Theories of Surplus Value, Part II, Chapter 10 - Part 6

The two commodities linen and beer, or coffee and sugar, can be equated, and an exchange relation established between them, only because they can both be related to a third term, their value, or, what is the same thing, the labour time required for their production. But, as Marx describes in 'A Contribution to the Critique of Political Economy', and in Capital I, Chapter 3, as soon as commodity exchange commences, this creates a process whereby money arises, and money takes the form of a money commodity, whether it be cattle, copper, silver or gold, or something else. The reason is simple. An exchange value, on the basis described above, always requires any commodity that is to be exchanged to be equated to the commodity it is to be exchanged with. Any commodity, therefore, although it only has one value, determined by the labour time required for its production, has an infinite number of exchange values. The exchange value of 100 metres of linen maybe 50 litres of beer, but simultaneously it might also be 20 kilos of sugar, or 30 kilos of coffee. What makes these different quantities of all these commodities equal is that they each have the same amount of value, each represent the same amount of social labour time. Consequently, if quantities of social labour time can take on physical form, in one single commodity, every other commodity can be simply equated against it.

In that case, if 10 hours of labour time are required to produce 10 grams of gold, which is minted, and given the name Pound, this Pound now fulfils the function of abstract labour, as a means of measuring value. It now becomes possible to say that 100 metres of linen, 50 litres of beer, 20 kilos of sugar and 30 kilos of coffee are equal to £1.00. Of course, the value of this money commodity can equally change. If it becomes possible to produce 10 grams of gold in just 5 hours, then its value halves, and in that case £1 would exchange for only half the above cited quantities of linen, beer, sugar and coffee, provided the value of these other commodities did not themselves change. But, similarly, if £1 now buys only 50 metres of linen, and so on, the exchange value of linen for beer, or sugar or coffee remains unchanged, because their respective values have remained unchanged. It is then only their price, the exchange value expressed as money that has changed.

“Hence, whether the values of two commodities are expressed in their own reciprocal use-values or in their money price—representing both commodities in the form of the use-value of a third commodity—these relative or comparative values or prices are the same, and the changes in them must be distinguished from changes in their relative values in the first sense of the term, i.e., in so far as they only express the change in the labour-time required for their own production, and thus realised in themselves.” (p 171)

Ricardo's 'relative value', in the first sense, i.e. value measured in labour time, appears as "absolute value" compared with the exchange value, or relative value in Ricardo's second sense, where it is only value as measured by some other use value, or money.

“That is why the term “absolute value” occurs in Ricardo’s work, to denote “relative value” in the first sense.” ( 171)

“At times Ricardo also calls this “absolute”’ value “real value”’ or simply value (for instance on p. 16).” (p 172)

This confusion is a major weakness of Ricardo's theory, and it opens the door for Bailey's criticism, because it means that he can ignore the question of exchange value and simply focus on absolute value. Bailey's critique of Ricardo is set out in two works – “A Critical Dissertation on the Nature, Measures and Causes of Value; chiefly in reference to the Writings of Mr. Ricardo and his Followers. By the Author of Essays on the Formation and Publication of Opinions”, London, 1825. and “A Letter to a Political Economist; occasioned by an article in the Westminster Review etc.,” London, 1826. 

“In the first of the above-mentioned works, Bailey says: 

“Instead of regarding value as a relation between two objects, they”( Ricardo and his followers) “consider it as a positive result produced by a definite quantity of labour.” (Samuel Bailey, A Critical Dissertation on the Nature, Measures and Causes of Value, London, 1825, p. 30.)

They regard “value as something intrinsic and absolute” (l.c., p. 8).

The latter reproach arises from Ricardo’s inadequate presentation, because he does not even examine the form of value—the particular form which labour assumes as the substance of value. He only examines the magnitudes of value, the quantities of this abstract, general and, in this form social, labour which engender differences in the magnitudes of value of commodities. Otherwise Bailey would have recognised that the relativity of the concept of value is by no means negated by the fact that all commodities, in so far as they are exchange-values, are only relative expressions of social labour-time and their relativity consists by no means solely of the ratio in which they exchange for one another, but of the ratio of all of them to this social labour which is their substance. (p 172)

This criticism, made by Bailey, of Ricardo's concept of value, as something intrinsic or absolute is not justified, but it does apply to theories of value based upon a concept of 'embodied labour'. That suggests that value is in some sense intrinsic to the commodity, and absolute in the sense that it has embodied some given quantity of labour in its production. But that is not Ricardo's conception and it is certainly not Marx's.

“On the contrary, as we shall see, Ricardo is rather to be reproached for very often losing sight of this “real” or “absolute value” and only retaining “relative” and “comparative values”.” (p 172)

For Marx, value cannot be something embodied, absolute and intrinsic to the commodity – which is the basis of commodity fetishism – because the value of every commodity is constantly changing, as it represents constantly changing amounts of social labour time. As Marx sets out in Capital III the value of any commodity can no longer be determined in isolation from all others, under capitalism, because its own value is constantly being determined by changes in all other commodities. The value of linen can no longer be determined simply on the basis of the time that the weaver expends on its production, because it now depends on the time taken by the cotton growers to produce cotton, the spinner to turn it into yarn etc. But, that too depends on the time taken by the machine maker to produce a cotton gin, or a spinning machine, or power loom, which transforms the productivity of the above activities. Then that also depends on the labour time of the forester to produce timber, the iron maker to produce iron ore and so on, which determines the labour time required to produce the machines and on top of all these goes a multiplicity of other connections to respective inputs.

Moreover, because, under capitalism, prices of production replace exchange values, even less can the price of production of any commodity be determined in isolation, because not only its cost of production continually changes as a consequence of this constant flux, but the average rate of profit is also constantly changing, and the price of production is the sum of these two constantly changing quantities – the cost of production plus the average profit.

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