“Schrödinger’s Capital”: The neoclassical core of the value-form argument

by Jehu

NOTE 9: Value equals price?

Marx makes a pretty simple argument in Capital: In any exchange, the only property a commodity has in common with any other commodity is that it is a product of labor. The values of the commodities consists of an expenditure of homogenous human labor power.

Later (in chapter six), Marx defines labor power this way:

“By labour-power or capacity for labour is to be understood the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of any description.”

For some odd reason, Marx only actually says what he means by the term, human labor power, in chapter six. But, okay. What he means by the term “labor power” is the “capacity for labor”. And this must be emphasized: labor power, or labor capacity is not actual labor, which latter is always concrete. So far as I can tell, human beings do not labor in the abstract any more than any other animal.

The total capacity for labor of a commodity producing community, or its total labor power, however, is the aggregate mental and physical capabilities they possess.

Which raises n important question we need to get out of the way: Do these capacities for labor themselves have value that are passed on to the product of labor? To be honest, I am not sure, but the answer seems to depend on the specific situation. In a capitalist society, the answer is clearly, Yes. In the capitalist mode of production, labor power is a commodity and like any other commodity has value. In a community of individual producers, however, labor power is not a commodity. Thus, I would assume labor power has no value in that situation.

Despite lacking value of its own in a community of commodity producers, the expenditure of labor power (i.e., the expenditure of the capacity to labor) is itself proposed by Marx as the source of value.

Marx’s argument seems to go like this:

In a community of commodity producers, the homogenous abstract capacity to labor is used up by being expended in actual concrete particular heterogenous useful labors. However, human beings are not perpetual motion machines; if they expend a certain amount of labor capacity, this capacity must be replaced out of the product of labor. The act of labor (expenditure of capacity) incurs a physical ‘debt’, so to speak, that the laws of nature demand be repaid at some point. If this physical debt is not repaid at some point, the human being who expended it will die.

Does Marx’s argument require him to show that value is intrinsic to commodities, i.e., a physical attribute of the objects? No. Does Marx’s argument require him to demonstrate value is “secreted” in the course of labor by the producers of commodities? No.

All Marx is required to show, it seems to me, is that the capacity for labor, having been expended in actual labor, must be replaced. Mind you, this is not even a huge hurdle to jump, since we all know this is true. We have to eat if we are to live.

Value as expression of anarchic production

Absent value, commodities are simply use values — objects that satisfy human needs. There is nothing in the objects, (no secretions or substances), that make them values, per se. What makes them values is that the material requirement that the labor capacity of the community must be replenished or the producers die is nowhere the starting point of labor in a commodity producing community. The requirement that labor power must be replenished is as much a natural law for a community of commodity producers as it is for individual producers.

The difficulty for commodity producers is that, since everyone is working by his lonesome, no one is thinking globally about this problem and nowhere are their combined efforts consciously directed. Marx, of course, explains all of this in his very powerful section, “The fetishism of commodities and the secret thereof”. The secret of commodity fetishism, says Marx, is that no one is directing the productive activities of the community, so its underlying material productive requirements (including bare physical metabolism) are imposed on the community as if they were natural laws.

Everything in the productive life of the commodity producing community is unregulated by conscious design.

It is very fashionable among some Marxists today to talk about commodity fetishism, but I seldom come across anyone who really explains it satisfactorily. It’s really very simple: since the producers are not consciously directing their productive activities, the material requirements of production operate as if they were a law of nature, imposing themselves on the community.

The imposition of these material requirements of production are what Marx calls the law of value.

I really don’t understand the problem here, because Marx states it as plainly as he can in section 4 of chapter 1.

  • No. Value is not a substance excreted by society into its product.
  • No. Value is not a physical property of the product of labor.
  • No. You cannot decompose a use value and find value embedded in it.
  • Most of all, No; value is not an unreal abstraction. Unless you call starvation unreal or abstract.

So this is Marx’s argument on value.

But Chris Arthur seems to feel Marx botched it. Marx, says Arthur, had one job and only one job: to explain what value was, “but his results are somewhat inconsistent, I think.” While Marx defines the source of value as an expenditure of human capacities for labor, Arthur thinks he should have defined value as the “power of exchangeability”.

Why does Arthur want to replace Marx’s argument with his own argument that value is the power of exchangeability?

It appears, Arthur accuses Marx of failing to “establish a common substance to products because the labours referred to are just as heterogeneous as the commodities themselves.” Marx, says Arthur, admitted the labors of the various producers in a commodity producing community are heterogeneous and incommensurable, but he insisted these labors had to be treated as if they were abstract and commensurable activities.

Ignoring labor power

If you have been following the discussion so far, you can see the problem with Arthur’s accusation against Marx:

Arthur just ignores Marx’s statement that by abstract labor he [Marx] was referring to labor power or the capacity to labor, not actual labor. And he ignores, as David Harvey did in his, “Companion”, that labor power was a new category first introduced to economic thought by Marx. Before Marx the distinction between the capacity for labor (abstract) and actual labor (concrete) did not exist.

Rather than recognizing this new category, Arthur asserts Marx was clumsily trying to establish a counterfactual: that production on the basis of exchange value, (i.e., commodity production), can work without money.

Having set up this straw man argument, Arthur goes in for the kill:

“[Without] money to make visible such a homogeneous value space there could be only an incoherent morass of molecular ‘value’ relations which fail to integrate into a common universe.”

For the life of me, when I first read this statement, I had no fucking idea what Arthur was babbling on about. After much contemplation, it appears to me he is arguing that since every transaction is accidental, there would be no consistent measure of values of commodities.

To give an example of what Arthur is talking about here: Two producers meet in the market and exchange their products — ten apples are exchanged for one hoe.  Later, the new owner of the hoe exchanges it for six oranges. He then takes the six oranges and exchanges them for two hoes.

We now have a problem:

Ten apples = one hoe;
and, one hoe = six oranges;
but, six oranges = two hoes

These sorts of exchanges can happen in the real world, of course, because every exchange is a comparison of incommensurable use values and thus somewhat accidental; the exchange of one incommensurable use value for another. The resulting exchange ratios would be all over the place. Certainly there is no consistency to exchange we would expect for a production mode based on exchange values.

But here is the thing: Marx never makes this damn argument and Arthur, if he ever bothered to read Capital, would know it. Since no one knows the value of their own product, nor the value of the product of anyone else, how can Marx argue exchange of incommensurable use values gives rise to commensurable exchange values?

Nevertheless, Arthur states, “These considerations lead me to underscore the importance of Marx’s section on the forms of value.”

“Money, as the universal equivalent form of value, overcoming the ‘defects’ of the simple and expanded forms of value, is itself essential to the actuality of value”.

Money as value-form

Essentially, Arthur turns Marx on his head: for value to exist, it requires a form to make value an actual power in society. Arthur proposes money is this power.

Value, says Arthur, only exists in the material use value serving as money. Although like other use values, money has no intrinsic value; by becoming the universal means of exchange, money confers value on other use values. To put this another way: no use value has value according to Arthur. A commodity acquires value only by being exchanged for the use value serving as money.

It may be objected that if no commodity really has value, the money also has no value, but Arthur’s reply is that this does not matter: the material of the object serving as money (gold, paper) itself is the form value takes in a community of commodity producers.

Further, since the thing serving as money, like all other use values, has no value, Arthur’s argument carries a dividend: You do not have to explain valueless inconvertible state issued fiat. If people object that fiat paper has no value, Arthur can respond:

“Of course it doesn’t, silly. No use value has value. Didn’t you read my paper?”

In Arthur’s argument, the use value serving as money does not have value; rather, it is value.

Mind you, this argument is very appealing because how else do you explain how an inconvertible fiat currency is world money after 1971? Arthur says this is because money is not the measure of value. It is value, i.e., whatever serves as money, becomes, in this role, the object giving (conferring) value to all other use values. At one point, he argues money works by making visible, “a homogeneous value space”.

Arthur’s neoclassical theory of value

Contra Marx, Arthur argues not only is value not a physical property of the commodity or a substance secreted by producers into their product, it is not even a social attribute of the commodity, but merely states the commodity has been exchanged for the money object.

If he had been honest, and not a sleazy academic, he would have admitted at this point he does not think value even exists. If no commodity has physical substance called value and no commodity has a social attribute called value, what is the possible purpose of using the term? Why would Arthur even involve himself in the discussion, since he knows value does not exist and never has existed?

Arthur’s argument can be restated with far less ambiguity than he does:

“The money price of any commodity is its value.”

All that fucking around with Marx and Hegel and “‘essence must appear’, together with its corollary” served no real purpose but to dazzle his audience with bullshit and obscure his conclusion.

The real reason why Arthur puts us through this torture is that he knows no one is buying the value-form school’s “price equals value” bullshit. That argument is entirely drawn from neoclassical theory:

“In neoclassical economics, the value of an object or service is often seen as nothing but the price it would bring in an open and competitive market.” –From Wikipedia:

Arthur really has to explain how his notion of value differs from the neoclassical definition.