Abstract Labor- Critique of Political Economy

Critique of Political Economy , Chapter One
[I am using some obscure edition from 1904 by International Library Publishing Co. NI Stone translation. So I’m sure the page numbers will be of no use to anyone. Sorry. However a few of the quotes are from the MIA translation, since that saves me time on having to type out quotes.]

The argument in the Critique has many similarities to Chapter One of Capital. (The most glaring theoretical difference between the two chapters is the absence of the distinction between exchange-value and value in the Critique, a distinction that Marx had apparently not yet made in his own mind. ) First Marx demonstrates that certain properties of exchange value clearly point to the existence of a common substance that allows commodities to be commensurable. This common substance is the fact that they are all products of social labor. As in Capital he immediately proceeds to an examination of this substance with a focus on its abstract character.

Since commodities are equivalents “they represent equal volumes of the same kind of labor,” which he calls, “uniform, homogenous, simple labor.” When we consider commodities and the labor that creates them from the perspective of use-value we see heterogeneous uses and heterogeneous labors. But when considered from the vantage point of exchange-value we see a homogenous value substance and homogenous labor, “i.e. labor from which the individuality of the worker is eliminated. Labor creating exchange value is, therefore, abstract general labor.”

In the next paragraph Marx uses the phrase, “simple, homogenous, abstract, general labor”. This leads us to wonder about the relation of each of these words to each other. Is this a list of synonyms or are all of these words separate terms modifying ‘labor’? If they are not synonyms then what exactly is the relation of simple labor to abstract labor? What is the relation of the homogenous quality of labor to its abstract nature? Do ‘abstract’ and ‘general’ belong together in the way that a Hegelian ‘abstract universal’ is a two-word term? Later Marx will use the word ‘universal’ and ‘social’ to modify ‘labor’. What is the relation of ‘universal’ to ‘abstract’? I’ll try to keep these questions in mind as I proceed through the chapter and as I consider Capital and the Grundrisse.

Given that all labors are of the same homogenous quality, time becomes the measurement of the value created by labor. Marx writes that in order to understand how value is determined by labor time we have to understand 3 things: 1. the reduction of labor to simple labor; 2. the specific ways in which commodity producing labor becomes social labor; and 3. the difference between labor as producer of use-value and labor as producer of value (or, in other words, concrete and abstract labor, though he doesn’t put it this way here.) He then proceeds to explain each of these 3 aspects.


The reduction of all labors to labor which is qualitatively the same, “uniform, simple, homogenous labor” is an abstraction. But this is not an abstraction that happens in our minds. Rather “it is an abstraction which takes place daily in the social process of production.” If we make an abstraction in our mind we mentally abstract away certain qualities of a class of things until we select the quality that we feel captures the real essence of the thing. But if a social process carries out this abstraction then it is the social process which whittles the thing down to a basic essence. Capitalist production reduces labor to an abstract, homogenous state by reducing most labors to simple labor. Simple labor is unskilled labor, the average labor that an individual in a given society can perform, “a certain productive expenditure of muscles, nerves, brain, etc.” This is the bulk of all labor in a capitalist society. In this way labor doesn’t appear as the labor of different individuals but rather individuals appear as mere organs of labor.

Marx is very clearly linking ‘abstract labor’ to the unskilled, generic labor that forms the bulk of all labor in a capitalist society.  “This abstraction of human labor in general virtually exists in the average labor which the average individual of a given society can perform-a certain productive expenditure of human muscle, nerve, brain, etc.” (p.25) With phrases like “this abstraction of human labor in general” Marx clearly links the terms ‘abstract’ and ‘general’. This helps clarify some of the relations between adjectives that I mentioned above. Also, here we see the direct link between unskilled (or ‘simple’) labor and abstract labor. The “abstraction which takes place daily in the social process of production,” is a real material abstraction which renders all labors qualitatively the same. This real material process is the reduction of most labor to simple labor. The question then arises: “Are simple labor and abstract labor the same thing?” This passage in Marx seems to be saying that they are two different aspects of the same thing. Simple labor “varies in different countries and at different stages of civilization…”(p. 25) while abstract labor refers to human labor in general, “labor which is qualitatively the same and therefore differs only in quantity.” (p.24) It is the reduction to simple labor, whatever the actual set of skills that comprise simple labor in a given society, that renders all labor homogenous so that we may refer to it as ‘abstract labor’.

After discussing the reduction of skilled labor to simple labor Marx proceeds to the second of the above points, the specific way in which commodity producing labor becomes social labor. He broaches the topic through a discussion of socially necessary labor time (SNLT). It is not individual labor time which sets the value of commodities but rather the average labor time required by society given the current conditions of labor. In addition to labor being social in the general sense capitalist labor has a unique sociality in which it is only social to the extent that it is equal labor. Here Marx reiterates his statements about the reduction to simple labor making labor homogenous thus allowing it to enter into relations of equality with other labors. The addition of SNLT to the picture further refines this notion of equality. In addition to labor being simple and homogenous it now also is only social to the extent that it measures up against against the SNLT. Wasted labor does not become social labor. SNLT and social labor are not the products of individuals but are objective magnitudes/categories given by the social conditions of labor.


Since labor is qualitatively the same (homogenous, abstract, general labor) and reduced to a quantitative equality via SNLT, the “labor-time of a single individual is directly expressed in exchange value as universal labor-time, and this universal character of individual labor is the manifestation of its social character.” (p.26-7) “It is the labor-time of an individual, his labor time, but only as labor-time common to all, regardless as to which particular individual’s labor-time it is.” This then is ‘universal labor time’.

This helps us relate two more terms, “social” and “universal”. Social labor seems here to be identified with SNLT, abstract labor. It is labor which measures up to this average social labor. It can be done by anyone and therefore is not dependent on any one laborer. Social labor is also useful labor, labor which contributes to the reproduction of society. Commodities have to be exchanged before they can be used and thus labor only realizes its social quality when its product is sold. In this chapter Marx clearly relates the exchange of commodities with realizing the social nature of labor.

When the labor-time of an individual is expressed in exchange-value it becomes universal labor-time “and this universal character of individual labor is the manifestation of its social character.” This is bound up with the role of the universal equivalent, the commodity which all other commodities measure their value in, thus serving as a manifestation of universal, abstract labor time. When commodities exchange with the universal equivalent their private labors are realized as universal labor. After a comparison with directly social labor of prior modes of production Marx says that the unique thing about the capitalist mode of production is that private labor “becomes social labor only by taking on the form of its direct opposite, the form of abstract universal labor.”

Because part of this long paragraph deals with commodities realizing their value through exchange I could see how a cursory reading might make one think that Marx is saying that it is the exchange of commodities for money which renders the labor embodied in them abstract labor, or universal labor. However I do not take this paragraph to be saying that exchange is what makes the labor abstract or that exchange creates value. First of all, he talks about private labor being “directly expressed in” universal labor through exchange, and of private labor “manifesting” its social character.  Furthermore, he doesn’t actually use the word “abstract” in this discussion. Instead he uses ‘social’ and ‘universal’. Marx has just gone through a long explanation of how the simplification of labor renders labor abstract and how SNLT makes labor quantitatively equal. It would be contradictory to then turn around and say that exchange is what makes labor abstract. Rather, exchange is the final stage where the social realities of production are ‘realized’. If what is required for labor to be social labor is given by the conditions of production (the reduction to abstract labor, the establishment of SNLT then exchange can in no way create SNLT or abstract labor. All exchange can do is realize what already exists in a potential state.

I think the same holds true for ‘universal’ even though it is perhaps tricky to see immediately in the paragraph. By ‘universal’ Marx means labor which is common to all but not dependent on anyone persons’ labor. In some ways the ‘universal’ character of private labors already seem to have been established by reducing labors to abstract labor and to SNLT. However, they are still private labors which only realize their relation to the abstraction ‘general social labor’ when commodities are sold. Exchange is not what makes it possible for a persons’ labor to be entirely replaceable by another’s in this universal sense. Rather, what Marx is after in his paragraph is, amongst other things, to explain how this universal quality is expressed in exchange through the exchange with the universal equivalent.

Finally Marx comes to the 3rd thing which we must understand about the labor that creates value, the difference between labor creating use-value and labor creating exchange-value. He expands on this point for some time, beginning with a bit on commodity fetishism, although he doesn’t actually use that term yet. “Labor, which creates exchange-value, is, finally, characterized by the fact that even the social relations between men appear in the reversed form of a social relation between things.” This juxtaposition of social relations and their “material cover” leads to Marx’s discussion of abstract and concrete labor. “Whereas labour positing exchange-value is abstract universal and uniform labour, labour positing use-value is concrete and distinctive labour, comprising infinitely varying kinds of labour as regards its form and the material to which it is applied.” While it’s not said as explicitly as in Capital, it seems clear labor is both abstract and concrete at the same time.

Expanding on this theme Marx explains how changes in productivity affect the value of commodities. He then moves into a discussion of exchange-value. Because commodity A must measure its value in commodity B, the use-value of B (by which he means the physical body of B) becomes the means of expressing the value of A. This finds its highest expression in the universal equivalent, the money commodity, which comes to express the value of all other commodities.

Use-value is realized in exchange. By itself a commodity is just an embodiment of individual labor time, not universal labor time. Through an exploration of exchange and the universal equivalent Marx will argue that it is the role of the universal equivalent to allow individual labor time to take the form of universal labor time. But with phrases like “It is not directly an exchange value, but must become one” the lack of distinction between value and exchange-value really mar the text and leave Marx open to various interpretations. Since exchange-value is a relation between two commodities it is obvious that the commodity must be in an exchange-relation in order to have exchange-value.

On 46 Marx says that private labors only become universal and social once they are exchanged as equivalents. He doesn’t use the word abstract. Social labor exists in a latent state, to be revealed in exchange. “Thus a new difficulty arises: on the one hand, commodities must enter the exchange process as materialized universal labour-time, on the other hand, the labour-time of individuals becomes materialized universal labour-time only as the result of the exchange process.” p.47


Marx also says that prior to exchange, exchange value and universal labor time are an abstraction which must find “concrete expression” through the actual process of exchange. (“Linen thus becomes the universal equivalent through universal action..”48 ) Here ‘abstract’ refers to an ideal or potential quality that must become concrete through real action. This passage could be seen as conflicting with Marx’s previous remarks about abstract labor if we take ‘universal’ to mean the same thing as ‘abstract’. But if we treat the two terms as referring to different aspects of labor then we do not run up against a contradiction. If abstract labor refers to the homogenous, impersonal nature of labor, a generic expenditure of muscle, brain and nerve, created by the capitalist labor process then this category of abstract labor doesn’t necessarily explain how private labor becomes social labor. It merely explains why all labors are of a similar quality and thus commensurable. But they are still private labors which must realize their social nature only in exchange, when commodity values are measured in money. The question of how private labor time becomes universal social labor time is a different question. Marx solves this latter question through his analysis of the money commodity which resolves the tension between use-value and value and between private and social labor by externalizing value, universal labor, in the form of the money commodity which all other commodities measure themselves in.

Working definitions from CPE:

abstract labor: a generic exertion of muscles, brain, nerves, etc. That which is most common to all labor and that which capitalist labor is reduced to through the deskilling of work.

simple labor: the basic, ‘unskilled’ labor that comprises the bulk of all labor in a given capitalist society. This changes as production changes.

universal labor: aspects of labor that do not belong to any one worker but are set by society through SNLT and AL.

homogeneous labor: the quality that capitalist labor has of being interchangeable and indifferent to the specific concrete labors that comprise it. This is a result of the reduction of work to simple labor and of capital’s indifference to the use-values it creates.

social labor: labor that is necessary for the reproduction of society. In order for labor in a capitalist society to be social it must produce something that is used and it must produce it at the SNLT.

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Abstract Labor and reading Marx

In the next few posts I will post a close reading of some important works by Marx that explore his concept of ‘abstract labor’. In a past post from last summer I wrote about some revelations I had from reading Ilenkov that I thought helped me come to terms with Marx’s use of the term ‘abstract’ when he speaks of Abstract Labor. Since then, however, I have become convinced that that line of inquiry was not as helpful as it could have been. I had this idea that there was something very complex going on with the abstract-concrete distinction and that I needed to understand a lot of complex dialectical ideas in order to really make sense of what Marx is doing with the concept of abstract labor. And while I do think it is useful to think about the way Marx handles abstractions in various dialectical ways, I now think that coming to terms with his use of ‘abstract’ in the context of ‘abstract labor’ does not require so much extra-reading, as if one needs to read all of Hegel in order to get ‘abstract labor’.

(As an aside, if I could go back and change anything about the way I have pursued my studies of Marx it would be to read less Marxists and more Marx.)

As I mentioned before, I have not been satisfied by my own understanding of the concept of abstract labor. I believe the confusion crept into my mind a long time ago when I read I.I. Rubin’s “Essays on Marx’s Theory of Value.” Rubin questions the idea that abstract labor can refer to physiological aspects of the labor process and instead argues that it is the process of exchanging commodities for money which makes labor abstract, a line of thought that has become known as the ‘value-form’ school. The issue is tricky because one can find passages in Marx like this from chapter one of Capital, “It is only by being exchanged that the products of labor acquire a socially uniform objectivity as values, which is distinct from their sensuously varied objectivity as articles of utility.” Such a sentence, in the past, led me to think that there was a case for arguing that exchange bestows social qualities (like abstractness?) onto commodities and the labor that creates them.

However, my recent close readings have helped me clarify these issues. I read through relevant passages in the Grundrisse, Critique of Political Economy and Capital. The latter two are ready for posting. I may or may not get around to polishing the Grundrisse notes enough to post (I have not had much time for the blog as of late). My main questions in the readings were these:

What is abstract labor and how does Marx make use of the terms ‘abstract’ and ‘concrete’?

How does abstract labor relate to simple labor, universal labor, homogenous labor, general labor and other terms that often appear side by side?

How does abstract labor relate to socially necessary labor time?

How does indirectly social labor realize its sociality and how does this process relate to the category of abstract labor? How is the concept that all labor is abstract related to concept of money as an embodiment of universal general labor that renders private labor social?

As always, I hope that those who have the time to read my posts feel up for posting their thoughts. I always find comments helpful.

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Discussing Volume 2 on Alpha to Omega

I recently appeared on Tom O’Brien’s excellent podcast ‘From Alpha to Omega’. We discussed Volume 2 of Capital and other matters.


(Apparently WordPress has made embedding podomatic content more difficult so you must follow the link to get to the podcast.)

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Abstraction, Abstract Labor and Ilyenkov

What reading Ilyenkov helped me understand about Abstraction and Abstract Labor.

All theory makes abstractions. Marx’s abstractions are different than how we often think of the term. His method, a dialectical materialist method, treats abstractions in a different way than other methods. One of these differences is that abstractions appear in reality itself, not just in the mind of those contemplating reality. Abstract Labor is not a result of theory. It is a real phenomenon of capitalism.

For awhile I have been frustrated with my understanding of Abstract Labor and with my understanding of the relation of abstract labor to Marx’s dialectical method. (There is a two-part video in my Law of Value series in which I attempt to deal with both abstract labor and abstraction but I think I really missed the mark completely on both topics in that video.) So I recently turned to Evald Ilyenkov’s classic book “The Dialectics of the Abstract and the Concrete in Marx’s Capital” to straighten me out. After spending several weeks doing a close reading of the book I can now say “I once was lost but now I’m found, twas blind but now I see.” This book does not fuck around. I highly recommend it.

I knew I was lost, that I was missing something crucial about the relation of abstraction to abstract labor, when I came across this passage in Marx’s Value-Form Appendix to the first German edition of Capital vol. 1, a passage that I didn’t understand:

“Within the value-relation and the value expression included in it, the abstractly general counts not as a property of the concrete, sensibly real; but on the contrary the sensibly-concrete counts as the mere form of appearance or definite form of realisation of the abstractly general. The labour of tailoring, which, for example, hides in the equivalent ‘coat’, does not possess, within the value-expression of the linen, the general property of also being human labour. On the contrary. Being human labour counts as its essence (Wesen), being the labour of tailoring counts only as the form of appearance (Erscheinungsform) or definite form of realisation of this its essence. This quid pro quo is unavoidable because the labour represented in the product of labour only goes to create value insofar as it is undifferentiated human labour, so that the labour objectified in the value of the product is in no way distinguished from the labour objectified in the value of a different product.

“This inversion (Verkehrung) by which the sensibly-concrete counts only as the form of appearance of the abstractly general and not, on the contrary, the abstractly general as property of the concrete, characterises the expression of value. At the same time, it makes understanding it difficult. If I say: Roman Law and German Law are both laws, that is obvious. But if I say: Law (Das Recht), this abstraction (Abstraktum) realises itself in Roman Law and in German Law, in these concrete laws, the interconnection becoming mystical.”
Marx, Value Form Appendix to 1st German Edition of Capital vol. 1, 1867

Often, in common language, when we talk about abstraction we are identifying the general properties that all objects of a certain class have, setting aside (abstracting from) differences. For instance, when I say ‘piano’ I refer to the general features that all pianos have (strings hit by hammers activated by keys, etc.) but I abstract away from all differences between particular pianos (size, model, age, etc.). In this everyday, non-dialectical sense of abstraction (Ilyenkov calls it ‘Old Logic’) an abstraction is based on the general features of a class of objects. The abstraction itself, the abstract piano, does not exist in reality. Only particular pianos exist. Therefore the abstract piano only exists in the mind. For old logic abstractions are only in the mind while the opposite of abstract, concrete, refers to the objects of the real world, the particular pianos. For old logic an abstract idea is correct if it adequately captures the general features of a class of objects. It is wrong if there are concrete objects within this class that do not have the general features of the abstraction. Thus, if there is a piano with no hammers (like the Yamaha Avante-Grand) this would challenge our abstraction that a piano is something with strings hit by hammers activated by keys.

But this is not how Marx deals with abstract and concrete. In the quote above he says that “the abstractly general counts not as a property of the concrete, sensibly real; but on the contrary the sensibly-concrete counts as the mere form of appearance or definite form of realisation of the abstractly general.” In our old-logic abstraction ‘piano’ the abstract general features (strings, hammer, keys, etc.) were all properties of the concrete. They were specific features of the concrete that we singled out, abstracted, as the general features of all pianos. Here Marx is saying, quite explicitly, that this is NOT what he means by ‘abstract’ when he talks about abstract labor. Instead he says that the concrete is merely an expression of the abstract. Concrete labors are just the form of appearance of abstract labor. This implies that abstract labor is a real thing, existing in reality, and that concrete labors are merely the various guises that abstract labor appears in.

Clearly this is a different way of looking at abstract-concrete. We could explain this by saying that Marx is being Idealist, that he thinks the Ideal exists in reality and that concrete reality is just an expression of the Ideal. This would be the Hegelian approach. But we know that Marx is not an idealist so that can’t be the explanation.

Let’s put this quote of Marx’s to the side for the moment and return to it after looking at some of the things Ilyenkov clarifies about Marx’s notion of abstract and concrete.

Whereas old-logic sees abstraction as a mental process and concrete as a quality of sensual reality, Marx sees reality itself as having abstract and concrete aspects. Thought can also be abstract or concrete. An abstract aspect of reality is reflected in an abstract concept. A concrete aspect of reality is reflected in a concrete concept. So the first thing we have to rid ourselves of is this notion that abstract-concrete is analogous to mind-matter.

The next thing we have to consider is the way in which meaning, for Marx, is all about the interrelations of things within a complex system. Contrary to positivist notions of reality in which objects can be understood on their own, in isolation from a system of interactions, Marx only understands things relationally. The meaning, the essence of an object, is not found by observing it in a vacuum. It’s essence is found in the role it plays within a larger system. The same object could have a different essence in a different system.

Concrete reality is composed of many interrelations, relations which form laws of motion. The goal of theory, or science, is to understand this concrete reality in all of its interrelations. A concrete concept is one that captures the real essence of these interrelations. The goal of thinking, of theory, is concrete concepts. However we cannot immediately see all of reality and understand all of the complex interrelations all at once. We can only see a bit at a time. We point our camera to the right, then to the left, then we zoom in, then we zoom out, etc. What is this process? It is the process of abstraction. Abstraction means to leave out some detail and focus in on certain aspects at the expense of others.

The goal of this abstraction is to eventually identify the essential connections between different abstract aspects, slowly piecing the pieces together to give us a concrete picture of the whole. However this can only happen if we abstract correctly. There are two senses in with Marx talks of abstractions, a good and a bad way of abstracting. When abstraction has gone bad Marx often refers to the abstraction as ‘one-sided’. This means that the abstraction views an aspect of reality in an incomplete, one-sided way. An essential aspect of the nature of the object has been left out. Often Marx critiques bourgeois economists for making one-sided abstractions that make it seem like capitalism is a universal, a-historical system by abstracting away all of the historically specific aspects of capital. For instance, if we say that capital is just tools used to make more tools we have performed a sloppy, 1-sided abstraction. We are viewing capital merely from the abstract general features that capital has of increasing physical quantities of things while abstracting away the historically specific value-relations that give capitalism its essential nature.

This shows that abstraction can be arbitrary. If we are free to select one general feature over another we can radically change the concept of capital. If we choose only the ahistorical features we can make capital seem eternal. If abstraction is just seen as the identification of general features then we have no choice but to be arbitrary in our abstractions. But if abstraction is seen differently, as identifying the essential nature of an object, as identifying the “relation within which this thing is this thing” as Ilenkov puts it, then we can be scientific about our abstractions.
When we make an abstraction we want to select that aspect of the object which identifies its essence. Since the essence of things is in their relation to other things, we want to identify the essential relations which govern the object, abstracting away other non-essential aspects. Thus capital’s essence is in the increase of value in production through the exploitation of wage labor. A funny thing happens when we make abstractions of this kind: They often cease to be general features of the entire class. For instance, the above abstract definition of capital does not describe the general features of all capitalist activity. For instance, banks have an increase in value over time but they do not engage in production. Neither do landlords. So the abstraction, capital, is not a general property of capital. Instead it is an abstraction that gets to an essential relation. The profit of banks and landlords is a derivative profit, a subtraction from the surplus value created in production by other capitalists. This is a very different sense of abstraction that we are often used to. Here the abstraction ‘capital’ identifies the essential relation which makes all forms of capital possible, wether or not they share the same general features! The same is true with the basic abstract starting point of Marx’s theory: the commodity. As Ilenkov points out, Marx defines the commodity form very abstractly, even abstraction away money at first and just looking at the relation of one commodity to another. But this basic commodity-commodity relation is generative of the whole complex of social forms that exist in a capitalist economy. Even though some aspects of capitalism (credit default swaps for instance) are not the exchange of one product of labor for another this basic C-C relation is the logical and historical cell which is generative of the whole.

This way of abstracting gets us out of the arbitrary nature of old-logic where we chose whatever general features we wanted. Instead when we abstract we must identify the essential relation which defines an object, a relation that is generative of the class. This requires a very careful scientific approach to understanding how one form generates another, etc. This is the process of unfolding contradictions, etc…. but I will not get into that here.

A good abstraction, one that really identities the essential “relation within which the thing is the thing” is called a ‘concrete abstraction’. From the standpoint of old-logic this seems a contradiction in terms. But it makes perfect sense once we jettison the prejudice that abstract-concrete refers to thought-reality. Concrete abstractions don’t just refer to ideas. They refer to real things in the world. Every concept is abstract in the sense that it just refers to one aspect of reality. Every concept (every well-defined dialectical concept) is concrete in that it refers to the specific features that define an object in relation to the whole rather than to abstract general features. So every well-conceived dialectical concept is a concrete-abstraction.

This returns us to our discussion of abstract labor, an aspect of labor that Marx says is really existing in the world, and which appears in the form of concrete labor. At first it seems like Marx’s general use of abstract-concrete does not map onto his discussion of concrete and abstract labor. Concrete labor refers to the specific working activity of people, the use-values they make and the specific type of labor needed to make that use-value. Abstract labor seems at first, given Marx’s definition of “productive expenditure of a certain amount of human muscles, nerves, brain, etc.”(Capital vol. 1), to be a general feature of all labor, a description that doesn’t describe a relation.

Meanwhile concrete labor seems abstract and seems to define the interrelation of labors. Concrete-labor refers to the 1-sided development of specific laborers, the fact that in a developed division of labor people’s specific working activity is developed 1-sidedly at the expense of other skill sets. This 1-sided development leads to the interdependence of labors on one another. So, at first glance it seems like Marx’s use of abstract and concrete labor is the opposite of his use of abstract-concrete in his method in general.

However, though the inter-relation of all labors is a result of the division of labor, this is not the relation which defines the essential capitalist nature of labor in our society. The division of labor refers to a much wider historical category of labors. It is not an abstraction that captures “the relation within which the thing is the thing”. The specific aspect of capitalist labor that needs to be explained is that fact that it is value producing and that this value is a homogenous substance, one value product commensurable with another despite having different use-values and being the product of different heterogeneous labor-processes.

Were Marx to just appeal to old-logic’s method of generalization to identify the homogenous quality of capitalist labor he could be accused of being arbitrary. Marx’s method requires that abstraction refer to a real process or thing, something existing outside of the mind. Theory must trace the development of things in reality, not in the mind. This causes Marx to look to real events, real processes to identify the substance which produces this homogenous value.

When Marx speaks of abstract labor he is referring to the real development of an aspect of the labor process in capitalism. Capitalist labor is developed one-sidedly. It is developed purely for its abstract productivity, productivity developed for its own sake, not related to any specific use-values or social need. This causes labor to be machine-like, to be devoid of any content outside of its physical productivity. The process of social averaging which is socially necessary labor time also abstracts from the differences in productivity between workers so that the product of all labor has a uniform value. This is the essential aspect of capitalist labor that makes “the thing the thing.”

As objectified abstract labor, value takes an independent form, money, which exists as value in the abstract. But abstract labor itself, though it is real, though it is objective, only exists through its manifestations as various concrete labors. Here the concrete becomes a subordinate to the abstract. This is because in capitalism abstract laws dominate individuals. Isolated, independent concrete labors are at the mercy of abstract social forces which dominate individuals.

I hope others find this clarifying. Coincidentally Bruce Wallace has been writing about Ilyenkov on his blog as well.

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Indirectly Social Labor

Indirectly Social Labor

(This is a draft chapter. Comments appreciated.)

This chapter considers Marx’s distinction between directly social and indirectly social labor. Indirectly social labor is a key concept used by Marx to characterize the distinctive nature of capitalism. Any attempt to theorize a way to break with capitalist production, to form a new society not organized around capitalist social relations, must have a plan to break with the indirectly social nature of capitalist production.

Since these are two types of social labor perhaps the first place to begin is to clarify what ‘social labor’ is in the first place. It is obvious to anyone that any labor process which requires more than one person (moving a piano, for example) is an inherently social activity since it requires the direct cooperation of individuals to achieve a task. This cooperation also entails mutual dependence of all laborers involved. (If one person drops the piano then everyone is screwed.)

But not all tasks require direct cooperation between people to be executed. A piano tuner, for instance, works alone. Her work does not require the direct cooperation of other workers and she is not mutually dependent on anyone else in order to tune a piano. However Marx argues that the piano tuner’s work is still social labor. Why?

But also when I am active scientifically, etc. – an activity which I can seldom perform in direct community with others – then my activity is social, because I perform it as a man. Not only is the material of my activity given to me as a social product (as is even the language in which the thinker is active): my own existence is social activity, and therefore that which I make of myself, I make of myself for society and with the consciousness of myself as a social being.”1

So even though our piano tuner works alone her labor is social because it is part of a much larger social organization of labor extending beyond the piano to encompass all of society. The materials which she uses (wrench, tuning fork) and the material she works on (piano) are all products of other people’s labor. Furthermore, the language she uses (equal-tempered tuning) is a social creation, the product of centuries of development. And the art of piano-tuning itself is an art which has developed over time through the labor of thousands upon thousands of other tuners. Each piano that she tunes supports the labor of piano players and teachers in her city as well as the training of future pianists. To be a piano tuner is to be a part of this much larger development and organization of labor. Thus, her “own existence is a social activity,” and “that which she makes for herself she also makes for society.”

The social nature of labor is an ever-present theme in Marx’s work not just because all labor is social but because labor is the activity through which society is produced and reproduced each day. Societies do not fall from the sky nor do they develop out of the mind of God or humans. They are built and rebuilt each day through practical human activity. Social relations are reproduced everyday with this labor. Thus labor is the basic constitutive unit of society. Because this constitutive unit is an activity, society’s essence is constantly in motion, in the process of creating itself. This explains the ability of human society to change so drastically over the course of history, from living in caves to living in condos. The specific organization of this social labor defines the particular essence of any human society, from primitive communism, to feudalism, to capitalism. By understanding human activity as the constitutive unit of society Marx is able to identify the radical potential of human activity, labor’s potential to radically transform society into new forms.

Directly and Indirectly Social Labor

The distinctive thing about the organization of social labor in a capitalist society is that, in opposition to all previous forms of society, the private labor of individuals manifests its social character through the value relations between commodities. In capitalism the labor of individuals is private labor, the labor of atomized, separate individuals, which only reveals its social nature indirectly through the exchange relations between the products of labor, commodity values. This indirectly social labor is different than the directly social labor of prior societies in which the labor of individuals was not private labor separated by the mediation of value.

Take for instance the “patriarchal system of production”, as Marx calls it, where the family unit was the basic productive unit, each member of the family contributing different labors to the collective product of the family. Here the labor of each individual is not private and the product of that labor does not take the form of private property to be exchanged against the product of other family members’ products. The labors of the family members do not take the form of commodities with values and they do not require exchange to reveal their social nature. Instead the labor of each individual is already directly social: each person’s contribution to the family’s product is immediately part of the total product of the family, without having to pass through the mediation of money.

Personal vs. Objective Dependence

The direct social labor of pre-capitalist societies was organized through relations of personal dependence. Individuals were dependent on other members of the community in direct, subjective ways. Relations reflected the specific personal relations between individuals whether they be the relations between members of a family or between feudal classes. This made social custom, belief structures and religion quite crucial in regulating the relations between people. Capitalism, by reducing all interactions between producers to commodity relations, annihilates these ties of personal dependence as well as these customs and belief structures. This change liberated people from direct, personal dependence on one another, freeing humans from relations of direct servitude and other forms of coercion associated with pre-capitalist class society. However Marx cautions that this apparent freedom from relations of personal dependence is not as free as it at first seems. Capitalism replaces the “personal restriction of the individual by another” with “objective restriction of the individual by relations independent of him and sufficient unto themselves.” “These external relations are very far from being an abolition of ‘relations of dependence’; they are rather the dissolution of these relations into a general form….These objective dependency relations also appear, in antithesis to those of personal dependence (the objective dependency relation is nothing more than social relations which have become independent and now enter into opposition to the seemingly independent individuals; i.e. the reciprocal relations of production separated from and autonomous of individuals) in such a way that individuals are now ruled by abstractions, whereas earlier they depended on one another.”2

What does Marx mean when he says that relations of personal dependence are replaced by relations of general objective dependence? The change from personal dependence to general dependence is easy enough to to grasp. Capitalism with its global distribution of labor, complex chains of payments, etc links individuals into a vast, global organization of social labor, each person dependent on society in general but not dependent on any particular person. But why does Marx call this general dependence “objective” and how do these objective relations “enter into opposition to the seemingly independent individuals”?

The over-arching point which Marx is aiming at here is the fact that capitalism is not ruled by people, by subjects making choices, but instead by objective economic laws. These laws rule people rather than people ruling over the laws. “Individuals are subsumed under social production; social production exists outside them as their fate; but social production is not subsumed under individuals, manageable by them as their common wealth.”3 A capitalist economy is of course made up nothing more than individuals making choices. However the circumstances of these choices is not a choice. Choices are made within a pre-existing system of production which has its own laws of motion, laws that take on a character of objective independence from society. As long as the capitalist mode of production exists these laws act in the same way as a law of nature: they are inevitable, unbreakable and proceed free from the actions of humans. Because relations between producers are not direct, because they are mediated through the value relations between objects, these value relations take an independent form, an autonomous force that regulates production outside of the control of the producers. This is why Marx was highly critical of proposals to modify surface features of capitalism without doing away with the system of indirectly social labor that lay at the root of capitalist production. Individuals, groups and states cannot run capitalism. Capitalism runs people. This is an inescapable aspect of indirectly social labor.

But what accounts for this objective, law-like quality of a capitalist economy? Let us look more closely at what it means for social relations between producers to be mediated by value relations between commodities, for labor to be indirectly social. In order to have money to buy my means of subsistence I must produce a commodity and it must sell in the market for a price. The connection between my labor and the labor of the rest of society is contingent upon the sale of my commodity for money. This money does not just measure the value of my own personal labor. The value of the widget I create is not determined by myself alone. It is determined by the socially necessary labor time it takes to make a widget. If I take 2 hours to make a widget but the socially necessary labor time for widgets is 1 hour then my two hours of labor are only worth 1 hour to society. Not all of my labor is counted as social labor by society. Only the socially necessary part of my labor counts as social labor. This is why we say that our labors are only indirectly social in capitalism. Our labors are only social in this limited, contingent way. The fact that my two hours of labor only count as 1 social hour is not a decision made by people. It is a result imposed upon me by forces outside of any person’s control. Even though socially necessary labor time is a result of human actions its imposition upon people takes the form of an impersonal objective force.

While in the above example my 2 hours of labor only count as 1 hour of social labor, money always counts for its full value. This is one of the ‘peculiarities of the equivalent form’ as Marx calls it.4 While the labors of people are always indirectly social, money, the mediating link between these labors, is directly social because it always counts for exactly as much value as it represents. Money can be exchanged for, it can measure the value of, any commodity. Money is social value in the abstract, unattached to any particular use-value. Of course the social power of money comes from society, from labor, but this social power appears as a force independent of individuals, an alien power confronting individuals. Money, the direct incarnation of social wealth, the objective link between individuals, exists in the form of an object which can be owned and amassed by, as well as kept from, people. “The individual carries his social power, as well as his bond with society, in his pocket.”5

So in a system of indirectly social labor not only are private labors regulated by social forces (socially necessary labor time) which are outside of the control of society but money, the mediating link which stands between these labors, appears as an objective social power outside of the control of individuals as well. Whereas pre-capitalist societies were organized through the direct personal dependence of people on one another, in capitalism this dependence becomes a general objective dependence. We depend on money. Money serves as our link to the rest of society. Money confronts us as the executor of objective economic laws.


In the same way that we said that directly social labor is constituted of subjective relations of dependence we could also say that directly social labor is organized around the particular aspects of labor as opposed to capitalism which organizes the universal aspects of labor. Returning to our hypothetical patriarchal family production unit we see that my contribution to the family’s product is very much bound up in the particularities of my labor. My particular skills, speed, habits, mood, health, etc all are immediately relevant factors in what I contribute to the family. This is not the case in a capitalist society where my output is a tiny part of the total output of society. The value of the widgets I make in a capitalist factory do not depend on my particular skills, speed, habits, mood or health. Instead this value is a universal, social value established by the time it takes society in general to produce a widget, the socially necessary labor time of widgets. Rather than the particularities of my labor it is the universal aspect of my labor that counts as part of the total social output. If the socially necessary labor time to produce widgets is 1 hour per widget but I require two hours to make a widget my widgets are not worth anything extra just because I took a long time to make them. They are only worth the social average. The particular nature of my work does not count. What counts is the universal aspect of my work.

What is this universal aspect? “This abstraction, human labour in general, exists in the form of average labour which, in a given society, the average person can perform, productive expenditure of a certain amount of human muscles, nerves, brain, etc.”6

This universal aspect Marx calls “Abstract Labor” and it forms the topic of a separate chapter in this book. However it is appropriate to explore the topic here briefly. These ‘universal’ aspects of labor may exist for all labors in all types of society. They also may only be some among many other universal aspects of labor. However these specific universal aspects are the ones deemed important to capitalism, the aspects which capitalism develops to the extreme, at the expense of other aspects of labor. Capitalism requires that all private labors are only counted as social to the extent that they take part in the formation of social averages of productivity, productivity measured as output over time. If socially necessary labor time is 1 widget per hour my labor will only count as social labor to the extent that it can produce at that average. Thus what is universal, what is social about my labor, is not any particular feature of me or the way I work. What is universal is the ability of my muscles, nerves and brain to produce 1 widget per hour. Marx argues elsewhere that capitalism is production for production’s sake. This productive imperative is reflected in abstract labor in which it is only productivity in the abstract that is socially valued. All particularity is erased and replaced by the imperative to produce at the social average. Capitalism develops this abstract character of labor, its physical productivity, to the extreme in its drive to amass profit for the sake of amassing profit.

If we look at labors in their particularity we see that they are all quite different, some much more productive, more efficient than others. However if we look at labor from the perspective of the person at Wallmart in charge of buying product from suppliers, then we see that all particularities are irrelevant. It does not matter what country the product comes from, the conditions of the producers, the health and safety standards of the conditions of production, etc. All that matters is the unit cost of the product. From the perspective of Wallmart all of those particular labors are just manifestations of value in general. They are considered only in their universal aspect. How would Wallmart calculate the value of an individual’s contribution? Wallmart would merely take the total value of the product and divide it by the total hours worked to create it. Through this process of averaging all particularity is erased and human labor is considered only in its most abstract aspects. “Labour, thus measured by time, does not seem, indeed, to be the labour of different persons, but on the contrary the different working individuals seem to be mere organs of this labour.”7

When does labor ‘become social’? (hint: trick question)

We have said that labor in a capitalist society is indirectly social because the labor of private producers only realizes its social character in the value relations between producers rather than the producers directly relating to each other. This seems straight-forward enough. However this concept has produced different interpretations. Isaak Rubin’s highly influential reading takes Marx to mean that the private labor of individuals does not become social until the products of labor are exchanged on the market. This then means that the labor itself, when it is happening, is not social (or only social in some ideal sense). The exchange process is what makes the labor social. For Rubin, it is market exchange which is the distinctive aspect of capitalism, the aspect that establishes the social relation between private producers.8

It is easy to see why such a reading would be tempting. The labor of separated, isolated producers does not appear to be social at first glance. The exchange process brings the products of those labors into relations with each other, establishing their social connectivity, and so it would seem that it is exchange which ‘makes labor social’ post festum. However Marx does not actually characterize the situation in this way. He speaks of exchange ‘realizing’ the social character of production. ‘Realizing’ the social character is different than ‘making’ the social character. If I ‘realize’ that the sun is out today this does not mean that I have caused the sun to come out today. If the exchange of commodities ‘realizes’ the social character of capitalist labor this does not mean that the exchange has caused one’s private labor to become<br / social labor. Furthermore, as we saw with our example of the piano tuner above, her labor was already social labor even though it was private labor. It was social labor because it was part of the total past and present labor of society. Even though her work is done in isolation, it is still a component part of a much larger social process of production. Exchange may realize these social connections, it may reveal the linkages between labors, and this labor may be production for exchange, but this does not mean that labor is not already social during production. In fact, her labor is always social because it is the labor of an individual in a society.

This distinction may sound like academics splitting hairs however there is more at stake here than first meets the eye. Rubin’s characterization of the matter suggests an understanding of capitalism in which it is market exchange that defines the essence of capitalism. Rubin often counterposes market exchange to the socialized production of communism in which planners replace the market with a plan. This seems to make sense of the directly-indirectly social labor distinction: markets are indirectly social; planning is directly social. This market-plan dichotomy is the hallmark of many Marxist and bourgeois characterizations of the difference between capitalism and communism. The fact that Marxists and their bourgeois critics accept the same characterization of communism and capitalism, plan vs. market, should be a clue that too much has already been conceded to the bourgeois vantage point.

But if we interpret the market to be merely ‘realizing’ the indirectly social nature of capitalist production then it is not necessarily the case that replacing the market with a plan will eliminate the indirectly social nature of production. If production is indirectly social then it could be realized by a market or a plan. If we take into consideration the above discussion of Marx’s critique of those who want to fix capitalism by managing it better without ridding it of value production, we might ask how planning alone can alter the indirectly social nature of value production. After all, do highly-planned production chains in capitalism have a more directly social character? Does the planned production of state industries have a directly social character? If the answer is ‘yes’ then planned capitalism might the road to communism!

In contrast to the ‘circulationist’ reading of Rubin there has been a development of Marx’s idea of indirectly social labor within the Marxist-Humanist tradition developed by Raya Dunayevskaya.9 This reading links the category of indirectly social labor to socially necessary labor time, a link we have already discussed above. Since SNLT is established in production and then realized/enforced in the market, this then implies that the indirectly social character of labor is present during production, to be realized later in exchange. Capitalist labor is not un-social in production, becoming social after the fact in exchange. Rather exchange realizes the indirect sociality of capitalist production (just as the labor of our piano tuner, above, is already stamped with a social form before the labor is even finished.) The essence of this indirectness is the fact, discussed above, that an individual’s labor is only social through a process of averaging which eliminates the particularity of labor, counting only the most abstract qualities of labor as social. Because only socially necessary labor is social, individuals do not relate their labors to one another in a direct sense. Their labors are only social in an indirect sense, mediated through this process of averaging.

The distinction between this humanist reading and the circulationist reading still may seem trivial. After all, SNLT only exists because we produce for exchange. Exchange plays a vital role in the process of regulating labor in a capitalist economy where private labors happen in relative isolation from each other. However the distinction becomes more crucial once we consider the nature of labor in the state-planned economies of the USSR. Soviet economists claimed to operate under the law of value, to produce commodities, similarly to capitalism. However they also claimed that they were doing so consciously, using the law of value to their advantage, as a conscious tool of state planning. This meant, according to Soviet economists, that while other categories of capitalist production may have been at play, labor was directly social. It was directly social because it was planned by people, not blind economic forces. This was meant to prove the socialist nature of their state-planning.10

But if we understand indirectly social labor to be the result of socially necessary labor time then it does not matter whether this labor’s social nature is realized by a market or by a plan. What gives it its indirectly social nature is the fact that one hour of my work is not worth as much as another’s. Labors are not treated equally. Instead a process of social averaging takes place which rewards some labors and punishes others. The mechanism which realizes or reinforces this does not alter matters. This argument has been used to argue that the USSR was actually a state-capitalist society, not a communist society. Such a claim requires an empirical analysis of the organization of the USSR, something outside the topic of this book. [cite mh and ticktin] What is important for our purposes here is to show the relevance and importance of the category of indirectly social labor. It is clearly a central concept to grapple with if we are to know how not to repeat the mistakes of the USSR as well as know how to build a real communist society in the future.

Directly Social Labor and Communism

Marx lays out, briefly, a way to make labor directly social, breaking with capitalist value production, in his Critique of the Gotha program. In Marx’s concept of directly social labor he advocates a system which breaks with the disciplining of production by socially necessary labor time. Producers in this post-capitalist society will not be compensated according to the social average but instead compensated directly for the actual amount of labor time they expend in production. If I spend 2 hours making a widget I get a labor-certificate entitling me to purchase consumption goods equal to two hours of labor. If you spend 3 hours making the same widget you get a certificate entitling you to 3 hours of consumption goods. Regardless of productivity our labors are directly social because they are compensated in full, considered part of the total labor of society, no matter what.11

Careful readers may ask how such a society would determine the labor-content of consumption goods (the ‘prices’ at which workers ‘buy’ them with their labor-certificates) in the absence of socially necessary labor time. This calculation would be based on the average social labor-time that it took to make a commodity. The calculation could be done simply by adding up all of the concrete labor times that go into making widgets and dividing this by the number of widgets. Such a calculation would allow society to continue to make production plans and to ‘price’ commodities. But the compensation of laborers would not be done through such a process of averaging. So such a system would not eliminate the role of average labor time as an accounting unit. What it would eliminate is the role of average time in the compensation of workers.12

Earlier we used a similar example of a Wallmart executive finding the average cost of of producing a commodity to set the price of the commodity. This example demonstrated how this process of averaging, which determines the socially necessary labor time, erases all particularity of workers, treating individuals only as units of average labor time, as abstract labor. Here, in our example of a communist society with directly social labor, we also see an example of the ‘prices’ of goods being calculated through a similar calculation of average labor time. What is the difference between these two examples? The difference is that Wallmart pays the same price for all of the commodities it buys from suppliers and those suppliers in turn only pay workers to the extent that they can produce at the social average. Any wasted time is not compensated. This creates an incentive for speed-up, exploitation, and the domination of machines over humans in production. In our communist society workers are compensated for the actual amount of time they labor, not just the part that achieves the average. This means that their labor is directly social. The immediate practical implications of this are that there is not an incentive for speed-up and so machines do not loom over production demanding more and more life from the worker.

To execute such an organization of labor it would be necessary for production to be owned and planned by society and not by individual capitals competing in the market. A society of directly social labor would entail different property relations and a different organization of production. In such a system labor-certificates would not circulate independently as money nor would alternative monies emerge spontaneously. This elimination of money would not be the result of political fiat. It would be a result of the organization of the mode of production. Directly social labor has no need for money. Money does not have a role in measuring socially necessary labor time. There is no need for a money commodity to measure the abstract labor content of commodities. The products of labor do not function as commodities with values. Without money and commodities there is no capital.


We saw earlier that capitalism’s system of indirectly social labor requires a process of social averaging in which individual labors are measured against a social average, measured in money. This money becomes an independent, objective economic force and society becomes ruled by impersonal, abstract forces. In contrast to the personal dependence relations of directly social labor in pre-capitalist society, capitalism gives us a general objective dependence on society. Marx’s labor-certificate proposal evolves directly out of this analysis of capitalism. In order to rid ourselves of this domination by objects and objective laws we must eliminate money and production for money. By rewarding all labors equally a communist society would eliminate the primary function of money, its role as a post-festum measure of socially necessary labor time.

We also saw how capitalism ignores the rich diversity of human labor and instead only counts as social the most universal and mechanical aspects of labor, the ability of human muscles and nerves to generate a certain average output over a span of time. Marx’s proposal would have the opposite effect. By counting all labor as social, with no exceptions, this eliminates the factory clock as the slave-master of the laborer. The drive to increase production at all costs ceases. Instead human labor is valued in its own right. Society can begin to develop the full-spectrum of human potentialities rather than the narrow spectrum of abstract labor.


1. Economic and Philosophic Manuscripts of 1844 from the essay “Private Property and Communism” p. 44
2Marx. Grundrisse p. 164
3Marx,Grundrisse p. 158
4Marx, Capital vol. 1 p. 151
5Marx, Grundrisse p. 157
6Marx.Contribution to a Critique of Political Economy p. 8
7Marx, Contribution to a Critique of Political Econ. p. 25
8In his essay Abstract Labor and Value in Marx’s System, which appeared in the Soviet journal Under the Banner of Marxism in 1927, Rubin answers critics who charge him with claiming that value is created in exchange (and that therefore labor is made abstract in exchange and labor becomes social in exchange). Rubin defends himself by saying that there are two senses in which we talk about exchange. One is exchange as a form of social reproduction in general and the second is exchange as a moment within the process of reproduction. Although exchange itself is only a moment within a larger process of reproducing capitalist relations Rubin argues that the entire process is characterized by exchange, that it is the fact that products are exchanged which accounts for the unique aspect of capitalist production. This allows him to try to pacify his critics by saying that labor is ideally abstract, ideally social at the time of production but only becomes abstract and social when commodities are exchanged. I find this solution problematic. Marx talks about ‘ideal price’ being realized in exchange but does not talk about ‘ideal value’ being realized in exchange. Rather Marx argues very explicitly that commodities and money enter the market already with values, therefore already representing a sum of abstract labor. If value already exists prior to exchange then the labor that makes this value must already have a social character prior to exchange.
9For the relation of indirectly social labor to socially necessary labor time see Kliman, Hudis and Weiss cited in Bibliography.
10Kliman, “A new look at the Russian Revision of Marx’s concept of ‘directly social labor’.”
11Saying that labor is compensated “in full” is slightly misleading. As Marx points out in the Critique of the Gotha Program, society would most likely choose to make certain deductions from compensation for a common fund that would fund the consumption of those who cannot work, allow for the construction of public goods, etc. See Gotha Critique p. 528-529
12Why is ‘price’ in quotes here? Ideally there would be a completely different term to designate this concept without needing to refer to the categories and terms of capitalist society. While indirectly social labor must be expressed in money prices (always averages expressed in the body of the money commodity), directly social labor could be expressed directly in labor hours. Stamping the products created by a communist society with their labor times would allow people to spend their labor certificates on a given amount of goods. However these labor times would not function in the way capitalist prices do. For one, labor certificates would not circulate as money because there would be no value production and thus no need for a general equivalent. Because goods would not be produced for exchange they would not have exchange values or intrinsic value and thus would not need to externalize their value in the form of the equivalent, money. See Pannekoek quote in David Adams piece cited in Bibliography
Hudis, Peter. “Directly and Indirectly Social Labor: What Kind of Human Relations Can Transcend Capitalism?” http://www.internationalmarxisthumanist.org/articles/directly-and-indirectly-social-labor-what-kind-of-human-relations-can-transcend-capitalism-by-peter-hudis
Kliman, Andrew “A new look at the Russian revision of Marx’s Concept of ‘directly social labor’”, News and Letters; Nov.-Dec. 2005. http://www.newsandletters.org/issues/2005/Nov-Dec/Kliman_Nov-Dec_05.htm
Marx. “Capital” Penguin edition
Marx. “Critique of the Gotha Program” in “Marx-Engels Reader” ed. Tucker
Marx. “Contribution to a Critique of Political Economy”. Marxist Internet Archive http://www.marxists.org/archive/marx/works/1859/critique-pol-economy/
Marx. “Grundrisse” Penguin edition
Marx. “Economic and Philosophic Manuscripts of 1844” Marxist Internet Archive translation https://www.marxists.org/archive/marx/works/1844/manuscripts/preface.htm
Rubin, II. Abstract Labor and Value in Marx’s System, in “Under the Banner of Marxism” 1927. http://marxists.org/archive/rubin/abstract-labour.htm
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On Labor as the Substance of Value

(This is a draft. All comments welcome. Citations and footnotes are incomplete.)

Labor as Substance of Value

Once Marx has established that value is a property intrinsic to commodities he immediately goes on to ask what this value is and what determines the magnitude of this value. The answer to both questions is human labor time. Human labor creates commodities. The magnitude of labor (the time spent producing) determines the magnitude of the value of the commodity. Value itself is ‘objectified labor time’. That is, once a worker has produced a commodity this commodity represents, or ‘contains’, however many hours of past labor. This past, objectified labor is value. Objectified labor is the substance of value. Active human labor time determines the magnitude of this value.

Why is labor the substance of value? Marx’s argument is quite simple and short.

A commodity is a product of labor that has a use-value and an exchange-value. We know that exchange value is an expression of intrinsic value so exchange value cannot be the substance of value. Use-value also cannot be the substance of value. Use-values are heterogeneous and thus cannot be compared with one another. How do we compare the use of an apple to the use of a piano? There is no common denominator which we can reduce all uses to. Furthermore use-value has no quantitative properties, only qualitative ones. We cannot divide the usefulness of a piano in half or multiply it by 4.  Yet we know value is a homogenous substance, that commodities with value share a common quality that can be divided, multiplied, etc. Value implies numerical relations between commodities.

Once we have excluded use-value and exchange-value Marx says that the only property of the commodity left is that the commodity is the product of human labor. In some ways this is a very simple and obvious argument since Marx has defined the commodity from the beginning as a product of labor that has a use-value and exchange-value. Since exchange-value and use-value cannot be the substance of value then the fact that they are products of labor is the only remaining attribute which can explain the value character of the commodity.

Many objections have been raised to Marx’s argument over the years. The great bulk of these critiques can be found in Bohm-Bawerk’s 1898 book “Karl Marx and the Close of His System”. Marx was not alive to address all of Bohm-Bawerk’s critiques. Let us see what we can do to remedy this here.

1. Bohm-Bawerk takes issue with the structure of Marx’s argument. Marx has defined a commodity as being a product of labor with a use-value and exchange-value. When he shows that use-value and exchange value cannot be the substance of value then only labor is left. Bohm-Bawerk argues that this is only possible because of the crafty way in which Marx defines ‘commodity’, sneakily leaving out other exchangeable goods which are not the product of labor.
“From the beginning he only puts into the sieve those exchangeable things which contain the property which he desires finally to sift out as “the common factor,” and he leaves all the others outside.” p70
    “To exclude the exchangeable goods which are not products of labor in the search for the common factor which lies at the root of exchange value is, under the circumstances, a great error of method.” p70
    “ his idea of “commodities” is narrower than that of exchangeable goods as a whole.” p71

BB is correct. Marx does not look at all exchangeable goods when he derives labor as the substance of value. He intentionally only considers commodities, which he defines as being useful objects produced by labor for exchange. This is because, contrary to some interpretations, Marx is not trying to explain the phenomenon of exchangeability or to explain prices. He is trying to explain the commodity. He says so very explicitly in the first lines of Capital:  “The wealth of those societies in which the capitalist mode of production prevails, presents itself as “an immense accumulation of commodities,”[1] its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.” (also cite Notes on Adolph Wagner and Kliman)

Marx’s topic is the commodity because the commodity is the basic unit of capitalist wealth. Commodity production, production for exchange, is the dominant form of production. This does not mean that commodity production is the only form of production, or that commodities are the only things that are exchanged. It instead means that commodity production dominates all other production and exchange. A common theme in Marx’s writing is the way in which value relations permeate and impose their logic on all other forms of social organization. This means that in order to understand our society we must first understand its most basic unit, the commodity and the value-form that it contains. Then we can examine the way the logic of the commodity effects other aspects of social organization.

Still, it seems we have not entirely disposed of BB’s critique. After all, Marx is saying that labor and only labor creates value in a capitalist society. Yet there are examples of things that have exchange-value that are not products of labor. How does Marx deal with this? He holds that not everything with an exchange-value has a value. This seems odd at first since we have said previously that exchange-value is the form of appearance of value. If a good has no value, is not the product of labor, what is its exchange-value measuring?

In fashioning a response a good place to start might be to try to name some exchangeable goods that are not a product of labor. Bohm-Bawerk asks us to imagine the products of nature: trees, land, minerals. But it is quite hard to distinguish between the product of nature and the labor that is required to turn these natural products into exchangeable goods. Trees must be cut and transported. Minerals must be mined, refined and transported. The only product of nature that seems able to have an exchangeability somewhat independent of human labor is the land itself. Land, of course, is hard to distinguish from the built environment that humans have produced. Much of the land is a result of the construction of spaces and transportation networks. So it is actually quite hard to have a theory of the exchange-value of land that is entirely divorced from a theory of production. At the same time there remains an aspect of land that is not directly produced for exchange. This aspect falls under the category of rent.

The theory of rent is a bit too complex to deal with in detail here, but a look at the basic contours of the theory will help us answer the question at hand. One plot of land is different from another and these differences constitute different resource endowments that convey productive advantages to the owners of land. As producers compete to produce below the socially necessary labor time in order to outsell rivals these difference in the productivity of land allow some sellers to produce below the socially necessary labor time thus obtaining a super-profit (see chapter on SNLT). This super-profit can be capitalized upon to become rent. Rent is a function of the relation of different productivity of the land to socially necessary labor time. Rent is a derivative category which we can only theorize once we understand value production. The price of land is related to rent. (Once one also considers other derivative forms of capital like credit, we can theorize other aspects of the exchange-value of land, as land becomes the focus of speculation and other credit-based investments.)

Land does not just have value by itself. Rent does not grow from the soil. The value of land, rent, is a product of the relation of land to the productivity of labor. Thus Marx’s exclusion of land from his analysis of commodities is entirely justified. Humans have worked on land for millennia. It is only in a capitalist society that land takes the form of private property that generates rent. If we want to understand the price of land we need to understand the wider social relations which generate this price form.

Later in Chapter 1 of Capital Marx explores the exchange of other non-produced goods:

“Objects that in themselves are no commodities, such as conscience, honour, &c., are capable of being offered for sale by their holders, and of thus acquiring, through their price, the form of commodities. Hence an object may have a price without having value. The price in that case is imaginary, like certain quantities in mathematics.”

(As an aside I find it amusing that Marx uses such strange examples of non-commodities here like conscience and honor. Clearly it is hard to find examples of non-produced exchangeable goods! Perhaps a modern-day example might be a politician who sells his “loyalty” to the capitalist class or an athlete who sells his “like-ness” to advertisers.)

In discussing rent we decided that rent was a derivative category of value production and that therefore Marx was justified in theorizing rent after he had formed a theory of commodities. Here we have a different matter, “imaginary value”. The first thing we might note is that since conscience and honor are not products of labor they are not freely reproducible and thus do not respond to the laws of supply and demand, or socially necessary labor time, the typical forces by which prices are established. This is a good reason to exclude them from the class of goods that we are considering since this sale of conscience or honor does not follow any predictable economic logic. Rather, the price of conscience or honor would be whatever the two parties of the exchange decide upon at the moment. We draw no further conclusions or laws from this. If we were to use these exchanges to construct a theory of value we would end up with an indeterminate, nihilistic theory of value in which values are merely whatever people decide they are in the moment, with no law-like regulation by the production process. (This is, of course, the direction that BB and his ilk would like to move value theory, into a nihilistic, hedonistic terrain where value is whatever an individual decides it is leaving us unable to make any theories about social structure, class, or production relations.)

But it is not the fact that we can deduce no laws from it that Marx excludes imaginary value from the central focus of a theory of value. Instead it is because such exchanges are an entirely irrelevant and peripheral phenomenon in our society. The nihilistic, indeterminate logic of “imaginary values” does not extend into the realm of commodity production. So there is no reason to bend the laws of commodity value to fit into the arbitrary whims of those who sell conscience and honor. On the other hand, the basic category of value (and money!) extends over all exchangeable goods. Because commodity production dominates all production and exchange, the exchange of “imaginary values” takes the form of commodity exchange, even though it is not commodity exchange proper. To win the loyalty of a Cardinal in medieval Europe a king would need ply the Cardinal with political favors. To win the loyalty of a politician in a capitalist society one must give her money. Thus the price of loyalty takes the form of commodity exchange even if it is not commodity exchange proper.

By “form of commodity exchange” I refer to a class society in which most people must buy their subsistence and sell their labor power in the market because they are divorced from the means of production. Labor is organized through commodity exchange and money stands as the universal measure of value. The exchange of products of labor take the form of market exchange. The exchange of non-produced things, like honor and conscience, also take the form of commodity exchange, even though they are not commodities.

Though BB does not bring up the topic at this point we might also mention the exchange-value of produced commodities that are not freely reproducible. A one-of-a-kind work of art like a Picasso painting is a commodity but it cannot be reproduced. Thus it does not respond to the pressure of socially necessary labor time. The exchange-value of a Picasso is a reflection of whatever someone is willing to pay for it at the moment, much like honor and conscience. Marx excludes non-reproducible commodities from his analysis for the most part as well since they are peripheral to capitalist production. However, like imaginary value, when we look at non-reproducible commodities we see that they take the form of commodity-exchange because that is the dominant form of social labor in our society.

2. BB’s second objections to Marx’s argument for labor as the substance of value is that there are other common properties to commodities other than being the products of labor.

“is there only one other property? Is not the property of being scarce in proportion to demand also common to all exchangeable goods? Or that they are the subjects of demand and supply? Or that they are appropriated? Or that they are natural products?….Why then, I ask again today, may not the principle of value reside in any one of these common properties as well as in the property of being products of labor” (BB p.75)

Since value is a social relation this means that we cannot look to natural properties (natural products) of commodities for a common property. Excluding their natural properties is the same as excluding their character as use-values since use-value is directly tied to the natural properties of the object. In addition, as Marx argues, there is no such thing as use in the abstract, as use-in-general, so use cannot be the common property we are looking for. There are only specific uses for things.

Certainly all commodities are scarce in proportion to demand. Is this a property of a commodity? When we buy a commodity are we purchasing a sum of scarcity? A sum of supply and demand? How can these be the substance of value? Here again we see what happens when BB conflates value and exchange value. Marx is certainly in agreement that supply and demand affect the formation of prices. Yet he does not believe this to have any relation to the determination of value.  These cannot be the substance of value.

Ultimately, when it comes to society, human labor is the scarcity that matters. Society only has so many hours in a day to produce the commodities needed to reproduce itself. It must apportion these labor hours in such a way that shit gets done. Yes, there is a scarcity of natural resources as well. But this scarcity is measured in labor time! If it takes a million hours of labor a year to produce all the oil society needs then a million hours if the measure of the scarcity of oil.

3. BB’s third objection takes a different tack.
“Labor and value in use have a qualitative side and a quantitative side. As the value in use is different qualitatively as table, house, or yarn, so is labor as carpentry, masonry, or spinning.”p76

Marx has said that use-value can’t be the substance of value or the determination of its magnitude because use-value is not homogenous. We cannot compare one use-value to another. Just as use-values are heterogeneous so too are the labors that create these use-values. The labor that creates apples is not the same as that which creates pianos. How can we equate the two? What makes them a common substance? Isn’t Marx using one argument to dismiss use-value and then ignoring the same argument when it comes to labor?

It may seem that BB has come up with a clever retort here unless we realize that Marx himself poses this same question in the first chapter of Capital. “As the coat and the linen are two qualitatively different use values, so also are the two forms of labour that produce them, tailoring and weaving.”

Notice however that Marx does not say here that the labors are qualitatively different in any and all senses. Rather he says they are qualitatively different as the coat and linen are different use-values. The aspect of human labor that accounts for the different qualitative use-values is “concrete labor”, heterogenous labor unique in the motions, skill and knowledge specific to apple growing or piano making. Yet despite these specific, concrete differences all labor is also human labor in general, or “abstract labor”. As will be discussed further in the chapter on abstract labor, labor is both concrete and abstract at the same time. As concrete labor it is heterogeneous, differentiated. As abstract labor, it is part of the total labor expended by society, the same as all other labor in the sense that it is a function “of the human organism, and that each such function, whatever may be its nature or form, is essentially the expenditure of human brain, nerves, muscles, &c.” (from fetishism section of Chapter one.)

So even though labors are different these different labors are all just examples of labor in general, of labor in the abstract. If Marx can make this concrete-abstract distinction with labor why not also for use-value or utlity? The answer is simple: there is no such thing as use in general. Uses are only concrete, specific to the commodity and the way it is used. [footnote]

But isn’t the fact that we have the word “use” that applies to both apple eating and piano playing evidence that there is a concept of ‘use in general’? A ha! This question brings us to the heart of what is really interesting and important about Marx’s concept of abstract labor. The word ‘use’ is a category which encompasses all specific types of using just as the word ‘labor’ is a category that encompasses all specific types of labor. However Marx is arguing that abstract labor is not just a theoretical abstraction, not just a handy linguistic device for tying together heterogenous concrete actions. Instead abstract labor is a real entity existing in capitalist society.

This is covered further in the chapter on abstract labor however the basic line of argumentation is this: There are multiple forces in a capitalist society that reduce human labor to an abstraction, a pure expenditure of physiological labor. Socially necessary labor time reduces all labor to its maximum output so that all labors everywhere are valued the same, that is, they are all labors producing at maximum efficiency. We can compare the labor of apple pickers to piano makers because both are human labor expended in its most efficient form. Capital of course has no care for the specific use-values it creates and therefore no care for the concrete labor that produces them. It only cares about value production, value in general. Thus capital treats all labor as abstract units in a giant profit calculator. Whether this labor produces apples or pianos or rubber ducks makes no difference as long as it is working at maximum efficiency. For this reason workers in a capitalist society have a much higher degree of subjective indifference to their work than in past societies. People move from job to job with much more flexibility than in, say feudalism where one was born into a caste and worked in the same capacity for life. Etc….

Thus Marx can say that labor is the substance of value because labor is both concrete and abstract at the same time.

Part Two: Other arguments

Setting aside BB’s objections it should be noted that some folks, Marxists included [Rubin for example], have not always found Marx’s above argument satisfactory enough to not need additional argumentation. Marx’s argument has the flavor of an analytical proof (a commodity is x, y and z. Since x and y can’t explain value then it must be z.) and such forms of argument don’t always sit well with folks. Andrew Kliman has advanced a very thorough defense of Marx’s argument (see “The Fourth Thing on the Third Thing”) which there is no need to repeat here. However, when something is true there are often multiple ways of knowing or explaining why it is true, so it does no harm to examine other arguments that have been put forward to defend the idea that labor is the substance of value.

Humans and Robots

Human labor most often uses tools or machines or even robots in the course of doing work. These machines allow us to be more productive. In a sense machines ‘do work’. But is this work the same as human labor? Many have argued against Marx by claiming that machines labor just as humans do (see Sraffa, Keen, etc.). This has led to discussions as to what specifically is so unique about human labor. Why is human labor the substance of value but the work done by machines, or even nature for that matter (like when the apple tree does the work of growing an apple) is not considered the substance of value? [insert footnote as to how the dead-labor in machines is transferred to the product.]

We use machines to make our labor more productive. Productivity is a measure of the amount of use-value created in a span of time. Since, for Marx, value is determined by labor time an increase in productivity (in use-values) does not create a corresponding increase in value. The same amount of value is created, just spread out over a larger quantity of use-values. This difference between use-value production and value production is one of the hallmarks of Marx’s theory of value. It allows Marx to explain many of the most important contradictions at the heart of capitalism: the domination of living labor by dead labor, the tendency of the rate of profit to fall, ETC. This also explains why unit prices tend to fall as productivity rises. If we were to argue, contrary to Marx, that machines create value then we wind up with a theory in which use-value production is the same as value production. An increase in productivity would mean an increase in value-production. This results in a very different theoretical understanding of the economy. Such an understanding cannot derive any of the same contradictions that Marx’s theory does. There is no tendency for the profit rate to fall with rising productivity, living labor is not dominated by dead labor, profit doesn’t come from exploiting workers, and prices do not fall with rising productivity.

Merely pointing to the different implications of these two perspectives is not some proof that labor is the substance of value. In the search for ‘proof’ defenders of Marx’s value theory have sometimes tried to point to the unique properties of human labor, properties that machines do not have. Marx himself makes reference to the unique properties of human labor in a famous passage: “But what distinguishes the worst architect from the best of bees is this, that the architect raises his structure in imagination before he erects it in reality. At the end of every labour-process, we get a result that already existed in the imagination of the labourer at its commencement. He not only effects a change of form in the material on which he works, but he also realises a purpose of his own that gives the law to his modus operandi, and to which he must subordinate his will.” [capital chapter 7]

With each successive revolution in robotics more and more types of activity are removed from the list of “exclusive human activities”, leaving less and less options for those who want to point to an essential aspect of human labor that differentiates it from machines.  In the above passage Marx brings out probably the most essential difference between human labor and the work of machines: that the worker imagines the product and process before she commences production. However, in this age of rapid advances in computing and artificial intelligence I believe it is dangerous to hinge our argument on an aspect of human work that is directly under attack by the artificial intelligence industry. I think it is much more fruitful to find a unique property of human labor that holds even if robots one day can do every task that humans can do.

Caffentzis makes, in my opinion, the only possible argument: “if labor is to create value while machines do not, then labor’s value creating capacities must lie in its negative capability, its capacity to refuse to be labor.” [“Why Machines Cannot Create Value” Caffentzis 1997 in “Cutting Edge” ed. Jim Davis] In other words, what makes humans different than machines is that humans can refuse to work. This makes human labor a social relation. Humans must be coerced/convinced to do work. They do not operate like machines that can be just turned on and off. This distinction brings out the coercive side of value relations. Feudal society had knights and the Catholic Church to make the serfs work the land. Capitalism has value relations which are their own form of coercion.

Of course if robots ever evolved to the point in which they could refuse to work then their work would also become a social relation and thus would be value creating. Of course, if this ever happens we might have more important problems on our hands…

Production as the Dominant Moment

Marx’s argument for labor as the substance of value is often placed, quite rightly, within the context of his wider historical method which treats the organization of production relations as the central defining aspect of all societies. It is argued that since the organization of human productive activity is the defining aspect of all societies, and since the production of value is the specific form of organization this takes in a capitalist society, that the substance that capitalist labor produces is value. [cite Rubin? Hilferding?]

The organization of human social relations is not handed down to us by God. It is something we actively create and recreate each day. In an obvious physical sense our labor produces food and other necessities needed to continue our daily physical existence. But our labor also reproduces the social relations within which we live. When a feudal peasant produces surplus grain for the landlord they are reproducing the class relations of feudal society. So too do workers in a capitalist society reproduce capitalist class relations when they produce surplus value for the capitalist class. And this is not all that workers produce. Everything from the built environment, to the means of subsistence, to the forms of entertainment and diversion are creations of human labor, creations that must continually be reproduced in order to reproduce capitalist social relations. Marx sees this creative power as central to the organization of society. Other aspects of social organization like state forms, ideology, family, distribution, etc derive their character through the fact that they exist within a society organized by capitalist social relations. Capitalist states can, of course, take different forms, but they are all various forms of the capitalist state. Capitalist ideology can take different forms but they are all various manifestations of capitalist ideology. Their essential character is defined by their relation to the mode of production.

This way of looking at society is often criticized as ‘reductionist’. There are many forces that act upon and shape a society. What right does Marx have to privilege one aspect, production, above other aspects?

In his online lectures on Capital David Harvey gives this defense: “My own view of it is that it is an inspired idea but, like most reductionist arguments, ultimately it fails. But by taking that reductionist position you start to see all kinds of things you would not otherwise see. And without that reductionist impulse Marx would never have understood all manner of things.” After a brief aside about reductionism in the biological sciences he goes on to say, “…the very search for reductionism has produced very important insights in the biological field in exactly the same way that I would argue that Marx’s holding to principles of reductionism here plays a very significant role in his method of inquiry, in his compulsion to inquire. And one of the things I get annoyed at is people who say ‘Oh it’s reductionist therefore don’t believe it!’ If people were not prepared to be reductionist about things we would hardly know anything about anything.” (Reading Capital with David Harvey Class 2)

Regardless of whether one agrees with Harvey’s characterization of the issue this is a rather weak defense of Marx’s method. For Harvey Marx’s placement of production at the center of social relations is not an accurate representation of reality. It is merely an inspired viewpoint that allows us to generate interesting insights. Such criteria could justify any method of reduction if it generated an interesting insight. For our purposes here, justifying the argument that labor is the substance of value by appealing to the role of production as the central category in all societies, Harvey’s argument is even more useless. We are trying to justify the results of the method by showing the legitimacy of the method. Harvey is trying to justify the method by showing the legitimacy of its results. It is hard to justify the means by the ends in social theory. Is a faulty form of argumentation justified because the conclusions conform to our preconceived political opinions or because they paint a picture of the world that helps us ‘make sense of things’? No doubt people often do appeal to this type of justification but this cannot be an adequate framework for a radical theoretical project to critique and transform capitalism.

When we consider the relation of production to distribution, consumption and exchange it is easy to seem caught up in an endless game of ‘chicken and egg’. For example, production produces the objects we consume but consumption, or the need to consume, is the force which triggers the need to initiate production. How then does Marx have the right to claim that “production is the real point of departure and hence also the predominant moment”? (Grundrisse p.94) Marx is certainly aware of the ways in which production is informed by consumption, exchange and distribution, yet he insists that production is the dominant moment.

I believe that the best answer is to consider the alternatives. What would it mean to define capitalism as a ‘mode of consumption’ rather than a mode of production? What would a mode of consumption be? Just as there is no ‘use in general’, no ‘use in the abstract’, there is no general mode of consuming by which we can classify all of the consumptive activities of a capitalist society. We only have specific ways of consuming. Furthermore these are not social relations but relations between individuals and objects. The only aspect of consumption which can apply to all consuming activity is that most consumption in our society is consumption of commodities. This, however, is a definition that requires an understanding of commodity production. It is commodity production that stamps capitalist consumption with its unique character.

This same argument could be carried out in relation to exchange and distribution. To the extent that we can define a specifically capitalist mode of exchange it is commodity exchange. [Footnote on distribution. Tie in to the point earlier on about commodity relations dominating other relations. Follow Marx’s argument from intro to Grundrisse.]

Empirical evidence

There is a long history of debate about whether or not Marx’s theory of value can be empirically confirmed. Depending on how one understands the theory attempts to prove or disprove the theory empirically take different approaches. This is not the place to evaluate all of these. However a few points can be made that should help clarify the issue.

One of Bohm Bawerk’s chief complaints against Marx is that Marx ignores empirical evidence that contradicts his theory of value.  BB argues that Marx himself contradicts his own theory of value laid out in volume one of Capital when later in Volume 3 he develops the theory of ‘prices of production’. I explain ‘prices of production’ in the chapter ‘Value and Price’. For now all that needs to be said is that in the theory of prices of production Marx shows how prices systematically deviate from values in the context of competition between capitals. BB sees this as an admission by Marx that in reality prices deviate from values. He takes this to be an empirical counter-factual that brings into question why labor should be the determinant of value.

BB makes repeated claims that Marx began with one theory of value and then later changed his mind when writing volume 3. We now know that Marx actually penned much of volume 3 before beginning work on volume 1. Marx was completely aware of the systematic deviation of prices from values when he introduced the concept of labor as the substance of value in the opening chapters of Capital. Clearly, to Marx, there is no contradiction between value and prices of production. Why does BB see things differently?

The answer to this question lies in the fact that BB is quite confused as to what value is in the first place. BB has conflated value and price. He thinks that Marx is arguing that the magnitude of price is determined by labor time. Thus if there is a systematic deviation of value and price this shows that other factors influence the magnitude of price. Therefor labor time cannot be the exclusive determinant of price.

However this is not Marx’s theory of value at all. Prices of production are prices which deviate from values (the commodity bears a price that is more or less than the labor time that entered into its production.) However prices of production are still a sum of value.

If I trade an apple pie worth 1 hour of labor for a piano worth 100 hours of labor I have sold my apple pie for far above its value. However both apple pie and piano are sums of value. The reason we can say that the exchange was an unequal exchange is because we know that both commodities have a value outside of their exchange value. Price is just a special form of exchange value, the exchange value of any commodity with the money commodity. If I trade my apple pie with money representing 100 hours of labor time then the same unequal exchange has taken place. And, once again, both the apple pie and the money represent sums of value.

If Marx had merely said that labor time is the primary determinant of commodity values then we could easily prove or disprove his theory with empirical studies of prices in relation to labor inputs. But Marx’s argument that labor is the substance of value is a different beast entirely. All money prices represent sums of value. These prices can be above or below the actual labor content of a commodity. This can happen through unequal exchange. It can happen through imbalances of supply and demand. And this happens systematically with prices of production. Regardless, none of these deviations stop prices from being sums of value or stop labor from being the content of this value.

What then can be done to empirically verify Marx’s theory of value? I do not believe there is any knock-down empirical proof that labor is the substance of value. However, the argument that labor is the substance of value suggests several tendencies/phenomena that can be empirically judged, to an extent. For one, even though prices systematically deviate from values this is a systematic deviation. They do so in a predictable way. This means that there are still correspondences between value and price. The chief correspondence is the fact that a decrease in labor time per unit produced (increases in efficiency) leads to falling unit prices. This is a prediction based on Marx’s theory of value and it is a prediction that is quite obviously borne out empirically again and again. Everyone is aware that commodity prices fall as labor becomes more productive.

Another phenomenon suggested by Marx’s theory of value is the ‘tendency of the rate of profit to fall’, a subject which has its own chapter in this book. If only human labor produces value then we would expect profit rates to fall when capitalists invest more in non-human inputs (machines, raw materials) than living labor. There is quite a lot of debate about the extent to which empirical evidence supports this theory. As with any empirical debate the devil is in the details. There are quite a lot of different factors involved in measuring profit rates, and even greater difficulties when it comes to showing any causality investments in living labor relative to machines and profit rates. It may be that the present state of record keeping and number crunching is in adequate to properly adjudicate Marx’s value theory through an empirical study of profit rates.

[footnote on Kliman’s position on whether his work ‘proves’ the TRPF]


The role of labor as the substance of value, and of labor time as the determinant of the magnitude of value, is one of the most controversial aspects of Marx’s work. At the same time it is one of the most crucial. Without a theory of value Marx could not have explained the phenomenon of surplus value which defines the class relation between capitalists and workers. Without a theory of value Marx would not have been able to understand the role of money in capitalism and to argue against the money-reformers of his time. Without value theory Marx would have been unable to theorize the recurrent crisis tendencies of capitalism. The list goes on and on. Value theory sits in a central place in Marx’s universe of thought.

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Intrinsic Value

(What follows is a draft. Citations and footnotes are incomplete.)

Intrinsic Value

[cite Kliman’s paper on Intrinsic Value as helping me to understand the importance of the concept.]

Throughout the opening chapter of Capital Marx jousts with many intellectual opponents, not all of whom are immediately named. One of these is Samuel Bailey. (cite Rubin, Kliman.) In Bailey’s “Critical Dissertation”, published in 1825, he sets out to clear up the mess of confusion associated with the concept of value in economics. He does so by arguing against any notion of an intrinsic value possessed by commodities. Rather, for Bailey, value is nothing more than the fleeting and temporary exchange value a commodity has when it finds itself being exchanged for another commodity. Following Adam Smith Bailey defines value as “the power of purchasing other goods.” (p.11)

“According to this definition, it is essential to value, that there should be two objects brought into comparison. It cannot be predicated of one thing considered alone, and without reference to another thing. If the value of an object is its power of purchasing, there must be something to purchase. Value denotes consequently nothing positive or intrinsic, but merely the relation in which two objects stand to each other, as exchangeable commodities.” (Bailey p. 11)

Bailey is setting up a clear dichotomy between a notion of intrinsic value in which value is something belonging to the commodity in isolation from other commodities, apart from and prior to exchange, and a relative notion of value in which value is only something that exists through the relation of one commodity to another. Since in everyday life we measure the values of commodities in their relation to one another (so much of A is worth so much of B) Bailey advocates for this second, relational notion of value and rejects the intrinsic notion.

This leads to some interesting conclusions. Because value is only relational for Bailey, not intrinsic to the commodity, the value of A is whatever it is exchanged with. If today A exchanges for 2B then 2B is the value of A. If tomorrow A exchanges for 4B then 4B is the value of A. An intrinsic theory of value would say that perhaps the value of A has stayed the same while the value of B has changed or that the value of A has changed while the value of B has stayed the same, or even that both values have changed. But for Bailey this makes no sense. There is no intrinsic value of A or B that can stay the same or change. The value of A is only its exchange value with B at the moment of being exchanged. It has no value of its own before or afterwards.

Examining how this might relate to the classical labor theory of value Bailey asks the reader to consider a quantity of corn, the value of which is determined by the labor time required to produce it. What happens if the labor time required to produce the corn stays the same while the labor time of all other commodities changes?  Even though the corn’s labor time has remained the same it will exchange for a different quantity of other commodities. It will form new exchange ratios every time the labor time of other commodities change. Thus its “value” changes even though the labor time that it takes to make the corn has not changed. Here Bailey is attempting to prove that value is not an intrinsic aspect of commodities because exchange ratios are inherently relational. Since a ‘value’, as he defines it, is nothing more than a relation between two commodities, it cannot, by definition be the property of one commodity outside of this relation. [This is a repetition of the previous paragraph, but perhaps still helpful.]

Marx sets out to argue the exact opposite of Bailey. Marx argues that value is an intrinsic property of commodities and, at the same time, its also a relative concept. How is this possible?

The key theoretical move that makes this possible for Marx is to distinguish between value and exchange value. Value is intrinsic to commodities. It is the amount of labor time society requires to produce the commodity. If a widget takes 2 hours to produce then its value is two hours. Exchange value is the ratio in which one commodity exchanges for another. If a widget exchanges for 3 apples then 3 apples is the exchange value of the widget. If the widget exchanges for 30 pencils then 30 pencils is the exchange value of the widget. What then is the relation between value and exchange value?

Similar to Bailey’s conception each different pairing of the widget with a different commodity produces a different exchange value. However where Bailey sees in this nothing but random, fluctuating, relativist values, Marx argues that each of these exchange values is a reflection, a measure of an intrinsic value.

Marx’s argument is quite simple actually. If we say that commodity X is equal to commodity Y this means, by definition, that they both contain quantities of a common substance/property. Just as the comparison of physical properties like weight, volume and height is only possible if both objects share the same property, the comparison of economic value is only possible if both commodities possess an intrinsic value. [footnote: there are debates as to the validity of Marx’s argument. Kliman provides a stellar defense of Marx in his paper “The 4th thing on the 3rd Thing”. I will not repeat those arguments here.]

When we say that commodity X is equal to commodity Y this implies that they are both made up of the same substance, value, and that their values are of the same magnitude. We cannot see the value of X by looking at it in isolation. Commodities do not walk around with their values ‘stamped on their heads.’ Instead we only see the value of X when it stands in relation to Y. Y measures the value of X. X is worth so much Y. The same is true if we measure the weight of an object. A piano has a weight of its own that does not depend on other objects. But we can only measure the piano’s weight in relation to some standard unit of weight, a pound or kilogram. This unit of weight, the pound, is always defined in relation to an actual object, arbitrarily chosen to be the standard.

Bailey had argued that the value of X cannot change without also meaning a change in value for Y. Look at how Marx’s distinction between value and exchange value allows us to see the problem differently. Both X and Y have an intrinsic value. Let us imagine that the value of Y changes while X stays the same. This variation in the value of y produces different exchange values (x=y, x=2y, x=3y, etc.) The intrinsic value of X does not change but its exchange value does change! Various quantities of Y are expressing the value of X.

I believe that this way of understanding value is much more intuitive and inline with common sense. Consider the effect of inflation on the value of a widget. If I sell widgets for $10 and a decade later the value of the dollar falls by 50% I will adjust the price of the widget to $20. Has the value of the widget changed? Are widgets worth more to society? Not at all. All that has changed is the value of the unit by which we measure the value of the widget.

Marx’s argument that commodities have an intrinsic value is immediately followed by his argument as to what this value is and what determines the magnitude of this value. His answer is that value is objectified human labor and that living labor determines the magnitude of this value. Often discussion/debate immediately jumps to this issue of whether or not labor is the substance of value, skipping over the important implications of the notion of intrinsic value. We will deal with the notion of labor as substance of value in the next chapter. For the remainder of this chapter we will examine some of the important implications of Marx’s notion of intrinsic value.

Intrinsic Value is Relative

Bailey had established a dichotomy between intrinsic value and a notion of value as something relative. As we have seen, Marx shows that the relative aspect of value that Bailey is talking about is actually exchange value, not value, and that exchange value is an expression of something intrinsic to commodities, their value. However Marx also holds that this intrinsic value is also relative. [cite Kliman]

Intrinsic value is not relative in the way exchange value is. As we have seen, exchange value can change while intrinsic value does not. To understand how intrinsic value is relative we have to fast-forward to the topic of a future chapter, ‘socially necessary labor time’. Marx does not hold that the value of a commodity is determined by the individual labor time it happens to have been created with. Rather, value is determined by the amount of labor time necessary for society to create the commodity at a given place and time. It is the average labor time required for a commodity’s production that defines its value. Thus the value of a commodity is not the product of one isolated laborer. Rather it is relative to the average productivity of an industry. Socially necessary labor time is also constantly changing as productivity increases. If a toaster took  2 hours to make in 2013 but only takes 1 hour to make in 2014 this doesn’t meant that a toaster from 2013 is worth more than a toaster from 2014. The 2013 toaster is revalued at the current socially necessary labor time. It is relative to current levels of productivity.

“as value it appears as something merely contingent, something merely determined by its relation to socially necessary, equal, simple labour-time.  It is to such an extent relative that when the labour-time required for its reproduction changes, its value changes, although the labour-time really contained in the commodity has remained unaltered.” [Marx, Economic Notebooks 1861-63]

Thus socially necessary labor time determines the magnitude of the (intrinsic) value of the commodity. Exchange value is the means by which this value is expressed through its relation to other commodities.

value is not exchange value or use-value

Marx’s argument about intrinsic value is often referred to as ‘the 3rd-thing argument’ because Marx is arguing that in addition to commodities having a use-value and an exchange value that they also have a 3rd thing, value.

Despite the clear distinction between value and exchange value it is quite common in the literature to see instances of the two concepts being confused and/or conflated. To make matters more confusing Marx himself did not make the distinction clearly in his writings prior to the publication of vol. 1 of Capital. He also often asks us to assume, for the purpose simplifying an argument, that commodities sell at their values, in other words, that commodities have exchange-values that are quantitatively equal to their values.

Use-value refers to the specific utility or value-in-use that a commodity has. Because use-value is determined by the physical body of the commodity (Hammers are for pounding nails because they have handles and hard heads; Knives are for cutting bread because they have handles and sharp blades, etc.) Marx also refers to the physical body of the commodity as a use-value. When we equate commodity X to commodity Y we are measuring the value of X in the body of Y. The use-value of Y becomes the unit by which we measure the value of X.  Y can perform this function because both X and Y are commodities with values.

Marx is very clear that the value of commodities does not come from their use-value. We will discuss this further in the next chapter. Since commodities measure their value in the use-value of another commodity it sometimes appears as if value is arising from the particular nature of the use-value rather than due to social production relations. We usually see this confusion arise when discussing money. Money is the commodity in which all other commodities measure their value. As such it is a representation of value in general. Throughout history this has produced the illusion that money’s power comes from its use-value, from some mystical property of money itself, rather than from the social relations of production which give rise to money.  [footnote on money commodity and MELT and paper money….]

Unequal Exchange

Marx’s distinction between value and exchange value also allows us to theorize unequal exchange. What happens if commodity A worth 1 hour of labor exchanges for commodity B worth 2 hours of labor? Obviously the owner of commodity A wins out! We have two different sums of value, 1 hour and 2 hours. The exchange value of A is 2 hours and the exchange value of B is 1 hour. The exchange values are different than the values. When A trades for more than its value the owner of A receives a greater sum of value in exchange. The opposite happens for the seller of B who receives a lesser sum of value. We could not theorize unequal exchange without a concept of intrinsic value. For Bailey an exchange ratio is just an exchange ratio and it cannot be more or less equal or unequal because there is no intrinsic value being measured in the exchange process.

This distinction comes in handy later when we discuss deviations of price from value. Price after all is just the exchange value that a commodity has when it exchanges with money. Just as a commodity is a sum of value, so is money. [Footnote on money commodity and MELT] If a commodity’s price is greater than its value then the seller receives a greater sum of value in exchange than she parts with. Sometimes critics of Marx point to price-value divergences as if such divergences prove that value is being created by something other than the labor that created the commodity. But, as we have seen from the simple example of unequal exchange in the previous paragraph, labor has created the value of A and B. Whatever social forces have caused the exchange to be unequal (monopoly, imbalance in supply and demand, dishonesty, etc.) are not creating value. They are merely causing an unequal exchange to take place. This unequal exchange is still an exchange of two sums of value value created by labor. Such a distinction would not be possible with Bailey’s notion of relative value. But with Marx’s clear division between value and exchange value we can easily theorize how an exchange value can be different from a commodity’s intrinsic value while still holding to the idea that labor is the sole source of value.

Quality and Magnitude of Value

This points us to an important distinction. When we say that X is equal to Y it means that they are of the same magnitude of something, the same quantity of some substance. This substance must be the same substance, the same quality, in order to be of the same magnitude/quantity. The weight of two objects can be the same (or different) because they both have weight. But we can’t compare the weight of a piano to the height of a chair because weight and height are different qualities.

The fact that we can make quantitative comparisons between commodities means that they share the same quality, the quality of having an intrinsic value. But commodities do not have to have identical magnitudes in order to share the same quality of being values. We can compare the weight of a piano to a chair because they both share the quality of having weight not because they have the same magnitude of weight. In other words, commodities have the same quality of having value regardless of whether of not they have the same magnitude of value. This clarification is important because many, such as Bohm-Bawerk, have assumed that Marx is arguing that intrinsic value can only be deduced in the case of the exchange of equivalent magnitudes.

This common quality, value, is of much more interest to Marx than the question of the magnitude of value. An investigation into the forces which affect the magnitude of value is, of course, also of critical importance to Marx’s theory. But the investigation of the question of why commodities have the same quality of having values leads Marx to an understanding of the specific social nature of capitalist production. It is the exploration of this intrinsic quality which drives much of the investigation in the first chapter of Capital, allowing Marx to unlock important categories like abstract labor and to understand the nature of money. What is interesting and unique to capitalism is that the private labor of individuals takes on a uniform social substance embodied in objects. This is a curious form of social production, unique to capitalist society. It imbues capitalism with its fetishistic character in which objects have social power and the relations between objects express social relations between people.

How exactly does the private labor of an individual take on a general, universal social form, the form of undifferentiated, homogenous value? It is a question we will have to explore in greater detail in the chapters on Abstract Labor and Socially Necessary Labor Time. However, a basic outline can be dealt with here. In order for the private labors of different individuals to have the same social character there must be a process which reduces their labor to a common standard and quality. Imagine a fictional society in which everyone produced the same widget in the same amount of time. Here it would be easy to see how one person’s labor was just as good as another’s. It would be easy to see that all individual labors shared the same quality.

What if we took this one-commodity society and dropped the assumption that all workers produced widgets at the same level of productivity? Here the value of each widget would not be the individual amount of labor it contained. Rather, value would be determined by socially necessary labor time. Thus, though individual productivity varied, each commodity would still be stamped with a social character. Each individual’s labor would only count as a fraction of the social whole, no one persons’ labor having any different quality than any others’.

What if we then imagine a society in which workers produced either widgets or pears? How could we claim that the labors of widget-makers and pear-pickers were of the same social substance, of the same quality? There must be some social force that reduces both types of labor to a common expenditure of effort, the same level of productivity, so that one hour of pear-picking is of the same value as one hour of widget-making. What else could this social force be but, again, socially necessary labor time, which disciplines labor to ensure that production time revolves around a common standard? Once this is understood it is easy to move from our two-commodity society to the real world of billions of commodities. Although these labors take many different concrete forms they are also all expenditures of equal labor in the abstract, an abstraction imposed upon them by a society which conditions and disciplines labor to a common level of efficiency.

The examination of the qualitative nature of value, that it is an embodiment of abstract human labor conditioned by socially necessary labor time, allows Marx to theorize value in direct relation to the unique character of the labor process in a capitalist society. Whereas the classical political economists before Marx had been focused on establishing the causal relation between labor time and prices Marx’s analysis of the qualitative nature of value gets to the heart of the distinctive way in which labor is organized in a capitalist society. This approach not only theorizes the alienation, exploitation and domination of capitalist labor but also allows us to understand the historical specificity of value relations and capitalist labor, allowing us to understand that such conditions are not universal and inescapable. They are not universal conditions of all human labor. They are socially created conditions and they can be socially transcended.


Bailey’s notion of relative value allows no room for comparing the value of a commodity over time. Since commodities don’t have their own value apart from their exchange value he holds that it is impossible to say that the value of a commodity has changed. Commodities, for Bailey, don’t have a value which can change or stay the same. We are left in a nihilistic state of not being able to say anything about anything. In contrast, Marx’s notion of intrinsic value allows us to compare changes in value over time. Of course, in everyday life we constantly compare changes in the value of a commodity over time. A Steinway piano appreciates. An iPhone depreciates. Profit is a measure of the change in value over time. We cannot theorize credit without a notion of value changing over time.

Intrinsic Value is a product of Production Relations and not Exchange Relations

In various debates around Marx’s theory of value there is often tension over how much influence and power to ascribe to market forces in relation to production. As always, the devil is in the details, in the specific claims being made and their implications. Rather than opening the various hornets nests involved it may be more appropriate here to point out the way that the concept of intrinsic value allows us to frame the general issue.

In the equation 1 coffee= 1 apple the apple expresses the value of the coffee. Exchange value expresses intrinsic value. This implies that value is present in the coffee prior to exchange. The coffee gets its value in production. It realizes this value when it is exchanged for the apple. If we deny that value is intrinsic to commodities then we end up with a Bailey-ish conception of value in which value appears to be created in exchange. Money too would also only acquire a value in exchange. Hence commodities and money would enter the market valueless and exit with values. Value, for Bailey, is a product of exchange, of the market.

Marx’s theory of value is a theory about production relations. Value expresses the relation between the worker and her product. It also expresses the relation between the worker’s labor and all of the other labors in society since it is the socially necessary labor time that determines the value of the commodity.

How then does exchange fit into this theory? How do the relations of buyers and sellers fit into the picture? Exchange is a process whereby sellers attempt to ‘realize’ the values of commodities. Sometimes they realize more or less value than that embodied in the commodity. But, as demonstrated in our discussion of unequal exchange, no new value is being created in exchange. Value is just being moved around, reapportioned. This reapportioning of value is not unimportant. When commodities sell above their value this attracts investment into that line of production, reapportioning labor. When commodities sell below their value this triggers outflows of labor and capital and a disciplining of labor in that industry.

These fluctuations in price are an important part of the way production is disciplined and organized. Producers do not always know the socially necessary labor time or the market demand for their commodities. They discover these things after production has taken place. They then use these discoveries to alter future production plans.

The term “realize” is quite apt. When we realize an idea we are discovering something that already exists. When we realize the value of a commodity we are not creating anything. We are not changing anything. We are merely allowing something that already exists to come to fruition, to take the form of exchange-value. Not only is the individual commodity value realized in exchange but the entire spectrum of production relations is realized in exchange. Exchange finishes the work of production.

immanent measure vs expression of value/measure of value

“The external measure of value already presupposes the existence of value.  For example, gold can only measure the value of cotton if gold and cotton—as values—possess a common factor which is different from both.  The “cause” of value is the substance of value and hence also its immanent measure.” [marx 1861]

A commodity’s value is determined the the labor time required to produce it. Labor time is the immanent measure of the value of the commodity. This value is expressed in the exchange relation when the commodity’s value is measured in the use-value of another commodity (the book is worth so many apples.) The apples express the value of the book. This means that there are two ways of measuring the value of the commodity. One is by labor time (it’s immanent measure) and one through its exchange-value (its external measure).

Because commodities have two means of being measured Marx often moves with ease back and forth between them. We can say that a commodity is worth 5 hours of labor or worth 50 dollars. If an hour of labor equals 10 dollars then both expressions are correct. Of course, in the market place commodities are only measured in their exchange values. This does not mean that the immanent measure of value is only theoretical. The capitalist workplace has developed the measurement of labor time into a science. The scientific study of productivity has resulted in rigorous systems of the measurement of labor time relative to commodity output. [cite Braverman]

It doesn’t need to be exchanged to have a value… or an exchange value!

“it is a matter of indifference…whether, as in the case of the seed in agriculture, a part of the product is directly re-employed by the producer himself as a means of labour, or is first sold and then converted afresh into a means of labour. Whatever their role as use values in the production process, all the means of labour that have been produced now function at the same time as elements in the valorisation process. To the extent that they are not converted into real money, they are converted into money of account, they are treated as exchange values, and the value element they add to the product in one way or another is precisely calculated.” p. 952 in Capital 1 Penguin, Resultate

In other words, the act of exchange only formally realizes the value of a commodity. But this value still exists even if the commodity is never exchanged. In the case Marx cites of the farmer who uses part of his seed crop to replant, the farmer takes the value of the crop into consideration when planning his production even though this seed never enters the market. And, as Marx says, he not only considers the value of the seed but he considers the exchange-value, its price, even though the seed is never sold. The seed has an ideal exchange-value. It is treated as an accounting unit in production without ever actually taking the form of an actual exchange value.

If this sounds surprising consider that we all own commodities whose exchange-values we are aware of regardless of whether or not we are actively selling the objects. I am aware of the exchange-value of my piano but I never plan to sell it. If I sold the piano I would realize its price. But it has the price before I sell it.  [cite Kliman 4th Thing on 3rd Thing]


Because the value of a commodity is expressed in the use-value, the body, of another commodity this gives rise to the illusion that value is something that comes from the “thing-ness” of the commodity. Such an impression makes value seem like a natural property of things and not a socially determined force.

One reflection of this fetish is the fact that economic analysis, before and after Marx, often orients itself around the question of what determines exchange-values, the relations between objects. While we are perfectly capable of theorizing the determination of prices from within Marx’s value theory it would be a mistake to treat this as the most important question. Exchange-values express object-object relations. Capital however is a social relation. It’s economic categories are expressions of these social relations. The object-object relation that is exchange-value is nothing more than an expression of value relations. These value relations are the focus of Marx’s analysis.

“it is characteristic of labour based on private exchange that the social character of labour “manifests” itself in a perverted form—as the “property” of things; that a social relation appears as a relation between things (between products, values in use, commodities).  This appearance is accepted as something real by our fetish-worshipper, and he actually believes that the exchange-value of things is determined by their properties as things, and is altogether a natural property of things.  No scientist to date has yet discovered what natural qualities make definite proportions of snuff tobacco and paintings “equivalents” for one another.” [Marx economic manuscripts 1861-3]

“…Bailey is a fetishist in that he conceives value, though not as a property of the individual object (considered in isolation), but as a relation of objects to one another, while it is only a representation in objects, an objective expression, of a relation between men, a social relation, the relationship of men to their reciprocal productive activity.”


Hopefully the reader will find the above points useful in clarifying the unique contours of the concept of intrinsic value. Our next task, in the following chapter, is to ask what this value is, what it consists of, and what determines its magnitude.


Money Commodity and MELT

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