Use value

In Marx's critique of political economy, any labor-product has a value and a use value, and if it is traded as a commodity in markets, it additionally has an exchange value, most often expressed as a money-price. Marx acknowledges that commodities being traded also have a "general utility", implied by the fact that people want them, but he argues that this by itself tells us nothing about the specific character of the economy in which they are produced and sold.

Origin and definition

The concepts of value, use value, utility, exchange value and price have a very long history in economic and philosophical thought, from Aristotle to Adam Smith, and their meanings evolved. Marx comments for example that "in English writers of the 17th century we frequently find "worth" in the sense of value in use, and "value" in the sense of exchange-value." With the expansion of market economy, however, the focus of economists has increasingly been on prices and price-relations, the social process of exchange as such being assumed to occur as a naturally given fact.

Marx emphasizes that the use-value of a labor-product is practical and objectively determined, i.e. it inheres in the intrinsic characteristics of a product which enable it to satisfy a human need or want. The use-value of a product therefore exists as a material reality vis-a-vis social needs regardless of the individual need of any particular person. The use-value of a commodity is specifically a social use-value, meaning that it has a generally accepted use-value for others in society, and not just for the producer.

Marx first defines use-value precisely in "A Contribution to the Critique of Political Economy" (1859) where he explains that:

The concept is also introduced at the beginning of Das Kapital, where Marx writes:

This was a direct reference by Marx to Hegel's Elements of the Philosophy of Right [http://www.marxists.org/reference/archive/hegel/works/pr/property.htm §63] . Marx adds that:

Quotation|"A thing can be a use value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, &c. A thing can be useful, and the product ofhuman labour, without being a commodity. Whoever directly satisfies his wants with the produce of his own labour, creates, indeed, use values, but not commodities. In order to produce the latter, he must not onlyproduce use values, but use values for others, social use values. (And not only for others, without more. The mediaeval peasant produced quit-rent-corn for his feudal lord and tithe-corn for his parson. But neither the quit-rent-corn nor the tithe-corn became commodities by reason of the fact that they had been produced for others. To become a commodity a product must be transferred to another, whom it will serve as a use value, by means of an exchange.) Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value." (Capital Vol. I, end of Section 1, Chapter 1)

Marx acknowledges that a nominal price or value can be imputed to goods or assets which are not reproducible goods and not produced by human labour.

Transformation into a commodity

The transformation of a use-value into a social use-value and into a commodity (the process of commodification) is not automatic or spontaneous, but has technical, social and political preconditions. For example, it must be possible to trade it, and to transfer ownership or access rights to it from one person or organisation to another in a secure way. There must also be a real market demand for it. And all that may depend greatly on the nature of the use-value itself, as well as the ability to package, store, preserve and transport it. In the case of information or communication as use-values, transforming them into commodities may be a complex and problem-fraught process.

Thus, the objective characteristics of use-values are very important for understanding (1) the development and expansion of market trade, and (2) necessary technical relationships between different economic activities (e.g. supply chains). To produce a car, for example, you objectively require steel, and this steel is required, regardless of what its price might be. Necessary relationships therefore exist between different use-values, because they are technically, materially and practically related. Some authors therefore write about an "industrial complex" or "technological complex", indicating thereby how different technological products are linked in a system. A good example would be all the different products involved in the production and use of motor cars.

The category of use-value is also important in distinguishing different economic sectors according to their specific type of output. Following Quesnay's analysis of economic reproduction, Marx distinguished between the economic sector producing means of production and the sectors producing consumer goods and luxuries. In modern national accounts more subtle distinctions are made, for example between primary, secondary and tertiary production, semi-durable and durable goods, and so on.

The role of use value in political economy

In his textbook "The Theory of Capitalist Development" (1942), American Marxist Paul Sweezy claimed that:

Quotation|"Use-value is an expression of a certain relation between the consumer and the object consumed. Political economy, on the other hand, is a social science of the relations between people. It follows that 'use-value as such' lies outside the sphere of investigation of political economy".

Curiously, Sweezy disregarded that in consuming (both intermediate and final consumption), producers and consumers might "also" be socially related.

Likewise, in his influential "Principles of Political Economy", the Japanese Marxist Kozo Uno sums up the theory of a "purely capitalist society" in the three doctrines of circulation, production and distribution. Apparently it did not occur to him that even in the purest capitalist society, (final) consumption would have to occur as a necessary aspect of economic reproduction, and that capitalist relations extended to, and included, the way in which consumption was organised in capitalist society - increasingly substituting private consumption for collective consumption.

Marx himself explicitly rejected Sweezy's and Uno's interpretation (see the quotation from 1859 cited previously, in which use-value is distinguished from the general concept of utility) , and in an important essay Roman Rosdolsky [http://maximumred.blogspot.com/2005/05/rosdolsky-on-marxs-use-value.html] shows the important role of use value in Marx's economics. The fact is that Marx himself, in the introduction to his "Grundrisse" manuscript, had defined the economic sphere as the "totality" of production, circulation, distribution "and consumption". He did not however live to finish Das Kapital, and did not theorise how commercial relations would reshape the sphere of personal consumption in accordance with the requirements of capital accumulation.

It was only later that scholars such as Walter Benjamin, Fernand Braudel, Ben Fine, Manuel Castells and Michel Aglietta tried to fill this gap in Marx's unfinished work.

Use value and utility

Marx's concept of use-value seems akin to, but in reality differs from the neoclassical concept of utility.

*Marx usually assumes in his analysis that products sold in the market have a use-value to the buyer, without attempting to quantify that use-value other than in product units (this caused some of his readers to think wrongly that use-value played no role in his theory). The neoclassicals, on the other hand, typically see prices as the quantitative expression of the general utility of products for buyers and sellers, instead of expressing their exchange-value.

*In neoclassical economics this utility is ultimately subjectively determined by the buyer of a good, and not objectively by the intrinsic characteristics of the good. Thus, neoclassical economists often talk about the marginal utility of a product, i.e., how its utility fluctuates according to consumption patterns. This kind of utility is a "general utility" which exists independently from particular uses that can be made of a product, the assumption being that if somebody wants, demands, desires or needs a good, then it has this general utility.

*Marx rejects any economic doctrine of consumer sovereignty, stating among other things in his first chapter to Das Kapital that "In bourgeois societies the economic "fictio juris" prevails, that every one, as a buyer, possesses an encyclopedic knowledge of commodities".

In summary, different concepts of use value lead to different interpretations and explanations of trade, commerce and capitalism. Marx's main argument is that if we focus only on the general utility of a commodity, we abstract from and ignore precisely the specific social relations of production which created it.

Indifferent to use value?

Some have claimed that according to Marx capitalists are basically "indifferent" to the use-value of the goods and services in which they trade, since what matters to capitalists is just the money they make; whatever the buyer does with the goods and services produced is, so it seems, of no real concern.

But this is a misunderstanding of business activity and the bourgeoisie as a class [http://www.mises.org/epofe/c5sec3.asp] . Marx realised very well that capitalists can never be totally "indifferent" to use-values, because inputs of sufficient quality (labour, materials, equipment) must be bought and managed to produce outputs that:

*will sell at an adequate profit,
*are legally permitted by the state to be sold,
*do not destroy the reputation of the supplier (with its obvious effect on sales).

For this purpose, the inputs in production must moreover be used in an economical way, and care must be taken not to waste resources to the extent that this would mean additional costs for an enterprise, or reduce productivity.

It is just that from the point of view of the financier or investor, the main concern is not what exactly is being produced as such or how useful that is for society, but whether the investment can make a profit for him. If the products of the enterprise being invested in sell and make a profit, then that is regarded as sufficient indication of usefulness. Even so, the investor is obviously interested in "the state of the market" for the enterprise's products - if certain products are being used less or used more, this affects sales and profits. So to evaluate "the state of the market", the investor needs knowledge about the place of a product in the value chain and how it is being used.

Often Marx just assumed in his argument that supply and demand will balance, and that products do sell. Even so, Marx carefully defines the production process both as a labour process creating use-values, and a valorisation process creating new value. He asserts only that "capital in general" as an abstract social power, or as a property claim to surplus value, is indifferent to particular use-values - what matters in this financial relation is only whether more value can be appropriated through the exchanges that occur. Most share-holders are not interested in whether a company actually satisfies customers, they want an adequate profit on their investment (but a countertrend is so-called "socially responsible investing").

In modern times, business leaders are often very concerned with total quality management in production, which has become the object of scientific studies, as well as a new source of industrial conflict, since attempts are made to integrate "everything" a worker is and does (both his creative potential and how he relates to others) in the battle for improved quality. In that case, it could be argued not just labour power but the whole person is a use-value (see further Richard Sennett's books such as "The Culture of the New Capitalism", Yale (2006). Some leftists regard this practice as a kind of "pseudo-slavery".

In truth, from beginning to end, and from production to consumption, use-value and exchange-value form a dialectical unity. If this is not fully clear from Marx's writings, that is perhaps mainly because he never theorised the sphere of final consumption in any detail, nor the way in which commerce reshapes the way that final consumption takes place.

ee also

*commodity
*exchange value
*labor theory of value
*productivity
*Abstract labour and concrete labour

References

*Karl Marx, [http://www.marxists.org/archive/marx/works/1867-c1/ Capital Volume 1, Chapter 1] .

*Karl Marx, Notes on Adolph Wagner's “ [http://www.marxists.org/subject/economy/rubin/ch17.htm Lehrbuch der politischen Ökonomie] ” (Second Edition), Volume I, 1897

*Hans Ehrbar, [http://www.econ.utah.edu/~ehrbar/value.pdf Annotations to Marx's value page at the end of [Grundrisse]

*Roman Rosdolsky, [http://maximumred.blogspot.com/2005/05/rosdolsky-on-marxs-use-value.html The Making of Marx's 'Capital'] (London: Pluto Press, 1977).

*Isaac I. Rubin, Essays in Marx's Theory of Value (Detroit: Red & Black, 1972), chapter 17: " [http://www.marxists.org/subject/economy/rubin/ch17.htm Value and social need] "

*Simon Clarke, Marx, marginalism, and modern sociology: from Adam Smith to Max Weber (London: The Macmillan Press, Ltd, 1982).

*Francis Green and Petter Nore, Economics: An Anti-Text (London: Macmillan, 1977).