comments on Keen's article

Fred B. Moseley fmoseley at
Thu Sep 22 22:22:33 MDT 1994

This posting responds critically to Steve Keen's views on Marx's theory
of value and surplus-value recently discussed on this network.
I have not seen the entire discussion, so I went back and read his
two articles in Journal of the History of Economic Thought, and my
comments are primarily responses to the first of these two articles,
"Use-Value, Exchange-Value, and the Demise of Marx's Labor Theory of
Value (Spring 1993).

Keen wants to argue that, according to Marx's own logic, not only is
labor a source of value and surplus-value, but also the means of
production.  More precisely, he argues that the USE-VALUE of both
labor and means of production are sources of value and surplus-value.
Keen's argument consists of two main parts:  (1) In Chapters 5-7 of
Volume 1 of Capital, Marx argues that the use-value of LABOR-POWER is
a source of surplus-value.  (2) In Chapter 8 of Volume 1 (and
elsewhere), Marx attempts to argue that MEANS OF PRODUCTION are not
a source of surplus-value, and hence that labor is the ONLY source of
surplus-value, but this argument involves a logical contradiction.
I will discuss each of these two parts in turn.


Keen begins his discussion of labor-power by citing Marx's argument
in Chapter 5 that, since the exchange of commodities involves the
exchange of equivalents, surplus-value cannot arise from the act of
exchange by itself.  Keen then leaps to the conclusion that, since the
exchange value of the commodity cannot be the source of surplus-value,
then the dialectical opposite of value, use-value, is the only
possible source.  To support this interpretation, Keen quotes the
following passage from the first paragraph of Chapter 6:
CONSUMPTION.  In order to be able to extract value from the
consumption of a commodity, our friend, Moneybags, must be so
lucky to find, within the sphere of circulation, in the market,
BEING A SOURCE OF VALUE.  (Keen's emphasis).

However, a reexamination of Marx's text reveals that Keen has once
again quoted Marx in an inaccurate and misleading way (as Juan Inigo
has already shown on this network with respect to another key passage
in Keen's argument in the Grundrisse).  The last sentence of this
passage does not end as indicated above, but Keen does not indicate
the incomplete sentence with the customary "..." .  The rest of Marx's
sentence (and the next sentence) reads:
... whose actual consumption is therefore an objectification
of LABOR, HENCE A CREATION OF VALUE.  The possessor of money
does find such a special commodity on the market: the capacity
for labor, in other words labor-power.  (my emphasis)

These words by Keen show clearly that Marx's arguement is based on
the labor theory of value.  The use-value of the special commodity
labor-power is a source of surplus-value because the use-value of
labor-power is labor itself which produces additional value.  The
consumption of labor-power is "an objectification of LABOR, HENCE a
creation of VALUE."  This passage does not say that use-value in a
general sense and meaning possibly something other than labor is the
source of surplus-value, but rather that labor is the source of
surplus-value and labor is the use-value of the specific commodity
labor-power.  Labor is the use-value of no other commodity, and hence
the use-value of no other commodity can be the source of surplus-

On further reflection, it would be very odd indeed if Marx suddenly
concluded in Chapter 6 that use-value is the source of surplus-value,
after explicitly denying that use-value is the source of value in
Chapter 1.  Instead, as is well known, Marx argued in Chapter 1 that
abstract labor is the source of value.  This labor theory of value
then becomes the fundamental premise for the rest of the three volumes
of Capital, including especially the above argument that only the
commodity labor-power possesses the potential to produce surplus-value
(because only its consumption involves additional labor).  It is very
significant that Keen does not mention Chapter 1 and its role in the
overall logic of Capital.  What would be the point of Chapter 1 if
Marx soon abandoned this premise and looked for other sources of value
and surplus-value, as Keen suggests?


According to Keen, Marx's argument that the means of production cannot
transfer more value then they have is based on a misidentification of
the exchange-value and the use-value of the means of production.  Keen
argues, first of all, that the value transferred from the means of
production is determined by their use-value, not by their exchange-
value.  This value determined by use-value may be greater than the
exchange-value of the means of production, and hence can be another
source of surplus-value besides labor-power.  Keen argues further that
Marx often assumed that the value transferred from the means of
production is equal to their exchange-value (i.e. that the exchange-
value of the means of production is equal to their use-value), and
therefore contradicted a basic dialectical premise that use-value and
exchange-value are unrelated.

Keen's textual evidence for the key point that the value transferred
from the means of production is determined by their exchange-value
consists of three relatively obscure passages.

The first passage is from Chapter 8 of Volume 1 of Capital.  Keen
acknowldeges that Marx argues in this chapter that the maximum value
transferred by the means of production is determined by the labor-time
necessary for their production (following the labor theory of value).
However, Keen argues that this is an incorrect conclusion and that
Marx also stated in one passage in this chapter the correct proposi-
tion that machines transfer their use-value to the product.  This
"correct" passage is:
Suppose its [a machine's] use-value in the labor process lasts
only six days.  It then loses on average one-sixth of its use-
value every day, and therefore parts with one-sixth of its value
to each day's product.

However, Keen's interpretation of this passage confuses the deter-
mination of the TOTAL value transferred by the machine and the RATE at
which this total value is transferred over the life of the machine.
The TOTAL amount of value transferred is determined by the labor-time
required to produce the means of production, as already stated.  The
RATE at which this total value is transferred depends on the lifetime
of the machine, i.e. on the rate at which the machine loses its use-
value.  In Marx's example, in one-sixth of the lifetime of the
machine, one-sixth of its use-value is lost and one-sixth of its total
value is transferred.  There is no suggestion here that the total
value transferred is determined by the use-value of the machine.
Indeed, Marx ridicules this latter view in a footnote in this chapter
on Say and Roscher:
This shows the absurdity and triviality of the view adopted
by J.B. Say, who claims to derive surplus-value (interest,
profit, rent) from the "services productifs" rendered by the
means of production (land, instruments of labor, raw material)
in the labor process via their use-value.   Mr. Wilhelm Roscher,
who seldom loses the opportunity of rushing into print with
ingenious aplolgetic fantasies, records the following example
... (Vintage edition, p. 314)
It should also be noted that this chapter presents Marx's final
and definitive views on the transfer of value by the means of

A second passage used to support Keen's claim that the value trans-
ferred from the means of production is determined by their use-value
is from Chapter 5 of Volume 3 of Capital.  The passage quoted is:
So far as constant capital enters into the production of
commodities, it is not its exchange-value, but its use-value
alone which matters...  [T]he assistance rendered by a machine
to, say, three laborers does not depend on its value, but on its
use-value.  (p. 80)
>From this, Keen concludes:
Thus the contribution of the means of production to the value of
the output is their use-value.

The title of Chapter 5, and thus the context of Marx's passage, is
"Economy in the Employment of Constant Capital".  The main point of
the chapter is that, with the rate of surplus-value given, such
economy in the employment of constant capital (or cheapening of
machinery and raw materials) will raise the rate or profit.

Keen's interpretation of the quoted passage confuses the production of
USE-VALUES and the production of VALUE (this confusion is of course
fundamental to Keen's entire approach; Juan Inigo has made a similar
criticism of Keen's intepretation of other passages).  The correct
interpretation of this passage and the paragraph which follows it (to
be quoted below) is:  With respect to the production of USE-VALUES,
the quantity of the means of production required to produce a certain
quantity of output (or use-values) in a given industry depends on the
level of technological development in that industry.  The value of
these means of production does not matter in this determination of
the physical "input-output coefficients" (to use a modern phrase).
However, if the VALUE of these means of production is to be reduced,
so that the rate of profit can be increased (the main point of the
chapter), then the LABOR-TIME required to produce these means of
production must be reduced, i.e. the productivity of labor in those
industries which produce these means of production, must be increased.
The paragraph following the one quoted by Keen begins:
The increased profit received by a certain capitalist through
the cheapening of, say, cotton and spinnning machinery, is the
result of higher labor productivity; not in the spinnery,
to be sure, but in cotton cultivation and construction of
Therefore, Marx continues to assume that the value of the means of
production, and hence the value they transfer to the value of the
final product, is determined by the labor-time required to produce
them, not by their use-value.

The third passage quoted by Keen is from the Grundrisse (p. 383).
This is a different passage from the footnote on pp. 267-68 already
discussed on this network.  Keen also cites this footnote, but to
support the claim that the use-value and the exchange-value of
commodities must always be unrelated, not the claim that the value
transferred by the means of production is determined by their use-
value.  The passage is:
It also has to be postulated (which was not done before) that
the use-value of the machine significantly greater than its
value; i.e. that its devaluation in the service of production is
not proportional to its increasing effect on production.
>From this Keen concludes:
Here Marx specifically referred to the use-value of a machine
being greater than its value, and in contrast to the discussion
of depreciation in Capital, dissociated the productivity of a
machine from its depreciation.

I must admit that I find Marx's sentence somewhat puzzling and I am
not sure what it means.  But I am convinced that it does not mean that
the value transferred from the means of production is determined by
their use-value, primarily because Marx had just finished an extended
discussion of the value transferred from the means of production in
which it is developed and emphasized that this value transferred is
determined by the labor-time required to produce them (pp. 354-65).
This discussion is Marx's first working out of the distinction between
the old value transferred from the means of production and the new
value created by current labor, and the resulting distinction between
constant capital (which Marx called here "invariable value") and
variable capital.  It is highly unlikely that, after this extended
development, Marx intended to suggest an entirely different principle
for the determination of the value transferred from the means of
production.  Especially since, in the immediate context of this
sentence, Marx is not discussing the value transferred from the means
of production, but rather the effects of increased productivity (see
next paragraph).  Even if Marx did intend such a suggestion, it comes
out of nowhere and is not mentioned again.  And It is clearly rejected
in his later work, as we have seen above.

One possible meaning for this sentence arises from the fact that it
occurs in the midst of a discussion of the effect of increased
productivity on surplus-value and on the rate of profit (pp. 366-401
and earlier pp. 333-53).  This is Marx's first working out of his
theory of the falling rate of profit.  One of the the two main points
of this discussion is that an increase of productivity increases
surplus-value, but the increase of surplus-value is proportionally less
than the increase of productivity and diminishes over time (the other
main point is that even though an increase of productivity
increases the ratio of surplus-value to wages, it reduces the rate of
profit because it also reduces the share of wages in the total
capital).  Therefore when Marx says that "the use-value of a machine
is greater than its exchange-value", this could be a clumsy restate-
ment of the point that the increase of productivity resulting from the
introduction of a machine (the "use-value" of the machine) is
proportionally greater than the resulting increase of surplus-value
(the "exchange-value" of the machine).

This interpretation is suggested by two other passages on nearby pages
in the Grundrisse.  Three pages before the sentence in question, Marx
An increase in the productive force then corresponds to the
increase in the instrument, since the surplus-value of the
instrument does not keep pace ... with its use-value, its
productive force, and since any increase in productive force
creates more surplus-value, although by no means in the same
numerical proportion.  (p. 380)
And one page after the sentence in question, Marx says:
It [a larger capital with more advanced machinery] therefore
creates more use-values and a higher exchange value in the same
amount of time; but the latter not in proportion with the
former, since, as we saw, exchange value does not rise in the
same numerical proportion as the productivity of labor.

Nonetheless, I am less certain of the meaning of this sentence than I
am of the other points I have made above.  But I would still argue
that this sentence does not mean what Keen suggests, for the reasons
given above.  And even if Keen's interpretation is accepted, this one
sentence in an early work is an extremely slim basis for an entirely
new interpretation of Marx's theory of value, especially since it runs
counter to abundant evidence to the contrary throughout Marx's works.


Keen's criticism of a logical error in Marx's theory depends on the
assumption that the value transferred by the means of production is
determined by their use-value.  However, the textual evidence for such
an assumption in Marx's theory consists at most of one sentence in the
Grundrisse and the textual evidence for the contrary assumption that
the value transferred by the means of production is determined by
labor-time required to produce them is pervasive throughout Marx's
works.  Therefore, Keen's criticism of a logical error in Marx's
theory has no basis.

I appreciate Keen's emphasis on Marx's logic, but I would appreciate
even more a more sympathetic reading, which does not attempt to place
Marx in the same camp as Sarffa and neo-classical economics, with
their emphasis on the determination of value by use-value.


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