In essence, for Marx, factors of production that have no embodied labour value transfer no value into the output commodity:
“It is thus strikingly clear, that means of production never transfer more value to the product than they themselves lose during the labour-process by the destruction of their own use-value. If such an instrument has no value to lose, if, in other words, it is not the product of human labour, it transfers no value to the product. It helps to create use-value without contributing to the formation of exchange value. In this class are included all means of production supplied by Nature without human assistance, such as land, wind, water, metals in situ, and timber in virgin forests.” (Marx 1906: 227).This is a development of Marx’s idea in Chapter 1 of volume 1 of Capital, as follows:
“A thing can be a use-value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, &c. A thing can be useful, and the product of human labour, without being a commodity.” (Marx 1906: 47–48).That is to say, things that are not produced by human labour have no real labour value (e.g., air, uncultivated soil, natural meadows) and only fetch an “imaginary” money price (Marx 1906: 115).
But, since a large number of capital goods bought by capitalists must be included in the list of things that Marx thinks have no labour value, we have a severe problem here. Many such goods used in production processes that, for Marx, have only “imaginary” money prices and no labour values still form part of the monetary costs of production for capitalists and are used to calculate cost-based mark-up prices.
Therefore the whole theory of exchange value in volume 1 of Capital is undermined, for goods cannot tend to exchange at pure or true labour values when many of them have prices that include mere “imaginary” money prices of factor inputs with no labour values (such as land, metals in situ, and timber in virgin forests, etc.). For example, purchase of land is by itself for many industries a major cost of production and one that needs to be recouped in the eventual money price of the output good that the business sells.
This is yet another terrible problem for Marx’s labour theory of value.
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.