Friday, May 27, 2005

Rosdolsky on Marx's 'use-value'

Karl Marx and the Problem of Use-Value in Political Economy.

Chapter 3 from The Making of Marx’s ‘Capital’
Pp.74-95. Pluto Press, London 1977.

[1. originally published in the Swiss Journal Kyklos, 1959]

Before proceeding to a presentation of the contents of the Rough Draft we want to raise a methodological question which has been very neglected in previous marxist literature, [2. We can name two works which constitute an exception: first, the work of the Russian economist I.I. Rubin on Marx’s Theory of Production and Consumption of 1930, which was unfortunately unavailable to the author; second (at least in part) Grossman’s last work on Marx, die klassische Nationalokonomie und das Problem der Dynamik, (mineographed) New York.] the answer to which, however, contributes fundamentally to our knowledge of the Rough Draft. The issue is that of the role of use-value in Marx’s economics.

I.

Among Marx’s numerous critical comments on Ricardo’s system the most striking can be found only in the Rough Draft, namely that Ricardo abstracts from use-value in his economics, [3. Grundrisse, Penguin, 1973 p.267] that he is only ‘exoterically concerned’ [4. ibid p.647] with this important category, and that consequently for him it ‘remains lying dead as a simple presupposition’. [5. ibid. p.320]

We should now examine this criticism more closely. Strangely enough, it concerns not only Ricardo, but also many of Marx’s pupils, as it has been a tradition among marxist economists to disregard use-value, and place it under the scope of ‘knowledge of merchandise’ (Warenkunde). For example, Hilferding in his reply to Bohm-Bawerk: ‘The commodity is the unity of two different aspects. As a natural thing it is the object of a natural science –as a social thing, it is an object of a social science, political economy.

The object of economics is the social aspect of the commodity, of the good, insofar as it is a symbol of social inter-connection. On the other hand the natrual aspect of the commodity, its use-value, lies outside the domain of political economy.’ [6. R. Hilferding, Bohm-Bawerk’s Criticism of Marx, Lifton NJ, Kelley, 1949, p.130]

At first glance this appears to be simply a paraphrase of the well-known section from Marx’s Contribution. However, how does this passage actually read in Marx?
‘To be a use-value is evidently a necessary prerequisite of the commodity, but it is immaterial to the use-value whether it is a commodity. Use-value as such, since it is independent of the determinate economic form, lies outside the sphere of investigation of political economy. It belongs to this sphere only when it is itself a determinate form.’ [7. Contribution, p.28]

It must be conceded that the original differs considerably from the copy,
[8. Bernstein notices this immediately and chafes Hilferding ih his discussion of the latter’s text (in Dokumenten des Sozialismus 1904 Heft 4, pp.154-570) on the subject of the discrepancy between his formulation of the question and Marx’s own. He writes, ‘Marx is not so daring as to throw use-value completely out of political economy’, and if Hilferding does this, ‘then he stumbles from his lofty position as an interpreter of Marx into depths far below those of the university professors whom he holds in such low regard’. However, these sarcastic remarks do not obscure the fact that Bernstein himself had no idea how to deal with the discrepancy, and was only able to solve it through a convergence of Marx’s theory with the economists of the ‘psychological school’.
Hilferding’s reply turned out to be very weak. ‘Use-value can only be designated a social category when it is the conscious aim of society, when it has become an object of its conscious social action. It becomes this in a socialist society, whose conscious management sets as its aim the preodcuction of use-values; however, this is in no way the case in capitalist society . . . However, although use-value can be designated as a social category in a socialist society it is not an economic category, not an object of theoretical economic analysis, since a consciously directed relation of production does require this analysis.’ (Neue Zeit No 4, 1904, pp.110-11)]
and that Hilferding’s arbitrary reproduction of these sentences is tantamount to clumsy distortion of Marx’s real view.

Or, we can take a more recent marxist author, P.M. Sweezy. In his work the Theory of Capitalist Development, which is intended to popularise Marx’s economics, we read: ‘Marx excluded use-value (or as it would now be called, ‘utility’) from the field of investigation of political economy on the ground that it does not directly embody a social relation. He enforces a strict requirement that the categories of economics must be social categories, i.e. categories which represent relations between people. It is important to realise that this is in sharp contrast to the attitude of modern economic theory . . .’ [9. op.cit. p.26]

Sweezy’s presentation does not differ substantially from that normally found in popularisations of marxist economics. [10. The Philospher Marcuse goes to the other extreme when he writes, ‘when Marx declares that use-value lies outside the scope of economic theory, he is at first describing the actual state of affairs in classical political economy. His own analysis begins by accepting and explaining the fact, that, in capitalism, use-values appear only as the “material bearers of exchange-value” (Capital 1, p.126 (36)). His critique then refutes the capitalist treatment of use-values and sets its goals on an economy in which this relation is entirely abolished.’ (Reason and Revolution, p.304).

The arbitraryness of this interpretation is immediately obvious. In the first place the passage quoted from the Contribution is not conerned exclusively with classical political economy, but with political economy in general. Secondly, Marx nowhere states that use-values are only ‘material depositories of exchange-value’, but rather that they are so ‘at the same time’, which is quite another question. Finally, Marx never set himself the task of combating the capitalist treatment of use-values, but rather of scientifically explaining the fact, peculiar to capitalism (and to commodity production in general), that for use-values to be able to satisfy human needs, they must first prove themselves as exchange-values.]

However, in his case the mistake is even less forgivable, as not only did he have access to the Theories of Surplus-Value, but also the Marginal Notes on A. Wagner, [11. Marx’s last economic work, printed in MEW Vol. 19, pp.335-89. An English translation was published in Theoretical Practice, Issue 5, spring, 1971.] where Marx discusses the role of use-value in his economic theory in great detail.

He says there on Wagner, ‘Only a vir obscurus, who has not understood a word of Capital could conclude: Because Marx dismisses all the German professional twaddle on “use-value” in general in a footnote on “use-value” in the first edition of Capital and refers the reader who would like to know something about real use-value to “manuals dealing with merchandise’” [12. See Contribution, p.28] therefore use-value plays no role for him . . . If one is concerned with analysing the “Commodity”, the simplest concrete economic entity, all relations which have nothing to do with the object of analysis must be kept at a distance. However, what there is to say about the commodity, as far as use-value is concerned, I have said in a few lines; but, on the other hand, I have called attention to the characteristic form in which use-value –the product of labour – [13. this should read, ‘insofar as it is the product of labour’.] appears in this respect; namely, “A thing can be useful and the product of human labour, without being a commodity. Whoever directly satisfied his own needs with the product of his own labour creates, indeed, use-values, but not commodities. In order to produce the latter, he must not only produce use-values, but use-values for others, social use-values . . .” [14. Quoted from Capital I. p.131 (40).]

Hence use-value itself – as the use-value of a “commodity” – possesses a historically specific character . . .It would therefore be sheer wordspinning to use the opportunity provided by the analysis of the commodity – because it presents itself as, on the one hand a use-value or good, and on the other a “value” – to add on all kinds of banal reflections about use-values or goods which do not form part of the world of commodities [in the way that standard university economics does.] . . .

On the other hand the vir obscurus has overlooked the fact that I do not stop short in my analysis of the commodity at the double manner in which it present itself, but immediately go on to say that in the double being of the commodity there is represented the twofold character of labour, whose product the commodity is useful labour, i.e. the concrete modes of labour which create use-values, and abstract labour, labour as the expenditure of labour-power, irrespective of whatever “useful” was it is expended (on which my later representation of the production process is based); that in the development of the value-form of the commodity, in the last instance of its money-form and hence of money, the value of the commodity is represented in the use-value of the other, i.e. in the natural form of the the other commodity; that surplus-value itself is derived from a “specific” and exclusive use-value of labour-power, etc. etc. That is, use-value plays a far more important part in my economics, than in economics hitherto, [15. Marx refers here, of course, to the economics of Smith and Ricardo.] but N.B. that it is only ever taken into account when this arises from the analysis of given economic forms, and not out of arguing backwards and forwards about the concepts of words “use-value” and “value”. [16. MEW Vol. 19, p.371]

This then is Marx’s view. It is clear from this that the traditional marxist interpretation of Hilferding, Sweezy et al. Cannot possibly be correct, and that in this instance the authors mentioned above –without knowing it – do not follow their teacher, Marx, but rather Ricardo, the man he criticises.

II.

However, what is the basis of Marx’s critique, and how should we actually interpret the objections to Ricardo which are mentioned at the beginning? To answer this we have to go back to the basic methodological assumptions of the marxist system.

We know that, in contrast to the Classical school, Marx’s entire theoretical effort was directed at uncovering the ‘particular laws which govern the emergence, existence, development and death of a given social order, and its replacement by another higher one’. [17. J.J. Kaufman’s description of Marx’s method of investigation –quoted by Marx in the Afterword to the Second Edition of Volume I of Capital, p.102 (19)]

He thus regarded the capitalist mode of production as ‘merely a historical mode of production, corresponding to a certain limited epoch in the development of the material conditons of production’, [18. Capital, III, p.259.] and the categories of bourgeois economics as ‘forms of thought expressing with social validity the conditions and relations of a definite, historically determined mode of production’. [19. Capital, I, p.169 (76).]

But how can a theory arrive at a knowledge of such particular laws, which have only a historical claim to validity? And how can these laws be brought into consonance with the general economic determinants which apply to all social epochs since ‘all epochs of production have certain features in common’, a fact which ‘arises already from the identity of the subject, humanity, with the object, nature’.
[20. Grundrisse, p.85. Hence, ‘no society can go on producing, in other words, no society can reproduce, unless it constantly reconverts a part of its products into means of production, or elements of fresh products’. (Capital I p.711 (566). For this purpose, therefore it must maintain a certain production between the growth of the industries producting the means of production, and those producing the means of consumption (Departments I and II in Marx’s schemes of reproduction), accumulate reserves etc. On the other hand, in any society, a certain quantity of surplus labour has to be carried out by the members of that society in order that it may have ‘at its disposal, so to speak, a fund for development, which the very increase in population makes necessary’ (Theories I, p.102), ‘If we strip both wages and surplus-value, both necessary and surplus labour, of their specifically capitalist character, then certainly there remain not these forms, but merely their rudiments, which are common to all social modes of production,’ (Capital III, p.876). And finally, ‘No society can prevent the disposable labour-time of society one way or another from regulating production.’ (MEW Vol 32, p.120. And consequently this material basis of the determination of value will also have considerable significance under socialism. (Cf. Capital III, p.851.)]

Consequently, nothing is easier that ‘to confound or extinguish all historical differences under the general human laws’, by picking out these common characteristics. [21. Grundrisse, p.87.]

For example, ‘even though the most developed languages have laws and characteristics in common with the least developed, nevertheless, those things which determine their development’ must express ‘the distinction between what they have in general and what they have in common’. Similarly the task of political economy is, above all, the investigation of the laws of development of the capitalist period, which it studies ‘so that in their unity’ (the unity between this period with earlier ones through the features which they have in common), ‘the essential difference is not forgotten’. [22. ibid. p.85.]

But what constitutes development in the sphere of the economy? It is precisely that process in which it expresses its specific social character! ‘To the extent that the labour-process is solely a process between man and nature, its simple elements remain common to all forms of social development. However, each definite historical form of this process marks a further development in its material basis and social forms.’ [23. Capital III, p.883.]

Here it is the social forms which are the decisive factor – as distinct from their naturally given ‘content’. They alone represent the active, forward-moving element, [24. Cf. Hegel’s Science of Logic, Volume II, p. 79. ‘Matter is determined as indifferent: it is the passive as against the active . . . Matter must be formed and Form must materialise itself – must in Matter give itself self-identity and persistence.’] for ‘natural laws cannot be abolished at all. What can change in historically different circumstances is only the form in which these laws assert themselves.’ [25. ‘Marx’s letter to Krugelmann’, 11 July 1868. Selected Correspondence, p.196.]

We cannot go any more closely here into the fundamental marxian distinction between ‘Form’ and ‘Content’ in economics. (The influence of Hegel’s Logic is easily discernible here. [26. The Russian political economist I.I. Rubin wrote in another context: ‘One cannot forget that, on the question of the relation between content and form, Marx took the standpoint of Hegel and not of Kant. Kant treated form as something external in relation to the content, and as something which adhere to the content from the outside. From the standpoint of Hegel’s philosophy, the content is not in itself something to which form adheres from the outside. Rather, through its development, the content itself gives birth to the form which was already latent in the content. Form necessarily grows from the content itself.’ (Essays on Marx’s Theory of Value, Detroit: Black and Red 1972, p.117.)])

One fact though is certain: for Marx it is the economic forms which serve to distinguish the particular modes of production, and in which the social relations of economic individuals are expressed. For example, as he says when criticising Rossi : ‘the “forms of exchange” seem [to Rossi] to be a matter of complete indifference. This is just as if a physiologist were to say that the different forms of life are a matter of complete indifference, since they are all only forms of organic matter. It is precisely specific character of a mode of social production. A coat is a coat. But have it made in the first form of exchange, (a: the form in which the tailor produces the coat for sale ready-made.) and you have capitalist production and modern bourgeois society; in the second, (b: the form in which the tailor is provided with the material and a wage by the person who wants the coat.) and you have a form of handicraft which is even compatible with Asiatic relations of those of the Middle Ages etc.’ [27. Marx’s comments here refer to the following sentence from Rossi: ‘Whether one buys ready-made clothes from a tailor, or whether one gets them from a jobbing-tailor who had been given the material and a wage, as far as the results are concerned the two actions are perfectly similar.’ (Theories I, p.295.)]

For, ‘in the first case the jobbing tailor produces not only a coat, he produces capital; therefore also profit; he produces his master as a capitalist and himself as a wage-labourer. When I have a coat made for me at home by a jobbing tailor, for me to wear, that no more makes me my own entrpreneur (in a sense of an economic category) than it makes the entrepreneur tailor an entrepreneur when he himself wears and consumes a coat made by his workmen.’[28. Theories I, pp.295-96.]

And in another passage: ‘The agricultural labourers in England and Holland who receive wages which are “advanced” by capital “produce their wages themselves” just like the French peasant or the self-sustaining Russian serf. If the production process is considered in its continuity, there the capitalist advances the worker as “wages” today only a part of the product which he produced yesterday. Thus the difference does not lie in the fact that, in one case, the worker produces his own wage, and does not produce them in the other . . . The whole difference lies in the change of form, which the labour fund produced by the worker undergoes, before it returns to him in the form of wages . . .’ [29. Theories III, p.424. (Cf. Grundrisse, p.87.)]

Hence it is the specific social forms of production and distribution which, in Marx’s view, constitute the real object of economic analysis; and it is just this ‘lack of the theoretical understanding needed to distinguish the different form of economic relations’ combined ‘with a crude obsession with the material’ which characterises previous economics, even in its best representatives. [30. Theories I, p.92 and Capital I, p.682 (542); Capital III, p.323.]

Only R. Jones and Sismondi are exempt from this criticism.
[31. ‘What distinguishes Jones from the other economists (except perhaps Sismondi) is that he emphasises that the essential feature of capital is its socially determined form, and that he reduces the whole difference between the capitalist and other modes of production to this distinct form.’ (Theories III, p.424.)]

With this we come to the end of our methodological excursus. Meanwhile the reader will have noticed that we have simultaneously answered – in very general terms – the question of the role of use-value in Marx’s economics. How did that passage run which we quoted at the beginning, from Marx’s Contribution? In its ‘independence from the determinate economic form’ use-value ‘lies outside the sphere of investigation of political economy. It belongs in this sphere only when it is a determinate form itself.’

In other words, whether use-value should be granted economic significance or not can only be decided in accordance with its relation to the social relations of production. It is certainly an economic category to the extent that it influences these relations, or is itself influenced by them. However, apart from that – in its raw ‘natural’ characteristics – it falls outside the scope of political economy. Or, as it says in the Grundrisse : ‘Political economy has to do with the specific social forms of wealth or rather the production of wealth. The material of wealth, whether subjective, like labour, or objective, like objects for the satisfaction of natural or historical needs, initially appears as common to all epochs of production.

This material therefore appears initially as mere presupposition, lying quite outside the scope of political economy, and falls within its purview only when it is modified by the formal relations or appears as modifying them.’
[32. Grundrisse, p 852. Cf. The parallel section on p.881. ‘The first category in which bourgeois wealth presents itself is that of the commodity. The commodity itself appears as the unity of two aspects. It is use-value, i.e. object of the satisfaction of any system whatever of human needs. This is its material side, which the most disparate epochs of production may have in common, and whose examination therefore lies beyond political economy. Use-value falls within the realm of political economy as soon as it becomes modified by the modern relations of production, or as it in turn intervenes to modify them.’]

III.

Regarded in this way, the question of the difference between Marx and Ricardo on the role of use-value in economics no longer presents any difficulties. It cannot be related to their basic theories of value since both subscribed to the labour theory of value. From the standpoint of the labour theory of value the utility or use-value of the products of labour cannot be granted any influence in the creation of value; their use-value must rather appear as a simple presupposition of their exchangeability. However, it in no way follows from this that use-value has no economic significance at all, and that it should simply be excluded from the sphere of economics.

In Marx’s view this is only correct in the case of simple commodity circulation (the exchange form C-M-C). Simple circulation ‘consists at bottom [33. In original, ‘au fond’.] only of the formal process of positing exchange-value, sometimes in the role of the commodity, at other times in the role of money’. [34. Grundrisse, p.256.]

How exactly the commodities to be exchanged were produced (i.e. whether they originated in a capitalist or pre-capitalist economy), and how they will be consumed after exchange is incidental to the economic study of simple commodity circulation. The protagonists here are simply buyers and sellers, or rather the commodities put up for sale by them, which establish their social connection on their behalf. The real aim of exchange –the mutual satisfaction of the needs of the commodity producers – can only be fulfilled if the commodities simultaneously prove themselves to be values, if they are successfully exchanged for the ‘universal commodity’, money. Consequently the social change of matter takes place in the change of form of the commodities themselves.

And in this situation the change of form is the only social relationship between the commodity owners – ‘the indicator of their social function, or their social relation to each other’. [35. ibid. p.241.] However, as far as the content outside the act of exchange is concerned, this ‘content can only be . . . 1) the natural particularity of the commodity being exchanged 2) the particular natural need of the exchangers of both together, the different use-values of commodities being exchanged’. [36. ibid. p.242.] However the content as such does not determine the character of the exchange relation. In fact, use-value simply constitutes ‘the material basis in which a specific economic relation presents itself’ and ‘it is only this specific relation which stamps the use-value as a commodity . . . Not only does the exchange-value not appear as determined by use-value, but rather, furthermore, the commodity only becomes a commodity, insofar as its owner does not relate to it as use-value.’ [37. ibid. p.881.] Hence in this situation, where exchange ‘takes place only for the reciprocal use of the commodity, the use-value . . . the natural peculiarity of the commodity as such, has no standing as an economic form’, - is not ‘a content of the relation as a social relation’. [38. ibid. p.267.] Consequently only the change of form of the commodity and money has economic significance, and the presentation of simple commodity exchange has to be confined to this change of form alone. [39. ‘If we want to examine the social relation of individuals within their economic process, we must keep to the characteristic form of this process itself.’ (Grundrisse, German edn. P.914.)]

However, although this is correct for simple commodity exchange, nothing would be more erroneous, states Marx, than to conclude ‘that the distinction between use-value and exchange-value, which falls outside the characteristic economic form in simple circulation, . . . falls outside it in general . . . For example, Ricardo, who believes that the bourgeois economy deals only with exchange-value, and is concerned with use-value merely exoterically, derives the most important determinations of exchange-value precisely from use-value, from the relation between the two of them: for instance, ground-rent, the minimum level of wages, and the distinction between fixed and circulating capital, to which he imputes precisely the most significant influence on the determination of prices; likewise in the relation of demand to supply etc.’ [40. Grundrisse, pp.646-47.]

Ricardo was indeed right to say that ‘exchange-value is the predominant aspect. But of course use does not come to a halt because it is determined only by exchange; although of course it obtains its direction thereby’. [41. ibid. p.267.] ‘To use is to consume, whether for production or consumption. Exchange is the mediation of this act through a social process. Use can be posited’ through exchange and be a mere consequence of exchange; then again exchange can appear merely as a moment of use, etc. From the standpoint of capital (in circulation), exchange appears as the positing of use-value, while on theother hand its use (in the act of production) appears as positing for exchange, as positing for exchange-value. Similarly with production and consumption. In the bourgeois economy (as in any) they are posited in specific distinctions and specific unities. The point is to understand these specific distinguishing characteristics . . . and not, as Ricardo does, to completely abstract from them, or like the dull Say, to make a pompous fuss about nothing more than the presupposition of the word “utility”.’ For ‘Use-value itself plays a role as an economic category. Where it plays this role . . . the degree to which use-value exists outside economics and its determinate form and not merely as presupposed matter . . . is something which emerges from the development itself.’ [42. ibid. pp.646, 267.]


IV.

So when, according to Marx, does use-value as such become modified by the formal relations of bourgeois economy, and when, in its turn, does it intervene to modify these formal relations – that is, as a ‘determinate economic form’ itself?

In the Marginal Notes on A. Wagner, which have already been cited, Marx points out that even in simple commodity circulation, with the development of the money-form of the commodity, the value of a commodity must be represented in ‘use-value, i.e. in the natural form of the other commodity’. In Marx’ view this does not only mean that money must be a commodity as a matter of course, i.e. possess use-value in its material, but also, that this use-value is connected to quite specific physical properties of the money-commodity which make it capable of fulfilling its function. We read in the Rough Draft : ‘The study of the precious metals as subjects of the money relation as incarnations of the latter, is therefore by no means a matter lying outside the realm of political economy, as Proudhon believes, any more than the physical composition of paint, and of marble lie outside the realm of painting and sculpture. The attributes possessed by the commodity as exchange-value, attributes for which its natural qualities are not adequate, express the demands made upon those commodities which are the material of money par excellence. These demands at the level at which we have confined ourselves up to now [i.e. the level of pure circulation of metals] are most completely satisfied by the precious metals.’ [43. ibid. p.174.]

The commodities which fulfill the function of the universal equivalent, can double their use-value precisely because of their specific attributes, which make them the only material for money. They contain ‘besides their particular use-value as a particular commodity’, a ‘universal’ or ‘formal’ use-value. [44. ‘The formal use-value [of money] unrelated to any real individual need,.’ (Contribution, p.89)]

This latter use-value is itself a characteristic form, i.e. it arises from the specific role, which it [the money-commodity] plays as a result of the all-sided action exerted on it by the other commodities in the process of exchange.’ [45. Contribution, p.47.] With this, the ‘material change and the change of form coincide, since in money the content itself is part of the characteristic economic form.’ [46. Grundrisse, p.667.]

The second example which Marx refers to in the Marginal Notes is of decisive importance – the exchange between capital and labour. If we look, for example, at simple commodity circulation, as it occurs ‘on the surface of the bourgeois world’, in retail trade, ‘a worker who buys a loaf of bread, and a millionaire who buys the same thing, seem, in this act, to be simply buyers, as the grocer who confronts them is simply a seller. The content of these purchases, like their extent, here appears as completely irrelevant compared with the formal aspect.’ [47. ibid. p.251]

However the matter looks quite different if we proceed from this exchange on the surface, to the exchange which determines the essence of the capitalist mode of production – that between capital and labour. For, if in simple circulation, ‘commodity A is exchanged for money B, and the latter then for the commodity C, which is destined for consumption – the original object of the exchange for A – then the use of commodity C, its consumption, falls entirely outside circulation; is irrelevant to the form of the relation . . . is of purely physical interest, expressing no more than the relation of the individual in his natural quality ot an object of his individual need.
What he does with commodity C is a question which belongs outside the economic relation,’ [48. ibid. p.274.]

In contrast to this, in the exchange between capital and labour, it is precisely the use-value of the commodity purchased by the capitalist (i.e. labour-power) which constitutes the presupposition of the capitalist production process and the capital relation itself. In this transaction the capitalist exchanges a commodity whose consumption ‘coincides directly with the objectification (Vergegenstandlichung) of labour i.e. with the positing of exchange-value’. [49. Grundrisse, German ed. P.944.] Consequently, if ‘the content of use-value was irrelevant in simple circulation’ here, by contrast, ‘the use-value of that which is exchanged for money appears as a particular economic relation . . . falls within the economic process because the use-value here is itself determined by the exchange-value’. [50. Grundrisse, pp.274-75, 311.]

Hence if the creation of surplus-value, as the incvrease in the exchange-value of capital, is derived from the specific use-value of the commodity labour-power, then political economy must in turn restrict the share of the value-product acccruing to the worker to the equivalent of the goods necessary to maintain him, and consequently must allow this share to be determined at bottom by means of use-value. [51. ‘Ricardo regards the product of labour in respect of the worker only as use-value – only the part of the product which he needs to be able to live as a worker. But how it comes about that the worker suddenly only represent use-value in the exchange, or only draws use-value from the exchange is by no means clear to him.’ (ibid. p.551)] In this instance, too, the category of use-value has an impact on the economic relations of the capitalist mode of production.

We can confirm now use-value constantly influences the forms of economic relations in the circulation process of capital. We disregard here the many ways in which the material nature of the product affects the duration of the working period and the circulation period, [52.Cf. especially Chapters V, XII, and XIII of Capital II.] and proceed directly to the distinction which is basic to the circulation process –that between fixed and circulating capital, which Marx refers to in his polemic against Ricardo, which we have already cited.

As far as fixed capital is concerned, it only circulates ‘as value to the degree that it is used up or consumed as use-value in the production process. But the time in which it is consumed and in which it must be repreoduced in its form as use-value depends on its relative durability. Hences its durability, or its greate or lesser perishability –the greater or smaller amount of time during which it can continue to perform its function within the repeated production processes of capital – this aspect of its use-value here becomes a form-determining moment i.e. a determinant for capital as regards its form, not as regards its substance. The necessary reproduction of fixed capital, together with the proportion of the total capital consisting of it, here modify, therefore, the turnover time of the total capital and thereby its valorisation.’ [53. Grundrisse, p.685. Cf. Capital II, pp.170-71.]

Thus, in the categories of fixed and circulation capital, ‘the distinction between the [three] elements [of the labour process] as use-values . . . appears as a qualitative distinction within capital itself, and as the determinant of the complete movement (turnover).’ [54. Grundrisse, p.692.] This therefore represents yet another instance where use-value enters into the process of capital as an economic factor.[55. In this regard we should refer to the instruments of labour which, ‘as capital united with the land’, function in the form of factory buildings, railways, bridges, tunnels, docks etc. The fact that such instruments of labour are ‘localised, attached to the soil by their roots, assigns to this portion of fixed capital a peculiar role in the economy of nations. They cannot be sent abroad, cannot circulate as commodities in the world market. Title to this fixed capital may change, it may be bought and sold, and to this extent may circulate ideally. These titles of ownership may even circulate in foreign markets, for instance, in the form of stocks. But a change of the persons owning this class of fixed capital does not alter the relation of the immovable, materially fixed part of the national wealth to its movable part.’ (Capital II, p.166.)]

However, the role of use-value is seen most clearly in the reproduction process of aggregate social capital, as it is presented in Part III of Volume II of Capital. At the beginning of this section Marx points out that as long as the analysis was simply one of the reproduction process of an individual capital (i.e. as in Volume I), ‘the natural form of the commodity-product was completely irrelevant to the analysis . . . whether it consisted of machines, corn or mirrors’. In Volume I it was simply ‘presupposed on the one hand that the capitalist sells the product at its value, and on the other that he finds within the sphere of circulation the objective means of production for restarting the process’. For, ‘the only act within the sphere of circulation on which we have dwelt was the purchase and sale of labour-power as the fundamental condition of capitalist production’. [56. ibid. pp.356-57.] However, ‘This merely formal [57. i.e. bearing in mind the form of the process.] manner of presentation is no longer adequate in the study of an aggregate social capital’, in the reproduction of which the problem is not merely the replacement of value, but also the replacement of material, and consequently everything depends on the material shape, on the use-value of the value-product. [58. Capital II, p.398. The well-known schemes of reproduction of Tugan-Baranovsky and Otto Bauer suffer precisely from not having observed this methodological postulate.]

The same point is made in the Theories, the difference being that Marx expressly refers to the significance of use-value as an economic category: ‘In considering surplus-value as such, the original form of the product, hence of the surplus-product, is of no consequence. It becomes important when we consider the actual process of reproduction, partly in order to understand its forms, and partly in order to grasp the influence of luxury production etc. on reproduction.’ [59. Capital II, p.407.] ‘Here’, Marx stresses, ‘is another example of how use-value as such acquires economic significance.’ [60. Theories III, pp.251-52. In another passage in the same work Marx examines the question as to whether ‘a part of the surplus-value can be directly transformed into constant capital . . . without first having been alienated’. He writes: ‘In industrial areas there are machine-builders who build whole factories for the manufacturers. Let us assume one-tenth is surplus-product, unpaid labour, whether this tenth, the surplus-product, consists of factory buildings which are build for a third party and are sold to them, or of factory buildings which the producer builds for himself – sells to himself – clearly makes no difference. The only thing that matters here is whether the kind of use-value in which the surplus labour is expressed can re-enter as means of production into the sphere of production of the capitalist to whom the surplus belongs. This is yet another example of how important is the analysis of use-value for the determination of economic phenomena.’ (Theories II, pp.488-89.)]

We now proceed to those subjects dealt with in Volume III of Capital. We can find numerous examples here of the significance of use-value as an economic category. This is obvious in the case of ground-rent, which Marx (like Ricardo) derives ultimately ‘from the relation of exchange-value to use-value. The importance of use-value is shown in relation to the rate of profit, insofar as this is dependent on fluctuations in the value of raw materials. For, ‘it is especially agricultural produce proper, i.e. raw materials taken from organic nature, which . . . is subject to fluctuations of value in consequence of changing yields etc. Owing to uncontrollable natural conditions, favourable or unfavourable seasons etc. the same quantity of labour may be represented in very different quantities of use-values, and a definite quantity of these use-values may therefore have very different prices’. [61. Capital III, pp.117-18.]

Such variations in price, ‘always affect the rate of profit, even if they loeave the wage untouched and hence the rate and amount of surplus-value too’. [62. ibid. p.115. Another example is provided by the uneven development of the different spheres of production in the capitalist economy. We read in Volume III, ‘The fact that the development of productivity in different lines of industry proceeds at substantially different rates and frequently even in opposite directions, is not due merely to the anarchy of competition and the peculiarities of the bourgeois mode of production. Productivity of Labour is also bound up with natural conditions, which frequently become less productive as productivity grows – inasmuch as the latter depends on social conditions. Hence the opposite movements in these different spheres – progress here, retrogression there. Consider only the influence of the seasons, for instance, which determines the available quantity of the bulk of raw materials, the exhaustion of forest lands, coal and iron mines etc.’ (ibid. p.260.)]

We should also devote special attention to the influence of use-value on the accumulation of capital.

Grossman writes : ‘In Marxist literature up till now stress has been laid merely on the fact that the mass of the value of the constant capital grows both absolutely, and in relation to the variable capital in the course of capitalist production and the accumulation of capital, with the increase in the productivity of labour, and the transition to a higher organic composition of capital. However this phenomenon only constitutes one side of the process of accumulation, in that it is regarded from the aspect of value. In fact, it cannot be repeated too often that the reproduction process is not merely a process of valorisation but also a labour process – it produces not merely values, but also use-values’. And, ‘looked at from the aspect of use-value, the increase in productive capacity does not only operate in the direction of the devaluation of existing capital, but also in the direction of a quantitative increase in the objects of use.’ [63. Grossman, Das Akkumulations-un Zusammenbruchsgesetz des kapitalistischen Systems, pp.326-28.] The effect that this has on the accumlation of capital can be read in Volume III of Capital. [64. Cf. In addition Capital I, pp.752-53. (604-05)]

It states there : ‘The increase in productive power can only directly increase the value of the existing capital, if by raising the rate of profit it increases that portion of the value of the annual product which is reconverted into capital . . . Indirectly however, the development of the productivity of labour contributes to the increase of the value of existing capital by increasing the mass and variety of use-values [65. ‘If one has more elements of production (even of the same value) the technical level of production can be expanded; then, at the same mass of value of capital more workers can be employed in the production process, who, will therefore produce more value in the next cycle of production.’ (Grossman, op. cit. P.330.)] in which the same exchange-value is represented and which form the material substance i.e. the material elements of capital, the material objects making up the constant capital directly and the variable capital at least indirectly. More products which may be converted into capital, whatever their exchange-value, are created with the same capital and the same labour, hence also additional surplus labour and therefore create additional capital.’ For ‘the amount of labour which a capital can command does not depend on its value, but on the mass of raw and auxiliary materials, machinery and elements of fixed capital and necessities of life, all of which it comprises whatever their value may be. As the mass of labour employed and that of surplus labour increases, there is also a growth in the value of the reproduced capital and in the surplus-value newly added to it.’ [66. Capital III. P.248.]

V.

The problem of supply and demand is dealt with in particular detail in Volume III of Capital. This problem is closely related to that of the much discussed question of socially necessary labour-time, which has already bgeen broached in Chapter 2 above. [67. Cf. p.51.]

Right at the beginning of Volume I we read, ‘Socially necessary labour-time is the labour-time required to produce any use-value under the conditions of production mormal for a given society and with the average degree of skill and intensity prevalent in that society.’ And, that ‘which determines the magnitude of the value of any article is therefore the amount of labour socially necessary or the labour-time socially necessary for its production.’ [68. Capital I, p.129 (39).]

We encounter this ‘technological’ meaning of the concept of socially necssary labour-time again and again in Capital, and in other of Marx’s works. However, we also encounter another meaning, according to which labour can only count as ‘socially necessary’ if it corresponds to the aggregate requirements of society for a particular use-value.

In Volume I of Capital we read, ‘Let us suppose that every piece of linen in the market contains nothing but socially necessary labour-time. In spite of all this all these pieces taken as a whole may contain superfluously expended labour-time. If the market cannot stomach the whole quantity at the normal price of 2 shillings a yard this proves that too great a portion of the total social labour-time has been expended in the form of weaving. The effect is the same as if each individual weaver had expended more labour-time upon his particular product than was socially necessary. As the German proverb has it : caught together, hanged together. All of the linen on the market counts as one single article of commerce, and each piece of linen is only an aliquot part of it. And in fact the value of each single yard is also nothing but the materialisation of the same socially determined quantity of homogeneous human labour.’ [69. ibid. p.202 (107).]

Marx expresses the same idea in numerous other passages. And Engels even combined both meanings in one definition when he stated in the course of an attack on Rodbertus, ‘If he had investigated by what means and how labour creates value and therefore also determines and measures it, he would have arrived at socially necessary labour, necessary for the single product, both in relation to other products of the same kind, and also in relation to society’s total demand.’ [70. Engel’s Preface to Marx’s Poverty of Philosophy, p.20.]

The amalgamation of these two meanings of ‘socially necessary labour’ has been seen as an intolerable contradiction by numerous writers. [71. See the review of the relevant literature in the instructive study by T.Grigorovici. Die Wertlehre bei Marx and Lassalle. Beitrag zur Geschichte eines wissenschaftlichen Misverstandnisses 1908. Cf., also Diehl’s Sozialwissenshaftliche Erlauterungen zu D. Ricardo Grundgesetzen, I, 1905, pp.125-28.]
In reality the contradiction is only apparent; it is in fact a question of different levels of analysis, which require operating with two different, but mutually complementary concepts.

Volume III of Capital states on this : ‘To say that a commodity has a use-value is merely to say that is satisfied some social need. So long as we dealt with individual commodities only,k we could assume that there was a need for a particular commodity – its quantity already implied by its price – without inquiring further into the amount of the need which has to be satisfied. This quantity is, however, of essential importance, as soon as the product of an entire branch of production is placed on one side, and the social need for it on the other. It then becomes necessary to consider the extend i.e. the amount of this social need.’ [72. Capital III, p.185. The same line of thought can also be found in the Rough Draft pp.404-05.]

In other words : The analysis so far has proceeded from a series of simplifying assumptions. First it was assumed that commodities are exchanged at their values, and second, that they always find a buyer. Only in this way was it possible to outline the production and circulation process of capital in pure form, without the influence of distrubing ‘accompanying circumstances’. Now is the time, however, to bring into the economic analysis the moment of supply and demand which has so far been neglected, but which must at last be given its due.

As far as supply is concerned, this mean, in the first instance, that instead of one individual commodity (or the amount of commodities produced by a single capitalist), we now have to posit the aggregate product of an entire branch of production. For the individual commodity the determination of socially necessary labour-time proceeeds from the fact that ‘the individual value of the commodity (and what amounts to the same under the present assumption, its selling price) should coincide with its social value’. [73. Capital III, p.182.] However, the matter is quite different when it is a question of the aggregate product of a branch of production. Here the requirement of socially necessary labour-time can only apply for the entire mass of commodities; and so consequently the individual value of commodities has to be distinguished from their social value. Social value assumes the form of market value, which represents the average value of the sum of commodities, from which, consequently, the individual values of some commodities must always diverge : they must either stand above or below the stated market value.

This is because we can generally distinguish three categories of producers in each branch of production : producers who produce under above-average, average and below-average conditions. ‘Which of the categories has a decisive effect on the average value, will in particular depend on the numerical ratio or the proportional size of the categories.’ [74. Theories II, p.204.] As a rule this will be the average category. In this case that part of the total amount of commodities produced under the poorer conditions will have to be sold off below their individual value, whereas the commodities produced under the above average can secure an extra amount of profit. However, it may be the case that either the class producing under the better conditions, or that under the worse conditions will predominate. In the first instance the commodities produced under the better conditions will determine the market value; in the second instance, those produced under the poorer conditions.

The determination of market value appears in this way if we look exclusively at the mass of commodities thrown on to the market, ignoring the possibility of an imbalance between supply and demand. Hence, ‘provided that the demand is large enough . . . to absorb the whole mass of the commodities at the values which have been fixed [by competition among the buyers] . . . the commodity will still be sold at its market value, no matter which of the three above-mentioned cases regulate the market value. The mass of commodities not only satisfied a need but satisfies it to its full social extent. [75. Capital III, p.185.]

However, we know that in the capitalist mode of production, ‘there exists an accidental rather than a necessary connection between the total amount of social labour applied to a social article . . . on the one hand, and the extent of the demands made by the society for the satisfaction of the need gratified by the article in question, on the other. Every individual article, or every definite quantity of a commodity may, indeed, contain no more than the social labour required for its production, and from this point of view the market value of this entire commodity represents only necessary labour, but it this commodity has been produced in excess of the existing social needs, then so much of the social labour-time is squandered and the mass of the commodity come to represent a much smaller quantity of social labour in the market than is actually incorporated in it . . . the reverse applies if the quantity of social labour employed in the production of a certain kind of commodity is too small to meet the social need for that commodity.’ [76. ibid. p.187.]

In both cases the ‘determination of market value which we [previously] outlined abstractly’ is modified, in the sense that ‘of the supply is too small, the market value is always regulated by the commodities produced under the least favourable circumstances and if the supply is too large, always by the commodities produced under the most favourable conditions; that therefore it is one of the extremes which determines the market value, in spite of the fact that if we proceed only from the relation between the amounts of the commodity produced under different conditions, a different result should obtain.’ [77. ibid. p.185.]

So it can be seen that which of the categories (of producers) determines market value depends not only on their proportional strength, but also, in a certain sense, on the relation of supply and demand. But doesn’t this completely invalidate Marx’s theory of value? Not at all. This would only be true if each time demand out-weighed supply, or vice versa, this led to a proportional increase or fall in market value itself. However, in this case the market value would be identical with the market price, or it would –as Marx expressed it – ‘have to stand higher than itself’. [78. ibid. pp.279-71.] For, according to Marx’s conception, market value can only move within the limits set by the conditions of production (and consequently by the individual value) of one of the three categories.

We read in the section of the Theories devoted to ground-rent that : ‘A difference between market value and individual value arises in general not because products are sold absolutely above their value, but only because the value of the individual product may be different from the value of the product of the whole sphere . . . The difference between the market value and the individual value of a product can therefore only be due to the fact that the definite quantities of labour with which different parts of the total product are manufactured have different degrees of productivity. It can never be due to the value being detemined irrespective of the quantity of labour altogether employed in this sphere.’ [79. ibid. pp.270-71.]

Thus, if as a consequence of the market situation, the mass of commodities is sold above the individual value of the commodities produced under the worst conditions, or alternatively below the individual value of those produced under the best conditions, the market price would indeed diverge from the market value. [80. Cf. ibid. p.268. ‘This market value itself can never be greater than the value of the product of the least fertile class’ (the coal mine). ‘If it were higher this would only show that the market price stood above the market value. But the market value must represent real value.’] This regulation of the occasional fluctuations of market price is, or course, the main function allotted to the relation of supply and demand in the system of bourgeois economics.

It is evident that our interpretation of Marx’s theory of market value diverges very considerably from that normally presented in marxist literature. The following passage by Grigorovici could serve as an example. ‘ “If the demand is large enough to absorb commodities at their market value”, says marx, “this commodity will be sold at its market value, no matter which of the three aformentioned cases regulates it. This mass of commodities does not merely satisfy a need, but satisfies it to its full social extent. Should their quantity be smaller or greater, however, than the demand for them, the market prices will diverge from the market value”, i.e. the market price will exceed or fall below the market value; market price and market value will not coincide.’ The author concludes, ‘Thus, what affects the relation of supply and demand, or in other words the demand-moment is not a change in market value, but simply a divergence of market price from the market value of the commodity, although in both the first and second cases it seems as if the market value itself has changed, as a result of the change in the relation of supply and demand; because in the first case the commodity produced under the poorer conditions seems to regulate market value, and in the second the commodity produced under the better,’ [81. Grigorovici, op.cit. P.37.]

This then is Grigorovici’s view. However, what does the passage from Volume III, which we have already cited in part, actually say on this point?

‘Should demand for this mass also remain the same, this commodity will be sold at its market value, no matter which of the three aforementioned cases regulates this market value . . . Should their quantity be smaller or greater, however, than the demand for them, there will be divergencies between the market price and the market value. And the first divergence is that if the supply is too small, the market value is always regulated by the commodities produced under the least favourable circumstances, and, if the supply is too large, always by the commodities produced under the most favourable conditions; that therefore it is one of the extremes which determines the market value, in spite of the fact that if we proceed only from the relation between the amounts of the commodity produced under different conditions, a different result should obtain.’ [82. Capital III, p.185.]

The formulation is not at all clear, and consequently can give rise to uncertainties. However, Marx expresses himself more precisely on p.179 of Volume III. He writes: ‘At a certain price, a commodity occupies just so much place on the market. This place remains the same in case of a price change only if the higher prices accompanied by a drop in the supply of the commodity, and a lower prices by an increase of supply. And if the demand is so great that it does not contract when the prices is regulated by the value of commodities produced under the least favourable conditions, then these determine the market value. This is only possible if demand is greater than usual, or if supply drops below the usual level. Finally, if the mass of commodities produced exceeds the quantity disposed of at average market values, the commodities produced under the most favourable conditions regulate the market value.’

We in no way want to deny that there are passages in Marx which seem to prove the opposite of what has just been said. [83.It should not be forgotten, as Engels remarked, that the manuscript for Volume III only represents a ‘first extremely incomplete draft’.] What is important, however, is not to ‘explain’ thse unclarities away on the basis of a falsely conceived marxist orthodoxy, but rather to understand and interpret the true meaning of Marx’s explanations in terms of their ‘inner logic’. And we consider that our interpretation of the passages on market value corresponds better with Marx’s theory as a whole, in particular with his theory of ground-rent, than the interpretations which are to be found in Grigorovici and others.

However, this is not the place to to into this special problem in detail. Our point was only to show that Marx, in strictly logical fashion, deals with the problem of ‘socially necessary labour-time’ on two different levels, and that his aim in doing this was to place the moment of social demand, i.e. use-value, in its true light.

In another passage in Volume III we read: ‘It continues to be a necessary requirement that the commodity represent use-value. But if the use-value of individual commodities depends on whether they themselves satisfy a particular needs, then the use-value of the mass of the social product depends on whether it satisfies the quantitatively determined social need for each particular kind of product in an adequate manner, and whether the labour is therefore proportionately distributed among the different spheres in keeping with these social needs, which are quantitatively circumscribed . . . The social need, that is the use-value on a social scale, appears here as a determining factor for the amount of total social labour-time which is expended in various specific spheres of production is but a more developed expression of the law of value in general, although the necessary labour-time assumes a different meaning here. Only just so much of it is necessary for the satisfaction of social needs. It is use-value which brings about this limitation.’ [84. Capital III, pp.635-36. Cf.Theories I, p.204.]

And so we can see again how use-value operates as such in the relations of the bourgeois economy, which is based on exchange-value, and consequently how it becomes an economic category itself.

With this last example, we come to the end of our analysis. Future research into Marx will decide whether the extracts which we have cited from the Rough Draft prove us correct, and actually lead to a partial revision of previous interpretations of Marx’s economic theory, as we believe they must. We can, however, allow ourselves one final remark; that it was clearly Marx’s own unique method of analysis which enabled him to elaborate his opposition to Ricardo in such an original and logical fashion. Engels was surely right when he perceived in Marx’s treatment of use-value, and its role in political economy, a classic example of the use of the ‘German dialectical method’. [85. See his review of Marx’s Contribution (1859) in MEW Vol.13, p.476.]

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