Law of Value 6: Socially Necessary Labor time- another draft

This is another draft of my SNLT script, substantially different in content than the last script. I must thank previous commentators on the last draft. Their input was really helpful in me forming my thoughts about what I wanted to get across in this script. I have swapped the order of this video with the one on contradictions (the draft of which I posted yesterday). I am hoping to get some good feedback on both drafts before starting production.

The script:

Alone on his tropical island Robinson Crusoe can take as long as he wants to build a cabin for himself. It’s up to him. We don’t have that luxury when we produce for market exchange. When Wonder Bread makes bread they are competing in the market against Pepperidge Farm, Arnold and White Rose. If their workers are less productive, if they take longer to make bread, that doesn’t mean they can sell their bread for more money. The social value of bread is not set by individuals but by the average amount of time it takes to produce bread. This is called the “Socially Necessary Labor Time”. (SNLT)

Title sequence

In neo-classical economic theory there are all sorts of concepts that, though mathematically elegant on paper, have very little descriptive power in the real world. When was a capitalist society ever in General Equillibrium? When was there ever Pareto Optimality? When did consumers ever measure their desires in utils?

SNLT is not like that. SNLT is something very real that we can observe at work everyday. The private labor that goes on behind factory doors will not know for sure what its social value is until the products of that labor enter the market to be compared to the products of other workers. In the market these private labors become social. Socially necessary labor time is asserted. This SNLT then acts back upon production. It disciplines what goes on in the factory. Factories that were spending more labor than was socially necessary are considered inefficient. They must change their production methods or else go out of business. Factories that were producing under the socially necessary time, that were more efficient than average, are rewarded.

Let’s say that the average television takes 1 hour to make. 1 hour is the SNLT for television. But the owner of the ACME TV factory invests in some fancy new machines that make his workers twice as productive. They can now make a television in 30 minutes. They are producing way below the SNLT. This allows ACME to produce twice as many televisions in the same amount of time.

Now if ACME sold their new TV at half the old price they wouldn’t make any more money than before and there would have been no point in investing in all that new stuff. Rather than sell them at their individual value (30 minutes) they continue to sell them at the SNLT (1 hour), or perhaps just under the SNLT in order to out-sell their rivals. Because the price of TVs hasn’t changed significantly there is still the same demand from consumers for TVs, but now there is a giant surplus of TVs on the market because ACME has been making twice as many TVs. ACME’s rivals won’t be able to sell all of their TVs. Part of their product will go unsold. Meanwhile ACME will sell most of their TVs at the SNLT, making not just their normal profit, but an additional “super-profit” because they sold their TVs above their individual values by selling at or near the SNLT.

Profit vs. super-profit

Profit comes from exploiting workers. The only way to turn money into more money is to invest it in workers, or to be precise, in labor power, the only commodity which can produce more value than it costs. (This is all covered in the video “Law of Value 5: Contradictions”.) When ACME sells TVs at under the SNLT they don’t just reap their normal profits from exploiting workers. They also get super-profits: profit appropriated in exchange because their TVs are made at under the SNLT.

It is this race for super-profits that drives much of the technological dynamism of a capitalist society as capitalists compete to constantly lower SNLT. By doing so capitalists don’t just exploit value from workers. They also appropriate value in exchange.

Physical vs. Value Productivity

A superficial look at the ACME TV factory might give one the impression that ACME is making more profit because they are creating more value. But this is not the case. The same amount of workers are doing the same amount of work as before. The same amount of labor time is being performed, spread out over a greater number of commodities. Thus the amount of value they create is not increasing merely because the physical output is increasing. It is extremely important to understand this difference between physical productivity and value productivity. As it becomes easier to make TVs their prices fall. Thus, just because we can make more of something doesn’t mean we have created more value. If other firms were to adopt technology similar to ACME’s we would see the SNLT of TVs fall to half of its former value and ACME’s super-profits would disappear.

Appropriating Value in Exchange

What does it mean to say that ACME makes a super-profit by appropriating value in exchange? If you trade one commodity for another of greater value then you have appropriated value in exchange. There are lots of ways this might happen. One of these ways of appropriating value is to produce a product at less than the SNLT but to sell it at the SNLT. Thus we get back more in exchange than we put into exchange. But where does this appropriated value come from?

At first glance it appears to come from the consumers that buy the commodities. But these consumers are buying a commodity at its value, at the SNLT. They are not losing value in exchange. They pay $50 for a TV and they get a TV worth $50. The people that do lose value are all of the other capitalists who are still producing at the SNLT. They are not able to sell all of their product. They lose out. ACME is able to lure more consumers away from them.

Exchange is a zero-sum game. Whenever one person wins another must lose. There are only so many people willing to buy TVs at the SNLT. When ACME appropriates value in exchange this doesn’t mean that they are stealing money from the coffers of their competitors. It means that they are filching away sales from their rivals. More value comes to ACME than it actually created, less goes to its rivals. (1)

SNLT and the Labor Process

This process goes on everyday in a capitalist society. We have an obsession with time and efficiency. Everything from the working day, to the motions of workers are timed and rationalized. From the moment the alarm clock rings you are checking train schedules, punching time cards, and working as efficiently as possible. There is an entire field of industrial engineering which is devoted to decreasing SNLT in society. Some of the most influential minds of the last century have been people like Henry Ford and Frederick Taylor who made substantial contributions to the reduction of SNLT, all in the quest for a super-profit.

This drive to produce a super-profit does not mean that less and less labor is happening in society. It means that the same amount of labor is producing more output. We are often told that machines will make life easier, reducing the need for work. But this has never been the case in a capitalist society. Machines just create more output per hour worked. Often times machines are used to get more work out of workers because the machine can dictate the pace and intensity of work to the worker. SNLT is a force that presses down upon us, disciplining our motions, driving us to produce value merely for the sake of producing value, rewarding us when we can produce above the average productivity and punishing us when we fall behind.

SNLT and the centralization and concentration of capital

Capitalists compete to lower the SNLT by investing in fancier equipment. The better the machines the more efficient the labor process the higher the output the lower the prices the more super-profit the more money available to invest in new machines… Competition for SNLT means that more and more equipment is needed in order to stay competitive. This makes it harder and harder for small firms to stay competitive. The size of the firm gets larger and larger and the amount of firms in an industry shrinks. The winners gobble up the losers and capital is consolidated into fewer and fewer hands. If firms become powerful enough they may even take measures to blunt competition so that nobody can produce more efficiently than them.

SNLT and Market Socialism

The tools we use to critique capitalism determine how we envision an alternative to capitalism. Models for market socialism that talk of worker-owned cooperatives coordinated by market exchange clearly see that production for the enrichment of the capitalist class must be done away with if we are to overcome capitalism. Yet any society coordinated by market exchange is still disciplined by SNLT.

This means that workers in such a society would still have to discipline their actions to the social average. Cooperatives that worked at under the SNLT would appropriate value in exchange. Cooperatives would compete to modernize their equipment so as to lower the SNLT. And how would co-ops obtain the money to invest in better, labor-saving equipment? They would have to exploit themselves. That is, the more money that workers want to plow back into making their labor competitive, they less they can pay themselves. Not only would the workers be disciplined by SNLT, they would also find themselves disciplined by the need to amass surplus value so as to stay competitive.

Production of surplus-value for its own sake, fierce competition over super-profits, the disciplining of the labor process to the whims of impersonal market forces… sound familiar? Now perhaps one might be of the opinion that it is impossible to do away with SNLT, with market coordination. If this is the case then our best option is do debate what type of market socialism would be least exploitative, least alienating. But why not challenge ourselves to imagine a world without these things.

A World Without SNLT

What would it mean to create a society without surplus value, SNLT or super-profits?

No SNLT means that the products of labor don’t meet in the market as commodities with values. In other words, if we challenge ourselves to imagine a world without SNLT then we must begin to think about a world without value production- a world where the labor process is not coordinated by market exchange. Obviously there are a lot of different ideas about how such a world might be organized. This is not the place to evaluate all of those ideas. Rather, here we should realize that Marx’s theory of value is a powerful tool not just for critiquing capitalism as we know it, but also of helping us evaluate proposals to change the world. That doesn’t mean that Marx’s theory of value has all of the answers for those who want to change the world. But it is incredibly useful in helping us understand the complexity of the task, the consequences of our actions, and the possibilities that might lie before us.

Conclusion

Our private labor doesn’t immediately become social. It must become value in order to be social. But in becoming value it is disciplined by socially necessary labor time. SNLT acts as an external force which disciplines our private labor, constantly compelling us to work more efficiently, yet never actually making our work easier or more fulfilling. SNLT creates the possibility for super-profits when one produces under the SNLT.

In a society not producing for competition or capital, but for communal ownership, there would not be a SNLT. The engineer-worker would be free to design their labor time anyway they wanted, without the external compulsion to maximize output per labor time. There would still be an incentive to increase efficiency, but it would not be an external compulsion to increase efficiency at the expense of the worker. A job would cease to be a job- that is, a passionless series of motions we are compelled to carry out in order to eek out a living in the market. Work could become something much more deep and fulfilling, a means of self-discovery and expression, and a means of establishing social bonds. A radically different notion of work would mean a radically different world.

Footnotes:
1. Here is another example of the way in which individual value and social value diverge. Many times lay-critics of Marx (like the trolls often found stalking this blog) think they can “disprove” Marx’s theory of value by pointing to instances where the individual value of a commodity (the amount of time an individual put into making it) diverges from its social value. But as we can see such deviations are a central part of Marx’s theory. In fact it is these deviations of individual value from social value that create the dynamism and disequilibrium that Marx was so intent on theorizing. It is important to constantly point this out as many lay objections to Marx’s theory of value come form the misconception that social value and individual value must always coincide.

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17 Responses to Law of Value 6: Socially Necessary Labor time- another draft

  1. Arslan Amirkhanov says:

    Hello, first I want to say thanks for your helpful videos, which have aided me greatly in my ongoing study of Marxism. I also really appreciated the intro to your Law of Value series, which points out how ridiculous it is to try to become an expert on something based on Youtube videos. Youtube/Wikipedia/Google scholars piss me off to no end. But I’m not going to go off on that tangent.

    I was already quite familiar with Marxist/Communist thought before seeing your work, but something troubles me about the last part of this essay. You say that in a socialist/Communist society with communal ownership, the engineer would be able to design according to his fancy. But at the same time, we generally accept that the main difference between socialism/Communism on one hand and capitalism on the other is that whereas the latter is based on commodity exchange, the labor of the former would be apportioned with an eye to fulfilling human need first and foremost. This being the case, wouldn’t it make more sense to say that while under communal ownership workers would have more say in what they produce, they would still be limited to some extent because they need to produce the use-values necessary to fulfill their society’s needs?

    Moreoever, revolution, counter-revolution, and threat of capitalist invasion would generate a need for a lot of non-consumer products like military technology(even if we aren’t talking about masses of tanks and planes which are commonly associated with the USSR). Until such time as the security of this socialist state or group of states reached a certain point, people would have to apportionate a great deal of labor dedicated to producing that which is necessary for their defense, among other things.

    On the other hand I do see clearly how this form of ownership would create a greater sense of freedom to design what one wants- because exploitation of labor would not be the source of value, there is no limit on things like automation and other time-saving devices. There is no threat of overproduction if there is no profit motive. So if everyone has more time they would have the freedom to produce things more in alignment with their own wishes. However I still see a problem here because this engineer or architect or whatever is still not working with his or her own tools or materials. They belong to society communally.

    Anyway let’s just use this as a starting point. Is there anything crucial I am missing in this?

  2. Arslan Amirkhanov says:

    I’m glad you haven’t replied yet because when I wrote the first post I was pressed for time. In terms of the type of society I was referring to, I meant Communist society/higher level of socialism where there is no external threat and production is ‘to each according to his needs.’ It it sometimes said that this would consist of a free association of labors, and as alluded to above, a society wherein workers decide what to produce, etc. But needs still exist. So again, how “free” would people be to produce whatever they wanted?

    • I think I agree much with what you said. What would you think about this amended last paragraph:

      In a society not producing for competition or capital, but for communal ownership, there would not be a SNLT. This means that work would not exist in order to make value. Work would exist in order to both provide use-values for society and to better the life of the worker. In our culture we have an intense fascination with those rare people whose work is fulfilling and challenging. Great musicians, athletes, artists, etc inspire us because these are people whose work has challenged them to become the best possible person they can be. Perhaps in a world without SNLT such an experience of work could become more universal.

  3. s. says:

    I really enjoy your videos, Brendan. Thank you.

    “In the market these private labors become social. Socially necessary labor time is asserted. ”

    I have serious problems understanding that.

    I think (!) Marx says, that value is a social relation, embodied in commodities. The relation of the socially necessary labortime needed to create commodity x and the socially necessary labortime needed to create the money commodity.

    But how is the socially necessary labor time determined?

    It cannot be the labortime the worker needed to produce the concrete commodity, because this would only be the concrete labor measured in time.
    It also cannot be the time needed by all producers divided by the amount of all commodities produced, because this would still be the concrete time needed per commodity.

    I think Marx says in various forms, that concrete labor has nothing to do with abstract labor, the same way exchange value has nothing to do with use value. So the SNLT cannot be related to the concrete labor time.

    But then i have no clue what the SNLT really is about… Help!

    • I’m not sure what is confusing about the concept. The SNLT is the average amount of labor needed to create something. It is a simple mathematical average.

      Abstract labor means abstracting from the particular useful nature of the labor: the particular work required to do make a particular thing. But Abstract labor is measured in units of SNLT. The temporal nature of abstract labor is very “concrete” if you want to use that language. It’s determined by the amount of time required, on average, to carry out a specific task Market exchange abstracts away from the particular usefulness so that we can measure all value in abstract labor time, according to the time required to produce a specific commodity.

      • s. says:

        Thanks for your answer. I’m from germany and not too confident with marxism. Around here, there is an ongoing discussion about the nature of abstract labor and there don’t seem to exist clear, unified positions. I would say, the discussion evolves around thoughts that kliman summarizes as the “value form paradigm”. It seems very difficult for me to form my own opinion, because there are just too many different opinions around me.

        Perhaps you could take a look on the following thoughts, where i am trying to summarize what (i think) you are saying :-):

        I produce 10 burgers per hour
        Individual labor time= 1/10=0.1 hour per burger

        In total economy, 1000 burgers are produced in 200 hours.
        Socially necessary labor time=200/1000=0.2 hours per burger

        MELT=1$ per hour of SNLT

        The value of the burger equals 20 cent.

        Lets state there is 1.) competition in the branch of burger producers und 2.) equivalent trade. So the burgers would trade at their SNLT measured in money. Because, if somebody trades his or her burger for more, his or her competitors would underprice him and he wouldn’t be able to sell his burgers.

        So in the actual trade, it is revealed as how many SNLT the individual labor time counts.

        But there isn’t just competition between burger producers but 3. )competition between all capitals. Because some branches exploit more human labor and create more surplus, more capital flows into these branches, thus creating a general rate of profit among capitalists. They now sell their commodities at their prices of production.
        But the total amount of value (SNLT) still equals the total amount of prices and the total amount of surplus equals the total amount of profit. Only the redistribution of the surplus changed.

      • Yes. I think this sums up the concept pretty well. The one exception being: “Because some branches exploit more human labor and create more surplus, more capital flows into these branches, thus creating a general rate of profit among capitalists.” This is almost correct. But the issue isn’t different rates of exploitation or different amounts of labor being exploited. The differences is in the rate or profit between branches due to a different organic composition of capital (c/v or the ratio of dead labor to living labor).

  4. Arslan Amirkhanov says:

    Ok but isn’t it true we can’t necessarily say that the burger’s price is $0.20, because products usually don’t sell at their values but at their price of production? Or did I miss something here?

    • We are dealing with three distinct, yet real, quantities: SNLT, price of production, market price. SNLT is determined by the average amount of time it takes to do a task. Prices of production are formed by the above method (redistributing surplus through formation of average profit rate) and market prices are the actually existing prices which gravitate around prices of production but which change according to the balance of supply and demand, monopoly pricing, etc.

      Each of these 3 things is related in a chain of determinations. These interlocking determinations are the way the social labor process (and the reproduction of capital) is coordinated via commodity exchanges. The fluctuation of market prices around prices of production (the fluctuation of supply and demand) allow for the allocation of capital and labor so that supply and demand balance (though, in practice they never actually do balance because they are in constant fluctuation around prices of production). The fluctuation of individual profit rates around the average profit rate serves to allocate capital and labor to the most profitable areas. Though because prices of production deviate from SNLT systematically this allows for an unchecked growth of the organic composition of capital (the force leading to the tendency of the rate of profit to fall). The deviation of individual values from social values (that is, the deviation of private labor time form the SNLT) serves to discipline labor to the average labor time.

      These three modes of determination are all interlinked, all serving different/related purposes in the distribution of social labor.

    • allan says:

      Arslan, I wanted to take up the discussion about the value of the burgers; I am also somewhat confused about SNLT.

      As I understand Marx this is how it works: I am paid, say $5.00 per hour to make burgers. On average, a typically skilled burgermaker makes 10 ordinary burgers per hour (SNLT.) The materials, machinery, and other costs (insurance, electricity, etc.) are, say, $.50 per burger.

      The labor cost (me, the burgermaker) is $.50 per burger; the other cost is $.50 per burger. The owner of the burger factory, however, sells the burger for $1.10, on average, its real market price/value. Thus the factory owner makes a profit of $.10 per burger even though he only paid $1.00 for the labor and materials. I think Marx explains this by saying that human labor is the only type of labor than can actually add value during the production process. Thus, a shoemaker works on leather and makes a shoe. The shoe is worth more than the leather.

      The burgermaker adds the same kind of labor value, which is “surplus-value.” The factory owner pays an hourly wage and then takes (appropriates) the burger (or the shoe) and sells it at its real value.

      The factory owner might force me to make 20 burgers per hour. But that can only be a temporary advantage, and other owners can quickly catch up, if 20/hr is the socially necessary time for burger production. On the other hand, if 10/ hr is the socially necessary time and the owner forces me to work harder by jabbing me with a stick, then that is not “socially” necessary labor time (unless it becomes socially necessary to use such methods, which may be the case in China, etc.)

      There is no doubt Marx said that the value of a commodity is determined by the amount of labor in it. Not any amount, but the socially necessary amount of labor time. And he said the commodity is always sold at its true value (as did Adam Smith and Ricardo.) But the owner of the commodity (the capitalist) does not pay for its true value, he underpays the worker. Thus, the SNLT always is the price of production (the labor to create the commodity and the labor to produce the materials.) At least according to Marx, I think.

  5. Dave says:

    Brendan,
    It might be useful to clarify one thing. You are perfectly right to point out the detrimental effects of an economy governed by market exchange, which in an unconscious and unplanned way is regulated by a “law of value” that appears to operate as “an external force”.

    However, that the very concept of “socially necessary labour” ought vanish in a planned, socialist economy is far from clear. The fact is that such a society must allocate its finite quantity of social labour time to meet the various planned and unplanned demands from the population. Labour time is then a social metric which could find useful applications in planning, deciding and allocating in such societies.

    • I appreciate what you are saying here. I think perhaps the best solution, in terms of this script, is to try to leave the concept more open ended. I will continue to revise the script in this spirit.

      • Dave says:

        Indeed, Marx did suggest such a role for quantifying labour-time in a socialist economy. E.g. in his Critique of the Gotha programme and in Capital vo1.1, ch.1 (emphasis added):

        “[In an association of free producers, the mode of distribution] will vary with the productive organisation of the community, and the degree of historical development attained by the producers. We will assume, but merely for the sake of a parallel with the production of commodities, that the share of each individual producer in the means of subsistence is determined by his labour time. *Labour time would, in that case, play a double part*. Its apportionment in accordance with a definite social plan maintains the proper proportion between the different kinds of work to be done and the various wants of the community. On the other hand, it also serves as a measure of the portion of the common labour borne by each individual, and of his share in the part of the total product destined for individual consumption. The social relations of the individual producers, with regard both to their labour and to its products, are in this case perfectly simple and intelligible, and that with regard not only to production but also to distribution.”

  6. Everpresent says:

    This will probably be the most important video of the serie.

  7. Massimo Vidale says:

    Dear Prof. Cooney,
    I am an archaeologist working since 30 year with Bronze age – Early state production systems. I am currently working with the archaeological evidence of ancient apprenticeship and its role in the development of complex societies.

    I quote from McCain A. R. (2010) Marx and The Labor Theory. Accessed on October 6, 2010 at the site http://faculty.lebow.drexel.edu/McCainR//top/prin/txt/marx/marx3.html

    “In Marx’s terms, the value of a commodity is the socially necessary labor time embodied in it. This phrase, socially necessary, takes care of some minor confusions in the theory: Suppose John is a carpenter, but he is very clumsy, so it takes him twice as long as other carpenters to build a house. Does that mean his houses are worth twice as much? No, since there are other carpenters who can build the house in half the time, half the time is the “socially necessary” labor time. The time that John wastes doesn’t go into the value of the house he builds because it is not “socially necessary.”

    This sounds very theoretical, because a clumsy carpenter in a pre-industrial society will be known by everybody and never be given a house to build; and even in this case, his product will have little or no value at all. In such a society, a non-skilled craftsman will be more likely an apprentice. In this case, the double extra-hours will be invested for creating, by the means of a teaching/learning practice, the growing skill of the apprentices. In a social context where professional training is not alienated from the families and transformed in a state institution, the socially necessary labour time should be probably evaluated within the production unit, where technical know-how was protected in terms of professional secret, rather than within the boundaries of the community as a whole. When craft specialization is inherited along family lines, a larger family will have more apprentices, and its socially necessary labour time for produced commodity, in a sense, will be higher than that of a smaller family. At the same time, on the long run the greater expenditure of extra-hours of teaching and training will be a precious investment, because will create within the family of the producers a more substantial and efficient core of craft specialists. Only at this point, the production unit might compete and overwhelm its competitors, and impose a socially necessary labour time outside its boundary.
    The impression would be that in pre-industrial societies SNLT should be considered differently. Am I wrong?

    • Yes I agree with the substance of this. Unlike his predecessors Marx did not see value as a universal category but rather a phenomenon strictly unique to a capitalist society where the vast majority of people are wage-laborers allowing labor to quickly be moved around by market forces in order to establish a SNLT.

  8. allan says:

    Marx discussed “socially necessary labor time” only for the production of commodities (as indicated in the quote “…the value of a commodity is the socially necessary labor time embodied in it”.) As far as I can tell he never said anything about feudal or any other pre-industrial economic society using that concept. Such an idea would not make any sense. It is true that some 12th century carpenters were more skillful than others. That did not transform the skillful carpenters’ houses into commodities. John the clumsy carpenter would simply not get any work.

    The crucial difference for John and modern carpenters working for a wage is that the 12th century carpenters sold the houses when they finished working on them. The buyers paid them directly for the houses. When 20th century wage-worker carpenters finish their houses they cannot sell anything. They have, however, been paid a wage, which is less than the value which they built into the house.

    As far as apprentices, they were happy to work only for room and board, because they knew that they could learn how to be master carpenters after a few years. This, of course, could be a problem for the master carpenters; which they sometimes solved by creating carpenter guilds and allowing only certain carpenters to work in a given area.

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