All page numbers referenced, unless otherwise stated, are to the Penguin Classics (1990) edition of Capital, volume one, by Karl Marx.

“In the misty realm of religion, the products of the human brain appear as autonomous figures endowed with a life of their own, which enter into relations both with each other and with the human race. So it is in the world of commodities with the products of men’s hands.” – Marx, Capital Vol I, chapter 1

 

1) Chapter 1: The Commodity

The capitalist system is only two or three hundred years old. It emerged from the breakup of feudalism, which laid the basis for a new socio-economic system. The forcible eviction of the peasants from the land became the basis for a new class of propertyless workers. Through pillage, plunder and robbery, the necessary capital resources were accumulated for the emergence of a capitalist class, which set out to monopolise the means of production. Capitalism came into being, to use the words of Marx, “dripping from head to toe, from every pore, with blood and dirt”¹.

Modern capitalism is a complex and chaotic system, composed of a great multitude of interacting processes, agents, and factors. It initially confronts us, therefore, as something mysterious and unfathomable; as an omnipotent force, somehow existing above society, which imposes its laws upon us regardless of our will. It is nevertheless governed by its own laws, peculiar to the capitalist system.

The task that Karl Marx set himself was to analyse the capitalist system in a scientific manner – to make sense of capitalism by studying its historical development and thus outlining its general motion, tendencies, and laws of development. This approach is in complete contrast to that of modern bourgeois economists, who have replaced ‘political economy’ simply with ‘economics’, which concentrates simply on market relations and individual preferences and ignores the capitalist system as a whole.

The task of providing a materialist explanation to the inner workings of capitalism was started not by Karl Marx, however, but by the classical economists Adam Smith, David Ricardo, and others. It was upon the work of these giants that Marx built his own analysis of capitalism. There is no great barrier that separates Marxist economics from the economic analysis of those preceding Marx; instead Marx, using the method of dialectical materialism, simply pointed out the limitations of the theories of the classical economists, which regarded capitalism as the highest development of society, whilst providing a revolutionary explanation for the source of profit – the driving force behind capitalism.

The first question facing Marx was: where do you begin in trying to analyse the seemingly chaotic capitalist system? Marx decided to start by analysing the concept of the commodity, the production and exchange of which forms the main basis of the capitalist mode of production. While commodities were produced prior to capitalism, this was very limited. Commodity production becomes universal under capitalism.

What, then, is a commodity? In simple terms, a commodity is the product of labour – a good or service – that is produced, made, or conducted for the purpose of exchange – that is, for use by someone else. Clearly the production of goods and services has always existed in every society, without which nothing could survive. If a society stopped producing it would perish. What differentiates products as commodities, however, is the question of production for exchange. A commodity is an article or service produced for exchange.

In early tribal societies, where production was socially owned and managed, the work of various individuals was for the common good and the needs of the community, whilst individual needs were fulfilled by taking from this social wealth. In this form of society, exchange between individuals was unnecessary. However, the emergence of a division of labour within society, as Marx discusses, lays the basis for the development of commodity production and exchange. In other words, alongside the emergence of different individuals and groups performing different socially necessary tasks, we see simultaneously the development of commodity production:

“This division of labour is a necessary condition for commodity production… Only the products of mutually independent acts of labour, performed in isolation, can confront each other as commodities.”²

In earlier class societies, such as under slavery or feudalism, the concept of producing commodities – i.e. producing for exchange – also existed, but this accounted for a minority of the wealth produced in society. The vast majority of production involved products that were not exchanged, but consumed for personal use or were simply appropriated by the ruling class of slave-owners or feudal lords. As Engels comments in a passage in parentheses:

“The mediaeval peasant produced a corn-rent for the feudal lord and corn-tithe for the priest; but neither the corn-rent nor the corn-tithe became commodities simply by being produced for others. In order to become a commodity, the product must be transferred to the other person…through the medium of exchange.”³

Alongside the products in earlier class societies that were simply appropriated by the ruling class – i.e. taken without anything given in return – there existed also an enormous quantity of products that were neither exchanged nor appropriated. They were instead simply consumed by the producer themselves. For example, peasants farming on their own land would predominantly produce for their own consumption, with only a small fraction of their produce being exchanged for the products of others. As Marx emphasises, therefore:

“A thing can be useful, and a product of human labour, without being a commodity. He who satisfies his own need with the product of his own labour admittedly creates use-values, but not commodities. In order to produce the latter, he must not only produce use-values, but use-values for others, social use-values.”⁴

Thus whilst the production and exchange of commodities existed in earlier societies, it is only under capitalism where commodity production becomes universal and accounts for the dominant proportion of the wealth created in society. It is only under the capitalist mode of production, therefore, that the laws and inner logic of commodity production and exchange become the dominant laws within society. It is the understanding of these laws with which Marx sought to reveal in his analysis.

Use-value

What is wealth? The wealth of present-day society consists, in the main, of a vast accumulation of commodities, which must be distinguished from wealth in the broader sense. If a person grows vegetables for their own table, or produces any of the one-thousand-and-one articles made for personal use or pleasure, such articles would undoubtedly be economic wealth, but, because they would not be placed upon the market, they would not be commodities. They would be what Marx calls ‘use-values’: things that have utility and satisfy human needs. Such useful things include both the products of human labour – whether they be for personal consumption or for exchange – and also those things that society obtains for free from nature – the natural wealth of the Earth.

As Marx states in the opening sentence of Capital, “The wealth of societies in which the capitalist mode of production prevails appears as an ‘immense collection of commodities’.”⁵ In other words, where production is predominantly not for individual consumption, but for the consumption of others via exchange, we identify wealth through the production of commodities.

Due to the division of labour in society, where everyone produces something different from everyone else, it is only through exchange that we can get access to the products of other people’s work. We are all dependent upon one another. We enter into social relationships with each other, not because we are interested in other human beings, but because we want to exchange our commodities with theirs. Barter is the most basic form of exchange. But this is overtaken later by exchange involving money.

A defining feature of commodities is their possession of ‘use-value’, or utility; possessing properties that are useful to society in general, fulfilling a social need. It they were not useful, then nobody would want them and they could not be exchanged. Use-value, therefore, is a fundamental property of a commodity. Marx, however, is keen to point out that, “The nature of these needs, whether they arise, for example, from the stomach, or the imagination, makes no difference. Nor does it matter here how the thing satisfies man’s need, whether directly as a means of subsistence, i.e. an object of consumption, or indirectly as a means of production.”⁶

This clarification by Marx puts to rest all those claims made by the critics of Marxism about its lack of relevance today. How many times has it been said that, “Marxist economics isn’t relevant in modern times now that we are all consumers buying consumer goods that we don’t need?” This myth about Marxism assumes that Marx’s analysis was only applicable to the 19th Century, with a working class that existed in a state of pauperism and wages at subsistence levels. Now that we are all buying TVs and iPhones, going on holidays abroad, and filling our wardrobes with different brands, the conclusion is that a Marxist economic analysis no longer applies.

Marx, however, makes no such assumptions about the nature or type of the commodities in society. These may be goods such as food, shelter, or clothing that fulfil basic human needs; they may be ‘luxury’ or ‘consumer’ goods; they may be services rendered; or they may be technologies and machines developed for others to employ in production. As Marx emphasises, use-values constitute both material needs and desires of the mind. The development of ‘consumerism’, with a vast advertising industry that seeks to create desires and artificial ‘needs’, therefore, changes nothing about the fundamental nature of the commodities produced and exchanged in society, nor about the laws and dynamics that govern the capitalist mode of production.

Exchange-value

People obtain commodities through exchange in order to consume them. Needless to say, a commodity will never find a purchaser unless it is useful. A useless thing has no value to anyone. Each commodity has its own particular properties that make it useful. Every specific need corresponds with a commodity with specific characteristics. Cars, bananas, trousers, tins of beans, laptops, etc. – all have different use-values.

All commodities, as Marx explains, however, contain a dual nature. Not only are they use-values, but they have also exchange-value. The use-value of a commodity marks its quality as being a useful thing; the exchange-value, in contrast, marks “the quantitative relation, the proportion, in which use-values of one kind exchange for use-values of another kind.”⁷ The exchange-value expresses a ratio of how much of one commodity is worth in relation to another.

In other words, commodities that are exchanged differ from one another – they have different uses or use-values. Indeed, commodities are exchanged only because their use-values have different qualities. For example, I am a carpenter and need a coat for the winter. I can exchange the two chairs I made for a winter coat that I want to buy.

What, then, is the feature common to all commodities that allow them to be compared against one another? How many chairs can I exchange for a coat? Or how many pairs of shoes can I exchange for so many pairs of trousers? The answer is labour: “If then we disregard the use-value of commodities, only one property remains, that of being products of labour.”⁸

Commodities are the result of work; they are all products of human labour. This allows us to compare one commodity (chairs) with another (coats). The exchange-value (or simply ‘value’), Marx explains, is expressed by the relative quantity of labour contained within different commodities. Commodity A (the two chairs), made from say 5 hours work, would be equal in value to commodity B (the coat), provided B is also produced in 5 hours.

In exchange, the work of the carpenter and tailor are made equivalent. The respective forms of work are disregarded, but they do not disappear. The separate, individual work of the workers still remains. But in exchange, not only are their differences shown (as chairs and a coat), but also their common features (as products of human labour). As a result of such general labour, all commodities have one quality in common: they contain value.

There was a time when the merchant was regarded as the creator of surplus; in other words, new value was added by ‘buying cheap and selling dear’. But this is false. If a person buys cheaply, someone must have sold cheaply. One person’s gain is another person’s loss. Values can be amassed in circulation, but not created. For example, a coat worth £20 may be exchanged for a chair worth £10. Here values have changed hands, but the total worth of the two commodities, namely £30, remains unaltered. One dealer wins out, but no new value has been created. In fact, value is created in production, not in exchange – namely in the making of things, not selling them.

Marx, however, was not the first to assert that labour was the source of value. Such an idea had been raised earlier by the classical economists (and even by those in ancient times). Marx developed this ‘labour theory of value’ by looking at the question not from the standpoint of the product of an individual worker, but of labour in the abstract – of society’s labour in general.

The property of value is not something natural or inherent within the commodity. It is not physical and cannot be detected with a microscope. It cannot be cut into pieces. It is nothing we could recognise with our senses. Nevertheless, it exists. It is a social property, only arising from the interaction of exchange; emerging from the act of exchange. The chairs and coat are different as use-values, but they are equal as values. This arises from the twofold character of the commodity itself.

Whilst we have chosen an example involving the exchange of chairs and coats in order to explain a point, the question of value, according to Marx, is not about the labour expended by the individual producer. Under capitalism, where commodity production and exchange is dominant and universal, commodities are not simply exchanged between individuals, but are bought and sold on the open market. Producers and consumers rarely ever come into direct contact with one another. As such, the individual character of any commodity is lost; instead, it simply becomes one example of a multitude of similar use-values. In other words, value is the result of abstract human labour.

“With the disappearance of the useful character of the products of labour, the useful character of the kinds of labour embodied in them also disappears; this in turn entails the disappearance of the different concrete forms of labour. They can no longer be distinguished, but are all together reduced to the same kind of labour, human labour in the abstract.”⁹

In turn, the individual character of the labour contained within each commodity is lost. Buyers in the market do not care about the labour expended to produce any individual commodity, but only about the quantity of labour that is needed to produce such-and-such a commodity in general. In this sense, we no longer talk about commodities as the products of individual labour, but as products of abstract human labour; “they are merely congealed quantities of homogeneous human labour…[and] this quantity is measured by its duration, and the labour-time is itself measured on the scale of hours, days, etc.”¹⁰

“The total labour-power of society, which is manifested in the values of the world of commodities, counts here as one homogeneous mass of human labour-power, although composed of innumerable individual units of labour-power.”¹¹

Socially necessary labour-time

The value of commodities, therefore, is not determined by the labour expended within an individual commodity, but only by the labour required to produce a given, relatively homogeneous, commodity in general. It is determined by the duration of labour-time socially necessary for the production of a commodity; that is, an average quantity of labour-time.

In this sense, Marx explained that the value of a commodity was not simply due to labour, as the classical economists had concluded, but due to socially necessary labour-time – “the labour-time required to produce any use-value under the conditions of production normal for a given society and with the average degree of skill and intensity of labour prevalent in that society.”¹² Value is the result of abstract human labour, namely labour in general.

Value, therefore, as Marx explains, is not an absolute and timeless property of any commodity, but is a “relation [that] changes constantly with time and place,”¹³ depending on historical and social conditions – at root, due to the productivity of labour:

“This [the productivity of labour] is determined by a wide range of circumstances; it is determined amongst other things by the workers’ average degree of skill, the level of development of science and its technological application, the social organisation of the process of production, the extent and effectiveness of the means of production, and the conditions found in the natural environment.”¹⁴

Buyers in the market do not care about the time spent concretely in any particular case, but only the labour-time required on average. Sellers in the market – a truly global market today – must, therefore, compete against the average level of skill, technology, and organisation, found in their industry or sector. “In general, the greater the productivity of labour, the less the labour-time required to produce an article, the less the mass of labour crystallised in that article, and the less its value.”¹⁵ Those producers with the higher productivity, therefore, are the ones that will produce commodities with a lower value. Competition drives this process. It is this fact that forces companies to compete by investing in new machinery and methods in order to increase productivity and thus sell their products below the general average of their competitors.

In this respect, Marx explained that, through the qualitative development of the means of production – i.e. through the development of science, industry, technology, and technique and the resultant increasing productivity of labour – society would see an increasing amount of use-values produced with an ever decreasing amount of labour; “an increase in the amount of material wealth may correspond to a simultaneous fall in the magnitude of its value.”¹⁶ Thus we see the distinction between use-value (wealth) and value (socially necessary labour-time): a person or society may be wealthy (i.e. in possession of many use-values), while a commodity is more valuable if a larger quantity of socially necessary labour-time is needed for its production.

Modern day economists in the ‘marginal utility’ school of microeconomics – who seemingly know the price of everything and the value of nothing – frequently attack the labour theory of value by citing the ‘example of the mud pie’. “If labour is the source of value,” state our critics, “then surely if I make a mud pie, it will automatically be valuable. Furthermore, if my friend takes longer to make a mud pie than me, his mud pie will be even more valuable.”

Such an argument is so much nonsense on two accounts. Firstly, as Marx asserts, for a commodity to have an exchange-value, it must first have a use-value – that is, there must be social need for the commodity. If there was no such need, the commodity would not and could not be exchanged at all, and hence it would contain no value. The mud pie argument, then, falls flat on its face.

Secondly, as Marx explains, in contrast to his predecessors, we are not simply concerned with labour-time, but with socially necessary labour-time. What buyer cares if producer A takes longer to make a given commodity than producer B (or producers C, D, E, etc.)? In a system of commodity production, buyers and sellers confront one-another in the market, and all that matters is the average labour-time required to produce the items. The producer who works more slowly than the average only receives in exchange the socially average-value. If producer A takes longer than the average, that is their bad luck; they cannot charge more simply by virtue of their inefficiency. This inefficiency will be revealed in the market, as commodities are bought and sold or unable to find a buyer. The more costly commodities made with outdated machinery will simply remain on the shelf.

On this basis, the less efficient producers will soon find themselves unable to compete and will be forced out of business. It is the market, ultimately, that determines whether the individual labour contained within a commodity is socially necessary for its production or not.

On a related note, Marx makes an important clarification regarding the different levels of skill employed in the production of any commodity. The idea behind value and labour-time is always that of average, homogeneous labour – labour in general. But all labour is concrete and particular, involving a variety of complexity and skill: the baker, the butcher, the candlestick maker all have their specialities. For this reason, Marx explains that all these different types of labour are reduced to “simple average labour”, which “varies in character in different countries and at different cultural epochs, but in a particular society it is given.” Again, we see something that is not timeless, but relative and changing under historical and social conditions. “More complex labour counts only as intensified, or rather multiplied simple labour, so that a smaller quantity of complex labour is considered equal to a larger quantity of simple labour.”¹⁷ Thus unskilled labour is regarded as multiples of skilled labour.

With such examples, we see the dialectical method of Marx in action: constantly abstracting from the infinite variety of particulars in order to examine the general tendencies and patterns in society; seeing properties such as value, not as intrinsic properties of commodities, but as relationships not simply between things, but between people; also, meanwhile, understanding that such abstractions – value, socially necessary labour-time, and simple average labour – are themselves constantly changing under social and historical conditions.

Price vs value

There are many criticisms of Marx’s labour theory of value by bourgeois economists, who are obsessed with distorting what the theory actually states. It is easy to knock down a straw man, which seems to be the stock-in-trade of bourgeois critics of Marx.

Marx never denied the fact that certain objects that are not products of human labour – and therefore do not contain value – can certainly have a price when offered for sale. Through their price they take on a ‘commodity form’. In the past, even religious indulgences were sold to cleanse away the sins of the repentant! Virgin land in an attractive location can be sold at an extortionate price.

Likewise, works of art or precious stones can attract vast sums of money. Scarcity plays a very important role in this regard. “Diamonds are of very rare occurrence on the world’s surface”, explained Marx, “and hence their discovery costs, on an average, a great deal of labour-time. Consequently, much labour is represented in a small volume.” He continues, “With richer mines, the same quantity of labour would be embodied in more diamonds, and their value would fall. If man succeeded, without much labour, in transforming carbon into diamonds, their value might fall below that of bricks.”¹⁸

In relation to works of art and other unique items, here we see monopoly prices operating. Scarcity will mean demand completely outstrips supply. However, we must not mix up the question of value with that of price, which are two different things. Value is determined by the socially necessary labour-time encapsulated within the product, while market price, affected by supply and demand, always tends to fluctuate above or below this value. Value is the axis around which price revolves.

With unique items, their price is not determined by value, but simply by what people are prepared to pay for them. In practice, such things lie beyond the realm of the labour theory of value, which deals with commodities that can be produced or reproduced without limitations or restrictions. “No labour can increase the quantity of such goods,” wrote David Ricardo, “and therefore their value cannot be lowered by an increased supply.”

It is labour that forms the basis for the production and reproduction of the things that sustain life. It is socially necessary labour-time, expressed in value, which lies at the centre of a system based on generalised commodity exchange. Monopoly prices are therefore a product of specific circumstances, and do not reflect value as such.

The law of value

Marx dedicates a large number of pages of Capital to analysing the development of exchange-value, from the case of simple, isolated acts of exchange, where the value – i.e. the ratio of use-values exchanged – seems accidental, to the general form of value, whereby – through the great multitude of acts of exchange within society – the value of any one commodity can be expressed in relation to many others.

In a simple barter economy, there may be a degree of flexibility over the amount of one commodity exchanged for another in any individual, isolated act of exchange. The different quantities of labour-time congealed within the particular commodities are seemingly random, and in this sense, as indicated above, the value of a commodity appears accidental. As commodity exchange becomes generalised, however, each act of exchange loses its individual character, and the various ‘accidental’ values – i.e. labour-times – seen in these concrete acts average out and a general, objective value – i.e. ‘socially necessary labour-time’ – arises.

The general form of value arrives, therefore, historically at the point when the process of commodity production and exchange has become so universal that the relative values – that is, congealed labour-times – of commodities now present themselves, not as accidents, but as objective facts to buyers and sellers on the market.

“…in the midst of the accidental and ever-fluctuating exchange relations between the products, the labour-time socially necessary to produce them asserts itself as a regulative law of nature. In the same way, the law of gravity asserts itself when a person’s house collapses on top of him. The determination of the magnitude of value by labour-time is therefore a secret hidden under the apparent movements in the relative values of commodities. Its discovery destroys the semblance of the merely accidental determination of the magnitude of the value of the products of labour, but by no means abolished that determination’s material form.”¹⁹

We see, therefore, how the law of value – like any law in nature, history and society – is not something timeless that is imposed from without, but something dialectical that emerges from the interactions within. ‘Necessity expresses itself through accident’, to use the German philosopher Hegel’s expression: the question of social necessity in relation to labour and value arises out of the multitude of ‘accidental’ exchanges taking place in the market. In the case of the law of value, this law only asserts itself at the historical point where commodity production and exchange is universal and dominant.

In this respect, whilst others in pre-capitalist societies had searched for an explanation as to the source of value, none were able to arrive at a complete understanding of labour as the source of value, for none lived in an historical period where commodity exchange, and thus the law of value, was fully dominant. As Marx discusses, Aristotle, the great Greek philosopher, arrived at an incomplete labour theory of value, but he was limited, not by his lack of genius, but by the historical conditions of slave society in which he lived:

“…Greek society was founded on the labour of slaves, hence had as its natural basis the inequality of men and of their labour-powers. The secret of the expression of value, namely the equality and equivalence of all kinds of labour because and in so far 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 social relation is the relation between men as possessors of commodities. Aristotle’s genius is displayed precisely by his discovery of a relation of equality in the value-expression of commodities. Only the historical limitation inherent in the society in which he lived prevented him from finding out what ‘in reality’ this relation of equality consisted of.”²⁰

Finally, Marx arrives at the money form of value, in which a single commodity – originally exchanged as a commodity in its own right – becomes a universal equivalent, i.e. a universal yard stick against which the value of all other commodities can be expressed. The development of money is not brought about by a conscious plan, but by common practice and social interaction, behind the backs of the producers.

Historically, precious metals such as gold – itself extremely valuable because of the difficulty in producing and obtaining it – have played this role. This is due to concrete material reasons: metals such as gold were convenient universal forms of exchange as small, easily carried quantities of the metal were able to express a large amount of value. Rather than carrying around baskets of food, rolls of cloth, or herds of cattle, therefore, one could simply carry small bags of gold or silver. These precious metals come to represent the values of all other commodities and, in turn, become the money commodity.

Marx develops his analysis of money in chapter 3, but simply notes at this point that the money form of value is the logical conclusion of commodity production and exchange: “The simple commodity form is therefore the germ of the money-form.”²¹

Value and commodity exchange

Commodities are use-values because they are useful to a purchaser, and they are values (i.e. exchange-values) because they contain human labour in general. This value, or exchange-value, is only revealed in exchange, when the proportions of one commodity are exchanged for another. What appears in exchange is the exchange of use-values, a pair of shoes are exchanges for a pair of trousers. Two commodities face each other with different use-values, but with an equality of value contained within them.

The important point that Marx emphasises is that value is ultimately a social relation – a relation between people, i.e. the labour of different individuals that, under a system of universal commodity production and exchange, expresses itself on the surface as a relationship between things. It is through these acts of exchange, therefore, that private, individual labour acquires a social character.

“The equality of the kinds of human labour takes on a physical form in the equal objectivity of the products of labour as values…

“…It is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things…

“Objects of utility become commodities only because they are the products of the labour of private individuals who work independently of each other…the labour of the private individual manifests itself as an element of the total labour of society only through the relations which the act of exchange established between the products, and, through their mediation, between the producers…

“It is only by being exchanged that the products of labour acquire a socially uniform objectivity as values, which is distinct from their sensuously varied objectivity as articles of utility.”²²

In this respect, Marx criticises the simplistic notion of the direct connection between labour and value presented by his predecessors, who saw value not as a relation between people, but as something absolute, determined from the actions of an ideal rational agent, as frequently represented by the example of Robinson Crusoe. The Crusoe example proposed that an isolated individual, such as a castaway on his island, could determine the value of products by simply noting the various amounts of time he expended in producing these things.

As Marx highlights, however, the property of value – and the nature of products as commodities – expresses a relative quantity that can only acquire an objective character through a process of social interaction – that is, through a general and universal process of exchange within society. Crusoe’s products – “exclusively the result of his own personal labour” – are, therefore, not commodities with values, but simply “directly objects of utility for him personally”. They are not produced for sale but simply to be consumed by himself.²³

Commodity fetishism

The term ‘fetishism’, as used by Marx, is derived from ethnology, the study of early societies. At this time, people were not conscious of their social or natural conditions of life. As a result, they attributed phenomena to supernatural forces. They believed they could influence the powers of nature by superimposing onto their own activities the actions of gods and spirits. In their imagination, inanimate objects acquired human or superhuman abilities and became a fetish. Marx draws parallels between this and the actions of commodity-producing societies, where products have taken on a magical power; hence ‘commodity fetishism’.

Under a developed form of commodity production, producers work in isolation from each other. It is not until their products are exchanged that they discover whether or not their private labour constitutes a part of the total necessary labour of society. Only if the exchange is successful does it prove to be a socially necessary part of the whole. Commodity producers are unaware of this social relationship, but are nevertheless subject to it and act accordingly.

For the commodity producer, commodities seem to be exchanged by virtue of some mysterious natural characteristic of their own. These man-made things seem to have a life of their own and develop a power over human beings. This is a commodity fetish, which is then reinforced when commodities are routinely exchanged for money instead of through direct exchange. A coin or piece of paper now seems to possess the magical quality of being able to buy all available commodities. They appear to have these powers simply because they are pieces of metal or paper.

Producers simply run after money, each competing with one another in their search for this universal commodity. They appear to be independent of each other, but dependent upon money. Money rules their world – ruling society like a fetish.

As production is not consciously planned, their own products confront them as an alien power on the market. The exchange appears to be a relationship between mere things. In reality, the relationship of commodities is inverted: they express the relationship not between things, but between people themselves. But this is not transparent. The producers are blinded by the laws of the market.

Only when you have the free association of producers will this commodity fetishism disappear. Then people will no longer face each other as mere partners in exchange – as mere appendages of their commodities – but will instead be able to plan production collectively.

This analysis and explanation of the law of value leads to an important conclusion in Marx’s argument regarding value and commodities: the fact that such forms and laws are not timeless, but are historically determined and conditioned. Just as commodity production has arisen to become universal, so one day it will disappear, along with capitalism, and with it the law of value.

“The value-form of the product of labour is the most abstract, but also the most universal form of the bourgeois mode of production; by that fact it stamps the bourgeois mode of production as a particular kind of social production of a historical and transitory character. If then we make the mistake of treating it as the eternal natural form of social production, we necessarily overlook the specificity of the value-form, and consequently of the commodity-form together with its further developments, the money form, the capital form, etc…

“…the vulgar economists confine themselves to systematising in a pedantic way, and proclaiming for everlasting truths, the banal and complacent notions held by the bourgeois agents of production about their own world, which is to them the best possible one.”²⁴

It is only with the socialist transformation of society, when the means of production are commonly owned as part of a rational and democratic plan of production, that the social character of society’s labour will finally correspond to a social form of ownership. To the degree that common ownership of the means of production increases, so the dominance of commodity production and exchange will decrease. Rather than acts of exchange between separate individuals, society will instead be composed of men and women contributing to society ‘according to their ability’ and taking from the communal wealth ‘according to their need’.

The products of labour will no longer confront society as commodities, but simply as useful objects; thus the contradiction between use-value and exchange-value will also dissolve. For the first time, the relationship between things will be replaced by genuine relationships between people, and men and women will confront one-another as real human beings. The economy – previously a mysterious force, whose laws seemed to be imposed upon society – will no longer dominate over us; instead, we will be masters of our own destiny.

“With the seizing of the means of production by society, production of commodities is done away with, and, simultaneously, the mastery of the product over the producer. Anarchy in social production is replaced by systematic, definite organisation. The struggle for individual existence disappears. Then, for the first time, man, in a certain sense, is finally marked off from the rest of the animal kingdom, and emerges from mere animal conditions of existence into really human ones. The whole sphere of the conditions of life which environ man, and which have hitherto ruled man, now comes under the dominion and control of man, who for the first time becomes the real, conscious lord of nature, because he has now become master of his own social organisation. The laws of his own social action, hitherto standing face-to-face with man as laws of Nature foreign to, and dominating him, will then be used with full understanding, and so mastered by him. Man’s own social organisation, hitherto confronting him as a necessity imposed by Nature and history, now becomes the result of his own free action. The extraneous objective forces that have, hitherto, governed history, pass under the control of man himself. Only from that time will man himself, more and more consciously, make his own history — only from that time will the social causes set in movement by him have, in the main and in a constantly growing measure, the results intended by him. It is the ascent of man from the kingdom of necessity to the kingdom of freedom.”²⁵

Footnotes

1 p926

2 p132

3 p131

4 p131

5 p125

6 p125

7 p126

8 p128

9 p128

10 p128-129

11 p129

12 p129

13 p126

14 p130

15 p131

16 p136-137

17 p135

18 p130-131

19 p168

20 p152

21 p163

22 p163

23 p171

24 p174-175, footnote 34

25 Frederick Engels, Socialism: Utopian and Scientific

“Money’s contradiction bursts forth in that aspect of an industrial and commercial crisis which is known as a monetary crisis. Money suddenly and immediately changes over from its merely nominal shape, money of account, into hard cash. Profane commodities can no longer replace it. The use-value of commodities becomes valueless, and their value vanishes in the face of their own form of value.” - Marx, Capital Vol I, Chapter III