The use-value that the workers sell to the capitalists is the specific form of useful concrete labour-power that they provide (e.g., tailoring, spinning, etc.) (Marx 1990: 681).
Marx sets out the issue:
“On the surface of bourgeois society the wage of the labourer appears as the price of labour, a certain quantity of money that is paid for a certain quantity of labour. Thus people speak of the value of labour and call its expression in money its necessary or natural price. On the other hand they speak of the market prices of labour, i.e., prices oscillating above or below its natural price.” (Marx 1906: 586).But labour-power is a special commodity. Capitalism requires that the worker is not paid for the full value of his labour-power expended in making a commodity.
So the remuneration of labour-power is a contradiction in the law of value, i.e., that commodities tend to exchange at their true labour values.
Marx reminds us that the current average socially necessary labour time required to produce commodities react back on the values of commodities produced in previous production periods:
“ … the value of a commodity is determined not by the quantity of labour actually realized in it, but by the quantity of living labour necessary for its production. A commodity represents, say 6 working hours. If an invention is made by which it can be produced in 3 hours, the value, even of the commodity already produced, falls by half. It represents now 3 hours’ of social labour instead of the 6 formerly necessary. It is the quantity of labour required for its production, not the realized form of that labour, by which the amount of the value of a commodity is determined.” (Marx 1906: 588).The worker is selling his labour-power, not labour: labour has no value in itself (Marx 1990: 677). So the expression “the value of labour” is “as imaginary as the value of the earth” (Marx 1906: 588). Classical economists regard wages as the “price of labour” but, Marx says, this is misleading (Brewer 1984: 63).
There is a crucial distinction between (1) the value of labour-power and (2) the value actually created by labour (Brewer 1984: 63).
Classical economists saw that once the fluctuations of supply and demand are removed labour-power has a value:
“Classical political economy borrowed from every-day life the category ‘price of labour’ without further criticism, and then simply asked the question, how is this price determined? It soon recognized that the change in the relations of demand and supply explained in regard to the price of labour, as of all other commodities, nothing except its changes, i.e., the oscillations of the market price above or below a certain mean. If demand and supply balance, the oscillation of prices ceases, all other conditions remaining the same. But then demand and supply also cease to explain anything. The price of labour, at the moment when demand and supply are in equilibrium, is its natural price, determined independently of the relation of demand and supply. And how this price is determined, is just the question. Or a larger period of oscillations in the market-price is taken, e.g., a year, and they are found to cancel one the other, leaving a mean average quantity, a relatively constant magnitude. This had naturally to be determined otherwise than by its own compensating variations. This price which always finally predominates over the accidental market-prices of labour and regulates them, this ‘necessary price’ (physiocrats) or ‘natural price’ of labour (Adam Smith) can, as with all other commodities, be nothing else than its value expressed in money. In this way political economy expected to penetrate athwart the accidental prices of labour, to the value of labour. As with other commodities, this value was determined by the cost of production. But what is the cost of production—of the labourer, i.e., the cost of producing or reproducing the labourer himself? This question unconsciously substituted itself in political economy for the original one; for the search after the cost of production of labour as such turned in a circle and never left the spot. What economists therefore call value of labour, is in fact the value of labour-power, as it exists in the personality of the labourer, which is as different from its function, labour, as a machine is from the work it performs. Occupied with the difference between the market-price of labour and its-so-called value, with the relation of this value to the rate of profit, and to the values of the commodities produced by means of labour, &c., they never discovered that the course of the analysis had led not only from the market prices of labour to its presumed value, but had led to the resolution of this value of labour itself into the value of labour-power.” (Marx 1906: 589–590).Marx endorses the Classical analysis that supply and demand drive wages around its equilibrium “natural price” but contends that the Classical economists misunderstood the nature of the latter. For Marx, the “necessary price” or “natural price” of labour is actually the value of labour-power, which is the value of the maintenance and reproduction of labour, a subsistence wage.
Now capitalism conceals this because the workers are paid a wage which covers all their working hours:
“The value of labour-power thus determines the value of labour, or, expressed in money, its necessary price. If, on the other hand, the price of labour-power differs from its value, in like manner the price of labour differs from its so-called value.So Marx’s argument here is that subterfuge conceals the slavery of capitalism, in that the subsistence wage appears to be spread out over all hours of the working day, as the worker is nominally paid an hourly wage for all his total hours.
As the value of labour is only an irrational expression for the value of labour-power, it follows, of course, that the value of labour must always be less than the value it produces, for the capitalist always makes labour-power work longer than is necessary for the reproduction of its own value. In the above example, the value of the labour-power that functions through 12 hours is 3s., a value for the reproduction of which 6 hours are required. The value which the labour-power produces is, on the other hand, 6s., because it, in fact, functions during 12 hours, and the value it produces depends, not on its own value, but on the length of time it is in action. Thus, we have a result absurd at first sight—that labour which creates a value of 6s. possesses a value of 3s.
We see, further: The value of 3s. by which a part only of the working day—i.e., 6 hours’ labour—is paid for, appears as the value or price of the whole working-day of 12 hours, which thus includes 6 hours unpaid for. The wage-form thus extinguishes every trace of the division of the working-day into necessary labour and surplus-labour, into paid and unpaid labour. All labour appears as paid labour. In the corvee, the labour of the worker for himself, and his compulsory labour for his lord, differ in space and time in the clearest possible way. In slave-labour, even that part of the working-day in which the slave is only replacing the value of his own means of existence, in which, therefore, in fact, he works for himself alone, appears as labour for his master. All the slave’s labour appears as unpaid labour. In wage-labour, on the contrary, even surplus labour, or unpaid labour, appears as paid. There the property-relation conceals the labour of the slave for himself; here the money-relation conceals the unrequited labour of the wage-labourer.” (Marx 1906: 590–591).
“Let us consider, on the other hand, the capitalist. He wishes to receive as much labour as possible for as little money as possible. Practically, therefore, the only thing that interests him is the difference between the price of labour-power and the value which its function creates. But, then, he tries to buy all commodities as cheaply as possible, and always accounts for his profit by simple cheating, by buying under, and selling over the value. Hence, he never comes to see that, if such a thing as the value of labour really existed, and be really paid this value no capital would exist, his money would not be turned into capital.” (Marx 1906: 593).
But this only works if labourers tend to be paid a subsistence wage: the value of the maintenance and reproduction of labour. Once workers are paid over and above a subsistence wage for more than their necessary labour-time, then they are being paid for some of their surplus labour time.
And of course since commodity prices in real world capitalism are not determined by or equal to the true labour values, as the working day is held constant, the intensity of labour is stable or falls, and the real wage rises and rises in capitalism and productivity soars, the more and more the workers are being paid for their surplus labour value.
Supply and demand might temporarily change the money wage (Marx 1990: 681), but under Marx’s theory it is clear that there are powerful forces which tend to drive it back to the value of labour-power.
Because there are surface differences in the wage payments owing to different lengths of the working day and sometimes (presumably because of supply and demand) different wage rates for the same work, the underlying truth that the value of labour-power is a subsistence wage is concealed (Marx 1990: 682).
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.