The economics of capitalism

The whole of the labour of society is engaged in producing the whole social product, but not in accordance with a predetermined social plan. Each producer works on his own account and does not know, until he tries to sell his product, whether or not he has kept in line with the average socially necessary labour criterion. If his product remains unsold he knows, too late, that he has failed. There is the further fact that society only requires commodities in appropriate proportions. For example, at a given time, there is a certain effective demand for bread, coats, and shoes, and labour employed in producing these commodities in excess of this demand is superfluous labour, and does not count in determining their values. As producers are working on their own account, producing commodities of different kinds with labour of different degrees of intensity, the common measure of value, that lies at the back of all kinds of skilled labour, is the labour that is the same in all human beings—just the expenditure of energy in its simplest form. The greater the skill involved in the work that is being done, the more of simple labour is compressed in an hour’s employment of this labour, and the greater is the value produced in relation to what is produced by simple labour in the same time, even though the result may be a vastly increased product with a fall in the value of individual commodities.

The reduction of skilled labour to simple labour in the estimation of the value of a commodity is not done consciously by the producers but is accomplished behind their backs. An illustration may help to make this clear. If we turn back to the the early history of mankind, to conditions of barter when articles were exchanged against articles, those who were making the exchanges within the communities did so on the rough basis of the work involved in each article. The products were such that one man could have made any of them himself, if he had the time, but it was more convenient for him to exchange his surplus of one article for his neighbours surplus of another. If his neighbour asked what he considered too much for an article then he would make it himself. The products were so few that the members of the community knew the time that would be involved in the production of each of them. Now let us transfer the idea to the present time. All kinds of companies and the like are engaged in the production of a variety of commodities, commodities so dissimilar as bread and fur coats. Money is invested in the production of these commodities for the purpose of making a profit out of doing so, and money flows into the most profitable channels. This flow of investment increases the production of the more profitable commodities until it so far outstrips effective demand that the prices of them, and their profitability, is reduced. The flow of investment then forsakes the production of the commodities whose profit capacity has declined and moves into more profitable productions. This ebb and flow of investment ensures that, in the long run, all the commodities produced by society sell at prices that are round about their values.

Now let us go a little further into the question of prices. Over a period the price of an article goes up and down, and these ups and downs are caused by the rise and fall of demand; that is to say when supply exceeds demand prices are low, and when demand exceeds supply prices are high—the black market has been a sufficient indication of that fact. The average of these ups and downs is round about the actual value of a commodity. There are those who argue that it is supply and demand, and not the quantity of labour required to produce it, that determines the value of a commodity. They overlook the fact that in the alternations between supply exceeding demand and demand exceeding supply there must be a period when supply and demand are equal and therefore cancel each other out. During that period the supply and demand theory cannot be the answer to the question of the value of a commodity. No amount of mathematical manipulation can get over this hurdle. Supply and demand as an explanation of value must be ruled out. At best it can only explain the fluctuations in prices but not the point about which they fluctuate.

When commodities are being exchanged through the medium of money value is being; exchanged for value, but what really underlies the process is that the labour of one man or group of men is being exchanged, for the labour of another man or group of men; there has been a social division of labour. For instance the labour of housebuilding has been exchanged for the labour of shoemaking; and so on. Thus value is really a social relation; a relation between people, between one man’s labour and that of another; but this social relation between the labour of different people is expressed as a relation between the commodities they have produced; it is expressed when the latter appear on the market for sale. People have been producing articles for use all through history but they have only produced commodities, articles possessing value, where a system of exchange has come into operation. Further, it is only under a system of commodity production, the production of articles for the purpose of being exchanged, that value becomes one of the essential qualities of a product. As Marx puts it:

“Every product of labour is. in all states of society, a use-value; but it is only at a definite historical epoch in society’s development that such a product becomes a commodity. viz. at the epoch when the labour spent upon the production of a useful article becomes expressed as one of the objective qualities of that article i.e., its value.”

Thus with the abolition of commodity production value will also disappear. Articles will no longer be looked upon as having so much value but will only be appreciated according to their usefulness for consumption or enjoyment, and diamonds and furs will lose a good deal of their attraction. At the same time the mysterious nature of commodities will disappear: the mystery of money arises out of the relation of the individual producers to the total of their own products which appears to them as a social relation between the objects they produce.

There is one aspect of commodities which, unless it is understood, will leave, room for confusion. Commodities are articles that are regularly produced for the market, therefore only those articles that are capable of constant reproduction are commodities. A genuine antique is not a commodity because it cannot be indefinitely reproduced; it is true it comes upon the market and is sold and thus, although not a commodity, takes on a commodity character. Likewise honour takes on a commodity character when politicians sell their votes. In the huge productive output of to-day these are die comparatively odd things.

Finally, the labour of private individuals becomes labour directly social in its form owing to the fact that production is for the market; individual labour becomes an indistinguishable part of the general social labour. It is impossible to tell by looking at products as they appear on the market, what different portions of the world’s population have taken part in their production; the raw materials may have been produced in India, China or Russia, the machinery in England, France or Germany, and the finished products in America, Japan, or Holland. They appear on the markets, local, national, and international, just as articles for sale produced by a portion of the general labour of society.

GILMAC