Theories of Surplus Value, Part III, Chapter 20 - Part 110

The reason that Ricardo excludes labour from his definition of relative value, is because he recognised that where commodity exchanges with commodity, this is an exchange of equal values, of equal quantities of labour-time. Indeed, where a commodity (or money) does exchange directly with labour, i.e. an exchange of revenue with revenue, there is an exchange of equal value. However, where a commodity (money) exchanges as capital with labour there is no exchange of equal value. The commodity (money), as capital, commands a greater quantity of labour than it itself contains. This is the basis of the appropriation of surplus value. 

Ricardo's theory of value is then inconsistent, and he deals with that inconsistency by removing labour from his definition of relative value. But, this inconsistency is not an inconsistency of the theory of value itself, only of Ricardo's presentation of it. Had Ricardo distinguished between labour the essence and immediate measure of value, and labour-power, the commodity sold by the wage-worker, the inconsistency would have disappeared. He could then have included the commodity labour-power in his definition of relative value, alongside all other commodities. Its value would be determined by the labour-time required for its reproduction, and it would exchange with other commodities, on the basis of that value. 

McCulloch lumps labour in with other commodities, in his definition of relative value, so that, in an equilibrium situation of demand and supply, there is an exchange of equal values. 

“Thus “in the ordinary state of things” a commodity only exchanges for a quantity of wage-labour equal to the quantity of labour contained in it. The workman receives in wages just as much materialised labour as he gives back to capital in the form of immediate labour. With this the source of surplus-value disappears and the whole Ricardian theory collapses.” (p 170-1) 

In defining exchange-value as the amount of labour that a commodity commands, McCulloch adopts the position of Malthus. But, Malthus had made clear that his adoption of this argument was in opposition to Ricardo, whereas McCulloch adopts it in defence of Ricardo. 

“McCulloch therefore does not understand the essential kernel of Ricardo’s teaching—how profit is realised because commodities exchange at their value—and abandons it.” (p 171) 

Back To Part 109

Forward To Part 111