What is most astonishing in all of the endeavours of orthodox economics to establish utility as this third term, whilst studiously avoiding recognition of value, i.e. labour, as fulfilling that role, is the extent of historical and anthropological evidence, which demonstrates that, from the start of commodity production, and even prior to that, it has been so. In societies across the globe, there is a wealth of information setting out clearly that it has been labour-time which is the measure of value, and value itself, which thereby provided the objective third term required for comparing commodities one to another, so as to establish an exchange-value, as the ratio of those values, one to another, and so their exchange relation.
Even within the primitive commune, anthropological studies show us that measurement of value is conducted on the basis of labour-time, even though such people may not use the concept of value itself, in making these calculations. The fact that these communities do not use the concept of value in making these calculations, as the basis of organising their production, does not, of course, mean that value itself does not exist, or as Marx points out, in his letter to Kugelmann that The Law of Value, as a natural law, does not impose itself upon their production. That would be like saying that oxygen did not exist prior to its "discovery" by Priestley! It would be like saying that the laws of physics or chemistry did not exist, and did not impose themselves on reality, prior to the development of physics and chemistry as sciences that uncovered the laws of motion of matter and energy. Who would claim that the law of gravity did not impose itself, long before it was developed as a concept by Newton, and set down by him as a mathematical model, which merely discovers and describes what already exists, rather than being in some way the creator of gravity! Value is not somehow created as a result of its existence, merely becoming manifest, as exchange-value, when products become commodities, as a result of the occasional exchange of products becoming the basis of regularised trade, or of that value being theorised and conceptualised, as the foundation of that exchange-value.. As Marx set out in his letter to Kugelmann it is just as much a natural law as is the law of gravity, whether that law has been discovered or not.
“Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society’s aggregate labour. It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves.
Science consists precisely in demonstrating how the law of value asserts itself. So that if one wanted at the very beginning to "explain" all the phenomenon which seemingly contradict that law, one would have to present science before science. It is precisely Ricardo's mistake that in his first chapter on value [ On the Principles of Political Economy, and Taxation, Page 479] he takes as given all possible and still to be developed categories in order to prove their conformity with the law of value."
It is impossible to equate the utility of one apple to ten grapes, but it is rationally possible to equate the ten hours of labour time required to produce 100 metres of linen, with the ten hours of labour-time required to produce 10 grams of gold. Whatever the utility, whatever the physical characteristics of any two commodities, the one thing they have in common is that they are both the products of labour, be it labour previously performed to produce the materials, tools etc. used in their production, or the labour used to process those materials into the finished form of the commodity. It is this which is the objectively determinable third term.
In so far as they all contain this third term, then, irrespective of their utility, or the physical characteristics, they are all qualitatively the same; they are all values. They only differ quantitatively, i.e. in the amount of this third term, value, which they each represent.
“It is as manifestations of this substance that these different things constitute values and are related to one another as values; their different magnitudes of value, their immanent measure of value are thus also given. And only because of this can the value of a commodity be represented, expressed, in the use-values of other commodities as its equivalents. Hence the individual commodity as value, as the embodiment of this substance, is different from itself as use-value, as an object, quite apart from the expression of its value in other commodities. As the embodiment of labour-time, it is value in general, as the embodiment of a definite quantity of labour-time, it is a definite magnitude of value.” (p 128)
In an embodied labour theory of value, value is absolute, because the labour that has actually been expended is thereby fixed within the commodity. It is an historic cost that cannot be changed. But, Marx rejects such embodied labour theories of value, and definitions of value based on historic cost, rather than current reproduction cost. Marx's theory of value is based upon current reproduction costs, and on average socially necessary labour-time, as the basis for determining that current reproduction cost. On the basis of such a theory, value itself is no longer absolute, but only relative. However, it is relative in a different sense to the way exchange-value is relative. Value is relative in the sense only that the current reproduction cost constantly changes, as a result of changes in productivity. The value of any commodity is not absolute, fixed by the actual labour that was used in its production, but constantly changes, as the labour-time required for all commodities of that type constantly changes. Each individual commodity unit, is only a specimen of commodities of that type, and it is the value of the genus that is determinant. Each commodity unit acts as merely an empty vessel, filled with this constantly changing quantum of value, irrespective of its own specific historic cost of production. By contrast, the exchange-value of commodities is relative, precisely because it is not an imminent measure of value, but only a conditional measure of value, contingent upon the measurement of value of the specific genus of commodity, relative to other commodities, or the general commodity, money.
“It is quite wrong to say that the value of a commodity is thereby transformed from something relative into something absolute. On the contrary, as a use-value, the commodity appears as something independent. On the other hand, as value it appears as something merely contingent, something merely determined by its relation to socially necessary, equal, simple labour-time. It is to such an extent relative that when the labour-time required for its reproduction changes, its value changes, although the labour-time really contained in the commodity has remained unaltered.” (p 129)
Note that Marx is not talking about the exchange-value of the commodity, i.e. its relation to other commodities, which is always relative, but to the value of the commodity itself. It is relative, because, irrespective of its historic cost, irrespective of the actual labour-time embodied within it, its value constantly changes, because changes in productivity – not just in its own production, but in relation to all of those commodities consumed as constant capital in its production – means that the labour-time required for its reproduction is constantly changing.
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