Vicissitudes of Value

One of the more controversial constellations of concepts dropped in our lap by the Leftist tradition is Marx’s labor theory of value. On the one hand, in his own context, his views were entirely uncontroversial: when Marx was writing, the idea that value was a product of human labor was simply assumed across the political spectrum, and this had been the case for at least a century. On the other hand, we are looking back on this time from one after the “marginalist revolution” (among other things), and so there is a weird coloring which Marx’s analysis takes on: for those on the right, that enlightened condescension we all know so well, and on the left, that odd combination of nostalgic reverence (“if only we still lived in a time where value was such a simple conundrum…”) and embarrassed occlusion (not to mention those who obstinately defend Marx against all). Here, I’m going to focus on how Marx’s conception of value is stricto sensu idealist; in later posts I’ll address how this problem does not weaken, but in some cases actually strengthens other arguments of his (including, but not limited to, the infamous “law of the tendency of the rate of profit to fall”). This post is the first in a series which shall try to illustrate how, far from being outdated, the analyses Marx puts forth in Vol. I of Capital provide the tools for a robust understanding of our contemporary economic situation–how, as Ernest Mandel put it in his introduction to Vol. I, “Marx is much more an economist of the twentieth [or twenty-first] century than of the nineteenth.” (p. 12)

For Marx, as for all political economists of his time, human labor is the source of value. This is not the same as the claim we might, from our historical position, mistake it for: that value is a ‘social construct.’ (Marx himself would probably view the strains of contemporary relativism, skepticism, and so forth, that we normally group together under the heading of postmodernism, as so many forms of anti-scientific idealism.) Rather, Marx (and others) was making a more precise economic claim: the ultimate ‘substance’ of a commodity or product’s price on the market is correlative to, or as a marxist might put, in the last instance ontologically the amount of labor-time necessary to produce it. However, here already we have run into a problem: for Marx, value and price are two very different categories, or at least so he would like to claim. Many have pointed out that this distinction is quite hard to back up; arguably, Marx himself fails to do so (his arguments for this distinction and concerning the relation between them, the latter normally named the “transformation problem,” are concentrated in Vol. III of Capital).

On a certain level, the problem here is not so much Marx’s theory in general, but rather: what do we make of that famously obtuse text that begins Capital: Chapter One, on “The Commodity”? Much has been written both for and against these pages (with the most famous call to simply skip it at first no doubt being Althusser’s). What a conundrum they are! I sometimes suspect that, like the routines of Burroughs, they are to be read as a comedy–and frankly, when it comes to the third section of this chapter, on “The Value-Form, or Exchange-Value,” I further suspect that this is the only way to save its analysis. For Marx himself does not seem aware of what he is trying to do in this section, this series of increasingly absurd ruminations on the relation between a coat and a quantity of linen: he is trying to square the circle of capitalist mythology, trying to explain how the monetary exchange of commodities (that is, money as the “universal equivalent”) develops out of barter. As David Graeber convincingly argues in Debt: The First 5,000 Years, the common sense notion of barter preceding money-based commodity exchange, of moreover serving as its seedbed and ground is, precisely, a myth, with no historical backing (and that, moreover, the mythological three periods of barter-money-credit is the exact reverse of the sequence in history itself: credit-money-barter–but this is a point for another post).

Marx’s likely reply to us, however, would be fully justified: “it is not I who measure the value of commodities by their socially necessary labor time, but capital itself!” Indeed, as his mind-bogglingly deep knowledge of economic theory at the time shows, this was very much the case, from Smith to Ricardo and beyond. Yet, for us, those for whom value is much more of a problem than it seemed to be for Marx (we could say that while it was a problem for him, it was one merely symptomatic of others)–let us only cite Nietzsche on this point, even if he was concerned with a very different type of value than Marx–we cannot accept this equivalence of value with socially necessary labor time. I suspect that this category–socially necessary labor time–exists mainly to be paired with the strange category of use-value (as Jameson points out in Representing Capital, a category that both shows up throughout Capital and yet in the beginning is explicitly excluded from its analysis, insofar as it and exchange-value are supposedly utterly separate) to, perhaps subconsciously, give an indication of how to organize a socialist economy (as the Leninists would codify it, “to each according to their contribution”). For us who disavow such a Leninist notion of “socialism” as a “transitional stage” as inherently contradictory (yet another subject for another post), this equivalence of value with labor-time is deeply problematic. Ironically, it is so problematic because of Marx’s analysis, because of the often unappreciated philosophical aspect of Part One of Capital I: the critique of the equivalence or identity at the heart of market exchange. (On this point, see, again, Fredric Jameson’s book Representing Capital.)

What, then, is value? At the risk of alienating the more old-school marxists in the crowd, I think we should, in fact, endorse a variant of the ‘postmodernist’ view, namely that value is a ‘social construct.’ We should be as precise as possible here: what I intend is an anti-metaphysical definition of value whereby any attempt to nail down what value ‘is’ in ‘reality’ (a trap Marx himself sometimes falls into) is doomed to failure; rather, value (like all ‘social constructs’) should be understood as a quasi-floating signifier, a human creation which has no independent existence [it is ‘insubstantial’] and thereby whose nature is intimately related[, if not equivalent,] to its social functioning (in Judith Butler’s terms, it is “performative”). In more Hegelian terms, by seeking to uncover the essence of value hidden behind its appearance (as exchange-value, [or moreover, as an earlier paragraph here might mislead one to attempt,] as price), we reveal only what we ourselves put behind the veil (in Marx’s case, the political economy he is engaged in critiquing; another way to come at it via Hegelian jargon is that ‘social constructs’ operate according to the logic of “positing the presuppositions”). As Marx himself seems to unconsciously recognize at times, in the dialectic of appearance and essence, essence is not hidden behind appearance, but rather can only be understood as “appearance qua appearance.” (He seems to recognize this on those occasions where he refers to “value” and could only mean exchange-value, i.e. [seems to recognize how] in a capitalist, market economy, exchange-value is value as such.) That is, to consider value (whether exchange- or use-) as something separate from, and moreover occluded by, price (an assumption which is necessary in order to believe that one could organize a ‘socialist’ economy based on defining use-value in terms of socially necessary labor-time) is to idealize value into a substance with its own existence, rather than understanding it as a function of capitalist economics in its historical development. Thus, on the one hand, while our view of value (as a ‘social construct’) is a ‘labor-based’ one (value is inseparable from the human activities by which it is created-defined, from the actions which posit it as their presupposition), on the other hand, the classical labor theory of value (even Marx’s unique version of it) is insufficient to understanding contemporary capitalist economies, because they themselves no longer operate according to it (again, because of the so-called marginalist revolution, among other things). As said, the section on commodities which opens Capital can be read as a philosophical critique, focusing on the key philosophical issue of market-based, for-profit economics: how is it than one can make a profit off of an exchange between equivalents? I want to close with two developments of this line of thought. First, abandoning the labor theory of value (that is, the equivalence of value and labor-time) does not invalidate Marx’s main answer to this question as far as the exploitation of workers goes, namely the distinction between labor and labor-power. This gap is one of the major sources of profits: a laborer does not, in fact, sell themselves, their own labor, to the capitalist who employs them; rather, what they sell is simply their capacity to labor, as for a worker to sell their labor itself would be nothing other than selling the very commodities they produce in the course of their working hours to their employer, a possibility foreclosed from the beginning (one of the essential parts of any labor contract is that the products of a worker’s work belongs to the capitalist both before and after they touch the worker’s hands; and obviously such a situation would make many service-labor jobs infeasible). However, we should also emphasize another gap of sorts from which profit is born; this gap is a result of what Marx terms “the legal fiction […] that each person, as a buyer, has an encyclopedic knowledge of commodities.” (p. 126, n. 5) In our world, the most familiar name for how a firm takes advantage of this fiction is simply and interestingly named marketing. A great contemporary example of how this gap can be put to use is Dr. Dre’s headphone company, Beats Electronics, well known for selling high-priced headphones that are simply not worth their cost (compared to, say, Bose), but which people are willing to pay because of their image (perhaps we could term this marginal spectacular-utility). That is to say, profit can only be the result of the exploitation of inequalities, whether that is the inequality in bargaining power between employer and employee, or the inequality in knowledge between buyer and seller (or the inequality imposed by the valuations of the spectacle), and moreover, it is because of these fluctuations, gaps, inequalities, than any endeavor to nail down value ‘in itself’ is a foolish endeavor, a misguided quest for certainty that can only end up with conceptual constructions at once psychologically satisfying and politically bankrupt.

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