Marx’s Abstract Socially-Necessary Labour Time in A Contribution to the Critique of Political Economy and Capital

Here is a definition of abstract socially-necessary labour time in Marx’s A Contribution to the Critique of Political Economy (1859) that seems more lucid than the one in Capital:

“If one ounce of gold, one ton of iron, one quarter of wheat and twenty yards of silk are exchange-values of equal magnitude or equivalents, then one ounce of gold, half a ton of iron, three bushels of wheat and five yards of silk are exchange-values which have very different magnitudes, and this quantitative difference is the only difference of which as exchange-values they are at all capable. As exchange-values of different magnitudes they represent larger or smaller portions, larger or smaller amounts of simple, homogeneous, abstract general labour, which is the substance of exchange-value. The question now arises, how can these amounts be measured? Or rather the question arises, what is the quantitative form of existence of this labour, since the quantitative differences of the commodities as exchange-values are merely the quantitative differences of the labour embodied in them. Just as motion is measured by time, so is labour by labour-time. Variations in the duration of labour are the only possible difference that can occur if the quality of labour is assumed to be given. Labour-time is measured in terms of the natural units of time, i.e., hours, days, weeks, etc. Labour-time is the living state of existence of labour, irrespective of its form, its content and its individual features; it is the quantitative aspect of labour as well as its inherent measure. The labour-time materialised in the use-values of commodities is both the substance that turns them into exchange-values and therefore into commodities, and the standard by which the precise magnitude of their value is measured. The corresponding quantities of different use-values containing the same amount of labour-time are equivalents; that is, all use-values are equivalents when taken in proportions which contain the same amount of expended, materialised labour-time. Regarded as exchange-values all commodities are merely definite quantities of congealed labour-time.

The following basic propositions are essential for an understanding of the determination of exchange-value by labour-time. Labour is reduced to simple labour, labour, so to speak, without any qualitative attributes; labour which creates exchange-value, and therefore commodities, is specifically social labour; finally, labour in so far as its results are use-values is distinct from labour in so far as its results are exchange-values.

To measure the exchange-value of commodities by the labour-time they contain, the different kinds of labour have to be reduced to uniform, homogeneous, simple labour, in short to labour of uniform quality, whose only difference, therefore, is quantity.

This reduction appears to be an abstraction, but it is an abstraction which is made every day in the social process of production. The conversion of all commodities into labour-time is no greater an abstraction, and is no less real, than the resolution of all organic bodies into air. Labour, thus measured by time, does not seem, indeed, to be the labour of different persons, but on the contrary the different working individuals seem to be mere organs of this labour. In other words the labour embodied in exchange-values could be called human labour in general. This abstraction, human labour in general, exists in the form of average labour which, in a given society, the average person can perform, productive expenditure of a certain amount of human muscles, nerves, brain, etc. It is simple labour [English economists call it “unskilled labour”] which any average individual can be trained to do and which in one way or another he has to perform. The characteristics of this average labour are different in different countries and different historical epochs, but in any particular society it appears as something given. The greater part of the labour performed in bourgeois society is simple labour as statistical data show. Whether A works 6 hours producing iron and 6 hours producing linen, and B likewise works 6 hours producing iron and 6 hours producing linen, or A works 12 hours producing iron and B 12 hours producing linen is quite evidently merely a different application of the same labour-time. But what is the position with regard to more complicated labour which, being labour of greater intensity and greater specific gravity, rises above the general level? This kind of labour resolves itself into simple labour; it is simple labour raised to a higher power, so that for example one day of skilled labour may equal three days of simple labour. The laws governing this reduction do not concern us here. It is, however, clear that the reduction is made, for, as exchange-value, the product of highly skilled labour is equivalent, in definite proportions, to the product of simple average labour; thus being equated to a certain amount of this simple labour.

The determination of exchange-value by labour-time, moreover, presupposes that the same amount of labour is materialised in a particular commodity, say a ton of iron, irrespective of whether it is the work of A or of B, that is to say, different individuals expend equal amounts of labour-time to produce use-values which are qualitatively and quantitatively equal. In other words, it is assumed that the labour-time contained in a commodity is the labour-time necessary for its production, namely the labour-time required, under the generally prevailing conditions of production, to produce another unit of the same commodity.”
Marx, Karl. 1859. A Contribution to the Critique of Political Economy (trans. S.W. Ryazanskaya)
https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch01.htm

The crucial point about abstract socially-necessary labour time is that:

(1) it is an abstract labour time, not raw or direct labour hours;

(2) socially necessary in the sense that is not labour made in error or wasted;

(3) abstract labour time in the sense that all “different kinds of labour” can be reduced to a “uniform’ and “homogeneous” simple labour, which is abstract labour time of a “uniform quality, whose only difference, therefore, is quantity.”

This is also explained in volume 1 of Capital as follows:

“It might seem that if the value of a commodity is determined by the quantity of labour expended to produce it, it would be the more valuable the more unskilful and lazy the worker who produced it, because he would need more time to complete the article. However, the labour that forms the substance of value is equal human labour, the expenditure of identical human labour-power. The total labour power of society, which is manifested in the values of the world of commodities, counts here as one homogeneous mass of human labour-power, although composed of innumerable individual units of labour-power. Each of these units is the same as any other, to the extent that it has the character of a socially average unit of labour-power and acts as such; i.e. only needs, in order to produce a commodity, the labour time which is necessary on an average, or in other words is socially necessary. Socially necessary labour-time is the labour-time required to produce any use-value under the conditions of production normal for a given society and with the average degree of skill and intensity of labour prevalent in that society. ….

What exclusively determines the magnitude of the value of any article is therefore the amount of labour socially necessary, or the labour-time socially necessary for its production. The individual commodity counts here only as an average sample of its kind. Commodities which contain equal quantities of labour, or which can be produced in the same time, have therefore the same value. The value of a commodity is related to the value of any other commodity as the labour-time necessary for the production of the one is related to the labour-time necessary for the production of the other. ‘As exchange-values, all commodities are merely definite quantities of congealed labour-time.’” (Marx 1982: 129–130).

“If we leave aside the determinate quality of productive activity, and therefore the useful character of the labour, what remains is its quality of being an expenditure of human labour-power. Tailoring and weaving, although they are qualitatively different productive activities, are both a productive expenditure of human brains, muscles, nerves, hands etc., and in this sense both human labour. They are merely two different forms of the expenditure of human labour-power. Of course, human labour-power must itself have attained a certain level of development before it can be expended in this or that form. But the value of a commodity represents human labour pure and simple, the expenditure of human labour in general. And just as, in civil society, a general or a banker plays a great part but man as such plays a very mean part, so, here too, the same is true of human labour. It is the expenditure of simple labour-power, i.e. of the labour-power possessed in his bodily organism by every ordinary man, on the average, without being developed in any special way. Simple average labour, it is true, varies in character in different countries and at different cultural epochs, but in a particular society it is given; More complex labour counts only as intensified, or rather multiplied simple labour, so that a smaller quantity of complex labour is considered equal to a larger quantity of simple labour. Experience shows that this reduction is constantly being made. A commodity may be the outcome of the most complicated labour, but through its value it is posited as equal to the product of simple labour, hence it represents only a specific quantity of simple labour. The various proportions in which different kinds of labour are reduced to simple labour as their unit of measurement are established by a social process that goes on behind the backs of the producers; these proportions therefore appear to the producers to have been handed down by tradition.” (Marx 1982: 134–135).

It is quite clear that the attempt of some people sympathetic to Marx to use raw labour hours as a measure of abstract socially-necessary labour time won’t do at all. That is not what Marx meant by abstract socially-necessary labour time.

Nor does the market price human wage labour in terms of what Marx means by abstract socially-necessary labour time. Marx in the Contribution to the Critique of Political Economy (1859) seems to imply that the market does actually price commodities produced by labour in these terms:

“The laws governing this reduction do not concern us here. It is, however, clear that the reduction is made, for, as exchange-value, the product of highly skilled labour is equivalent, in definite proportions, to the product of simple average labour; thus being equated to a certain amount of this simple labour.”

This is utterly untrue. To believe so is obviously empirically false, and Marx can’t even explain or provide evidence of how it happens. In reality, wages are actually set – though to varying degrees in different sectors – by (1) social and institutional factors, (2) supply and demand and (3) to some extent by how people subjectively value labour, not by reckoning the abstract socially-necessary labour time required by the worker to produce whatever commodities he creates.

According to Marx, all concrete, qualitatively different labour time can be reduced to abstract labour time that is quantitatively measurable in a uniform, homogeneous unit. Abstract labour is the “value-forming substance” (Marx 1982: 129).

My charge against Marx is pure and simple: he has never adequately explained how to reduce all heterogeneous human labour to such abstract socially-necessary labour time.

How do you take an average of labour time when labour is such a heterogeneous factor, with so much difference in profession, skill, speed, competence, experience, and nature of work?

What do you average? Average energy expended in the work of average workers from each profession? When Marx says, “all labour is an expenditure of human labour-power, in the physiological sense, and it is in this quality of being equal, or abstract, human labour that it forms the value of commodities” (Marx 1982: 137), this suggests that “physiological” measurement of labour would have to be done in terms of energy expended. But that seems to be a grossly unsatisfactory and crude way to compare or aggregate

(1) intellectual work (e.g., work in, say, mathematics, physics, legal professions, advertising, etc.) and

(2) manual labour (e.g., the work of a brick-layer, mover, road-worker, etc.).

The qualitative difference between these two types of labour is profound, and it is difficult to see how even aggregating them by energy expended does justice to the difference between mental and manual labour. In short, even if energy expended is proposed as a homogeneous unit by which to measure heterogeneous labour, it still has insuperable difficulties.

Without a convincing explanation of how to reduce all heterogeneous labour to a meaningful, common and homogeneous unit, you can’t aggregate a society’s total labour power nor provide any meaningful, universal measure of the supposed labour value of any commodity.

BIBLIOGRAPHY
Marx, Karl. 1859. A Contribution to the Critique of Political Economy (trans. S.W. Ryazanskaya)
https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/index.htm

Marx, Karl. 1982. Capital. Volume One. A Critique of Political Economy (trans. Ben Fowkes). Penguin Books, Harmondsworth, England.

Marx on Labour Value and Cost Price in the Grundrisse

Marx’s Grundrisse der Kritik der Politischen Ökonomie (Outlines of the Critique of Political Economy) is an 800 manuscript on political economy that Marx wrote between 1857–1858, but was not published until 1939 (Wheen 2001: 227). Therefore the Grundrisse represents Marx’s thinking on economics in the late 1850s and some 10 years before he published Capital.

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.”

Marx, The Grundrisse, October 1857, Chapter on Money
https://www.marxists.org/archive/marx/works/1857/grundrisse/ch02.htm#p136

Some important points:

(1) The initial sentence is crucial to understanding Marx’s thinking:

“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, and

(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.

Only this would allow one to say that a cost of production price would be equal to labour value.

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”).

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

(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), and

(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.

Finally, 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.

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.

BIBLIOGRAPHY
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.