In the Grundrisse, there is this very interesting description of the labour value:
“The value (the real exchange value) of all commodities (labour included) is determined by their cost of production, in other words by the labour time required to produce them. Their price is this exchange value of theirs, expressed in money. The replacement of metal money (and of paper or fiat money denominated in metal money) by labour money denominated in labour time would therefore equate the real value (exchange value) of commodities with their nominal value, price, money value. Equation of real value and nominal value, of value and price. But such is by no means the case. The value of commodities as determined by labour time is only their average value. This average appears as an external abstraction if it is calculated out as the average figure of an epoch, e.g. 1 lb. of coffee = 1s. if the average price of coffee is taken over 25 years; but it is very real if it is at the same time recognized as the driving force and the moving principle of the oscillations which commodity prices run through during a given epoch. This reality is not merely of theoretical importance: it forms the basis of mercantile speculation, whose calculus of probabilities depends both on the median price averages which figure as the centre of oscillation, and on the average peaks and average troughs of oscillation above or below this centre. The market value is always different, is always below or above this average value of a commodity. Market value equates itself with real value by means of its constant oscillations, never by means of an equation with real value as if the latter were a third party, but rather by means of constant non-equation of itself (as Hegel would say, not by way of abstract identity, but by constant negation of the negation, i.e. of itself as negation of real value). In my pamphlet against Proudhon I showed that real value itself -- independently of its rule over the oscillations of the market price (seen apart from its role as the law of these oscillations) -- in turn negates itself and constantly posits the real value of commodities in contradiction with its own character, that it constantly depreciates or appreciates the real value of already produced commodities; this is not the place to discuss it in greater detail. Price therefore is distinguished from value not only as the nominal from the real; not only by way of the denomination in gold and silver, but because the latter appears as the law of the motions which the former runs through. But the two are constantly different and never balance out, or balance only coincidentally and exceptionally. The price of a commodity constantly stands above or below the value of the commodity, and the value of the commodity itself exists only in this up-and-down movement of commodity prices. Supply and demand constantly determine the prices of commodities; never balance, or only coincidentally; but the cost of production, for its part, determines the oscillations of supply and demand. The gold or silver in which the price of a commodity, its market value, is expressed is itself a certain quantity of accumulated labour, a certain measure of materialized labour time. On the assumption that the production costs of a commodity and the production costs of gold and silver remain constant, the rise or fall of its market price means nothing more than that a commodity, = x labour time, constantly commands > or < x labour time on the market, that it stands above or beneath its average value as determined by labour time. The first basic illusion of the time-chitters consists in this, that by annulling the nominal difference between real value and market value, between exchange value and price -- that is, by expressing value in units of labour time itself instead of in a given objectification of labour time, say gold and silver -- that in so doing they also remove the real difference and contradiction between price and value. Given this illusory assumption it is self-evident that the mere introduction of the time-chit does away with all crises, all faults of bourgeois production. The money price of commodities = their real value; demand = supply; production = consumption; money is simultaneously abolished and preserved; the labour time of which the commodity is the product, which is materialized in the commodity, would need only to be measured in order to create a corresponding mirror-image in the form of a value-symbol, money, time-chits. In this way every commodity would be directly transformed into money; and gold and silver, for their part, would be demoted to the rank of all other commodities.”Some important points:
Marx, The Grundrisse, October 1857, Chapter on Money
(1) The initial sentence is crucial to understanding Marx’s thinking:But as always there is no rational reason to think that the labour theory of value is of any empirical value in the first place, when“The value (the real exchange value) of all commodities (labour included) is determined by their cost of production, in other words by the labour time required to produce them.”A real “exchange value” or price equal to labour value (“labour time required to produce them”) is the cost of production. This is so obviously the same view that Marx held in his essay Wage-Labor and Capital published in the periodical the Neue Rheinische Zeitung in April 1849:“The determination of price by cost of production is tantamount to the determination of price by the labortime requisite to the production of a commodity, for the cost of production consists, first, of raw materials and wear and tear of tools, etc., i. e., of industrial products whose production has cost a certain number of work-days, which therefore represent a certain amount of labor-time, and, secondly, of direct labor, which is also measured by its duration.” (Marx 1902: 34).For more discussion of this point see this post.
(2) Marx thinks that“The replacement of metal money (and of paper or fiat money denominated in metal money) by labour money denominated in labour time would therefore equate the real value (exchange value) of commodities with their nominal value, price, money value.”Of course real world capitalist economies do not do this, and even if you introduced “labour money” denominated in labour time, then you would have to(1) demonstrate how to reduce all heterogeneous human wage labour to a common, meaningful homogeneous unit so that, for example, 1 labour money unit equals one unit of homogeneous labour time, andOnly this would allow one to say that a cost of production price would be equal to labour value.
(2) ensure that in real world capitalism wage labourers are paid exactly in accordance with the socially necessary labour time appropriate for their labour, and
(3) price all non-labour factor inputs in terms of socially necessary labour time required to produce them.
Yet, once again, it is obvious that this is not how real-world capitalism works, and the fact that it does not work this way contradicts and negates Marx’s statement in (1) above (that is, “The determination of price by cost of production is tantamount to the determination of price by the labortime ... .”). Marx even recognizes this by saying: “But such is by no means the case.”
(3) After this Marx argues that the “value of commodities as determined by labour time is only their average value,” which appears to be what he would later call the “average price” that equals the cost of production price plus a uniform long-run rate of profit (though admittedly he does directly not refer to profit in the quotation above). We even get some Hegelian claptrap with which Marx dresses this up philosophically (“as Hegel would say, not by way of abstract identity, but by constant negation of the negation, i.e. of itself as negation of real value”).
(1) it ascribes to human wage labour a special significance that it does not have (that is, if work expended by labour creates a value in commodities, then slaves, animals or the power of nature should be able to create such a value too), andFinally, neither real-world market wages or non-labour factor input prices are determined in the way required by Marx to make a cost of production price equal labour value, even if you could surmount the serious problems in (1) and (2) above.
(2) the problem of reducing (and aggregating) all heterogeneous human labour to a homogenous unit is a problem almost as severe as the idea of aggregating interpersonal subjective utilities, and I see no evidence that Marx or Marxists have ever shown how to do it.
In short, even here in the early version in Marx’s Grundrisse der Kritik der Politischen Ökonomie of 1857–1858 we have no reason to take the labour theory of value seriously.
Marx, Karl. 1902. Wage-Labor and Capital. New York Labor News Company, New York.
Wheen, Francis. 2001. Karl Marx: A Life. W. W. Norton & Company, New York and London.