4 THEORY OF VALUE
What is the effect of the worker's alienated labor on its products, both on what they can do and what can be done with them? Smith and Ricardo used the labor theory of value to explain the Cost of commodities. For them, the value of any commodity is the result of the amount of labor time that went into its production. Marx took this explanation more or less for granted. His labor theory of value, however, is primarily concerned with the more basic problem of why goods have prices of any kind. Only in capitalism does the distribution of what is produced take place through the medium of markets and prices. In slave society, the slave owner takes by force what his slaves produce, returning to them only what he wishes. While in feudalism, the lord claims as a feudal right some part of what is produced by his serfs, with the serfs consuming the rest of their output directly. In both societies, most of what is produced cannot be bought or sold, and therefore, does not have any price.
In accounting for the extraordinary fact that everything produced in capitalist society has a price, Marx emphasizes the separation of the worker from the means of production (whereas slaves and serfs are tied to their means of production) and the sale of his or her labor power that this separation makes necessary. To survive, the workers, who lack all means to produce, must sell their labor power. In selling their labor power, they give up all claims to the products of their labor. Hence, these products become available for exchange in the market, indeed are produced with this exchange in mind, while workers are able to consume only that portion of their products which they can buy back in the market with the wages they are paid for their labor power.
"Value", then, is the most general effect of the worker's alienated labor on all its products; exchange—which is embodied in the fact that they all have a price—is what these products do and what can be done with them. Rather than a particular price, value stands for the whole set of conditions which are necessary for a commodity to have any price at all. It is in this sense that Marx calls value a product of capitalism. The ideal price ("exchange value") of a commodity and the ways in which it is meant to he used ("use value") likewise exhibit in their different ways the distinctive relationships Marx uncovered between workers and their activities, products and other people in capitalist society.
"Exchange value" reflects a situation where the distinct human quality and variety of work has ceased to count. Through alienation, the relations between workers has been reduced to the quantity of labor that goes into their respective products. Only then can these products exchange for each other at a ratio which reflects these quantities. It is this which explains Smith's and Ricardo's finding that the value of a commodity is equal to the amount of labor time which has gone into its production. While in use value, the physical characteristics of commodities—planned obsolescence, the attention given to style over durability, the manufacture of individual and family as opposed to larger group units, etc.—give unmistakable evidence of the isolating and degraded quality of human relations found throughout capitalist society.
Surplus-value, the third aspect of value, is the difference between the amount of exchange and use value created by workers and the amount returned to them as wages. The capitalist buys the worker's labor power, as any other commodity, and puts it to work for eight or more hours a day. However, workers can make in, say, five hours products which are the equivalent of their wages. In the remaining three or more hours an amount of wealth is produced which remains in the hands of the capitalist. The capitalists' control over this surplus is the basis of their power over the workers and the rest of society. Marx's labor theory of value also provides a detailed account of the struggle between capitalists and workers over the size of the surplus value, with the capitalists trying to extend the length of the working day, speed up the pace of work, etc., while the workers organize to protect themselves. Because of the competition among capitalists, workers are constantly being replaced by machinery, enabling and requiring capitalists to extract ever greater amounts of surplus value from the workers who remain.
Paradoxically, the amount of surplus value is also the source of capitalism's greatest weakness. Because only part of their product is returned to them as wages, the workers cannot buy a large portion of the consumables that they produce. Under pressure from the constant growth of the total product, the capitalists periodically fail to find new markets to take up the slack. This leads to crises of "overproduction", capitalism's classic contradiction, in which people are forced to live on too little because they produce too much.