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.