Cooking the Books II: Use value and exchange value

In June the media discovered an interview John McDonnell had given last September. It was immediately seized on by the campaign to depict him, Corbyn and even the Labour Party as ‘Marxist’. Interviewed by Aaron Bastani and Ash Sarkar, according to the Times (24 June), ‘the shadow chancellor discussed how Karl Marx’s work could help people to alter their priorities, and how the “use value” rather than “exchange value” of goods should dominate the way people think.’

Marx did distinguish between ‘use value’ and ‘exchange value’ and McDonnell is correct to say that ‘what we have is a society dominated by exchange value’ (

However, Marx was not the first to make this distinction. The two terms were introduced by Adam Smith who wrote:

The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called “value in use,” the other “value in exchange”’(The Wealth of Nations¸ Book 1, chapter IV).

Marx pointed out, on the first page of Capital, that to have exchange value a product had to satisfy ‘human wants of some sort or another. The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference.’ So, a ‘use value’ is something that at least some people consider useful. This was, wrote Marx, socially determined but ‘to discover the various uses of things is the work of history,’ ie, not of economics.

Both he and Smith were interested in what determined a product’s ‘exchangeable value’. Both concluded that it was related to the amount of labour-time required to produce it from start to finish. What gave a product of labour exchange value was that it had been produced with a view to being sold. The word both used to describe such a product was ‘commodity.’

Marx’s Capital opens: ‘The wealth of those societies in which the capitalist mode of production prevails, presents itself as “an immense accumulation of commodities”.’ Capitalism was a society in which the products of labour, including the capacity to work of the producers, took the form of commodities. But Marx was not interested simply in what determined the exchange value of commodities but above all in how ‘a society dominated by exchange value’ worked.

He first noted that, where the producers’ capacity to work was also a commodity, this resulted in them producing other commodities with a greater exchange value than that of the one they had sold to their employer for a wage, the difference being ‘surplus value’, the source of profits. His conclusion was that capitalism was a society dominated by the imperative to accumulate more and more exchange value, derived from profits and embodied as use values in buildings and instruments for producing more wealth and surplus value, at the expense of producing use values to satisfy people’s needs. Exchange value was more important than use value.

McDonnell, who clearly is acquainted with Marx, is right to want to encourage people to think about this. But it is unclear what he thinks should be done. Marx saw the only way out as a society in which there was no exchange value because use values were not produced as commodities, as items for sale, but for people to take and use. McDonnell seems to want a society in which commodities are still produced but in which use value prevails over exchange value. A laudable aim but, as Marx showed and experience has confirmed, unachievable. Where there is production for sale with a view to profit, the making and accumulation of profits will always come first.