We propose now to briefly epitomise the Socialist theory of Value, which is exhaustively and scientifically worked out by Karl Marx in "Capital."
We have already pointed out that a knowledge of what constitutes the wealth of a given period, and the method by which such wealth is obtained, is necessary in order to understand the ideas prevailing at that period. Consequently, to understand the ideas of today, we must find out how the wealth of to-day is obtained, and of what it consists.
By the term "wealth" we do not mean air, water, happiness, misery, and so on. The wealth to which we refer is economic wealth— the result obtained by applying human energy to the material provided by nature, such as food, clothing, houses, ships—articles useful to man which require producing.
Now what is the first fact connected with the nature of the wealth of modern times that comes to our notice on examining present society? In the opening lines of "Capital" Marx plunged right into the heart of the matter. He said:
In other words the wealth of to-day appears as a multitude of useful article for sale.
These articles that are for sale have different values—one is worth so much, another is worth more, and another, again, is worth less.
To find out the cause of the difference in value, and the substance of value itself, we must separate in imagination a single commodity from the world of commodities and analize its relation to others, and also its origin and development.
A commodity, then, is an article for sale; but to be saleable it must contain two quite distinct properties: it must be useful and it must be valuable.
When we say that a commodity must be useful we do not mean useful to those who produce them. Commodity production is the production of articles that are useless to the producers but useful to others—the potential buyers. An article has as many uses as there are human wants it can satisfy. Its useful side is its capacity to satisfy these requirements. For example, steel is useful for moulding into a bayonet or a ploughshare; gold is useful for ornamenting a temple of peace or financing a war, and so forth. A useless article could not be a commodity, as it would be unsaleable— there would be no demand for it.
The valuable property of an article has nothing to do with its uses. No matter how varied the uses an article can be put to its value is not increased by a fraction. No matter how useful or essential an article may be to humanity its value is not in the least affected. For example, a diamond ring may be worth thousands of pounds whilst a piece of bread the same size would only be worth a fraction of a penny. If the value of an article had anything to do with its usefulness, the positions of the articles in question would be reversed. Further, an article can be very useful indeed, and yet contain no value. Thus a merchant could bring bottles of air upon the market — he might sell the bottles, but he certainly could not sell the air (except in very exceptional circumstances) though there is nothing more useful to mankind.
We have seen that an article, in order to figure as a commodity, must be useful and must contain value. We have already seen what constitutes the useful side of an article, and the question now arises, what constitutes the value side of an article ?
There is a common misconception abroad that the supply of and demand for commodities determines their values. This contention is easily disposed of. The relation of supply and demand is continually altering, supply at one time being greater than demand, and demand at another time being greater than supply. As a consequence of these movements there must come a time when supply and demand balance each other. What then would determine the value of an article ? Obviously not supply and demand, as the equilibration of the two would nullify their effect. Such a theory would then drive us to the absurd conclusion that the articles, at the moment supply and demand were equal, had no value! The supply and demand theory, therefore, offers no solution to value.
The value of an article is something contained in it that is only expressed when the article is put into exchange relations with other and different kind of articles. It is something different from the physical or useful properties of an article. We might look at a pair of boots for years without gaining any information as to their value. We can only find out the value of a pair of boots by putting them into exchange relation with other commodities.
The absolute value of an article cannot be determined, any more than its absolute weight. Relative weight only can be determined, and also relative value—the value of one article as compared with others. Hence the necessity for putting an article into exchange relation with another in order, by this means, to express its relative value.
As all commodities are exchangeable, though differing widely in physical characteristics and usefulness, the value property which makes them exchangeable must be one common to all commodities alike without reference to their peculiar forms or uses. Apart from their physical or useful properties there is only one other property possessed by all commodities alike, and that is—they are all the product of human labour-power applied to natural resources. It is the fact that they are all the product of human energy that enables the different kinds of articles to be put into an exchange relation with one another. Human energy is the common measurable factor of them all.
All commodities represent certain proportions of simple human energy. Skilled labour counts as a multiplication of simple energy, as in it has to be reckoned the amount of simple energy expended in making it skillful.
The average labour required to produce an article—or, to be more exact, to reproduce an article—gives it its value. Where machinery is employed in the production of one article and not in the case of another of the same kind, the value each would be determined by the value of the machine-made article. All commodities are produced for sale and competition compels producers to produce as cheaply as possible. Where out-of-date methods are used the value articles so produced only counts as the same as that of those produced by up-to-date methods —the labour that counts as value the socially necessary labour, the labour which is necessary with tha prevailing resources and technique.
As human energy is not a thing that can be put into pint measures and ladled out we must ascertain the method of measuring it. The sweat caused in producing an article cannot be measured, but the time taken to produce such an article can be measured, and this is in fact the method of arriving at value, although it is done, at present, by a process behind the backs of the producers.
Human labour is measured by time. The product of one man's labour is equal to the product of another's during the same time, assuming that they have each the same skill and follow the prevailing methods with the average results.
Broadly speaking, an article is equal in value to another that takes, on the average, the same time and skill to produce.
The value of a commodity, therefore, is determined by its cost of reproduction in human labour time.
(To be continued.)