Week Three: The Labor Theory of Value and Commodity Fetishism

The readings for this week have been selected to focus on the the labor theory of value, surplus value, and commodity fetishism. In addition to their importance in Marx's critique of capitalism as an economic system, these concepts have significance for Marxist and post-Marxist understandings of ideology. There is a lot of material here to read, but I have highlighted in red what I consider some of the crucial segments of each text. The text "Value, Price and Profit" was written as a speech to be given to the International Workingmen's Association in 1865. Roughly contemporaneous with the stage of development of Marx's ideas in Capital, "Value, Price and Profit" can serve as a sort of layman's introduction to the concepts that are developed in more detail in the three chapters from Capital, Vol. I included here.

Labor

"Labor" according to The Dictionary of Marxist Thought, is " . . . the capacity to do useful work which adds Value to commodities" (DMT, 265). The English economist David Ricardo had already articulated the "labor theory of value," asserting that all value is produced by human labor. Marx explained the workings of this theory in great detail and with much greater consistency than Ricardo had done.

Labor Power

But Marx also drew a distinction between "labor" and "labor power." "Labor" refers to the "socially necessary labor" that transforms commodities into forms that can be exchanged. What the capitalist pays the worker for is not the "labor" that he adds to a commodity, but the worker's "laboring power" for a set period of time. If the owner of capital (the means of production) paid directly for labor, exploitation would not be possible. The market would drive the price of labor to the level required for reprodution of labor (sustenance of the worker's life, costs required for nurturing children who will become workers, etc.) Instead, the capitalist pays the worker for his or her laboring power for a set period of time, which is longer than the time needed to work in order to produce the material conditions needed to reproduce the laborer. That is, the capitalist is paying the worker just enough for the worker to "reproduce" himself or herself (to feed shelter and clothe himself or herself so that s/he can show up for work again next week, and so that s/he can raise children to become workers), but the worker is working long enough to produce more value. This surplus value is appropriated, silently and systematically, by the employer.

Surplus Value

The distinction between "labor" and "labor power" is Marx argues, the sole source of "surplus value." Whereas previous economists had argued that merchants could make profits by selling commodities for more than they were worth, Marx argued that, while there might be individual instances of selling commodities for more than they were worth, in the long run, the market would force the prices of commodities to their true values. No economy could sustain itself on profits through such shrewd dealings. Instead, "profit" or "surplus value," is systematically "created" through the difference between labor (which functions as a commodity as well as the only activity that can transform other commodities into exchangeable forms) and the labor power that he buys from the worker. Because of a confusion between these two things, the capitalist can always receive more "labor" (as a commodity) than he exchanges for it in another commodity. So, Marx argues, if a person exchanges a ton of wheat for an ounce of gold, those two commodities will be of relatively equal value in terms of how much (socially necessary) labor has been required to produce each of them. But both the wheat and the gold will have been produced under conditions in which workers have continued to work longer than would have been necessary for their maintenance and longer than the period for which they have truly been paid. Hence, both the wheat and the gold will have more "crystallized labor" imbedded in them than the owners of those commodities will have paid for. This is not a situation in which one capitalist will make a profit at the other's expense. Both the gold merchant and the wheat merchant will make a profit at the expense of the workers.

Commodities

Marx's conception of labor, labor power and surplus value produces a revolutionary conception of the commodity as well. The Dictionionary of Marxist Thought explains the commodity form as follows:

All human societies must produce their own material conditions of existence. The commodity is the form products take when this production is organized through exchange. In such a system products once produced are the property of particular agents who have the power to dispose of them to other agents. Agents who own different products confront each other in a process of bargaining through which they will exchange the products. In exchange a definite quantity of one product changes places with a definite quantity of another. The commodity, then, has two powers: first, it can satisfy some human want, that is, it has what Adam Smith calls USE VALUE; second, it has the power to command other commodities in exchange, a power of exchangeability that Marx calls VALUE. (DMT, p. 86)

Significantly, for Marx, the commodity is a social phenomenon--it can only appear in a context of exchange. So, for instance, water is a useful and necessary thing, but it is not a commodity until someone builds a fence around the water source, drills a well where there is no surface water, or in some other way transforms water, through labor, into something that can be exchanged.

Commodity Fetishism

Beginning from the recognition that the commodity is a social phenomenon, Marx analyzes the relationship among commodities of different types and quantities brought into equivalence as different representations of value. As a thing becomes a commodity only when it is made available for exchange, and it is in the exchange relation that the labor which has transformed the thing into an exchangeable commodity is rendered is distorted. "A commodity is . . . a mysterious thing," Marx writes,

simply because in it the social character of men's labour appears to them as an objective character stamped upon the product of that labour; because the relation of the producers to the sum total of their own labour is presented to them as a social relation, existing not between themselves, but between the products of their labour. (Capital Vol I, Ch. 1)

The relationships between commodities are real, but nonetheless they mystify the relationship between the different human beings who produce the commodities being exchanged. As The Dictionary of Marxist Thought observes,

Labour expended in commodity production is social labour. The product is not consumed by its immediate producer, but by someone else who obtains it through exchange. Commodity producers depend on other producers to provide them, through exchange, with their required means of production and subistsence. But labour in commodity production appears to producers as their own private labour, expended independently of the society as a whole to meet their private wants and needs through exchange on the market. The real complex relations a commodity producer has with other human beings through the social division of labour promoted by commodity production are reduced to impersonal and uncontrollable market forces. The producers, whose world is in fact created by other people, see themselves as existing in a world of things, the commodities. The commodity form of production simultaneously makes private labour social as products are exchanged, and fragments social labour into private labour. The confusion of relations between people with relations to things is the fundamental contradiction of commodity production. (DMT, pp. 86-7)

Or, in Marx's words again,

. . . the labour of the individual asserts itself as a part of the labour of society, only by means of the relations which the act of exchange establishes directly between the products, and indirectly, through them, between the producers. To the latter, therefore, the relations connecting the labour of one individual with that of the rest appear, not as direct social relations between individuals at work, but as what they really are, material relations between persons and social relations between things. (Capital, Vol I, Chapter 1, Section 4)