1960s >> 1962 >> no-699-november-1962

What is value?

Private property, commodities and value are a troublesome trinity unless we understand them. There are three important aspects of value. The first is its purely social character which shows itself in buying and selling. The second is abstract human labour as the social substance of value. The third is the quantity of social labour which determines the magnitude of value. Buying and selling is the mode of exchanging wealth today. It involves careful weighing, measuring and counting against price to ensure that equal amounts of values change hands.


Exchange is a social act in which value is measured. In order to do this, a commodity must be related to some other commodity, different in kind, in which it can express its value. The value of the article, is, at all times, the chief concern of its owner. But it must be a use value to people other than its owner. In all equations, the article on the relative side expresses its value in the one on the equivalent side.


As an imaginary example of the elementary form of relative value we can equate a coat to a pair of shoes. In this case, the coat, occupying the relative side, is expressing its value in the material form of shoes. If we invert the equation we then express the value of the shoes. However, provided that each person sees, in the other’s useful article, a value content equal to that of his own, exchange takes place. Equal amounts of value are realised in the useful form of each other’s goods. As property owners both are satisfied.


In such equations it appears, on the surface, that value is an inherent, an intrinsic or material part of the commodities. This is an illusion. All value equations are social relations between men in society in which the legal transfer of ownership of property is determined on the basis of equal amounts of value being exchanged. It should be obvious that such acts can only take place in private property based societies.


The question now is—how is the ratio of exchange accurately determined? All useful articles differ greatly. Take coats and shoes, for example; they differ in material, form and purpose. The concrete (or producers’) labour in them is also very different. We have spinning, weaving, tailoring, tanning and shoemaking. It is productive labour which creates use values; both the labour and the articles are material in character and are different in quantity and quality. They cannot be measured in these forms.


If we disregard the specific type of the work (engineers, bakers, etc.) we reduce it all to the expenditure of human skill and energy in wealth production. The common denominator is therefore, abstract human labour. This is common to all commodities and is our measuring rod. Concrete labour produces use value whereas abstract labour creates values. It is important to note that value-creating labour must be useful, socially necessary, and of average skill and intensity. Irrespective of all differences in their material form or usefulness, all commodities are embodiments of the social substance abstract human labour. Social labour measures, in time, from the smallest fractions upwards simple or complex labour.


The magnitude of the value of any commodity is easily determined. In making this abstraction we are merely following the general practice in science. For example, we have steam, petrol, gas and diesel engines, etc.; all different forms of energy. In abstraction we reduce all of them to power and express it in units of horse power. If we now look at our equation (one coat equals one pair of shoes) we see that as embodiments of human labour the coat and the shoes are similar in quality and, as units containing x hours of social labour, they are equal in quantity. Equal amounts of labour time will always produce equal amounts of value.


Commodity production and exchange extended and developed from the elementary form of value, through expanded relative forms and general forms, to the present money form. This latter is its fully developed form and it works efficiently in expressing value. As Marx said, gold is not by nature money, though money is by nature gold. Gold functions socially, as a universal equivalent, as a measure of value, a standard of price, means of payment and al medium of exchange and circulation. In this capacity it functions as money and becomes the social form of value.


In this, its social function, it assumes an independent form of value because it measures value in its own bodily form and is socially accepted as the material form of value. It stands on one side of the relationship, the equivalent side, as value, opposed to all other commodities on the relative side. In this dazzling role gold appears as a sort of king amongst commodities. However, as a humble commodity, gold is no different from salt, oil or coal. Its value is determined in precisely the same way as all other merchandise. One coat equals one pair of shoes, or one ton of coal, or ten pounds sterling—all of these are different forms of the products of social labour and contain equal amounts of it, are in quality and quantity equal as values.


The exalted position which gold in its money capacity occupies is due primarily to its being a commodity and secondly to its nature as a metal, which renders it eminently suitable for its job. It contains great value in small bulk, is readily coinable and measures value from the smallest fraction upwards. In addition, it enables large quantities of accumulated wealth to be easily stored. As money it is the universally accepted social form of value. It represents the incarnation of abstract human labour and is the materialised form of value. It crosses all international frontiers and encounters no barriers. As a consequence of all this it also serves as universal social use value. The owners of money have immediate access to anything in the world of commodities, in proportion to the amount they have. The owners of all other articles for sale are constantly striving to attract money from the pockets of its owners.


While value is not a physical or material property of any article it is nevertheless a social reality of great importance. It finds its fully developed form in capitalism, in general commodity production. Men, women and children are converted into buyers and sellers whose major social relationships are value relationships. We socialists have abolished the spiritual trinity and impatiently await the workers organising to abolish the social trinities of private property commodities and value, and, with them rent, profit and interest.

J. H.