subject of commercial transactions. At a stroke the commodity is transformed from a physical into a social phenomenon! For things produced for market bear a banner with this strange device: “ I am worth  — ." They have value. The things in the second group do not go to market: they have usefulness, but not value. Things produced for exchange have usefulness and value. They represent values, not usefulness, to the intending seller; they represent usefulness only to the prospective buyer, or to the last of a chain of buyers, the one who buys to enjoy the use of them.

The commodity is thus a social phenomenon, because the evolution of exchange, from barter to “bulls" and “bears" on the Stock Exchange, progressively modifies the methods of production and the social institutions arising therefrom; because exchange and mart is bound up with important institutions—private ownership, class, government, law, even religion; because in the market material relations between tinker and tailor express themselves as social (exchange) relations between kettles and clothes; because, lastly and firstly, value, the soul of the commodity, is a social quality, socially determined.

Supply and demand theories explain why prices may rise above or fall below value. They explain fluctuations away from value, not the thing, value, round which the fluctuations occur. What determines value when supply and demand are equal?

Utility theories attempt to explain value in terms of usefulness, which we have seen is not the distinguishing feature of things produced for exchange. Some of the most useful things, air, water, sunlight, do not, in their natural state, enter into exchange and have no value. Moreover, the usefulness of a commodity differs with individuals and differs with the same person in varying circumstances, whilst the value may remain unchanged and the same for all. Clearly, our explanation of value must have the same general, social validity as value itself.

One variant of orthodox economic theory, which regards “scarcity as the basic factor in economics,” approaches the truth. For scarcity is one way of avoiding saying “human effort," which is necessary to the production of commodities. Those which are more “scarce” are those which cost more effort to produce, which have to be dug for, dived for, forced from nature by ingenuity, wrung from her by sweat and blood, slowly coaxed by patience. Labour is the substance of value.

It is no objection to the labour theory of value that men work with tools as well as with hand and thought. The instruments of production were likewise produced by labour, are past labour presently used in further production, and transfer this stored labour bit by bit, as they wear out, to the products. A complex machine is a number of tools combined and set in motion together and, accordingly, a multiple sewing machine will transfer to its products proportionately greater values in a given time than a simple needle.

It is no objection, either, that the work of the tinker is different from the work of the tailor. This objection confuses precisely the two things which the labour theory keeps distinct: usefulness and value. The work of the tinker differs from that of the tailor in its particular usefulness, just as do their respective products. But although kettles and clothes are unlike in physical properties, have different uses, a number of kettles will exchange for a suit of clothes. They are equal values. Copper-bottoming and tailoring are different kinds of work, but they are both labour. Highly-skilled labour is but a multiple of less skilled, takes proportionately longer to learn, and will produce proportionately more value in a given time, just as with the needle and the sewing machine.

Frank Evans

(To be continued) 

Letter: How goods are priced (1996)

Letter to the Editors from the July 1996 issue of the Socialist Standard

How goods are priced

Dear Editors,

Nearly all goods today have price bar codes giving the maximum retail price before the goods go on to the market. Is this practice in any way in contradiction to the Marxist concept of how goods are priced, which claims that the price of a commodity is determined by competition and supply and demand after the good is manufactured and goes on the market, not before?

D. Brooks, 

London

Reply:

Such a practice is confirmation of Marx's labour theory of value. This argues that supply and demand generally determine the exact prices at which commodities sell, but do so only about a prior axis around which variations occur. This axis is determined by the amount of labour socially necessary to produce a commodity under average conditions of production. It is this, not the oscillations of supply and demand, which determines that a motor car generally has a value many times greater than a shirt, or that an oil tanker has a much higher value than a car. Variations in supply and demand no more determine average commodity price levels than the waves of the sea determine the height of the ocean above the sea bed. What determines average prices of commodities is value—and this in turn is determined by socially necessary labour time.

It is not true, however, that prices and values are always identical—very often they are not, and we refer you to our pamphlet on Marxian Economics and Part 2 of Capital, Volume 3, for further explanation of this. In fact, competition determines that commodities sell at what Marx called their price of production—that is cost of production plus the average rate of profit. But profit is unpaid labour and the elements of the cost of production can be reduced to labour at every stage if you go back far enough in the productive process. In contradiction to bourgeois economic thinkers and standard economics textbooks, real practical studies of capitalist enterprises show that they calculate their initial prices on the basis of total average cost plus a preconceived average profit margin, both of which are reducible to labour, and the bar code practice you write of illustrates this point well enough.

Editors

50 Years Ago: “A Word on Marxism” (2002)

The 50 Years Ago column from the June 2002 issue of the Socialist Standard

It is not an exaggeration to state that to-day “Marxism” is becoming almost a household word. Unfortunately this does not mean that over the wide world millions of people have become thoroughly acquainted with the fundamentals of Marxian doctrines. Rather does it signify that the word “Marxist” has become the modern equivalent of “heretic” or “turk.” In other words, when a man is to-day called a “Marxist” people are usually expressing strong disapproval, although they may have little or no idea of the real meaning of the word they are using. As members of the working class concerned with the crying social evils of the modern world we cannot afford such loose thinking. We do not brand or abuse our political opponents; but are concerned rather with a thorough examination of their point of view. We do not reject or accept their statements out of hand. Marxism must be treated likewise by all serious-thinking men and women, and to do this we must ascertain exactly what we mean by the term.

Like the word “Socialism,” or “Marxism” has, over the course of the last century, been largely abused and misrepresented. We can, however, in brief form put the essential ideas of Marx as follows:-

1. Materialism.
2. Materialist conception of History. (Including the class struggle.)
3. Theory of Value.

These three components of Marxism are in indivisible unity. The so-called “Marxists” of the “Red” variety who claim allegiance to Marxism yet at the command of their Russian masters flout the class struggle and the most elementary conclusions to be drawn from the theory of value can lay no authentic claim to their title. No one with even an elementary understanding of the Marxian outlook can at one time claim to be a Marxist and in almost the next breath speak of his Christian faith and belief in God, as do many members of the Communist Party, including the one-time prominent Douglas Hyde of “I Believed” fame. Such people have failed to understand the most striking feature of Marx’s ideas, i.e., each central proposition implies and leads logically to the others. Materialism, so to speak, the foundation stone, is a philosophic view of the universe, irreconcilably opposed to religious dogma.

[From an article by J. Lestor, Socialist Standard, June 1952.]

"Utility" Goods (1950)

From the June 1950 issue of the Socialist Standard

The 1939-45 Great War and His Majesty’s third Labour Government have made the people of this country “Utility” conscious, but long before 1939 such economists as Bohm Bawerk, Jevons and Marshall were searching in the realm of utility for an answer to the question why a pair of boots exchange for thirty shillings.

The fruit of their efforts is the much-boosted Marginal Theory of Value by which they attempted to explain the value of a commodity—an article produced for sale—as the point at which marginal utility (the utility derived from that unit for which the consumer is just prepared to pay) coincides with the marginal cost of production (the cost to a firm that just pays its way). Thus they claimed their theory of Value takes both demand and supply into account.

Long before Bohm Bawerk and his Utility school of thought, Marx had shown that the value of a commodity is determined by the socially necessary labour time embodied in its production.

The Marginal school criticised this theory of Value on the grounds that Marx had looked at Value from the point of view of the producers and had therefore chosen “labour time” as the basis of Value. They contended that Value should be looked upon from the point of view of the consumer also and that Utility should form part of the basis of Value.

When Marx stated that the only quality commodities have in common with each other is that they are the “products of labour,” the Utility school pointed out triumphantly that commodities also have this in common—they must be useful. On these grounds they have argued that it is merely arbitrary to say that Labour is the source of Value. Indeed they have gone further and stated that only some useful things are the products of labour but all products of labour, if they are to be commodities, capable of sale and exchange, must be useful. They have pointed gleefully to the solitary traveller in the desert picking up a piece of gold or a diamond. They have argued that surely this piece of gold or diamond must have Value but its Value is certainly not determined by socially necessary labour time.

So frequently have the apologists of Capitalism put forward this view, that it is now accepted by most text-books on economics and is usually advanced by lecturers in Universities and Commercial Colleges as the Theory of Value which has ousted that of Marx.

In practically all books dealing with the classification of the Sciences, Economics is classified as a Social Science. That being so, Economics must be concerned with social relationships—the social relationships dealing with the production and distribution of Wealth at that.

We have therefore to examine the means by which Men produce and distribute the wealth of society in order to find which of these theories correctly reflect the law by which boots exchange for Gold (in the form of pounds, shillings and pence).

In all previous systems of society, production had been for use and only the surplus had appeared in the form of commodities but under our capitalistic system of society, production becomes solely for sale—for the World Market. Capitalism is therefore distinguished by the fact that here wealth takes the form of commodities.

In a commodity producing society extensive division of labour and private property are essential factors. That is to say the aggregate labour force of society consists of the sum total of the labour of all the producers of the different types of commodities who carry on their work independently of each other. When therefore we say that a fur cape is equal in value to a wrist watch we are really equating the labour of the furrier with that of the jeweller. In the early days of Man’s history when any surplus product was being exchanged, the question which confronted the two parties or groups involved in the exchange, say of arrow heads for skins, was this—Would it take us as long (or as much labour time) to produce these skins as it took us to produce the arrow heads? If the answer was in the affirmative then the transaction was completed. In the same manner the value of a commodity is determined by the socially necessary labour time embodied in its production.

What confuses the critics is that in capitalism value appears to be a quantitative relationship between things. They only see 100 bricks exchanging for two tables and do not see the SOCIAL RELATIONSHIPS underlying this quantitative equation.

In modern society, however, exchange does not take place in the form of barter (one article for another article) but Money enters into the field. Articles in the shop window have their price tag—their money form. Price is the monetary expression of Value, that is to say Price means the amount of gold equivalent in Value to the article which is being priced.

It is precisely in this developed form of Value that the law of Value manifests itself as the regulating principle of capitalist production. When the supply of a commodity is greater than the demand the price of the commodity falls and conversely when the demand is greater than the supply the price rises. The Capitalist economists see in this the regulator of the markets— the so-called Law of Supply and Demand.

Here again however, the Labour Theory of Value comes into its own. In our commodity producing society, the labour contained in a commodity has two aspects. It is the private labour of the commodity producer and at the same time part of the collective labour of society. To meet the last condition it must satisfy a definite social want—it must be useful to society. The private commodity producer fails to see his labour in this aspect—the social aspect. He never knows how much of a commodity is coming on to the market and what demand there will be for it. He therefore keeps on churning out his product until the demand for it drops and prices fall. Then he curtails production but he never dreams that the cause of the falling prices could be the fall in value of his product—a fall in value occasioned by the fact that he has expended part of the collective labour of society—his own private labour —USELESSLY. The value of a commodity being determined by the amount of SOCIALLY NECESSARY labour time embodied in its production, he has therefore not added one jot of Value to the commodities he has produced in excess of demand. Thus, does Marx’s Labour Theory of Value take Utility into account.

R.R.

Socialism in Debate. Part 4. (1914)

From the August 1914 issue of the Socialist Standard

As mentioned in our April issue, it was brought to our notice that Mr. G. W. Daw, Conservative agent for Wandsworth, had stated publicly that Socialists are reluctant to open the columns of their journals to pronounced opponents. We therefore offered Mr. Daw space in this journal for three months to set out his case. The following is the outcome.

Link to Part 3.

[The original arrangement, under which Mr. Daw was to have space afforded him for three months, was departed from in order to give him opportunity to develop an attack on the Marxian theory of value. The present contribution from our opponent, and our reply thereto, closes the debate.—Ed. Com.]

The Case Against Socialism. 

Mr. Daw’s Final Contribution.

A great deal has been made of my admission that evils exist under what my opponents style “the Capitalist system.” But when we examine the causes of those evils we shall find them due, as I stated, to the shortcomings of human nature.

A man inhabiting an old and rickety dwelling may decide to pull it down and re-build on a new plan, but using the old material. The result is that he gets a different shaped dwelling, but the defects still remain, because the old materials are used. So, if it were possible to re-organise society on a Socialist basis, the same defects and evils would be manifest, because human nature and instincts would remain unchanged; and as the evils would be materialistic, the probability is that greed and selfishness would be far more rampant, and assert themselves, though of course in different forms to those to which we are accustomed under existing industrial organisation.

As to Malthus’s arguments having been crushed to powder by Godwin and Henry George, that is a matter of opinion. Some modern Socialist writers have recognised the difficulty of the question I raised, and suggested methods for overcoming it which would place intolerable restrictions on individual liberty, thereby justi­fying the contention of anti-Socialists that under Socialism there would be no individual freedom. The natural tendency of population to increase up to the extreme limit of the means of subsist­ence is a fact, manifest to all who care to study statistics, and argument against facts is futile.

The Editor seeks to score a point because I admit that there is a surplus value. Yes, but not produced by manual labour force. Moreover, under the theoretical industrial organisation prescribed by Socialists this value would cease, because production is to be for use and not for profit. Exchange, as Bastiat observes, produces at once two interests where there was formerly one; and then the price, as I previously pointed out, is largely determined by the eagerness of the buyer on the one hand, and the eagerness of the seller on the other.

Those who carefully scrutinise the theory of communistic Socialism will discern that it is a reversion to a primitive form of life. Hyndman suggests that man lived under communism for a much longer period than he has lived under forms of private property. This is an important admission, because it will be noted that although the world then contained all the wealth, it was undeveloped, and tribes were constantly warring one against the other to escape starvation. Probably cannibalism had its origin in the extreme poverty to which mankind was driven under that communal organi­sation of human society.

In this discussion I have assumed for the sake of argument that Socialism is practicable. Personally, as the result of a fairly exhaustive study of Socialist writings, I am convinced that the reconstruction of the industrial and political order of things, in accordance with Socialist theories, is impracticable. Socialism is potent for one thing, and that is to cause a revolution which could only overthrow civilisation and leave those remaining in the direst misery and poverty. In a word, although Socialism may profess to be constructive in theory, it is destructive in practice.

When I suggest that the workers should set up their own machinery and factories I do not, as seems to be implied, suggest that the workers should steal someone else’s property. My proposition is that the Trade Unionists should devote a few thousands of their five millions capital, now invested in property, etc., and put their Socialist theories to a test. Whenever I have advanced this argument in debate it is evaded by my opponents. I am therefore not surprised to be told that “the working class have no capital.” On referring to the Fifteenth Abstract of Labour Statistics, compiled by the Board of Trade, I find that 100 principal Trade Unions had funds at the end of 1910 amounting to £5,121,529. The Retail Co-operative Societies of the United Kingdom have a share capital of £4,849,926, and a reserve of another two millions; the agricultural and wholesale departments have several more millions. In 1910 the Depositors in the Post Office and Trustees Savings Banks had 221 million sterling in deposits, the greater part of which must be savings of the workers.

If the workers are the inventors of machinery, why have they persistently opposed the introduction of the same? If they discovered “how to control various forces in nature” why have they allowed them to pass into the hands of others? Are our patent laws defective? Let anyone infringe a patent and he will soon find that it is a very difficult matter to rob the inventor. There is as much skill necessary to conduct a business as is required to invent a machine, and whereas the inventor’s task is generally an affair of months, the capitalist has to exercise his ingenuity throughout his career.

I come now to the criticisms in the last issue of the “Socialist Standard.” Utility. I am informed, “is not considered in measuring value,” and bread, by way of illustration, is cited as “immensely more useful—or possesses greater utility—than gold, yet its exchange value is enormously less,” because “the amount of labour power embodied in a given weight of gold is far greater than that embodied in the same weight of bread.” I venture to controvert this statement. In the first place, the weight of the two commodities can have no bearing on the question. If my critic will again peruse “Capital,” page 25, he will observe that Marx is careful to state that for measuring a commodity by weight “the iron officiates as a body representing nothing but weight,” and says “just as the substance of iron, as a measure of weight, represents in relation to the sugar loaf, weight alone, so in our expression of value, the material object, coat, in relation to linen, represents value alone.”

Therefore when my critic compares the weight of bread with gold, as an illustration in the way he does, he is giving an interpretation of Marx which is not born out by the philosopher’s own words. There is nothing in Marx’s conclusions which qualifies his very definite statement on utility I previously quoted from page 8. He tells us you can only measure value by comparing one article of human labour with another—”the most simple expression of value such as twenty yards of linen = the coat.” In anticipation of further questions which may be put to me I submit this: supposing instead of a coat the same material was cut up and sewn into a shape which was of no possible use whatever? There might be the same amount of material and labour, but it would not be the equivalent of twenty yards of linen. Without utility there can be no value after all.

In conclusion, if we are to measure human labour, let us do so fairly. “As far back as 1886,” Mr. W. C. Anderson, I.L.P., tells us “the Commissioner of Labour for the United States reported that in America the machinery at work represented 3,500,000 horse-power, and that 4,000,000 work people were able to turn out wealth to produce which, without power, would have required 81,000,000.” And in 1887 it was estimated that the power exerted by all the steam engines in existence was “equal to the labour of 1,000,000,000 men.” Notwithstanding all special pleading and argument, I, at any rate, remain, a hardened unbeliever in the Socialist faith, that seeks to maintain the omnipotence of human labour-force in the industrial world by blindly ignoring that greater labour-force and wealth producer, viz., steam power.

George W. Daw

—————————-

The Socialist Reply.

Mr. Daw’s concluding contribution empha­sises the truth of our statement in the first reply, namely, that no one has yet shown a flaw in the essentials of the Socialist case. In this closing contribution to the debate we have a number of question-begging statements, but no facts or evidence are brought forth to support these statements.

For instance, what is the chief evil under Capitalism? Want in the midst of plenty due to the slavery of the working class. Mr. Daw was quite unable to meet this point when we first put it. He is unable to do so now, and to fall back on the “shortcomings of human nature” after our analysis of the cause of poverty, is a confession of defeat.

Again, who are the “Socialist writers” who have “recognised, the difficulty” of the popula­tion question? We are not told—and for the simple reason that they do not exist. In our first reply we pointed out that neither Malthus nor anyone else had given any evidence of the “natural tendency of population to increase up to the limit of the means of subsistence.” If Mr. Daw has any evidence why does he not produce it? Our first reply to this Malthusian rubbish has not been touched, let alone met, by our opponent.

We are again told that surplus value is “not produced by human labour force.” We never said that it was. What we stated was that it was produced by applying human energy to the nature-given materials and forces, and we challenged Mr. Daw to show how it could be produced otherwise. Instead of doing this he merely repeats his former statement.

Socialism will not be a “reversion to a primi­tive form of life,” because it will be neither a “reversion” nor “primitive.” We state quite distinctly that we desire the common ownership of all the modern means of wealth production—huge machinery, control of colossal forces, far-reaching organisation and distribution of the results of productive activity. There is nothing “primitive” about this, but only action in line with social development.

The present “civilisation” leaves the mass of the workers “in the direst misery and poverty” to-day. How its overthrow would leave this condition remaining Mr. Daw, wisely, does not attempt to explain. The great thing Socialism will destroy is wage-slavery and exploitation.

Then the hoary wheeze of telling the workers to “set up their own machinery and factories” is trotted out again with figures from the “Fifteenth Abstract of Labour Statistics.” Mr. Daw is evidently quite ignorant of trade union work or responsibilities, or he would know that only a small portion of the £5,000,000 is invested in property. The larger portion has to be kept in readiness to meet the continual Sick and Death Benefit claims, as well as to furnish dispute pay.

As we mentioned in the June “S.S.,” it would be absurd to suppose that any serious critic would suggest the withholding of these benefits to buy machines or factories. The co­-operative societies are not restricted to working men. Anyone can take up shares in most of them, no matter which class he belongs to. Ah! but what of the 221 millions sterling in the Post Office and other savings banks? We are told that the greater part of this “must be savings of the workers.” Why “must be”? Can Mr. Daw or anyone else give any evidence to support this claim ? We say they cannot. It is largely baseless assertion. It is true that the bulk of the trade unions’ funds are deposited in the Post Office Savings Bank to meet their current liabilities ; but these having been already reckoned in the trade unions’ funds, should be deducted from the Post Office account. Again, a number of businessmen put money in the Post Office, while, where competition is keen, or some scheme of bankruptcy is contemplated, the funds are often deposited in the names of the various members of the family. Where workers do put any savings in the bank, these, as we said before, are only the few pence scraped off the wages to provide against serious sickness or unemployment. It would be useless for this purpose in the form of shares in a factory, for it could not be turned into cash when wanted.

But all these stale old quibbles of Mr. Daw are quite beside the point. It is a sheer dirty insult to tell the working class, who are robbed of the whole of the means of wealth production—means of production which they alone fashion and operate—that they should pinch and starve themselves a little more to put their tiny mite into a factory or works. Let the workers stop the robbery and take possession of what is rightly theirs—the means necessary to live.

The question of the inventor and machinery has already been fully met in the June and July issues of the “S.S.” Our opponent, instead of trying to meet the refutation given to his previous statement, merely repeats it like a parrot. As to it being difficult to rob an inventor, only an appalling ignorance of the history of inventions could excuse so false a statement. From the day when Arkwright robbed Paul Kay to the time when Carnegie robbed John Breslin the growth of modern industry has shown countless instances of inventors being robbed of their discoveries by capitalists.

Note first that the onus is thrown on the inventor to prove his claim. The capitalists’ agents, the lawyers, raise every technical point and quibble the laws are so prolific of, and often in cases where the inventor does go to law he loses on some small legal shuffle that does not concern the essential questions at all. John Breslin was unable to pay the fees for hearing the case in the Court of Appeal. Even the mere stamps for the documents cost more than many working men can pay.

As for our patent laws being defective, we have only to point to the fact that to take out a full patent costs about £100, and most inventors would be glad of a hundred pence by the time they have worked out their drawings and made their models. The law is most effective—for the capitalists !

We are then told that “There is as much skill necessary to conduct a business as is required to invent a machine,” and that “the capitalist has to exercise his ingenuity throughout his career.”

The careful reader will see that there is absolutely no connection between these two statements. If Mr. Daw means to suggest—for he does not say it—that the capitalist “conducts” or manages his business we have already denied this in our first statement of our case. All the management of business, as well as the manipulation of machinery, is done by wage-slaves—a fact Thomas Lipton admitted to the shareholders of Liptons Ltd. when referring to the Army canteen scandals.

After having proved how little Mr. Daw understands Marx, it is rather refreshing to be referred to the portion we ourselves quoted. We never said that weight determined or measured value. We simply pointed out, that Mr. Daw’s illogical and confused statements on utility being the measure of value, because it always had to be present, was similar to saying that volume measured weight instead of density. Simple as our explanation was it was evidently beyond our opponent’s mental capacity.

Whenever two things are compared in any science or sphere some basis has to be taken to measure from. We may compare yards of silk with pounds of coffee or tons of iron or ounces of gold, and it is evident to the poorest intelli­gence that, having taken a given unit to begin with, it must be kept throughout the calculation. Gold is usually dealt with in small quantities, and the ounce is the unit of weight generally used in England. Now take our illustration.

Why does a given quantity of gold—say an ounce—not exchange for the same quantity of bread? Every schoolboy knows that an enormous number of ounces of bread (over 12,000), usually reckoned in multiples called pounds, exchanges for one ounce of gold ; yet the utility of one ounce of bread is much greater than that of one ounce of gold. It is simply idiotic for Mr. Daw to say that weight has nothing to do with it. He must take some unit quantity for comparison or obviously he cannot compare at all. The particular unit he chooses does not affect the question in the slightest. Let him take equal volumes if he prefers ; still the same dilemma faces him. Why does a bushel of gold exchange for a large number of bushels of bread, despite the greater utility in the latter?

Note how Mr. Daw shuffles round this point by failing to give the slightest indication of how utility can be measured. Yet indeterminate as he leaves it, he tries to claim it determines value. His last point on machinery and steam has already been fully met in our June issue. Instead of looking at our reply Mr. Daw merely repeats statements that have already been pulverised. Discovery of machinery and steam power and the manipulation of these forces are entirely due to the working class, not to the capitalists.

This debate has been successful in exposing another empty braggart—an agent of the capitalist class—who, evidently lacking the ability to understand the Socialist case, sets up as a powerful critic and demolisher of the “Red Spectre.” This claim sounded very well until he met the Socialists, and then his empty boast and pitiful lack of even an elementary knowledge of Socialism were fully exposed.

No one, whether a member of the capitalist class or a renegade from the workers’ ranks, has yet shown a flaw in the case for Socialism, because it is based upon the irrefutable facts of social life and development. Its propaganda steadily grows. The way in which the various agents of the master class, in pulpit and in Press, in the political field and in the economic arena, are all shrieking against Socialism, proves not only what progress its propaganda is making, but also the hate and dread in which the capitalist class hold the force that will wipe them out cf existence.

Ed. Com.

Socialism in Debate. Part 3. (1914)

From the July 1914 issue of the Socialist Standard

As mentioned in our April issue, it was brought to our notice that Mr. G. W. Daw, Conservative agent for Wandsworth, had stated publicly that Socialists are reluctant to open the columns of their journals to pronounced opponents. We therefore offered Mr. Daw space in this journal for three months to set out his case. The following is the outcome.

Link to Part 2.

The Case Against Socialism. 

Mr. Daw’s Third Contribution.

Marx on machinery.

Karl Marx, in his work, “Das Capital,” explains to the world the economic basis not of Socialism, but of existing forms of industrialism, as viewed from a Socialist standpoint. In his discursive analysis and criticism of labour he seeks to fit existing conditions to preconceived theories, which may be summed up in the statement that the capitalist employers obtain all their surplus-value, viz., profit, from unpaid labour, and that without such labour, wealth would be non­ existent; that the amount of socially necessary human labour expended on a commodity alone determines its value in exchange for any other commodity. On this question of value he fails to realise that it is not objective but subjective. In other words, value is not a property inherent an the article, but a condition of mind which values a commodity when it is not an actual necessity, in which case supply and demand are the dominating factors. If these premises are wrong, how is it that gold is more valuable than silver? The difference in the labour necessary to obtain them does not account for the difference in value. This is admitted in a different form by Marx himself, when he says: “Nothing can have value without being an object of utility. If the thing is useless, so is the labour contained in it; labour does not count as labour, and therefore creates no value.” It is a perfectly fair deduction to draw from Marx’s own proposition, that utility, and not labour, is the basis of the exchange-value of commodities.

The cost of production is the point below which value cannot fall, at least, not permanently. But even the cost of production, does not depend on human labour alone. Steam propelled machinery is both producer of commodities and of wealth by reason of its facilitating transport. Now, it is impossible for such an observant mind not to have perceived this; but whilst unable to ignore the fact, Marx evades the obvious conclusion. “Modern industry,” he writes, “raises the productiveness of labour to an extraordinary degree; it is by no means equally clear that this increased productive force is not on the other hand, purchased by an increased expenditure of labour.” What is certainly obvious is that whilst Marx felt bound to acknowledge that machinery had increased productiveness to an “extraordinary degree,” he was what we should call in common parlance, “in a regular fix.” Here was an outside productive medium which could not be claimed as human labour or skill. He could only venture a guess that its use necessitated the employment of more human labour. Was this supposition correct? Was this increased production the result of an equal increased amount of human labour? I will let Marx answer for himself:

“If it be said that 100 million people would be required in England to spin with the old spinning wheel the cotton that is now spun by 500,000 people, this does not mean that the mules took the place of those millions who never existed. It means only this, that many millions of workpeople would be required to replace the spinning machine.” (p. 429.) 

Yes, to “replace the spinning machine.” Marx here gives away his case against machinery. The difference in the output by the employment of machinery is admitted by him to be equal to the labour of 99½ million people. As that quantity of human labour “never existed,” from whence does it come? Steam power applied to machinery. But mark well how cleverly Marx endeavours to obscure the issue. It is smart, but not straightforward.

After this it is useless for the philosopher to inform any practical man that “machinery, like every other component part of constant capital, creates no new value, but yields up its own value to the product that it serves to beget. In as far as the machine has value, and in consequence imparts that value to the product, it forms an element in the value of that product,” and here follows a conclusion which is absurd: “Instead of being cheapened, the product is made dearer in proportion to the value of the machine.” Two inferences are to be drawn from this statement: (1) That the manufacturer, by employing machinery, increases the cost of his goods, and so, by dispensing with the machine, he would cheapen the cost of production. (2) That the manufacturer employing cheaper, and consequently less efficient machinery, would have an advantage over a rival using more expensive machinery.

Machinery supplants the human skill and labour-power, so that, to quote the S.P.G.B. Manifesto, the worker has “lost his skill as craftsman and become a machine minder.” The skill and labour-power is derived from the machine, whilst the man has become in many instances a mere minder, or overlooker. If the capitalist exploits anything it is the machine. Yet on the following page of this manifesto we are gravely informed that wealth is produced by “labour-power” and is produced “by the working class alone.” If it be not true, Socialists say, take away the workers and where would the capitalist and his machinery be? This is plausible, but not conclusive reasoning.

To realise the fallacy of such an argument we may retort by asserting that without light no one could work, therefore all wealth is due to light. In order to give labour the foremost place as sole producer, Marxists are driven to adopt a process of reasoning which is not in accordance with facts. In the passage I have quoted from Marx, he admits the existence of a quantity of commodities from the machine spinning looms which cannot be accounted for by human labour-power. But he says it is impossible for profit to come from the machine itself beyond its own deperishment, which must be comparatively small. He ignores the fuel, which imparts an energy and labour force which is beyond all comparison with the labour expended in mining. Marx’s contention is that the profit the employer makes is from the unpaid human labour only. If that be so, then the manufacturers must be fools, for they are continually seeking to use more machinery to supplant human labour and thus lessen the profits; but, as the late Harry Quelch admits in one of his pamphlets: “It is to the capitalists’ interest to employ as few men as possible.”

Marx devotes much space to the careful analysis of the processes of labour applied to production, and makes endless comparisons; but he is, strange to say, silent on one very important point in his investigation.

While admitting that steam power enters into competition with muscle, he does not attempt to explain what peculiar property there is in human labour-power and skill (differing from the machine), by which he says it imparts three or four times the sum paid in wages by the employer. In one passage of his work Marx admits that “so soon as the handling of this tool becomes the work of a machine, then, with the use-value, the exchange-value too of the workman’s power vanishes” (p. 431). “But machinery acts as a competitor who gets the better of the workman and is constantly on the point of making him superfluous” (p. 436); further on he is compelled to admit that the “immediate result of machinery is to augment surplus-value and the mass of products in which surplus-value is embodied” (p. 446). After making these admissions Marx evades the logical conclusion and follows with a disquisition on surplus-value as if it came from human labour-power alone, conveniently dropping all further reference to steam power, and he concludes by asserting that all surplus-value, whatever particular form it may subsequently crystallise into, is in substance the materialisation of unpaid labour. Perhaps some Marxist will now explain why the employer’s surplus value comes from the human worker and practically nothing from the machinery. And when he has done so, he may then proceed to explain how it is that, if the employer’s profits depend on the surplus-value of the labour he employs, he so often fails in his business.

G. W. Daw.

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The Socialist Reply.

Our opponent’s first point is that Marx failed to realise that “value is not objective but subjective,” and the illustration of the relation of gold to silver is taken with the totally inaccurate assertion that: “The difference in the labour necessary to obtain them does not account for the difference in value.” Then what does ? As Marx has already shown (“Capital,” p. 7), much more labour-time on the average is required to produce an ounce of gold than an ounce of silver ; hence the greater value of the former.

No matter what value a capitalist may “subjectively” place upon the commodities he owns, he finds the exchange-relationships determined by the general social conditions of production, without the slightest reference to his personal views in the matter at all. In fact, Mr. Daw admits this when he says: “The cost of production is the point below which value cannot fall, at least, not permanently.” This certainly contradicts any idea of “subjective” value determining exchange.

Again, as Marx has so well shown (“Capital,” p. 3, and “Value, Price, & Profit,” pp. 19-20), “supply and demand” only decide fluctuations of price. These fluctuations are about the line of value. Can our opponent tell us what decides the point at which equilibrium is reached when supply and demand equal each other if it is not the average labour-time under the prevailing conditions of production?

Mr. Daw is quite at sea in handling the quotation from Marx on utility. Utility is the subject, but not the measure, of value. A masterly exposition of this, with a splendid illustration of the factor of weight, is given on pages 25-26 of “Capital.”

Our opponent might just as well argue that volume, instead of density, is the basis of weight, because all things possessing weight have volume. But, as the old phrase has it, “a pound of feathers is as heavy as a pound of lead” ; and just as volume is not considered in determining weight, so utility is not considered in measuring value. One simple illustration will make this clear. Bread is immensely more useful—or possesses greater utility—than gold, yet its exchange value is enormously less. Why? Only one explanation answers the question—the amount of labour-power embodied in a given weight of gold is far greater than that embodied in the same weight of bread.

We are told, however, that “even the cost of production does not depend on human labour alone. Steam propelled machinery is both producer of commodities and of wealth [sic] by reason of its facilitating transport.”

In our last reply (June “S.S.”) we pointed out how machinery of any kind is useless without labour-power. It is quite true—as pointed out there—that the discovery of the mechanical powers and of the control of certain natural forces, increases the productivity of labour-power, but as claimed in the opening paragraph of our first reply, in the May “S.S.,” the only people who operate this machinery and manipulate these forces are the members of the working class. They, then, are obviously the ones exploited, as without them the machinery would be idle.

So far is it from being “useless” for Marx to say that “machinery, like every other component part of constant capital, creates no new value, but yields up its own value to the product it serves to beget,” that it is just this that is tabulated on every balance sheet of every industrial firm in ordinary business.

If a machine costs a thousand pounds and lasts on an average ten years, then each year’s balance sheet will show an item of 10 per cent. (or £100) under the heading of “Depreciation” for that machine. This amount is counted in the cost of production, and divided among the number of commodities turned out during the year. Thus no more than its own value is imparted to the articles by the machine. But now take the labourers. What they receive is always less than the value they turn out, and it is the only item on the balance sheet showing such a difference—such a surplus.

Mr. Daw’s misunderstanding of Marx in the other quotation given is simply extraordinary. The “increased expenditure” of labour mentioned by Marx refers, of course, to the greater speed and intensity with which the individual is burdened, as shown in page after page of the section quoted from. See, in particular, pages 391 to 417. Marx never maintained the absurdity that Mr. Daw tries to place on him, that a machine required more labourers to produce the same amount of wealth in a given time. No one showed the contrary more clearly. See pages 430 to 448 of “Capital.” And Mr. Daw is treading on very thin ice when he refers to Marx’s statements being “smart, but not straightforward,” as the quotation that he refers to as “after this” occurs 26 pages before, i.e., on page 383. Here Marx—as every reader of the section knows—is comparing the cost of modern machinery with the old handicraft tools, and it is obvious to the poorest intelligence, that the product of a day’s working with a modern machine has more value transferred from that machine than the product of a day’s working with hand tools has. Or to quote the same page, “it is as clear as noon-day that machines and systems of machinery . . . are incomparably more loaded with value than the implements used in handicraft.” The day’s product is therefore dearer, but the number of products being so much greater, each individual article is cheaper. As shown above, however, the best division of time to take is the average life of the machine, and compare the two methods upon that basis.

The above shows how stupid and childish are the “two inferences” our opponent attempts to draw from Marx’s statement.

Our previous contribution shows the absurdity of Mr. Daw’s statement that the capitalist “exploits the machine.” But we are told that by our reasoning it can be shown that all wealth “is due to light.” What a pity it is for Mr. Daw’s illustration, that men work in so many dark places, such as mines, and so on. Any schoolboy could see that light is not the essential factor in wealth production in the economic sense. Light exists where no wealth is produced, but on the other hand no wealth is produced where labour-power does not exist. Twist as they may the defenders of capitalism cannot find a single loophole in the Socialist case, as all the wriggles of our opponent show.

To say Marx “ignores the fuel” is met, among countless other instances, by page 384, where Marx refers to this and the other “forces furnished by nature without the help of man.”

The manufacturers only seek “to use more machinery” because, as shown in “Capital” on the pages given, and in our own contributions, it enables them to more fully exploit the workers employed. To say that Marx “does not attempt to explain what peculiar property there is in human labour-power and skill by which it imparts three or four times the sum paid in wages,” shows either an ignorance of what Marx said, or a deliberate dodging of what he wrote. The point is dealt with in numerous portions of Marx’s writings, and is specially analysed in pages 166 to 180 of “Capital.” Anyone—opponent or friend—who is interested, is advised to read the chapter entitled, “The Labour Process” for a complete answer to Mr. Daw. The peculiar thing about labour-power, as Marx proves, is that it is “a source not only of value, but of more value than it has itself.” (“Capital,” p. 175.)

The only “admission” about the quotation from page 446, is that machinery enables the capitalists to rob the workers of greater quantities of wealth than previously, an “admission” that all Socialists cheerfully agree to. There is no dropping of any “logical conclusion” by Marx, but only the fuller working out of that conclusion by examination from various sides.

Several Marxists have already shown both “how” and “why” surplus value “comes from the human worker and practically nothing from machinery.” The best instance is to be found in pages 156 to 180 of a book called “Capital,” written by a person named—Karl Marx.

The chief reason for failures in business is the fact that the big concern with the large capital, having the greater powers of exploitation, is able to beat the relatively small competitor out of existence. But it must be carefully noted that, though individuals may fail here and there, the capitalist class not only do not fail, but grow richer year by year.

Ed. Com.

Link to Part 4.