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WHAT IS VALUE?
Let's get back to our game of Scrabble. Each letter is assigned a numerical value, and the point score is equal to the sum of the values of all the words that players spell out on the board.
In the photo above, we see three words that are central to Marx's value theory. From our panoptical vantage point we can also see the letters in the tile racks of three imaginary players. The players are not so lucky. According to the rules of Scrabble, they are not alowed to see what's in the tile racks of their opponents.
The rules of Scrabble are analogous to the laws of motion of capital. In both cases, we compete against our opponents with a limited amount of information. This is because critical information we need to make smart decisions about our next play is hidden in the tile racks of all those who are in the game.
In the game of capital, commodities are the tile racks and value is the information hidden within them.
In the opening pages of Capital, Volume 1, Marx sets out a number of foundational theories and concepts that will guide his analysis of capital. None figures more prominently than value, which takes material form in the commodity, "the economic cell-form" of capital.
The commodity internalizes all of capital's contradictory relations by virtue of its three-fold identity. It is a "use value" that satisfies some want, need or desire; an "exchange value" that can be bought and sold or traded for other commodities in the market; and a "value" which embodies the "socially necessary labor time" or average labor time required to produce it.
We now have a preliminary answer to the question posed above: value is the socially necessary labor time congealed in commodities. It is like the blood that circulates through our bodies, carrying oxygen and nutrients, and removing waste products. No blood, no body, no life; no value, no capital, no accumulation.
Value is a social relation specific to commodity production under capital. Not to put too fine a point on it, value is the class relation between workers who create value and capitalists who appropriate it. Prior to the advent of capital there had never had never been a mode of production organized around value.
Like all social relations, past and present, value is "immaterial but objective," as Harvey often says. What does this mean? While all of us have direct and daily encounters with commodities when we consume them as use values or buy and sell them as exchange values, the same cannot be said for commodities as objectifications of the socially necessary labor time that went into their production. Our encounters with commodities and the value contained therein are indirect, mediated, "fetishized," to use one of Marx's most evocative words.
It would be a mistake to think of the value of a commodity as a material property that can be measured using a scale or a ruler or an electron microscope or a beaker in an organic chemistry lab or a mathematical formula dreamed up by the latest Nobel Prize recipient in economics.
Yet while value is immaterial, capital as a totality cannot function without a material representation of it. This is where exchange value, money and price come in. The material representation of a commodity's value is price, which is the money name for exchange value. Price is not identical with value, nor value with price, and herein lay a tangled nest of contradictions which Marx will unpack in the three volumes of Capital.
Let's go to the movies for what I hope will be a useful analogy. In Christopher Nolan's Memento, the protagonist Leonard Shelby covers his body with tattoos to remind him of things he knows he will otherwise forget. Having lost the ability to form new memories as the result of a head injury suffered during the brutal rape of his wife, Shelby is trapped in an impossible dilemma: after a second or two he can no longer remember the meaning of the messages he has just inked onto his own chest, arms and legs. The tattoos have become empty signifiers. Or perhaps it would be more accurate to say they have become signifiers of a world that for Shelby has been reduced to surface appearances, untethered to time and place.
What does this have to do with labor, value and price? When we go shopping at the local supermarket, the price tags we see lining the shelves are like Shelby's tattoos. According to Marx's value theory, they are the material representations of countless acts of labor in which someone we will never know produced something for someone else we will never know. For shoppers the link between labor, value and price has been lost. We are amnesiacs pushing our carts down the aisles, reading the numbers that cry out for our attention but unable to grasp their true meaning.
Since the "marginalist revolution" of the late 19th century mainstream economists have been inclined to dismiss this conception of value as unreal if not completely unhinged. But before doing likewise, you might first want to consider how often in everyday life you accept without question the existence of immaterial forces which cannot be measured or directly perceived with the physical senses but which can be inferred from their objective and observable effects on the world.
You accept the existence of gravity, don't you? And heaven help you if you don't accept the existence of emotions like love, hate, sympathy and envy. Just as gravity is an immaterial force that has objective and observable effects on the natural world around us, so emotions are an immaterial force that have objective and observable effects on the interpersonal world around us.
Whether Marx's theory of value is useful or useless only you can decide. But the ultimate test should not be how well it explains price-setting in the market, which is what mainstream economists are paid top-dollar to obsess over, but how well it explains the fundamental social relations of capitalist production, which is what the poorly-paid Marx thought political economy should be about. As Harvey observes, Marx uses the concept of value to build "a theory of the processes by which capital rules over the conditions of life and labour of the working classes."
Central to Marx's conception of value is "labor power," or the capacity to labor. Capital is the only historical mode of production in which labor power is treated as a commodity. Take a moment to reflect on how strange this is: our capacity to labor, as distinct from our physical being as embodied laborers, is a commodity that can be bought and sold at market, like a pair of shoes, a share of Coca-Cola or a Pontiac LeMans (more on this in a moment).
In accordance with Marx's three-fold definition of a commodity, labor power possesses a use value, an exchange value and a value. The value of the commodity labor power is equal to the socially necessary labor time required to produce it—in other words, it is equal to the value of all the commodities workers must buy in order to live and reproduce themselves and their dependents as active or future workers.
Labor power is a unique commodity in one crucial respect: it is the only one that can produce value. What is more, it can produce value in excess of its own value. For capitalists labor power is the goose that lays golden eggs, a metaphor that Marx, who was deeply steeped in the literature of classical Greece, borrows from Aesop's Fables. (FYI: In addition to being a storyteller, Aesop was a workingman, which at that time and place meant he was a slave.)
Workers are desperate to sell their labor power, the only commodity they own, to the highest bidder. They would not be so desperate, or desperate at all, if they were independent artisans who owned their own tools and shops or self-sufficient peasants who had access to their own tools, draft animals and land. But they own neither the means of production nor the means of subsistence, having been systematically and violently stripped of both through a process which Marx calls "primitive accumulation" in reference to the historical transition from feudalism to capitalism, and which Harvey calls "accumulation by dispossession" in recognition of the ongoing nature of this form of class warfare.
The reality is that if workers wish to live, they must exchange their labor power for a wage. If they decide to go it alone, a few days or weeks on an empty stomach will bring them to their senses. This is what Marx has in mind when he writes about "the dull compulsion of economic relations" under capital.
Industrial capitalists buy labor power and means of production, and then put these two commodities to work in a production process from which will emerge new commodities whose value exceeds the value of the labor power, living and dead, expended in their production. According to capitalists and bourgeois economists, this arrangement rests on the foundation of a free and equal exchange between two property owners, the capitalist who owns money and the worker who owns labor power.
But for Marx this freedom and equality are a sham. What the capitalist and economist carefully conceal is that at a certain point during working day, long before Miller time, workers will have produced new value equal to the value of their labor power. Beyond this point workers produce "surplus value" which the capitalist sticks into his pocket, the coveted golden eggs that keep the system going.
According to Marx, surplus value is really unpaid labor time which the boss extracts from the worker in the "hidden abode of production." It is the historically-specific mechanism by which the dominant class appropriates the surplus product under the capitalist mode of production.
Surplus value is the source of capitalist profits, the fuel powering capital accumulation and the terrain on which anti-capitalist struggle is waged, not only at the point of production but in the spheres of realization, circulation and distribution as well.