In this third installment of our Introduction to Theory series, Maxximilian Seijo deepens Money on the Left’s analysis of Karl Marx’s critique of political economy. Specifically, Maxx investigates Marx’s 1865 speech and posthumously published book Value, Price and Profit.
This episode, drawn from Maxx’s pedagogy at the University of California, Santa Barbara, interrogates the relationship between Marx’s labour theory of value and the capitalist mode of production. Through close attention to Marx’s theory of price, Maxx teases out Marx’s classical formulations and critically distinguishes them from the Money on the Left Editorial Collective’s heterodox economic foundations.
Transcript: Mike Lewis & Scott Ferguson
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Hi, everyone, and welcome back to “Introduction to Theory” from the Money on the Left Editorial Collective. This is Maximillian Seijo, coming to you with another episode that touches on the works of Karl Marx. Just a little background of why I am going to discuss his book Value, Price and Profit today with you. It just so happens that I am teaching Marx at the beginning of this winter quarter at University of California, Santa Barbara. I’ve had my head buried in some of his works once again, some new works that I haven’t read before. And I thought what a great opportunity to take listeners back into the world of Karl Marx from the Money on the Left perspective and explicate some of the assumptions, ideas, really, the schema, the model that Marx is trying to draw together here in his analysis of value, price and profit.
Just a little bit of history about this book. For starters, it was prepared in 1865, initially as an address. It’s a transcript of a lecture series he delivered to the First International Working Men’s Association. And it coincides with the preparations for Capital, Volume 1. You will probably notice when I quote some things here that it sounds a little bit like the Capital version of Marx. And, you know, he’s headlong in economic analysis, specifically, in the English tradition at this point. There’s a reason why he tries to pin down his concepts and explain them here in the way that he does, and we’ll get into that. One other thing, though, I want to say before I actually get into what Marx is trying to communicate here and define through his analysis of pricing and commodity and labor value, is that the title in German is actually Lohn, Preis und Profit. Lohn doesn’t exactly mean “value.” Lohn means “wage.” Sometimes this book translates lohn as that, but I think there’s something productive about this slippage between lohn and value. Because ultimately, wage is a, let’s just say, it can’t be trusted as a determinative factor for what the value of labor is. It only plays a part in the value of labor. You’ll see what I mean when we start to go through some of the concepts.
I am not going to talk about the whole book in detail. To do so might be a bit unwieldy for this podcast. I am going to talk about Section 6 through Section 13. This is a large swath of the book. The reason why I’m going to do that is Section 6 starts with “value” and “labor” and really begins with his location of value, grounding his schema for analyzing prices. Another thing to say as a lead up to this analysis is that, in the book, Marx is attempting to refute the theoretical basis for a Ricardian socialism. So, we are talking about David Ricardo and his acolyte, John Weston. There’s a lot of technical reasons why, and it relates to what Marx ultimately discusses with regards to rising prices and the effect of trade unions on prices in general and the general rate of profit. That is not particularly the area that I will want to focus on in this podcast because I think we need to really hone in on what Marx means by value, if we are then to understand what he ultimately thinks about money, and prices and then a theory of change,
With all that said, we can dive in. For starters, I want to ask this question that Marx asks at the beginning of Chapter 6 of Value, Price and Profit, which is: “What is the value of a commodity? How is it determined?” I think we all know what Marx means by a commodity here: A commodity is a product that is subject to the market forces of exchange. It is not just a product that is for individual use. Marx makes a distinction between labor conducted to create something for use and labor conducted to create something for exchange.
So, what is the value of a commodity and how do we determine it? This is very important. Marx takes this question in a lot of ways, but I think the very simple answer is that the value of a commodity, and I will read here, it remains always the same. Whether expressed in silk, gold or any other form, the value of the commodity must be something distinct from, and independent of, these different rates of exchange. What he means is that we don’t look to its outward expression to identify the value of the commodity, to what you’re comparing it. In fact, there is no comparison. What we need is something universal. Not some artificial universal equivalent, according to Marx, but something truly universal. Something truly reducible. He even equates this to an algebraic function. We reduce the area of any triangle to an expression quite different from its visible form. So there’s an algebraic reduction. We cannot identify value simply through its expression. We must be able to reduce all commodities to an expression common to all.
This is where Marx is throwing out ideas that the value of a commodity is based on its interaction in a market and what the market produces as its value. He says no, absolutely not. Rather, the value of a commodity must have a “common social substance.” And “what is the common social substance of all commodities?” Marx asks. “It is labor. To produce a commodity a certain amount of labour must be bestowed upon it, or worked up in it. And I say not only labour, but social labor. A man who produces an article for his own immediate use, to consume it himself, creates a product, but not a commodity. As a self-sustaining producer he has nothing to do with society.” This is where Marx right away answers his question about how to determine the value of a commodity. And what determines the value of a commodity, he says, is labor. This is Marx’s labor theory of value. It is the ground, the social substance upon which his political economy rests. This is tremendously important, because his analysis of wages and prices and ultimately capitalism, writ large, is dependent upon this social substance. It’s dependent upon this analysis, this grounding.
Where does he go from here, if we say that labor, sensuous labor, is the ground of value, for any exchangeable commodity? “If we consider commodities as values,” Marx writes, “we consider them exclusively under the single aspect of realized, fixed, or, if you like, crystallized social labor.” This is where Marx brings up the theme of the crystal, which some of you might know, if you’ve read parts of Capital. Value, the “crystal of social labor.” Money often takes the form, for Marx, of this crystal, of this prism that refracts all labor value through a glistening image.
So, one thing I want to focus on in this description of what gives a commodity value, for Marx, is that it is fixed. It doesn’t move. It doesn’t vary. Now, the amount of labor that one might bestow onto a commodity, the power of it, how productive or efficient it is, that might vary. But if I weave silk, the value of that silk is grounded and fixed in my labor, no matter what happens after to the silk, who puts it on or pays for it. Marx move from there to essentially say that, and I can quote here, “The relative values of commodities are, therefore, determined by the respective quantities or amounts of labor, worked up, realized, fixed in them. The correlative quantities of commodities which can be produced in the same time of labor are equal.”
There we have it: It’s a fixed labor theory of value. Why is that important? I’m trying to run through this almost circular articulation here over and over in different ways in order to communicate it, but it is important ultimately, because capital as a coordinated enterprise of coordinating production, it ultimately does not add value to the production process. It merely exploits it. This is crucial because Marx’s theory and criticism of the capitalist mode of production rests on the notion of capital as siphoning surplus value from labor. I’m going to come back around at the end of this discussion to critique what Marx is describing here. But I wanted to note this before we keep moving through: The coordinating capacity of production does not all ultimately rest and fall on this dynamic movement. Sure, it can increase labor power through innovation, but value is fixed in the commodity through the labor endowed onto it.
With this notion of fixed value as baseline, I want to pull back a little bit and think about where Marx is deriving a lot of his analyses here. I mentioned at the outset that Marx is intervening in a space of Ricardian economics. Ricardo is, of course, a backbone of the classical story of economics and trade, or “comparative advantage” as it is called. In my undergrad economics classes, I learned about Ricardo. In classes on international trade, one learns to use his model to determine the “efficiency gains” of relations of trade across borders, the “double coincidence of wants” problem, and how trade fixes it and how tariffs are “bad.”
You learn all of these things in neoclassical economics. Marx is critical of this at some level, but he is also completely enmeshed in this world. One of the fun examples of this implicatedness is that, after Marx explicates this initial answer to the question of the commodity’s value and what determines it, labor, he cites Benjamin Franklin. This is Benjamin Franklin of the American “Founding Fathers” lore. In particular, Marx cites the essay, “A Modest Enquiry into the Nature and Necessity of a Paper Currency,” in order to affirm Franklin. It doesn’t mean he’s not also critiquing Franklin in other places, but that, essentially, Franklin hit upon the true nature of value as the crystallization of equal amounts of average labor. As Marx puts it: “In thus determining the relative values of gold and corn, do we refer in any way whatever to the wages of the agricultural labourer and the miner?” Marx answers no. The nature of value lies not in a wage, not in a money-price paid for labor.
We’ll come back to this because Marx explicitly critiques the monetary naming of these prices later on. But no, we look to the labor value, not the money value and not the wage value. This is Marx. He references Franklin here to do a sort of double move of affirmation and critique, but I do find it kind of hilarious that he cites Franklin, and there’s two other citations that I’m going to get to later that also fit into this. But this is not necessarily a part of the story that we’re used to being told about Marx, as the radical leftists, as someone who positively cites Benjamin Franklin. Yet there is this interesting relationship between what we might call Liberal political economy and Marx. This is an argument that we at Money on the Left put forward: This is a problem ultimately, for the left, because Marx is indebted, embedded, working in this Liberal political economic tradition.
So, Marx doesn’t look to wages. But wages are important. The reason why is that wages, even though they don’t reflect the value of the commodity, they cannot exceed the value of the commodity. Marx says of workers, “Their wages can, of course, not exceed, not be more than the values of the commodities they produced, but they can be less in every possible degree.” What does he mean by this? What he’s saying is, if the value of the labor of the produced commodity is, let’s say, $10, the wages for that cannot be $11. Because fundamentally, this would be a completely bankrupt enterprise. The capitalist firm would go out of business paying its workers more than the value of the labor that totally goes into producing it. However, the wages can be a lot less. And this is where we start to see Marx’s theory of surplus value come into the fore.
What does this claim about wages not exceeding commodity values mean? It means that you can pay workers less than they’re worth, less than the value of their labor. People being underpaid, and this is what Marx is railing against, right? He’s railing against people being paid less than the value of their work. There are a lot of assumptions here about what the value of a commodity is, what pricing means, etc. But in the end, this is what Marx is driving at. He does not like that workers are not paid for the value of their labor. And we can all agree with that. We don’t have to agree with all Marx’s assumptions. But we can all agree with that. So, the difference between what workers are paid, which can’t be more than the value of the commodity, and the value of the commodity is where he starts to define surplus value that is extracted and exploited by capitalists from workers, and ultimately, where he starts to get his idea of profit.
First, however, we’re going to come back to this theme of fixed value. As Marx explains, “To determine the values of commodities by the relative quantities of labor fixed in them, is, therefore, a thing quite different from the tautological method of determining the values of commodities by the value of labour, or by wages.” This is him driving home this point: It’s a tautology to try to use wages as the determinant factor for understanding the value of the commodity, because the value of labor is necessarily less than the value of the commodity, because of the surplus value extraction going on. So the wages are going to be less than the value of the commodity, they have to be for the enterprise to continue moving and running. This is the engine of capitalism: You need profit, right? This is the primary energy of the structure, and you need surplus value, and you need exploitation, right? This is a very dialectical point about the necessity of exploitation in this sort of generative antagonism of class, which doesn’t mean that I agree, but that is what Marx believes. It’s a very Hegelian point. It’s a model of Hegelian, zero-sum dialectic. It’s worth summing this up in a sense before moving on to what Marx means by prices.
So, then, from “value” Marx wants to relegate price to an ontologically invalid status—as an “expression,” not as the “essence” of value. What he says is that price taken by itself is nothing but the “monetary expression” of value. To say that something is $10, it’s just to say, the price is nothing but a passive monetary expression of the social substance of labor that went into the production of that commodity. Marx underscores the variability of this monetary expression. “The values of all commodities of this country, for example, are expressed in gold prices, while on the continent they are mainly expressed in silver prices.” Of course, by “this country,” he means the UK and by “on the continent,” he means continental Europe. We see here a commodity theory of money. The commodity money, qua price, expresses the labor value of the commodity.
Notice there’s no mention of law, government, accounting, administration in any of this. There is no legal grounding of money. It is merely a natural function of the labor process and, ultimately, the exchange process that makes this monetary expression as price. It is a natural price established by barter. “It is in this way, in fact by barter,” Marx claims, “that you learn to express in gold and silver the values of all commodities, that is the respective quantities of labor bestowed upon them.” This crystal of labor in gold and silver through barter is Marx’s classical barter theory, which we’ve talked about a lot on Money on the Left. It is a part of his classical Liberal economic trajectory and his Liberal economic work. Marx expressly connects this classical barter theory to the equally classical notion of “natural price.” “Looking somewhat closer into the monetary expression of value, or what comes to the same, the conversion of value into price, you will find that it is a process by which you give to the values of all commodities an independent and homogeneous form, or by which you express them as quantities of equal social labor. So far as it is but the monetary expression of value, price has been called ‘natural price’ by Adam Smith, prix necessaire by the French physiocrats.” Notice here that Marx is nestling up with Adam Smith and the physiocrats in his understanding and analysis of prices, as a monetary expression, through a commodity of gold or silver, of labor value stored and bestowed immediately by the laborer upon the commodity.
As we unpack this schema, there are a few things we can ask. What organizes production? I’m going to come back to this question later, but this is where we will want to introduce our MMT perspective. What comes before and mediates labor? And when it comes to monetary expression, the naming which Marx describes and we’ve talked about quite a bit on Money on the Left–including Natalie Smith and Will Beaman’s wonderful episode about monetary naming–who gets to decide what the prices are?
There’s no room for such questions in Marx because there is a prix necessaire, a necessary price that is “natural.” And this is Smith here. This is the classical economics that we are taught today under a neoclassical guise in orthodox economics in the reactionary, right-wing, conservative economics school of thought that dominates the discipline of economics up and down the academic-to-policy strata. From “necessary price,” Marx turns to “market price.” What is the market price? “The market price,” according to Marx, “expresses only the average amount of social labour necessary, under the average conditions of production, to supply the market with a certain mass of a certain article.” The market price gets determined by supply and demand. That’s the average. It’s an equilibrium.
One sees this classical model continue to develop in Marx’s theory. To tease this out, I’m going to quote at length from both Marx and Smith, who similarly insist that the market price is not ultimately stable. It moves. Marx writes, “The oscillations of market prices, rising now over, sinking now under the value or natural price, depend upon the fluctuations of supply and demand. The deviations of market prices from values are continual.” Thus, Marx’s model is a dynamic one that moves through time. Meanwhile, we find the same conception in Smith: “The natural price is the central price to which the prices of commodities are continually gravitating.” There’s that “gravity.” “Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this center of repose and continuance, they are constantly tending towards it.”
All roads lead towards equilibrium gravitationally. That is how pricing works when it is based on a labor theory of value. So, the labor value fluctuates. The natural price expresses that labor value and the market is constantly trying to identically locate that supply/demand equilibrium. It is an oscillation in a movement through time. This is how economics is taught in undergraduate orthodox courses, and it is very interesting to find it repurposed in Marx. Moving from there, we can see where profit comes from. Marx writes, “To explain, therefore, the general nature of profits, you must start from the theorem that, on an average, commodities are sold at their real values, and that profits are derived from selling them at their values, that is, in proportion to the quantity of labour realized in them.” So, we assume, on average, generally speaking, market equilibrium, that what you are paying for is the value of the commodity, that this is not administered, that there is not a markup of the value. You’re not overpaying, generally speaking, perhaps aside from a few really turbulent oscillations that soon get corrected by the market.
We can sense, here, a theme: this Ricardian foundation of market correction. John Maynard Keynes comes along later and undermines the logic of market correction. In fact, Zach Carter’s book on Keynes is great for rejecting this and implicating Marxism in this Ricardian foundation since, you know, it all comes back to the labor theory of value. This classical foundation assumes that the general nature of profits are derived from the value of commodities as a fixed substance of labor value.
Upon this foundation, Marx develops his arguments, less significant in my view, about how the values of a commodity can change over time and that the power of labor can change. You can spend less time making something, right? You have greater expertise, or you have the help of a loom, or whatever it is. But one thing I want to say about this is that Marx quotes from Thomas Hobbes, and then says, “Proceeding from this basis, we shall be able to determine the value of labor as that of all other commodities.” This is not actually that important, I think, to the argument of this chapter in this book, but I just find it funny that we’ve gone from Franklin to Smith to Hobbes, as if we couldn’t get more foundationally Liberal and Enlightenment in this economic structure.
Where this becomes extremely problematic is in Marx’s conception of the division of labor, because it predicates “labor power” upon a self-subsistent individualism. That is to say, labor power is essentially individual, for Marx. “The labouring power of a man exists only in his living individuality,” Marx writes. Labor power changes individually–in an individual relationship to a commodity–but that is only in what he calls an “original union” between man and his instruments of labor. This is a very quintessential Marx. We start from the union of an unalienated man laboring in nature, which then gets divided into surplus value. The value of his production ultimately gets sucked away, divided through the division of labor, and mediated by a capitalist who siphons his individuality from him. He takes it, he’s a parasite, right? This is what Marx believes. And it’s premised on this structural analysis of labor value and of value in general.
What this means is that, in the final analysis, one cannot overcome alienation through money. You can’t get back to equality through a wage system because it would be a fractured equality, because man’s individual labor power has been fractured by wages, which do not pay him for the value of his labor. The capitalist mode of production could not sustain paying him that, according to Marx, since that would reduce any surplus value or profit to zero. This would destroy the system, which is ultimately what Marx thinks will happen. And this is what Marx’s interest in the falling rate of profit is all about.
So, Chapter 8 is about the production of this surplus value. Once the laboring power of the man is divided, it leads to the production of the surplus value that siphons away that divided essence. In this chapter, Marx tells a story. I’ll just tell a different version of it, but it’s essentially the same. A man wakes up in 19th century England, he goes to the factory, and he works for 10 hours. The value of the commodities that he produces is 10 hours of his labor power. That is the maximum amount he could be paid for that commodity, because if he was paid, logically speaking, he can’t be paid more for that, because the money has to come from somewhere, right?
This is a reified, natural commodity scarce expression of labor value. Logically, he could not possibly be paid more. Logically, the capitalists could not pay him the same amount, pay him justly for his labor power, because then the capitalist would have no money for himself. He pays him, let’s say, for four hours. Okay, those wages sustain him, he can perhaps feed himself, maybe provide him a little bit of shelter. And the capitalist takes six hours of his labor power. This six hours, in this case, construed as profit, which is not always what surplus value is construed as, is what the production of surplus value is, for Marx. It is that parasitic relationship where man’s individuality is sucked from him through capitalist appropriation and exploitation, and it is premised on a labor theory of value.
“By repeating this same process daily,” Marx writes, “the capitalist will daily advance three shillings and daily pocket six shillings, one half of which will go to pay wages anew, and the other half of which will form surplus value, for which the capitalist pays no equivalent. It is this sort of exchange between capital and labour upon which capitalistic production, or the wages system, is founded, and which must constantly result in reproducing the working man as a working man, and the capitalist as a capitalist.” It reproduces the class structure. It’s the foundation of his analysis of the capitalist mode of production, and it’s premised on Ricardian foundations. “The rate of surplus value, all other circumstances remaining the same, will depend on the proportion between that part of the working day necessary to reproduce the value of the labouring power and the surplus time or surplus labour performed for the capitalist. It will, therefore, depend on the ratio in which the working day is prolonged over and above that extent, by working which the working man would only reproduce the value of his labouring power, or replace his wages.”
The rate of surplus value, this is everything for Marx, right? It drives the dialectical relationship of class between labor and capital. Again, note that we are not talking about law, government, monetary politics. We’re not talking about any of that. We’re talking about a system of immediate relationships, mediated through a commodity as a commodity that is produced, or as a commodity as monetary expression. This is what turns capitalism on its path towards primitive accumulation, direct accumulation after accumulation in search of more profit, and then towards destruction in the falling rate of profit where there is a diminishing marginal rate of return, or a rate of expropriation.
Connecting some of these dots, we can then talk about how this gets translated into price. Marx breaks this down in a way that is a little bit circular. He says, “The value or price of his laboring power necessarily appears to him as the price or value of his labor itself.” Strictly speaking, “value” and “price of labor” are senseless terms. What does he mean by this? Labor cannot have a price or a value. Labor is value. You can’t talk about the price of labor externally because that’s a circle, because the labor is the value of labor. It is self enclosed. Anything on top of that is something else. He breaks it down in this way: The price of labor, what one’s wages are, is only one part of the way in which the value of labor can be accounted for, and that is the paid part. So your wage is the paid part. And the other part is the unpaid part of your labor, which is the surplus value or profit of that labor. So, Marx really gets pissed about what he calls “this false appearance distinguish[ing] wage labor from other historical forms of labor.”
And how does he make this distinction between waged and other historical forms of labor? Well, he talks about slavery, and this is kind of fucked up, actually. In breaking down the way labor value, in the production of commodity, is renumerated across historical moments, Marx uses the slave mode as an example and he says, “With the slave, on the contrary, even that part of his labour which is paid appears to be unpaid.” He’s paid nothing. So there is no payment, essentially. It all appears unpaid. The relations are then clear, right? “In order to work the slave must live, and one part of his working day goes to replace the value of his own maintenance. But since no bargain is struck between him and his master, and no acts of selling and buying are going on between the two parties, all his labor seems to be given away for nothing. Take, on the other hand, the peasant serf, such as he, I might say, until yesterday existed in the whole of East of Europe. This peasant worked, for example, three days for himself on his own field or the field allotted to him, and the three subsequent days he performed compulsory and gratuitous labour on the estate of his lord. Here, then, the paid and unpaid parts of labor were sensibly separated, separated in time and space.” Wage labor doesn’t work this way according to Marx.
There is the appearance that one is being paid for his labor. But really what that appearance covers up in the form of a wage and the price of labor is that there is this surplus that is generated as profit. So you can kind of see an almost nostalgic Marx for a slave mode. This is very Hegelian, which, at least with slavery, everyone knew that nothing was being paid. At least with the peasant serf, there was a spatial, a bodily division of the paid time you spent tending to the gardens of the lord, and the time you spent on your own petty property. Wage labor doesn’t work this way. There’s the appearance that tricks laborers into thinking they’re being paid, but they are not.
This is another thing that I would say that is problematic in Marx. He, in a way, fetishizes the immediate domination of slavery and a feudal separation of labor. A feudal indemnity is more honest for him because ontologically there is only master and slave for Marx. He sees wages as a Liberal fantasy pretending to get out of the slavery that is “being itself.” This is a very Liberal, barbarous Hobbesian view of violence in relation to the world. It is reductive. And it is fetishizing slavery as a ground in the slave right or the “savage,” to use Rousseau’s term, as this ground of all existence that capitalism is trying to get us away from, but you know what it is just hiding it from us.
What it creates, though, in this hiding, in this mystery of surplus value exploitation, in these parasites, is profit. This is the new thing. That defines capitalism. And I’m going to read here from one section that really drives home why Marx is so concerned about the wage as a mis-identification of labor value. In the capitalist mode “paid and unpaid portions of labor are inseparably mixed up with each other, and the nature of the whole transaction is completely masked by the intervention of a contract and the pay received at the end of the week. The gratuitous labour appears to be voluntarily given in the one instance, and to be compulsory in the other. That makes all the difference.”
Thus Marx says, this is a labor contract, which again, is a contract, not in the legal sense of the way we would think of it as structured through labor law, but in a Kantian sense of a contract, which also Hegel takes up of an agreement between two people in nature, to decide to relate to one another. This contractual intervention is what Marx says masks the true nature of the domination that is at work in the capitalist mode of production. It mixes things up so that you can’t see with clarity, who is dominating who, absolutely. Who is universally dominating who: the capitalist and the wage worker? Upon this basis, Marx posits in Chapter 10 that profit is made by selling a commodity at its value. And this is where he rejects any notion of markup. The value of the commodity is, in part, the labor that is paid for and, in part, that is unpaid for.
This is the breakdown of the exchange, wage and surplus value. “I repeat, therefore,” Marx writes, “that normal and average profits are made by selling commodities not above, but at their real values.” This is his Smithian mode. There’s a natural price and it’s not a problem of capitalists gouging customers or anything like that. No, it is built into the system of natural price. Exploitation and surplus value and profit is in the system. It’s not external to it. And you know, this is correct, in some sense. But it’s framed all wrong. We again, have no law, we have no money, we have no theory of coordinated production that is not voluntary, self-organized by capitalists by a system of natural progression.
In Chapter 10, Marx starts to break down what surplus value is, and I’m not super concerned about this, except to say that this is where Marx theorizes rents and interest and other types of profit. So yes, there’s profit and surplus value is not reducible only to profit, it is also rent. In this sense, it is also interest. Think of ground rent or landlords or lending. This is where capitalists are divvying up between money lenders and all of these other capitalist parasitic forms. They’re divvying up the surplus value, and it’s up to them sort of how they want to do it. There’s all these dynamics that are very important. And there’s some part of this that I do want to read actually, which is Marx mentions that, and this is where we get to his thesis on rising wages. But the surplus value that is immediately extracted, fought by the capitalists from the labor, reverberates through this system.
So it reverberates in different ways to capitalists and other types of industrial forms of profit to landlords, and ultimately, to tax gatherers. Because for Marx, if money is a commodity, government needs to collect it in order to spend it. And again, we have this problem of what MMT introduced into the system, which is that all money’s created first. Value is not a function of labor substance. Value is implicated in the coordination of labor, in social reproduction as a coordinating process, as a rights process, to use Sanjukta Paul’s metric for allocating the right to coordinate and produce labor. This is a legal process. Contract doesn’t come in at the end, in the capitalist mode, which is the Kantian story, which is the Hugo Grotius story, who is an important proto-Liberal political thinker and legal thinker. No, it’s central to the allocation of coordination that comes before any form of labor production.
Essentially, Marx’s whole story of rising prices, and the zero-sum dynamic of the change in prices and the change of money prices, is predicated upon this zero-sum material grounding of value in labor.
Here, finally, is where we get to money’s problematic status in Marx’s theory of the political change. To tease this out, I want to read from Chapter 13, which concerns the main attempts at raising wages or resisting their fall–these progressive and left demands that say “no!,” we don’t want wages to fall and we want them to rise. You know, Marx is fully on board with this in principle. And this is, of course, good. I support this too. For Marx, however, such demands are ultimately futile on account of the analytical structure he has erected.
Here’s how Marx figures it. He writes: “We have seen that the value of the laboring power, or in more popular parlance, the value of labour, is determined by the value of necessaries.” This is a reference to the French physiocrats. The prix necessaire or the quantity of labor required to produce them. Labor power, the amount of average labor that requires to produce the commodity. “If, then, in a given country the value of the daily average necessaries of the laborer represented six hours of labour expressed in three shillings, the laborer would have to work six hours daily to produce an equivalent for this daily maintenance.” But if the cost of shillings changes, then okay, something has changed here, some price has changed, right? And for Marx, this is very different than the price of labor changing. Marx calls this the “change in money price,” because money has a value, which is related to the commodity, and the production, and the labor that goes into the creation of the money commodity, you know, mining. So the change in the value of gold, as a money price, will change the correspondence between the value of labor and the price of labor, but it doesn’t actually change the value of labor. And what he writes is that, in this process in which there is a change in money prices, “nothing would have changed except the money names of those values. To say that in such a case the workman ought not to insist upon a proportionate rise of wages, is to say that he must be content to be paid with names, instead of with things [emphases added].”
At bottom, what he’s talking about here is inflation. But I want to parse this names and things problem because, for Marx, this is the crux of his ontology of money, his notion that money is just the name. Pricing is just a name for a thing, for a dynamic that totally outstrips the process of labor and production. It’s a “mere” expression. Hegel says this, too, about money. Money, according to Hegel, is a universal expression of the value of a commodity, which is ultimately the value of labor that is endowed into the commodity. This is classical economics for you. This is Liberal money. It’s an ex post expression. It’s not active, it’s not productive. Therefore, when we publicly spend and create money, it does nothing. It’s inflationary. And what Marx is saying, in a sense, is workers should accept that it’s inflationary and ask for rising wages, but in the end justice is impossible until money is abolished.
Now, I agree that workers should demand rising wages in line with the rising cost of living. But Marx’s approach is not an economic analysis that acknowledges the productive aspect of money, because money is just the name. And if you follow Money on the Left and of course, Naty and Will’s episode on naming, you’ll know that naming is everything. What we name things is how we value them. We name them as valuable. And that naming, monetary and legal, is the driving force by which we get the labor and create these things.
Marx says “No, we want to be paid in things, not names.” But this is a nominalist understanding that is very modern as well as a reductive theory of law and money. And MMT, as a legal theory of money, totally shatters it. Which is not to say that I don’t think that Marx wanted good things, he wanted the workers to have good things. Of course he did. He wants workers to be able to sustain themselves and flourish. This is what Marxists want. This is what they say, and my friends who are Marxist say. And I want that, too! But I will insist that we have to come back to that grounding analysis here.
What is the ground? Why are we looking at labor in a vacuum of individuality? Individuality is such a myth. It may seem bizarre to claim that Marx grounds his whole theory of capitalist mode of production in individual labor, but he says it himself. And he even warns us! He warns us about the problems of premises and conclusions. Because he says, at the very end of Chapter 13, which is where I’m going to end with you today, that when you proceed from a false premise, then you arrive at false conclusions. And Karl Marx does this himself with his individual labor power premise, and not the coordinated dependent production process of collectivity as his ground. So his theory of value leads to the false conclusion that money is an expression and that we must change things solely within the immanent process of labor creation, and not with money, not with naming. He explicitly devalues the politics of naming.
Tis is ultimately what Money on the Left means. It’s a left political practice, and policy of naming, and valuing socially, through legal means, and legal in the most capacious sense through language. Valuing everyone and seeing no one as disposable as a product of what we name things, not just names as in Maxx, Will or Naty, but names as in price, and the administration of those prices and the production of our world through the administration of those prices. This is what we’re trying to pry open.