Surplus value is not created by the transactions M–C or C–M in the circuit of capital (Marx 1990: 270). Marx argues that it is the special commodity called labour-power that is the source of surplus value (Marx 1990: 270).
“In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power.” (Marx 1906: 186).Marx defines what he means by labour-power and what conditions are necessary for labour power to exist as a commodity, as follows:
“By labour-power or capacity for labour is to be understood the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of any description.For Marx, labour is an activity and cannot be sold but labour-power is what the worker actually sells on the market as a commodity (Brewer 1984: 36).
But in order that our owner of money may be able to find labour-power offered for sale as a commodity, various conditions must first be fulfilled. The exchange of commodities of itself implies no other relations of dependence than those which result from its own nature. On this assumption, labour-power can appear upon the market as a commodity only if, and so far as, its possessor, the individual whose labour-power it is, offers it for sale, or sells it, as a commodity. In order that he may be able to do this, he must have it at his disposal, must be the untrammelled owner of his capacity for labour, i.e., of his person. 1 He and the owner of money meet in the market, and deal with each other as on the basis of equal rights, with this difference alone, that one is buyer, the other seller; both, therefore, equal in the eyes of the law. The continuance of this relation demands that the owner of the labour-power should sell it only for a definite period, for if he were to sell it rump and stump, once for all, he would be selling himself, converting himself from a free man into a slave, from an owner of a commodity into a commodity. He must constantly look upon his labour-power as his own property, his own commodity, and this he can only do by placing it at the disposal of the buyer temporarily, for a definite period of time. By this means alone can he avoid renouncing his rights of ownership over it.
The second essential condition to the owner of money finding labour-power in the market as a commodity is this—that the labourer instead of being in the position to sell commodities in which his labour is incorporated, must be obliged to offer for sale as a commodity that very labour-power, which exists only in his living self.” (Marx 1906: 186–187).
For Marx, two conditions are necessary for labour-power to be a commodity, as follows:
(1) that the person offers his labour-power himself and is a free person (not a slave) and only sells his labour power for a limited period, andThe person who sells his labour-power alienates it but does not renounce his rights of ownership to it (Marx 1990: 271). Capitalism is that system where not only commodity production takes place but where the owners of the means of production buy the labour-power of free workers, and a large class of workers selling their labour-power is a precondition of advanced capitalism (Marx 1990: 274).
(2) that the person is not an owner of means of production or capital (understood as money or commodities used to increase value) and thus needs to sell his labour-power to survive (Marx 1990: 271–272; Harvey 2010: 98–99).
But there is a severe problem in Marx’s definition of labour-power as a commodity. It is this: it is perfectly possible for an unfree person or slave to sell his labour-power for a limited period to produce a commodity, even though he is enslaved and spends most of his time working as a slave (see also Roth and van der Linden 2014: 468–470).
There are real historical examples of this. In ancient Rome, for instance, there was the practice called the peculium in which a slave master could allow his slave to run a business which produced commodities for sale or even work as a labourer and earn wages, and later even buy his freedom (Plessis 2015: 96; Berger 1953: 624).
In the American south in the 19th century, slaves could sometimes work for wages: e.g., a New Orleans merchant John McDonogh gave permission for his slaves to undertake wage labour on Sundays and at night and keep their wages (Schafer 1997: 366). Such slaves were clearly selling labour-power to create commodities for sale to fetch a money profit. Yet Marx’s theory denies that a slave can sell labour-power that creates surplus value.
If Marx denied that slaves produced any surplus labour value in such instances, then his theory is logically incoherent and empirically dubious. Alternatively, if Marx were to admit that slaves in these circumstances did create embodied surplus labour value in the commodities they created, then his theory would still be logically incoherent as it stands.
Yet another problem is that some people can and do have considerable money savings (which they could use as capital) or even their own business, but still sell their labour-power for a money wage. But Marx says that the seller of labour-power cannot have these things. Marx seems to think of workers as “men possessing nothing but their own labour-power” (Marx 1906: 188), which is contrary to the reality of many middle class people working for a money wage today in businesses that produce commodities (especially in service industries or professions).
Marx is clear that societies with capitalist modes of production are contingent products of history, and not some product of nature:
“One thing, however, is clear—nature does not produce on the one side owners of money or commodities, and on the other men possessing nothing but their own labour-power. This relation has no natural basis, neither is its social basis one that is common to all historical periods. It is clearly the result of a past historical development, the product of many economical revolutions, of the extinction of a whole series of older forms of social production.It is no doubt true that economic systems are the result of a complex historical and social process and that we have seen many down through human history, and Marx deserves credit for this view.
So, too, the economical categories, already discussed by us, bear the stamp of history. Definite historical conditions are necessary that a product may become a commodity. It must
not be produced as the immediate means of subsistence of the producer himself. Had we gone further, and inquired under what circumstances all, or even the majority of products take the form of commodities, we should have found that this can only happen with production of a very specific kind, capitalist production. Such an inquiry, however, would have been foreign to the analysis of commodities. Production and circulation of commodities can take place, although the great mass of the objects produced are intended for the immediate requirements of their producers, are not turned into commodities, and consequently social production is not yet by a long way dominated in its length and breadth by exchange-value, the appearance of products as commodities presupposed such a development of the social division of labour, that the separation of use-value from exchange-value, a separation which first begins with barter, must already have been completed.” (Marx 1906: 188).
How does labour-power have value?
“The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this special article. So far as it has value, it represents no more than a definite quantity of the average labour of society incorporated in it. Labour-power exists only as a capacity, or power of the living individual. Its production consequently presupposes his existence. Given the individual, the production of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour-time requisite for the production of labour-power reduces itself to that necessary for the production of those means of subsistence; in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer. Labour-power, however, becomes a reality only by its exercise; it sets itself in action only by working. But thereby a definite quantity of human muscle, nerve, brain, &c, is wasted, and these require to be restored. This increased expenditure demands a larger income. If the owner of labour-power works to-day, to-morrow he must again be able to repeat the same process in the same conditions as regards health and strength. His means of subsistence must therefore be sufficient to maintain him in his normal state as a labouring individual. His natural wants, such as food, clothing, fuel, and housing, vary according to the climatic and other physical conditions of his country. On the other hand, the number and extent of his so-called necessary wants, as also the modes of satisfying them, are themselves the product of historical development, and depend therefore to a great extent on the degree of civilisation of a country, more particularly on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free labourers has been formed. In contradistinction therefore to the case of other commodities, there enters into the determination of the value of labour-power a historical and moral element. Nevertheless, in a given country, at a given period, the average quantity of the means of subsistence necessary for the labourer is practically known.So the value of labour-power is determined by the abstract labour necessary for the maintenance and reproduction of workers, so that this includes:
The owner of labour-power is mortal. If then his appearance in the market is to be continuous, and the continuous conversion of money into capital assumes this, the seller of labour-power must perpetuate himself, ‘in the way that every living individual perpetuates himself, by procreation.’ The labour-power withdrawn from the market by wear and tear and death, must be continually replaced by, at the very least, an equal amount of fresh labour-power. Hence the sum of the means of subsistence necessary for the production of labour-power must include the means necessary for the labourer’s substitutes, i.e., his children, in order that this race of peculiar commodity-owners may perpetuate its appearance in the market.
In order to modify the human organism, so that it may acquire skill and handiness in a given branch of industry, and become labour-power of a special kind, a special education or training is requisite, and this, on its part, costs an equivalent in commodities of a greater or less amount. This amount varies according to the more or less complicated character of the labour-power. The expenses of this education (excessively small in the case of ordinary labour-power), enter pro tanto into the total value spent in its production.” (Marx 1906: 189–191).
(1) the commodities needed for the worker’s subsistence;But there is a serious and problematic aspect to Marx’s definition of the value of labour-power. Marx asserts that
(2) the commodities needed for the workforce to have families and reproduce itself and
(3) the cost of education and training of the skilled forms of labour. (Brewer 1984: 37).
On the other hand, the number and extent of his so-called necessary wants, as also the modes of satisfying them, are themselves the product of historical development, and depend therefore to a great extent on the degree of civilisation of a country, more particularly on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free labourers has been formed. In contradistinction therefore to the case of other commodities, there enters into the determination of the value of labour-power a historical and moral element. (Marx 1906: 190).Brewer puts his finger on the problem here:
“Marx’s introduction of … [sc. the] historical and moral element [sc. determining the value of labour power] is open to criticism as question begging; it comes close to saying that the value of labour-power is whatever it happens to be. It may be above physiological subsistence, since any discrepancy can be described as due to the ‘historical and moral element.’” (Brewer 1984: 37).Since a capitalist economy with a very productive and rich economy could afford a generous minimum standard of “so-called necessary wants” (a base rate) and other more skilled workers would have a higher standard than this, the question arises why anyone should think that capitalism has an inherent tendency to keep workers poor, as Marx suggests in other chapters of Capital.
Unlike other commodities that are factor inputs which are paid for immediately, capitalists pay workers who sell their labour-power after they have given it: usually workers are paid weekly, fortnightly or even monthly (Marx 1990: 277–279).
Marx ends by noting the differences between labour power in the sphere of circulation and the sphere of production. In the former, theoretically speaking, buyers and sellers of labour-power confront one another as equals, but in the sphere of production labour power is subordinated to capitalist control (Brewer 1984: 38).
To the extent that labour-power is a special commodity very different from other commodities, Post Keynesianism would agree with Marxism. However, Marx’s view of labour-power via the labour theory of value only obscures his analysis and renders it problematic.
Berger, A. 1953. Encyclopedic Dictionary of Roman Law. American Philosophical Society, Philadelphia.
Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.
Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.
Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.
Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.
Plessis, Paul du. 2015. Borkowski’s Textbook on Roman Law (5th edn.). Oxford University Press, Oxford.
Roth, Karl Heinz and Marcel van der Linden. 2014. “Results and Prospects,” in Marcel van der Linden and Karl Heinz Roth (eds.), Beyond Marx: Theorising the Global Labour Relations of the Twenty-First Century. Brill, Leiden. 445–486.
Schafer, Judith Kelleher. 1997. “Roman Roots of the Louisiana Law of Slavery: Emancipation in American Louisiana, 1803–1857,” in Warren M. Billings and Judith Kelleher Schafer (eds.), An Uncommon Experience: Law and Judicial Institutions in Louisiana, 1803–2003. University of Southwestern Louisiana, Lafayette.