Labor theory of value

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Marxian economics

The labor theory of value (LTV) is a theory of value that argues that the economic value of a good or service is determined by the total amount of "socially necessary labor" required to produce it.

The LTV is usually associated with Marxian economics, although it originally appeared in the theories of earlier classical economists such as Adam Smith and David Ricardo, and later in anarchist economics. Smith saw the price of a commodity in terms of the labor that the purchaser must expend to buy it, which embodies the concept of how much labor a commodity, a tool for example, can save the purchaser. The LTV is central to Marxist theory, which holds that the working class is exploited under capitalism, and dissociates price and value. However, Marx did not refer to his own theory of value as a "labour theory of value".

Orthodox neoclassical economics rejects the LTV, using a theory of value based on subjective preferences.

The revival in interpretation of Marx known as the Neue Marx-Lektüre also rejects Marxian economics and the LTV, calling them "substantialist". This reading claims that the LTV is a misinterpretation of the concept of fetishism in relation to value, and that this understanding never appears in Marx's work. The school heavily emphasizes works such as Capital as explicitly being a critique of political economy, instead of a "more correct" theory.

Definitions of value and labor

When speaking in terms of a labor theory of value, "value", without any qualifying adjective should theoretically refer to the amount of labor necessary to produce a marketable commodity, including the labor necessary to develop any real capital used in the production. Both David Ricardo and Karl Marx tried to quantify and embody all labor components in order to develop a theory of the real price, or natural price of a commodity. The labor theory of value as presented by Adam Smith did not require the quantification of past labor, nor did it deal with the labor needed to create the tools (capital) that might be used in producing a commodity. Smith's theory of value was very similar to the later utility theories in that Smith proclaimed that a commodity was worth whatever labor it would command in others (value in trade) or whatever labor it would "save" the self (value in use), or both. However, this "value" is subject to supply and demand at a particular time:

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. (Wealth of Nations Book 1, chapter V)

Smith's theory of price has nothing to do with the past labor spent in producing a commodity. It speaks only of the labor that can be "commanded" or "saved" at present. If there is no use for a buggy whip, then the item is economically worthless in trade or in use, regardless of all the labor spent in creating it.

Distinctions of economically pertinent labor

Value "in use" is the usefulness of this commodity, its utility. A classical paradox often comes up when considering this type of value. In the words of Adam Smith:

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 things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it (Wealth of Nations Book 1, chapter IV).

Value "in exchange" is the relative proportion with which this commodity exchanges for another commodity (in other words, its price in the case of money). It is relative to labor as explained by Adam Smith:

The value of any commodity, [...] to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities (Wealth of Nations Book 1, chapter V).

Value (without qualification) is the labor embodied in a commodity under a given structure of production. Marx defined the value of the commodity by this third definition. In his terms, value is the 'socially necessary abstract labor' embodied in a commodity. To David Ricardo and other classical economists, this definition serves as a measure of "real cost", "absolute value", or a "measure of value" invariable under changes in distribution and technology.

Ricardo, other classical economists and Marx began their expositions with the assumption that value in exchange was equal to or proportional to this labor value. They thought this was a good assumption from which to explore the dynamics of development in capitalist societies. Other supporters of the labor theory of value used the word "value" in the second sense to represent "exchange value".

Labor process

Since the term "value" is understood in the LTV as denoting something created by labor, and its "magnitude" as something proportional to the quantity of labor performed, it is important to explain how the labor process both preserves value and adds new value in the commodities it creates.

The value of a commodity increases in proportion to the duration and intensity of labor performed on average for its production. Part of what the LTV means by "socially necessary" is that the value only increases in proportion to this labor as it is performed with average skill and average productivity. So though workers may labor with greater skill or more productivity than others, these more skillful and more productive workers thus produce more value through the production of greater quantities of the finished commodity. Each unit still bears the same value as all the others of the same class of commodity. By working sloppily, unskilled workers may drag down the average skill of labor, thus increasing the average labor time necessary for the production of each unit commodity. But these unskillful workers cannot hope to sell the result of their labor process at a higher price (as opposed to value) simply because they have spent more time than other workers producing the same kind of commodities.

However, production not only involves labor, but also certain means of labor: tools, materials, power plants and so on. These means of labor—also known as means of production—are often the product of another labor process as well. So the labor process inevitably involves these means of production that already enter the process with a certain amount of value. Labor also requires other means of production that are not produced with labor and therefore bear no value: such as sunlight, air, uncultivated land, unextracted minerals, etc. While useful, even crucial to the production process, these bring no value to that process. In terms of means of production resulting from another labor process, LTV treats the magnitude of value of these produced means of production as constant throughout the labor process. Due to the constancy of their value, these means of production are referred to, in this light, as constant capital.

Consider for example workers who take coffee beans, use a roaster to roast them, and then use a brewer to brew and dispense a fresh cup of coffee. In performing this labor, these workers add value to the coffee beans and water that comprise the material ingredients of a cup of coffee. The worker also transfers the value of constant capital—the value of the beans; some specific depreciated value of the roaster and the brewer; and the value of the cup—to the value of the final cup of coffee. Again, on average, the worker can transfer no more than the value of these means of labor previously possessed to the finished cup of coffee. So the value of coffee produced in a day equals the sum of both the value of the means of labor—this constant capital—and the value newly added by the worker in proportion to the duration and intensity of their work.

Often this is expressed mathematically as:

${\displaystyle c+L=W}$,

where

• ${\displaystyle c}$ is the constant capital of materials used in a period plus the depreciated portion of tools and plant used in the process. (A period is typically a day, week, year, or a single turnover: meaning the time required to complete one batch of coffee, for example.)
• ${\displaystyle L}$ is the quantity of labor time (average skill and productivity) performed in producing the finished commodities during the period
• ${\displaystyle W}$ is the value (or think "worth") of the product of the period (${\displaystyle w}$ comes from the German word for value: wert)

Note: if the product resulting from the labor process is homogeneous (all similar in quality and traits, for example, all cups of coffee) then the value of the period's product can be divided by the total number of items (use-values or ${\displaystyle v_u}$) produced to derive the unit value of each item. ${\displaystyle \begin{array}{c}{w}_i=\frac{W}{\sum v_u}\end{array}}$ where ${\displaystyle \begin{array}{c}\sum v_u\end{array}}$ is the total items produced.

The LTV further divides the value added during the period of production, ${\displaystyle L}$, into two parts. The first part is the portion of the process when the workers add value equivalent to the wages they are paid. For example, if the period in question is one week and these workers collectively are paid $1,000, then the time necessary to add $1,000 to—while preserving the value of—constant capital is considered the necessary labor portion of the period (or week): denoted ${\displaystyle NL}$. The remaining period is considered the surplus labor portion of the week: or ${\displaystyle SL}$. The value used to purchase labor-power, for example, the $1,000 paid in wages to these workers for the week, is called variable capital (${\displaystyle v}$). This is because in contrast to the constant capital expended on means of production, variable capital can add value in the labor process. The amount it adds depends on the duration, intensity, productivity and skill of the labor-power purchased: in this sense, the buyer of labor-power has purchased a commodity of variable use. Finally, the value added during the portion of the period when surplus labor is performed is called surplus value (${\displaystyle s}$). From the variables defined above, we find two other common expressions for the value produced during a given period:

${\displaystyle c+v+s=W}$

and

${\displaystyle c+NL+SL=W}$

The first form of the equation expresses the value resulting from production, focusing on the costs ${\displaystyle c+v}$ and the surplus value appropriated in the process of production, ${\displaystyle s}$. The second form of the equation focuses on the value of production in terms of the values added by the labor performed during the process ${\displaystyle NL+SL}$.

Relation between values and prices

One issue facing the LTV is the relationship between value quantities on one hand and prices on the other. If a commodity's value is not the same as its price, and therefore the magnitudes of each likely differ, then what is the relation between the two, if any? Various LTV schools of thought provide different answers to this question. For example, some argue that value in the sense of the amount of labor embodied in a good acts as a center of gravity for price.

However, most economists would say that cases where pricing is given as approximately equal to the value of the labour embodied, are in fact only special cases. In General Theory pricing most usually fluctuates. The standard formulation is that prices normally include a level of income for "capital" and "land". These incomes are known as "profit" and "rent" respectively. Yet Marx made the point that value cannot be placed upon labour as a commodity, because capital is a constant, whereas profit is a variable, not an income; thus explaining the importance of profit in relation to pricing variables.

In Book 1, chapter VI, Adam Smith writes:

The real value of all the different component parts of price, it must be observed, is measured by the quantity of labour which they can, each of them, purchase or command. Labour measures the value not only of that part of price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit.

The final sentence explains how Smith sees value of a product as relative to labor of buyer or consumer, as opposite to Marx who sees the value of a product being proportional to labor of laborer or producer. And we value things, price them, based on how much labor we can avoid or command, and we can command labor not only in a simple way but also by trading things for a profit.

The demonstration of the relation between commodities' unit values and their respective prices is known in Marxian terminology as the transformation problem or the transformation of values into prices of production. The transformation problem has probably generated the greatest bulk of debate about the LTV. The problem with transformation is to find an algorithm where the magnitude of value added by labor, in proportion to its duration and intensity, is sufficiently accounted for after this value is distributed through prices that reflect an equal rate of return on capital advanced. If there is an additional magnitude of value or a loss of value after transformation, then the relation between values (proportional to labor) and prices (proportional to total capital advanced) is incomplete. Various solutions and impossibility theorems have been offered for the transformation, but the debate has not reached any clear resolution.

LTV does not deny the role of supply and demand influencing price, since the price of a commodity is something other than its value. In Value, Price and Profit (1865), Karl Marx quotes Adam Smith and sums up:

It suffices to say that if supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, that is to say, with their values as determined by the respective quantities of labor required for their production.

The LTV seeks to explain the level of this equilibrium. This could be explained by a cost of production argument—pointing out that all costs are ultimately labor costs, but this does not account for profit, and it is vulnerable to the charge of tautology in that it explains prices by prices. Marx later called this "Smith's adding up theory of value".

Smith argues that labor values are the natural measure of exchange for direct producers like hunters and fishermen. Marx, on the other hand, uses a measurement analogy, arguing that for commodities to be comparable they must have a common element or substance by which to measure them, and that labor is a common substance of what Marx eventually calls commodity-values.

History

Origins

The labor theory of value has developed over many centuries. It had no single originator, but rather many different thinkers arrived at the same conclusion independently. Aristotle is claimed to hold to this view. Some writers trace its origin to Thomas Aquinas. In his Summa Theologiae (1265–1274) he expresses the view that "value can, does and should increase in relation to the amount of labor which has been expended in the improvement of commodities." Scholars such as Joseph Schumpeter have cited Ibn Khaldun, who in his Muqaddimah (1377), described labor as the source of value, necessary for all earnings and capital accumulation. He argued that even if earning "results from something other than a craft, the value of the resulting profit and acquired (capital) must (also) include the value of the labor by which it was obtained. Without labor, it would not have been acquired." Scholars have also pointed to Sir William Petty's Treatise of Taxes of 1662 and to John Locke's labor theory of property, set out in the Second Treatise on Government (1689), which sees labor as the ultimate source of economic value. Karl Marx himself credited Benjamin Franklin in his 1729 essay entitled "A Modest Enquiry into the Nature and Necessity of a Paper Currency" as being "one of the first" to advance the theory.

Adam Smith accepted the theory for pre-capitalist societies but saw a flaw in its application to contemporary capitalism. He pointed out that if the "labor embodied" in a product equaled the "labor commanded" (i.e. the amount of labor that could be purchased by selling it), then profit was impossible. David Ricardo (seconded by Marx) responded to this paradox by arguing that Smith had confused labor with wages. "Labor commanded", he argued, would always be more than the labor needed to sustain itself (wages). The value of labor, in this view, covered not just the value of wages (what Marx called the value of labor power), but the value of the entire product created by labor.

Ricardo's theory was a predecessor of the modern theory that equilibrium prices are determined solely by production costs associated with Neo-Ricardianism.

Based on the discrepancy between the wages of labor and the value of the product, the "Ricardian socialists"—Charles Hall, Thomas Hodgskin, John Gray, and John Francis Bray, and Percy Ravenstone—applied Ricardo's theory to develop theories of exploitation.

Marx expanded on these ideas, arguing that workers work for a part of each day adding the value required to cover their wages, while the remainder of their labor is performed for the enrichment of the capitalist. The LTV and the accompanying theory of exploitation became central to his economic thought.

19th century American individualist anarchists based their economics on the LTV, with their particular interpretation of it being called "Cost the limit of price". They, as well as contemporary individualist anarchists in that tradition, hold that it is unethical to charge a higher price for a commodity than the amount of labor required to produce it. Hence, they propose that trade should be facilitated by using notes backed by labor.

Adam Smith and David Ricardo

Adam Smith held that, in a primitive society, the amount of labor put into producing a good determined its exchange value, with exchange value meaning, in this case, the amount of labor a good can purchase. However, according to Smith, in a more advanced society the market price is no longer proportional to labor cost since the value of the good now includes compensation for the owner of the means of production: "The whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him." According to Whitaker, Smith is claiming that the 'real value' of such a commodity produced in advanced society is measured by the labor which that commodity will command in exchange but "[Smith] disowns what is naturally thought of as the genuine classical labor theory of value, that labor-cost regulates market-value. This theory was Ricardo's, and really his alone."

Classical economist David Ricardo's labor theory of value holds that the value of a good (how much of another good or service it exchanges for in the market) is proportional to how much labor was required to produce it, including the labor required to produce the raw materials and machinery used in the process. David Ricardo stated it as, "The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not on the greater or less compensation which is paid for that labour." In this connection Ricardo seeks to differentiate the quantity of labour necessary to produce a commodity from the wages paid to the laborers for its production. Therefore, wages did not always increase with the price of a commodity. However, Ricardo was troubled with some deviations in prices from proportionality with the labor required to produce them. For example, he said "I cannot get over the difficulty of the wine, which is kept in the cellar for three or four years [i.e., while constantly increasing in exchange value], or that of the oak tree, which perhaps originally had not 2 s. expended on it in the way of labour, and yet comes to be worth £100." (Quoted in Whitaker) Of course, a capitalist economy stabilizes this discrepancy until the value added to aged wine is equal to the cost of storage. If anyone can hold onto a bottle for four years and become rich, that would make it hard to find freshly corked wine. There is also the theory that adding to the price of a luxury product increases its exchange-value by mere prestige.

The labor theory as an explanation for value contrasts with the subjective theory of value, which says that value of a good is not determined by how much labor was put into it but by its usefulness in satisfying a want and its scarcity. Ricardo's labor theory of value is not a normative theory, as are some later forms of the labor theory, such as claims that it is immoral for an individual to be paid less for his labor than the total revenue that comes from the sales of all the goods he produces.

It is arguable to what extent these classical theorists held the labor theory of value as it is commonly defined. For instance, David Ricardo theorized that prices are determined by the amount of labor but found exceptions for which the labor theory could not account. In a letter, he wrote: "I am not satisfied with the explanation I have given of the principles which regulate value." Adam Smith theorized that the labor theory of value holds true only in the "early and rude state of society" but not in a modern economy where owners of capital are compensated by profit. As a result, "Smith ends up making little use of a labor theory of value."

Anarchism

See also: Anarchist economics and Cost the limit of price

 

Sample labor for labor note for the Cincinnati Time Store. Scanned from Equitable Commerce (1846) by Josiah Warren

Pierre Joseph Proudhon's mutualism and American individualist anarchists such as Josiah Warren, Lysander Spooner and Benjamin Tucker adopted the labor theory of value of classical economics and used it to criticize capitalism while favoring a non-capitalist market system.

Warren is widely regarded as the first American anarchist, and the four-page weekly paper he edited during 1833, The Peaceful Revolutionist, was the first anarchist periodical published. Cost the limit of price was a maxim coined by Warren, indicating a (prescriptive) version of the labor theory of value. Warren maintained that the just compensation for labor (or for its product) could only be an equivalent amount of labor (or a product embodying an equivalent amount). Thus, profit, rent, and interest were considered unjust economic arrangements. In keeping with the tradition of Adam Smith's The Wealth of Nations, the "cost" of labor is considered to be the subjective cost; i.e., the amount of suffering involved in it. He put his theories to the test by establishing an experimental "labor for labor store" called the Cincinnati Time Store at the corner of 5th and Elm Streets in what is now downtown Cincinnati, where trade was facilitated by notes backed by a promise to perform labor. "All the goods offered for sale in Warren's store were offered at the same price the merchant himself had paid for them, plus a small surcharge, in the neighborhood of 4 to 7 percent, to cover store overhead." The store stayed open for three years; after it closed, Warren could pursue establishing colonies based on Mutualism. These included "Utopia" and "Modern Times". Warren said that Stephen Pearl Andrews' The Science of Society, published in 1852, was the most lucid and complete exposition of Warren's own theories.

Mutualism is an economic theory and anarchist school of thought that advocates a society where each person might possess a means of production, either individually or collectively, with trade representing equivalent amounts of labor in the free market. Integral to the scheme was the establishment of a mutual-credit bank that would lend to producers at a minimal interest rate, just high enough to cover administration. Mutualism is based on a labor theory of value that holds that when labor or its product is sold, in exchange, it ought to receive goods or services embodying "the amount of labor necessary to produce an article of exactly similar and equal utility". Mutualism originated from the writings of philosopher Pierre-Joseph Proudhon.

Collectivist anarchism as defended by Mikhail Bakunin defended a form of labor theory of value when it advocated a system where "all necessaries for production are owned in common by the labour groups and the free communes ... based on the distribution of goods according to the labour contributed".

Karl Marx

Contrary to popular belief Marx never used the term "Labor theory of value" in any of his works but used the term Law of value, Marx opposed "ascribing a supernatural creative power to labor", arguing as such:

Labor is not the source of all wealth. Nature is just as much a source of use values (and it is surely of such that material wealth consists!) as labor, which is itself only the manifestation of a force of nature, human labor power.

Here, Marx was distinguishing between exchange value (the subject of the LTV) and use value. Marx used the concept of "socially necessary labor time" to introduce a social perspective distinct from his predecessors and neoclassical economics. Whereas most economists start with the individual's perspective, Marx started with the perspective of society as a whole. "Social production" involves a complicated and interconnected division of labor of a wide variety of people who depend on each other for their survival and prosperity. "Abstract" labor refers to a characteristic of commodity-producing labor that is shared by all different kinds of heterogeneous (concrete) types of labor. That is, the concept abstracts from the particular characteristics of all of the labor and is akin to average labor.

"Socially necessary" labor refers to the quantity required to produce a commodity "in a given state of society, under certain social average conditions or production, with a given social average intensity, and average skill of the labor employed." That is, the value of a product is determined more by societal standards than by individual conditions. This explains why technological breakthroughs lower the price of commodities and put less advanced producers out of business. Finally, it is not labor per se that creates value, but labor power sold by free wage workers to capitalists. Another distinction is between productive and unproductive labor. Only wage workers of productive sectors of the economy produce value. According to Marx an increase in productiveness of the laborer does not affect the value of a commodity, but rather, increases the surplus value realized by the capitalist. Therefore, decreasing the cost of production does not decrease the value of a commodity, but allows the capitalist to produce more and increases the opportunity to earn a greater profit or surplus value, as long as there is demand for the additional units of production.

Criticism

Main article: Criticisms of the labour theory of value

The Marxist labor theory of value has been criticised on several counts. Some argue that it predicts that profits will be higher in labor-intensive industries than in capital-intensive industries, which would be contradicted by measured empirical data inherent in quantitative analysis. This is sometimes referred to as the "Great Contradiction". In volume 3 of Capital, Marx explains why profits are not distributed according to which industries are the most labor-intensive and why this is consistent with his theory. Whether or not this is consistent with the labor theory of value as presented in volume 1 has been a topic of debate. According to Marx, surplus value is extracted by the capitalist class as a whole and then distributed according to the amount of total capital, not just the variable component. In the example given earlier, of making a cup of coffee, the constant capital involved in production is the coffee beans themselves, and the variable capital is the value added by the coffee maker. The value added by the coffee maker is dependent on its technological capabilities, and the coffee maker can only add so much total value to cups of coffee over its lifespan. The amount of value added to the product is thus the amortization of the value of the coffeemaker. We can also note that not all products have equal proportions of value added by amortized capital. Capital intensive industries such as finance may have a large contribution of capital, while labor-intensive industries like traditional agriculture would have a relatively small one. Critics argue that this turns the LTV into a macroeconomic theory, when it was supposed to explain the exchange ratios of individual commodities in terms of their relation to their labour ratios (making it a microeconomic theory), yet Marx was now maintaining that these ratios must diverge from their labour ratios. Critics thus held that Marx's proposed solution to the "great contradiction" was not so much a solution as it was sidestepping the issue.

Steve Keen argues that Marx's idea that only labor can produce value rests on the idea that as capital depreciates over its use, then this is transferring its exchange-value to the product. Keen argues that it is not clear why the value of the machine should depreciate at the same rate it is lost. Keen uses an analogy with labor: If workers receive a subsistence wage and the working day exhausts the capacity to labor, it could be argued that the worker has "depreciated" by the amount equivalent to the subsistence wage. However this depreciation is not the limit of value a worker can add in a day (indeed this is critical to Marx's idea that labor is fundamentally exploited). If it were, then the production of a surplus would be impossible. According to Keen, a machine could have a use-value greater than its exchange-value, meaning it could, along with labor, be a source of surplus. Keen claims that Marx almost reached such a conclusion in the Grundrisse but never developed it any further. Keen further observes that while Marx insisted that the contribution of machines to production is solely their use-value and not their exchange-value, he routinely treated the use-value and exchange-value of a machine as identical, despite the fact that this would contradict his claim that the two were unrelated. Marxists respond by arguing that use-value and exchange-value are incommensurable magnitudes; to claim that a machine can add "more use-value" than it is worth in value-terms is a category error. According to Marx, a machine by definition cannot be a source of human labor. Keen responds by arguing that the labor theory of value only works if the use-value and exchange-value of a machine are identical, as Marx argued that machines cannot create surplus value since as their use-value depreciates along with their exchange-value; they simply transfer it to the new product but create no new value in the process. Keen's machinery argument can also be applied to slavery based modes of production, which also profit from extracting more use value from the laborers than they return to laborers.

In their work Capital as Power, Shimshon Bichler and Jonathan Nitzan argue that while Marxists have claimed to produce empirical evidence of the labor theory of value via numerous studies which show consistent correlations between values and prices, these studies do not actually provide evidence for it and are inadequate. According to the authors, these studies attempt to prove the LTV by showing that there is a positive correlation between market prices and labor values. However, the authors argue that these studies measure prices by looking at the price of total output (the unit price of a commodity multiplied by its total quantity) and do these for several sectors of the economy, estimate their total price and value from official statistics and measured for several years. However, Bichler and Nitzan argue that this method has statistical implications as correlations measured this way also reflect the co-variations of the associated quantities of unit values and prices. This means that the unit price and unit value of each sector are multiplied by the same value, which means that the greater the variability of output across different sectors, the tighter the correlation. This means that the overall correlation is substantially larger than the underlying correlation between unit values and unit prices; when sectors are controlled for their size, the correlations often drop to insignificant levels. Furthermore, the authors argue that the studies do not seem to actually attempt to measure the correlation between value and price. The authors argue that, according to Marx, the value of a commodity indicates the abstract labor time required for its production; however Marxists have been unable to identify a way to measure a unit (elementary particle) of abstract labor (indeed the authors argue that most have given up and little progress has been made beyond Marx's original work) due to numerous difficulties. This means assumptions must be made and according to the authors, these involve circular reasoning:

The most important of these assumptions are that the value of labour power is proportionate to the actual wage rate, that the ratio of variable capital to surplus value is given by the price ratio of wages to profit, and occasionally also that the value of the depreciated constant capital is equal to a fraction of the capital’s money price. In other words, the researcher assumes precisely what the labour theory of value is supposed to demonstrate.

Bichler and Nitzan argue that this amounts to converting prices into values and then determining if they correlate, which the authors argue proves nothing since the studies are simply correlating prices with themselves. Paul Cockshott disagreed with Bichler and Nitzan's arguments, arguing that it was possible to measure abstract labour time using wage bills and data on working hours, while also arguing Bichler and Nitzan's claims that the true value-price correlations should be much lower actually relied on poor statistical analysis itself. Most Marxists, however, reject Bichler and Nitzan's interpretation of Marx, arguing that their assertion that individual commodities can have values, rather than prices of production, misunderstands Marx's work. For example, Fred Moseley argues Marx understood "value" to be a "macro-monetary" variable (the total amount of labor added in a given year plus the depreciation of fixed capital in that year), which is then concretized at the level of individual prices of production, meaning that "individual values" of commodities do not exist.

The theory can also be sometimes found in non-Marxist traditions. For instance, mutualist theorist Kevin Carson's Studies in Mutualist Political Economy opens with an attempt to integrate marginalist critiques into the labor theory of value.

Some post-Keynesian economists have been highly critical of the labor theory of value. Joan Robinson, who herself was considered an expert on the writings of Karl Marx, wrote that the labor theory of value was largely a tautology and "a typical example of the way metaphysical ideas operate". The well-known Marxian economist Roman Rosdolsky replied to Robinson's claims at length, arguing that Robinson failed to understand key components of Marx's theory; for instance, Robinson argued that "Marx's theory, as we have seen, rests on the assumption of a constant rate of exploitation", but as Rosdolsky points out, there is a great deal of contrary evidence.

In ecological economics, the labor theory of value has been criticized, where it is argued that labor is in fact energy over time. Such arguments generally fail to recognize that Marx is inquiring into social relations among human beings, which cannot be reduced to the expenditure of energy, just as democracy cannot be reduced to the expenditure of energy that a voter makes in getting to the polling place. However, echoing Joan Robinson, Alf Hornborg, an environmental historian, argues that both the reliance on "energy theory of value" and "labor theory of value" are problematic as they propose that use-values (or material wealth) are more "real" than exchange-values (or cultural wealth)—yet, use-values are culturally determined. For Hornborg, any Marxist argument that claims uneven wealth is due to the "exploitation" or "underpayment" of use-values is actually a tautological contradiction, since it must necessarily quantify "underpayment" in terms of exchange-value. The alternative would be to conceptualize unequal exchange as "an asymmetric net transfer of material inputs in production (e.g., embodied labor, energy, land, and water), rather than in terms of an underpayment of material inputs or an asymmetric transfer of 'value'". In other words, uneven exchange is characterised by incommensurability, namely: the unequal transfer of material inputs; competing value-judgements of the worth of labor, fuel, and raw materials; differing availability of industrial technologies; and the off-loading of environmental burdens on those with less resources.

Critique of work

From Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/Critique_of_work

Since 1870 the amount of hours of waged work have decreased and GDP per capita has increased.

Critique of work or critique of labour is the critique of, and wish to abolish, work as such, and to critique what the critics of works deem wage slavery.

Critique of work can be existential, and focus on how labour can be and/or feel meaningless, and stands in the way for self-realisation. But the critique of work can also highlight how excessive work may harm the productivity of society, or society itself. The critique of work can also take on a more utilitarian character in which work simply stands in the way for human happiness as well as health.

History

Many thinkers have critiqued and wished for the abolishment of labour as early as in Ancient Greece. An example of an opposing view is the anonymously published treatise titled Essay on Trade and Commerce published in 1770 which claimed that to break the spirit of idleness and independence of the English people, ideal "work-houses" should imprison the poor. These houses were to function as "houses of terror, where they should work fourteen hours a day in such fashion that when meal time was deducted there should remain twelve hours of work full and complete."

Views like these propagated for in the following decades by e.g. Malthus, which led up to the Poor Law Amendment Act of 1834.

Paul Lafargue

 

Bertrand Russell, writer of In Praise of Idleness and Other Essays

The battle of shortening the working hours to ten hours was ongoing between around the 1840s until about 1900. However establishing the eight hour working day went significantly faster, and these short-hour social movements aligned against labour, managed to get rid of two working hours between the mid-1880s to 1919. During this epoch reformers argued that mechanization was not only supposed to provide material goods, but to free workers from "slavery" and introduce them to the "duty" to enjoy life.

While the productive capacity rose enormously with industrialization, people were made busier, while one might have expected the opposite to occur. This was at least the expectation among many intellectuals such as Paul Lafargue. The liberal John Stuart Mill also predicted that society would come to a stage where growth would end when mechanization would meet all real needs. Lafargue argued that the obsession society seemed to have with labour paradoxically harmed the productivity, which society had as one of its primary justifications for not working as little as possible.

During 2021, the anti-work movement has experienced rapid growth online, especially on the subreddit r/antiwork which uses the slogan "Unemployment for all, not just the rich!". As of July 2022, the subreddit has 2 million members, and has aided workers in the 2021 Kellogg's strike.

Paul Lafargue

In Lafargue's book The Right To Be Lazy, he claims that: "It is sheer madness, that people are fighting for the "right" to an eight-hour working day. In other words, eight hours of servitude, exploitation and suffering, when it is leisure, joy and self-realisation that should be fought for – and as few hours of slavery as possible."

Automation, which had already come a long way in Lafargue's time, could easily have reduced working hours to three or four hours a day. This would have left a large part of the day for the things which he would claim that we really want to do – spend time with friends, relax, enjoy life, be lazy. The machine is the saviour of humanity, Lafargue argues, but only if the working time it frees up becomes leisure time. It can be, it should be, but it rarely has been. The time that is freed up is according to Lafargue usually converted into more hours of work, which in his view is only more hours of toil and drudgery.

Bertrand Russell

Russell's book In Praise of Idleness is a collection of essays on the themes of sociology and philosophy. Russell argues that if the burden of work were shared equally among all, resulting in fewer hours of work, unemployment would disappear. As a result, human happiness would also increase as people would be able to enjoy their newfound free time, which would further increase the amount of science and art. Russell for example claimed that "Modern methods of production have given us the possibility of ease and security for all; we have chosen, instead, to have overwork for some and starvation for others. Hitherto we have continued to be as energetic as we were before there were machines; in this we have been foolish".

Contemporary era

David Graeber

The anthropologist David Graeber has written about bullshit jobs, which are jobs that are meaningless and do not contribute anything worthwhile, or even damage society. Graeber also claims that bullshit jobs are often not the worst paid ones.

The bullshit-jobs can include tasks like these:

Man with sign that roughly translates to: Bullshit job example from nature: President of the Republic of Slovenia

• Watching over an inbox which received emails merely to copy and paste them into another form.
• To be hired to look busy.
• Working with pushing buttons in an elevator.
• Make others look or feel important.
• Roles that exist merely because other institutions employ people in the same roles.
• Employees that merely solve issues that could be fixed once and for all, or automated away.
• People who are hired so that institutions can claim that they do something, which they in reality are not doing.
• Jobs where the most important thing is to sit in the right place, like working in a reception, and forwarding emails to someone who is tasked with reading them.

Frédéric Lordon

In Willing Slaves of Capital: Spinoza and Marx on Desire, the French economist and philosopher Frédéric Lordon ponders why people accept deferring or even replacing their own desires and goals with those of an organization. "It is ultimately quite strange", he writes, "that people should so 'accept' to occupy themselves in the service of a desire that was not originally their own." Lordon argues that surrender of will occurs via the capture by organizations of workers' "basal desire" – the will to survive.

But this willingness of workers to become aligned with a company's goals is due not only to what can be called "managerialism" (the ways in which a company co-opts individuality via wages, rules, and perks), but to the psychology of the workers themselves, whose "psyches… perform at times staggering feats of compartmentalization." So consent to work itself becomes problematic and troubling; as captured in the title of Lordon's book, workers are "willing slaves."

Franco "Bifo" Berardi

Franco Berardi, an Italian Autonomist thinker, suggests in The Soul at Work: From Alienation to Autonomy, that capitalism has harnessed modern desires for autonomy and independence:

No desire, no vitality seems to exist anymore outside the economic enterprise, outside productive labour and business. Capital was able to renew its psychic, ideological and economic energy, specifically thanks to the absorption of creativity, desire, and individualistic, libertarian drives for self-realization.

Knowledge workers, or what Barardi calls the "cognitariat" are far from free of this co-option. People in these jobs, he says, have suffered a kind of Taylorization of their work via the parceling and routinization of even creative activities.

George Alliger

In the 2022 book Anti-Work: Psychological Investigations into Its Truths, Problems, and Solutions, work psychologist Alliger proposes to systematize anti-work thinking by suggesting a set of almost 20 propositions that characterize this topic. He draws on a wide variety of sources; a few of the propositions or tenets are:

• Work demands submission and is damaging to the human psyche.
• The idea that work is "good" is a modern and deleterious development.
• The tedious, boring, and grinding aspects of work characterize most of the time spent in many and probably even all jobs.
• Work is subjectively "alienating" and meaningless due to workers’ lack of honest connection to the organization and its goals and outcomes.

Alliger provides a discussion of each proposition and considers how workers, as well as psychologists, can best respond to the existential difficulties and challenges of work.

Guy Debord

One of the founders of the Situationist International in France (which helped inspire the student revolt of 1968), Guy Debord wrote the influential The Society of the Spectacle (La société du spectacle). He suggested that since all actual activity, including work, has been harnessed into the production of the spectacle, that there can be no freedom from work, even if leisure time is increasing. That is, since leisure can only be leisure within the planned activities of the spectacle, and since alienated labour helps to reproduce that spectacle, there is also no escape from work within the confines of the spectacle. Debord also used the slogan "NEVER WORK", which he initially painted as graffiti, and henceforth came to emphasize "could not be considered superfluous advice".

Anti-work ethic

"Anti-work" redirects here. For the subreddit, see r/antiwork.

History

Nietzsche

Nietzsche rejected the work ethic, viewing it as damaging to the development of reason, as well as the development of the individual etc. In 1881, he wrote:

The eulogists of work. Behind the glorification of 'work' and the tireless talk of the 'blessings of work' I find the same thought as behind the praise of impersonal activity for the public benefit: the fear of everything individual. At bottom, one now feels when confronted with work—and what is invariably meant is relentless industry from early till late—that such work is the best police, that it keeps everybody in harness and powerfully obstructs the development of reason, of covetousness, of the desire for independence. For it uses up a tremendous amount of nervous energy and takes it away from reflection, brooding, dreaming, worry, love, and hatred; it always sets a small goal before one's eyes and permits easy and regular satisfactions. In that way a society in which the members continually work hard will have more security: and security is now adored as the supreme goddess.

Buckminster Fuller

The American architect, philosopher, designer, and futurist Buckminster Fuller presented a similar argument which rejected the notion that people should be de facto forced to sell their labor in order to have the right to a decent life.

Contemporary era

Particularly in anarchist circles, some believe that work has become highly alienated throughout history and is fundamentally unhappy and burdensome, and therefore should not be enforced by economic or political means. In this context, some call for the introduction of an unconditional basic income or a shorter working week such as the 4-day workweek.

Media

The Idler is a twice-monthly British magazine dedicated to the ethos of "idleness." It was founded in 1993 by Tom Hodgkinson and Gavin Pretor-Pinney with the intention of exploring alternative ways of working and living.

The largest organized anti-work community on the Internet is the subreddit r/antiwork on Reddit with (as of December 2021) over 1.4 million members, who call themselves "idlers" and call for "Unemployment for all, not just the rich!".

In art

The Swedish Public Freedom Service is a conceptual art project which has been running since 2014. One of the artists involved argued in relationship to the project that "changes in the last 200 years or so have always been shifts in power, while not much that is fundamental to the construction of society has changed. We are largely marinated in the belief that wage labour must be central."

Critique of political economy

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Critique_of_political_economy 

 

Critique of political economy or critique of economy is a form of social critique that rejects the various social categories and structures that constitute the mainstream discourse concerning the forms and modalities of resource allocation and income distribution in the economy. The critique also rejects economists' use of what its advocates believe are unrealistic axioms, faulty historical assumptions, and the normative use of various descriptive narratives. They reject what they describe as mainstream economists' tendency to posit the economy as an a priori societal category.

Those who engage in critique of economy tend to reject the view that the economy, and its categories, is to be understood as something transhistorical. They rather argue that it is a relatively new mode of resource distribution, which emerged along with modernity. Hence, it is seen as merely one of many types of historically specific ways to distribute resources.

Critics of economy critique the given status of the economy itself, and hence don't aim to create theories regarding how to administer economies. Critics of economy commonly view what is most commonly referred to as the economy as being bundles of metaphysical concepts, as well as societal and normative practices, rather than being the result of any "self-evident" or proclaimed "economic laws". Hence they also tend to consider the views which are commonplace within the field of economics as faulty, or simply as pseudoscience.

There are multiple critiques of political economy today, but what they have in common is critique of what critics of political economy tend to view as dogma, i.e. claims of "the economy" as a necessary and transhistorical societal category.

Ruskin

John Ruskin portrayed in his thirties

In the 1860s, John Ruskin published his essay Unto This Last which he came to view as his central work. The essay was originally written as a series of publications in a magazine, which ended up having to suspend the publications, due to the severe controversy the articles caused. While Ruskin is generally known as an important art critic, his study of the history of art was a component that gave him some insight into the pre-modern societies of the Middle Ages, and their social organisation which he was able to contrast to his contemporary condition. Ruskin attempted to mobilize a methodological/scientific critique of new political economy, as it was envisaged by the classical economists.

Ruskin viewed "the economy" as a kind of "collective mental lapse or collective concussion", and he viewed the emphasis on precision in industry as a kind of slavery. Due to the fact that Ruskin regarded the political economy of his time as "mad", he said that it interested him as much as "a science of gymnastics which had as its axiom that human beings in fact didn't have skeletons". Ruskin declared that economics rests on positions that are exactly the same. According to Ruskin, these axioms resemble thinking, not that human beings do not have skeletons, but rather that they consist entirely of skeletons. Ruskin wrote that he didn't oppose the truth value of this theory, he merely wrote that he denied that it could be successfully implemented in the world in the state it was in. He took issue with the ideas of "natural laws", "economic man" and the prevailing notion of "value" and aimed to point out the inconsistencies in the thinking of the economists. As well as critiqued Mill for thinking that ‘the opinions of the public’ was reflected adequately by market prices.

Gandhi, one of those who was influenced by Ruskin. Gandhi even translated his central work Unto This Last into Gujarati in 1908. He released the work under the title Sarvodaya, which means "universal uplift" or "progress of all".

Ruskin also coined the term 'Illth' to refer to unproductive wealth. Ruskin is not well known as a political thinker today but, when in 1906 a journalist asked the first generation of Labour MPs which book had most inspired them, Unto This Last emerged as an undisputed chart-topper.

[...] the art of becoming "rich," in the common sense, is not absolutely nor finally the art of accumulating much money for ourselves, but also of contriving that our neighbours shall have less. In accurate terms, it is "the art of establishing the maximum inequality in our own favour."

— Ruskin, Unto this last

Criticism

Marx and Engels regarded much of Ruskin's critique as reactionary. His idealisation of the Middle Ages made them reject him as a "feudal utopian".

Marx

Karl Marx, author of Das Kapital (Das Kapital. Kritik der politischen Ökonomie) [Capital: A Critique of Political Economy]

In the 21st century, Karl Marx is probably the most famous critic of political economy, with his three volume magnum opus Capital: A Critique of Political Economy as one of his most famous books. However Marx's companion Friedrich Engels also engaged in critique of political economy in his 1844 Outlines of a Critique of Political Economy, which helped lay down some of the foundation for what Marx was to take further. Marx's critique of political economy encompasses the study and exposition of the mode of production and ideology of bourgeois society, and its critique of Realabstraktionen ["real abstraction"], that is, the fundamental "economic", i.e., social categories present within what for Marx is the capitalist mode of production, for example abstract labour. In contrast to the classics of political economy, Marx was concerned with lifting the ideological veil of surface phenomena and exposing the norms, axioms, social relations, institutions and so on, that reproduced capital.

The central works in Marx's critique of political economy are Grundrisse, A Contribution to the Critique of Political Economy and Das Kapital. Marx's works are often explicitly named – for example: A Contribution to the Critique of Political Economy, or Capital: A Critique of Political Economy. Marx also cited Engels' article Outlines of a Critique of Political Economy several times in Das Kapital. However Trotskyists and other Leninists tend to implicitly or explicitly argue that these works constitute and or contain "economical theories" which can be studied independently. This was also the common understanding of Marx's work on economy that was put forward by Soviet orthodoxy. Since this is the case, it remains a matter of controversy whether Marx's critique of political economy is to be understood as a critique of the political economy or, according to the orthodox interpretation another theory of economics. The critique of political economy is considered the most important and central project within Marxism which has led to, and continues to lead to a large number of advanced approaches within and outside academic circles.

Foundational concepts

• Labour and capital are historically specific forms of social relations, and labour is not the source of all wealth.
• Labour is the other side of the same coin as capital, labour presupposes capital, and capital presupposes labour.
• Money is not in any way something transhistorical or "natural" (which goes for the whole economy as well as the other categories specific to the mode of production), and gains its value/are constituted due to social relations rather than any inherent qualities.
• The individual doesn't exist in some form of vacuum but is rather enmeshed in social relations.

Marx's critique of the quasi-religious and ahistorical methodology of economists

Marx described the view of contemporaneous economists and theologians on social phenomena as similarly unscientific.

"Economists have a singular method of procedure. There are only two kinds of institutions for them, artificial and natural. The institutions of feudalism are artificial institutions, those of the bourgeoisie are natural institutions. In this, they resemble the theologians, who likewise establish two kinds of religion. Every religion which is not theirs is an invention of men, while their own is an emanation from God. When the economists say that present-day relations – the relations of bourgeois production – are natural, they imply that these are the relations in which wealth is created and productive forces developed in conformity with the laws of nature. These relations, therefore, are themselves natural laws independent of the influence of time. They are eternal laws that must always govern society. Thus, there has been history, but there is no longer any. There has been history, since there were the institutions of feudalism, and in these institutions of feudalism we find quite different relations of production from those of bourgeois society, which the economists try to pass off as natural and as such, eternal."

— Marx: The Poverty of Philosophy

Marx continued to emphasize the ahistorical thought of the modern economists in the Grundrisse, where he among other endeavors, critiqued the liberal economist Mill.

Marx also viewed the viewpoints which implicitly regarded the institutions of modernity as transhistorical as fundamentally deprived of historical understanding.

Individuals producing in society, and hence the socially determined production of individuals, is, of course, the point of departure. The solitary and isolated hunter or fisherman, who serves Adam Smith and Ricardo as a starting point, is one of the unimaginative fantasies of eighteenth-century romances a la Robinson Crusoe; and despite the assertions of social historians, these by no means signify simply a reaction against over-refinement and reversion to a misconceived natural life. No more is Rousseau's contract social, which by means of a contract establishes a relationship and connection between subjects that are by nature independent, based on this kind of naturalism. [...] The individual in this society of free competition seems to be rid of natural ties, etc., which made him an appurtenance of a particular, limited aggregation of human beings in previous historical epochs. The prophets of the eighteenth century, on whose shoulders Adam Smith and Ricardo were still wholly standing, envisaged this 18th-century individual – a product of the dissolution of feudal society on the one hand and of the new productive forces evolved since the sixteenth century on the other – as an ideal whose existence belonged to the past. They saw this individual not as a historical result, but as the starting point of history; not as something evolving in the course of history, but posited by nature, because for them this individual was in conformity with nature, in keeping with their idea of human nature. This delusion has been characteristic of every new epoch hitherto.

— Marx, A Contribution to the Critique of Political Economy, (Introduction)

Das Kapital: Kritik der politischen oekonomie [Capital: A critique of political economy] is a famous critique of political economy written by Karl Marx.

According to the french philosopher Jacques Rancière, what Marx understood, and what the economists failed to recognise was that the value-form is not something essential, but merely a part of the capitalist mode of production.

On scientifically adequate research

Marx also offered a critique regarding the idea of people being able to conduct scientific research in this domain. Or, as he stated it himself:

"In the domain of Political Economy, free scientific inquiry meets not merely the same enemies as in all other domains. The peculiar nature of the materials it deals with, summons as foes into the field of battle the most violent, mean, and malignant passions of the human breast, the Furies of private interest. The English Established Church, e.g., will more readily pardon an attack on 38 of its 39 articles than on 1/39 of its income. Nowadays atheism is culpa levis [a relatively slight sin, c.f. mortal sin], as compared with criticism of existing property relations."

— Marx: Das Kapital (Preface to the First German Edition)

On vulgar economists

Marx also used to criticize the false critique of political economy of his contemporaries. Something he did, sometimes even more forcefully, than he critiqued the classical, and hence 'vulgar' economists. He for example rejected Lasalle's 'iron and inexorable law' of wages, which he simply regarded as mere phraseology. As well as Proudhon's attempts to do what Hegel did for religion, law, etc., for political economy, as well as regarding what is social as subjective, and what was societal as merely subjective abstractions. In Marx's view, the errors of these authors led the workers' movement astray.

Interpretations of Marx's critique of political economy

Some scholars view Marx's critique as being a critique of commodity fetishism and the manner in which this concept expresses a criticism of modernity and its modes of socialisation. Other scholars who engage with Marx's critique of political economy affirm the critique might assume a more Kantian sense, which transforms "Marx's work into a foray concerning the imminent antinomies that lie at the heart of capitalism, where politics and economy intertwine in impossible ways."

Contemporary Marxian

Regarding contemporary Marxian critiques of political economy, these are generally accompanied by a rejection of the more naturalistically influenced readings of Marx, as well as other readings later deemed weltanschaaungsmarxismus ("worldview Marxism"), that was popularised as late as toward the end of the 20th century.

According to some scholars in this field, contemporary critiques of political economy and contemporary German Ökonomiekritik have been at least partly neglected in the anglophone world.

Feminist

There has been a growing literature of feminist viewpoints in examinations of the foundations of political economy in recent years.

According to economist Julie A. Nelson feminist critiques of economics should start from the premise that "economics, like any science, is socially constructed." Feminist economists say that social constructs act to privilege male-identified, western, and heterosexual interpretations of economics. They generally incorporate feminist theory and frameworks to show how traditional economics communities signal expectations regarding appropriate participants, to the exclusion of outsiders. Such criticisms extend to the theories, methodologies and research areas of economics, in order to show that accounts of economic life are deeply influenced by biased histories, social structures, norms, cultural practices, interpersonal interactions, and politics.

Feminist economists often make a critical distinction that masculine bias in economics is primarily a result of gender, not sex.

Differences between critics of economy and critics of economical issues

One may differentiate between those who engage in critique of political economy, which takes on a more ontological character, where authors criticise the fundamental concepts and social categories which reproduce the economy as an entity. While other authors, which the critics of political economy would consider only to deal with the surface phenomena of "the economy", have a naturalized understanding of these social processes.

Hence the epistemological differences between critics of economy and economists can also at times be very large.

In the eyes of the critics of political economy, the critics of economic issues merely critique "certain practices" in attempts to implicitly or explicitly 'rescue' the political economy; these authors might for example propose universal basic income or to implement a planned economy.

Abstract labour and concrete labour

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Abstract_labour_and_concrete_labour 

Abstract labour and concrete labour refer to a distinction made by Karl Marx in his critique of political economy. It refers to the difference between human labour in general as economically valuable worktime versus human labour as a particular activity that has a specific useful effect within the (capitalist) mode of production.

The twofold nature of the production for exchange purposes.

Overview

• As economically valuable worktime, human labour is spent to add value to products or assets (thereby conserving their capital value, and/or transferring value from inputs to outputs). In this sense, labour is an activity which creates/maintains economic value pure and simple, which could be realized as a sum of money once labour's product is sold or acquired by a buyer. The value-creating ability of labour is most clearly visible when all labour is stopped. If all labour is withdrawn, the value of the capital assets worked with will normally deteriorate, and in the end, if labour is permanently withdrawn, nothing will be left except a ghost town situation.
• As a useful activity of a particular kind, human labour can have a useful effect in producing particular tangible products which are used by others, or by the producers themselves. In this sense, labour is an activity which creates use-values, i.e. tangible products, results or effects which can be used or consumed. The creation of use-values is highlighted, when goods and services of poor quality are created, which are not supplied on time and mainly useless to the consumer. Labour must be applied to produce usable products, regardless of how much they are sold for, otherwise there are no use-values. If labour produces useless products or results, it is simply a waste of labour-time.

So, Marx argues that human work is both (1) an activity which, by its useful effect, helps to create particular kinds of products, and (2) in an economic sense a value-forming activity that, if it is productively applied, can help create more value than there was before. If an employer hires labour, the employer thinks both about the value that the labour can add within his business, and about how useful the labour service will be for his business operations. That is, the right kind of work not only needs to get done, but it needs to get done in a way that it helps the employer to make money.

If the labour makes no net addition to new value produced, then the employer makes no money from it, and the labour will be only an expense to him. If the labour is only a net expense (overhead), then it is commercially speaking unproductive labour. Yet it may be very necessary to employ this unproductive labour, if, without its performance, considerable capital value would be lost from the employer's financial investments, or if business would fail without it. That is, labour may be very necessary to maintain capital value, even if it does not actually add value to capital, and does not directly add to net profit. So, the employer also buys unproductive labour because the employer's costs in this respect are lower than the loss of value that would occur, if he did not employ unproductive labour to maintain capital value, and to prevent loss of capital value. For example, cleaning work might seem a very menial and low-value activity, but if business equipment fails, customers stay away, and the staff get sick or hurt, it costs the business a lot of extra money.

However, Marx posited abstract labor, all labor-power, as homogeneous, productive labor due to the social nature of value. Labor power, whether managerial or otherwise, when exchanged directly with capital, is included in any calculation of the average socially necessary labor time for production of a specific commodity, and is still represented by variable capital and therefore value adding capital.

Origin

In the introduction to his Grundrisse manuscript, Marx argued that the category of abstract labour "expresses an ancient relation existing in all social formations"; but, he continued, only in modern bourgeois society (exemplified by the United States) is abstract labour fully realized in practice. Because only there does a system of price-equations exist within a universal market, which can practically reduce the value of all forms and quantities of labour uniformly to sums of money, so that any kind of labour becomes an interchangeable, tradeable good or "input" with a known price tag – and is also practically treated as such. In the Grundrisse, Marx also distinguished between "particular labour" and "general labour", contrasting communal production with production for exchange.

Marx published about the categories of abstract and concrete labour for the first time in A Contribution to the Critique of Political Economy (1859) and they are discussed in more detail in chapter 1 of Capital, Volume I, where Marx writes:

"On the one hand all labour is, speaking physiologically, an expenditure of human labour power, and in its character of identical abstract human labour, it creates and forms the value of commodities. On the other hand, all labour is the expenditure of human labour power in a special form and with a definite aim, and in this, its character of concrete useful labour, it produces use values. ... At first sight a commodity presented itself to us as a complex of two things – use value and exchange value. Later on, we saw also that labour, too, possesses the same twofold nature; for, so far as it finds expression in value, it does not possess the same characteristics that belong to it as a creator of use values. I was the first to point out and to examine critically this twofold nature of the labour contained in commodities. ... this point is the pivot on which a clear comprehension of political economy turns."

Abstract labour and exchange

Marx himself considered that all economising reduced to the economical use of human labour-time; "to economise" ultimately meant saving on human energy and effort.

"The less time the society requires to produce wheat, cattle etc., the more time it wins for other production, material or mental. Just as in the case of an individual, the multiplicity of its development, its enjoyment and its activity depends on economization of time. Economy of time, to this all economy ultimately reduces itself. Society likewise has to distribute its time in a purposeful way, in order to achieve a production adequate to its overall needs; just as the individual has to distribute his time correctly in order to achieve knowledge in proper proportions or in order to satisfy the various demands on his activity."

However, according to Marx, the achievement of abstract thinking about human labour, and the ability to quantify it, is closely related to the historical development of economic exchange in general, and more specifically commodity trade (the trade in wares and merchandise).

The expansion of trade requires the ability to measure and compare all kinds of things, not just length, volume and weight, but also time itself. Originally, the units of measurement used were taken from everyday life—the length of a finger or limb, the volume of an ordinary container, the weight one can carry, the duration of a day or a season, the number of cattle. Socially standardized measurement units began to be used probably from circa 3000 BC onwards in ancient Egypt and Mesopotamia, and then state authorities began to supervise the use of measures, with rules to prevent cheating. Once standard measuring units existed, mathematics could begin to develop.

In fact, Marx argues the abstraction of labour in thought is the reflex of a real process, in which commercial trade in products not only alters the way labour is viewed, but also how it is practically treated. In other words, when labour becomes a commercial object traded in the marketplace, then the form and content of work in the workplace will be transformed as well. This transformation is practically possible, because labour already contains the potential to adapt to the requirements of capitalist business. This potential has already been shaped up by previous schooling and training.

If different products are exchanged in market trade according to specific trading ratios, Marx argues, the exchange process at the same time relates, values and commensurates the quantities of human labour expended to produce those products, regardless of whether the traders are consciously aware of that (see also value-form).

Therefore, Marx implies, the exchange process itself involves the making of a real abstraction, namely abstraction from (or indifference to) the particular characteristics of concrete (specific) labour that produced the commodities whose value is equated in trade. At first, the relationship between quantities of traded commodities symbolically represents the relative costs in labour time. Next, money-prices begin to represent symbolically the commodities being traded. In this way, a system of symbolic representation emerges which can facilitate the exchange of the most diverse products with great efficiency. In the end, commodities become simply objects of value, and since their value can rise and fall, they can be bought and sold purely for capital gain. Closely related to this, is the growth of a cash economy, and Marx claims that:

"In proportion as exchange bursts its local bonds, and the value of commodities more and more expands into an embodiment of human labour in the abstract, in the same proportion the character of money attaches itself to commodities that are by Nature fitted to perform the social function of a universal equivalent. Those commodities are the precious metals."

In a more complex division of labour, it becomes difficult or even impossible to equate the value of all different labour-efforts directly. But money enables us to express and compare the value of all different labour-efforts—more or less accurately—in money-units (initially, quantities of gold, silver, or bronze). Marx then argues that labour viewed concretely in its specifics creates useful things, but labour-in-the-abstract is value-forming labour, which conserves, transfers and/or creates economic value (see Valorisation). In 1844, Marx said that:

"As money is not exchanged for any one specific quality, for any one specific thing, or for any particular human essential power, but for the entire objective world of man and nature, from the standpoint of its possessor it therefore serves to exchange every quality for every other, even contradictory, quality and object: it is the fraternisation of impossibilities. It makes contradictions embrace."

In the feudal society of medieval Europe, Marx comments,

"The natural form of labour, its specific kind—and not, as in a society of commodity production, its universality—is here its immediate social form. The corvee can be measured by time in just the same way as the labour which produces commodities, but every serf knows that what he expends in the service of his lord is a specific quantity of his own personal labour-power. The tithe owed to the priest is more clearly apparent than his blessing. Whatever we may think, then, of the different character masks with which people confront each other in such a society, the social relations between individuals in the performance of their labour appear at all events as their own personal relations, and are not disguised as social relations between things, between the products of labour. ... For a society of commodity producers—whose general social relation of production consists in the fact that they treat their products as commodities, hence as values, and in this business-like form bring their individual, private labours into relation with each other as homogenous human labour—Christianity with its religious cult of man in the abstract, more particularly in its bourgeois development, i.e. in Protestantism, Deism, etc., is the most fitting form of religion.")

Abstract labour and capitalism

If the production process itself becomes organised as a specifically capitalist production process, then the abstraction process is deepened, because production labour itself becomes directly treated and organised in terms of its commercial exchange value, and in terms of its capacity to create new value for the buyer of that labour.

Quite simply, in this case, a quantity of labour-time is equal to a quantity of money, and it can be calculated that X hours of labour—regardless of who in particular performs them—create, or are worth, Y amounts of new product value. In this way, labour is practically rendered abstract.

The abstraction is completed when a labour market is established which very exactly quantifies the money-price applying to all kinds of different occupational functions, permitting equations such as:

x amount of qualified labour = y amounts of unskilled labour = z number of workers = p amount of money = q amount of goods.

This is what Marx calls a value relationship ("Wertverhältnis" in German). It can also be calculated that it costs a certain amount of time and money to train a worker to perform a certain task, and how much value that adds to the workers' labour, giving rise to the notion of human capital.

As a corollary, in these conditions workers will increasingly treat the paid work they do as something distinct or separate from their personality, a means to an end rather than an end in itself. Work becomes "just work", it no longer necessarily says anything at all about the identity, creativity or personality of the worker. With the development of an average skill level in the workforce, the same job can also be done by many different workers, and most workers can do many different jobs; nobody is necessarily tied to one type of work all his life anymore. Thus we can talk of "a job" as an abstract function that could be filled by anybody with the required skills. Managers can calculate that with a certain budget, a certain number of paid working hours are required or available to do the work, and then divide up the hours into different job functions to be filled by suitably qualified personnel.

Marx's theory of alienation considers the human and social implications of the abstraction and commercialization of labour. His concept of reification reflects about the inversions of object and subject, and of means and ends, which are involved in commodity trade.

Marx regarded the distinction between abstract and concrete labour as being among the most important innovations he contributed to the theory of economic value, and subsequently Marxian scholars have debated a great deal about its theoretical significance.

Evolutionary or historically specific

For some, abstract labour is an economic category which applies only to the capitalist mode of production, i.e. it applies only, when human labour power or work-capacity is universally treated as a commodity with a certain monetary cost or earnings potential. Thus Professor John Weeks claims that

"...only under capitalism is concrete labor in general metamorphosed into abstract labor, and only under capitalism is this necessary in order to bring about the reproduction of class relations."

Other Marx-scholars, such as Makoto Itoh, take a more evolutionary view. They argue that the abstract treatment of human labour-time is something that evolved and developed in the course of the whole history of trade, or even precedes it, to the extent that primitive agriculture already involves attempts to economise labour, by calculating the comparative quantities of labour-time involved in producing different kinds of outputs.

In this sense, Marx argued in his book A Contribution to the Critique of Political Economy (1859) that

"This abstraction, human labour in general, exists in the form of average labour which, in a given society, the average person can perform, productive expenditure of a certain amount of human muscles, nerves, brain, etc. It is simple labour [English economists call it "unskilled labour"] which any average individual can be trained to do and which in one way or another he has to perform. The characteristics of this average labour are different in different countries and different historical epochs, but in any particular society it appears as something given."

However in the same writing he also says

"Steuart knew very well that in pre-bourgeois eras also products assumed the form of commodities and commodities that of money; but he shows in great detail that the commodity as the elementary and primary unit of wealth and alienation as the predominant form of appropriation are characteristic only of the bourgeois period of production, and that accordingly labour which creates exchange-value is a specifically bourgeois feature."

Throughout the writing he never ceases to say that abstract labour is "universal" and strictly manifests itself as social labour, not existing in small isolation. Marx repeats this point in Capital Volume 1 (1867) implying that abstract labour arises only when products are produced solely as commodities, something limited strictly to the capitalist mode of production:

"This division of the product into a useful thing and a thing possessing value appears in practice only when exchange has already acquired a sufficient extension and importance to allow useful things to be produced for the purpose of being exchanged, so that their character as values has already to be taken into consideration during production. From this moment on, the labour of the individual producer acquires a twofold social character."

Skilled labour

Another controversy concerns the differences between unskilled (simple) and skilled (qualified) labour. Skilled labour costs more to produce than unskilled labour, and can be more productive. Generally Marx assumed that—irrespective of the price for which it is sold—skilled labour power had a higher value (it costs more to produce, in money, time, energy and resources), and that skilled work could produce a product with a higher value in the same amount of time, compared to unskilled labour. This was reflected in a skill hierarchy, and a hierarchy of wage-levels. In this sense, Friedrich Engels comments in Anti-Duhring:

"The product of one hour of compound labour is a commodity of a higher value—perhaps double or treble—in comparison with the product of one hour of simple labour. The values of the products of compound labour are expressed by this comparison in definite quantities of simple labour; but this reduction of compound labour is established by a social process which goes on behind the backs of the producers, by a process which at this point, in the development of the theory of value, can only be stated but not as yet explained. ... How then are we to solve the whole important question of the higher wages paid for compound labour? In a society of private producers, private individuals or their families pay the costs of training the qualified worker; hence the higher price paid for qualified labour-power accrues first of all to private individuals: the skilful slave is sold for a higher price, and the skilful wage-earner is paid higher wages.

Marx believed that the capitalist mode of production would over time replace people with machines, and encourage the easy replacement of one worker by another, and thus that most labour would tend to reduce to an average skill level and standardized norms of work effort. However he provided no specific calculus by which the value of skilled work could be expressed as a multiple of unskilled work, nor a theory of what regulates the valuation of skill differences. This has led to some theoretical debate among Marxian economists, but no definitive solution has yet been given. In the first volume of Das Kapital Marx had declared his intention to write a special study of the forms of labour-compensation, but he never did so. In contemporary society, a division is emerging between creative, skilled and specialized jobs attracting extraordinarily large salaries, and routine jobs paying very low salaries, where the enormous differences in pay rates are difficult to explain.

The economist Anwar Shaikh from the New School for Social Research has analyzed input-output data, wage data and labour data for the US economy, to create an empirically testable theory of the market valuation of skill differences. The counterargument is, that the valuation of skills depends to a great extent on the balance of class forces between the rich educated class, and the "lower-skilled" working class. The rent-seeking educated class, on this view, can often raise its income far beyond the real worth of its work, if its specialist skills happen to be in short supply or in demand, or if they are hired through the "old boy" networks. That is to say, to an extent, the assumed skill level of the employee may be more imaginary, than real; it all depends on how skills, experience and qualifications are defined and valued. Skilled labour may be over-valued and unskilled labour under-valued at the same time.

The conservative US journalist David Brooks, citing Oren Cass, highlighted in a 2018 op-ed that:

"The problem is that roughly one-fifth of our students fail to graduate high school in four years; roughly one-fifth take no further schooling after high school; roughly one-fifth drop out of college; roughly one-fifth get a job that doesn't require the degree they just earned; and roughly one-fifth actually navigate the path the system is built around — from school to career. We build a broken system and then ask people to try to fit into the system instead of tailoring a system around people's actual needs. ... We in the college-educated sliver have built a culture, an economy and a political system that are all about ourselves. It's time to pass labor market reforms that will make life decent for everybody."

The conservative Friedman Foundation noted that, although from 1950 to 2009 the total staffing at US public schools grew four times faster than the increase in students, scholastic achievement did not increase. While the number of teachers increased two and a half times faster, the number of administrators, teaching assistants and other staff grew seven times faster than the increase in students – i.e., almost three times as fast as the increase in teachers. To solve this problem, the Foundation proposed a more market-oriented approach, with more financial incentives and penalties. In 2018, the average student loan debt for US college graduates stood at $39,400 per graduate, up six percent from the previous year. Some 44 million Americans at that time owed $1.48 trillion+ in student loan debt, the bulk of which cannot be discharged through declaring bankruptcy.

Criticism

Marx did not think there was anything particularly mysterious about the fact that people valued products because they have to spend time working to produce them, or to buy them. However, academics have made many objections to his idea. The conceptual issues associated with the idea of abstract labour have been one of the main reasons why many economists abandoned the labour theory of value. It may be that the problems have never been resolved because they have been approached far too abstractly, using conceptual distinctions not really adequate for the purpose.

Without referring explicitly to Marx's work on the labour theory of value of David Ricardo, the marginal utility theorist William Stanley Jevons clearly stated the main criticism of the concept of abstract labour in his 1871 treatise:

"Labour affects supply, and supply affects the degree of utility, which governs value, or the ratio of exchange. In order that there may be no possible mistake about this all-important series of relations, I will restate it in a tabular form, as follows:

• Cost of production determines supply;
• Supply determines final degree of utility;
• Final degree of utility determines value.

But it is too easy to go too far in considering labour as the regulator of value; it is equally to be remembered that labour is itself of unequal value. Ricardo, by a violent assumption, founded his theory of value on quantities of labour considered as one uniform thing. He was aware that labour differs infinitely in quality and efficiency, so that each kind is more or less scarce, and is consequently paid at a higher or lower rate of wages. He regarded these differences as disturbing circumstances which would have to be allowed for; but his theory rests on the assumed equality of labour. [My] theory rests on a wholly different ground. I hold labour to be essentially variable, so that its value must be determined by the value of the produce, not the value of the produce by that of the labour. I hold it to be impossible to compare a priori the productive powers of a navvy, a carpenter, an iron-puddler, a school master and a barrister. Accordingly, it will be found that not one of my equations represents a comparison between one man's labour and another's."

Response to these Criticisms

Replying to this type of criticism, the Russian Marxist Isaak Illich Rubin argued that the concept of abstract labour was really much more complex than it seemed at first sight. He distinguished between "physically equal" labour; labour which is "socially equated" by means of consensual social evaluation or comparison; and labour efforts equated via the exchange of products using money as a universal equivalent.

To these three aspects we could add at least five others, which are also mentioned by Marx:

• the existence of normal labour-averages applying to different work tasks, which function as "labour norms" in any society;
• the gradation of many different labour efforts along one general, hierarchical dimension of worth, for the purpose of compensation;
• the universal exchangeability of labour efforts themselves, in a developed labour market;
• the general mobility of labour from one job or worksite to another; and
• the ability of the same workers to do all kinds of different jobs.

Some further aspects of the concept of abstract labour are provided by Marxian anthropologist Lawrence Krader and the mathematician Ulrich Krause. Possibly, these conceptual issues can be resolved, through a better empirical appreciation of the political economy of education, skills and the labour market.

Recent discussion

In his book Crack Capitalism, John Holloway considers abstract labour as the most radical foundational category of Marx's theory, and therefore he recommends the struggle against abstract labour as the centrepiece of the political struggle against capitalism.

The British computer scientist Paul Cockshott in 2013 wrote a piece critical of the German Marxist academic Michael Heinrich who, Cockshott argued, wrongly reinterpreted the concept of abstract labour so that it is no longer a scientifically testable concept.