Steve.Keen at unsw.EDU.AU Steve.Keen at unsw.EDU.AU
Thu Oct 19 19:40:12 MDT 1995

Thanks to Jim for his comments on my thesis.
Unfortunately, I feel his is making a subtle
misinterpretation of my argument in several important
respects. By so doing, he is missing the enormous
differences between Marx's treatment of use-value,
the "marxian" treatment of it since his death, and
the neoclassical/Austrian concept of utility.

Jim states:

|   To Steve, this indicates that now the specific use
|value of this particular commodity, labor power, has
|acquired a quantitative commensurability with value,
|regarding use value as the source of exchange value.
|But it is not the use value as such that creates the
|value, it is the labor. The source of value is the labor
|activity of the laborers themselves.
|   If you begin to consider "use value" as such to be
|the source of exchange value, you can fall into thinking
|that "use value," not labor, is the source of exchange
|value. There is a logical progression to this notion:
|l. Labor creates all value.
|2. Capital purchases labor power to create value.
|3. The use value of labor power is to create value.
|4. The use value of labor power creates value.
|5. Use value creates all value.

By now Jim should have read my comments on Bohm-Bawerk,
who of course made Jim's proposition 5 above the
foundation of his critique of Marx, and whose arguments
I reject. Yet Jim is effectively arguing that I think
in the same fashion as Bohm-Bawerk, seeing utility as
the basis of value. This happens because what Jim thinks
is a logical progression above actually has an enormous
leap. To make 5 be the same as what Bohm-Bawerk believes,
you have to amend it somewhat:

5. The Use value of each commodity is the source of
value of each commodity.

The step Jim seems to think I make is actually a leap
from Marx's objective concept of use-value to the neoclassical
concept of subjective utility.

The section Jim next objects to:

|   Steve comes close to this line of thinking when he
|says, "however, under capitalist commodity relations,
|use-value becomes a determinate form in political
|economy in the relationship between capital and labor
|because the incommensurability of the use-value and
|exchange value of labor power is expressed as a
|quantitative difference, from which the capitalist can
|derive surplus." (From the Chapter: Use Value in
|Marx's Economics, Section: The Grundrisse, Sub-
|section: The Revelation.)

is an attempt to explain how Marx believed that use-value
can be relevant to political economy. In his comment on
Wagner, he states that under capitalism, "use-value itself--as
the use-value of a `commodity'--possesses a historically
specific character", since "surplus value itself is derived
from a specific and exclusive use-value of labour power".
Marx then on numerous occasions states that this use-value
of labor power is a quantitative thing, whereas in general--
when it is irrelevant to political economy--use-value is

Obviously, something qualitative (use-value in general) and something quantitative (exchange-value) are incommensurable.
Obviously, something qualitative (use-value in general) and something
quantitative (exchange-value) are incommensurable.
Marx's genius was to see that, in the case of production,
the use-value of inputs was quantitative--but that the
general rule of the incommensurability of use-value and
exchange-value continued to apply. Thus there can be a
difference. However, Jim says:

|   I don't know how a quantitative difference can be
|established between incommensurable magnitudes. This
|is a self-contradictory statement, and not of a dialectical
|variety. What Steve means to say is that the use value
|of labor power and the value of the product of labor have
|now become commensurable, so that a quantitative
|difference can now be seen between them. And take
|note: he is not talking about the quantitative difference
|between the value of labor power and the value of the
|product of labor.

Turn to p. 506 of the Progress Press edition of Capital
Vol. I, Jim, where you will find the statement by Marx:

**Exchange-value and use-value, being intrinsically incommensurable
magnitudes,** the expressions "value of labour", "price
of labour", do not seem more irrational than the expressions
"value of cotton", "price of cotton". Moreover,
the labourer is paid after he has given his labour. In its
function as means of payment, money realises subbsequently the
value or price of the article supplied--*i.e.*, in this
particular case, the value or price of the labour supplied.
Finally, the use-value supplied by the labourer to the capitalist
is not, in fact, his labour-power, but its function, some
definite useful labour, the work of tailoring, shoemaking,
spinning, &c. That this same labour is, on the other hand, the
universal value-creating element, and thus possesses a property
by which it differs from all other commodities, is beyond the
cogniscance of the ordinary mind... Moreover, the actual
movement of wages presents phenomena which seem to prove that not
the value of labour-power is paid, but the value of its function,
of labour itself."

Under Marx's logic, (objective) use-value and exchange-value are
incommensurable. This is in contrast to the neoclassical
method, which makes (subjective) utility and cost
commensurable via the contrivances of marginal utility
and marginal cost. In the case of commodities consumed as
part of the circuit of commodities, C--M--C, this
incommensurability simply means that, to Marx, the
use-value of a given commodity plays no role in determining
the exchange-value of that same commodity. But in the case
of commodities consumed as part of the circuit of capital,
M--C--M, that incommensurability is between two quantitative
things--and hence all you can say is that they will be

This perspective is a long way removed from seeing utility
as the source of value. If you can't appreciate how Marx's
concept differs from the neoclassical, then you are in
good company--almost all marxists since Hilferding have
made the same error. But it is an error nonetheless.

Steve Keen

     --- from list marxism at ---


More information about the Marxism mailing list