Greetings to the 10,000 visitors who have now graced this blog. As always, I'm flattered. It shows the burning need for Marxist analysis in the world today! No, really. I just visited an online study site for students, which called Marxism "a mishmash of contradictions and lies", and dismissed the entire Bolshevik revolution with a line about "violence". In the face of such misinformation, I feel no qualms about 'going on' a bit.

On that note... some time ago I promised I'd write about the value-form, and the little I know about it. Please don't take this as the final word on Marxism and value-theory, cos there are far more sophisticated Marxists, and non-Marxists, than me who have written about it. But if this points you towards them, then it's worth reading.

Mmmmm... economic theory...

What is value?

Ask the person on the street, "What's that iPod worth?" and they tell you "250 dollars." Economists agree: the value of something is its price. The entire economy is measured in dollars and cents, from the biggest corporation to the smallest lemonade stand; from the ancient Egyptian tax collectors to the online futures traders.

This was no different in Marx's day. But Marx found the answer unsatisfying. In The Poverty of Philosophy, he complains, "Economists express the relations of bourgeois production, the division of labour, credit, money, etc. as fixed, immutable, eternal categories... what they do not explain is how these relations themselves are produced."

Bourgeois economics would have no problem with this - Fred & Barney leap a few modes of production

Where does money come from? Why do some societies use it and not others? Bourgeois economists say it hasn't changed, ever. But Marx was adamant that it has. These categories have a history, because they're produced by people.

Definite social relations are just as much produced by men* as linen, flax, etc.... the same men who establish their social relations in conformity with their material productivity, produce also principles, ideas and categories, in conformity with their social relations. Thus these ideas... are as little eternal as the relations they express. They are historical and transitory products.

Everyone says Capital Volume One is complicated. Well, sure. But boiled down to its essence, all Marx is doing is tracing that history. He knows that value is not an eternal concept - now he needs to find out where it comes from.

(*I won't bother writing [sic] after each male pronoun. At this level of abstraction, Marx's analysis applies to everyone, whether he realized it or not.)

The History of Value

If value isn't eternal, then it takes different forms at different times. This is why Marx called it the value-form. Money, trade, credit, debt - they're all different value-forms. Where to start? Marx decided to start with the simplest form, which we use everyday: the commodity.

Some might say money is simpler. Money represents something; every economist repeats the tautology, 'money is exchanged for goods and services'. It's just a place-holder, and it's changed over time. But what about those goods and services? They're commodities: things made for the market.

Probably wouldn't work in the Coke machine - Egyptian bronze coin

Things exchange on the market. Of course, a pyramid and a movie are qualitatively different things. Yet, according to the laws of economics, they could be exchanged: someone could determine their relative worth. The real question is: what allows them, and any other commodity, to be exchanged?

The economists say it's utility, units of something useful. How do you measure the usefulness of a smile? It gets used every day, as anyone working retail knows: if you don't smile at everyone, you lose your job. But is it as useful as, say, a tow-truck? Economists say yes; therefore everything has a use-value.

But Marx complicates it. He agrees all products have a use-value - no one wants something useless. But use-value is not the basis for exchange. At the end of the day, a smile and a tow-truck are still two totally different items. To exchange equivalents, those products' useful quality has to be replaced with something abstract... intangible... slippery: an exchange-value, an invisible substance that piggybacks use-value. You can't touch it or feel it - but without it, different products would confront one another, with no way to change hands.

This better be worth something

Even this wasn't enough info for Marx. Where does exchange-value come from, he asked? He argued it came from abstract labour: average units of socially necessary labour time. In other words, not the actual amount of time it takes to make an actual product, but the average amount of time, under given conditions in a society. All commodities contain abstract labour, and that's what lets them be exchanged with one another.

Here it gets tricky. Abstract labour is not value. It's a source of value. What's the difference? All societies need to exchange goods socially. But the particular form of social production, in a market-based society, is abstract labour. It only exists because the market erases useful qualities. Value arises when things exchange, not on the basis of their use, but on an abstraction from their use.

Once we've got that abstraction, it begins to take particular forms:

i) Commodities get exchanged for one another - we've got exchange-value.
ii) But commodities don't just exchange individually; they exchange socially. In Marx's example, a sheaf of wheat exchanges for a bible, which in turn exchanges for a glass of whisky. The owners of those commodities aren't all meeting at the same time & place; they need a universal equivalent, something they can all be exchanged with in common: money.
iii) Money can be put to many different uses. The worker uses it to buy the commodities needed to live; the capitalist uses it to produce more money i.e. as capital.
iv) Capital doesn't just exchange in a local market. It travels around the country, and then around the globe. We've got national and international capital circuits

And on, and on, and on. This is what Marx wrote Capital for: to describe the value-form in all its various stages. Here's a diagram that'll help:

This diagram was sketched out by a friend of mine, who's a much clearer-headed Marxist than I am

What about the workers?

I've left out one very important part. Every commodity exists on this chain, including our own capacity to work: labour-power. This is a special commodity: it's the only one that creates more than it's worth. Every other commodity has a fixed amount of abstract labour in it. Land, machines, raw materials - they all transfer their entire value to the production process, with nothing left over. But labour-power is different: it costs as much as a worker needs to live. That's a physical and social question - all workers need food, but some workers need rare steaks and others need rice. The point is that, like other commodities, its value can be determined. The capitalist buys a worker's labour-power, and pays them that value.

However, workers don't just reproduce that value. If it takes 6 hours of socially necessary labour to make the 'basket of commodities' a worker needs, then the capitalist makes them work 10 hours. Those four extra hours are surplus-value - and the capitalist keeps those. They get plowed back into production, investment and profit. The worker goes home, uses her commodities and has to come back the next day to get more (in the form of wages.) Meanwhile the capitalist keeps getting richer.

What? You mean this isn't fair?

Marx's innovation was to undermine liberal ideology. Liberals always say 'A fair day's work for a fair day's wages.' Marx agrees: there's no injustice in exchange. The injustice takes place "in the hidden abode of production", where the capitalist grabs the value of more labour power than she pays to the worker.

Why bother?

The worker could, of course, just refuse to show up to work. We see the consequences of strikes: the capitalist gets awfully angry all of a sudden. But what if the worker has enough to live on to avoid work? The capitalist makes sure they don't. Capitalism is only established as a system, when the worker has nothing to sell but her labour-power. The history of land enclosures, colonialism and war is a long, brutal story of capitalists, and capitalist states, making sure workers have nothing else but their own bodies to sell.

So what?

Always a good question. Why does Marx have to bring it back to value? Why not just start, as many of his honest contemporaries did, with the 'Satanic mills' of industrial factories, children crawling in mines and so on?

The problem is that economists themselves tart with the system as it is. They never look at it's history, other than reading back the exact same conditions that exist today into the past. But if the system has changed over time, then it's not permanent. It's historical and transitory. We can ask, along with Marx, "Why labour is expressed in value, and why the measurement of labour by its duration is expressed in the magnitude of the value of its product."

The answer opens up Marx's entire economic, social and historical project. It reveals capitalism, not as a benign culmination of economic growth, but as a history of exploitation, "dripping with blood and dirt" as Marx calls it. And equally important, since capitalism arose because some people have power over others, then that power can be taken away. Instead of exchanging on the market, according to the law of value, we can exchange as free producers, according to what we need.

The end of the law of value - Soviet factory meeting

Some Concerns

This is a short, bastardized version of the story of value. Marx devoted three volumes to Theories of Surplus Value. He tried to solve the 'transformation' problem - how, exactly, values get transformed into prices. Most Marxists today say that they don't, and that to pose the question is to miss the point of Marx's critique of economics: he was showing it to be an ideology, not trying to do it better.

But then, why do we need a labour theory of value, particularly if it's hard to quantify in the real world? Non-Marxists have attacked it for its ambiguity; some have staunchly defended it, others have suggested it was never meant as a guide, only a problematic.

Okay, we get it, your back hurts. So what's your position on the falling rate of profit?

This cuts to the heart of what it means to be a Marxist, a question I was asked before and gave a short answer to, which I'd like to expand. Not today - this post is already too long. But for people interested in value-theory, and its implications, I urge them to check out the following resources:

For a good introduction to value-theory & Marxist political economy, check out Geoff Pilling's Marx's Critique of Classical Economics

For a detailed critique of value-theory, and a Marxist defence of it, go to your local university library and look at "The Value Theory of Labour," in Diane Elson (ed.), Value: The Representation of Labour in Capitalism (London: CSE Books, 1979), 116-122ff. It's not an easy read, but I found it rewarding.