Contradiction and the Law of Value
This video is part of an ongoing series on the Law of Value.
Marx is always talking about contradictions in the law of value. But these aren’t logical contradictions like “round square” or “military intelligence”. They are contradictions inscribed into the very heart of the social relations of a capitalist society. Some prefer to use the word “antagonisms”.
We are all painfully aware that modern society is full of social antagonisms. There’s poverty amidst great wealth, over-work alongside massive unemployment, banks taking away homes, gentrification, racial tensions, violence against women, labor struggles, environmental apartheid, police brutality, gang violence, hate groups, massive dislocations of populations, and lots of war. Marx was interested in explaining all of these antagonisms, but he doesn’t start his analysis with any of them.
Instead he begins with what at first seems a rather innocuous thing: the commodity. Why? Because the commodity is the most elemental piece of the social relations of capitalism. The productive relations between people take the form of commodity exchanges. The commodity is the basic organizer of social relations. So if we want to understand how all of these different social antagonisms relate to one another we need to start with the commodity.
As we’ve already seen, the commodity contains a contradiction: it has a use-value and a value. (As we saw, value lies behind exchange value. So while at first we said the contradiction was between use-value and exchange-value, we later refined this to use-value and value.) At first glance this does not seem all that antagonistic. Yet as we start to look closer we see more significant antagonisms emerge.
Property, exchange and violence
Why is it that people must sell their labor in the market for exchange value, for money?-Because they can’t produce their own means of subsistence for themselves. This is a distinct aspect of a capitalism. In previously existing modes of production the majority of people had use of some sort of means of production for themselves which they used to make most of the things they needed. (Note that I say “had use of” and not “owned”. This is because much of feudal production happen on common land. This collective use of land has been part of many other pre-capitalist societies.) People sometimes bartered for things but they did so by selling part of the surplus they had created for themselves. (Selling off your surplus product is very different than producing exclusively for exchange.) Over the course of a very long, violent, historical process called “Primitive Accumulation” these means of production were privatized and became the possession of a group of people called capitalists. Whereas before people labored directly for their own use, now they have to enter the market in order to attain their subsistence.
So already the fact that we produce for exchange and not directly for use expresses a social antagonism between the propertied and the propertyless. There is an underlying coercion already at work in the “free market”. And this coercion requires some threat of violence to enforce it whether it be a state, private military, or hired thugs. Violence was necessary to privatize the means of production and it remains necessary to enforce all of the legal aspects of property.
In order for people to buy their subsistence in the market they have to sell something else. Since the means of production are privately owned the only thing they have to sell is their labor. But of course labor can’t really be sold. Instead we sell our ability to labor: our labor power. We sell a definite amount of working time, whether it is measured in hours, weeks or years. This is why value is an expression of labor time.
Our own creative working ability, the very thing that makes us human and links us to society, becomes a commodity that we sell to someone else, a commodity called “labor-power”. Labor power, like any other commodity, has a use-value and an exchange-value, and… you guessed it- there is a contradiction between them. The exchange value is the money paid for our working time, the wage. Wages are set by the cost of our subsistence. They depend on the cost of food, housing, clothes, transportation, etc. But the use-value of our labor power is that it can produce value. These are the two opposing sides of labor-power: On one hand it costs a wage, on the other it produces value. This makes it possible to produce more value than we are paid for.
You could be paid $5 an hour yet produce $20 worth of commodity value an hour. (1) If this happened you would be being exploited. In fact your rate of exploitation would be 400%. Exploitation is made possible by the contradiction between the use-value and exchange-value of labor power.
Exploitation explains a puzzle about capitalism: the existence of profit. Capitalists start off the day with a sum of money which they invest in production. At the end of the day they have a quantity of commodities which they sell for more money than their initial investment. It would seem that they have made a profit just by buying and selling things. Yet profit can’t be made through mere buying and selling. This is because buying and selling is a zero-sum game. When we exchange commodities we are just moving commodities from one place to another. This process does nothing to change the total amount of value in society. Sure it might be possible to rip someone off, to over-charge someone, to charge a monopoly price, etc. But a win for one person in the market is a loss for another. There can be no aggregate profit just be moving commodities around. Yet profit is something that does exist in the aggregate. The total amount of value in society grows each year (GDP) through this expansion of value called profit.
So we seem to have a puzzle, or a contradiction, on our hands. On one hand the market is a realm of equality and symmetry. Market exchange conserves the value of commodities: the total value of commodities is not changed merely by transferring ownership. Any loss by one person is offset with a gain by another so that there is an inherent symmetry to commodity exchange. Yet profit is a phenomenon where value expands through the buying and selling of commodities. Profit is asymmetrical. More comes from less. How is this possible?
To solve this puzzle Marx tells us we must look beyond the market into the mysterious realm of production. It is in production where value is expanded through the exploitation of labor. Exploitation does not break any of the rules of market exchange because it doesn’t happen in exchange. Labor power is bought at its value. The products of that labor are sold at their value. No profit has been made through these exchanges. The profit is not from the market at all but from the labor process. It is the amount of labor preformed over and above the value of wages that determines the amount of profit. While the market remains a realm of equality and symmetry, production is a realm of asymmetry and exploitation. Thus there is a contradiction between production and exchange. And this contradiction is made possible by the contradiction between the use-value and exchange-value of labor power.
This antagonism between the use and exchange value of labor power expresses a social antagonism between capitalists and workers. Capitalists and workers have opposing interests. Workers want their means of subsistence: housing, food, clothes, beer. They want use-values. Capitalists aren’t interested in use-values. They are after exchange-value. They want to expand the size of their capital by making a profit. In order for either class to get what the want they need the other. The workers must sell themselves for a wage in order to survive. The capitalist must hire workers in order to exploit them for profits. Yet despite this codependence their interests are entirely antagonistic. The more the workers are paid in wages the less profit the capitalist makes. The more profit the capitalist makes the more impoverished the working class. (This isn’t because capitalists are bad apples. It’s because they personify the interests of capital.)
Clearly the struggle between capital and labor has always been present in capitalist societies whether it takes the form of day to day struggles over the amount of work we consent to, or long-term battles for better wages and working conditions. But even outside of the workplace the class antagonisms of capitalism are clearly ever-present. The distribution of the value created by the working class into wages, profits, rent, interest and taxes has everything to do with the standard of living we are able to enjoy, the kinds of neighborhoods we live in, the type of life-chances we have, and the quality of our lives. In a society structured to maximize profit for one class rather than produce use-values for social need the quality of our lives is inversely proportional to the needs of capital. In the past 30 years, as neoliberalism broke down barriers to the free flow of capital, massive sums of wealth have been consolidated into the hands of a smaller and smaller class of uber-capitalists, while the standard of living for the rest of the world has steadily worsened.
Society has enough food, housing and technology that the entire world’s population could work a lot less and still have all of the basic amenities of life. (Maybe we couldn’t all have mansions, fancy cars, and all the expensive cocaine we wanted, but we could live comfortable lives.) And they’d probably be more fulfilling if we didn’t spend our whole life working for someone else. But we don’t have such a society because our labor is not aimed at creating use-values for society but at creating profit for capital. The constant revolutions in technology and productivity are not aimed at making work easier or improving the quality of our lives, but in creating more profit by submitting labor to greater control. Thus the workplace becomes increasingly dominated by machines, assembly lines and computers all designed to discipline labor to its task of creating more value.
The Labor Process
As the knowledge of work is removed from the worker it is placed into the machine. The worker loses control over the labor process, becoming just a minor cog in the machine, easily replaceable. Another contradiction is revealed: that between the conception and execution of work. Our own knowledge of the labor process is taken away from us and placed in a machine which dominates us, reducing our work to a job- the carrying out of routine tasks with no meaning to us except that they are a means to a wage. This is a contradiction which fascinates popular culture: man vs. machine. But behind the machine lies a social relation between ourselves and our own creative powers that have been taken from us, alienated from us, standing over us, dominating our work.
And with this steady accumulation of capital in the form of machines comes another contradiction, this one between the capital invested in dead labor like machines and raw materials, and the capital invested in living labor. Though an increase in machinery allows capitalists to better exploit workers (and to appropriate value in competition as super-profit) machines can’t create value. As more and more capital is reinvested in machines and raw materials and less and less on labor, the actual value-creating substance of society is crowded out. This is the starting point for Marx’s theory of crisis. As the mass of capital that must be constantly reinvested in expanding production grows it becomes increasingly invested in dead labor rather than living labor. This sets the stage for massive crisis that require the destruction and devaluation of capital in all of its forms.
All of Marx’s model of a capitalist society is derived from his basic starting point: the analysis of the commodity. From this basic idea of value as the organizing principle of a commodity producing society he establishes the contradiction between the use-value and value of a commodity. And then, over the course of multiple volumes he shows how the unfolding of this contradiction reveals all of these other contradictions: contradictions between classes, between society and itself, between people and machines, and between the conception and execution of work. What begins as a seemingly innocuous distinction between use and exchange becomes the substance of class struggle and crisis.
This doesn’t mean that every problem in society is directly explained by the law of value. Yet, how can we really understand any discussion of inequality without first understanding the way in which social wealth and power is created and distributed? How can we understand violence without understanding the coercive nature of the market, the deep inequalities generated by commodity exchange, and compulsion of capital to accumulate at all costs? How can we discuss a solution to the environmental crisis without discussing the way the productive relations of a capitalist society are organized? The problem with the left is not that there are not enough people who care about these things. It is that not enough people have the theoretical tools to think about these things in terms of the basic structure of our society. That is why the law of value is so important to understand today. If we want to overcome the antagonisms of society we need to understand how these antagonisms are related and to do this we must start at the beginning with an analysis of the commodity.
1. Of course the price of a commodity is more than just the immediate labor that goes into it. There is also the past labor that went into the raw materials and the instruments of production like machines. The price of the commodity is the sum of the money laid out for dead labor (raw materials, machines and other products of past labor) and living labor (wages for workers) plus the amount of surplus value, unpaid labor, performed by workers.
Evidently this analysis is intended to be abstraction, and it does well as such, but in applying it to the current world how might we look at the contradictions between nations in Wallenstein’s world systems analysis? Is it too much for one to imply that core-semi periphery-periphery relations may be a macro-form of bourgeois-petty bourgeois-proletariat relations and thereby that contradictions might need to be resolved on a world wide scale as well as on a micro-scale?
Sorry if this is too vague, but perhaps you could help me sort through some of these ideas.
Perhaps you need to read Harvey his book ‘limits to capital’ if you haven’t already. It has a superb section on the geography of capital and kinda frames your question (and solves it)
Another excellent post! Thanks for putting in all the work doing these videos.
I wonder if perhaps the “military intelligence” joke may have been misplaced. I shared the video recently and a friend wrote it off as “insulting its audience in less than half a minute”. While I think that if someone stopped watching at that point, they probably were a lost cause anyway, there is the truth that most military members are from the working class and the “military intelligence” joke does come across as somewhat elitist.
I thought it was funny and on the spot. Critical studies are always filled with irony and a critique of persons. Even Marx indulged his readers with funny sections like ‘senior’s last hour’. The maker of the video did the same and with succes.
i agree. if anyone is offended by that comment, then most likely they have little interest in the topic already. writing something off because of one small element is a bourgeois reaction designed to stifle change; and is too often employed by so-called liberals when they are presented with something that challenges their privilege.
Good stuff. keep it up!
Why do Marxists have beards or wild hair? Why don’t they have Ph.D.’s in economics or something quantitative? Why do your videos warn about being nerdy, but lack math? Why do Marxists argue about what Marx meant, and take a hundred years to decide in what way he was not mistaken about the transformation problem?
To a lesser extent, the Austrians are obsessed with Hayek. Adam Smith had errors, but mainstream economics just write down the neoclassical model and move on. So really, why can’t you Marxists contribute a model?
There are Phd s in economics who are Marxists (with or withour beards). I’m sure liberals like their heroes without beards and no revolutionary thoughts (aka boring).
The TSSI is a quantitative model. Mainstream economics tried to discredit Marx using wrong interpretations of his work.
The main advantage of Marx his work is that it is qualitative and not a quantitative abstraction that doesnt apply to reality. There exist quantitative tests of Marx his work. But mathematics stays within cartesian rationality which is clearly not Marx his way of thinking (without diverting into analytical marxism and bourgeois applications of Marx).
What is the value of a work of art that can’t be copied? How do you value a unique painting, an antique or rare book? The guitar that Hendrix used at Woodstock?
It seems to me that the value of such items is simply what someone will pay for it. It has nothing to do with the labor or raw materials.
The same reason why diamonds are expensive. They are almost unique and require special skills. In our market society these commodities acquire a specific social use value.
You’re absolutely right! Things are worth what people will pay for them. And not just individual items, like antiques or rare art, but even normal, everyday items. Take, for example, the cost of a steak at Applebee’s versus the cost of a steak at Morton’s Steak House. Morton’s is wildly more expensive, and more people eat steak at Applebee’s or (like me) at home (this should mean that the price of Morton’s steak comes down to meet the price of Applebees’ or your local grocer, but it doesn’t). But all of this is relativistic, there are no conclusions to be drawn. There is nothing to be studied.
This analysis, while correct, has nothing to do with Brendan’s video or with Marx’s analysis.
First, if it can’t be copied then it can’t be considered a normal everyday commodity, can it? And, if we are to maintain your relativistic approach, we start getting all kinds of erroneous conclusions that contribute nothing to our understanding of political economy. Jimmy Hendrix’s guitar, I would venture to guess, is worthless to the vast majority of the world’s population—but it is priceless to a collector. I, for another example, live in a big city and I have no need or interest in owning a car. A car, then, is worthless to me—but clearly other people find value in them, so they’re not free.
But this analysis (if you can call it that) moves too rapidly between the general and the specific. Generally, supply and demand moves toward equilibrium—but, specifically, it never does. Markets clear when prices are whatever they are (it may be more or less than what it would have been had any specific seller waited, for example). Things are worth whatever someone will pay for it. I like Coke, you like Pepsi; you say tamato, I say… *yawn*.
It’s for these reasons—this relativistic meaninglessness—that Marx (and Brendan) does not focus on things like exchange, distribution, and consumption. These things are chaotic, and they cannot lead us to understanding our interactions with economy. Marx focuses on production! If you re-frame your lens to that end, I think you’ll get a lot more out of this study.
Marx did focus on exchange, distribution and consumption. He just never quite got into them extensively (lack of time). But it is not that he never wanted to study them thoroughly…
That’s the reason why Marxist criminology is so wrong. They start with Marx his analysis, ignore or forget all his assumptions and preliminary nature of his analysis and start right away to the analysis of criminal justice.
Marx did not focus on distribution, exchange and consumption. He certainly discussed them. But only in terms of production. Exchange of commodities, for example, is important because they represent the product of labor in the production process.
David Harvey has a really good presentation on Marx’s method where he explains why this is the case: http://davidharvey.org/2010/10/video-talk-on-marxs-method-at-berkeley/
David Harvey mainly discussed the introduction of the Grundrisse. Let’s not forget that Marx never published anything of it. I’m not sure the introduction fully covers his method. I don’t think so.
Not ‘in terms of production’ but in relation to production. That’s a huge difference, methodologically.
Brendan, I was wondering if you’ve come across the argument that labour-power as a commodity can have its value determined like any other commodity is ‘wrong’ – such as ‘necessary needs can be realized by many different desires, the satisfaction of which need not all embody the same labour value’ (John Elster, ‘Making Sense of Marx, 69).
The distinction between ‘needs’ and ‘desires’ here is idiosyncratic (and incorrect), but I wonder what the response to the underlying issue might be here – that the satisfaction of the subsistence needs of labour can be realized at different values?
My initial thought is that Elster treats this as though it were an empirical fact and not a social process which really takes place in the market. Is not the ‘minimum wage’ essentially an attempt at a measure of the value of labour power? (Elster, it should be noted, is actually attempting to draw out an essentially neoclassical argument from Marx, and fails spectacularly).
I’d be interested in yours or others thoughts on this, who may have read more in the realm of economics dealing with this question than I have.
I guess my initial impression to this argument would be: Do you really think that Marx argues that all labor-power is reproduced the exact same way? Regardless of the particular bundle of commodities one chooses to reproduce oneself with, one still must reproduce oneself through the purchase of commodities and so the reproduction of labor power follows the basic laws of all other commodity exchange. The crucial part of this argument for marx, is that value can’t be created by the buying and selling of commodities, including labor power. He’s not saying that wages can’t vary or that means of subsistence can’t be diverse.
Hi, great videos. I was wondering what you meant by “machines can’t create value.” You say that machines are unable to create value, they are only able to allow better exploitation of human labor.
I’m sure it’s possible to have an entirely mechanized production system with no living labor at all. Say there is a toothpick factory where no one works. The wood is delivered by the delivery man and automatically turned into toothpicks and stored in boxes for the delivery man to pick up again. Has this factory not created value for society?
The next video explained it to me. I forgot that value was a function of the amount of labor time, not of the usefulness.
I still am not understanding something. This lesson says this:
“It is in production where value is expanded through the exploitation of labor. Exploitation does not break any of the rules of market exchange because it doesn’t happen in exchange. Labor power is bought at its value. The products of that labor are sold at their value. No profit has been made through these exchanges. The profit is not from the market at all but from the labor process.”
But where does the profit come from in a retail store? It is not through labor it does not seem, but through demand itself. I can see exploitation being present in the factory where things are made, and then sold to a retailer (actually probably a wholesaler). But the retailer sets a price, thus a profit, based on what they can get from consumers. The employees at the store are not adding any excess exchange value at all are they, yet the products are sold above what they cost to stock? What is the source of these types of employees exploitation?
an excellent question.
Marx treats the problem like this: All value (and hence surplus value) is created in production. But of course other parts of the capitalist class (retail, banks) also require profit in order to operate. But they do not create surplus value. Rather they siphon off surplus value created elsewhere. Productive capitalists sell their goods to merchants below their value so that merchants can sell them AT VALUE, thus realizing part of the surplus value that was created in production. Take Wal Mart for example: a pair of shorts sells at Wal Mart for $15. This value was created by a garment factory in Bangladesh. But the owner of the garment factory only received $3 for the shorts. Wal Mart is able to strong-arm their producers, and bargain them down to an extremely low profit-margin so that the retail giant gets a higher share of the surplus value produced by the garment workers than the factory owner him/herself gets.
How can mass of surplus value equal mass of profit then? Is part of the money in circulation fictitious (with no certain material base)?
The total mass of SV is equal to the total mass of profit because surplus value is just being redistributed amongst various parts of the capitalist class. This redistribution lowers profit rates for industrial capital and raises it for merchant and banking capital. But redistributing value is not the same as creating value. The same amount of value is just being moved around.
there is also fictitious capital. But Marx treats this question at a different level of abstraction so that fictitious value doesn’t confuse the more fundamental processes of value creation and distribution.
does this also mean that retail workers are not exploited, since their labor does not generate value?
I too was questioning the nature of the exploitation of retail workers. It seems they don’t really add surplus value like a factory worker, so they are not exploited to create surplus value. The retailer is merely profiting from a part of the surplus value but the employees did not add to it directly. The retail employee seems to be just a capital expense that must be minimized, similar to any utility expense. So does the retail employer just have capital expenses (if they are called that) and is not engaging in exploitation? Or do we say the retail employee is being exploited because they are being used to help the store owners to profit but aren’t sharing in the profits. It seems like the retail employee IS helping to create a greater surplus value in some way but not quite as clearly as the factory employee.
Yes, there are some real accounting problems here. If someone has a good article on this issue: please let me know.
What accounting problems are you referring to, specifically? I am not aware of any.
Nothing that endangers his theory. Only theoretical details like when stops productive labour and non productive labour in specific cases. Small accounting problems that interest me now.
Isn’t this problem discussed here resolved rather simply by considering the process of production as also including the distribution of the commodity to the consumer/buyer. After all, after the commodity is produced, it cannot just sit there at the dock without it being transported to the market by truck drivers, sailors, dock workers, warehousemen, and retail workers, all of which require labor?
Neither the use value or the exchange value can be realized without these additional production steps. Furthermore, even in retail food preparation, labor is required to bring a prepared meal to the buyer.
And lets not forget the extraction from nature raw materials that require labor, whether it be minerals for metals, petroleum for plastics, or cattle and lettuce for food commodities. Are not all these part of the process of production? If not, why?
The issue of productive or non-productive labour is a nasty one. Volume two seems to generate different understandings of the topic than earlier writings (such as his manuscript on the theories of surplus value). I wonder if the original manuscripts that were used by Engels show a more nuanced version of this issue. I have thought about this issue a long time and I think I need to read the original manuscripts.
It does not exist. It really does not.
Transportation is also a sort of production. You have to employ labor to move a commodity from A to B. I believe this can help with why merchant capitalists prices are higher.
The “workerism” and “productivism” (the idea that only an industrial proletariat makes value) is a serious analytical bias which limits the reach of the Marxian explanations of value production.
Sure, that ‘the profit is made before the sale’ is a truism, even in conventional business thinking. You don’t have to be a Marxist to believe it. But the addition of a sales force, transportation, storefronts, advertising, etc, preserves and realizes that value. It’s not a trivial or secondary consideration.
Saying these “nonproductive workers” only ‘indirectly’ support or create value seems to minimize the absolutely crucial role these functions play.
As a thought experiment, consider that all sales could occur at the factory door. Would the factory owners realize all of the possible value and surplus value this way?
The question answers itself. The reason this method of moving goods doesn’t happen much is that the separation of function involved in getting the goods out to the ultimate consumer produces other efficiencies, preserves the value, and in that sense, “produces” the value so circulated and realized.
Each set of hands in the chain also needs means of subsistence, preserves, and [presumably] adds value, therefore is variable capital in the Marxian schema.
David Harvey will publish a book on 17 contradictions in Capital. Will you read this Mr Cooney?
“Violence was necessary to privatize the means of production and it remains necessary to enforce all of the legal aspects of property.”
Any pointers to where I can read what these legal aspects are, and when violence is employed to enforce them?
“The total amount of value in society grows each year (GDP) through this expansion of value called profit.”
Does this mean the money supply doesn’t need to continually increase in order to support the increase of value, as it is stored as commodities in circulation? If not, how does this relate to the money supply? Sorry if this is nonsensical, I feel tied in knots thinking this stuff through.