The Value of Labour-Power

Labour-power, the power to perform labour, is a use value possessed by all free human beings. As with any other use value, its value is determined by the labour-time required for its production.

“A use value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialised in it.”

(Capital I, Chapter I) 

The use-value labour-power is inseparable from the labourer who undertakes the labour. The value of labour-power, is then equal to the labour-time required to produce the labourer. In other words, it is equal to the labour-time required to produce all of the use values – food, clothing shelter etc. - required to ensure the production of new generations of labourers. Labour-power is itself a product, that is it is a use value that has been produced by human labour in conjunction with nature. That is not just in the sense of the material requirements of that reproduction. A weaver is not born a weaver, but has to be trained to acquire the skill, and that training requires an expenditure of labour-time too. This is true whether the labour-power is the power to labour of a member of some primitive commune of free labourers, of a peasant living in a medieval village, or the labour-power of a wage worker under Capitalism. The difference is that it is only under Capitalism that labour-power is transformed from being merely a product, and becomes a commodity sold by the wage worker.

“A thing can be useful, and the product of human labour, without being a commodity. Whoever directly satisfies his wants with the produce of his own labour, creates, indeed, use values, but not commodities. In order to produce the latter, he must not only produce use values, but use values for others, social use values. (And not only for others, without more. The mediaeval peasant produced quit-rent-corn for his feudal lord and tithe-corn for his parson. But neither the quit-rent-corn nor the tithe-corn became commodities by reason of the fact that they had been produced for others. To become a commodity a product must be transferred to another, whom it will serve as a use value, by means of an exchange.)”

(Capital I, Chapter I) 

Labour-power is not a use value for the wage worker. Because they do not own the means of production, they cannot perform useful labour in the way that a direct producer can. The use value labour-power can only manifest itself in the case of the wage worker in the work they do for capital. Labour-power, as a commodity, is only a use value for capital, not for the wage worker. The product, labour-power, becomes the commodity labour-power because it is transferred from its owner, the worker, to another, the capitalist, for whom it serves as a use value. The basis of this exchange, as with the exchange of any other commodities, is on the basis of an exchange of equal values, the value of the labour-power is exchanged for an equal amount in wages.

In practice, because all of the labour performed by the peasant (outside the compulsory labour performed as rent) or member of the primitive commune, and its product, belongs to the producer, there is no separation of that part of the day whose purpose is solely to ensure the reproduction of the labourer. The direct producer is free to utilise any available time, after the time required to meet their essential requirements, either to increase their consumption, to provide resources to increase their productive capacity, or simply to enjoy as leisure. Unlike for the wage worker, there is no separation between a portion of the day required as necessary labour, solely to reproduce their labour-power, and another portion of the day, appropriated by capital as surplus labour. The situation facing the direct producer, will also be the situation facing freely associated workers under Communism.

As Marx describes in Capital, the Law of Value imposes constraints
on production in all modes of society, including for Robinson Crusoe,
 who has to apportion his labour-time to ensure that his means of
production are maintained and extended, as well as to cater for his
needs for consumption. 

The direct producer has some constraints imposed upon them by the Law of Value in that they must assign sufficient labour-time for production of the various funds required to ensure reproduction can continue. So, for example, a certain amount of time must be set aside to ensure that the production fund is at least maintained. If time is not set aside to ensure that the existing cattle herd is maintained, for example, there will be insufficient cattle in future to maintain consumption at present levels. If tools and other equipment are not repaired or replaced, the productivity of labour will decline, so again the amount available for future consumption will decline. If time is not set aside to ensure the reproduction of the consumption fund, then there will not be enough food, clothing shelter etc. to ensure that the labourers can continue to produce efficiently, so again, future production will decline. Having met the requirement to ensure these funds are maintained, any labour-time left over can be used to either increase consumption, or else to increase the potential for future production, or else can be utilised as leisure-time.

But also, the Value of Labour-power, for the wage worker, whilst a constant, objectively determined quantum, at any one time and place, is itself subject to change, over time and place. The Value of Labour-power, for the present day wage worker, has to comprise a whole range of use values required for their reproduction that was not required for the reproduction of the labour-power of an industrial worker in the 19th. Century, let alone for the medieval peasant, or member of a primitive commune. On the other hand, because labour productivity has risen, the value of these use values, required for the reproduction of the labour-power of the modern wage labourer, has been reduced drastically. The former increases the Value of Labour-power, whilst the latter reduces it. The modern wage labourer, therefore, has a higher standard of living than their historical counterparts, in that they consume a greater quantity and range of use values, and yet it is simultaneously the case that the Value of Labour-power of the modern wage labourer is less than that of their historical counterparts, because massive rises in productivity have reduced the value of all those wage goods they require to ensure their reproduction! In short, the proportion of the day that is now required to produce the commodities required for the reproduction of the workers is only a fraction of what it was in the past, which leaves a much greater proportion of the day as surplus labour, which creates surplus value for capital.

This difference over time also applies from one place to another, but also from one type of concrete labour to another. Wage workers, in countries where the general level of development is much lower than in more developed economies, require much less in terms of the quantity and range of use values to reproduce their labour-power. Yet, for the opposite reason to that set out above, the value of their labour-power might be higher than that of the wage worker in the more developed economy, precisely because the lower level of development means productivity is lower, the labour-time required/value of the wage goods they consume may, therefore, be higher than for those of the worker in the more developed economy. Certainly, a greater portion of the working-day will be required to produce these goods, and so the rate of surplus value in these countries, and, therefore, the rate of profit, will be lower than in more developed economies.

Marx quotes Adam Smith in this regard to the effect that “wherever wages are low the price of labour is high”  - Adam Smith - Wealth of Nations Book 1, Chapter 8.  By this he means that low wages go together with low levels of productivity, and low levels of productivity mean that unit labour costs are high. By contrast, high wages encourage capital to innovate and raise productivity, which reduces unit labour costs, and increases surplus value.

The more economic activity is integrated, the more these geographical differences are evened out. This occurs initially within the context of the formation of nation states, and national economies, and then as capitalism becomes a global economic system operating as a global market, applies across economies too. This never becomes completely the case, because even within national economies, various frictions arise that prevent workers from moving from where wages are low to where they are higher, and so on. The result is that in certain areas, low wages then result in a preponderance of forms of capital that rely on low value, low wage labour. Low levels of productivity are then continued, with attendant low levels of surplus value, accumulation and economic development. The situation is exacerbated with the subsidy that the Welfare State provides to these low paying employers via various benefits paid to workers to compensate for their wages being below the value of their labour-power. 

If there were complete mobility of labour, then workers in low wage, low value areas would move to areas where the demand for labour-power is high, and where, therefore, wages are higher. For example, low paid or unemployed workers would move to London and the South-East. The increased supply of labour-power would then reduce wages in the latter areas, and raise them in the former, which in turn would encourage capital there to innovate and raise productivity. Instead, the Welfare State, acts to reduce wages of workers in London and the South-East by taxes, and transfers that amount to low-paid workers in the form of various benefits, which simply perpetuates their condition as low wage workers, in low value jobs, with low levels of productivity, and high unit labour costs.

Capital has an incentive to introduce robots and other machines
to replace high value labour, or else to raise its productivity.

A similar thing applies to workers whose labour is complex, or high value labour. The value of this labour-power is higher than that of simple labour because it requires more labour-time for its reproduction. A brain surgeon may require only a similar amount of food to that of any other worker, but they require more labour-time for their education, and that includes not just the fact that they are not producing during that time that they are being educated and trained, it also includes the fact that the people who educate and train them have to be of a higher standard themselves; the Universities etc., in which they are educated and trained, require labour-time for their production, the other educational resources also require more labour-time; in order for the skill of the surgeon to be maintained, they need to continue to have access to resources; they will need to live in better housing perhaps where they can study without the interruptions of living in unsuitable surroundings, and so on.

The Value of Robbie Williams' Labour Power
may be little different to that of any other worker,
but the value produced by an hour of his labour
is many, many times that of an hour of simple labour.

This higher value of labour-power resulting from the higher cost of its reproduction is not to be confused with the fact that such complex labour may create more new value in an hour than does an hour of simple labour. The value of the product of labour is a consequence of the nature of that labour as concrete labour. Some concrete labour produces commodities which consumers place a high value upon, but this is not at all determined by the value of the labour-power that produces it. In fact, as Marx points out, the fact that the value of labour-power rises or falls has no effect on the new value created by it. If an average worker works for 10 hours, they produce 10 hours of new value. This is not changed by whether the value of the worker's labour power is equal to 4 hours of that 10 or 6 hours of that 10. The worker will still have only produced 10 hours of new value in either case. The only difference is that in one case, 6 hours of the 10 are appropriated by capital as surplus value, and in the other only 4 hours are appropriated by Capital.

The Value of Labour-power is calculated over the average lifetime of workers at the given time. That necessarily includes the time before workers begin to work, and the time after their working life has ceased. The shorter the working-life, therefore, the more this raises the value of labour-power. It can be seen why capital seeks to extend the working life for as long as possible so as to reduce the value of labour-power, and increase surplus value. This is not just why capital seeks to push back the age of retirement, but it is also why developed capitalist states introduced welfare states, providing healthcare so as to extend the useful working life of the source of their surplus value.

If the average worker lives for 80 years, and has 15 years before they start work, and 15 years of retirement, that leaves a working life of 50 years. The worker must be paid enough during this 50 years to cover the 80 years of their average lifetime. Suppose this lifetime cost is £1 million. For each year of their working life, this amounts to wages then of £20,000. If there are 50 working weeks in a year, this is £400 per week, and if there are 40 hours in a working week, £10 per hour.

In order to ensure the reproduction of labour-power, therefore, the average worker would need to be paid wages of £10 per hour to cover the value of their labour-power. But, of course, the worker would require this £1 million over their 50 years, whether they actually worked for each of those years or not, just as the same applies whether they work 40 hours per week or not. If workers are not fully employed, therefore, the value of labour-power rises, and, to ensure its reproduction, wages would have to rise for the hours worked. Again, this is one reason that capital does not like to see the working week reduced, or the number of holidays increased, because this raises the value of labour-power, and means wages must rise accordingly.

The Capitalist State, as the "Executive Committee
Of The Ruling Class", in the shape of its permanent
bureaucracy, like Factory Inspector Leonard Horner,
imposes regulation on the reckless activity of capital
for its overall benefit, as opposed to the interests of
individual capitals.

In fact, it can be seen why capital would seek to increase the length of the working week, to reduce holidays, and extend the length of the working life. By all these means it spreads the value of labour power over more hours, and thereby reduces hourly wages, increasing surplus value in the process. In the early period of capitalism it does this in a completely reckless manner that results in the destruction of huge quantities of labour-power. At the start of the 19th century, 9 generations of textile workers were used up in just 3 generations, as the average life expectancy of workers was slashed. So long as large number of new workers were being born, or being brought in from the countryside, capital could get away with this wasteful use of its most vital resource. Once those supplies began to dry up, it could not. It was forced to accept regulation of its rapaciousness in its own interests, as limits on working hours and conditions were introduced via the Factory Acts.

But, it can be seen why this was necessary for capital. By slashing the average life expectancy of workers to not much more than 20, capital had thereby increased the value of labour-power itself, because the cost of producing new workers had to be compressed into that 20 years less the time the worker was too young or too ill to work. High infant mortality increases this cost even more. In all developing economies this is a huge economic cost. Large amounts of resources have to be devoted to rearing children, but if a large proportion of those children die young, they have taken resources out of society, without producing resources themselves to compensate. They become a total cost to society. One of the biggest economic benefits to developing economies is then to increase life expectancy, and in particular to cut infant mortality.

Wedgwood was one of those capitalists who petitioned
Parliament to impose limits on working hours, because
he recognised that competition was driving individual
capitals to increase them without limit, and thereby
to destroy the very workers they needed to produce
surplus value.

But, there is another reason that capital needed to regulate its activities. Although the cost of reproducing the worker's labour power is not reduced, if the worker works only 20 hours rather than 40 hours, it is not the case that, if the worker has to work more than a certain number of hours, the cost of reproducing their labour-power does not increase. A part of the reproduction of the worker's labour power, as with the maintenance and repair of a machine, is the need to ensure that the worker's vital functions are maintained. If the worker works beyond a certain number of hours, or beyond a certain level of intensity, they will use more energy and require more food, for instance. For similar reasons, if this additional work damages the workers' health, they will require additional expenditure for healthcare and so on. The result is that for any given level of exertion a maximum working-day is determined, beyond which, the additional wear and tear on the worker causes the value of their labour-power to increase.

Henry Ford sharply raised the wages of his workers, and introduced
 various measures of welfare for them.  He recognised that the
 old method of extracting surplus value, were no longer the most
effective means.  As Engels had described, he realised that it was
much more effective to reduce the value of labour-lower, by raising
productivity through the introduction of new machines etc. and
Taylorist techniques. 

Whilst capital, therefore, sought to increase Absolute Surplus Value by increasing the length or the intensity of the working-day, so as to leave a greater proportion of it as surplus value, there are objective limits to that beyond which it cannot go. It then becomes more effective to increase the proportion of the working-day given over to producing surplus value by reducing the value of labour-power, by increasing productivity, through the introduction of more efficient machinery and techniques etc. That is why capital moves in the second half of the 19th century to the extraction of this relative surplus value rather than absolute surplus value, as its main method of exploitation.