Marx's 'real' value, who needs it?

Marxism. Value

Marx's "real" value is a most wondrous thing. It is a great discovery but still it is impossible to know, it is impossible to use, it is totally meaningless.

Labor has no specific value, just like heat has no specific temperature and gravity no specific weight. Value is created by labor; it is equal to the amount of labor necessary to produce the commodity. Labor-power itself is a commodity; like all commodities it is bought and sold; like all commodities it has a value.

What is value? It depends on what you mean by value. To me this is a truism. To Marx it is not. To him, like to the Greek philosopher Plato, there exists somehow a more "real" world of Forms. In this more "real" world, every concept has its own "real" Form; there exists some archetypal, "real" value. A value more "real" than the price existing in our physical world.

Of course, if you want to, you can define a value that depends only on labor. If you want to, you can define a value, just as "real", that depends only on weight. You can define a value that equals the price.
Marx doesn't define. He has a two-step "proof" that his value exists: the first step is his assertion that the value exists because it has to exist; the second step is his assertion that it has to depend on labor because it cannot depend on anything else. He does not convince me.

To prove you can't increase the value by selling and buying, Marx claims a merchant can't sell his merchandise at a price higher than his purchase price; because if he does, his supplier will just raise his price with the same amount. And to add insult to injury, in the beginning of the same chapter Marx declares that surplus value is what you get if you buy something and then sell it at a higher price.

The price is of interest to the buyer, should he be a business man and sell the commodity on, should he use it as raw material in production, should he consume it himself. Labor costs affect the price; in that meaning labor affects the value. To Marx, the value can be the same as the price; as a rule it is not. Who needs it? He doesn't tell you why anybody would or should be interested in some value different from the price.

Marx's Great Discovery

Before Marx, the socialists could not explain the capitalistic mode of production and its consequences. Marx's great discovery, the revelation of the secret of capitalistic production through surplus-value changed this. He showed that even if the capitalist buys the labor-power of his laborer at its full value, he yet extracts more value from it than he paid for.

Columbus described a previously unknown land (unknown to himself and a lot of others). Newton described a previously unknown relationship between the orbits of heavenly bodies and their masses. What does Marx describe? The capitalist gets more money than he pays for. This is his great discovery. This is Marx's revelation of the secret of the capitalist production.
I am one hundred percent sure this was known before Marx. The only thing new is that he is using new names. The pay for the workers is called the value of the labor-power. The surplus is called surplus-value. The sum of pay and surplus is called total value produced. Marx discovering surplus value is like me naming my kid Urban and then claiming I discovered that his name is Urban.
The Marxist believer believes in the surplus value and in its importance for our lives, just like the Christian believer believes in God and his importance for our lives. The surplus value is something just as elusive as God; it is impossible to prove it exists, it is impossible to prove it does not exist.

Surplus value

To Marx, the commodity's value consists of three parts: Constant capital, Variable capital and Surplus value. Constant capital is costs for raw material, fuel, tools, buildings and other such things. Variable capital plus Surplus value is the value created by the producing workers. Variable capital is wages; it is that part of the created value that goes to the producing workers. The rest is surplus value.
Surplus value is not only what goes to the capitalist. It is what is not constant or variable capital. It is taxes, it is pay to non-producing employees, it is other things. It is even what goes to the buyer if supply is too big or demand is too small to let the capitalist sell the commodity at the price Marx thinks he should.

The Rate of surplus value is Surplus value / Variable capital. According to Marx, it is the exact expression for the capitals exploitation of the worker. It does not matter what the capitalist has to pay. Taxes. Salary for bookkeeping and sales. It does not matter if he has to sell at a loss; the capitalistic exploitation of the worker remains the same.

Supply and demand

When Marx "proves" that the commodity's value has to depend on labor, he assumes commodities have only one abstract property in common; that they are products of labor. Therefore, the value can only depend on labor. Still, he also claims: first of all a commodity has the abstract properties supply and demand.

So the commodity has a price because it has a value. Still, Marx has to modify it so it won't get too outlandish.
Wheat has a value determined by the amount of work needed; should supply and demand give a higher or lower price, the value does not change. But should supply and demand give a higher or lower price for linen, the value does change.
If there is no demand, there is no value; no matter how much you labor, an object has no value if nobody wants it.
If there is demand, things like uncultivated soil, conscience, honor, can get a price although they have no value.

If the relationship between constant and variable capital differs for different types of commodities, the profit will be different if the rate of surplus value is the same. In this case, supply and demand will equalize the profit; one commodity will get a price higher than the value and the other lower and you will get an equalized production price.
The production price is known; it is what you get when you sell the commodity. The "real" value is not known; it is impossible to know because you cannot know how the surplus value is split between different capitalists; and you cannot know the "real" value because you cannot know how the surplus value is split between seller and buyer.

Supply and Demand versus Production Price

Supply and demand are two forces that make the price fluctuate around a center; this center is the equalized production price mentioned above. Supply and demand cannot explain why there is a center around which the price moves; two equal forces in working in opposite directions cannot explain anything because they cancel each other.

If you put a book on a table, the book stays on the table. Why? According to Newton, the explanation is that the table exerts a force on the book; a force equal in magnitude but working in the opposite direction to the gravitational force from the book. According to Marx, this explanation is wrong; because two equal forces working in opposite direction cancel each other so they cannot explain anything. I do not know what Marx believes is keeping the book on the table when it cannot be gravitation.
Marx's argument is nonsense applied to gravitation. It is the same nonsense applied to supply and demand.

© Anders Floderus