[Marxism] Ecological Economics vs The Misevaluation of Value:

Jurriaan Bendien andromeda246 at hetnet.nl
Sun Aug 15 16:57:01 MDT 2004


Eloy asked:

> Sorry to ask, I quite don't get the difference between value in exchange
and
> value in use. ¿Is it central to Marxist theory that human labor is the
sole
> producer of value?

Yes, Marx argues that human work is the only source of net new economic
value, but just as important is the conservation of value by human work. If
work stops, asset value is diminished or destroyed. However, both land and
work are the sources of material wealth in his theory. Unimproved land has
no value, because it is not a labor-product, but it can have an imputed
trading price.

An explicit distinction between use-value and exchange-value goes back in
economic thought to at least Adam Smith and was already noted in a primitive
way by Aristotle. Marx explains his own distinction conceptually in the
first chapters of Das Kapital, a book in which he examines what happens when
the economic values of market economy begin to dominate human life in
society, and what laws then govern market interaction.

Marx's "law of value" applies to market trade. This law states that the
economic value of commodities in exchange is determined by the average
quantity of socially-necessary labor-time currently required to replace them
through production. Thus, the law of value implies that a determinate
relationship holds between production-costs and social needs, with respect
to reproducible material wealth. The pattern of trading in new products, and
exchange-values realized, must reflect quantitative proportions of
labor-time performed to produce and conserve products offered for sale.



Commodities are tradeable products of human labor, consisting of either
goods or labor-services supplied on a commercial basis. Not all products are
tradeable; in order to be tradeable, they must be subject to private
ownership and access rights and these rights must be transferable from one
owner to another in a secure way.



Consequently, the conversion of products into commodities has both technical
and social prerequisites, since it must be technically possible to trade in
them, and also, this trade requires socially established rules which permit
ownership and access rights to be securely held and transferred between
private owners. Both these prerequisites are critical for the expansion of
market trade. Both technological progress and the removal of legal or social
obstacles to trade, therefore expand the scope of real or potential markets.



Commodities have both an economic value as such, a specific exchange-value
and a specific use-value. They have a value as such, because they are
products of human labor-time as such, and this value consists of a fraction
of the labor-time of an economic community.



Value exists, because human beings as social beings must co-operative
produce their means of life to survive, and in so doing are subject to
production relations. This involves a triple relationship which is objective
and empirical: between people, between people and their products, and
between products. The attribution of value to products, occurs within this
triple relationship.



However, because this triple relationship exists objectively as a social
fact, independently of particular individuals, it may appear that value is
an intrinsic property of products, or alternately, that it is simply a
characteristic that results from negotiations between market actors with
different subjective preferences.



That is merely to say, that when more and more of human requirements are
marketised, and a complex division of labor develops, the link between value
and labor-time becomes obscured or opaque, and seems to exist only as an
impersonal "market force" (a given structure of costs and sale-values) to
which people must adjust their behaviour. Human labor becomes dominated by
the exchange of the products of that labor, and labor itself becomes a
tradeable abstract value.



The result of that is that value and its source itself becomes something of
a mystery, and that how the attribution of value really occurs is no longer
clear. The three relationships mentioned becomes mixed up, and are confused
with each other, in commercial discourse, and it appears that things and
assets have an independent power to create value. Marx refers to this as
fetishism or thingification (reification) which culminates in what he calls
"fictitious capital". The most simple case of that is "capital gains" on
property assets - you buy assets, do nothing with them beyond conserving
them, yet they increase in value if the terms for their exchange change in
your favour, without it being very clear why or how the terms of exchange
have changed.



Exchange-value refers to the trading value attributed to products in
markets, expressible either in the ratios in which products are traded (x
units of product A =  y units of product B), or in price relativities
expressed in money-units of a common currency (x units of product A = p
units of a currency, y units of product B = q units of currency).
Exchange-value is the form of expression of value as such in trade, meaning
that value in trade can be practically expressed and measured only by
relating one product to another, or to a quantity of money.



Use-value refers to the physical characteristics of a product being traded,
which enable it to satisfy a socially expressed human need. This is not the
same as a subjective utility preference, and the specific material use-value
of commodities plays a very important role in economics (although some
Marxists deny this).



For example, if you want to make a car, you need steel, and you need that
steel regardless of price fluctuations. You also need rubber, and you need
petrol which is produced from oil. This means there are definite
product-chains involved in producing a car and a definite division of labor,
which independently influence the pattern of market trade. The topic of
use-value in Marx's theory is discussed in more detail by Roman Rosdolsky in
"The Making of Marx's Capital", chapter 1.



But obviously,



- some items which are not products of human labor can nevertheless be
traded for a given price (such as unimproved land),

- some items traded are intangibles which exist only ideationally, but not
physically (e.g. trade in ownership titles or financial claims themselves),
and

- a large portion of labor-products, although they have both a value and a
use-value, are not traded at all, and hence have at most only an ideal, but
not an actual, exchange-value, i.e. an ideal price but not an actual one.



This creates the possibility of trade in notional, fictional and
pseudo-commodities which, although they may presuppose a structure of
price-relativities governed by the law of value, either fall outside its
field of application, or involve exchange-values derived from other
exchange-values.



If the volume of this trade grows very large, it can alter or distort the
structure of price-relativities established by the law of value, within
certain limits. Beyond those limits, however, any rational relationship
between economic cost of supply and effective demand is lost, and notional
exchange-values must either reduce back towards real production costs, or
disappear altogether, unless markets are heavily segmented (protected) such
that many economic agents are excluded from free market access. But this
exclusion restricts market expansion, whereas the tendency of capitalism is
to remove such obstacles. In that sense, the value structure of traded items
remains bounded by the law of value.



Marx commented that "any child knows" that human society can neither cease
to produce, nor to consume, if it is to survive, and that in order to
consume, it is compelled to produce. The pattern of trade (exchanging
products) must therefore adjust to this social and physical necessity, which
asserts itself with the force of a law of nature. Markets do not just offer
choices in buying and selling, they also force people to trade, and force
people to accept prices in a certain range. Market despotism is the other
side of market freedom.



The scientific question was then to understand how the law of value
specifically determined economic exchange, in particular when where almost
all the goods and services required for human life are traded in a universal
market system (which is what happens in developed capitalism). Three
specific kinds of theoretical problems arise:



(1) the substance of economic value which makes commodities commensurable
regardless of the kind of trade;

(2) the regulation of the exchange-ratios of commodities in markets by the
specific forms in which value is commercially expressed (production-prices,
market values and market prices);

(3) how the adjustment of labor-allocations in different branches of
production to social needs expressed in markets is mediated by
value-relations.



These are the problems which Marx tackles in his book Das Kapital, basing
himself on the idea that they have to be analysed in the "pure case" first,
in order to be explained at all. This means specifically that in his
analysis, Marx makes six main assumptions:



- trade on the basis of equal exchange, towards which prices will normally
tend to gravitate, rather than unequal exchange

- constant values for components of productive capital

- compositions of capitals invested stay constant

- exclusion of the influence of credit on exchange-values

- exclusion of the effects of foreign trade on exchange-values

- exclusion of the effect of some costs or constant imposts of production
(e.g. insurance, taxes)



In the third volume of his book, which he did not himself finish for
publication, he begins to overturn some of those assumptions, in order to
show how they influence trading patterns. However, much of his work in this
area was never finished, and he left us really only with a ""pure"
(simplified) model of capitalist production and trade. His argument however
is that in the course of capitalist development and marketisation, more and
more of human life becomes internal to the logic of capitalism, and
increasingly the law of value will assert itself in purer forms, undistorted
by extraneous factors, so that economic behaviour will increasingly conform
to the regulative principles which he identified in the "pure" case. It was
a question, Marx said, of the basic socio-economic tendencies working
themselves out with "iron necessity".



English discussions of the ecological implications of Marx's analysis of
capitalism are by Harry Rothman and by John Bellamy Foster.



Jurriaan









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