Marx inserts a short digression on the etymology of value. The proponents of theories of subjective value, such as Bailey, and later the neoclassical economists, equate value with utility or use-value. In terms of the etymology of the term, that is quite correct, as Marx sets out. Tracing the root of the words, “value”, “valeur”, “wert”, via Sanskrit, and other ancient languages, Marx demonstrates that they originally mean the use value of things to people. But, its precisely for that reason that this concept of value, as use value, has nothing to do with the actual value, or, therefore, the exchange-value that is the subject of economic study.
“Exchange-value, as the result of the social development which created it, was later superimposed on the word value, which was synonymous with use-value. It [exchange-value] is the social existence of things.” (p 296)
Marx examines Hodgskin's analysis of fixed capital, and commends him for his correct understanding of its relation to labour. Hodgskin also makes the correct distinction between wear and tear of fixed capital, the value of which is transferred to the commodity, as against depreciation, which isn't. Wear and tear is a function of use. It requires that the fixed capital participate in the labour process alongside immediate labour. That labour thereby preserves the value of constant capital, by firstly preserving its use value. It does that, in the case of fixed capital, via the transfer of the value of wear and tear.
All capital that is not participating in the labour process, however, deteriorates. Its use value is not, thereby preserved by the action of immediate labour upon it. It depreciates, because it loses use value, and, consequently, it has less use value to transfer, as wear and tear, to output. Unlike the value of wear and tear, which is reproduced in the value of output, this depreciation is then simply a capital loss that is not reproduced.
But, this demonstrates, as Hodgskin says, that it is not this fixed capital that somehow adds value to the value created by labour, but that the value even of the fixed capital is itself not even preserved or reproduced without the action of immediate labour upon it.
““… all instruments and machines are the produce of labour. […] As long as they are merely the result of previous labour, and are not applied to their respective uses by labourers, they do not repay the expense of making them. […] most of them diminish in value from being kept. […] Fixed capital does not derive its utility from previous, but present labour; and does not bring its owner a profit because it has been stored up, but because it is a means of obtaining command over labour” ([Thomas Hodgskin,] Labour Defended etc., pp. 14-15).” (p 297)
““After any instruments have been made, what do they effect? Nothing. On the contrary, they begin to rust or decay unless used or applied by labour.” “Whether an instrument shall be regarded as productive capital or not, depends entirely on its being used, or not, by some productive labourer” (loc. cit., pp. 15-16).
“One easily comprehends why […] the road-maker should receive some of the benefits, accruing only to the road-user; but I do not comprehend why all these benefits should go to the road itself, and be appropriated by a set of persons who neither make nor use it, under the name of profit for their capital” (loc. cit., p. 16).” (p 297)
Marx gives a number of further quotes from Hodgskin to a similar effect that it is the accumulation of skilled labour that is significant, and so the claim to profit, by capitalists, simply on the basis of the role of fixed capital is baseless.
““… it is not […] the quantity but the quality of the fixed capital on which the productive industry of a country depends. […] fixed capital as a means of nourishing and supporting men, depends for its efficiency, altogether on the skill of the labourers, and consequently the productive industry of a country, as far as fixed capital is concerned, is in proportion to the knowledge and skill of the people” (loc. cit., pp. 19-20).” (p 298)
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