Socialist Economics: 1 – Commodities
It is impossible to understand the way in which the Capitalist system works without some knowledge of basic Marxian economics. Such knowledge is invaluable to the Socialist because he can use it to expose the myth that the capitalist is the lynch-pin of society and without him, civilization would perish.
The Marxist theory of value is based upon the analysis of the commodity. Marx describes the commodity as being the “cell form” of capitalist society, and that wealth within capitalism presents itself as a vast accumulation of commodities.
First and foremost, a commodity is a product of human labour under definite social conditions of production which can only apply to capitalist society. It is an article produced for sale or exchange with a view to profit. It contains two diametrical opposites—Use-Value and Exchange-Value.
Use-Value is the utility of an article and is something concrete. Food can be eaten. Homes can be lived in. Clothes can be worn. This is self-apparent. But as we Socialists are well aware, the production of use-values is not the prime function of capitalist society. That function is the production of Exchange-Value.
Exchange-Value or price is the proportion in which commodities exchange with each other. A thing possesses exchange-value only to the person who has no use for it and loses its exchange value when its use-value asserts itself or is eventually lost in consumption.
Commodity production is peculiar to capitalist society. When we talk about commodity production we mean a condition where the dominant means and almost the entire means of social production are devoted to the production of articles for sale and exchange. Commodities have been produced in past societies before capitalism, but their production was confined to the handicraftsmen or to incidental surpluses. Their production was never a mass social process as it is today. It is only in capitalist society that commodity production becomes the prevailing mode of production.
Use-value has nothing to do with whether or not an object or service is useful to humanity. The whole economy of capitalism has a multitude of products and services which are incontestably useless, and indeed harmful. Nuclear weapons; military bases; equipment for armies; banking, insurance and the whole apparatus of wholesale and retail. The institutions and services, however, are useful to capitalism and use-value in this context is related to the needs of capitalism and whatever these needs may be from time to time.
The most practical way to find out whether an article or service is useful or not is when it is offered for sale. If no-one wants it, then it is socially useless whatever its virtues in other respects. Production of that particular commodity or service would then cease as its reproduction would be unnecessary. To put it another way, the production of any commodity or group of commodities which cannot be marketed or sold is useless by capitalist standards. The fact that a social need may exist for unwanted commodities has nothing to do with the case. There is no morality in capitalist economics.
Some things which are bought and sold are not commodities. Bearing in mind that (a) a commodity must contain a certain amount of human labour and (b) that it must be capable of being reproduced we find that there are a number of instances where this does not apply.
Land (excluding buildings) for example contains no value; there is no labour involved in its production. It cannot be reproduced. Nevertheless, land is bought and sold; it has a price, and that price is determined by competition between buyers. A woman’s virtue is not a commodity but we know that virtue may be sold by prostitution. Likewise with a man’s character. You can buy a man’s character by bribing him. What happens in effect is that these non-commodities assume the commodity form. They take on an abstract exchange-value, and successfully masquerade as the real thing. Likewise with works of art.
The value and consequently the price of a commodity is determined by the amount of social labour spent on its production. Social labour includes the materials used in the productive process and is measured in time.
There is one important qualification and that is that the labour must be socially necessary. If this were not the case, the more inefficient and time-wasting processes would produce the most value, which is nonsense. Socially necessary labour means the average time that is spent in any field of production or distribution in the manufacture of articles or services. For example, if crude oil was shipped from Europe to the Middle East, the cost of society’s time, including the element of wear and tear on the ship etc., could not be added to the product because this would have been unnecessary labour (as crude oil is found in abundance in the Middle East). Again, if a group of capitalists decided to erect a factory on the Island of Tristan de Cunha or some other remote spot, say for the manufacture of textiles, the cost of the textiles would not have a greater value on account of the cost of shipment, transport and other charges, for the obvious reason that the areas for producing textiles are mainly concentrated in industrial areas with all the attendant services of railways, roads etc. Again (although the example may be open to question due to the capitalist energy crisis), if a firm decided to build Hansom cabs to be drawn by horses to replace taxi-cabs, the social time spent on these would be quite valueless, as this commodity (transport) by horse-drawn carriage is obsolete and is not used by society outside of its novelty value which is minute.
Socially necessary labour must take into consideration the things which society now requires, and the average methods through which they can be obtained. This average working raises another question, and that is whether by using the latest machinery the value of the product is less than that of similar products produced by relatively old machinery, because the time spent on the former is naturally less. The answer is that we have to take an average throughout the whole field of this production in particular. In the coal-mining industry throughout the world, methods of extracting coal vary from working narrow seams to exploiting huge faces by coal-cutting machinery. The hand-cut coal is not more valuable, and in any case the entire production of coal cannot be carried out by hand. Neither can it be entirely carried out by machinery; therefore the average time is proportioned between the two methods. Again, if we take ten firms with varying degrees of efficiency say from 1-10, the average would be 5 and this would represent the social necessary labour time. Socially necessary labour is the substance of value, or conversely value has for its substance embodied or congealed labour.
We shall have a look at another aspect of Marxian economics in a further article.