Labor value theoryforms the foundation of classical political economy. This theory was consistently developedW. Petty, L. Smith, D. Ricardoand their many followers and popularizers. A logically coherent concept of the theory of labor value was createdK. Marx.
According to the theory of labor value the only source of value of a product is work. Since price is the monetary form of value, it follows that The basis of the price is the labor expended on the production of goods.
To understand the cost and price, it is extremely important theory of the dual nature of labor. K. Marx attached great importance the doctrine of the dual nature of labor, putting its development on a par with the discovery of the law of surplus value.
Since the product has use value and cost, then work, who creates it, also has a dual character. On this occasion, K. Marx remarked: “What has escaped the attention of all economists without exception is simple thing“that if a commodity represents something dual, namely: use value and exchange value, then the labor embodied in the commodity must have a dual character.”
Labor simultaneously appears in concrete and abstract forms.
Specific labor as an economic category is not difficult to understand. Its beneficial properties are obvious, they appear on the surface of phenomena. Specific labor a qualitatively defined use value is produced - bread, a suit, boots, a bicycle, etc.
The development of the social division of labor leads to the emergence of all more qualitatively different types of labor. These types of labor differ from each other in the different usefulness of the products for humans, in the use of means of production, and in the nature of labor operations. Specific work exists in any socio-economic system as a result of the social division of labor and the need to meet the economic needs of everyone in these conditions.
There are many millions of specific types of labor. But at the same time they all have something in common — the costs of human labor in general: energy, muscles, nerves, mind. This abstract labor, which allows you to compare the results of specific labor that differ in their consumer utility.
The labor of a commodity producer, considered as the expenditure of human labor power in general, regardless of its specific results, is called abstract labor. A synonym for the word “abstract” is the word "abstract". In the market, during exchange, there is a distraction from the specific forms in which goods are clothed by each of the numerous types of specific labor. Products are compared with each other as crystals of homogeneous abstract labor.
Abstract labor creates the value of a commodity. Value manifests itself in the exchange of goods in the form exchange value. The exchange value of goods, the proportions in which they are exchanged, their exchange ratio are the form in which the value of goods is expressed.
With private ownership of the means of production, the labor expended on the production of goods appears as private, while at the same time the social division of labor determines its social character. Consequently, the abstract labor that forms the value of a commodity, and the value itself, express social relations.
Value “is only an expression in things, a material expression of relations between people, social relations, the relation of people in their mutual production activities.”
Thus, price - an economic category that expresses relations between economic entities regarding the equivalence of abstract labor spent on the production of goods.
Having discovered the category of value of a commodity in abstract labor devoid of distinctions, which is essentially social labor, Marx overcame the confusion of individual and social value of goods characteristic of his predecessors and was able to solve the problem of the value of a commodity.
Since the value of a commodity is created by labor, the value of a commodity is measured by the amount of labor contained in it.
The natural measure of labor is working hours : hour, day, week, etc. Manufacturers can spend different amounts of time on the production of not only different, but also homogeneous goods. It depends on the tools of labor, the worker’s dexterity, his professional skill and other conditions.
The time it takes individual employee for the production of any product is called individual working time or individual labor costs.
But the value of the goods is determined not individual, but socially necessary expenses labor or working time. K. Marx gives the following definition of this concept: “Socially necessary labor time is that labor time that is required for the production of any use value under the existing socially normal conditions of production and at the average level of skill and intensity of labor in a given society.”
Socially normal (or typical) conditions of production are those in which the overwhelming majority of goods of a given type are created. This is usually average conditions. Only under these conditions does a producer with average skill and working with average intensity create value per hour of labor equal to one socially necessary hour. If production conditions do not correspond to socially normal ones (better or worse), or if the skill of the worker and the intensity of his labor are higher or lower than the average value established in society, then in this case the value created by him per hour of labor will be correspondingly greater or less.
In other words, more productive labor always creates more value over a given time than less productive labor.
Socially necessary labor costs act as a kind of social norm, which appears on the market and into which commodity producers must fit. Extra costs of individual labor are not recognized by society, are cut off by it, and therefore do not create value. In the market, no one will pay for actual labor costs that exceed those that it costs to produce the bulk of goods of a given type.
The essence of the law of value is that the exchange of goods occurs in accordance with the amount of socially necessary labor spent on their production. In other words, the law of value means that goods are exchanged for each other at a value containing the same amount of socially necessary labor. The purchase and sale of goods at such an equivalent acts as a law.
The price of a product on the market is determined by the socially necessary labor costs for its production. In practice, the price, under the influence of competition, supply and demand, can be higher or lower than the cost. The less a product is on the market, the more demand for it exceeds supply, the higher the price for this product will be, and vice versa.
Labor theory of value
As is known, the English classics of political economy (W. Petty, A. Smith, D. Ricardo) were the first to define the essence of value.
1. Heterogeneous products of market exchange have the same internal content - value. Therefore, on the market they are equated to each other in a certain exchange proportion.
2. The value of goods is created by the social labor of producers. This labor is social because the producer of the market product creates it for others. Therefore, value is social labor embodied in a commodity. And the equality of products in terms of their value means that they contain the same amount of labor.
A. Smith explained: “It was not with gold and silver, but with labor alone, that all the wealth of the world was originally acquired; and the value of them to those who own and who want to exchange them for any new products is exactly equal to the amount of labor that he can buy with them or have them at his disposal."
3. The labor that creates value differs in its complexity or quality. Simple (not requiring any training) and complex (skilled) labor can be distinguished. The latter requires a preliminary investment of time and human effort in order to acquire the necessary knowledge and work skills. Therefore, in the market exchange of goods, one hour of complex labor can be equated to several hours of simple labor.
4. Labor itself is measured using working time. If labor is of the same quality (for example, simple labor), then it is quantitatively measured in hours of work.
5. To produce the same type of product, workers usually spend unequal amounts of individual working time. Because they have different production conditions (means and objects of labor), differ in the level of qualifications, in the degree of intensity (intensity) of labor efforts. Therefore, goods of the same type and quality (for example, potatoes) usually have different individual values.
But on the market, goods cannot be sold at the individual value of each of their owners. Indeed, in this case, the person who spent the most labor time on the same product would benefit more than others (but this could be the most inexperienced and lazy). On the market, a social (market) value is established for products of the same type and quality. Therefore, the labor theory of value revealed economic connections that can be schematically reflected in the formula “commodity producer - social labor - commodity - social value - market price.” It is noticeable that here we present a view of commodity-market relations from only one side - from the position of the commodity producer and seller of the product.
1.1. Labor theory of value and trends in technological development.
Today, there are several economic theories that form models that everyone is encouraged to follow in everyday life. Entrepreneurs are interested in models that allow them to increase personal wealth, income, and profit. It is this problem, at a fundamental level, that the labor theory of value put forward by Adam Smith was supposed to solve.
A. Smith put forward a very interesting idea. He argued that wealth is not some kind of absolute given, but the result of labor costs. Current labor and labor previously accumulated in the form of capital. This is how one can interpret the essence of A. Smith’s works on this issue.
A. Smith wrote that gold as a measure of wealth (or a measure of labor) is not suitable for use in economics, because gold itself is a commodity that has its own price. The price of gold changes in the market depending on various circumstances. Nothing can be a standard if it itself changes.
Adam Smith's idea: the more labor you can exchange on the market, the greater your income. This is the first. And second. The measure of value is labor, as a constant standard. Everything is created by labor. And gold, money, is only a convenient way to measure, in certain conditions, labor costs, but in no way a measure of value, i.e. not a standard. Gold itself is a commodity whose price changes on the market.
The next world-class thinker who dealt with this problem is David Ricardo. He said that work also cannot be a standard. Its value changes even more significantly than gold in different conditions and skills. At different times, the production of one product requires significantly different labor inputs. Those. Nothing can be determined using labor as a standard in a market environment. But at the same time, one can interpret the views of D. Ricardo in such a way that the price depends on the total labor costs (capital and current labor), and the higher the income, the lower the current labor costs. But in any case, the cost corresponds to the labor expended.
However, both of these thinkers do not have a clear explanation of how labor costs generate income .
Here it is also appropriate to clarify what exactly in economics is meant by the terms “capital”. Capital – in in a broad sense– the accumulated (total) amount of goods, property, assets used to generate profit, wealth. House money is not capital. Money in the bank, if it earns interest, is capital.
A machine at home is not capital, it is props. Machines that produce parts that are then sold on the market to make a profit are capital. Those. a plant that does not produce products is zero, and a working plant is capital.
When West and East Germany were united, large factories sold for one mark. There were few takers, since in fact these were ruins in which a significant amount of money had to be invested in order for them to become capital.
Apparently, the complexity of the problem under consideration is so great that until today, it has not been possible to reach a consensus on the ideas of A. Smith and D. Ricardo. One gets the impression, and as Ghislain Delaplace, a major researcher of the history of economic doctrines, directly writes, economists themselves were confused in the ideas of A. Smith and D. Ricardo.
"Characteristics of Ricardo as a theorist labor theory the values popularized by both Schumpeter and Marx are highly inaccurate.” One of the greatest economists of the twentieth century, Piero Sraffa, established this fact in his work “Production of goods through goods. Prelude to a critique of economic theory."
The founders of economic theory, minds such as Adam Smith and David Ricardo, believed that the essence of the value of a product or service is associated with the labor costs incurred in its production. Powerful critical analysis labor theory of value, made by an unknown, young researcher, Karl Marx, should have at least undermined, if not overthrown, this theory. Marx demonstrated that the approaches of both Smith and Ricardo within the framework of labor theory do not explain the most important phenomenon market economy. Namely, the main thing remained unacceptably vague. How an entrepreneur's profit is formed.
The irony and even tragedy of the situation lies in the fact that Marx himself gives a brilliant explanation of this phenomenon. Everything was decided by the idea of surplus value. This probably brilliant misconception not only saved the labor theory of value (albeit for a while), but also split the world into two parts, led to revolutions, wars, innumerable misfortunes, as well as to amazingly large-scale social experiments.
The first thing Marx argued: on the market everything is bought and sold according to the cost of labor.
Second. If labor is a measure of value, then labor must be exchanged for labor in exactly the same amounts.
That is, on average in the market, there can be no unequal exchange. Everyone strives to get more for their goods, but as a result, the market leads to the fact that, on average, as much as one participant in the transaction spent labor for the products that he offers for exchange, so much other labor spent for his products. The exchange occurs with equal labor costs on both sides. And it doesn’t matter whether you spent labor now or earlier, in the form of capital.
That is, all value is always formed by labor. Only one part of it is past labor that was once spent. And the other - current labor, or living labor, i.e. the labor of a hired worker who is paid a salary.
In fact, K. Marx put forward two hypotheses:
1) all value is created by labor;
2) everything is sold and bought on the market at a cost corresponding to labor costs.
The work can be difficult, it can be simple. Complex work, taking into account skills and intelligence, is valued much higher than unskilled labor. But in any case, cost is equal to labor. Cost = price = quantity of labor.
For example, let's look at how the cost of a chair is determined.
Let's imagine that a chair is being made in production. In this case, costs are incurred for:
Wood – 5 units. labor
Metal – 5 units. labor
Capital – 10 units. labor
- living labor – 10 units. labor (4 units + 6 units)__________________________________________________
30 units labor
But if you spend 30 units of labor and sell the chair for 30 units, where does the profit come from?
K. Marx put forward a paradoxical idea that solves this problem. According to the statements of K. Marx, the entrepreneur gives the employee only part of the labor he invested, and appropriates part of the labor. This part is surplus (added) value. This idea puts everything in place.
For example, an entrepreneur gives 6 units to a worker, and keeps 4 units for himself when 10 units of living labor have been spent.
Living labor is always divided into unequal parts. Part goes directly to the performer who spent this labor, and part is taken by the entrepreneur. And then everything comes together.
If an enterprise employs 100 people and a worker receives money per day for 6 units of labor, then the entrepreneur will receive 400 units of income. 4 units out of 10 is the so-called rate of surplus value. Those. part is given to the worker, and part is taken by the entrepreneur.
Labor theory of value
The founder of the labor theory of value is Adam Smith(1723-1790). The Scottish economist occupies a special place in the history of economic thought. The main idea of Adam Smith and other representatives of the “English school of classical political economy” was that the wealth of the people is created only by productive labor, and therefore the source of the wealth of the people is the creation of conditions for increasing labor productivity. The merit of Adam Smith is that he pointed out that the source of value is socially divided labor in all spheres of social production. Smith concluded that income and rent are a deduction from the product of the worker and are the income of the capitalist and landowner.
An outstanding representative of bourgeois classical economic theory is David Ricardo. He argued that the value of a product is determined by the necessary labor expended in its production. Ricardo's merit lies in the fact that he considered the law of value as the starting point for the analysis of the entire system of capitalist economy and reduced all other categories of economic theory to this basis. David Ricardo separated wages and profits as two parts of the value created by labor.
Adam Smith was the founder of a direction in economic science called the “political economy of labor,” within which the doctrine of the labor theory of value, the division of society into classes with conflicting interests, and the exploitative origin of profit under capitalism developed. The same direction was developed in the works Karl Marx(1818-1883). The main difference between Marx's economic theory was that he viewed the capitalist system from the class positions of the proletariat. Marx's doctrine of the internal laws of development of capitalism turned into a doctrine of its death under the weight of internal contradictions and a justification for the inevitability of the revolutionary transition to a new social system - socialism.
The foundation of Marxist political economy is the so-called labor theory of value. Its essence lies in the fact that the exchange of goods in society occurs in accordance with the amount of human labor that is spent on their production. Heterogeneous products of market exchange have the same internal content - value. Therefore, on the market they are equated to each other in a certain exchange proportion. The ability of a commodity to be exchanged for other commodities in certain proportions is called exchange value. Exchange value is a property necessarily inherent in a product. The basis of the exchange value of goods is social labor. It is embodied in the cost of the product.
And if Adam Smith laid the foundations of this theory, then Marx introduced a fundamentally new element - the idea of the dual nature of labor. Labor in his theory is both concrete and abstract at the same time.
Any labor activity is recognized as specific labor. The specific form of labor is due to the fact that it is always aimed at creating very specific use values. Use value is the property of a product to satisfy the production, social, personal or other needs of people. Therefore, use value is a natural property of a good.
Labor that is impersonal or taken outside of its concrete form and embodied in a product is called abstract labor. In other words, abstract labor is the expenditure of human labor power in general, contained in all goods and making them homogeneous and commensurate. Therefore, the criterion for equalizing various use values in the exchange process is abstract labor. Abstract labor creates value.
Thus, labor has a dual character and determines two properties of the product. On the one hand, it appears in the form of concrete labor aimed at creating use value, and on the other hand, it appears in the form of abstract labor that creates the value of a commodity.
In conclusion, we can conclude that despite the fact that concrete and abstract labor have different results (use value and value, respectively), nevertheless, as two opposites at the level of synthesis, they transform into each other. Concrete labor and use value act as a value-forming basis, which is manifested in the qualitative characteristics of abstract labor (super complex, complex, less complex, simple labor) and, accordingly, in larger or smaller amounts of value created. The division of labor into concrete and abstract is a specific phenomenon of commodity production.
Abstract labor has two sides: social and natural. The natural side involves the expenditure of human energy, muscles, nerves, etc. The natural side does not determine the abstract nature of labor. The essence of abstract labor is determined by the social side.
The value of goods is created by the social labor of producers. This labor occurs because the manufacturer of the market product creates it for others. Consequently, value is social labor embodied in a commodity. If the cost of different goods is the same, this means that the same amount of labor was spent on their production. The labor that creates value varies in its complexity and quality.
Highlight:
q simple work (not requiring any training);
q complex labor (skilled).
Simple labor - This is unskilled work that any healthy person can perform without first obtaining any specialty.
Difficult work - this is skilled work, the performance of which requires obtaining some specialty. Goods produced by complex labor have a higher value than goods containing the same amount of simple labor.
In the market exchange of goods, 1 hour of complex labor can correspond to several hours of simple, unskilled labor. Complex labor is simple labor multiplied or raised to a power. This reduction of complex labor to simple is called labor reduction, and is carried out through the mechanism of market exchange. Labor itself is usually measured using working time. If the work is of the same quality (for example, complex), then it is quantitatively measured in hours.
It should also be noted that different workers spend different amounts of time producing the same type of product. This time is called individual working time. Workers have different working conditions and have different levels of training. Therefore, goods of the same quality may have different individual values. Individual cost of a product is formed from the labor costs of each individual manufacturer to produce a particular product. The best, better-equipped businesses will have lower individual costs, while the worst ones will have higher individual costs.
However, goods cannot be sold on the market at the individual value of their owners. Therefore, a social value is established on the market for identical goods. The market price will be based on the cost or labor costs that will be recognized by buyers as necessary for society, i.e. recognized by society through a deed of sale. Such labor costs are called socially necessary labor costs. In order to determine which labor costs will be recognized as socially necessary labor costs, consider the following example.
Let us assume that the same product is supplied to the market by three groups of producers. The first group produces goods in worse conditions and, therefore, at high costs, the second group - in average conditions, the third - in best conditions and at minimal cost. Socially necessary labor costs will approach the individual costs of those producers who supply the largest portion of a given product to the market. As a rule, social cost corresponds to average production conditions at a given level of development of technology or technology, productivity and labor intensity.
Individual and social value do not coincide in magnitude. This is determined by the following reasons:
objective reasons - proximity of raw materials, level of specialization, level of mechanization and automation of production, capital equipment;
subjective reasons - poor organization of production, low labor discipline, excessive consumption of raw materials and wages, low level of labor intensity, defects in production.
Subjective reasons can be eliminated completely. Objective reasons can be smoothed out by creating economically equal business conditions.
Thus, the labor theory of value establishes economic connections that can be schematically depicted as follows: “commodity producer - social labor - commodity - social value - market price.”
Since every entrepreneur, together with the labor of his employees, uses the results of labor in the social sphere, science and natural products, the total, or market value, of his product includes labor value, social and nominal value. In the process of circulation of goods, under the influence of market laws, market value turns into a specific price for each purchase and sale.
Labor cost a commodity represents that part of the value of a commodity that is determined by human productive power taken in isolated labor. Labor value is created in the isolated process of production of an individual entrepreneur. However, each enterprise produces its products, cooperating with other enterprises and structures that supply materials, labor, information, etc. Accordingly, the question arises: “How to take these costs into account in the cost of the product?” Therefore, at this stage, such a concept as social cost is introduced. Its embodiment in a specific product differs from the process of direct creation of labor value. Social cost- this is the result of the joint work of socio-economic structures, the dismemberment of which leads to the destruction of labor cooperation and the disappearance of its productive power.
Products of the productive force of nature have a special way of valuation in commodity relations. In the origin in which human labor is not applied, they have no value and are not commodities. But when involved in commodity-money relations, they take on a commodity form and acquire a price. Under the influence of customer demand, a certain face value. This cost contrasts with the cost that buyers pay.
To summarize all of the above, the labor theory of value set forth by Marx can be summarized as follows.
First. Socially necessary labor inputs, social value are determined by average production conditions.
Second. Use value and its qualitative characteristics are not the factors that create value.
Third. Labor costs are determined by the amount of working time spent on the production of a given specific product.
And as a result, with the socialization of production relations, value relations allegedly die out, and they are replaced by relations of direct distribution of goods in accordance with the quantity and quality of labor expended or in accordance with socially necessary labor costs.
Ministry of General and Professional Education of the Russian Federation.
St. Petersburg State Engineering and Economic Academy
Institute of Information Systems in Economics and Management
Department: economic theory.
Coursework
“Labor Theory of Value.”
Completed:
student gr. No. 371 Yu. M. Timofeeva
Checked:
Academician of the Academy of Sciences, prof. G. S. Vechkanov
Saint Petersburg
1998
Content.
2. Labor theory of value 5-26 pp.
I. Petty 5-8 pp.
II. Smith 8-11 pp.
III. Ricardo 11-20 pp.
IV. Marx 20-26 pp.
3. Alternative theories
cost 26-33 pp.
4. Conclusion 33-34 pp.
References 35 pp.
Introduction.
In my work, I tried to consider the essence and historical development of the labor theory of value, which is one of the main theories of value in modern economic science. They will also try to compare it with alternative theories.
The labor theory of value existed long before Marx. William Petty was the first to raise this question, then Adam Smith continued to develop the theory, then David Ricardo, and Marx finally formalized the labor theory of value.
W. Petty established that the basis of the proportion of exchange is the equality of labor, labor time spent on comparable goods. But by cost Petty means only the labor expended in producing the silver.
A. Smith, deepening Petty’s ideas, came to the broadest generalization: “Labor is the only universal, as well as the only accurate measure of value, or the only measure by which we can compare the value of different goods with each other at all times and in all places.” . But he believed that this theory was valid only in simple commodity production. His other opinion is that value, and therefore price, consists of labor costs and surplus value.
D. Ricardo built a more logical theory than Smith's. He believed that the cost of a product should take into account not only the labor costs for its production, but also the labor costs for the production of the means of production with which this product is produced, as well as the labor costs for the production of materials.
K. Marx completed the formation of the labor theory of value. When considering value, he took into account the dual nature of labor. He resolved all the contradictions, clearly separated exchange and use values and turned the labor theory of value into an integral system.
The main content of the labor theory of value can be briefly expressed in the following provisions.
First position. Heterogeneous products of market exchange have the same internal content - value. Therefore, they can be equated to each other in a certain exchange proportion.
Second position. The value of all goods is created by the social labor of commodity producers. This labor is social because the manufacturer of a market product does not work for himself, but creates a useful thing for other members of society. Therefore, value is social labor embodied in a commodity. And the equality of products in terms of their value means that they contain the same amount of labor.
Third position. The labor itself that creates value varies in its complexity or quality. We can distinguish between simple (requiring the least training) and complex (skilled) labor. The latter requires a preliminary investment of time and human effort in order to acquire the necessary labor skills and knowledge. Therefore, 1 hour of complex labor is not directly equal to 1 hour of simple labor.
However, during the market exchange of things, the so-called reduction of labor occurs: 1 hour of complex labor is reduced to several hours of simple labor. Indeed, on the market, products of skilled activity, due to their value, are equated to products of simple labor.
K. Marx gave the following interpretation of the reduction of labor: “Simple average labor, although different character in different countries and in different cultural eras, nevertheless, for each specific society there is something given. Comparatively complex labor means only simple labor raised to a power, or rather multiplied... A commodity may be the product of the most complex labor, but its value makes it equal to the product of simple labor.”
Fourth position. Labor has an internal measure - working time. If labor is the same in quality, then it is quantitatively measured by its length in time.
It is obvious that the working time per unit of production is not the same in size for different producers producing the same specific goods. How, in this case, - according to what economic law - does the commodity economy develop?
This is the law of value. He expresses such an objective need that the value of a commodity is determined by socially necessary labor time. This is the working time spent on manufacturing products when:
a) socially normal (prevailing) state of production;
b) average qualification of workers;
c) average labor intensity.
This is the amount of time it usually takes most manufacturers to create a product, which is the average time. But with limited natural factors (for example, in agriculture or in the extractive industries), worse economic conditions may also be socially normal.
2. Labor theory of value.
I. Petty.
William Petty is rightfully considered the first professional economist, in the modern sense of the word. He lived in England in the 17th century. But as usually happens, he did not realize that he was a pioneer. The greatest thing he attributed to himself was the invention of political arithmetic (statistics). This was seen by his contemporaries as his main merit. In fact, he also did something else: with his statements, as if, among other things, thoughts about value, rent, wages, division of labor and money, he laid the foundations of scientific political economy. Petty can also be considered the founder of the labor theory of value. Petty’s most important economic work is considered to be “Treatise on Taxes and Fees.”
Petty was fully open to science only by Marx. Only Marx, having illuminated the entire history of political economy in a new way with his materialist and class analysis, showed the true place that the brilliant Englishman occupies in it. Petty is the founder of bourgeois class political economy, which moved on to the analysis of the internal laws of the capitalist mode of production, to the search for the law of its movement.
200 years later, Karl Marx wrote about the Treatise: “In the work we are considering, Petty essentially determines the value of goods by the comparative amount of labor contained in them. In turn, “the definition of surplus value also depends on the definition of value.” These words of Marx express in the most concise form the essence scientific achievement English thinker.
Let's give one famous example from Petty's Treatise. “Suppose someone is engaged in the production of grain. Part of the product he produces will again be used for seeds, part will be spent on satisfying his own needs (including through exchange), and the remainder of the grain constitutes the only and true land rent.” Here it is planned to divide the product and its value into three main parts: 1) the part representing the reimbursement of the spent means of production, in in this case seed; 2) the portion necessary to support the life of the worker and his family, and 3) the surplus or net income. This last part corresponds to the concept of surplus product and surplus value introduced by Marx.
It is curious that as part of the costs of means of production, Petty omits other costs, in addition to seeds: manure, wear and tear of a horse, plow, sickle, etc. These costs are not reimbursed by grain in kind (therefore Petty may not take them into account), but should be reimbursed by cost. Let's say in 10 years a plowman needs a new horse. From each year's harvest he must retain some portion of the value for the subsequent purchase of that horse.
Note also that here we are talking about production without hired labor. This can be partly explained by the fact that Petty strives to make his “model” as simple and visual as possible. But what is most certain is that simple commodity production (on one’s own land, with one’s own tools and without hiring workers) was of great importance in his times, prevailing over a capitalistically organized economy.
Petty further poses the question: “... how much English money can this bread or this rent be equal in value? I answer: the amount of money that someone else acquires in the same amount of time, after deducting his costs of production, if he devotes himself entirely to the production of money, that is, suppose that someone else goes to the country of silver, mining this metal there , cleans it, delivers it to the place of production of bread first, mints coins from this silver, etc. Let us further assume that this individual, during the time that he devotes to the production of silver, also acquires the means necessary for his food, clothing etc. Then the silver of one must be equal in value to the grain of another; if there are, for example, 20 ounces of the former, and 20 bushels of the latter, then an ounce of silver will represent the price of a bushel of corn.”
It is obvious that equalizing the value of parts of grain and silver, which represent a surplus product, is equivalent to equalizing the entire gross product. After all, these last 20 bushels of grain are no different from the remaining, say 30 bushels, which replace the seeds and constitute the subsistence of the farmer. The same applies to the 20 ounces of silver discussed above. Elsewhere Petty expresses the labor theory of value in its purest form: “If any one can mine their Peruvian soil and bring one ounce of silver to London at the same time in which he is able to produce one bushel of corn, then the first represents the natural price of another..."
So, Petty essentially formulates the law of value. He understands that this law operates in an extremely complex way, only as a general tendency. This is expressed in the following truly amazing phrases: “I maintain that this is precisely the basis for comparing and contrasting values. But I recognize that the superstructure that develops on this basis is very diverse and complex.”
Between exchange value, the value of which is determined by labor costs, and the real market price, there are many intermediate links that immensely complicate the pricing process. With unusual insight, Petty names some price-forming factors that modern economists and planners have to take into account: the influence of substitute goods, new goods, fashions, imitation, and consumption traditions.
Petty takes the first steps towards analyzing the labor itself that creates value. After all, each specific type of labor creates only a specific benefit, use value: the labor of a farmer - grain, the labor of a weaver - linen, etc. But in any type of labor there is something common that makes all types of labor comparable, and these benefits - goods, exchange values: the cost of working time as such, the cost of the worker’s productive energy in general.
Petty was the first in the history of economic science to pave the way for the idea of abstract labor, which formed the basis of the Marxist theory of value.
It would be strange to look for some kind of coherent and complete economic theory from the founder and discoverer. Entangled in mercantile ideas, he still cannot get rid of the illusion that labor in the extraction of precious metals is still some kind of special labor that most directly creates value. Petty cannot separate exchange value, which is most clearly embodied in these metals, from the very substance of value - the costs of universal human abstract labor. He does not have any clear concept that the value of value is determined by the costs of socially necessary labor, typical and average for a given level of economy. Labor costs that exceed socially necessary costs are wasted and do not create value. From the point of view of the subsequent development of science, much of Petty’s work can be considered weak and downright erroneous. But is this the main thing? The main thing is that Petty stands firmly on his chosen position - the labor theory of value - and successfully applies it to many specific problems.
II. Smith.
The needs of the era give birth to the right person. Being conditioned by the development of the capitalist economy itself, political economy in England reached a stage when the need arose to create a system, the need to streamline and generalize economic knowledge. Smith was a man and a scientist who was up to the task. This Scot happily combined the ability of abstract thinking with the ability to vividly talk about specific things. Encyclopedic scholarship - with exceptional conscientiousness and scientific honesty. The ability to use the ideas of other scientists with great independence and critical thinking. Scientific and civic courage - with professorial poise and systematicity. In London in March 1776, one of the most remarkable books in the history of political economy was published: “An Inquiry into the Nature and Causes of the Wealth of Nations.”
Adam Smith based his research on the labor theory of value, considering the law of determining value to be the labor expended on the production of goods and the exchange of goods according to the amount of labor contained in them. At the same time, he attempted to advance from the initial, simplest formulation of the labor theory of value to an analysis of the real system of commodity-money exchange and pricing under conditions of free competition capitalism. Treating the problem of value with a scientific depth and thoroughness unattainable for him, Smith, nevertheless, came across insoluble contradictions.
Smith, with greater clarity than anyone before him, defined and differentiated the exchange and use value of a commodity. He recognized the equivalence of all types of productive labor as the creator and final measure of value, showed the pattern that value must certainly be expressed in exchange proportions, in quantitative terms of the exchange of goods, and with sufficiently developed commodity production - in money. However, Smith did not explore labor as a substance of value. He did not distinguish between the labor process as a factor in the creation and transfer of value, since all his attention was directed to exchange value, to the quantitative measure of value, as it manifests itself in exchange proportions, and ultimately in prices.
Smith understood that the value of value is determined not by the actual labor costs of an individual commodity producer, but by those costs that are on average necessary for a given state of production. He also noted that skilled and complex labor creates more value per unit of time than unskilled and simple labor, and can be reduced to the latter using certain coefficients. He outlined the concept of labor reduction.
Smith's further development of the theory of value was evidenced by the distinction between natural and market prices of goods, with the former initially being interpreted as a monetary expression of value. It “seemed to represent the central price towards which the prices of all commodities constantly gravitate,” Smith wrote. - Various random circumstances can sometimes keep them at a significantly higher level and sometimes lower them somewhat in comparison with it. But whatever the obstacles that deflect prices from this stable center, they constantly gravitate towards it.” Smith initiated the study of specific factors that cause prices to deviate from value. This, in particular, opened up opportunities for studying supply and demand as pricing factors and the role of various types of monopolies.
However, Smith was not consistent in presenting his theory of value. Indeed, as Marx wrote, we find in Smith “not only two, but three, and, to be quite precise, even four sharply opposed views on value, which peacefully sit side by side or intertwine with each other.” Apparently, the main reason for this is that Smith could not find satisfactory, from the point of view of scientific logic, connections between the labor theory of value, as it developed at that time and as it was fixed by him, and the complexity of the specific processes of the capitalist economy. Not finding these connections, he began to vary and adapt the original concept.
First of all, along with value determined by the amount of necessary labor contained in a product (the first and main view), he introduced a second concept, where value is determined by the amount of labor that can be bought for a given product. In the conditions of a simple commodity economy, when there is no hired labor and producers of goods work on the means of production that belong to them, this is the same in magnitude. A weaver, say, exchanges a piece of cloth and not boots. You can say that a piece of cloth is worth a pair of boots, or you can say that it is worth the labor of a shoemaker during the time he made these boots. But quantitative coincidence does not serve as proof of identity, since the value of a given product can be quantified only in one single way - in a known quantity of another product.
Smith completely lost ground when he tried to apply this second interpretation of value to capitalist production. If a shoemaker works for a capitalist, then the cost of the boots he produces and the “cost of his labor,” what he receives for this labor, are completely different things. It turns out that the employer, having bought the labor of a worker (as Marx showed, what is actually purchased is labor power, the ability to work), receives a greater value than he pays for this labor.
Smith could not explain this phenomenon from the position of the labor theory of value and made the incorrect conclusion that value is determined by labor only in the “primitive state of society,” when there were no capitalists and wage workers, i.e., in Marx’s terms, during simple commodity production. For the conditions of capitalism, Smith constructed a third version of the theory of value: he decided that the value of a commodity simply consists of costs, including workers' wages and capitalist profits. He was also encouraged by the fact that this theory of value seemed to explain the phenomenon of the average profit on capital, the “natural rate of profit,” as he put it. Smith simply identified value with the price of production, without seeing complex intermediary links between them.
This was the “cost theory” that was destined to play an important role during the next century. Smith here took the practical point of view of a capitalist, who really believes that the price of his commodity is mainly determined by costs and average profit, and in each at the moment also supply and demand. This concept of value opened up space for depicting labor, capital and land as equal creators of value. This conclusion from Smith was soon drawn by Say and other economists seeking to use political economy to protect the interests of capitalists and landowners.
III. Ricardo.
An integral part of Ricardo's theory of value is his criticism of unscientific ideas on this issue. This theory, in fact, grew out of such criticism. Ricardo thoroughly, reasonedly, critically examined a number of theories of value and rejected them one after another.
In this case, Ricardo paid special attention to the non-scientific version of Smith's labor theory of value. According to the duality of the method used by Smith, he developed a dual theory of value. On the one hand, Smith came to the generally correct conclusion that the value of goods is determined by the labor spent on their production. On the other hand, Smith imagined that it was possible to determine the value of goods by the labor that is “bought with this product.” According to Smith, these are identical definitions.
Ricardo strongly opposed Smith's second, unscientific definition of value. He showed that these are by no means identical positions, and that Smith's second point of view does not correspond to reality. “If this were really true,” wrote Ricardo, “if the worker’s remuneration were always proportional to how much he produced, the amount of labor expended on a commodity and the amount of labor that could be purchased for that commodity would be equal. … But they are not equal.” A worker’s work is not paid twice as much if this worker has doubled the volume of production, Ricardo explained his point of view.
Ricardo showed that a worker's wages do not actually depend on the level of labor productivity he achieves. He wrote: “Wages do not depend on the quantity of goods that will be produced by the labor of one day... if instead of four measures by the labor of one day ten measures could be produced, wages would not rise at all and the worker would not receive a larger portion of bread, clothing or cotton fabrics."
This means that Ricardo made a clear distinction between the labor spent on the production of a product and determining its value, and the labor that can be bought for a given product, between the labor expended and the labor purchased. The source of value for Ricardo is the labor expended on the production of goods.
At the same time, Ricardo’s thesis about the absence of a direct dependence of wages on changes in labor productivity seems to contradict reality. It is known that under piecework conditions, the more goods a worker produces, the higher his wages. The reason why Ricardo defended this thesis is that he sought to identify a certain dependence of economic phenomena, and therefore abstracted from less significant cause-and-effect relationships. Indeed, Ricardo's thesis rests on the following two premises. First, Ricardo assumed that wages are regulated by the labor input required to produce “labor” as a commodity (in reality, labor power as a commodity). That is why it does not depend directly on labor productivity. Secondly, it is clear that Ricardo abstracted from the secondary laws of wages, which established the dependence of wages on the quantity and quality of labor.
However, this criticism has not been consistent enough. Ricardo actually showed that the value of goods does not consist of income, since these latter represent already created value. However, he accepted another unscientific thesis of Smith's theory of value, namely his position that the value of a commodity is divided into income. Meanwhile, in reality, only newly created value breaks down into income. Consequently, this point of view ignored the so-called old value in the structure of the value of goods, that is, the value transferred from the means of production. And here we see that Ricardo’s lack of understanding of the dual nature of labor did not allow him to give a truly scientific solution to the problem of the structure of the value of goods.
Let us note that the structure of value has duality, containing both newly created (by abstract labor) and transferred (by concrete labor) value from the means of production, precisely due to the dual nature of the labor that creates the commodity.
We know that Smith was inconsistent in his labor theory of value. He believed that the determination of value by labor and labor time was applicable only to the “primitive state of society,” when there was no capital and wage labor. In modern society, value is actually determined by the amount of income in the form of wages, profits and rent received from the production and sale of goods. Such inconsistency was unacceptable to Ricardo's strict logical mind. Smith's characteristic free handling of basic principles did not suit him. Such a fundamental law as the law of value cannot completely change with the development of society. No, said Ricardo, the determination of value by labor time is an absolute universal law. The thesis about the full applicability of the law of labor value to a developed capitalist society was Ricardo’s great scientific merit.
Ricardo's criticism of unscientific theories of value cleared the way for him to develop his own scientific concept.
What is new that Ricardo introduced into the labor theory of value, in contrast to his predecessors, is mainly due to a significant change in the historical situation - the transition from manufacturing capitalism to capitalism at the machine stage of development.
The new historical situation required Ricardo, first of all, to clarify the understanding of the very essence of the law of value, the very concept of value. Emphasizing that its uncertainty creates confusion in political economy as a whole, Ricardo more consistently than Smith developed the position of labor spent on the production of goods as the source of their value. He formulated their principle, “by virtue of which the value of objects increases or decreases depending on the increase or decrease in the labor expended on them.”
By determining the value of a product by the labor costs that went into its production, Ricardo grasped the general dependence of value on the level of labor productivity. He wrote: “If the exchange value of goods is determined by the amount of labor embodied in them, then any increase in this quantity must increase the value of the commodity on which labor is spent, and any decrease decreases it.”
If the value of goods is determined by the labor spent on their production, then the question arises, what kind of labor are we talking about here? After all, it is clear that labor has the most various characteristics. It appears as living and materialized, as simple and complex, which also has varying degrees of complexity, as labor employed in various industries and spheres of production, in a variety of production conditions - the best, average and worst, and besides, labor is rewarded according to different in various fields its application, it is technically armed in different ways, it is carried out by representatives of various working classes, etc.
Ricardo's merit lies in the fact that he was able to carry his definition of value through all these complicating circumstances and come to the conclusion that they do not at all deny the fact that the value of goods is determined by the labor expended in their production.
Ricardo posed and, on the whole, correctly resolved the question of the relationship of labor of varying degrees of complexity to the determination of value by labor.
The significance of this issue is that it is closely related to the essence of the process of formation of the value of goods. Let us note that simple labor cannot always be identified with unskilled labor. Simple labor is the dominant type of labor that determines the value of goods, to which more complex and less complex labor is reduced. It is precisely due to the fact that simple labor, as labor of the dominant degree of complexity, determines the value of goods, and it becomes possible and necessary to reduce both more complex and less complex labor to it.
Ricardo found that differences in the complexity of labor are not an obstacle to considering labor as a source of value, since “the value of labor of various qualities is soon established in the market with sufficient accuracy for all practical purposes ....” This means that Ricardo saw that in the market, labor of varying quality is reduced to a certain amount of simple labor. At the same time, he also saw that different remuneration for labor of different quality does not make any significant changes in determining the value of goods by the labor spent on their production. He wrote that “work of different quality is rewarded differently. This circumstance does not cause a change in the relative value of goods,” since wages do not determine the value of goods.
Ricardo, on the whole, correctly resolved the problem of the relationship between the value of a commodity and its use value, although he did not give his position any detailed justification. And again, his lack of understanding of the dual nature of labor that creates goods played a negative role here.
In his analysis, Ricardo came to understand the opposite movement of the use value of a product and its value in conditions of increasing labor productivity. This problem received scientific resolution in the works of Marx, primarily in Capital. It has enormous scientific and practical economic significance, since the secret of effective management lies precisely in the understanding of this pattern.
Ricardo illuminated this problem when considering the relationships between the categories “wealth” and “value”. However, by wealth he meant precisely use value, a certain amount of it.
At the same time, Ricardo discovered that quantitatively “value” and “wealth,” that is, the sum of use values, do not at all coincide. He wrote: “Value differs significantly ... from wealth, for it does not depend on abundance, but on the difficulty or ease of production. The labor of one million men in factories will always produce the same value, but it will not produce the same wealth.”
Moreover, Ricardo came close to understanding that the dynamics of use value and value with increasing labor productivity will be different. His reasoning boils down to the following. The use of machines makes it possible to produce more labor products per unit of time, while labor costs per unit of output are reduced. Consequently, the sum of use values increases, and the value of a unit of goods decreases. Moreover, the total cost of goods decreases, due to the fact that increased labor productivity reduces the cost of previously produced goods. Thus, “society, despite the increased quantity of goods ... would have at its disposal a smaller amount of value.”
Ricardo also saw the methodological aspect of the problem he raised. He understood that many errors in political economy stem from the confusion of the use value of a commodity and its value, often in the most unexpected forms. Ricardo wrote: “Many errors in political economy are explained by erroneous views on this subject, namely, the identification of an increase in wealth with an increase in value...”. This position of Ricardo is very relevant today.
However, the underdevelopment of labor value, primarily Ricardo’s lack of a clear idea of the dual nature of the labor that creates a commodity, did not allow him to fully reveal the problem of the relationship between the value of a commodity and its use value, to identify the reason for their opposite movement in conditions of increasing labor productivity, although he recorded this phenomenon .
A major step towards the development of a scientific theory of value was Ricardo’s formulation of the problem of socially necessary labor, without solving which it is impossible to reveal the mechanism of action of the law of value. Thus, he himself came to the distinction between the individual and social value of a commodity, on the contradictory unity of which the operation of the law of value is based.
The historical conditions of the industrial revolution required concretization of the conclusion about labor as a source of value. These conditions raised the question of what kind of labor actually regulates value: after all, the labor costs of a small artisan, a worker in a manufactory, and a worker in a machine factory in the production of the same type differ significantly.
Considering this problem, Ricardo came to the conclusion that differences in labor productivity do not negate the determination of value by labor, since the amount of value is regulated not by the labor that actually went into the production of a product, but by the labor that is necessary for its production under certain conditions. precisely the worst production conditions. Ricardo wrote: “The exchangeable value of all commodities, whether manufactured goods, or the products of mines, or agricultural products... is regulated by the greatest quantity of labor, necessarily expended in the production of goods by those who... continue to produce under the most unfavorable conditions; the latter are understood as those at which it is necessary to carry out production in order to produce the required quantity of products.”
Here Ricardo actually made a distinction between individual and socially necessary labor, thereby seeking to solve a problem that economic thought had been struggling with for centuries. Petty also encountered the problem of socially necessary labor when he discovered that goods on the market were sold for which no labor had gone into, although they were sold at the same prices as goods produced by labor (for example, livestock raised in natural conditions without any expenditure of human labor, a nugget of gold, etc.). This meant that, although no labor was expended on the production of such goods, they nevertheless had value. And this, in turn, could only take place under one of the following two conditions. Either other factors, along with labor, are the source of value, or value is not created by the labor that is actually contained in the product, i.e. individual labor, but the labor that is expended on the production of a given product under average, socially normal conditions of production.
Ricardo's merit was that he consistently developed the principle of labor value, convincingly proving the inconsistency of statements about the multiplicity of sources of value. Ricardo's position played an outstanding role in the development of economic science.
However, the solution given by Ricardo is far from complete and inaccurate. As a regulator of the value of value, he depicts individual labor costs under worse production conditions, which means a misunderstanding of the social nature of labor that creates the value of goods. In addition, the solution to the problem of value in relation to industrial goods is incorrect. The pricing process, which is typical for agriculture and the mining industry (the cost of goods is determined by labor costs under worse production conditions), Ricardo extended to all sectors of the economy, including industry. Thus, he made it difficult for himself to understand the actual dependence of the value of value on the level of development of the productive forces of society.
Ricardo also tried to answer the question of what happens to the cost of the means of production during the production process. Some of Ricardo’s predecessors also approached this problem in one form or another (primarily Quesnay, the founder of the doctrine of the physiocrats, who in his “Economic Table” actually proceeded from the fact that the value of spent means of production in the process of their productive use is not lost, but is transferred to new product). However, there is a very significant difference between the positions of Quesnay and Ricardo. If Quesnay relied more on intuition and only stated the very fact of the transfer of value from the means of production, then in Ricardo for the first time there is a conscious formulation of this problem, moreover, an attempt to solve it from the position of the labor theory of value. The title of the 3rd section of the 1st chapter of Ricardo’s main work formulates his position as follows: “The value of goods is influenced not only by the labor applied directly to them, but also by the labor expended on tools, instruments and buildings that facilitate this labor.”
Ricardo came to the conclusion that capital is nothing more than the labor of workers accumulated in the means of production. Despite the limitations of this interpretation of capital (which in reality represents a special social-production relationship between the capitalist and the wage worker, namely the relationship of exploitation by the first of the second), this position of Ricardo meant that the means of production cannot create new value, they only transfer their value to new goods. This revealed the inconsistency of the apologetic theory of “capital productivity”.
At the same time, this point of view of Ricardo represented a significant contribution to the foundation of the labor theory of value. Based on his analysis, Ricardo came to the conclusion that under capitalism, and not just under simple commercial farming As Smith believed, the value of goods is determined by the labor spent on their production, and not by income at all, that the accumulation of capital does not abolish the law of value, but only complicates the process of value formation. Ricardo showed that land, and not just factory means of production, does not create value, that the income brought by land - land rent - was created by the labor of hired workers and is determined by the law of value.
From these reasonings Ricardo followed a very important conclusion: the only source of value is the labor of hired workers who went into the production of goods. This conclusion brought bourgeois political economy to the point beyond which scientific truth became incompatible with the bourgeois form of thinking.
However, Ricardo, who did not reveal the dual nature of labor, was unable to explain how the value of the means of production is transferred to a new product, what is the mechanism of this process. For the same reason, he did not clearly characterize the duality of the process of forming the value of a product, and at the same time the duality of its result: transferred value (as the result of concrete labor) and newly created value (as the result of abstract labor). This is where Ricardo’s very contradictory attitude towards the so-called Smith’s dogma stems. He rejected one side of it, namely Smith's thesis that value is composed of income, and agreed with the other side, the assertion that value is divided into income. Meanwhile, the second side of Smith’s dogma ignored the old, transferred value in the structure of the value of goods, which clearly contradicted Ricardo’s position on the “influence” of labor spent on the means of production on the value of the goods produced.
Another drawback of Ricardo’s position when considering this problem was that he failed to identify the role of the working part of constant capital, materially represented by raw materials, materials, fuel, etc., in the process of forming the cost structure of goods. Ricardo's formulation noted above speaks only of “tools, instruments and buildings that facilitate labor” and does not mention circulating capital.
The difficulty that Ricardo encountered stemmed from the unique role of objects of labor in the labor process. Ricardo mixed the division of capital into fixed and circulating capital, into constant and variable.
From the point of view of the first division, objects of labor, together with labor, oppose the means of labor, and from the point of view of the second, objects of labor, together with the means of labor, oppose labor. Since Ricardo mixed two different principles of division of capital, since the role of objects of labor, or more precisely, their value, in the process of value formation did not seem clear enough. At the same time, we should keep in mind that Ricardo, excluding objects of labor from those elements of capital that transfer their value to the goods produced, in his general theoretical interpretation of the problem included them in this category when considering particular cases of the production process.
The labor theory of value developed by Ricardo was an outstanding event in the history of political economy, the highest stage in the development of this theory in the pre-Marxist period, despite some inconsistency of Ricardo’s positions, the historical and class limitations of his views, and the lack of development of a number of key problems of the theory of commodity production.
The formation and justification of the labor theory of value in the works of Ricardo represents a major achievement of scientific bourgeois political economy, in at least two directions. Firstly, this theory contains a study of the most general economic relations and laws underlying the capitalist mode of production. Secondly, it provides the development of the most important methodological principle for analyzing the more developed and complex essential relations of the capitalist economy, which allows us to study the entire set of economic phenomena of capitalism from the point of view of their internal basis. Ricardo's labor theory of value, which substantiates the position of labor as the only source of value of a commodity, led to an understanding of both the socio-economic essence of capitalism and, to a certain extent (although not explicitly) its historically transient nature. And although Ricardo did not solve these problems, his theory of value exhausted those possibilities scientific approach, which were provided by the bourgeois form of thinking.
IV. Marx.
Marx turned the labor theory of value into a deep and logically coherent system, on the basis of which he built all the buildings of a fundamentally new political economy. He freed the labor theory of value from the contradictions and impasses that plagued Ricardo. Of decisive importance in this case was the analysis of the dual nature of labor contained in a product - concrete and abstract labor. Based on the labor theory of value, Marx also created a theory of money that explains the phenomena of metal and paper money circulation.
Marx resolved the contradiction that Ricardo had posed to himself; it consisted in explaining the exchange between the worker and the capitalist. The labor of a worker creates the value of a commodity, and the quantity of this labor determines the value. But in exchange for his labor, the worker receives less value in the form of wages. If this law were observed, then the worker would have to receive the full value of the product created by his labor, but in this case the profit of the capitalist would be impossible. The result was a contradiction: either the theory does not correspond to reality, or the law of value is continuously violated in the most important sphere of exchange. But Marx showed that the worker sells to the capitalist not labor, which is only a process, activity, expenditure of human energy, but his labor power, i.e., the ability to work. By purchasing it, the capitalist, under normal conditions, pays the worker the full value of his labor power, for this value is determined not at all by what labor creates, but by what the worker needs to live and reproduce his own kind. Thus, the exchange between capital and labor takes place in full accordance with the law of value, which does not at all exclude the exploitation of the worker by the capitalist.
The commodity appears—such is its appearance—on the one hand, as a use value, on the other, as an exchange value. Use value means the property of a thing and is completely determined by it. “The usefulness of a thing” (its ability to satisfy a human need of one kind or another) “makes its use value.” And it does not depend on whether a person spent a lot or a little labor to produce a given product. When considering use values, their quantitative determination is always assumed, for example, a dozen watches, a ton of iron, etc. Use values are realized only in use and consumption, and at the same time they are material carriers of exchange value.
By exchange value is meant the proportion according to which the use value of one type is exchanged for the use value of another type, this ratio constantly changes depending on time and place. One product may have not one, but several exchange values, for example: x kg of iron can be exchanged for y kg of gold, and z kg of silver. The exchange values of goods must be reduced to something common to them, greater or lesser quantities of which they represent.
This common cannot be geometric, physical, chemical or any other natural properties of the goods. These properties are taken into account only when considering the utility of goods, that is, when taking into account use values.
“Use values form the material content of wealth, whatever its social form.” Exchange value is possible only in a commodity economy, in an economy where they produce not for their own consumption, but for exchange. As use values, goods are heterogeneous. The use value of one commodity is not similar to the use value of another commodity. As exchange values, commodities are homogeneous. Marx, quoting Barbon, writes: “One kind of goods is as good as another if their exchange values are equal. There is no difference or difference between things having equal exchange values.”
If we ignore the use values of goods, then they have only one property, namely, that they are products of labor.
But since we have abstracted from their use value, we have at the same time abstracted from those constituent parts of commodities that make them use values.
Along with the use value of the product of labor, the useful nature of the types of labor represented in it also disappears; the latter no longer differ from each other, but are reduced to abstract human labor, that is, the expenditure of human labor power, regardless of the form of this expenditure. Commodities represent expressions of the fact that human labor power is expended in their production, human labor is accumulated, they are the essence of value - commodity values.
Commodities, like things, are not equal, and the equality found in the exchange relation relates to them only as products of labor. If earlier it was stated that, as an exchange value, one commodity is similar to another, now this fact takes on the following meaning: as exchange values of goods, they are only products of labor. “Now it is no longer a table, or a house, or yarn, or any other useful thing. All sensually perceived properties extinguished in him.” He is a product of labor - and nothing more.
But the equality of goods as products of labor also means the equality of labor itself, that is, the reduction of all types of labor “to the same human labor, to abstract human labor,” to human labor in general. Hence the conclusion: “All these things are now only expressions of the fact that human labor power was expended in their production, human labor was accumulated.”
And, finally, the last link in this entire chain: “Like crystals of this social substance common to all of them, they are values, commodity values.”
We have considered the exchange value of commodities completely independently of their use values. Thus, what is common, which is expressed in the exchange value of goods, is their value.
So Marx attacked the “trace” of value hidden behind exchange value, that is, he moved from the appearance of phenomena to their essence. It goes from the exchange value of commodities to labor and from labor to value. The homogeneity of goods, manifested by them in exchange, expresses only their homogeneity as products of labor and, consequently, the homogeneity of labor itself. And, conversely, goods are now presented as products of identical human labor, as crystals of a social substance common to all of them, and as such are values.
Marx formulates the difference between abstract labor that creates value and concrete labor that creates use values as follows. “All labor is, on the one hand, the expenditure of human labor power in a physiological sense - and in this quality of the same, or abstractly human, labor forms the value of goods. All labor, on the other hand, is the expenditure of human labor power in a special, expedient form, and in this quality of concrete useful labor it creates use values.”
“So,” says Marx, “use value, or good, has value only because abstract human labor is embodied, or materialized, in it. How to measure the value of its value?
The answer to this question is suggested by the entire previous analysis: if value is a material expression of abstract labor, then it is measured by the quantity of this labor, or – in Marx’s words – “by the quantity of labor contained in it, this value-creating substance.”
The substance of values is formed by the same human labor, the expenditure of the same human labor power. The entire labor force of society, expressed in the values of the commodity world, appears here as one and the same human labor force, although it consists of an innumerable number of labor forces. Each of these individual labor forces, like every other, is one and the same human labor force, since it has the character of a social average labor force and functions as such a social average labor force, therefore, it uses only what is necessary on average or socially necessary working time.
Marx gives the following definition of the concept of socially necessary labor. “Socially necessary labor time is that labor time that is required for the production of any use value in the presence of socially normal conditions of production and with the average level of skill and intensity of labor in a given society.”
But if all types of labor are reduced to the same homogeneous human labor, then questions immediately arise: 1) what should be understood by skilled labor and simple labor? 2) How and where does their reduction take place, one to the other and to labor in general? Marx answers: “ Comparatively complex labor means only simple labor raised to a power, or rather multiplied... A commodity may be the product of the most complex labor, but its value makes it equal to the product of simple labor.” This is the answer to the first question. “Experience shows that such a reduction of complex labor to simple work occurs constantly. A commodity may be the product of the most complex labor, but its value makes it equal to the product of simple labor, and, therefore, itself represents only a certain amount of simple labor.” This is the answer to the second question.
So, the value of a given use value is determined only by the amount of labor, or the amount of labor time socially necessary for its production. Each individual product in this case has value only as an average specimen of its kind. Therefore, goods that contain different quantities of labor, or that can be produced during the same labor time, have the same amount of value. The value of one commodity is related to the value of every other commodity, as the labor time required to produce the first is to the labor time necessary to produce the second. “As values, all commodities are only certain quantities of frozen labor time.”
Consequently, the value of a commodity would remain constant if the labor time required for its production were constant. But working time changes with every change in the productive power of labor.
Since the value of a unit of goods expresses the amount of materialized (socially necessary) labor, i.e., the growth of the latter causes a corresponding increase in value, and a decrease in the amount of materialized labor entails the same decrease in the value of value. But the amount of labor embodied in a product is, in turn, determined by the level of labor productivity: the higher this level, the less labor is embodied in a unit of goods, and the lower the specified level, the more materialized labor. Consequently, the value of value is inversely proportional to the productive power of labor. Precisely because the magnitude of value is directly proportional to the amount of labor embodied in a commodity, it is inversely proportional to productive power. The productive power of labor is determined by various circumstances, including, among other things, the average degree of skill of the worker, the level of development of science and the degree of its technological application, the social combination of the production process, the size and efficiency of the means of production, and natural conditions.
This dependence discussed above was subsequently called the law of value, the law of motion and the regulator of the commodity economy.
A thing can be a use value and not be a value. This happens when its usefulness to a person is not mediated by labor. These are: air, water, natural meadows, wild forest, etc. A thing can be useful and be a product of social labor, but not be a commodity. He who satisfies his own needs with the product of his labor creates use value, but not a commodity. To produce a commodity, he must produce not just use value, but use value for others, social use value.
In order to become a commodity, a product must be put into the hands of someone to whom it serves as a use value, through exchange. Finally, a thing cannot be value without being an item of consumption. If it is useless, then the labor spent on it is useless, is not considered labor and therefore does not form any value.
3. Alternative theories of value.
The Austrian school of marginal utility (its founders K. Menger, O. Böhm-Bawerk and F. Wieser) gave an explanation of the cost (value) and price of goods and services from the position of the economic psychology of the consumer of useful things. The main provisions of this theory are as follows.
First position. Austrian scientists believed that utility cannot be identified with the objective properties of goods. Utility, in their opinion, is a subjective assessment given by each buyer of the role of a certain good in satisfying his personal needs. The value (synonym of cost) of a good is a person’s understanding of the significance of the thing consumed for his life and well-being. K. Menger categorically argued that “value is not something inherent in goods... Value is a judgment that economic people have about the value of the goods at their disposal for maintaining their lives and their well-being, and therefore does not exist outside their consciousness.”
There is a certain amount of truth in this statement. We know from everyday life that people, even in the same family, differ greatly in their views on the value of the same thing to satisfy their needs. They assign different values to one or another good for their lives and well-being.
Second position. Beneficial benefits are divided into two types:
a) available in unlimited quantities (water, air, etc.). People do not consider these things valuable to themselves. For they are available in such abundance that they are not needed to satisfy human needs;
b) which are relatively rare and insufficient to satisfy the existing needs for them. It is to these goods that economic entities attribute value.
K. Menger, from his own position, tried to solve the long-standing paradox. The goods that are most useful for human life are not always the most valuable. How much his views on this matter differ from those of Adam Smith can be seen from the data given below.
Views of K. Menger and A. Smith on utility and exchange value
K. Menger:
“The answer to the question why, for example, a pound of drinking water has no value for us under ordinary conditions, while a very small particle of a pound of gold or diamonds always has a very high value, resulting from the following conditions.
Diamonds and gold are so rare that all the quantities of the former available to people could fit in a box, and all the quantities of the latter available to people could fit in one large room... On the contrary, drinking water is available on Earth in such large quantities that it is hardly possible imagine a tank that could hold all of it.”
A. Smith:
“Objects that have a very large use value often have little or no exchange value at all; on the contrary, objects that have a very high exchange value often have little or no use value at all. There is nothing healthier than water, but you can’t buy almost anything with it. … On the contrary, a diamond has almost no use value, but often a very large quantity of other goods can be obtained in exchange for it.”
Although K. Menger and A. Smith provide essentially similar illustrations, their positions are fundamentally different.
In the first case, the unequal values of water and diamonds and gold are explained by their different degrees of rarity.
And in the second case, a similar inequality in the exchange value of water and diamonds is motivated by the discrepancy in the amount of labor spent on their production.
At the same time, the quantitative limitation of goods must be taken into account in practice when setting prices. This is exactly how it happens, for example, when pricing agricultural products, where there are few good-quality land plots. The uniqueness of some goods has an even greater impact on prices when rarities are sold at auction.
Third position. A person arranges his needs in descending order of importance and tries to satisfy them with the amount of goods at his disposal. Moreover, the value of each good will depend, firstly, on the importance of satisfying the need, and secondly, on the degree of its saturation.
In this case, it is possible to distribute needs into certain types that characterize their significance for ensuring life. Within each type of needs, stages of saturation of human demands are distinguished.
So, let’s say, satisfying the need for food at the highest level has full meaning to save human life. Continued consumption is important for maintaining health. Finally, subsequent eating is done for the sake of pleasure, which usually gradually decreases. It reaches a certain limit when food needs are satisfied so completely that pleasure disappears. And incessant eating turns into torture and can threaten health and even life. A similar picture is observed with regard to the importance of increasing the degree of saturation of the need for housing and needs of other kinds.
Needs of different kinds and the degree of their saturation have different significance for ensuring human life and well-being. Their arrangement in decreasing order of this value is shown on the Menger scale. It presents the mechanism for the formation of generic and specific utility of a good (Roman numerals correspond to generic, and Arabic numerals to specific needs).
Menger scale.
I II III IV V VI VII VIII IX X
10 9 8 7 6 5 4 3 2 1
9 8 7 6 5 4 3 2 1 0
8 7 6 5 4 3 2 1 0
7 6 5 4 3 2 1 0
6 5 4 3 2 1 0
5 4 3 2 1 0
4 3 2 1 0
3 2 1 0
2 1 0
4. 0
The Menger scale is based on the principle of diminishing returns. It helps to understand why goods of lesser generic utility can have greater value. This is determined by the place of each good in the scale of needs and the degree of saturation of the need for it.
Fourth position. In the process of personal consumption, the law of diminishing utility operates. The German economist Hermann Gossen (1810 – 1858) formulated this law as follows. The degree of satisfaction with the same product, if we continue to use it continuously, gradually decreases, so that finally saturation occurs.
Every person has probably experienced the law of diminishing returns. It is known that a hungry person eats the first slice of bread with great appetite. Then, with each new piece, the usefulness of the bread is lost, until the desire to eat this product disappears. The entire amount of bread eaten forms the value of saturation.
The founders of the Austrian school of political economy sought to give universal significance to the law of diminishing utility. F. Wieser stated that this law applies to all processes - from hunger to love.
Fifth position. The value of a good is determined by marginal utility, that is, the subjective utility of the “ultimate instance” that satisfies the least urgent need for a product of this kind.
Marginal utility can arise at different levels of consumption of goods. In such cases, it means the amount of additional utility perceived by a person, which is obtained from an increase in the consumption of a new unit of some product (for example, one serving of ice cream).
If marginal utility reaches the “saturation point,” then the person ceases to feel the benefit of the thing consumed. When this threshold in consumption is overcome, the ordinary product is perceived as anti-good, and usefulness turns into harmfulness. This state of oversaturation is known to many people who have undermined their well-being and health.
Marginal utility, and, consequently, the value of a good, depends on the “stock” (availability of quantity) of a given product and the need for it. If, while the quantity of demand remains unchanged, the “stock” increases, then the marginal utility of the thing decreases. As the “stock” decreases, marginal utility and value increase. All this affects the market price of the product, which directly depends on its marginal utility. Market practice appears to confirm this relationship. Thus, in conditions of relative scarcity of some product (its “stock” decreases), the price is set at a higher level, which, in essence, justifies the purchase of the “marginal product”.
However, the theory of marginal utility does not fully correspond to economic practice and contains internal contradictions. Here are some proofs of this.
First, mass market transactions require some kind of objective measurement of all goods. Meanwhile, subjective utility does not and cannot have any quantitative expression, since there are no objective units for its measurement.
In the 19th century, some economists believed that there was some quantitative measure of happiness, or utility, for each person. The unit of measurement of utility was called util (from the English utility - utility). The more utilities a consumer purchased on the market, the greater the portion of happiness he supposedly received.
Regarding this behavior of the buyer, Professors S. Fischer, R. Dornbusch and R. Schmalenzi (USA) noted the following in their textbook “Economics”. “...It’s hard to believe that there is actually a measure of happiness that can be used to prove this kind of statement: “Dick would be twice as happy if he ate one more chocolate bar.”
Secondly, the subjective psychological theory of marginal utility could not solve the problem of finding a single co-measurer of value for the entire variety of goods and for all people. It is reasonable to note that each person should have his own utility account. And in principle there cannot be a general measure of purely individual perception of the benefits of goods for all humanity. The next question is: is it possible to use the utility to measure the marginal utility of various types of goods and services, for example, a concert? jazz music, oysters and watermelon... The answer is obvious
Third, the law of diminishing returns is not universal. It manifests its effect in relation to a limited range of essential items (for example, bread, water, housing). Such things have a limit of saturation for an individual and for each moment. However, this law is not applicable to the vast majority of goods - numerous non-food products, and especially to means of production.
So, the main provisions of the theory of marginal utility to a certain extent reflect real market relations. These connections can be represented in the formula: consumer – need – utility of the good – its value – market price. So, apparently, it is possible to evaluate the product and economic relations from the consumer’s side.
Proponents of the marginal utility concept believe that it is consumers who determine the value of goods that determine the market price. They portray the market as an arena of economic democracy. Here all buyers participate in the free evaluation of goods. They conduct a kind of “voting”: they give rubles, dollars or other money for the goods they choose. Thus, the path to any product in the sphere of consumption is opened or closed. The results of this popular “referendum” are reflected in market prices.
Criticizing the concept of J. B. Say about the utility of goods as a regulator of their value, D. Ricardo wrote: “This would be true if the value of goods were regulated only by buyers.” D. Ricardo noted that the utility of goods, i.e. their use value, is necessary for the product to have value, but it is not a source of value. “The utility of things,” he wrote, “is undoubtedly the basis of value, but the degree of utility cannot be a measure of value. A commodity produced with greater difficulty will always be more expensive than a commodity produced with greater ease, even if all men unanimously believed that the latter was more useful than the former.”
After becoming familiar with the labor theory of value and the concept of marginal utility, one cannot help but notice that a serious contradiction has arisen in the theory of market pricing as a whole. The English classics of political economy attributed the decisive role in setting prices to the proposals of producers, who proceed from accounting for the labor expended on the creation of goods. In contrast, early Austrian marginal utility theorists emphasized consumer demand. Alfred Marshall undertook to resolve this contradiction.
A. Marshall considered it equally wrong to give preference in the process of forming a market price to either supply or demand. In his opinion, it is equally useless to argue: which blade of scissors cuts a piece of paper - the top or the bottom?
A. Marshall based his theory on the dynamics of the demand and supply functions and their synthesis. Economists such as Samuelson, Lynn and others, following Marshall, reduce the purpose of the theory of value to the study of supply and demand at various periods of time and the influence of price on the quantity of goods produced or purchased. Professor Lynn, going to the market, looks for the price of goods at the point of intersection of the supply and demand functions, moving within the framework of the notorious subjective estimates of the marginal utility of a product. But Marx already convincingly proved that supply and demand do not explain the pricing process in any way, because they only affect the deviation of the market price from value, but do not determine the value of value. In Chapter X of Volume III of Capital, Marx showed that if supply and demand are equal, the forces on their side cease to act and the market prices of goods coincide with their value. Supply and demand depend on prices, and their movement can only be explained on the basis of the law of value.
A. Marshall tried to consider supply as the sum of the prices of factors spent on the production of goods. However, it turned out that the price set by the seller is also explained by the price... A. Marshall considered it inappropriate to delve into the essence of supply and demand. He limited himself to describing the impact of market prices on the economic situation of buyers and sellers.
4. Conclusion.
After all our research, a strange picture emerges. There is one economic system. There are two theories of value that quantitatively explain this system. It turns out that one of the theories is wrong?
No. Each of them is both true and false: they are one-sided. They describe the economy from different sides. Each one covers one side, not noticing that there is another. Hence, further development theory of value lies in the scientific synthesis of both options.
The traditional labor theory of value is too concerned with production and underestimates consumption. But with the help of a synthesis of two theories, this can be avoided, and the theory of marginal utility makes up for its one-sidedness.
The labor theory of value cannot explain how people take into account the objective labor proportions that develop behind their backs. Subjective assessments corresponding to changes in labor proportions in the theory of marginal utility relieve it of these problems.
Economics either accepts the theory of marginal utility, or remains within the framework of labor theory, or develops a third option. A third option could be:
- developing a completely different approach to cost, which is unlikely;
- development of an information theory of value, which is in its infancy;
- synthesis of labor theory and marginal utility theory.
The last option (synthesis of theories) is very promising both from the point of view of world economic science and from the point of view of understanding the economic interests of Russia.
References.
1. A. V. Anikin “The life and deeds of economic thinkers before Marx.”
2. E. F. Borisov “Economic theory”.
3. G. S. Vechkanov, G. R. Vechkanova “Dictionary of market economics.”
4. V. N. Zamyatnin “History of economic doctrines.”
5. E. M. Mayburd “Introduction to the history of economic thought.”
6. K. Marx “Capital”.
7. A. I. Mikhailushkin, P. I. Shimko “Fundamentals of a market economy.”
8. A. L. Reuel “History of economic doctrines.”
9. D. I. Rosenberg “Comments to “Capital” by K. Marx.”
10. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations.
11. G. B. Khromushin “Bourgeois theories of political economy.”
12. “Adam Smith and modern political economy” Moscow University 1979
13. “History of Economic Thought” Moscow University 1961
14. “Economic Theory” St. Petersburg State University of Economics and Philosophy, 1997
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Labor theory of value(TTS), or labor theory of value(English labor theory of value) - an economic theory according to which goods are exchanged among themselves in such quantities as to ensure equality of socially necessary labor costs, that is, the amount of labor time required for their production (or reproduction) in socially given -economic conditions. These proportions of exchange determine the value of goods, which is manifested in price through comparison with an equivalent product. The logical consequence of the labor theory of value is the recognition of labor as the only source of wealth.
Story
Various versions of the labor theory of value were put forward by the founders of classical political economy: William Petty, Adam Smith, David Ricardo. This theory received its completed form in the works of Karl Marx and therefore it is usually associated with Marxism.
The views that labor underlies value (price) originated in Ancient Greece. Aristotle already pointed out that “just equality is established in such a way that the farmer relates to the shoemaker, as the work of the shoemaker relates to the work of the farmer.” These ideas were developed by many other thinkers, including John Locke and William Petty. However, they inextricably linked the exchange of goods with its usefulness for the consumer.
At the same time, one should not confuse the value, expressed in the number of hours of working time of abstract labor, with the price of a product, expressed in the amount of money. The price depends on many factors, including changes in the value of money itself, the fall of which can lead to inflation, as well as on the relationship between supply and demand for the product. The price of new, previously unproduced goods may significantly exceed their value.
Simplified models
Both before and after Marx, simplified economic models regularly appeared and appear, in which cost directly depends on working time. The main object of simplification is “labor force”. Unlike Marx, labor power is often not treated as a commodity with its own value. Many systems offer only accounting for direct work time, without taking into account its intensity and complexity (without taking into account the level of required preliminary preparation, qualifications).
An example is the theory of “equivalence economics” by the German socialist Arno-Peters. According to his theory, cost is based on the simple amount of labor time directly spent. Peters sees the ethical-humanistic argument for such an equivalent exchange in the assumption that an hour of life spent on the work of a minister and the same labor hour of a factory worker are absolutely equivalent - the life of one person cannot be valued higher than another - hence the cost of an hour of work for both should be equivalent. Working time is treated similarly in projects “