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May 13, 2010
This is part 3 of my Law of Value series.
video 1:
video 2:
A Spectre haunts the face of Marxist theory: the spectre of the mudpie argument. It was this central conundrum that Marx devoted his momentous work “Das MudPie”. It has since haunted Marxist theorists of all persuasions. How can Marxists theory go on in light of this devastating theoretical problem?
Just Kidding…
If you spend any time reading about Marx’s theory of value on the internet you probably will come across some version of this asinine excuse for a critique called “the mudpie argument.” The basic style of the mudpie argument is similar to many advanced by those who know nothing about Marx’s theory of value: one constructs a ridiculous strawman argument that has nothing to do with Marx and then proceeds to knock it down with “devastating” brilliance, moral outrage, and a few clever asides about Stalinism. The MudPie argument goes something like this:
Marx claimed that labor is what gives all commodities value. But what if I make a mudpie? This is a product of labor yet nobody will buy it. It has no value. So Hah! Take that Karl Marx!
The problem with this argument is that Marx was very clear that labor has to be useful labor to create value. Yet he didn’t think that is was this usefulness that creates value. Labor has been doing useful things for millennia. All societies are made up of useful labor. Marx calls this useful labor that makes up a society “social labor”. The organization of this social labor differs from society to society. In a capitalist society this social labor is organized through the commodity exchange: the products of labor are assigned market values and the fluctuations of these values coordinate the social labor process. This is a way of organizing social labor unique to capitalism and it has all sorts of unique properties that other forms of social labor don’t have. The usefulness of labor is not what is specific to capitalism. Value is. Hence, usefulness is not what Marx interested in talking about. Value is.
In video 4 we will look at why usefulness can’t explain the amount of value a commodity has. For now we will look at this more fundamental question: What does it mean for useful labor to take the form of commodity exchanges?
What is a society?
The key difference between humans and animals, for Marx, is in the way they create their own worlds. Humans aren’t slaves to their own evolutionary destiny, repeating the same patterns of survival over and over for millennium. Instead humans actively shape the world in which they live. There is a certain creative aspect to human labor in which we imagine the product of our work in our mind before we go about the work:
“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.”
-Das Kapital, Karl Marx
This world which we create forms the structure of our lived experience: we live in, wear, eat and think about the products of our own creation. The structure of our social relations, from the way we relate in cultural and family groups, to the organization of production, to ideas about the world we live in, constitute a created universe powered by the creative power of human labor. Yet this world of our creation also acts back upon us. It structures both our desires and our means of attaining these desires. In much mainstream economic thinking human desires and the means of attaining them are treated as universal, timeless things. Marx says the opposite: What we desire and how we go about getting the things we desire changes as the organization of our society changes. In this sense, “Men make their own history, but they do not make it as they please” (The 18th Brumaire of Louis Bonaparte, Karl Marx)
In different times and different places this organization of human activity has been radically different. The level of technological development, the organization of production, the organization of classes, and the shared conceptions about the world have all changed radically over time. It is the organization of these different “modes of production” and the way the organization of production effects the other aspects of a society that was of interest to Marx. In essence Marx is asking what this organization of production can tell us about a society. [This mode of inquiry is called "historical materialism" because it is interested in the way the production of our own material conditions of existence has changed over time. It is different than theories of history that treat human society as a progressive evolution of disembodied ideas, or of abstract psychological states (bourgeois economics.) Ideas and psychology are important but they can't be understood apart from the basic organizational structure of the social relations of society.]
This means that Marx is not just interested in any labor. He is interested in “social labor”- labor that is part of this mode of production, labor that goes into the make-up of a society. Useless labor, like that of the mudpie maker, is not social labor. The first step then, in looking at a particular historical mode of production, is to ask how the private labor of an individual becomes social labor in that society.
If you were a medieval peasant working a plot of land with your family you would be laboring directly for your own use (or the use of the landlord.) There would be no mystery about whether the labor you were doing had use to your social group or whether the right amount of labor was being allocated to the right tasks. The private labor you did on your land would be “directly social.”
In a capitalist society we don’t produce things in order to use them ourselves. We produce things in order to exchange them in the market. We don’t care about the usefulness of the things we are producing. We only care about receiving money in exchange for our labor. We then use that money to enter the market and buy the things we need for our own personal use. The production of a commodity and the use of it are separated in space and time. They are separated by value. They are linked by value. In order for our private labors to become social they must first take the form of value.
This is a very different type of social labor than in pre-capitalist societies. Rather than being directly social, capitalist labor is indirectly social. People don’t directly decide what to produce. Instead these decisions are made through the fluctuations of market signals, a constant back and forth of buyers and sellers. But these market signals aren’t some autonomous power. They are composed of the aggregate individual labors of millions of separated producers. This separation of production and consumption means that our labor has both an individual value and a social value. The individual value is the amount of work that actually goes into making something. The social value is the actual amount of value the commodity sells for when it enters the market.
Because producers are separated from each other by the market, because we have no collective control over production, we have no way of knowing, for sure, how much labor time society requires of us and what sort of labor it should be. We don’t know what the demand will be for our product. We don’t know how much of the product other producers are making. We have to guess these things. We only find out once the products of our labor meet the products of everyone else’s labor in the market. This means that the individual value, the amount of time an individual puts into making a commodity, and the social value, the amount of time society requires go into it, can differ.
If individual value and social value diverge what does this mean? Some people think that Marx held that individual value had to equal social value, that if I spend 15 hours making a sandwich then this has to be the value of the sandwich. But this is not at all what Marx argued. Marx wanted to show how individual values become social values in a market society. Unlike other forms of production in which we labor directly for use, in a capitalist society we labor to produce value. Yet society must still use the products of our labor. We can’t all make the same thing or all make useless things. Labor must be apportioned between the right tasks in the right proportions. Value is the mechanism that does this since value is the only connection between individual laborers. Marx sought to explain how value acted as a force for the regulation of individual labor, turning individual labor into social labor.
[The fact that social value differs from individual value is not a defect to Marx's analysis. It is the mechanism by which value asserts itself. How else could labor be apportioned between tasks in a society where labor is only indirectly social? The very fact that we have a field called economics in the first place is because the transformation of private labor into social labor is a mysterious, invisible one, it's law-like properties hidden behind constant fluctuations of market prices.]
The fact that we discover the social value of our individual labor in the market creates the illusion that it is the market itself which is creating value. We bring the objects of our labor to market and there they are turned into money, making it seem like the subjective decisions between buyers and sellers are what create these money prices. This is what is being insinuated by the Mudpie argument: that it is the subjective valuation of the usefulness of a commodity that determines its value, not the labor that goes into it. Yet this is an illusion, a fetish created by the fact that our labor is indirectly social.
Yet contrary to what some vulgar economists want you to believe individuals are not free to buy and sell commodities at any price they want. This is because exchange is not just a fleeting, isolated contract between two individuals. Each exchange is part of a vast web of exchanges which unites the productive labors of society. [close-up of two people exchanging, zoom out to their other hands being exchanging with others (duplicate image), zoom out to reveal of vast network of the same images all linking hands..] This is what it means for an individual’s labor to become social. When this happens, society acts back upon the individual, disciplining their labor to make sure that they are doing socially useful labor at something near average productivity.
Thus the transition from individual value to social value isn’t a random one. It has law-like properties that govern the connection between the private laborers of millions of individuals and the aggregate social labor process. These law-like properties that link our private laborers to their social value is what Marx calls the “law of value.” There are two basic forces that govern the way individual values become social values:
1. The first is average productivity. Let’s say the average widget maker takes 1 hour to make a widget. This social average is the social value of the commodity: the amount of time society requires to make a widget. But I am old and slow. I take 3 hours. This is the individual value. My individual value is higher than the social value. But that doesn’t mean I can sell my widget for more. I must sell at the social average. Marx calls this “socially necessary labor time”. In this case the determination of social value is made not by my individual labor time, but by the average productivity of society. If the socially necessary labor time changes due to changes in productivity then the individual value and social value will change too.
2. The second factor is the interaction of supply and demand. Supply is determined by the total amount of labor that goes into making widgets and the productivity of that labor. But when we go to the widget factory to work we do not know how much labor as a whole society is devoting to making widgets. There could be a million other people making widgets or only a few. We only learn how much labor society has put into widget making when we enter the market and compare the products of our labor with the rest of society. If too much labor goes into widget making then there is an over-supply of widgets. Their social value falls below their individual value. [The private labor of widget makers counts as less social labor.] If not enough work has gone into widgets there is an under-supply and their social value rises above the individual value. [The private labor of widget makers counts as more social labor.] This fluctuation of social value around individual values is what allows labor to be apportioned.
But what of demand? Isn’t demand a random subjective element in the equation? As we will see later on the video on Supply and Demand, demand traces its power back to the labor process as well. Demand isn’t just an abstract psychological substance. It is a definite amount of purchasing power made of of worker’s wages and capitalist profits. Even the things demanded, be they inputs for the production process, or subsistence goods for maintaining the worker are needs generated by the structure of production. People’s demand for things change as the value of those things change. When the average productivity of widgets rises, their value falls and the demand for them rises because now they are cheaper. So rather than demand existing in some subjective vacuum, it is is always dependent on a preexisting world of values. But most important to the MudPie theory, demand doesn’t create the social value of a commodity. It only helps determine if labor has been apportioned to the right tasks. Labor is creating the value. Labor is doing the work. Demand tells us if this labor has been socially useful. But demand can’t create commodities, nor can it be separated from the web of social labor.
Conclusion
You might notice when you go to the grocery store that there isn’t a mudpie aisle filled with unsold mudpies. Though capitalist production involves this element of guessing, this uncertainty of transforming private labor into social labor, this doesn’t mean that production is totally random and absurdist. If exchange was random and sporadic then there would be no way for the division of labor to be coordinated. But exchange is not random and sporadic. It is constant. Every act of exchange links the buyer and seller in a complex network of buying and selling that connects all buyers and sellers everywhere. This constant interaction of production and exchange means that most of the time we have a pretty good idea of what social labor is. We don’t go around making mudpies, or bicycles with square wheels, or hip-hop polka records.
Sellers are constantly saying, “This is how much labor went into this commodity and so this is what we think it is worth”. Buyers are constantly saying, “Less labor should go here, more labor should go there.” The constant interaction of buyers and sellers apportions labor to the right tasks. This is only made possible by the fact that there is a correspondence between the labor that goes into something and its price. But this correspondence is loose, constantly fluctuating. The fluctuations are what allow labor to be reapportioned. As productivity changes values change.
Underlying these fluctuations of demand and supply lies a more basic observation about human society. We only have so much time as a society to devote to the production of our needs. If we are to have food, houses, clothes, DVD’s, and beer we are going to have to devote work to these things. Some things take a lot more labor to produce than others. They cost society more in terms of its expenditure of the total social labor. In a market society this cost isn’t decided by a committee, it’s decided by prices in the market. And this is what value is. Labor becomes social when its products obtain a price in the market. And these prices coordinate the social labor process.
More Conclusion:
What have we learned about value in this video. Value the way the social labor process is coordinated in a capitalist society. The relation between workers takes the form of relations between commodities in the market, each with a market value. Because producers are separated from each other in time and space this coordinating process is indirect, marked by fluctuations of individual values and social values. The thesis of the MudPie argument is that these deviations of individual from social value is some sort of flaw in Marx’s theory. But this display’s a profound ignorance of Marx’s theory of value. For Marx this divergence is one of the most important part of the theory of value. This divergence is the mechanism by which labor is apportioned in a society of atomized, isolated individuals competing in the market.
Suggested Reading:
Capital, vol. 1 Karl Marx
Essays in Marx’s Theory of Value, I.I. Rubin
Frontiers of Political Economy, Guglielmo Carchedi
http://kapitalism101.wordpress.com/2010/05/13/law-of-value-3-das-mudpie/
June 13, 2010
part 4 of the Law of Value series
This is one of many abandoned houses in my neighborhood. The slumlord owner let the property deteriorate until it became unlivable and doesn’t want to pay the money to make it livable again. There are thousands of abandoned houses in this city, and thousands of homeless people. Despite the urgent social need for houses these properties don’t fulfill a social use. Why not? Because the owners of these commodities are not interested in their use. They are interested in their exchange-value, the rent they receive from the property. For decades they collected rent while the use-value of the house deteriorated. And now these houses sit vacant, a testament to the contradiction between use-value and exchange-value.
This is not a contradiction restricted to housing. Every commodity contains this contradiction because every commodity is produced to be exchanged, not to be used by the producer. We have enough food on the planet to feed everyone, yet millions starve. Why? Because we don’t produce food directly for social need. We make food in order to sell it for money. Society has much of the technological ideas it needs to reduce greenhouse gas emissions, yet it isn’t acting fast enough to apply these ideas. Why? Because production is not undertaken to direct ly mediate our relation with the environment. We produce for profit.
The exchange of the products of labor in the market is just one of many possible ways that the private labors of billions of individuals can be coordinated. Some people think this is the best possible way to coordinate human productive activity. Marx saw that, despite all of the dynamism and technological wizardry of capitalism, there were fundamental social antagonisms at the heart of this means of coordination… that production for market exchange leads to all sorts of unexpected consequences including gross inequality, exploitation, and crisis. And for Marx all of these social antagonisms can’t be understood until we understand the contradiction within the idea of a commodity itself: the contradiction between use value and exchange value.
Use value vs. exchange value
A commodity has a use. This is its use-value. What does use-value tell us? It tells us how a commodity satisfies a social need. If we want to feed everybody we need a certain quantity of food. If we want to build everyone a house we need a certain quantity of wood and nails. Some use-values require no effort to attain: air, sun, gravity, etc. Others require effort to attain. There is a finite limit to the amount of labor that can be devoted to the production of use-values. Society must apportion this labor between the production of different use-values in some way. As technology changes the amount of labor required to produce some use-values decreases thus signaling a change in the apportioning of labor. As technology evolves to reshape what human labor is capable of producing so do our needs and desires evolve.
In different societies this labor is apportioned by different methods. In a market society it is the buying and selling of the products of labor in the marketplace that serves the purpose of allocating labor between the production of this use-value or that use-value. This creates a second type of value, unique to market societies: exchange-value.
Exchange value is the ratio in which one good exchanges for another. Perhaps one book exchanges for a loaf of bread… Or a new car exchanges for a thousand bottles of whiskey. These ratios are all exchange values. They say a book is worth this much bread; a car is worth this much whisky. In a developed market society one commodity eventually emerges as the primary commodity in which all other commodities express their exchange value. This is what money is. For most of the history of capitalism this commodity has been gold. By comparing the ratio of tomatoes or cars or baseballs to gold all commodities measured their exchange value in ratios to gold.
These two sides of the commodity, its use-value and exchange value, form two opposing, contradictory poles. Much of the social antagonisms of capitalism are rooted in this tension between use-value and exchange value. Of course, most of the time when we look at a commodity it doesn’t seem very antagonistic. This is because the antagonistic social relations behind the commodity are not visible. But when we look at a society organized around commodity exchange we can see lots of social antagonisms. To understand how these social antagonisms spring from the opposition of use-value and exchange-value we will need to take a closer look at both…
You can’t use it AND exchange it!
If I am selling a tomato this tomato has no use-value at all for me. Its use-value only exists for the person that buys it. I am only interested in the exchange-value, how much money I can get for it. Production in a capitalist society is not production for use, but for exchange. This means that we have no inherent interest in the usefulness of our labor outside of its ability to create exchange-value. Now, from a social perspective, it is very important what kind of labor we do: Do we make bombs or flowers? Oil or cupcakes? But as individuals we have no stake in this. We produce in order make money, to get exchange value.
Why do people produce for exchange and not for their own use? Because in a capitalist society the working class does not own the means of producing their own subsistence. The only way for working people to get the necessities of life is buy them in the market. And the only way to do this is to sell our labor to a capitalist for a wage. We spend our whole life making a profit for an employer so that we can spend this wage in the market to obtain our daily bread. Our job is not a means toward personal satisfaction. Our job is a means of making money so that we can buy our satisfaction in the market.
Bourgeois subjective value theory talks about a “double-inequality of exchange.” It says that the only reason exchange happens is that two people value the other person’s product more than the product they are giving up. Marx actually goes even further than this. He says that to the seller the commodity has no use-value at all, other than the fact that it can be exchanged.
Not only does this bourgeois theory of “double-inequality of exchange” give the mistaken impression that people produce for their own wants and then sell off the surplus in the market, but it also imposes the profit-maximizing logic of the capitalist onto the consumer. By claiming that consumers make a subjective profit from exchange it transposes the real, objective profit of a capitalist who pays his workers one sum of money and sells the products of their labor for a greater sum of money, onto a completely intangible and unquantifiable notion of subjective profit. But subjective preferences for commodities can’t be measured, divided, added to, or compared in a numerical fashion. By imposing the logic of capital onto consumers it effectively erases class from the scope of its analysis.
The mystery of exchange value…
One book= 1 car. What does that mean? What does it mean to say something is worth so much of something else?
Some people think that the usefulness of a commodity can answer this. But uses of things can’t be compared. You read books. You drive cars. They are two totally unrelated and incomparable uses. Maybe you like books more than cars. Does this mean that books are worth more than cars? (1)
What does it mean to say a book is worth so many jars of peanut butter, or so many cups of coffee? Clearly jars of peanut butter or cups of coffee are measuring something. And clearly any other commodity could be used to measure this something. A book could be worth so many pencils, so many kittens, so many tires… And each of these exchange values would be a different way of measuring the value of the book.
But this means that the book has a value independent of the particular commodity that we choose to measure it with. Whether we measure the book’s value in beers, beans or kittens it stays the same. Yet we can’t see this value. We only see the specific exchange ratios of the book as it is exchanged with other commodities. [The only thing that changes is the "form of appearance" of this value- the particular manifestation of this value.] But isn’t this what exchange value really is- the comparison of the value of one commodity with the value of another? These exchange-values only make sense, only work, because there is something called value that is being measured by them. Exchange value necessarily implies the presence of an underlying value. Marx uses the term “intrinsic value”. By this he doesn’t mean that value lies buried within the commodity, or that it is magically bestowed upon the commodity, but that it is impossible to compare commodities to each other in the market without a commodity having its own value. But what is this value?
What is the 3rd thing?
We have seen that exchange value implies that commodities have an intrinsic value expressed in different exchange ratios. This value is not use-value or exchange-value but a 3rd thing. What is this value? Where does it come from?
I know you are in a lot of suspense so I’ll just come right out and say it: Marx argues that it is the labor time that society devotes to the production of these commodities that accounts for this underlying value. Commodities that take more labor to create have more value than ones that take less labor. As labor becomes more productive, as it becomes easier to produce things, their value falls. But what is Marx’s justification for choosing labor as this 3rd thing?
Marx’s critic Bohm-Bawerk pointed out that there are lots of properties that are common to all commodities: Marx could just as easily have said scarcity or utility were this third thing. This, of course, is the approach taken by marginal utility theory which argues that it is our subjective desires for commodities in relation to their scarcity that determines their value. Why is it that Marx doesn’t take this route?
For one, scarcity and utility cannot be understood without reference to labor. The amount of a commodity that exists at any point in time is clearly related to the amount of labor that has been devoted to producing that commodity. And utility isn’t just some abstract, individual substance detached from the labor process. Subjective desire only counts economically when it is turned into real action, when we buy things in the market. The only way to enter the market as a purchaser is to also enter it as a seller. We must sell the products of our labor and then use this money to buy the commodities we desire. (More specifically, workers sell their ability to work, their labor power, to an employer. The employer sells the product of that labor in the market. Workers receive a part of this value in the form of a wage.) The only means of attaining our desires is the buying and selling of the products of labor. Not only does capitalism shape our desires, it determines how we go about attaining our desires.
But there is an even more important reason why Marx doesn’t choose scarcity and utility as the determinants of this underlying value. Utility and scarcity both describe the relation between individuals and objects. Marx is interested in the relations between people. If we think back to Marx’s argument about commodity fetishism we will remember that in a capitalist society the relations between people take the form of relations between things. Objects appear to have power and value, on their own. But this wold of appearance is not the full story. These value relations between commodities are actually relations between people whose work is coordinated indirectly through commodity exchange.
And this is where any social theory must begin: with a study of the productive activity of people as they work to create the world they live in. Not only is this the best starting place for an analysis of society, it is also the best starting point for a radical social theory whose aim is to investigate the possibility of changing the world. If we realize that human society is not the result of some natural or divine eternal logic but merely the creation of our own labor then that means that we have the power to mold and shape that society as we see fit. In a capitalist society these creative powers take the form of an external world of value and capital that acts back upon society, shaping it against the will of its creators. Yet, in the end the world of capital is nothing but the product of our own creation. If we truly want to change the world it is not up to nature, God, fate or experts, but up to us. This is the radical challenge of the law of value.
Let’s review and clarify:
1. The usefulness of a commodity is its use-value. Uses can’t be quantitatively compared.
2. The exchange-value of a commodity is the proportions at which it exchanges with other commodities.
3. Price is a specific type of exchange-value, the ratio at which a commodity exchanges with money.
4. The fact that commodities measure their worth against each other implies that they have an intrinsic value.
5. This intrinsic value is not a physical thing, nor is it magically bestowed upon commodities. It is not a timeless trait existing for all products of labor everywhere. Value, in the way Marx uses the term, is the means by which the labors of isolated producers are coordinated through commodity exchange. It is the social substance the binds together the labors of isolated, disparate individuals separated through the market.
Price and Value (a brief distinction)
We notice then that value and price are not the same thing. The value of a sandwich may be 1 hour of labor. Yet we don’t see this 1 hour when we buy a sandwich. All we see is its price. Prices are just the exchange value of commodities measured in money. The only way we see value is indirectly through these quantitative relations between commodities. Though value and price are indirectly linked, their connection is still strong. If demand rises suddenly causing the price of sandwiches to rise this will trigger an inflow of sandwich-making labor to meet demand. And once demand and supply have balanced, price falls back down to meet value. If the productivity of sandwich-making rises the time it takes to make a sandwich falls. The supply rises and the price falls. Prices and values fluctuate around each other, constantly codetermining each other.
Conclusion
The last thing we should note is that this concept of value is historically specific. Unlike bourgeois economic theory which projects its categories of utility and capital back in time to make all of history retroactively bend to the laws of capitalism, Marx’s theory of value describes a specific type of social organization unique to a society in which the dominant form of production is production for market exchange. When we don’t produce directly for use, but for exchange, we find that our productive activity is regulated by unconscious economic laws which Marx calls the “law of value”. Whereas before we said there was an antagonism between use-value and exchange-value we can now say that this is really an antagonism between use-value and value (since exchange value is an expression of value). As long as production is production to produce values instead of uses we will have to deal with the social antagonisms that spring from this contradiction: The logic of profit will dominate over society rather than the logic of usefulness. And the nature of work will be to maximize profit at all cost rather than to maximize the quality of the experience of work or of the life of the worker.
Footnotes:
1. There have been attempts by neoclassical economists to reduce the usefulness of commodities to some common substance. Since there is no common substance that makes up usefulness they have to make up an imaginary substance called “utles”. These economists actually say things like, “A cup of coffee has 13 utles and a car has 3000 utles of utility”. But such attempts to invent imaginary substances with which to reduce utility to are generally thought to be pretty silly and misguided. In neo-classical economics this concept has been mostly replaced by the concept of rank preferences, or graded utility: A consumer has a ranking of demand preferences but these can’t be reduced to some common scale. In this way the question of value, in the sense that a commodity has a definite amount of value as determined by subjective social demand, is mostly abandoned: Commodities don’t have values, but consumers have preference rankings and these preference rankings result in prices. This approach conveniently eliminates many of the theoretical problems with earlier marginal utility theory (namely the unquantifiable nature of subjective utility), yet it has an inherent circularity: consumer preferences are not formed in a vacuum. They are formed on the basis of preexisting exchange ratios. As the prices of commodities change so do the preference rankings of commodities. So commodity prices must first be assumed in for marginalists to theorize the subjective processes of price formation. This is circular. The pink elephant in the room is the productivity of labor. As this productivity changes so do prices. There are a host of other criticisms lodged at Marginalism by Marxists. Perhaps sometime in the future I can write/produce more on the topic.
http://kapitalism101.wordpress.com/2010/06/13/law-of-value-4-value/
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