We now have three concepts: use-value, exchange-value, and value. (I’m not sure under what conditions Marx capitalizes the V in value; it seems inconsistent, but I’m guessing there is a reason for it somewhere).
Use-value refers to the material particulars of the commodity; size, weight, chemical composition, shape, &c. Exchange-value refers to the quantity of that commodity that can be exchange for given quantities other commodities. Value refers that which is carried by the commodity that permits it to be exchanged for definite quantities of other commodities; we might say that exchange-value is the reflection of value, or how value is expressed in the market.
Value, in other words, is the expression of human labor in the abstract– by abstract, we mean that, when discussing value, we no more care about the particular nature of the labor that produced the commodity, then we care about the use-value.
Page 38: “We have seen that when commodities are exchanged, their exchange-value manifests itself as something totally independent of their use-value. But if we abstract from their use-value, there remains their Value as defined above. Therefore, the common substance that manifests itself, whenever they are exchanged, is their value.”
“A use-value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialized in it. How, then, is the magnitude of this value to be measured? Plainly, by the quantity of the value-creating substance, the labour, contained in the article. The quantity of labour, however, is measured by its duration.”
Well, okay, that makes sense. But what if the labor is, well, badly done? How do you derive value from shoddy work (unless you’re Microsoft)?
Page 39: “Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and and unskilful the labourer, the more valuable would his commodity be, because more time would be required in it’s production. The labour, however, that forms the substance of value, is homogeneous human labour, expenditure of one uniform labour-power. The total labour-power of society, which is embodied in the sum total of the values of all commodities produced that society, counts here as one homogeneous mass of human labour-power, composed though it be of innumerable individual units. Each of these units is the same as any other, so far as it has the character of average labour-power of society, and takes effect as such; that is, so far as it requires for producing a commodity, no more time than is needed on an average, no more than is socially necessary. The labour time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.”
So then: the value of a commodity is determined by the amount of labor necessary for it’s production, not the amount that, in a given case, it actually took. If it takes me twice as long to make a brick as it takes most people, it doesn’t mean my bricks are worth twice as much, it means I’m about to be fired from my job as a brick-maker.
But this brings up the next question: How do we compare the labor of me, an humble brick-maker, with that of, for example, the architect who created the blue-prints for these townhouses my bricks will be used on? He is paid a great deal more than me, presumably his labor is worth more.
Glancing ahead, it seems we will be getting to that. For now, I will quietly mediate on socially necessary labor time.
Considering the original is in German, where all nouns are capitalized, maybe it’s just the translator’s whim?
Ross: Oh. Hadn’t thought of that. Yeah.
Possibly just translator whim, but in my view that is unlikely.
In my readings of Marx, capitalizations of that sort have more often than not been used to note when the translator sees Marx using a particular word in multiple contexts. For example, Capital is one thing in the relation between woker and capitalist, and something quite different when the context is between capitalists or in a discussion of alienation.
This is most common among translators who have also done translations of Hegel. The general observation about word usage is not something I could have articuated without reading Bertell Ollman’s introduction to his work on alienation.
And this is where Marx goes off the rails. The definition of value as the product of labour is not useful for any purpose other than proving that value arises from labour in order to support a political ideology. It leads very easily to counter-intuitive results.
Mike: Interesting. What were the political ideologies of Adam Smith, David Ricardo, Benjamin Franklin, and all the other early political economists who defined value that way? Did these ideologies have much in common? I don’t think Smith’s ideology had that much in common with Marx’s.
It has been my experience that those who get all hot-under-the-collar at the idea of value as the product of labor do so because of *their* political ideologies. See the post on prefaces for Marx’s comments on the furies of private interest.
None of which addresses if it is true.
But I certainly agree that it leads to counter-intuitive results. I really should do that post on Brust’s Law.
It seems to me that, absent any ideology, labor is at least ONE thing value can be reduced to. It’s a part of the equation, and the whole can be arranged so as to quantify the other elements in relation to it. There may be other elements for which this is ALSO possible, but labor is one.
I assume that the brickmaker versus architect issue will, at some later point, be addressed by factoring in the labor required to achieve the minimum level of skill at which the task becomes possible. “The labour time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time” has to be the simple case, for articles which can be produced, eventually, by almost anyone. Articles or tasks which require skilled labor have to somehow factor into their value the effort to reproduce not only the article, but also the skill.
JP: OK, so “whim” was the wrong word. Still, it’s a typographical difference inserted by the translator based on the translator’s reading of the text (or a consensus of many translators; barely possible with Marx’s original input as he read some early translations). The capitalization difference did not exist in the original German.
Some of these terms are curiously named. Certainly the word ‘value’ is being used in too many different ways :) And it doesn’t help that ‘value’ is being used in a particular way that doesn’t agree precisely with its colloquial use…among other things, it creates an opportunity for confusion or outright error when someone shifts from the technical definition to the ‘common’ one in the midst of a discussion.
In my mind, it comes down to utility – his ‘use-value’. The…let’s say worth, just to avoid using ‘value’ again… of an article arises from its ability to satisfy a need (use-value) or to be exchanged for something that does (exchange-value). Labor has worth because it produces something that can satisfy a need, and that worth is easily measured as the difference between the worth of what you started with and the worth of what was produced. If that same labor, though, is spent producing (however skillfully) something that does NOT satisfy a need and which cannot be exchanged for something that does, then did one really create value?
If a thing has substantial ‘labour time socially necessary’, but isn’t GOOD for anything – satisfies neither physical nor emotional needs – is it valuable?
Sean: Yes, we’ll be getting to that. And you aren’t far off.
“If a thing has substantial ‘labour time socially necessary’, but isn’t GOOD for anything – satisfies neither physical nor emotional needs – is it valuable?”
Well, according to Marx, no. I think we covered that in post 1.
Ross, I think whim was okay, really, so I guess my bad. When a bunch of translators have the same whim, it takes on a different status.
When a theorist uses one word to refer to several different possible relationships, and those are not clear in translation because of the nature of the language, you gotta do something.
Marx translators tend to capitalize key relations.
Hey Mike: In a world convinced it’s headed straight to the promised land on tracks going straight to hell, counter-intuitive is precisely what’s needed.
@Sean M (who I’m pretty sure is actually someone other than me)
I do think Marx’s analysis of value would be much clearer if he had used some sort of qualifier for what he calls ‘value’, which in this context is really ‘abstracted-and-alienated-labour-turned-value-for-capital’, but that’s a bit unwieldy and invokes elements of his analysis that he has yet to raise. There is perhaps some rhetorical effect from showing how the content of such a broad concept as value (meaning something like ‘social worth’) is brutally restricted and abstracted within capitalism, but it certainly does cause some problems.
Outside of the standpoint of capital, it is use values (in all their qualitative, subjective, material glory) which are the relevant forms of value. These non-capitalist forms of value are nevertheless required if value-for-and-as-capital is to reproduce itself–indeed, in contemporary capitalism the manufacturing of needs and desires is itself a major industry. So use value probably shouldn’t be treated as quite as ‘obvious’ a thing as Marx tends to present it here. But then, capital itself is not really concerned with the specific content of such use values, so Marx does not dwell on them very much in Capital, a text in which he enters into the logic of capital in order to expose and critique it.
I think it is all much clearer if you keep in mind that ‘Marx the Economist’ is a critical device employed by ‘Marx the Communist’ in his analysis of capitalism, rather than a straightforward articulation of his own theory of value (in a general sense, Marx approaches value as something like ‘the social worth produced through human activity’). In my reading, this chapter is really less about what value is than it is about what capital does to value.
Having never studied the historical key economic texts, I’m going out on a limb here.
How do the tenets of value stream mapping and the Lean Manufacturing basic concepts compare to Smith, Marx, etc?
For instance, identification of your value add vs your Muda or waste is key to improvement and improving your competiveness in the market.
Minimizing the non value added components of your process improves your efficiency and lets you focus on the important things that effect your product.
Some non value added processes are necessary evils, or even keys to success such as quality monitoring–they add no intrinsic value to your product but help you get to the end goal most effectively. Therefore they require investment of resources and labor, but have no economic value of and to themselves.
Did the historical big thinkers of economic world embrace this concept or is it contrary to their work?
Charles: If memory serves, Marx gets into some of that later, as examples of how surplus value is distributed (which includes various things that are not directly part of production but are necessary for production to take place), and the efforts of capitalists to reduce these costs as much as possible. But that’s getting way, way ahead of ourselves.
Interesting that you mention reducing waste as a key to competitiveness in the market. Intuitively, I’d think it would be matter of directly increasing profit,and have no connection to competitiveness. This may be one of those places where the truth is counter-intuitive. Can you explain?
Hmm, well I think of competitive advantage separately from maximizing profit. If you have a significant efficiency advantage over your competition, you can create more value with the same resource expenditure. Thus you can entertain passing this effciency to the end user as price advantage in order to gain market share. Or you can maintain similar prices to the competition but pocket higher operating margins. Obviously this is an exercise in min-maxing your investment versus your revenue, and the size of the available market, and your ability to penetrate it solely through price.
To quote someone elses work which may help explain what I’m attempting to express:
“Well designed and managed processes utilize resources efficiently and therefore cost less, satisfy customer needs more effectively and subsequently increase customer loyalty, and
provide those performing the steps in the process with meaningful work, autonomy, and feedback, resulting in lower turnover and higher productivity.” –Appioti & Bertel, (“Achieving competitive advantage through Lean thinking”)
I agree with the efficieny portion of the above, but am more cynical in the nature of corporate greed — how much of this competitive advantage gets passed on to the customer?
Charles @ 14
The answer to your question is how much is passed on to the consumer is it depends on the elasticity of demand. To show this:
Price on the x axis
Quantity on the y axis
Additional low cost production is going to alter the supply curve, increasing the supply at a lower price point, this moves the left side of the supply curve upwards. The demand curve remains static therefore the intersection moves to the left which means the marginal price falls. The extent of the price fall depends on the relative shape of the two curves. If demand is highly inelastic (quantity consumed largely constant) price may fall sharply. If demand is highly elastic (quantity consumed increases rapidly as price falls) price may hardly change as increased demand soaks up the extra supply .