Summary, Volume I: Parts I, II
Commodities, the Labor Theory of Value and Capital
Commodities are objects that satisfy human needs and wants.
Commodities are the fundamental units of capitalism, a form of economy based
on the intense accumulation of such objects. The basic criterion
for assessing a commodity’s value is its essential usefulness, what
it does in the way of satisfying need and wants. This usefulness is
its use-value, a property intrinsic to the commodity. Commodities also
possess an exchange-value, the relative value of a commodity in relation
to other commodities in an exchange situation. Unlike use-value,
exchange-value is not intrinsic to a commodity. Exchange-value allows
one to determine what one commodity is worth in relation to another
commodity, for example how many units of corn one might exchange
for a given unit of linen. In a complex market, all sorts of different
commodities, although satisfying different needs and wants, must
be measurable in the same units, namely money.
Exchange-value as monetary value is what one means when
one says a commodity has “value” in a market. Marx poses the question of
where this value comes from. How is it that commodities with different
use-values can be measurable in the same units? His answer is that
universal measure for value, expressed in terms of money, corresponds
to the amount of labor time that goes into the making of each commodity.
Labor time is the only thing that all commodities with different
use-values have in common and is thus the only criterion by which
they are comparable in a situation of exchange. This is Marx’s labor
theory of value. This theory implies that commodities have a social
dimension because their exchange value is not intrinsic to them
as objects but instead depends on the society’s entire division
of labor and system of economic interdependence, in which different
people produce different products for sale on a common market. Exchange-value
allows this market to function. As an expression the amount of “congealed
labor” in a given commodity, the value of that commodity, measured
in monetary terms, always refers to the system of social and economic
interdependence in which it is produced.
Marx elaborates on the relationship between a commodity’s value
and its social dimension in a section on the “Fetishism of Commodities.”
Commodities are meaningful in two ways, first and most obvious as
objects of exchange with a certain a monetary value. The second,
which is not so obvious and is in fact obscured by the first, is
that commodities reflect not only the labor that went into making
them but the social relations of production in which the labor was
performed. This social aspect of commodities cannot express itself
because in capitalist society the quality of a commodity is thought
to emanate solely from its price, not from that which money expresses,
namely social labor. The fact that people are moved to mistakenly
reduce the quality of a commodity to money alone leads Marx to argue
that modern capitalist society has invested the money-form with
mystical or magical significance. Those who comment on the nature
of economy, in particular bourgeois economists, reduce economics
and the production and exchange of commodities to the behavior of
money and in so doing always avoid looking at what commodities represent
in social terms. In so doing, the bourgeoisie is conveniently able
to ignore the fact that commodities emerge through an inherently
exploitative system of wage labor.
Analysis
The Labor Theory of Value is not Marx’s invention, originating instead
with classical economist David Ricardo, who developed a labor theory
of price, which states that the prices of commodities represent
the labor that went into making them. However, Marx’s labor theory
of value differs from Ricardo’s and is given a drastically different
significance within the larger context of his work. Marx’s focus
on the nature of value is intended to show that the modern capitalist
system of production and exchange is not what it seems. Although
economic activity is apparently reducible to the behavior of money,
to focus only on money is barely to scratch the surface. Production
and exchange are social institutions, and their organization has
social consequences. Capitalism, founded on a principle of private
ownership, has the owners of the means of production (factories,
raw materials) dependant on wage labor to create profits. Modern
economists do not accept the Labor Theory of Value as an explanation
of prices, but that is not really the sense in which Marx intended
the theory to be used. Marx’s point is that the production of commodities
is a social process, dependent on exploitation and giving rise to
antagonistic relationships among classes, an idea that is not addressed
at all in modern economics.
Summary, Volume 1: Parts II –V
Capital, Surplus Value, and Exploitation
Marx differentiates ordinary money from capital. In the
simplest form of circulation of commodities, a commodity is transformed
into money, which is then transformed back into a commodity as someone
sells a commodity for money and then uses that money to buy a commodity they
need. In this very basic market arrangement, people produce commodities
so that they can obtain money to buy the commodities that they need.
This dynamic naturally emerges in societies with a simple division
of labor, in which different people specialize in the production
of different commodities. Capitalism operates in accordance with
different principles. Capitalists do not see money as a means of
exchanging the commodities they produce for the commodities they
need but as something to be sought after for its own sake. The capitalist
starts with money, transforms it into commodities, then transforms
those commodities into more money. Capital is money used to obtain
more money. These two different arrangements are summed up respectively
in the diagrams C-M-C and M-C-M (C = commodity; M = money). Capitalists
are primarily interested in the accumulation of capital and not
in the commodities themselves.
To increase their capital, capitalists rely on workers
who put their labor power at the disposal of capitalists. Workers
treat their labor power as a commodity and sell it to factory owners.
The capitalist buys the workers’ labor power and puts the worker
to use making products. The capitalist appropriates the product,
since it does not belong to the worker, and sells it on the market.
Capital accumulates through the creation of surplus-value. Since
a commodity’s value equals the labor time congealed in it, this
extra value can only come from the workers. In fact, says Marx,
the capitalist forces the worker to work longer hours to generate
this surplus value. The capitalist, to generate profits, must keep
the working day at a certain length. Part of the day is spent generating
value that keeps the workers fed and clothed, while the remainder
is spent generating surplus value, which goes to the capitalist
himself. This is the essence of exploitation.
