What Is Value? A Marxist Perspective

Marx’s critique of capitalism, and more specifically his theory of value, is still very relevant today, as I argue in my new book Fetishism and the Theory of Value: Reassessing Marx in the 21st Century.

But his work is often misunderstood, not only by orthodox economists but also by others – such as ‘greens’ – who seek inspiration in his writings. Economists, if they refer to his work at all, have tended to focus on the quantitative labour theory of value, ignoring what Marx called the qualitative theory of value: his critique of the economic categories of ‘bourgeois’ economics which mystify –  and hence also justify – the reality of what is really going on. The concept of fetishism is crucial to this theory, but by economists this has been either ignored or treated as the work of Marx the philosopher or Marx the sociologist. Marx introduces the concept of commodity fetishism in the very first chapter of Capital Volume I, where he seeks to get to grips with the mysterious phenomenon of exchange value. Rather than simplistically equating value with price – as is the practice of the market system and mainstream economics – he delves deep into the beliefs and practices that constitute and sustain the capitalist system. In other works, he applies the concept of fetishism to capital, money and interest-bearing capital. By reference to what he calls the ‘Trinity Formula’ he shows how, by presenting profit as the return on capital and rent as the return on land, both profit and rent are taken for granted, and go unchallenged. That the surplus value generated in production accrues solely to capital is treated as somehow ‘natural’.

In my book, I show the continuing relevance of Marx’s theory today, especially with regard to finance and the environment. Both the financial crisis of 2008 and the continuing crisis of environmental destruction are related to the way in which the market increasingly extends its grip over our lives: through the financialisation of everyday life, and through the use of market instruments and market principles that shape our relationship with nature.

In Capital Volume I, Marx begins with exchange-value and the commodity, which constitute the very foundations of the capitalist system. Exchange value is the form that value takes; a form which conceals its origins in labour. As Marx expresses it, in Chapter 1: in exchange-value: “a social relation between persons assumes the fantastic form of a relation between things.”  This is the phenomenon that he refers to as the fetishism of commodities. It is a very apt metaphor, for the power of the fetish (among the people of West Africa whence the term arose) did not derive from its natural, material properties but rather from the beliefs and practices of that society. So too in capitalism: what appears to be natural – the market price of a commodity – is very far from being so. It is in fact social: ‘social’ in the sense that it is dependent on the shared beliefs and practices of society. This – his insistence that value is a social rather than a natural phenomenon – is a  central pillar of Marx’s work; in contrast to ‘bourgeois’ economics, which provides the conceptual and moral underpinning of the market system which dominates the world , that equates value simply with price.

The fetishism of commodities allows the exploitation of labour to be concealed: it appears to be natural that surplus value accrues to the capitalist as profit. Marx first used the concept of the fetish when, as a journalist, he attacked the members of the Rhineland Assembly. Here, it served as a powerful metaphor in his criticism of the institution of private property. But, with the increasing focus on labour in his writings, the concept gradually developed into an analytical device central to his critique of capitalism. The first chapter of Capital Volume I begins with the commodity, and with what some have seen as an unduly complex analysis of exchange-value. As I demonstrate, Marx’s argument here is very much shaped by the need to distinguish his position from that of Ricardo, and – on the other hand – Samuel Bailey.

In the book, I also present what I perceive as some limitations in his work. I suggest that his attempts to explain exchange value by the use of analogy are hindered by his drawing on material analogies. Value, he says, is like weight, or area, or volume. Yet, as he is at pains to point out, value is very much a social phenomenon. More appropriate, therefore, would have been an analogy with language, the quintessential social phenomenon. (Interestingly, such an analogy has been drawn by linguists and semioticians – in the other direction). Following on from this, I assess the merits of Structural Marxism – which has largely been ignored in recent decades. I further suggest that Marx’s focus on production as dominant led him to ignore the fact that exchange and consumption are also social relations in their own right; the former especially relevant in traditional societies, the latter in modern western societies.

To demonstrate the continuing relevance of these ideas, I critically review recent Marx-inspired literature relating to the two key crises of our time: environment, and finance.

In recent years, a great deal has been written about nature and the environment that draws on Marx’s work. What these works generally share is a recognition that capital’s relation to nature has both widened and deepened dramatically. There is a broad consensus in rejecting market-based environmental policies such as emissions trading; but there are also major disagreements between what are sometimes referred to as Reds and Greens – offering either  applause or criticism of Marx’s writings on nature. The latter often seem misplaced, for Marx’s theory of value is not normative – concerning how people ought to behave. It is an attempt to understand how capitalism works: what value means, in practice, in a capitalist system – and according to the categories of bourgeois economics, of which the concept of rent is particularly crucial.

The finance crisis, and the ‘financialisation of everyday life’ have also contributed to a renewed interest in Marx’s works. Compared to the literature on environment, commentators here make more reference to Marx’s theory of value, although there are unresolved debates as to how far this needs to be modified to fit modern conditions. Interestingly, there are strong similarities between the key analytical questions that have been debated in relation to the environment and to financialisation: ‘is the environment/finance productive?’ and ‘what sort of appropriation is taking place here?’

The power of the market, and of finance, over our lives has never been greater than it is today.  We still have much to gain from revisiting Marx’s critical analysis, challenging the concept of value that underlies the capitalist system.

Desmond McNeill recently retired from the Centre for Development and the Environment, at the University of Oslo, Norway, where he has been Research Professor and Director. This post was first published on Progress in Political Economy (PPE).

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