Musing on Labor as the Source of Value

I am pondering the legitimacy or otherwise of Marx’s claim that labor is the sole source of value in capitalist commodity production. It is not clear that such a claim can be proved. Sometimes it is simply presented as an assumption. Other times various motivations or intuitions are offered. Here are some thoughts of that nature.

According to Marx:

  1. Living labor is the sole source of value and unpaid labor is the sole source of surplus value.
  2. Nature, labor, animals and machines are all productive of material wealth (material output or use values) but only labor is productive of value.

‘Labor’, in what follows, always refers to abstract, socially necessary labor.

The hope is to pin down why it might be true that labor is the sole source of value and surplus value.

To begin, consider a similarity and a difference between machines and workers in Marx’s theory that might, at first blush, appear to undermine the idea that labor is the sole source of value.

On the one hand, there is a similarity …

The price of a machine will depend on its cost of production plus profit, not the productive contribution of the machine once it is utilized in a production process.

Likewise, the price of labor power (wage and other pecuniary benefits) depends on the cost of cultural reproduction of the worker and the worker’s dependents, not directly on the worker’s productive contribution.

On the other hand, there is a difference …

A machine can produce more material “stuff” than went in to its own production. Yet, this material surplus will not represent any additional value if Marx’s theory is correct.

A worker can also produce more stuff than went into his or her reproduction, and in Marx’s theory this does represent additional value.

Why might the worker be a source of new value and the machine not?

Human Effort?

One possibility, perhaps, is that value in capitalist production relates to effort, whether this effort is in the form of grunt, nous, ingenuity or some combination. In a human society of capitalist form, what is being valued above all else may be the effort of humans.

This suggestion is reminiscent of Adam Smith in the Wealth of Nations (beginning of chapter V of Book I):

The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What everything is really worth to the man who has acquired it, and who wants to dispose of it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour as much as what we acquire by the toil of our own body.

To the extent physical output is produced by nature, machines or animals, it involves no human toil or trouble – no human effort. Of course, producing a machine does cost human effort in a previous period (or in a separate production process during the same period). But to include that as part of the human effort of the current production period (or as part of the human effort of the production process into which the machine has entered) would be to double count the effort. It is not new effort but the fruits of past efforts being preserved in production and transferred to current output.

In our present economic system, capitalists own the results of human effort – the commodities that are produced as physical output in one line of production or another. To the extent that the production of commodities requires the expenditure of human effort, capitalists possess something (value) that cannot be replicated without effort.

If all production cost no human effort – i.e. was carried out entirely by nature and machines produced by machines without involvement of labor either now or in the past – commodity values would be zero. There might well be a wealth of material output, but no value from the perspective of capitalists.

Prices would also likely be zero. The state could give them a positive price by imposing an exogenous tax obligation on owners, payable only in the state’s currency, and then issuing currency to non-owners with which to purchase the goods and services produced without human effort. But nothing would be left over for owners after taxes had been paid.

If, historically, labor has been involved in production – which of course it has been in a big way – but in the future production came to be carried out entirely by nature and machines produced by machines, commodity values would remain positive for a while but tend to zero over time. The basis for the positive values for a time would simply be the preexisting value getting transferred from used up plant and machinery to the final output. The further into the past the contribution of labor became, the more infinitesimal the value to be transferred from the means of production to final output because of the devaluation over time of old plant and machinery.

Simply put, if production happens to cost humans no effort, then as far as capitalists are concerned, it costs nothing. They then own nothing that can’t be replicated by other capitalists with zero effort. There would be no basis for positive values or surplus value.

This is Not a Normative Theory of Value

Needless to say, this is not a normative theory of value. The argument is not that value should be entirely based on human effort. Valuing commodities in this way results in an undervaluing of nature. It ignores ethical considerations and need. Even under capitalism, not all goods and services are permitted to be subjected to this ‘law of value’. Many countries provide free education, free or subsidized health care and various necessities for free or at prices below cost.

The theory applies only to commodity production – that sphere in which society permits capitalist commodity production. But, even here, there is no suggestion that valuation should be entirely based on socially necessary labor time. Rather, the theory is saying that this is how commodities actually are valued under capitalist commodity production. The theory is an attempt to explain the way goods and services are valued when capitalist commodity production is left to play out according to its own logic.

Prices of individual commodities will differ, of course, from individual values. But, for Marx, the sum of all prices will equal the sum of all values. The total amount of socially necessary labor – the total expenditure of human effort – will determine value in aggregate, over which workers and capitalists tussle for their collective shares, and over which everyone is pressured into competing for an individual share.

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14 thoughts on “Musing on Labor as the Source of Value

  1. Steve Keen just posted a lecture on the very subject: https://www.youtube.com/watch?v=jvBWJWFTZWY

    He basically puts forth that Marx at some early points saw some flaws/inconsistencies between his treatment of human labor vs. machines for use value, but ended up pushing on with them anyway for reasons ideological or otherwise.

  2. @Gus,

    I am sure yourself and Prof. Keen, interested as you both are on this subject, are aware that others — besides Marx — also claimed that labour was the sole source of profits.

    Pierre-Joseph Proudhon (a French anarchist and, incidentally, anti-Marxist and anti-Marx — as is frequent among anarchists), as you surely remember, is a case in point:

    “Whoever labours becomes a proprietor — this is an inevitable deduction from the principles of political economy and jurisprudence. And when I say proprietor, I do not mean simply (as do our hypocritical economists) proprietor of his allowance, his salary, his wages, — I mean proprietor of the value his creates, and by which the master alone profits … The labourer retains, even after he has received his wages, a natural right in the thing he was produced.”
    (source: http://anarchism.pageabode.com/afaq/secC2.html)

    Proudhon argued that based on John Locke’s theory of labour as the foundation of private property.

    Are you — and/or Prof. Keen — prepared to extend that observation to Proudhon and Locke? Was Locke, too, arguing such out of an ideological wish to favour the working class?

  3. I myself had forgotten another author, more respectable and trustworthy perhaps than both Marx and Proudhon combined.

    John C. Calhoun (a noted proponent of slavery in the pre-Civil War America and one-time Vice-President of the U.S.A.):

    “It would be well for those interested to reflect whether there now exists, or ever has existed, a wealthy and civilized community in which one portion did not live on the labor of another; and whether the form in which slavery exists in the South is not but one modification of this universal condition… Let those who are interested remember that labor is the only source of wealth, and how small a portion of it, in all old and civilized countries, even the best governed, is left to those by whose labor wealth is created.”
    (source: http://books.google.com.au/books?id=GJA_AQAAMAAJ)

  4. I too “ ponder the legitimacy ….. of Marx’s claim that labor is the sole source of value in capitalist commodity production”.

    This is because human effort is twofold: the first component is the human, and the secondary one is the effort. It is the human that gives a value to the effort. And to the goods or services. And to anything that turns up in consciousness. We weigh everything – and having never met anything that is truly ‘priceless’ we value our scales. So, the ‘price’ of everything is the value we give. Depending on whether you are 5 years old, 25 or 85. We cannot help but value things, so I don’t think the price could ever fall to zero. What we do is prioritise: – ‘We are shopkeepers’ [Zorba the Greek].

    So, wouldn’t it be more accurate to say ‘a human being is the sole source of value in …’ (?)

    I have no idea what that would mean to an economist …??????? (not pointing a finger anywhere)! Or a politician …. thanks to nivekb (MNE) I know what it means to the Free Scots 🙂

  5. @Pete,

    I think you had been too modest all along. I’m impressed. As someone once told me (I quote from memory): “I’m not sure you are entirely right, but if you are wrong, you are wrong in the right way”.

    Let me give this all some more thought!

  6. Thanks, Magpie. I have put up a new post giving some background to why I felt this musing post was in order.

    gus: The new post was actually prompted by your comment. It started off as a comment that got too long. Thanks for the interesting link. I was aware of the video but had not yet watched it. Cheers.

  7. Hi Peterc

    Can I just say that Adam Smith’s rationale makes a lot of sense and is why It seems this is why Marxists often refer to value as a social relation.

    My question is this: How would you even go about “proving” such a idea?

    Also, the statement about the law of value being a non-normative theory is key to perhaps understanding why nations which tried to base socialism on the “Law of value” failed to achieve a full break with capitalist production.

    As your more recent post says, a value theory of energy, might be preferable in many aspects to the law of value, in organising society. But this is a normative theory. Not a description of current society.

    Overall though, I think you’ve laid out the basic ideas very nicely. Clear writing style, helped me a lot. Thanks.

    D.K.

  8. Hi D.K. Yeah, I don’t know that it can be proved. It seems it should at least have a decent justification. Personally, I think that Smith’s rationale offers one. Others’ mileage may vary.

  9. @Pete

    They say “imitation is the sincerest form of flattery”.

    It seems you have a secret admirer. Consider yourself duly flattered! 🙂

  10. It occurred to me, that this whole discussion on the meaning of the word ‘value’ falls on a divide between what is experiential, and what is conceptual; similarly to the word ‘ownership’.

    To understand this, we have to, through experience and acceptance, be aware of a more inner aspect of consciousness (labelled here the heart – because it is the best modern word, that people are closest to, causing the least wave of nebulous or fanciful concepts to arise in the mind), or at least accept this theoretically; and an outer human being whom we know both familiarly, experientially, and theoretically, labelled here the persona (mind, emotions body).

    The problem is that the heart ‘knows’ what it values, but you, the persona, unless you have a lot of good luck going for you, probably do not. If you ask the heart what it wants, people just feel an inexplicable longing – and that’s it – which they promptly ignore, because it ‘bothers the mind’. Or else, mind rushes in and says, ‘Oh you need this and this and this; or read this’. Mind asserts that it is the only reality, and only gateway. The heart demands experience, not concepts.

    It can be quite a shock to mind: – to the heart, 70 laps around the sun, all that human effort and value sums to zero, if the consciousness of what it knows is not extended to the persona. Everything the persona ‘owns’ means nothing to the heart. Nor does, the so-called ‘power’ of the persona (which really is just force, driven by ignorance). There is something inside of every human being on the planet that knows this, already. But we ignore. And this part IS experiential: – walk down the aisle of the terminally ill in your community hospital and look into their eyes. For them, it is not the luxury of a discussion. In the end, if their heart is in charge, they go back to a childhood trust that all will be well; if the mind is in charge, there is fear. Empty handed they came into this world …..

    So, once again I would like to tease out the point, everything begins and ends with the human being. We should value the human being. We should begin with, honour and respect, a human being. It is the only way we will ever put all of the other external values and ideas of possession in context. For me, mind hasn’t got a clue: – the human heart carries our evolutionary potential, reality and identity.

    For me: – value is not grounded in labour, or human effort without direction, leading to consciousness. Evolution builds a connection between the heart and the persona, so lets get with the program. All human experience expands consciousness. Peace, (the experience of the heart) is not a luxury – it is absolutely essential if the human being is to progress in real terms (societal progression follows – it only appears (alludes) to lead). The experience of peace, leavens and lightens the mind, then completely transforms it. For me, wherever true peace is being fought for in the world, there is the real front-line of human development. These are the Warriors. History is the story of Teachers who have left behind clues for the human race, and is being written, even today like never before. All recommended getting to know your heart, understand its nature, and experience its energy; and take one step at a time like everyone must. The heart has made a commitment to something that is real, and each step along the way must be real. The world just fudges circumstance.

    Funnily enough these Teachers didn’t recommend consulting an ‘expert’.

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