2. Value of Labour-Power. Value of Labour. [Ricardo’s Confusion of Labour with Labour-Power. Concept of the “Natural Price of Labour”]
The Physiocrats were able to derive the concept of surplus value as being created in production, because, having defined value in terms of use value, it was easy to see that the use values that went into the production process, at one end, were less than the use values that came out at the other. Adam Smith essentially derives surplus value in the same way, except he strips the Physiocratic theory of this focus on use value, and asserts that value is labour. The labourer is required to perform a given amount of labour to produce the necessaries required for their own reproduction, and any labour they perform in addition to that is surplus labour and so surplus value. As soon as landed property and capital arises, the owners of the landed property and of capital, appropriate this surplus value as rent and profit.
In order to derive surplus value, Ricardo, like Smith and the Physiocrats must first derive the value of labour-power, or, as he and Smith call it, the value of labour. Without first doing that, it is impossible to determine what is surplus labour, and thereby surplus value. Ricardo defines the value of labour as its natural price, and natural price is nothing other than the monetary expression of value. The natural price is not the same as the market price, which fluctuates with changes in demand and supply. Ricardo says,
““Labour, like all other things which are purchased and sold, and which may be increased or diminished in quantity” (that is like all other commodities) “has its natural and its market price. The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution.” (Should read: with that rate of increase, required by the average progress of production.)” (p 400)
So, the value of labour (power) is equal to the value of all those commodities required for the reproduction of labour-power, and, as Marx adds in parentheses, for the natural expansion of capital, and so of the workforce. This is essentially the same as in the Physiocratic theory, except that it is expressed solely in terms of use value. Here it is expressed not only in terms of those use values, as commodities, but as the monetary equivalent of the value of those commodities, paid to the worker as money wages.
For the Physiocrats, the physical composition of the wage does not vary greatly from one year to another, but, for Ricardo, as industrial production expands, the physical constituents of the wage are also seen to change and to expand. So, the concept is included here that the wage is not some fixed set of use values, but comprises what Marx calls an historical and cultural element. That is the physical make-up of the wage, what is considered the minimum required, varies from country to country, and over time, as new needs are developed.
Ricardo continues,
““The power of the labourer to support himself, and the family which may be necessary to keep up the number of labourers … depends on the price of the food, necessaries, and conveniences required for the support of the labourer and his family. With a rise in the price of food and necessaries, the natural price of labour will rise; with the fall in their price, the natural price of labour will fall” (l.c., p. 86).
“It is not to be understood that the natural price of labour, estimated even in food and necessaries, is absolutely fixed and constant. It varies at different times in the same country, and very materially differs in different countries. It essentially depends on the habits and customs of the people” (l.c., p. 91).” (p 400)
So, the wage varies in terms of its composition, but it also varies in value, depending upon whether these components are more or less expensive. At any given time, in any given country, the physical components of the wage are determined, but the value of the wage, i.e. the value of labour (power), is higher or lower, dependent on the prices of these components.
Marx comments,
“The value of labour is therefore determined by the means of subsistence which, in a given society, are traditionally necessary for the maintenance and reproduction of the labourers.
But why? By what law is the value of labour determined in this way?” (p 400)
Ricardo has no answer to this question, other than to say that competition, supply and demand reduces the price of labour down to this minimum subsistence level. If all we are dealing with is an exchange of commodities, and, therefore, an exchange of labour in different forms, then its clear that there is no basis for the value of labour to be any different to that of any other commodity. If a capitalist has wage goods, required for the reproduction of the labourer, with a value of £100 or 100 hours of labour, then it would be a simple matter of the worker providing 100 hours of labour, in exchange for these wage goods. But, in that case, no surplus value would be produced, and the capitalists' variable capital would not have acted as capital, as self-expanding value.
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