Friday, January 03, 2014

Karl Marx - Value, Price and Profit

Karl Marx's work is often decried as being difficult or inaccessible. While it is true that some of it requires careful reading, the basic concepts are actually fairly straightforward, and indeed, many books have been written to present these ideas in an accessible way. What is less well known, is that Marx's own writing can be extremely readable, and he was a master at clarifying and presenting complex ideas. Value, Price and Profit is a case in point.

First presented as a paper to a meeting of the International Working Men's Association in 1865, its subtitle, "Addressed to Working Men", betraying its intended use - as a tool to educate and arm workers. In it, Karl Marx presents the basic concepts of what is today usually known as the Labour Theory of Value.

Marx begins by debunking a commonly held belief, that rises in wages cause price rises. At the time he was arguing with a fellow traveller of the IWMA. But more recently the argument that workers cannot have price rises because of inflation has been used by various governments. In opposition to the "dogma" that "prices of commodities are determined or regulated by wages", Marx embarks on showing what actually causes prices to rise. In doing so, he takes the reader through the nature of a commodities value and what gives it that value.

What gives a commodity a value, is its "relations to all other commodities" and the thing that all commodities, whether newspapers, gold or wheat have in common is the human labour required to make them. In a wonderfully clear passage, Marx shows how what is important in giving commodities exchangeable values is the social labour that goes into creating them.

"To produce commodity a certain amount of labour must be bestowed upon it, or worked up in it. And I say not only Labour, but Social Labour. A man who produces an article for his immediate use, to consume it himself, creates a product, but not a commodity. As a self-sustaining producer he has nothing to do with society. But to produce a commodity, a man must not only produce an article satisfying some social want, but his labour itself must form part and parcel of the total sum of labour expended by society. It must be subordinate to the Division of Labour within Society. It is nothing without the other divisions of labour, and on its part is required to integrate them. If we consider commodities as values, we consider them exclusively under the single aspect of realised, fixed, or if you like, crystallised social labour."
Marx then goes on to discuss Price a "peculiar form assumed by value".  Marx goes on to show the origins of the capitalist's profit, lie not in the setting of a commodities' price, but in the difference between the value generated by a worker and that paid to the worker. Because a working men sells is his Labouring Power, there exists the potential to alter both the wages and the profits. But because what the capitalist is doing is paying a wage, but gaining far more from the worker than the wage is worth, Marx repeats that "that normal and average profits are made by selling commodities not above, but at their real values." These real values are determined by the "social labour" utilised in manufacturing the commodity by the worker.

Despite the short length of this work, Marx packs a lot in. He has a brief digression on the origins of the wage labour system being in the separation of the worker from his original means of subsistence and the revolutionary change embodied in the transition to capitalism. Marx also discusses briefly how rent, profit and interest are actually different terms for parts of the surplus value extracted from workers.

But Karl Marx was above all a revolutionary, and the conclusion of the book, after drawing out the nature of work under capitalism, is to point out a revolutionary way forward. The struggle between workers and capitalists has an effect. As Marx points out "if wages fall, profits  will rise; and if wages rise, profits will fall". But for the worker this cannot be enough. Capitalism can only seek to maximise its profits by making workers pay, thus in order to secure for workers the best possible situation, the wages system must be ended. Famously Marx concludes that

"Instead of the conservative motto, 'A fair day's wages for a fair day's work!' they ought to inscribe on their banner the revolutionary watchword, 'Abolition of the wages system!'

In this context, Trade unions are "centres of general resistance" to capital, but the struggle is hampered by their lack of revolutionary struggle, their "guerilla war against the effects of the existing system". What is needed is a revolutionary movement and this short book by the greatest anti-capitalist of them all, is one of the best weapons to educate and clarify workers in understanding the nature of the beast we must destroy.

Related Reviews

Marx - The Civil War in France
Mehring - Karl Marx: The Story of his Life
Choonara - Unravelling Capitalism: A Guide to Marxist Political Economy
Harman - Zombie Capitalism: Global Crisis & the Relevance of Marx


Magpie said...


Very good review.

Magpie said...

Clear and concise, this is a very good review of Marx's "Value, Price and Profit".

Keep the good work up, RR!