Analysis of Wealth. I. Value

Although from time immemorial the mass of objects which we term wealth has formed the basis of humanity’s existence, it is only of recent years that a scientific investigation of the con­ditions of its production and distribution has arisen. This is indicative of a development of these conditions, for if there was in the past a lack of effort to solve economic problems, this can only be because these problems existed, if at all, in an obscure, immature fashion. In the days when small local communities were prac­tically self-supporting and articles only rarely exchanged on their borders, it was obvious enough that wealth was the direct product of labour for individual consumption. Likewise in the earlier stages of production for exchange the seller of commodities knew them to be his per­sonal products and attached no miraculous import to the money for which he sold them and with which he purchased the products of men likewise known to him. With the complexity of full-blown capitalism, however, the workers become separated from the commodities pro­duced by them, which acquire a mysterious knack of realising more in their sale than what was laid out in buying the necessary factors for their production. Henceforth wealth seems to spring from nowhere—money makes money; and problems present themselves for solution.

Founded upon the very conditions which give rise to the problems, however, is the power of the capitalist class, who have a pretty sure in­stinct that a real economic science is inimical to their interests since it unavoidably exposes their parasitical position in society. It can readily be understood, therefore, that prior to critical revolutionists like Karl Marx developing the science in working-class interests, only a few isolated truths were revealed by the studies of honest, if orthodox, inquirers likewise few in number ; while the mass of so-called economic literature became of an apologetic character seeking to obscure, in capitalist interests, the very problems it pretended to elucidate.

Members of the working class, having nothing to fear from criticism of a social order which entails nothing but poverty for them, may find in the writings of Marx a clear, if elaborate, analysis of the facts of their existence. Time spent in their study, snatched though it be from scanty leisure, is repaid by the acquisition of an undying purpose in life and the joy of knowledge with which to carve the road to power. If in the following paragraphs the writer can out­line the main points of Marx’s economic theory in such a way as to arouse interest in some hitherto apathetic or hostile mind, his immediate object will be served. If the inquirer be worth his salt he will not rest till he is intellectually equipped for the conflict with capital.

The unit of modern wealth is the commodity, which has three essential features. Firstly it must satisfy some human want ; be useful. Secondly it is a product of human labour, a con­scious adaptation of nature ; while lastly it must be exchangeable for other useful labour pro­ducts. It must find its way into the social market else it is no commodity.

Thus a commodity is a combination in an ob­ject of utility and exchangeability, or in other words, of use-value and exchange-value. The former is due to its natural qualities (physical, chemical, etc.,) and also distinguishes it from any other commodity. It is this difference in usefulness which leads to the exchange of com­modities, although it by no means determines the ratio in which they are exchanged. Any given commodity vendor does not exchange, say, boots for boots, but for some article of wealth which has different properties. On the other hand it would be absurd to say that boots are as useful to him as the commodity he re­ceives in exchange. Any attempts, therefore, (and there have been many), to explain exchange-value through utility are futile. Exchange-value is a relation of equality, while a comparison of the use-values of commodities simply reveals their differences or inequalities. What, then, is exchange-value ? If we take a pair of boots and a ton of coal, each selling say for £1, we have three commodities (including the sovereign) of equal value. Compare as we may their relative weight, colour, smell, size, or any other tangible property, we can discover no equality between them. Their uses are different and it is highly improbable that the relations of supply and de­mand in coal and boot markets respectively are identical at any given moment. We are thus left with only one feature common to all these commodities, viz., they are products of human labour, they embody human energy. In this re­spect they may be compared and an equation between them arrived at if we measure the energy embodied in them by the time occupied in its expenditure. If, then, our imaginary pair of boots and ton of coal are equal in value, it can only be because they contain equal quantities of labour or. in other words, have taken an equal length of time to produce.

It is important to remember here that commo­dities are social products and presuppose the division of labour in society. Producers of coal and boots or of any other special product cannot exist on their commodities alone ; they exchange as a matter of necessity. In consequence they seek to minimise the length of time taken in producing any given commodity in order, by the cheapness thereof, to secure a certain sale. If, therefore, someone takes up unnecessary time in the production of a commodity its value in exchange ia not enhanced thereby. It is the socially necessary labour-time alone which forms value.

Another result of the division of labour is the difference in quality of the forms of labour which produce different commodities. Certain occupa­tions exhaust more nerve and muscle in a given time than others. Their products therefore con­tain more value in proportion to the intensity of labour in excess of that embodied in other commodities. This, however, by no means affects the fact that they are reducible to one common element, simple labour-power ; the more intense or skilled labour simply counts as a multiple of ordinary labour. Labour remains the factor which determines value.

This fact in the key to the door of economic mystery. Ignoring this, the professional “political economists” have endeavoured to lead us down one blind alley after another, beguiling us the while with romantic yarns concerning the awesome and unapproachable majesty of Money arrayed as Capital, embodiment of all the attributes of God, before whom the knees of men must bow for ever. Let us try to use the key and enter the holy presence. Mayhap ’tis a gilded skeleton, after all with which they would scare us.

Value (by which we continue to mean exchange-value) does not exist apart from material, valuable objects, any more than weight exists apart from things which are heavy, or heat apart from hot things. In measuring or expressing the value of a commodity we are, therefore, compelled to use some other commo­dity as an equivalent.

In common practice we use gold and say, for instance, 1 pr. of boots is worth 1 sovereign ; but if 1 ton of coal is also worth £1, then we might just as well say, 1 pr. of boots is worth 1 ton of coal or any other commodity which exchanges for £1. £1 serves as an expression of the value of the boots only because, like the boots (and the coal), it contains a definite quantity of human labour, and is in this respect equal to them.

There is, therefore, nothing mystical about the function of gold as money more than there is about the use of mercury as a measure of heat, or iron weights in a greengrocer’s shop. Gold measures value only because itself is valuable, as mercury has a temperature and iron is heavy. As coin gold becomes symbolic and may be replaced by tokens bearing a nominal value only, but said tokens must not diverge in nominal value from the real value of the gold which would otherwise be used. Likewise the amount of depreciation in weight and therefore value which a gold coin is allowed to suffer and yet remain in circulation, is limited by law.

The quantity of gold for which a commodity will exchange we term its price. This price is broadly determined by the commodity’s value, which is liable to fluctuations as the time taken in production varies.

The price, however, does not only reflect these variations. The velocity with which it is disturbed from time to time carries it now above, anon below the actual value of the commodity. On the surface these minor disturbances appear to be caused by supply and demand, and this is indeed so ; but the relations of supply and demand are themselves subject to the changes in labour-time. Assume, for instance, that the time occupied in producing a given quantity of boots is decreased by some new invention or pro­cess, then there will be a tendency to increase the output beyond the power of the market to immediately absorb, followed by a fall in price. The excess of boots remaining unsaleable, pro­duction is restricted till prices rise, probably above the new value, afterwards falling to approximately the correct level, when production, is resumed. The process may be compared with the oscillations produced on a pair of balances when the weight on one side is disturbed. Owing, however, to the continual alteration in the values of commodities due to improved methods of production, prices hardly ever come to rest at an exact coincidence with value. Nevertheless, it must be an approximation of price to value that takes place, for money is under the same necessity to express its value in the form of other commodities as these commodities are to express their value in the form of money. The state­ment that a sovereign is always worth a sovereign teaches us nothing.

Gold as money, then, is a transformed commo­dity. In addition to its own use (mainly luxurious) it has acquired the functions of universal equivalent—equivalent for all other commodities. Alone of all of them it is directly exchangeable for any of them by reason of its fitness to serve at once as a measure of value and a means of exchange or medium of circula­tion. Like all other commodities, it originates in a form of division of labour in which the means of production are private property and the product also; in which, moreover, production is not for direct use but for exchange.

The self-supporting peasant family of the Middle Ages had little use for money. Its various products were consumed by itself. The labour of each member was obviously part of the family’s labour. Consequently products were not exchanged within it but were considered the family property. Long ages before civilisa­tion tribal mankind produced forms of wealth which were used without going through the process of private exchange. They too needed not money.

The existing order of society, in which goods are produced for the market, is not immortal. It has not always existed ; nor will it continue for ever to exist. When the vast means for producing wealth have been converted from private into common property ; when the labour of society becomes consciously organised and its products distributed directly for consumption ; when, in short, Socialism has been established, money will disappear. Labour products will cease to be commodities. Their social character will be obvious at first sight and will need no translation into mystical terms of gold.

As it is at present, when we express the values of commodities, we do but state in a round-about way that they are products of so much social labour, in a word, our products. Money conceals the fact but does not alter it. It is itself a social product which has the power to command social labour. Accumulated in the hands of private individuals it enables them to exploit masses of their fellow men, in short, it becomes capital. Precisely how it does this will form the subject matter of a future article.

E. B.