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) 

Cooking the Books: Two questions answered (2024)

The Cooking The Books column from the March 2024 issue of the Socialist Standard

An enquirer from Vietnam has asked us (and others) a couple of questions on Marxian economics. Here they are with our reply.

1. Does the commodity value come mainly from demand, market evaluation and utility, not from labor? (explain labor theory of value v/s marginal value theorem)

A commodity (as a product of labour produced to be sold) does have to be useful to sell but its price is not related to its usefulness. Water, for instance, is more useful than gold but this is not reflected in their respective price. Nor could a commodity’s price be determined solely by the paying demand for it as supply conditions have also to be taken into account. A stable price for a commodity arises when supply and demand are equal, as Marginalist theory notes, but this tells us nothing about what that price will be. For this we need to look at what it costs to produce the commodity.

No capitalist enterprise is going to produce something to sell unless it recovers the commodity’s money cost of production plus a mark-up for profit. The cost of production to a capitalist enterprise is the labour embodied in the materials and machines the enterprise has to buy to produce it and the wages paid to those working at the final stage of its production. These wages, however, represent less labour than the labour the workers add through their work. The part of the added labour that is not paid for – the surplus value – is the source of the capitalist enterprise’s profit.

So, a commodity’s value, reflected in its price, does depend on labour. It is not quite as direct as that, though, as a commodity’s market price will not normally be an exact reflection of its value due to the averaging of the rate of profit (see the answer below to your second question) but it is still related to the labour required to produce it. Gold is more valuable than water because it needs more labour to produce it.

2. Do employers, business owners, corporation boss… (capitalist class) earn money and create profits from their efforts in marketing and managing their companies… (choose market output with great needs), from the difference in value and price of goods (increased due to consumer demand after being marketed by the boss). Therefore, the capitalist class gets rich on its own merit, not through the exploitation of surplus value by the working class (workers) and the workers’ wages are fair for their labor.

No, the source of profits is surplus value created by workers, not necessarily by the workers that a particular capitalist enterprise employs but from that created by the working class as a whole. Capitalist enterprises compete to obtain a share of this in the form of profits on the capital they have invested. Competition has brought about a situation where each capital ends up tending to make the same rate of profit through capital having moved from less profitable to more profitable fields of activity.

Some capitalist enterprises can make more profits than others depending on how astute they are in anticipating trends, cutting costs and marketing their products. To this extent, the actual profits a particular enterprise makes can reflect the knowledge and experience of its managers (these days capitalists themselves don’t normally manage their business themselves) but the source remains surplus value created by the working class. The managers can justly claim that their skills have brought in more profits, but the skill is in capturing a share of surplus value not creating it. The capitalist class as a whole does not get rich from this; in fact could not as there are losers as well as winners — some individual capitalist enterprises get more in this way but at the expense of others.

The Economics of Capitalism - Part 2 (1954)

From the October 1954 issue of the Socialist Standard

(Continued from August issue)

The whole of the labour of society is engaged in producing the whole social product, but not in accordance with a predetermined social plan. Each producer works on his own account and does not know, until he tries to sell his product, whether or not he has kept in line with the average socially necessary labour criterion. If his product remains unsold he knows, too late, that he has failed. There is the further fact that society only requires commodities in appropriate proportions. For example, at a given time, there is a certain effective demand for bread, coats, and shoes, and labour employed in producing these commodities in excess of this demand is superfluous labour, and does not count in determining their values. As producers are working on their own account, producing commodities of different kinds with labour of different degrees of intensity, the common measure of value, that lies at the back of all kinds of skilled labour, is the labour that is the same in all human beings—just the expenditure of energy in its simplest form. The greater the skill involved in the work that is being done, the more of simple labour is compressed in an hour's employment of this labour, and the greater is the value produced in relation to what is produced by simple labour in the same time, even though the result may be a vastly increased product with a fall in the value of individual commodities.

The reduction of skilled labour to simple labour in the estimation of the value of a commodity is not done consciously by the producers but is accomplished behind their backs. An illustration may help to make this clear. If we turn back to the the early history of mankind, to conditions of barter when articles were exchanged against articles, those who were making the exchanges within the communities did so on the rough basis of the work involved in each article. The products were such that one man could have made any of them himself, if he had the time, but it was more convenient for him to exchange his surplus of one article for his neighbours surplus of another. If his neighbour asked what he considered too much for an article then he would make it himself. The products were so few that the members of the community knew the time that would be involved in the production of each of them. Now let us transfer the idea to the present time. All kinds of companies and the like are engaged in the production of a variety of commodities, commodities so dissimilar as bread and fur coats. Money is invested in the production of these commodities for the purpose of making a profit out of doing so, and money flows into the most profitable channels. This flow of investment increases the production of the more profitable commodities until it so far outstrips effective demand that the prices of them, and their profitability, is reduced. The flow of investment then forsakes the production of the commodities whose profit capacity has declined and moves into more profitable productions. This ebb and flow of investment ensures that, in the long run, all the commodities produced by society sell at prices that are round about their values.

Now let us go a little further into the question of prices. Over a period the price of an article goes up and down, and these ups and downs are caused by the rise and fall of demand; that is to say when supply exceeds demand prices are low, and when demand exceeds supply prices are high—the black market has been a sufficient indication of that fact. The average of these ups and downs is round about the actual value of a commodity. There are those who argue that it is supply and demand, and not the quantity of labour required to produce it, that determines the value of a commodity. They overlook the fact that in the alternations between supply exceeding demand and demand exceeding supply there must be a period when supply and demand are equal and therefore cancel each other out. During that period the supply and demand theory cannot be the answer to the question of the value of a commodity. No amount of mathematical manipulation can get over this hurdle. Supply and demand as an explanation of value must be ruled out. At best it can only explain the fluctuations in prices but not the point about which they fluctuate.

When commodities are being exchanged through the medium of money value is being; exchanged for value, but what really underlies the process is that the labour of one man or group of men is being exchanged, for the labour of another man or group of men; there has been a social division of labour. For instance the labour of housebuilding has been exchanged for the labour of shoemaking; and so on. Thus value is really a social relation; a relation between people, between one man’s labour and that of another; but this social relation between the labour of different people is expressed as a relation between the commodities they have produced; it is expressed when the latter appear on the market for sale. People have been producing articles for use all through history but they have only produced commodities, articles possessing value, where a system of exchange has come into operation. Further, it is only under a system of commodity production, the production of articles for the purpose of being exchanged, that value becomes one of the essential qualities of a product. As Marx puts it:

“Every product of labour is. in all states of society, a use-value; but it is only at a definite historical epoch in society's development that such a product becomes a commodity. viz. at the epoch when the labour spent upon the production of a useful article becomes expressed as one of the objective qualities of that article i.e., its value.”

Thus with the abolition of commodity production value will also disappear. Articles will no longer be looked upon as having so much value but will only be appreciated according to their usefulness for consumption or enjoyment, and diamonds and furs will lose a good deal of their attraction. At the same time the mysterious nature of commodities will disappear: the mystery of money arises out of the relation of the individual producers to the total of their own products which appears to them as a social relation between the objects they produce.

There is one aspect of commodities which, unless it is understood, will leave, room for confusion. Commodities are articles that are regularly produced for the market, therefore only those articles that are capable of constant reproduction are commodities. A genuine antique is not a commodity because it cannot be indefinitely reproduced; it is true it comes upon the market and is sold and thus, although not a commodity, takes on a commodity character. Likewise honour takes on a commodity character when politicians sell their votes. In the huge productive output of to-day these are die comparatively odd things.

Finally, the labour of private individuals becomes labour directly social in its form owing to the fact that production is for the market; individual labour becomes an indistinguishable part of the general social labour. It is impossible to tell by looking at products as they appear on the market, what different portions of the world's population have taken part in their production; the raw materials may have been produced in India, China or Russia, the machinery in England, France or Germany, and the finished products in America, Japan, or Holland. They appear on the markets, local, national, and international, just as articles for sale produced by a portion of the general labour of society.

Gilmac.

(To be continued.)

The Price of Everything (2000)

From the March 2000 issue of the Socialist Standard

One aspect of capitalism’s spreading tentacles which Marx correctly predicted was the way in which the money system has constantly expanded to take over areas of life that were previously free of that rationing. Things that had been taken freely without question start to be priced. Even the most minute details of our daily progress through existence are turned into commodities, items to be bought and sold at a profit for those who own and control the productive resources of the planet.

New Age dreamers get excited if one out of a thousand predictions made by some old Nostradamus type charlatan happens to accidentally come true. Karl Marx, on the other hand, used the ultimately hardheaded, scientific, rational approach to prediction. Looking at the material, economic and social forces developing around him, he saw the trends that existed and where they were leading. He predicted that if capitalism were allowed to continue as a global social system, things would get worse for the majority of people. And those predictions have proved right time and again.

The proportion of people across the world who starve to death in the face of plenty is today higher, not lower, than a hundred years ago. The gap between rich and poor has grown wider over the past decades, even in so-called modern countries like Britain. Mergers grow larger, monopoly increases, and both absolute and relative poverty expands globally. Individual despair and depression is worse than a hundred years ago. Social conflict, repression and violence across the world are both more brutal and more inescapably sophisticated than ever before. Exploitation, in the widest sense, has even become taken for granted.

Nothing for free

Was it not once a common saying, “as free as the air we breathe or the water we drink”? Now water has become one of the most significant of household bills, and even a point of controversy as the authorities recently acknowledged that the water “companies” might be “overcharging” for it. Charging for water is quite unavoidable, within the warped logic of the capitalist system. To get water from its natural sources into the glass on your kitchen table does involve work, measured in hundreds of person-hours. It can be mathematically quantified. The customer pays a sum of cash reflecting the value which effort has embodied in the product, then the manufacturing company which controls the process can make a profit and hence expand its capital, by paying salaries to those who have done that work, and holding on to the surplus. That surplus is the difference between the wealth created by those workers and the smaller value, paid as salaries or wages, on which they struggle to survive.

In fact, from the point of view of capitalism, anything that is free is an abhorrent aberration to be corrected as urgently as possible, if any essential items of consumption are not charged in this way (whether because their cost is being underwritten by government or other subsidies, or because it has just been overlooked). For decades, if you went into a cafe for your breakfast, there would be those big, round, red plastic tomatoes on each table, from which you could squirt a dollop of watered-down tomato ketchup which came served with a disgusting sound, if there was any left. Then, with greater modern style and sophistication, Heinz 57’s monopoly of the market allowed them product-placement advantage in which their little angular bottles could be found on the tables of cafes and even cheaper restaurants, for the free and liberal use of their customers. Of course, nothing in capitalism is free, and the cost of such extras would have been built into the prices charged for meals. But at least there was some individual leeway as to how much of the sauce each individual could add to the side of their plate if they desired. Now the almost universal norm in such places is those absurd tiny, individual sachets of ketchup and other condiments.

Did their designer have any awareness that one such sachet would be enough only to adorn a pea? So you need to use at least three or four for a plate of chips, and the fact that they are almost impossible to open means frustration, mess and a rapidly congealing plate of chips. The ratio of plastic to sauce is such that the 10p generally charged to the customer is probably more than half for the packaging – which, under the previous system did not even exist for individual portions. This, although it seems a trivial example, sums up perfectly how capitalism expands its control over our lives in a negative way, with every year it is allowed to continue. Individual consumption in that detail has become more precisely controlled, monitored and charged. A new and pointless product has been created. Profits have been increased. And the net effect to its consumer? Inconvenience, complete lack of dignity and an extra bill at the end.

Competition time, suckers

The telecommunications industry is now one of the biggest and most rapidly growing sectors of the worldwide economy. It has proved to be an almost inexhaustible source of “new product” creation, with needs that people never realised they had mysteriously emerging, shrink-wrapped, from Soho advertising agency back-doors to be introduced as marvels to those who are going to suffer from them and pay for the privilege. Do you recall a time when concert promoters were keen to sell tickets and would therefore publicise their contact-numbers, so that you could phone up and buy your supply? It has now become common for them to use premium rate numbers, so that the thousands of keen punters, if they want to even find out more details of the event in question, must pay not only the phone operators via their phone bills, but a substantial additional fee incorporated in the higher call charge to . . . none other than the promoters themselves!

Cheap capitalist tricks

The audacity of this is breathtaking. I am willing to sell you a ticket to my show. And if you pay me a pound, I might tell you when and where it is. For another pound, I’ll tell you how you can get a ticket. And when I do, and you have your thirty pounds ready for that ticket, there will be a special “buying” fee, which we call a booking cost, of another two pounds! The Rolling Stones made more money than any other band from touring during the 1990s, sharing a staggering £470 million, but you can be sure that their promoters did not go away empty-handed. Of course, the extra costs of employing people to actually sell the tickets and so on would have been allowed for in the ticket price previously. But what is happening here is a crude and exploitative bit of nasty psychological manipulation. If the tickets were advertised at £50 it might sound off-putting, so, the logic goes, these scum punters will be more likely to go for it if we chip away at them for the money bit by bit.

The exploitation of this cheap psychological manipulation is all the more sickening when used against the young and naive, and yet here it has become so taken for granted that the presenters of children’s television who supervise these scams on Saturday mornings in particular can scarcely sometimes suppress their own smug chuckles with each other, as they announce the latest absurd competition. The technique, which has become popular throughout the week on TV and is used even with adults, is to have people phone in the answer to a multiple-choice question, in the hope of winning a prize.

The cheap and transparent trick they use is to make the question stupidly easy. All but one of the multiple-choice answers are meant to be patently silly. The singer Tom Jones comes from a) Dolphins b) Wales c) China? The object of this is not in the humour of those silly options, however much that might be milked for laughs. It is to maximise the instant profit of tens or even hundreds of thousands which each of these numerous “competitions” creates so easily. Foolish viewers spot that they know the answer, and rush to phone and claim their prize, paying premium rates for the call (shared between the programme makers and their pimps at BT), conveniently forgetting that if they found the answer so obvious to this stupid question, so will millions of others.

Clifford Slapper

Economics: Theory of Rent (part 2) (1975)

From the April 1975 issue of the Socialist Standard

Link to part 1

Generally speaking, commodities sell at their price of production. This is calculated by the amount of the total capital involved in their production — constant capital (machinery, materials, etc.); variable capital (wages); plus a profit. Through the action of competing capitals an average rate of profit is formed, and all capitals, usefully employed, whatever the field of investment, will generally obtain the average.

This means that the range of goods produced by these capitals will sell at average prices appropriate to their classification as use-values. For instance, similar-quality bread produced by one baker would not alter dramatically in price from that of another baker, although their individual prices of production may be different. The amount of profit is the difference between the cost of production and the average price of production, which is not determined by individual prices, but by a socially determined price based on socially-necessary labour which regulates the market. Socially- necessary labour is not measured industry by industry.

It should be borne in mind that no capitalist manufacturing concern by itself produces commodities or value; products only become commodities when they come into contact with other commodities which provide their social equivalent. This means they all contain social labour — the labour of society. The individual labour which has gone into the production of groups of commodities forms part of the social labour. The value of commodities is determined by the amount of social labour, measured in time, and they exchange with one another according to the amount or proportion of this social labour vested in them. It is not individual producers who determine the proportion, but society generally. The realization of the market price (value) of a commodity depends purely on social interaction without regard to the nature of the commodities, whether they be agricultural products, motor cars, pig-iron or coal. Commodities can only average this price of production with reference to the whole field of commodities, and the total social capital, and cannot realize their price of production in groups isolated from other groups.

If we assumed that all commodities sell at their price of production, and that all capitals secured the average rate of profit, there would be no rent available for the landlord. As land in itself does not form part of the social cost of production, it cannot have any influence on the rate of profit. Therefore, rent must come from a profit over and above the average rate of profit — in effect a surplus profit. The individual cost of production for most capitalists within particular industries are generally the same, pro rata to the capital invested. The larger firms may be more efficient, although this is not always the case. Wage rates are regionally and nationally determined, and the cost of materials, machinery, etc. and the other elements of constant capital are similar. This will establish a general average cost of production.

Let us assume that a few factories within a certain country, because of their location are able to drive their machinery with the use of natural hydro power, whereas the great majority of other factories have to use electricity in the production of their commodities. Suppose that for every £100 unit of capital expended the factories using electricity make a profit of £15. The average price of production of the commodities in that case would be £115. (We are ignoring for the moment any temporary fluctuation of the market or any other accidental factors.) Assume that the factory using water power could produce the same quantity of commodities in the same time, but that instead of using a unit of £100 capital they need only use a unit of £90, because the water power was provided by a natural force, and not having to buy electricity they managed to save £10, this brings their production costs down to the £90 referred to above.

In effect, through the use of this force they were able to produce the same amount of commodities with less capital. In the normal way their commodities would contain less value than those of the capitalists using electricity, because less social labour was involved in their production. But the average price of production is based on the socially-necessary labour of the whole of society, not of individual factories. The majority of factories using electricity determine the price of production, because all commodities can only realize their value by acting as equivalents to each other over the whole field of commodity production, and not in separate compartments.

Individual industries do not produce commodities as value; it is society at large which creates the commodity form (e.g. a tailor produces a coat. He does not produce the exchange-value of a coat — that is socially determined.) The capitalist using water power, would, therefore, be able to sell his commodities at an average price of production, i.e. £115 — the same as the others. In that case, he would receive a surplus of £25 per unit of capital, an excess of £10 over all the other capitalists who had to buy electricity. This is a surplus profit; a profit over and above the average rate of profit, and this fact directly arises because the conditions under which he used his capital were more favourable; his exclusive use of the natural force denied to other capitalists, and which could not be reproduced by them and consequently was not at their command. Capital can reproduce electricity at will, but you cannot reproduce a natural waterfall or the land upon which it flows.

In the same way, capital cannot reproduce land, and therefore the landowner holds a position of monopoly. In the final reckoning, the surplus profit of the capitalist using water power was due entirely to this force — something which had no value because no labour had entered into its production, as with all natural power. The labour of harnessing this natural power would add value, and this is taken into account. Nevertheless, the cost of harnessing and supplying electricity has been shown to be greater, and it is this difference in cost which constitutes the surplus profit.

Inevitably the owner of the land over which the river or waterfall flowed would require payment for permission for the use of the land which contained the natural force, otherwise he would forbid its use. If the capitalist were to part with the surplus profit of £10 out of the £25, he had received, to the land- owner, that would constitute a ground rent. He would have, in effect, transferred his surplus profit to the landlord. At the end of the day he would have earned a profit of £15, the same as the body of capitalists who used electricity. If he owned the land it would make no difference to the formation of the ground rent. In that case he would retain the surplus profit of £10 in his capacity as landlord and not as an industrial capitalist, because the surplus profit was not due to his capital as such but to a natural force which he has monopolized.

It is evident that any capitalist who is able to use a natural force based on land, whether it be hydro power, naturally fertile land, natural pasture-land, land where the climate is more favourable, and other natural attributes, will be able to cut down his production cost below that of his fellow capitalists who are not in a similar position. He will always be in a position of earning a surplus profit over the average rate of profit, which he transfers to the landlord by way of ground rent for permission to use the land in question.

Agriculture and mining dominate the use of land. The degree of fertility of the soil and the potential mineral wealth will determine the amount of rent. But the existence of rent is due to the use of the land itself. There is an erroneous view held by the Labour Party and other left-wing parties that if you nationalize land you abolish rent. In fact, at no time has any Labour government taken any action to abolish ground rent. The object of the present Land Nationalization Bill is to curtail by taxation the profits of the landlords the price of whose land has risen because of planning and other consents — external factors. In other words, an attempt to prevent landowners from consuming the whole fruits of social progress instead of sharing it with their brother capitalists whose interests are represented by the State.

This makes no difference at all to the formation of ground rent, nor would it make any difference if all ground rent were paid to the State. It would mean that all land was owned by the State and has been taken from the private owners. How this came to pass, whether by nationalization with compensation or by confiscation does not matter. In point of fact, the State is inevitably the largest landlord in any country, and the State is the embodiment of all capitalists’ interests. It is a fallacy to assume that the State or local authority will act differently from private landlords and refrain from levying a ground rent.

At the moment, the Government owns directly, or through the nationalized industries, over 5¼ million acres of land. There are 345,000 acres of Crown Estates; 183,000 acres Church Commissioners; 248,000 acres National Coal Board (50 per cent, farm land); 220,000 acres British Rail (Sunday Times, 2nd February 1975):

The new landlords are operating on strictly commercial terms . . . the tenant farmers have Crown Estates, the Treasury, and tough minded agents for landlords.

(Wiltshire: Sunday Times 2nd Feb.)

The Crown Estates are one of the biggest landlords in London, owning large blocks of flats and houses in Regent’s Park and Kensington. If anything, the rents charged are higher than those of a private landlord, and furthermore Crown property is not subject to the application of Rent Acts, and courts and Rent Officers have no power to fix “fair rents”. According to the agricultural correspondent of the Daily Telegraph: “Tenant farmers occupy about 40 per cent, of the country’s holdings and farm nearly half of the agricultural land.” Rents vary from £30 per acre for good land to £12 per acre for other land. (Daily Telegraph 28th February 1975).

As the total amount of agricultural land in England and Wales is 27.2 million acres (Min. of Agriculture statistics 1972), tenant farmers alone pay an average of £260 millions rent annually for the use of the 13.6 million acres. The formation of rent over the whole 27.2 million acres would amount to approx. £540 million by present rent levies. Practically the whole of London is in the hands of ground landlords, both public and (very) private family trusts. The colossal amount of wealth which is appropriated annually in rent comes solely from the surplus value produced by the working class. Every advance in agricultural science, every intensification of the use of land, is of direct benefit to those parasites who have literally inherited the earth. In the same way, every advance in technology and science generally is appropriated for the benefit of their industrial capitalist brethren.

If human rights mean anything, they mean the right of every man, woman and child to the best possible existence society can provide. Freedom from paying rent, selling labour-power, and producing surplus value for a wealthy group of international idlers. Capitalist society simply cannot cope with the multifarious social problems which it has created because of the restrictive social relations which hold it together. Socialism is an urgent necessity, and working men and women everywhere must devote their thoughts and energies to its establishment through the Socialist Party of Great Britain.

Jim D'Arcy

Letter: Minted Gold. (1922)

Letter to the Editors from the October 1922 issue of the Socialist Standard

We have received the two following questions from Mr. W. A. Archer :—

1. Is minted gold, e.g., a sovereign, a commodity within the borders of the nation of issue?
2. What would be the attitude of the Executive of the S.P.G.B. towards the member of that party who disagreed with the explanation given in reply to question (1)?

Reply to W. A. Archer.

(1) A sovereign is issued for purposes of currency, under Government control, to ensure that fineness and weight of metal shall be constant in all new coins. To attempt to alter, or interfere, with either the fineness, weight or inscription of such coins is an illegal act. Technically the sovereign can only be used as currency inside the country of issue, and is, therefore, not a commodity.

It is true that on rare occasions jewellers take sovereigns and melt them down for use in their business, to save the time and trouble of assaying gold they might purchase in the ordinary way, but the quantity of sovereigns thus used is extremely small. Moreover, as it is impossible to distinguish minted gold after remelting from any other gold of the same fineness and colour, it is exceedingly difficult to detect such illegal occurrences unless the offender were “caught in the act.”

(2) The attitude of the Executive would be to judge any case brought before them on its merits, in the light of the declaration of principles and the constitution of the party.

Wages and the cost of living. (1925)

From the February 1925 issue of the Socialist Standard

If the cost of living to the workers fell to the level of a few shillings per week, wages would be quickly reduced to a level which left them little or no margin after satisfying thqir wants each week.

This is due to the fact that labour power is a commodity, the price of which is determined by its cost of production. All commodities are subject to this law. There may be temporary fluctuations in the price of a commodity due to variations in supply and demand; but these compensate one another in the long run, and a mean level can be traced through the ups and downs which is the actual cost of production.

Wages fluctuate because they are the price of a commodity. The demand for labour power, however, is seldom in in excess of the supply; consequently wages for any particular form of labour power are rarely above the cost of production for that form. Striking an average and taking the more highly-paid with the lowest, we say the cost of production of labour power is synonymous with the cost of living.

As there are always more workers than jobs, competition for them is so keen that wages can always be kept down to a point which, for the bulk of workers, represents a meagre portion of the necessaries of life. It therefore seems to them, that if the cost of necessaries were lower their lot would be improved. The same result would follow if wages were higher and commodities remained the same in price.

The workers, only seeing this much, are between two stools. They can struggle for higher wages, or reduced prices; or both. To concentrate on price reductions is a fallacy; because cost of production determines prices. True the price at one time may be above the cost of production, but that very fact induces greater production and thereby reduces price. While some commodities are rising in price others may be falling. In the first case the capital is increased, in the second it is withdrawn. In this way the fluctuations compensate each other, and the cost of production is shown to be the real price. Hence the fallacy.

On the other hand, if the workers concentrate on wages they are met by stubborn opposition from the masters, and are powerless to effect any real improvement in their standard of living. Only by constant struggle, even, can they prevent reductions in their standard inliving. On either hand they are faced with forces that are invulnerable to their puny weapons. Hence the need for them to understand Socialism.

Almost hopeless as is the struggle for higher wages any agitation for reduced prices is still more so. Yet we find the I.L.P. definitely advising the workers to follow this line. The National Administrative Council passed the following resolution (New Leader, 5-12-24).

  “The I.L.P. declares that the rise in food prices is due to manipulation and speculation in food supplies by profiteering combines and trusts, and expresses the view that the effective remedy is State purchase of food and grain imports through a National Board of Supplies. We recommend the branches to educate and organise public opinion in favour of this reform with a view to its adoption by the Government at the earliest opportunity.” etc.

Whether trusts and combines are responsible for high prices does not affect the question, because trusts and combines cannot be broken except by breaking the capitalist state. The New Leader, 28-11-24 admits this in a leading article, as follows :

  “There may be talk of breaking up the Trusts : America, with all the bull moose energy of a Roosevelt, tried that and failed​ The disease of profiteering is organic : it is not to be cured by such simple means.”

What then is the means according to the New Leader? In its issue 28-11-24 they say :—

  “The ideal is to attain and to keep the general level of prices steady. We believe that by a conscious regulation of credit this can be achieved. It would be necessary, however, to take special measures to stabilise the prices of wheat and meat, and this again we would do by creating a national monopoly of these imported foods, based upon long-term contracts with the organised producers. Stunt thinking will not help us, nor guerilla attacks on the profiteer. Our battle is to alter the basic fact of instability with which private enterprise gambles.”

All the I.L.P. promise the workers is to fix the prices of necessaries at a level that would remain constant. Obviously wages would gravitate to a level that coincided with such prices, and the workers would be as they were minus the ups and downs in the money name of the value of their subsistence.

Notwithstanding this foolish advice, the I.L.P. in its leading article, New Leader, 5-11-12, says :—

  “It is our task as a Socialist [?] Party, which is struggling to understand these obscure causes which govern our lives, to insist on probing this fundamental fact of the trade cycle.”

They appear to recognise the need for serious study, but will require to prosecute that study for some time before they “probe the fundamental fact.” Such of their members as reach this goal will then, leave the I.L.P. to join a Socialist Party—the S.P.G.B.

F. Foan

Correspondence. (1923)

Letters to the Editors from the May 1923 issue of the Socialist Standard

Gentlemen,

Referring to Mr. Fitzgerald’s reply to my letter (this month’s issue of the Socialist Standard), I would like, for charity’s sake, to leave on one side all matters, such as whether Mr. Fitzgerald’s article was vituperative, whether my policy is akin to that of an ostrich, and whether I am in the habit of misapplying what I call my reason—matters upon which Mr. Fitzgerald and myself would probably still disagree in the long run, and to ask this simple question :—

Taking Mr. Fitzgerald’s statement in his article in the December issue of the Socialist Standard, that “Every increase in prices . . . has called either for an increase of currency, or for some financial readjustment,” what are the successive stages between the increase in prices referred to and the arrival in circulation of the increased currency? It would, of course, make the answer more interesting if a concrete example were given, starting with the definite reason for (or cause of) the particular increase in prices.

Yours sincerely,

J. Hutchinson.

Answer to J. Hutchinson.

In his previous letter, appearing in the February issue of the Socialist Standard, Mr. Hutchison refused to examine or accept the facts and figures we presented in our criticism of “Plebs,” in the December (1922) Socialist Standard, but brushed them aside contemptuously in favour of what he called his “reason.” As, by the above letter, he still retains that position, it would, obviously, be a waste of time to supply any further facts or figures to such a critic.

When Mr. Hutchison is prepared to take and examine facts, as the basis of a discussion, we may deal with his question.

Jack Fitzgerald.

* * *

March 23rd, 1923.

The Socialist Party of Great Britain, 

17, Mount Pleasant, 

London, W.C.I.

Dear Comrade,

I have only received the Socialist Standard for February this week, hence my delay in answering J. F.’s reply to my question:

"How to distinguish a commodity from other things “; for if we can do that, we can tell without further aid, whether a sovereign is a commodity or not. J. F. says:— 

“Whether a product of labour reaches the position of currency or not has no bearing on this question.”

I claim that that is the point at issue, and that it is J. F. who bears on it, and tries to show that when gold is minted into sovereigns it is no longer a commodity, because :—

  “When it has reached this position, and only then; it ceases to be a commodity, as it is no longer produced for profit, but as an official instrument set apart for currency purposes.”

Are we to clearly understand from the above sentence :—

(a) That a use-value that has no surplus-value embodied in it, is not a commodity.

(b) That although gold has surplus-value embodied in it before it is minted, by some miraculous means it looses that surplus-value as soon as it is minted, and therefore, is no longer a commodity.

(c) Is there any “profit” produced in circulation. In other words, is value augmented in any commodity by means of circulation, and if not, why bring it into the discussion ?

Yours fraternally,

Wm. Walker.

Answer to “W. W.”

The questions in the above letter were answered in the previous reply appearing in the February Socialist Standard. “W. W.” appears to have muddled himself by dragging in the question of circulation. Whether the explaining of the obvious will clear that muddle we cannot say, but perhaps it is worth the trial.

“W. W.” wants to know whether he is “to clearly understand” from a sentence he quotes :—

“(a) That a use-value that has no surplus-value embodied in it, is not a commodity.”

If “W. W.” will read our statement again, he will see that his question has nothing to do with that statement.

First, as we pointed out, when a particular article is no longer bought and sold, is not produced for profit, but is used for the performance of certain work, it is no longer a commodity, no matter what it may have been before. An illustration may help to make the matter still more simple. A machine bought from the market and used in production is not then a commodity. It is in the stage of being consumed. True ! In the case of bankruptcy, or for some other reason, it may be brought on the market again, and once more become a commodity. But this is only an occasional occurrence. The bulk of machines are used up, or consumed in production.

And so with sovereigns. The Government might gather together light weight coins, and, after melting them down, sell the gold ingot as a piece of gold, which would then be a commodity. But the sovereign is not produced for sale or profit, but as an article of utility in certain social transactions. It is being consumed in use while acting thus, and is not a commodity.

Question (b) is disposed of by the above.

Question (c) has nothing to do with the subject, as the word “circulation” was not used once throughout the whole answer. On the general question of “circulation” and “value,” an answer to a correspondent in the March Socialist Standard covers the ground.

Jack Fitzgerald.

Production Values: bottled water (2011)

The Production Values Column from the February 2011 issue of the Socialist Standard

   A sideways glance at capitalism through some of its products.  This month: bottled water 

It may come as a surprise to younger readers to learn that water hasn’t always come from the supermarket in plastic bottles. There was apparently a time when you could drink it pretty much for free, straight out of the tap. Just as if it fell out of the sky!

But that was in the bad old days. Before consumers wised up and demanded that all those empty spaces waiting on supermarket shelves were filled with rows of different brands of bottled water. Petitions, campaigns and protests demanding new beverage “experiences” finally forced manufacturers and retailers in the 1980s to relent and meet consumer demands for water filtered through Corsican volcanic rock, carved from ancient arctic glaciers or condensed from mountain clouds in Fiji. (These high-end products are of course in the minority. Most products, despite the iceberg or mountain stream on the label come via a tap in an industrial estate, across from an abattoir, just off the M6).

To think that there was a time when we used to think there was just water! H2O our science teachers used to call it, which does scant justice to the range of minerals, fizz and flavourings that can now be pumped into this “pure” product. None of which appears to make much real difference, it has to be said. According to the Observer, one blind tasting panel praised a particular water’s ‘fresh, sweet, lemony aroma’ only to inform them it came from a tap in a Birmingham public toilet. Taking the piss surely.

Under capitalism there is nothing new under the sun. Not even rain. The market wasn’t of course responding to a real demand so much as completely creating that demand. Perrier and Evian are hardly even an example of capitalism’s supposed dynamic inventiveness, more a case of “old wine in new bottles”.

Humans need water. But capitalism doesn’t need humans – unless they can be employed or sold to. So because they are too poor, 3,000 children die each day from diseases caught through drinking tainted supplies. Their mistake? – to be born not as capitalists, nor even as consumers under the market system. In some regions wars are fought over which capitalist controls the water. Every time a borehole is dug a common resource is sucked up, enclosed and sold back to us. Does capitalism think we will swallow anything? Clear as.

Next month: We look at “the best a man can get”. A cure for cancer?! Of course not, we’re just looking at the razor blade.

A Brief Exposition of Socialist Theory. (Continued.) (1922)

From the January 1922 issue of the Socialist Standard

Link to Part 8.

VALUE—continued.

A commodity has two forms—a physical form (coat, basket, spade, and so forth), and a value form (its worth—though not necessarily its price). As we have already seen, it is a useful article and a valuable article. Its valuable property is made evident in exchange relations. Exchange is very complex now (as witness the recent clear understanding of it can be obtained by voluminous literature on currency), but a examining, in the first place, the simplest form of exchange—or value relation, and then progressing through the more complex forms to the modern price form.

The simplest value relation is the relation of one commodity to another one of a different kind. Let us take Marx's illustration. Suppose we assume that

20 yards of linen equals 1 coat;
now let us analyse this simple relation.

The first thing we learn from it (arising out of what we have previously learnt) is that the same amount of energy was used up in producing the 20 yards of linen as was used up in producing the coat. In other words, the same quantity of the same underlying substance is contained in each of these physically different objects. Value is hidden underneath the value relation. In order to elucidate this point it is necessary to forget, for the moment, the quantity side of the matter (20 yards equals 1) and examine the quality side (linen equals coat). It is obvious that "the magnitude of different things can only be compared quantitively when those magnitudes are expressed in terms of the same unit." The basis of the relation we are examining is the essential equality of the linen and the coat as products of human energy.

In the linen equals coat value relation the two articles take entirely different, in fact opposite, parts. In putting them into such a relation to one another an essential peculiarity becomes clear; and that peculiarity is that only the value of the linen is being stated—and it is being stated under the disguise of the physical form of the coat. The coat is giving a visible form to the invisible value hidden in the linen. The human energy that was used up in the manufacture of the linen is now represented by the coat itself. The coat as a coat is of no interest to us, we are only concerned with it as solid value, the representative of the value contained in the linen.

If the foregoing is clear, then it must be obvious that if we wished to state the value of the coat it would be necessary to reverse the positions of the two articles in the relation, e.g.,

1 coat equals 20 yards of linen.

We have already pointed out earlier in our investigation that human energy can only be measured when it is used up—when it is represented by some object that has been produced. In other words, tailoring or weaving cannot be collected in jugs, although the tailor and weaver have given away something the loss of which makes them feel tired, and necessitates the taking in of more replacing material in the form of food. Further, human energy can only be measured relatively—the product of one man's work with the product of another man's work; or the product of the same man's work in different kinds of articles; finally, the proportions of the total energy of society employed in producing different objects. In the example quoted we have the point illustrated—the quantity of human energy employed in the production of linen is compared with that employed in the production of coats. Appearance tends to hide this fact more and more with the growing complexity of exchange.

From the simplest form of value relation it will be seen that in expressing the value of one article in another each takes up opposite positions in the form of expression. The coat, in the expression 20 yards of linen equals 1 coat, occupies the position of equivalent, i.e., the equal to the value of the linen; the linen, on the other hand, occupies the position of relative, i.e., the article whose value is being expressed in its relation to that of the coat. The linen is only linen in this example, but the coat is value itself; 20 yards of linen, for instance, is 1 coat's worth of linen in the case in question.

As these two articles take up opposite positions in the above relation, an effect in one direction on one of them affects the other in the opposite direction. If some new method were devised whereby 40 yards of linen could be produced with the same expenditure of energy as it formerly took to produce 20 yards, then the value relation would be (other things remaining the same) :

40 yards of linen equals 1 coat,
or 20 yards of linen equals ½ coat.

A fall in the relative value of linen and a rise in the relative value of coats. If, on the other hand, there were a reduction by half in the energy cost of production of coats the relation would be :

20 yards of linen equals 2 coats,
or 10 yards of linen equals 1 coat. 

A fall in the relative of coats and a rise in the relative value of linen.

It is apparent, then, that one article cannot occupy both positions in the same value expression ; it cannot be at the same time relative and equivalent—i.e., the article whose value is being stated, and also the object in which that value is being stated. In other words, in a particular value expression an article that occupies one side is thereby excluded from occupying the other side. As Marx puts it :—

  ''The relative form and the equivalent form are two intimately connected, mutually dependent and inseparable elements of the expression of value ; but, at the same time, are mutually exclusive, antagonistic extremes—i.e., poles of the same expression."

By putting the linen and the coat into the above value relation we are, in reality, illustrating the fact that value-making labour is simple abstract labour. Although the linen and the coat are produced by different kinds of work (weaving and tailoring), and perhaps work of different degrees of skill, yet they are, at bottom, the product of just definite quantities of general labour, and hence they can be put into a relation based upon their equality. Weaving, so far as it produces value, is the same as tailoring.

Perhaps an illustration may make this point clearer.

The making of a coat is one particular form in which a tailor uses his energy ; the making of a pair of trousers is another and different particular form, yet coat-making and trouser-making are only different forms of the general activity known as tailoring. Similarly, all productive activity, no matter what particular form it may take, is simply different forms under which human energy is used up.

From the above analysis of the simplest form in which the value of a commodity is made evident, it will be seen that value does not originate in the value form (20 yards of linen equals one coat), but, on the contrary, this form of expression can only exist because commodities contain value—the form arises out of the nature of value. In other words, value does not originate in exchange, as the advocates of capitalism would have us believe, but value must exist before the exchange relation can arise; production precedes exchange; articles must be produced before they can be exchanged. An article exchanges—or is a commodity—because it possesses value; it does not possess value because it exchanges. It is by taking the form of exchange value—entering into a value relation—that the value of a commodity is given an independent and definite form—in our example the form is that of the coat.

As we have already shown, there is no opposition contained in each commodity between use-value and value. This opposition is given an objective or obvious existence when we put two commodities into an exchange relation, one appearing simply as a use-value (the linen) and the other as value itself (the coat). Consequently, the simple form of value—the one we are examining—is that in which this opposition or contrast is clearly demonstrated.

The form of value we have analysed Marx describes as the "elementary or accidental form of value." It is defined as "accidental" because the position of a commodity on one or the other side of the relation (as relative or equivalent) depends entirely upon accident, whether it is the one whose value is being expressed or the one expressing value.

Throughout all history the articles obtained by the expenditure or human energy have been use-values—i.e., useful articles— but it was only at a definite point in social development that such articles became commodities—i.e., useful articles produced for exchange. That point was the period when the human energy used up in their production expressed as objective qualities of these articles—as their value. Consequently, the simple form of value is also the earliest historical form under which a product of human energy appeared as a commodity. The earliest form of exchange was primitive barter on the boundaries of ancient territories or during the accidental meetings of peoples on the march. We will make a more detailed examination of the historical development of exchange later on.

Gilmac. 

(To be continued.)

A Brief Exposition of Socialist Theory. (Continued.) (1921)

From the November 1921 issue of the Socialist Standard

Link to Part 7.

VALUE—continued.

The last article under the above heading appeared in the Socialist Standard of December, 1920. The long interruption in the series was due to circumstances out of the control of the writer.

In the article referred to, we commenced the discussion of the theory of value; the following is a summary of the conclusions arrived at :

  Economic wealth is the result of human energy applied to the materials provided by nature.

  The wealth of to-day appears as a multitude of useful articles for sale—commodities.

  A commodity is a useful article (not to the producer, but to the potential buyer) produced for sale.

  The uses of such an article are as many as the human wants it can satisfy ; but these uses have no connection with its value.

  The value of an article is something contained in it that is only expressed in exchange. Absolute value cannot be expressed, only relative value.

  The only common property of all commodities, apart from their physical properties, is their property of being the product of human energy.

   All commodities represent certain proportions of simple human energy.

   Human energy is measured by time.

  The value of a commodity is measured by its cost of reproduction in human labour time— the time simple human energy would occupy in reproducing it.

The conclusion that the value of an article is determined by the amount of socially necessary labour contained in it, gives us the key to the apparent mystery of commodities. At the bottom, commodities represent the relation of the labour of one man, or group of men, to that of another man, or group of men; this relation becomes mysterious, simply because it appears before our eyes as a relation between two articles. In other words, at the back of the expression of value lies the relation between different methods of expending human energy.

The next point we have to consider is the double-sided nature of the labour contained in commodities. On this point Marx wrote as follows :

"I was the first to point out and to examine critically this twofold nature of the labour contained in commodities. As this point is the pivot on which a clear comprehension of political economy turns, we must go more into detail."

We have seen that a commodity is a useful article and a value; and that the latter is determined bv the amount of labour-power required to reproduce such an article. But just as an article must be looked at from two points of view, so also must the labour contained in it. For example, the labour incorporated in a commodity appears on the one side as the work of a baker, a shoemaker, an engineer, and so forth. That is to say, labour of a particular kind or quality, labour that produces a particular kind of article. But on the other side it appears just as the simple expenditure of human energy—getting tired. All its particular physical characteristics are abstracted and it is viewed as the normal activity of the human organism.

If, therefore, taking for illustration the simple exchange of one article for another, we say : 

l pair of boots = 1 hat,

we are simply stating that the same general substance—human energy—exists in the same quantity on each side of this statement or equation.

On the one hand, therefore, we have concrete or useful labour; on the other hand, abstract or value-creating labour. We look at one from the point of view of quality— the kind of labour (baking, engineering, etc.), we look at the other from the point of view of quantity—the amount of labour; the unifying point is the fact that labour of different qualities is, at the bottom, the simple expenditure of human energy.

From the above it will be seen that labour expressed in value has different attributes from labour as a producer of use-value. This enables us to understand another point around which there is a considerable amount of confusion.

At a first glance it would appear that an increase in the quantity of articles produced would necessarily result in an increase in value—more articles, more value. If we examine the matter closely, in connection with what we have already learnt of the twofold nature of labour, we will see that the above statement is not correct.

Suppose a method of producing boots was discovered whereby two pairs of boots could now be produced with the expenditure of the same amount of energy as it formerly took to produce one pair; we would now have two pairs of boots instead of one (an increase in material wealth), but the same quantity of value is contained in the increased amount of wealth as was formerly contained in the smaller amount. This illustration shows the necessity of understanding the twofold nature of labour contained in commodities.

As different commodities are the products of different kinds of labour, commodity production—Capitalism—could not come into existence until the method of expending human labour power had reached the point where it was split up into a multitude of different kinds carried on independently of each other. To put the case another way : Before the exchange of products in the form of commodities can exist as a social basis, the labour of society must have become sectionalised in such a manner that human energy is expended in different ways, each way being carried on independently and for the account of private individuals; there must have arisen a social division of labour. This naturally follows when we remember that, in bringing two different commodities upon the market to exchange for each other, we are in reality exchanging two different kinds of labour. There would be no point in exchanging one hat for another of exactly the same description, i.e., the labour of a hatter for the labour of a hatter. From this fact it follows that while we can have the social division of labour (as in primitive societies) without commodity production, we cannot have commodity production without the social division of labour.

The value of a commodity represents the expenditure of human labour in general, but this simple labour is generally expended under the cloak of labour of different degrees of skill. Skilled labour in essence is more intensified simple labour—a given quantity of skilled labour is equal to a greater quantity of simple labour.

In the process of commodity production all kinds of labour—no matter what the degree of skill may be—are reduced to the simple expenditure of human energy. This reduction of skilled labour to simple labour is not done openly or consciously—as Marx puts it :

"The different proportions in which different sorts of labour are reduced to unskilled labour as their standard are established by a social process that goes on behind the backs of the producers, and, consequently, appear to be fixed by custom."

A good illustration of the point with which we are dealing was provided in the Whistler versus Ruskin case some years ago.

In the course of the action, one of Whistler's pictures (the subject of the action, the "Nocturne in Black and Gold") came up for discussion. This picture had been exhibited at a gallery and marked two hundred guineas. After Whistler had informed the Attorney-General that, altogether, he had only been two days working upon it, the latter asked : "Oh, two days ! The labour of two days, then, is that for which you ask two hundred guineas !" To this Whistler replied: "No; I ask it for the knowledge of a lifetime."

The above puts the case in a nutshell. Highly skilled labour is the result of the expenditure of energy in the past to make it skilful—it is more intensified labour—a multiple of simple energy.

Gilmac.

(To be continued.)

Letters: The Labour Theory of Value (1970)

Letters to the Editors from the May 1970 issue of the Socialist Standard

The Labour Theory of Value

Sir,

I have not read in the Socialist Standard an explanation of the Labour Theory of Value, and since it is a theory to which objections are frequently made may I put to you the following four points.

(1) It is a basic .and apparently reasonable law of economics that when demand exceeds the supply the price of a commodity rises, and conversely, when supply exceeds demand, the price then falls. What role therefore does supply and demand play in determining value?

(2) Following from this it is suggested that if all the commodities used by man were supplied by nature either the intervention of human labour, and in the same proportions as they are now produced, then they would have the same exchange value as now. In other words if meteorites which occasionally fall, were really diamonds and could be picked up off the streets once in a lifetime, they would still have the same value, providing they were just as rare and could be obtained in no other way.

(3) Why should the value of works of art rise to such heights? An estimate of the value of the Mona Lisa puts its worth at nearly £36 million, and this can only be due to the painting’s rarity — the fact that it is unique, and the demand for it — the fact that it is one of the world’s most coveted treasures. The original labour involved was fixed for all time, and ought not therefore to have altered the value.

(4) Finally, does the capitalist by anticipating demand, and matching supply to demand. thereby reducing waste and needless expenditure of socially necessary labour, not contribute to the value of the commodity?

K. McCormack.

Belfast, 15.

Reply: 

It would be helpful to make a few definitions and give a brief outline of the Marxian Theory of Value before dealing with the points raised. By economics we mean the study of wealth production and distribution under capitalism. By wealth we understand useful goods and services (use values) produced by the application of human energies to the nature-given material of the earth. Under capitalism wealth is produced for sale with a view to profit, its unit being a commodity which in addition to use value also has exchange value. This form of society has not existed for all time but is the result of a long process of evolution. From the simple societies of pre-history where little or no exchange took place to the complex society of the 20th Century where activities are nothing but a continuous series of exchange transactions. Under capitalism the means of production are run co-operatively by the propertyless majority of the population whilst being owned and controlled by a non-working minority. The Labour theory of value not only shows what regulates the proportion in which commodities exchange but also the source of income of the owning capitalist minority.

As exchange is a social act value, which regulates this, is defined as a relationship between people which shows itself as a relationship between things. It has nothing to do with the physical properties (weight, colour, size, etc.) of commodities. It is the social labour embodied in commodities that gives them the common social property by which they may be compared. The value of a commodity is the amount of socially necessary labour required to produce it. Price is the monetary expression of value.

It is the working class who create value at the point of production. In order to get the necessities of life, they sell their labour power (skills and energies) to the capitalist. On average they get the value of their labour power: enough of the things needed to maintain themselves and their families (i.e. to produce and reproduce their labour power). But the value created by workers in production is more than the value of the labour power they have sold. This excess is known as surplus value and forms the source of the capitalist class’s income in the form of rent, interest and profit.

This brings us to the answer to question (4). A capitalist is someone who lives off rent, interest and profit. The capitalist does not play a role in trying to match supply and demand. This is done by workers, such as statisticians and market researchers, whose efforts are concerned with selling and maximising profits. Capitalism generates enormous waste over which neither capitalist or worker have any control. The only way a capitalist could contribute to the value of a commodity would be through being engaged in productive activities but as such would not be acting as a capitalist.

(1) It is price that varies according to supply and demand. When supply and demand are in equilibrium price and value are equal. Value varies according to the amount of socially necessary labour required to produce a commodity. Factors affecting value are the productivity of labour, and natural conditions like the fertility of the soil and ease of access to mineral wealth.

(2) This is an assumption we cannot accept. There is no commodity (wealth for sale with a view to profit) supplied by nature without the intervention of human labour. Air for instance is most useful to man and it is provided by nature without the intervention of human labour. It has no value or price and is not a commodity and is not private property. If everything were available from nature in the same way they would not be commodities.

As for meteorites, we know of none that have delivered anything useful that cannot be obtained here. For the sake of argument if it happened that a meteorite delivered “once in a lifetime" some useful material not previously known to man, there would be no means of applying theories of price or value (which deal with here everyday experience of capitalist production and distribution) to this. No doubt efforts would be made to reproduce the material synthetically. If successful, then the question of value would arise as we would be back to the familiar ground of labour power being expended in production. In the case of diamonds, efforts have been made to reproduce artificially what nature has produced naturally. For the capitalist it has proved better (cheaper) to have workers mining for diamonds, than making them artificially. If diamonds were to fall regularly as meteorites then their value would fall to the socially necessary labour spent in collecting them.

(3) As already explained the theory of value deals with everyday experiences of production in capitalist society. A commodity is not only produced once but is continuously reproduced. Works of art are unique and the prices put on them cannot be explained by economic theory. [That capitalism has to foul the things it finds most beautiful by putting prices on them is to be condemned.] The ‘Mona Lisa’ is no more rare than other paintings having much lower prices say the £500,000 recently paid for a Van Gogh. It will no more help us, if we could explain the conundrum of a price of £36 millions, than if we know the reason for Lisa's enigmatic smile!

Editorial Committee

Beyond Wages

Sir,

Among the multitude of wage and salary slaves, there are few indeed who look beyond striking for higher wages and salaries to a solution of their problems. Truly, that hypocritical slogan “A Fair Day’s Work for a Fair Day's Pay” has a lot to answer for!

Does our modern wage slave, crawling painfully into the Seventies really think he has “won” or yet "broken even” at the end of his day ?

On the contrary, he has "lost” on each occasion he accepts his wages. Why do we say this? Once a worker has worked — once his labour power has been expended, it has created a value greater than its own. But what he has produced this concealed labour within a given commodity, is the legal property of his employer, the capitalist, who thus has increased his original capital with the surplus-value donated by the sellers of the labour power generated in their carcases.

Despite these facts, we daily witness appeals for higher wages as the be-all and end-all of working class aspirations.

Certainly they must strike to protect their living standards, so long as capitalism remains, but if they desire to put an end to their status as suckers for the capitalist class, they must organise for the abolition of the wage system and the establishment of world Socialism. This will be an overdue end to human beings hawking their abilities, which is a degrading business.

G. R. Russell