Value-form

Template:Marxist theory The value-form or form of value is a concept in Karl Marx’s critique of the political economy of capitalism. It refers to one characteristic of a commodity (a product traded in markets). It is introduced in the first chapter of Das Kapital where Marx argues the content of economic value (human labour effort) becomes manifest in an objectified way only through the form of value established by the exchange of products. The question that the value-form analysis intends to answer, is essentially how the value of products is expressed in ways which acquire an objective existence, and can change, quite independently of the valuers who trade in them. Marx's idea can be traced back to his 1857 Grundrisse manuscript where he contrasted communal production with production for exchange (see Karl Marx, Grundrisse, Pelican edition 1973, pp. 171-172).

The value-form is often regarded as a difficult, obscure or even esoteric idea by scholars, and there has been considerable debate about its real theoretical significance. Probably the difficulty is mainly due to the fact that, abstractly, economic value refers at the same time to quantitative and qualitative dimensions, which can be stated according to both absolute and relative criteria, and expressed both as a relationship, a subjective orientation and as an attribute or an object in its own right. From the use of the expression "value" it may therefore not be immediately clear what kind of valuation or expression is being referred to. Marx himself rarely if ever defended his finished theory of value in scientific debate, and left it to his followers to clarify issues and problems in his unfinished manuscripts. Because he uses the term "value" somewhat differently in different contexts, disputes have arisen about what exactly he means.

In addition, typically official economics simply assumes that the exchange processes on which markets are based already exist and will occur, and that prices already exist, or can be imputed. This assumption is overturned only there where markets still have to be brought into being.

Basic explanation

Marx defines a commodity (ware for sale) as being simultaneously:

• (1) a useful object that can satisfy a want or need (a use value); this is the value of object considered from the point of view of consuming or using it, referring to its material form, i.e. the tangible characteristics it has which make it useful.
• (2) an object of economic value generally; this is the value of the object considered from the point of view of its earnings potential, its sale value or its cost of production. The reference here is to the social form of the product.

The “form of value” (a reference to Phenomenology in the classical philosophical sense used by Hegel) then refers to the specific ways of relating through which “what a commodity is worth” happens to be socially expressed in trading processes, when different products and assets are compared with each other. Practically speaking, Marx argues that the product values cannot be directly observed and can become observably manifest only as exchange-values, i.e. as relative expressions, by comparing their worth to other goods they can be traded for. This causes people to think value and exchange-value are the same thing, but Marx argues they are not; the content and form of value must be distinguished, and according to the law of value, exchange value is determined and regulated by value.

Marx argues that the form of value is not "static" or "fixed once and for all", but rather, that it develops logically and historically in trading processes from very simple, primitive expressions to very complicated or sophisticated expressions.

Initially, the form that economic value takes does not even involve any prices, since what something is "worth" is very simply expressed in (a quantity of) some other good (an occasional barter relationship). But at the most abstract, developed level, the value form is only a purely monetary relationship or price relationship, or an abstract earnings potential based on some assumptions, which may not even refer to any tangible object of trade anymore at all.

By analyzing the value-form, Marx aims to show that when people bring their products into relation with each other in market trade, they are also socially related in specific ways (whether they like it or not, and whether they are aware of it or not), and that this fact very strongly influences the very way in which they think about how they are related. It influences how they will view the whole human interactive process of giving and receiving, taking and procuring, sharing and relinquishing, accepting and rejecting - and how to balance all that. For example, Marx writes a bit theatrically:

"We will discover in the progress of our inquiry, that the economic character masks ["Charaktermasken" in the German original] of persons are only the personifications of economic relationships, where persons face each other as their bearers. Namely, what distinguishes the commodity owner from the commodity is the circumstance that every other commodity counts for each commodity only as the appearance-form of its own value. A born leveller and a cynic, the commodity is constantly ready to exchange not only soul, but body, with each and every other commodity... The owner makes up for this lack in the commodity of a sense of the concrete, physical body of the other commodity, by his own five and more senses (...) commodities must be realized as values before they can be realized as use-values. On the other hand, they must stand the test as use-values before they can be realized as values.(...) In their difficulties, our commodity-owners think like Faust: 'In the beginning was the deed'. Thus they act already before they have thought it out." (Capital Vol. 1, Penguin ed., p. 179-180, translation corrected according to the German edition and emphases added).

Thus, the value-form does not merely refer to a “trading valuation of objects”; it refers also to a certain way of relating or interacting, and a mentality, among human subjects who internalize the value-form, so that the manifestations of economic value become regarded as completely normal, natural and self-evident in human interactions (a "market culture" which is also reflected in language use).

Marx’s argument is that in order to be able to trade, people must objectify (objectively express) the value of goods produced, but it turns out that, in doing so, they are actually also objectifying and comparing the value of their own labour-efforts. Most abstractly, quantities of money express quantities of labour in general, or “abstract labour”. So by equating and comparing the value of their products in exchange, people at the same time equate and compare the value of their labour efforts, even if they are completely unaware of that.

This objectification process has two main effects:

• (1) value relations gain an independent, objective existence which begins to regulate and dominate human life, and to which all people must adjust their behaviour, whether they like it or not. They internalize the value-form by adjusting to its effects (this is called “the forces and laws of the market”). Simply put, if human valuations originate in people's ability to prioritize behaviours according to self-chosen options, the very meaning of their choices will be strongly influenced by the surrounding world ordered by the value-system.

• (2) a consequent tendency towards a reifying inversion in human awareness (subjects become treated as things, and things become treated as active subjects, while means become ends, and ends become means). Even although the values attributed to products exist only as a social effect of how people are relating and related, it begins to look like value is actually an intrinsic property of products, because the way average values change begins to lead a "life of its own" which individuals and groups are unable to control. Traders become primarily concerned with the objective trading value of products, rather than any other kind of valuation.

The combination of (1) and (2) mean that regardless of how one happens to think or choose, one must necessarily conform to the structure of value relations which exists in capitalist society, quite independently of one’s will or awareness. It is not that value relations are “only objective” or “only subjective” (value relations obviously could not exist at all, without humans making and accepting valuations, whether explicitly or implicitly) but rather that the objectification of value becomes a tangible, practical reality that one simply cannot get away from.

Textual sources

Marx’s explanation of the value-form originated in his Grundrisse manuscripts, and in ideas expressed his 1859 book A Contribution to the Critique of Political Economy, which failed to sell many copies. Marx first explicitly described the concept in an appendix to the first (1867) edition of Das Kapital [1], but this appendix was dropped in a second edition, where the first chapter was rewritten to include a special section on the value-form at the end.

In a preface to the first edition of Das Kapital, Marx stated

"I have popularised the passages concerning the substance of value and the magnitude of value as much as possible. The value-form, whose fully developed shape is the money-form, is very simple and slight in content. Nevertheless, the human mind has sought in vain for more than 2,000 years to get to the bottom of it…” (Capital Vol. 1, Penguin ed., p. 89-90).

Marx gives various reasons for this, but the main obstacle seems to be that trading relations refer to societal relations which are not necessarily observably manifest, and therefore can only be inferred or analyzed with the aid of highly abstract ideas. The quote clarifies that Marx thought that the value-form is not simply a feature of capitalism but is associated with the whole history of commodity trade.

According to Marx, the Greek philosopher Aristotle had already described the basics of the value-form when he argued (in Nicomachean Ethics, Book V, Ch.5 [2]) that an expression such as "5 beds = 1 house" does not differ from "5 beds = such and such an amount of money", but according to Marx, Aristotle's analysis "suffered shipwreck" because he lacked a clear concept of value. By this Marx meant that Aristotle was unable to clarify the substance of value, i.e. what exactly was being equated in value-comparisons, or what was the common denominator commensurating different goods. Aristotle thought the common factor must be demand for goods, since without demand for goods they would not be exchanged. According to Marx, the substance of value is human labour-time in general, labour-in-the-abstract or "abstract labour". This value exists quite independently of the forms that exchange may take.

Marx argues that only when market production is highly developed, that it becomes possible to understand what economic value actually means in a comprehensive and theoretically consistent way, separate from other sorts of value. He states:

"The secret of the expression of value, namely the equality and equivalence of all kinds of labour because and insofar as they are human labour in general, could not be deciphered until the concept of human equality had already acquired the permanence of a fixed popular opinion. This however becomes possible only in a society where the commodity-form is the universal form of the product of labour, hence the dominant relation is the relation between men as possessors of commodities” (ibid., p. 152).

He discusses the notion of the formal equality of market actors more in the Grundrisse (Penguin ed., p. 241ff.). Marx admitted that the value-form was a somewhat difficult notion but he assumed “a reader who is willing to learn something new and therefore to think for himself” (Capital Vol. 1, Penguin ed., p. 90). In a preface to the second edition of Das Kapital, Marx said that he had “completely revised” his treatment, because his friend Dr. Louis Kugelmann had convinced him that a “more didactic exposition of the form of value” was needed (ibid., p. 94).

The development of the value-form in the history of trading relations

Marx distinguishes between four successive steps in the trading process, i.e. in the circulation of commodities, through which fairly stable and objective value relations are formed which express "what products are worth". These steps are:

• 1. The simple value-form, an expression which contains the duality of relative value and equivalent value.
• 2. The expanded or total value-form, a quantitative "chaining together" of the simple forms of expressing value.
• 3. The general value-form, i.e. the expression of the worth of all products in a general equivalent.
• 4. The money-form of value, which is a general equivalent used in trading (a medium of exchange) which is universally exchangeable.

The simplest value-form expression can be stated as the following equation:

                          X quantity of commodity A is worth Y quantity of commodity B

where the value of X(A) is expressed relatively, as being equal to a certain quantity of B, meaning that A is the relative form of value and B the equivalent form of value, so that B is effectively the value-form of (expresses the value of) A. This simple equation, expressing a simple value proportion between products, however permits of several variations, mutations, or possibilities of differences in valuation emerging within the circulation of products:

• the absolute value of A changes, but the absolute value of B stays constant; in this case, the change in the relative value of A depends only on a change in the absolute value of A (The absolute value, Marx argues, is the total labour cost on average implicated in making a commodity).
• the absolute value of A stays constant, but the absolute value of B changes; in this case, the relative value of A fluctuates in inverse relation to changes in the absolute value of B, meaning that if B goes down then A goes up, while if B goes up then A goes down.
• the values of A and B both change in the same direction and in the same proportion. In this case, the equation still holds, but the change in absolute value is noticeable only if A and B are compared with a commodity C, where C’s value stays constant. If all commodities increase or decrease in value by the same amount, then their relative values all remain exactly the same.
• the values of A and B change in the same direction, but not by the same amount, or vary in opposite directions.

Value should not be confused with price here, because products can be traded at prices above or below what they are worth (implying value-price deviations; this complicates the picture and is elaborated only in the third volume of Das Kapital). The main points Marx makes about this simple relative form are that:

• (1) the value of a commodity can change relative to other commodities, although its real cost in labour stays constant, and vice versa, its real labour cost can vary, although its relative value remains the same; this means that goods can be devalued or revalued depending on what happens elsewhere in the trading system and on changes in the conditions of producing them elsewhere. It would therefore be wrong to claim, as some Marxists argue, that for Marx "economic value is labour"; rather, economic value really refers to the current social valuation of labour effort implicated in products. Indeed Marx himself is quite clear that living labour itself has no value although it has a price and creates value, only labour power and products have value.
• (2) that the absolute and relative values of commodities can change constantly, in proportions which do not exactly compensate each other, or cancel each other out, via haphazard adjustments to new production and demand conditions. Thus, contrary to the concept of general equilibrium, Marx did not believe at all, even at the most fundamental level, that the circulation process itself offers any guarantees that the gains and losses incurred by trading parties will somehow "balance out" (the secret of the economic balance is to be found instead in the maintenance of the social relations of production). If there is a relative balance in the exchange process as such, that is because people refuse to trade on terms which they regard as excessively unfavourable, or do so only with the greatest reluctance (see also Unequal exchange).

In the simplest expression of the value-form, Commodity B can also function as the “equivalent form of value”, in which case it is the value-equivalent, the utility of which is to express value in general. Value is then always expressed simply in terms of “Y amount of commodity B”. In this expression of value, commodity A becomes merely one kind of specific, particular expression or instance of B, and B makes the value of A identical with every other commodity in equal amounts of the value of B.

But, Marx also argues that, at the same time, such an economic equation accomplishes two other things:

• the value of specific labour activities is related in proportion to the value of labour in general, and
• private labour activities carried out independently of each other are socially recognized as being a fraction of society’s total labour.

Effectively, a social nexus (a societal connection or bond) is established and affirmed via the value-comparisons in the marketplace, which makes relative labour costs (the expenditures of human work energy) the real substance of value. Obviously, some assets are not produced by human labour at all, but how they are valued commercially will nevertheless refer, explicitly or implicitly, directly or indirectly, to the comparative cost structure of related assets which are labour-products. A tree in the middle of the Amazon Rain Forest has no commercial value where it stands. We can estimate its value only by estimating what it would cost to cut it down, what it would sell for in markets, or what income we could currently get from it - or how much we could charge people to look at it. Imputing a price to the tree assumes that there already exists a market in timber or in forests.

In the expanded value-form, the equation process between quantities of different commodities is simply continued serially, so that their values relative to each other are established, and they can all be expressed in some or other commodity-equivalent. However, Marx argues that, as such, the expanded value-form is practically inadequate, because to express what any commodity is worth might now require the calculation of a whole “chain” of comparisons, i.e.

X amount of commodity A is worth Y commodity B is worth Z commodity C … etc.

What this means is, that if A is normally traded for B, and B is normally traded for C, then to find out how much A is worth in terms of C, we first have to convert the amounts into B (and maybe many more intermediate steps). This is inefficient. The practical solution in trade is therefore the emergence of a general value-form, in which the values of all kinds of bundles of commodities can be expressed in amounts of one standard commodity (or just a few standards) which function as a general equivalent. The general equivalent has itself no relative form of value in common with other commodities; instead its value is expressed only in a myriad of other commodities.

However, Marx argues that just because quantities of goods can be expressed in amounts of a general equivalent, which acts as a reference, this does not mean that they can necessarily all be traded for that equivalent. Hence, the general equivalent form in practice gives way to the money-commodity which is a universal equivalent, meaning that (provided people are willing to trade) it possesses the characteristic of direct and universal exchangeability in precisely measured quantities. Once the money-commodity (e.g. gold, silver, bronze) is securely established as a stable medium of exchange, symbolic money-tokens (e.g. bank notes) which are issued by the state, trading houses or corporations can in principle substitute for the “real thing”, and this also usually happens, because it is cheaper and more efficient. At first, these "paper claims" (legal tender) are by law convertible on demand into quantities of gold, silver etc. But gradually currencies are brought into use which are not so convertible, i.e. "fiduciary money" which relies on social trust that people will honor their transactional obligations, and that this money will be able to claim goods, assets and services. The ultimate universal equivalent according to Marx is "world money", i.e. financial claims which are accepted and usable for trading purposes everywhere. The US dollar, the Euro, and the Japanese Yen, the currencies of the world's richest and most powerful economies, are widely used as "world currencies" providing a near-universal standard and measure of value. They are used as a means of exchange worldwide, and consequently most governments have significant reserves or claims to these currencies.

It is important to note that Marx's four steps in the development of the value-form are mainly an analytical or logical progression, which may not always conform to the actual historical processes by which objects begin to acquire a relatively stable value and are traded as commodities. Various different methods of trade may exist and persist side by side, and objects which previously had no socially accepted value at all, may acquire it in a situation where money is already being used, simply by imputing or attaching a money-price to them. In this way, objects can acquire the value-form "all at once" - they are suddenly integrated in an already existing market. The only prerequisite is that somebody owns the trading rights for those objects. It is just that, typically, what the socially accepted value of a wholly new kind of object will be, requires the practical "test" of a regular trading process, assuming a regular supply by producers, which establishes a trading "norm" consistent with production costs. A new object that wasn't traded previously may be traded above or below its value, until the supply and demand for it stabilizes, and its exchange-value fluctuates only within relatively narrow margins.

General implications of the value-form analysis

To summarize, the development of the value-form through the growth of trading processes involves a continuous dual equalization & relativization process:

• the worth of products and assets relative to each other is established with increasingly precise equations, creating a structure of relative values;
• behind that, the comparative labour efforts required to make the products are also valued in an increasingly standardized way at the same time.

Five main effects of this are:

• the process of market-expansion, involving the circulation of more and more goods, services and money, leads to the development of the value-form, which includes and transforms more and more aspects of human life, until almost everything is structured by the value-form (monetized, i.e. the value of everything is expressible in money).
• that it increasingly seems as though economic value ("what things are worth") is a natural, intrinsic characteristic of products and assets (just like the characteristics which make them useful) rather than a social effect created by labour-cooperation;
• what any particular kind of labour is worth, becomes largely determined by the value of the tradeable product of the labour, and labour becomes organized according to the value it produces.
• Labour power that creates no commodity value, has no value, and is therefore usually not highly valued, except insofar as it reduces costs that would otherwise be incurred.
• The diffusion of value relations eradicates traditional social relations and corrodes all social relations not compatible with commerce; the valuation which becomes of prime importance is what something will trade for.

Marx defines the capitalist mode of production as “generalized commodity production”, meaning that most goods and services are produced primarily for commercial purposes, for market sale. This has the consequence, that both the input and the output of production become tradeable objects with prices, and that the whole of production is reorganized according to commercial principles. Whereas originally commercial trade occurred episodically at the boundaries of different communities, eventually commerce engulfs and reshapes the whole production process of those communities.

In turn, this means what whether or not a product will be produced, and how it will be produced, depends not simply on whether it is physically possible to produce it or on whether people need it, but on its financial cost of production, whether a sufficient amount can be sold, and whether its production yields sufficient profit income. That is why Marx regarded the individual commodity, which simultaneously represents value and use-value as the "cell" (or the "cell-form") in the "body" of capitalism.

The concept of the value-form as an aspect of the commodity form is intended to show how, with the development of commodity trade, anything which has a utility for people (a use-value) can be transformed into a quantity of abstract value expressible as a sum of money; but, also, how this transformation changes the organization of labour to maximize its value-creating capacity, how it changes social interactions and the very way in which people are aware of their interactions.

Essentially, Marx argues that if value is to express social relations, then, in trading activity, people necessarily have to "act" symbolically in a way which inverts the relations among objects and subjects, whether they are aware of that or not. In an advertisement, a financial institution might for example say "we make your money work for you", but money does not "work", people do. A relationship gets treated as a thing, and a relationship between people is expressed as a relationship between things. In Postmodernist culture, this inversion is acknowledged, but an explicit attempt is made to recognize the social relationship involved and its meaning for Self and Other; the idea is that, in so doing, an otherwise impersonal, estranged or superficial trading contact can be "humanized". The question remains how one can know that this attempt is authentic and what its real motivation is.

Value-form and price-form

Any banker or speculator knows that the expression of the value of something as a quantity of money-units is by no means the “final and ultimate expression of value”. At the simplest level, the reason is that different “monies” (currencies) may be used side by side in the trading process, meaning that “what something is worth” may require expressing one currency in another currency and that one currency is traded against another, where currency exchange rates fluctuate all the time. Thus, money itself can take many different forms. In more sophisticated trade, however, what is traded is not money itself, but rather claims to money (“financial claims”, for example debt obligations or stocks which provide the holder with a certain income). And in even more sophisticated trade, what is traded is the insurance of financial claims against the risk of possible monetary loss. In turn, money can be made just from the knowledge about the probability that a financial trend or risk will occur or not occur. Eventually financial trade becomes so complex, that what a financial asset is worth is often no longer expressible in any exact quantity of money (a “cash value”) without all sorts of qualifications, and that its worth becomes entirely conditional on its earnings potential, i.e. how much extra money could be obtained from owning title to the asset, or from selling it at a future date.

In Capital Volume 3, Marx shows he was well aware of this. He distinguished not only between real capital (physical capital) and money capital, but also noted the existences of fictitious capital and "pseudo-commodities". Consistent with this, he explicitly introduced a distinction between the value-form and the price-form early on in Capital Volume 1. Simply put, the price-form is a mediator of trade which is separate and distinct from the value-form. If we want to trade goods for money, or money for goods, we need to know how much we have to pay. Prices tell us how much. Prices are not money, but they indicate money-quantities. They symbolize how much money is required in exchange, to trade and acquire something. Thus, prices are ways to express and inform about how much money is involved in any kind of (potential) transaction, or what it takes to make the transaction.

According to Marx, the price-form is not a “further development” of the value-form, for two reasons. Firstly, as Marx notes, prices may be attached to almost anything at all, and therefore need not express product-values at all. Secondly, insofar as the price of a commodity does express its value, this does not necessarily mean that it will actually trade at this price; products can trade at prices above or below what the goods are really worth, or fail to be traded at any price. Value relationships according to Marx exist quite independently from price information, and prices can oscillate in all sorts of ways around economic values, or indeed quite independently of them. That is why Marx felt quite comfortable about mostly ignoring price fluctuations in the first stages of his value theory.

In discussing the form of prices in the Grundrisse and Das Kapital, Marx drew an essential distinction between actual prices charged and paid, i.e. prices which express how much money really changed hands, and various “ideal” prices (imaginary or notional prices). Because prices are symbols or indicators in more or less the same way as traffic lights are, they can symbolize something that really exists (e.g. hard cash) but they can also symbolize something 'which doesn’t exist, or symbolize other symbols. That can make the forms of prices highly variegated, flexible and complex to understand, but also potentially very deceptive. Consequently, as Marx notes in the Grundrisse, the knowledge of prices itself became a specialized science. In what Marx called “vulgar economics”, all this is ignored however, because, Marx claimed, the vulgar economists assumed that (1) all prices belong to the same object class, (2) “price” is just another word for “value”, i.e. value and price are identical expressions, (3) prices are always exact, in the same way that numbers are exact, and (4) price information is always objective. In his critique of political economy, Marx denied that any of these assumptions were scientifically true. However he did not analyze all the different forms that prices can take, focusing mainly on the value relations he thought to be central to the functioning of the capitalist mode of production as a social system.

Quote by Marx on the relationship between the value-form and the price-form

"Every trader knows, that he is far from having turned his goods into money, when he has expressed their value in a price or in imaginary money, and that it does not require the least bit of real gold, to estimate in that metal millions of pounds’ worth of goods. When, therefore, money serves as a measure of value, it is employed only as imaginary or ideal money. This circumstance has given rise to the wildest theories. But, although the money that performs the functions of a measure of value is only ideal money, price depends entirely upon the actual substance that is money. (...) The possibility... of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself. This is no defect, but, on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another. The price-form, however, is not only compatible with the possibility of a quantitative incongruity between magnitude of value and price, i.e., between the former and its expression in money, but it may also conceal a qualitative inconsistency, so much so, that, although money is nothing but the value-form of commodities, price ceases altogether to express value." - Marx, Capital Vol. 1, ch 3, section 1 [3]

Engels on the value-form

Friedrich Engels comments on the value-form concept in Part 3 chapter 4 of his 1876-1878 book Anti-Dühring which was written with Marx's approval, emphasizing how the growth of commodity trade breaks up the social fabric of traditional societies:

"Commodity production... is by no means the only form of social production. In the ancient Indian communities and in the family communities of the southern Slavs, products are not transformed into commodities. The members of the community are directly associated for production; the work is distributed according to tradition and requirements, and likewise the products to the extent that they are destined for consumption. Direct social production and direct distribution preclude all exchange of commodities, therefore also the transformation of the products into commodities (at any rate within the community) and consequently also their transformation into values. (...) The concept of value is the most general and therefore the most comprehensive expression of the economic conditions of commodity production. Consequently, this concept contains the germ, not only of money, but also of all the more developed forms of the production and exchange of commodities. (...) The value form of products... already contains in embryo the whole capitalist form of production, the antagonism between capitalists and wage-workers, the industrial reserve army, crises. (...) Once the commodity-producing society has further developed the value form, which is inherent in commodities as such, to the money form, various germs still hidden in value break through to the light of day. The first and most essential effect is the generalisation of the commodity form. Money forces the commodity form even on the objects which have hitherto been produced directly for self-consumption; it drags them into exchange. Thereby the commodity form and money penetrate the internal husbandry of the communities directly associated for production; they break one tie of communion after another, and dissolve the community into a mass of private producers. [4]

Scientific criticism

There are three main lines of criticism of Marx's idea of the value-form:

(1) Whereas many economists have been inspired by Marx's analysis of the value-form, they have often rejected the thrust of Marx's argument, namely that the substance of product-value is abstract labour. Marx insists that:

"It is not money that renders the commodities commensurable. Quite the contrary. Because all commodities, as values, are objectified human labour, and therefore in themselves commensurable, their values can be communally measured in one and the same specific commodity, and this commodity can be converted into the common measure of their values, that is into money. Money as a measure of value is the necessary form of appearance of the measure of value which is immanent in commodities, namely labour-time." - Capital Vol. 1, Penguin ed., p. 188

Marx's argument is that the exchangeability of commodities according to their value is based on the common factor that they are all products of social labour, and thus that the exchange process represents effectively the value abstraction of human labour. The analysis of the value-form is intended as a demonstration of this idea, by showing how the money-relationship originates out of commodity exchange in an increasingly complex division of labour.

Critics however argue that Marx's argument is simply not logically compelling. They claim that we could just as well argue that what makes products exchangeable is simply the "common factor" that they have a price, or that a price can in principle be attributed to them; or even more simply, that people just have a common desire to exchange products for money. If that common desire exists, it is argued, nothing else is necessarily required in order to exchange products.

Thus, while Marx's observations might be of sociological or anthropological interest, it is argued they fail to provide any logically decisive proof that human labour is the substance of value. Approximately at the same time as Marx published his theory in 1867, Stanley Jevons for instance proposed that price fluctuations could be explained in terms of marginal utility and the subjective preferences of buyers and sellers.

For this reason, the Japanese Marxist scholar Kozo Uno argued that Marx's original argument had to be revised. In the revised version, the theory of the value-form is integrated in the theory of commodity circulation, and does not refer to the substance (content) of value at all. The substance of value as labour then becomes apparent and is theoretically demonstrated only in the analysis of the production of commodities "by means of commodities". Some Western Marxists do not find this approach very satisfactory however, because of Marx's basic insistence that the formation of product values is an outcome of both the "economy of labour-time" and "the economy of trade", i.e. commodity values are originally formed through mutual adjustments of the processes of producing commodities and circulating (trading) commodities. Since exchanging products itself takes work, however - "circulation costs" - human labour and trade are in reality inseparable at any time.

(2) In a 1975 paper subtitled "Was Marx's Journey Really Necessary?", the influential Marxist economist Ronald L. Meek argued that Marx's value theory had become redundant since its problems could be resolved using the insights of Piero Sraffa:

"With the specification where necessary of the appropriate institutional datum, and with remarkably little modification and elaboration, a sequence of Sraffian models can be made to do essentially the same job which Marx's labour theory of value was employed to do. We can start, as Marx did, with the postulation of a prior concrete magnitude which limits the levels of profit and rent. We can adopt the same kind of view about the order and direction of determination of the variables in the system as Marx did. Up to a point, the same kind of quantitative predictions about the relation between price ratios and embodied labour ratios can (if we wish) be made; and the analysis based on the models can readily be framed (again if we wish) in logical-historical terms. The same kind of scope can be left for the influence of social and institutional factors in the distribution of income; and the transformation problem (or its analogue) can be solved in passing, as it were, without any fuss whatever. In the light of all this, the fact that we do not need to tell our Sraffian equations anything at all about Marxian values seems superbly irrelevant." - Smith, Marx and After. London: Chapman & Hall, 1977, p. 131.

In response to this kind of rejection of Marx by economists on mathematical grounds, the so-called "value-form theorists" ("value-form school") have emphasized - influenced by the rediscovery of the writings of Isaak Illich Rubin - the importance of Marx's value theory as a qualitative cultural or philosophical critique of capitalist commercialism. Examples in the English literature are Christopher J. Arthur [5], Alfred Sohn-Rethel [6], Moishe Postone and Geert Reuten & Michael Williams who wrote Value-form and the State (1989). Noted German value-form theorists are the Marx-scholars Hans-Georg Backhaus and Michael Heinrich [7], as well as the Sydney-Constance Project (Michael Eldred[8], Marnie Hanlon, Lucia Kleiber, Mike Roth). Value-form theory has also been popular among intellectual supporters of Autonomism and Anarchism, although Antonio Negri thinks the theory is out of date now:

"The definition of the form of value which we find in Karl Marx's Capital is completely internal to what we have called the first phase of the second industrial revolution (the period 1848-1914). But the theory of value, formulated by Ricardo and developed by Marx, is in effect formed in the previous period, the period of "manufacture," during the first industrial revolution. This is the source of the theory's great shortcomings, its ambiguities, its phenomenological holes, and the limited plasticity of its concepts. Actually, the historical limits of this theory are also the limits of its validity, notwithstanding Marx's efforts, at times extreme, to give the theory of value the vigor of a tendency." - Antonio Negri, "Thesis 5" in: Theses on Marxism [9].

Negri's interpretation is difficult to reconcile with the view of Marx and Engels, who regarded the value-form as an emergent characteristic of human dealings in thousands of years of commodity trade (Aristotle already talked about it).

The suggestion of some authors (such as Reuten/Williams) is that although Marx's labour theory of value is theoretically wrong as stated, his theory can be modified such that, rather than value being created by co-operative human labour, value and abstract labour can be regarded as effects ("social forms") created by the exchange-process itself. Critics of such an interpretation think that, beyond rhetorics, it is really not much better than a vulgar accounting theory, according to which "value is created" when goods are sold for more than they were bought for. The objection here is, that value exists not simply because of a trading relationship, but because people actually did some work to produce something of value, and in so doing are socially related also external to the exchange process. If that work did not occur, nothing would be left but a ghost town. Moreover, a "form" isn't a form at all without a content, namely it is "the form of something", the form that a content takes - the point being that a content or substance can take various "forms", necessitating a special study of what those forms are. A "form without a content" would make form and content identical, and the distinction between them redundant. We are then left only with a "sociology of trading processes" studying how people socially interact in trade and how they symbolize that.

There are also authors such as Lawrence Krader who argue that Marx's value categories should be modified in the light of historical and anthropological research about how human communities value objects.

(3) The third line of criticism, articulated by libertarians such as Friedrich von Hayek is that Marx & Engels tend to present "value" and "value relations" as negative, alienating and reifying phenomena which cause people to get used by others for ends they can no longer fathom. According to them, value phenomena belong to the prehistory of humanity that closes with the abolition of capitalism. In other words, the negative, dehumanizing features of markets for workers' lives had prominence for them, even although Marx also acknowledges here and there that they have some progressive, developmental and "civilizing" features. Marx and Engels depict the "value form" as an alien, impersonal and corruptive force which gradually subordinates anything and everything to "making money".

• The first objection made here is, that such an historical judgement is not objective, because, on balance, the results for human civilization of the valuation of labour by capital have had much more progressive effect than Marx & Engels were willing to acknowledge. The proof is said to be, that workers themselves prefer choosing their own employer, purchasing goods at stable prices, and owning private property; market trade has improved their standard of living faster than any other method.

• A second objection made is that Marx & Engels are wrong to think that value disappears when commercial trade is abolished. Here the argument is that humans would simply continue to make valuations anyway, and that goods continue to have value, except that knowing what exactly that value is, becomes much more problematic because a general, shared standard of valuation is absent. The proof of this is supposed to be the experience of Soviet-type societies.

• A third objection is that people can distinguish quite well between the means/ends rationality of commerce, and non-commercial relationships. Therefore, it is simply an inaccurate and false subjective opinion to claim that there exists some kind of "monumental domination" of commercial relationships over people's lives, because that is not true - except perhaps for people who are obsessively focused on trading relationships. What is ignored is that markets offer a freedom of choice and development to those who value themselves, and believe in their own self-worth.

• A fourth objection made is that without the "discipline" and "incentives" of value relations, it is simply impossible to reconcile self-interest and the common interest in any efficient and fair manner, and achieve sensible cost-economies in the use of resources. Again, this is supposed to be proved by the resource waste and ecological damage suffered by Soviet-type societies. All these four objections resurface in the Socialist calculation debate.

The general theme of the responses of Marxian scholars to such criticisms has been that the criticisms are not based on the facts of reality and history; they are based on a false or one-sided view of market activity, reflecting the interests of those who most strongly benefit from market activity. After all, "market freedom" depends entirely on the ability to own something which can be traded, while people may be forced to trade something to survive, even although they do not really want to trade it.

References

• Karl Marx, Capital Volume 1, chapter 1, section 3.
• Isaak Illich Rubin, Essays on Marx’s theory of value. Detroit: Black & Red, 1972.
• Kozo Uno, Principles of Political Economy. Theory of a Purely Capitalist Society. Translated from the Japanese by Thomas T. Sekine. Brighton, Atlantic Highlands/New Jersey: Harvester Press, 1980.
• Michael Eldred, Critique of Competitive Freedom and the Bourgeois-Democratic State: Outline of a Form-analytic Extension of Marx's Uncompleted System. With an Appendix 'Value-form Analytic Reconstruction of the Capital-Analysis' by Michael Eldred, Marnie Hanlon, Lucia Kleiber and Mike Roth, Kurasje, Copenhagen, 1984.
• Geert Reuten & Michael Williams, Value-form and the State. The Tendencies of Accumulation and the Determination of Economic Policy in Capitalist Society'. London, 1989.
• Alfred Sohn-Rethel, Intellectual and Manual Labor: A Critique of Epistemology. Atlantic Highlands, NJ: Humanities Press, 1977.
• Axel Kicillof & Guido Starosta, "Value form and class struggle: A critique of the autonomist theory of value". Capital & Class, Summer 2007.
• Hans-Georg Backhaus, Dialektik der Wertform; Untersuchungen zur marxschen Ökonomiekritik. Freiburg: Verlag Ca Ira, 2nd edition, 2008.
• Michael Heinrich, Die Wissenschaft vom Wert: Die Marxsche Kritik der politischen Ökonomie zwischen wissenschaftlicher Revolution und klassischer Tradition. Westfälisches Dampfboot, 2005.
• Samezo Kuruma, Theory of the Value-Form & Theory of the Exchange Process. Tokyo: Iwanami Shoten, 1957 [10].
• Dieter Wolf (Soziologe): Auswahl aus: Der dialektische Widerspruch im Kapital Der dialektische Widerspruch im Kapital. Ein Beitrag zur Marxschen Werttheorie. Hamburg, 2002, ISBN 3-87975-889-1
• Paul Einzig, Primitive money in its ethnological, historical and economic aspects. Pergamon, 1966.
• Daniel E. Saros, "The price-form as a fractional reflection of the aggregate value of commodities", in Review of Radical Political Economics, Vol. 39, No. 3, 2007, pp. 407-415.

See also

• Commodity (Marxism)
• Commodification
• Exchange value
• Use value
• Prices of production
• Real prices and ideal prices
• Reification (Marxism)
• Commodity fetishism
• Abstract labour and concrete labour
• Labour theory of value
• Law of value
• Unequal exchange
• Relations of production
• Silent barter