Every commodity, as an exchange-value, represents this certain quantity of general abstract labour, and can be exchanged proportionately for any other commodity, on that basis. In being exchanged for money, the value of the commodity is separated from it, and metamorphosed into the body of the money commodity, whose only use value is to perform this function, to become exchange-value incarnate, the physical manifestation of a quantity of social labour-time, a store of value, which can thereby be divided up, bundled together, and repeatedly passed on from hand to hand, in one exchange after another. But, as Marx discussed in “A Contribution to the Critique of Political Economy”, this also thereby poses the question of what it is exactly that represents this physical manifestation of this social labour-time. A 1 gram gold coin may represent 10 hours of social labour-time, and repeatedly be exchanged for commodities of equal value, on that basis. Yet, the reality is that one coin will actually contain less gold than another, whilst continuing to function as though it were full weight.
This idea that the value of a commodity is something that is not embodied within, or intrinsic to it, is alien to subjectivists, such as Bailey or the neoclassical economists. For them, the value of a commodity is intrinsic to it, and inseparable from it. For them, its value is only ever its exchange-value, as manifest in the proportions in which it exchanges for other commodities, which is nothing more than a reflection of the changing preferences of consumers for the different utility that each commodity provides.
“This shows, therefore, that the “verbal observer” understands as little of the value and the nature of money as Bailey, since both regard the independent existence of value as a scholastic invention of economists. This independent existence becomes even more evident in capital, which, in one of its aspects, can be called value in process—and since value only exists independently in money, it can accordingly be called money in process, as it goes through a series of processes in which it preserves itself, departs from itself, and returns to itself increased in volume.” (p 137)
Ricardo, like Smith, Malthus, Franklin and others has an embodied labour theory of value, which fails to distinguish between the specific, individual, concrete labour embodied in commodities, and the general abstract, social labour, which is the essence of value, and of which commodities are merely representatives. Ricardo, thereby, fails to recognise the contradiction between these two aspects of labour, and the process by which it is resolved by the reduction of all labour to this general, social labour in money.
“Therefore he has not understood that the development of money is connected with the nature of value and with the determination of this value by labour-time.” (p 137)
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