The Value Controversy

A reply to G.A. Cohen

The central scientific discovery in the realm of economics by Karl Marx was the theory of Surplus-Value.  The theory of surplus-value argued that the origin of the capitalist profit was in fact the exploited labour-power of the worker.  It was Marx’s understanding that once the dynamics of capitalist exploitation were made clear to the workers, all illusions in the capitalist system would melt like snow at the coming of spring.  On the basis of this scientific understanding, workers would rise up and build a socialist society.

It is no surprise, therefore, that ideological attacks have been made on the body of Marxism from all different directions and flanks, from the most philosophical and abstract, to the most political and concrete.  Similarly bourgeois economists the world over have spent much of their time in an attempt to refute the theory of surplus-value.  In this paper I shall be critically analysing one such clumsy attack by an author named G. A. Cohen.  This paper will work systematically through Cohen’s argument refuting his claims chronologically.

Mr. Cohen fires the opening shot by informing the reader that “the relationship between the theory of value and the concept of exploitation is one of mutual irrelevance.”

Mr. Cohen says that “the central claim of the labour theory of value is that magnitude of value is determined by socially necessary labour time”, “but a stipulate definition of a technical term is not a theory, and when value is defined as socially necessary labour time, it cannot also be a central theoretical claim of the labour theory that socially necessary labour time determines value”. 

First, it is incorrect to say that the central claim of the labour theory of value is that magnitude of value is determined by socially necessary labour time.  The central claim of Marx’s use of the labour theory of value is that the concept of value can explain the movement of the laws of commodity production.

Second, ‘value is socially necessary labour-time’ is a central a priori axiom of the labour theory of value.  The method of scientific discovery does not exclude the presupposition of an a priori axiom or the pre-definition of a central concept.  The science lies in being able to show how this concept helps to explain the movement of the entire complex phenomenon.  Marx captured this understanding in a letter to Kugelmann 11 July 1868:

The nonsense about the necessity of proving the concept of value arises from complete ignorance both of the subject dealt and of the method of science.

…

The science consists precisely in working out how the law of value operates.  So that if one wanted at the very beginning to “explain” all the phenomena which apparently contradict that law, one would have to give the science before the science.

In section (2) Cohen contends that the word ‘exploitation’ should not be used in relation to surplus-value.  He argues that this phrase ‘denotes a kind of injustice’ and that Marxists are ‘purely scientific’ without ‘moral content’. 

First, it is incorrect to place the concept of exploitation outside the ambit of science a priori.  It implies that science has nothing to say about relations of domination or oppression?  Science is not antithetical to questions with respect to relations of domination, subordination, exploitation, oppression or alienation[1].  In the Thesis of Feuerbach Marx criticised mechanical materialism for its failure to analyse and develop the subjective side of humans.

The chief defect of all hitherto existing materialism (that of Feuerbach included) is that the thing, reality, sensuousness, is conceived only in the form of the object or of contemplation, but not as sensuous human activity, practice, not subjectively. Hence, in contradistinction to materialism, the active side was developed abstractly by idealism -- which, of course, does not know real, sensuous activity as such.

Second, this practice of placing science outside relations of exploitation confuses the issue between science and morality.  For Marxists science lays bare the basis of any particular morality.  In other words, science shows that morality is by definition class morality.  Marx was opposed to the ‘mere moral condemnation’ of capitalism (as the Young Hegelians were fond of doing) because such critiques revealed nothing about the profound dynamics of the system.  Marx went on to prove that the economic dynamics of the capitalist system inevitably lead to the birth and development of a revolutionary exploited class interested in the overthrow of the capitalist system.  Therefore, Marxism is not above classes, such a position can not logically exist.  Marxists base their morality on science.  The so called science of Cohen that stands outside of morality is a continuation of mechanical materialism that fails to look at the subjective side of humans as objective activity.

Cohen makes three short rhetorical flourishes perhaps to undermine the confidence of the reader.  He says “that an explicit normative premise is not stated” with respect to the term ‘exploitation’.  One must ask how much more explicit does the normative premise have to be?  Marx quite clearly says that the transfer of surplus from the working class to the capitalist class is ‘exploitation’.   Next Cohen states that it is ‘disputed’ whether the labourer “is forced by his propertylessness, to work for the capitalist”.  One must ask whether Cohen suggesting that workers would live happy and healthy lives by not being employed.  That there is no compulsion in a capitalist system to seek employment.  Clearly those who dispute such things have never had to face the sting of unemployment.  Cohen says that an explicit definition of the working class or the capitalist class is not given in Capital.  In fact it is quite clear that people who earn their living purely by selling their labour-power are proletariats and people who earn their living off the labour-power of workers are capitalists.  But these arguments are just embellishments of Cohen’s main arguments against the labour theory of value.

Cohen attempts to ‘destroy’ the labour theory of value by pointing out that value does not correspond to exchange value.  He tries to show that a rapid change in the socially necessary labour time in the production of a commodity will cause a discrepancy between the exchange-value and labour-value.  He says:

Suppose there is a use-value a, which was produced in the past, when things such as a could come into being only through labour, but that labour is no longer required to produce such a thing as a to appear.  Then according to the labour theory of value, a is valueless, despite the labour ‘embodied’ in it.

Cohen has really outdone himself in terms of profundity.  There is no need to delve into Capital Volume III to untie this knot (although Marx deals with it in great detail in that volume), one simply has to turn the popular pamphlet written by Marx and Engels entitled Wage Labour and Capital to answer the above question.

By what is the price of a commodity determined ?

By competition between buyers and sellers, by the relations of inquiry to delivery, of demand to supply.

…

And if price is determined by the relations between supply and demand, what determines the relations between supply and demand?

…

We see how capital continually migrates in and out of the domain of one industry into that of another.  High prices bring too great an immigration and low prices too great an emigration.

…

We have just seen how the fluctuations of supply and demand continually bring the price of a commodity back to the cost of production.

…

The determination of price by the cost of production is equivalent to the determination of price by labour time necessary for the manufacture of a commodity, of the cost of production consists of 1) raw materials and depreciation of instruments, that is, of industrial products the production of which has cost a certain amount of labour days and which, therefore, represent a certain amount of labour time, and 2) of direct labour, the measure of which is, precisely, time.

It becomes clear from the above quotation that exchange-value corresponds to labour-value only through the mechanism of supply and demand, the movement of prices, and the resultant movement of capital between branches of industry.  The fact that at a particular point in time exchange-value does not correspond to labour-value is not problematic to Marx’s theory but is axiomatic to it. When exchange-value does not correspond to labour-value, capital is reallocated from one branch of industry to another.  In other words, exchange-value corresponds to labour-value only as a tendency of capital to equalise the rate of profit among different branches of production.

Therefore, in the example pointed out by Cohen one can see that people will stop producing a since it will be freely available.  Through the movement of capital away from the branch of industry that formerly produced a, its price will become zero, and come to reflect the new labour-value of a.

But Cohen wishes to address a slightly different point.  He argues that value does not correspond to the amount of value contained in the commodity.  He acknowledges that Marx was aware of his argument.  For example he quotes Marx as saying:

What determines value is not the amount of labour-time incorporated in products, but rather the amount of labour-time currently necessary.

The value of every commodity … is determined not by the necessary labour-time contained in it, but by the social labour-time required for its reproduction.”

In the latter part of section (5) Cohen artificially bifurcates ‘Marx’s argument’ into the strict doctrine, and the popular doctrine and takes great pleasure in pouncing upon the popular doctrine.  Then he tells us of a mixed formulation that Marxists use to bring ‘in line’ the popular and the strict doctrine.  There is absolutely no point in defending this so called  popular, or mixed  doctrines, in so far as they exist, they seem to be purely a construct of Cohen’s own mind, and therefore, wholly irrelevant to Marx’s labour theory of value.  The fact that Cohen takes great pleasure in pouncing upon the shadows of his own brain one can only attribute to a fetish on his own part.  Cohen argues that ‘Marxists’ assume that:

(14) The worker creates value if, and only in so far as, the amount of labour he performs will be socially necessary when the product is marketed.

(15) Value is determined by expended labour-time when the amount expended is what will be socially necessary when the product is marketed.

To put it in simpler terms, Cohen is saying that Marxists (not Marx) assume that the socially necessary labour-time contained in a commodity is equal to the socially necessary labour-time necessary for its reproduction.  This assertion is only true if there is no change in technology between the time a commodity is created and the time it is sold in the market. 

Thus, Cohen correctly points out that the so called popular understanding that “value is determined by the socially necessary labour-time contained in a commodity”, is incorrect.  In fact and in accordance with Marx’s correct formulation, value is the socially necessary labour-time for the reproduction of a commodity.

It still stands to test whether Cohen can prove that there is a discrepancy (apart from the temporal fluctuations of demand and supply) between the exchange-value of a commodity and the socially necessary labour-time for its reproduction?  This task Cohen does not attempt but this is precisely the task he must attempt if he is to disprove Marx’s labour theory of value and not a popular interpretation of that theory of value.  In a word, Cohen must argue with Marx, not with the straw-man he has constructed of Marx’s argument.

One can empirically verify that the tendency of capital to equalise the rate of profit dominates the movement of prices via the circuit of supply and demand.  Therefore, prices have a tendency to converge, owing to the resultant reallocation of capital via supply and demand, in the direction of the socially necessary labour-time for the reproduction of that commodity.  That in essence means that the socially necessary labour-time for reproduction determines the value and via the supply and demand functions the exchange-value.