Capital I, Chapter 19 - Part 1

The Transformation of the Value (and Respective Price) of Labour-Power into Wages

Wages appear as the price of labour. So many hours work has a price of £x. At the same time, as with any other commodity, the concept of a market price for labour is used, whereby this market price oscillates above or below some natural price.

But, further analysis shows that wages cannot be the price of labour. Put simply, the reason, which confounded Adam Smith and others, is this. If wages are the price of labour, and the value of any commodity is determined by the labour-time required for its production, there could never be any surplus value!

“But what is the value of a commodity? The objective form of the social labour expended in its production. And how do we measure the quantity of this value? By the quantity of the labour contained in it. How then is the value, e.g., of a 12 hour working-day to be determined?. By the 12 working-hours contained in a working-day of 12 hours, which is an absurd tautology.” (p 501)

In order to be sold as a commodity, labour-power must first exist, and it cannot exist separate from the worker. Could the worker separate it from himself he would sell it as a distinct commodity. The worker does not sell himself as a commodity – that would make him a slave – but only his labour-power.

If money (Exchange value incarnate) as realised labour, exchanged directly with living labour, this would imply either abolition of the Law of Value, which dictates that value is equal to the labour-time required to produce the commodity, or else it implies the end of capitalism, which rests on wage labour.

The Law of Value, which operates throughout man's history as a natural law, only begins to develop freely on the basis of capitalism, as this law takes the form of Exchange Value. The value of Robinson Crusoe's labour-power, is just as much determined by the labour-time required for its production as is that of the wage labourer. The value of the things produced by Robinson, are just as much determined by the labour-time required for their production as are the products of the wage labourer. These constraints, imposed by the Law of Value, determine the proportions in which each society allocates its available social labour-time, in order to meet its needs.

As Marx writes, of Robinson Crusoe,

Necessity itself compels him to apportion his time accurately between his different kinds of work. Whether one kind occupies a greater space in his general activity than another, depends on the difficulties, greater or less as the case may be, to be overcome in attaining the useful effect aimed at. This our friend Robinson soon learns by experience, and having rescued a watch, ledger, and pen and ink from the wreck, commences, like a true-born Briton, to keep a set of books. His stock-book contains a list of the objects of utility that belong to him, of the operations necessary for their production; and lastly, of the labour time that definite quantities of those objects have, on an average, cost him. All the relations between Robinson and the objects that form this wealth of his own creation, are here so simple and clear as to be intelligible without exertion, even to Mr. Sedley Taylor. And yet those relations contain all that is essential to the determination of value.”

Capital I, Ch. 1. Section 4

A communist society would operate in a similar manner. It would decide upon its priorities – in essence, it ranks the utility obtained from all the various combinations of Use Values possible – but then how much of one it can have rather than some other option continues to be determined by the Law of Value i.e. the available social labour-time (total Value the society can produce) has to be divided, just as in every previous society, across all the range of possible Use Values, whose individual value is determined by the social labour-time required for their production. Only in the higher stage of Communism, when there is general abundance, and where having more of one thing does not mean foregoing an amount of some other, does the Law of Value cease to operate, to exert this constraint.

For Robinson, as for the peasant, or for the communist society, this distinction between necessary labour (which determines the value of labour-Power) and surplus labour (which is the basis of surplus value) does not exist, because all of their labour goes to producing Use values, which continue to belong to them (apart from the peasant production paid as rent to the landlord) rather than being alienated to the capitalist. The peasant that produces more than they immediately require, as with Robinson, or the communist society, can use it as investment, thereby creating the potential for increasing future production. Workers, who like the peasant, or the communist society, that own their means of production through a worker owned Co-operative can also operate in this way. For them too, the distinction between necessary and surplus labour breaks down. They could use any surplus to reduce the amount of labour they require to do in future. Similarly, using the surplus to enable investment might also be aimed at reducing the burden of future work rather than simply increasing output and consumption. The surplus might be stored up to deal with unforeseen future events, or it might be used to facilitate other types of unproductive activity. In the Critique of the Gotha Programme, indeed, Marx points out that any such communist society, could not simply distribute all production on a 1:1 basis to the producers because, the society would need to allocate a proportion of its output to cover those employed in necessary administration, or those who are too sick, young or old to currently work. In other words, workers would need to effectively assign part of their current consumption entitlement, to a social insurance fund, as they were doing in the 19^th Century via their Friendly Societies, to cover the potential of drawing from it under any of these circumstances. The difference of all these other forms of property ownership compared to capitalist ownership, is that control over the surplus remains with the producer, so unlike capitalist surplus there is no imperative to maximise it, or to accumulate it.

Peasant societies that had unexpected good harvests frequently decided to consume much of it, organising feasts and so on. But, a peasant with a surplus could also use it to buy a horse, for example, which would then be used to pull a plough, which improved productivity, which enabled their future output to rise consistently. Indeed, it is this, as Marx and later Lenin describe as the means by which differentiation within the peasantry occurs, creating an element of the bourgeoisie.

But, under capitalism, these aspects of the Law of Value take on free development. The fact that the Law of Value takes the form of Exchange Value, and that labour appears as wage labour, make that inevitable. The division of the working day between necessary and surplus labour is a consequence of that.

But, it is precisely for this reason that, under capitalism, wages cannot be the price of labour.

“The working-day of 12 hours embodies itself, e.g., in a money-value of 6s. Either equivalents are exchanged, and then the labourer receives 6s, for 12 hours’ labour; the price of his labour would be equal to the price of his product. In this case he produces no surplus-value for the buyer of his labour, the 6s. are not transformed into capital, the basis of capitalist production vanishes. But it is on this very basis that he sells his labour and that his labour is wage-labour. Or else he receives for 12 hours’ labour less than 6s., i.e., less than 12 hours’ labour. Twelve hours’ labour are exchanged against 10, 6, &c., hours’ labour. This equalization of unequal quantities not merely does away with the determination of value. Such a self-destructive contradiction cannot be in any way even enunciated or formulated as a law.” (p 502)

That cannot be got round by arguing that less labour (value) in money can be given for more labour, by claiming that the form of this labour is different, the one being the labour provided by the worker as living labour, the other paid to the worker as wages, being realised labour (money).

“This is the more absurd as the value of a commodity is determined not by the quantity of labour actually realized in it, but by the quantity of living labour necessary for its production. A commodity represents, say, 6 working-hours. If an invention is made by which it can be produced in 3 hours, the value, even of the commodity already produced, falls by half. It represents now 3 hours of social labour instead of the 6 formerly necessary. It is the quantity of labour required for its production, not the realized form of that labour, by which the amount of the value of a commodity is determined.” (p 502-3)

Marx then once again explains the answer to this conundrum.

“That which comes directly face to face with the possessor of money on the market, is in fact not labour, but the labourer. What the latter sells is his labour-power. As soon as his labour actually begins, it has already ceased to belong to him; it can therefore no longer be sold by him. Labour is the substance, and the immanent measure of value, but has itself no value.” (p 503)

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