The Analysis of Capitalist Society Must Start from Commodities
3. The Analysis of Capitalist Society Must Start from Commodities
Commodities, Money, and the Law of Value 1
Chairman Mao points out: Marx “started from the simplest capitalist factor — commodities — to analyze closely the economic structure of the capitalist society” 2 Why did Marx start from commodities in his analysis of capitalist economy? This is because every product in the capitalist society is a commodity. Not only are means of production and consumer goods commodities, even human labor is a commodity. Here, social wealth is reflected as a large number of accumulated commodities. Commodities become the cell structures of the capitalist economy. In commodities are embodied all the contradictions of capitalism. Therefore, the study of capitalism must start from an analysis of commodities.
The Commodity Relation Embodies the Seeds of All Capitalist Contradictions
Commodities Consist of Two Components: A Use Value and an Exchange Value
Commodities, the product of labor, are for sale and exchange. They went through a historical process of birth and development. In the primitive society, people labored together. The products obtained were all consumed by the members of the primitive commune. Under these conditions, there was no exchange or production of commodities. The exchange and production of commodities developed gradually in the slave and feudal society. Their development reached a peak in the capitalist world.
What are the basic characteristics of commodities which are the cells of the capitalist economy?
Since commodities are labor products for exchange, they must first of all be useful to people. For example, rice can fill our stomachs, clothes can keep us warm, iron and steel can be made into machines, and tractors can plow. This usefulness of a commodity is called use value. Obviously, if something is not useful, nobody needs it. It cannot, therefore, qualify as a commodity.
Use value is a necessary condition of a commodity but not the only condition. Not all useful things are commodities. For example, air and sunshine are basic necessities for our survival, but they are not labor products. They are free goods and therefore not commodities. Further, though food grains and vegetables are labor products, if they are produced for one’s own consumption, they are not commodities. Again, though food grains turned in by the peasant to the landlord as rent are not for the peasant’s own consumption, they are not paid for by the landlord and cannot, therefore, be regarded as commodities.
Labor products can become commodities only if they are transferred to other people through exchange. Therefore, in addition to use value, commodities must also be exchangeable for other products. This characteristic of commodities is called exchange value.
Exchange value is first expressed as a numerical proportion between one use value and another use value. For example, one chang of cloth is exchanged for two tou of rice. The two tou of rice is the value in exchange for one chang of cloth.
The numerical exchange proportion between two commodities varies according to time and place. But at a given time and place, this proportion is, on the whole, uniform. What determines this exchange proportion? Obviously, if various commodities can, in the course of exchange, establish among them numerical proportions, they must have something in common. This common property cannot be their use values. From the viewpoint of their use values, every commodity is different in nature. For example, cloth can be made into clothes, and rice can fill our stomachs. These are two entirely different use values and cannot be compared. The common property among the commodities must be found in their exchange value. And when the use value of both commodities, whether cloth or rice, is ignored, the only characteristic left is that they are both labor products. Labor has been expended for their production. This embodied labor constitutes value. Values are comparable, and therefore commodities can be compared in quantity. The fact that one chang of cloth can be exchanged for two tou of rice implies that their production requires an equal quantity of labor. Consequently, they are equal in value. Exchange value is therefore determined by value. Exchange value is an expression of value. Value itself is the basis of exchange value.
Use value and value are the two characteristics of commodities. They constitute the two factors of commodities. Use value is the material support for value. If one commodity has no use value, no matter how much labor has been expended on it, no value can be formed. And it cannot be a commodity in exchange for other labor products. At the same time, only use value created by labor can become the use value of commodities. Even if something is absolutely essential for our survival, such as air and sunshine, it cannot become a commodity unless labor has been expended on it.
The Duality of Commodities Is Determined by the Duality of Labor Used in Commodity Production
Where does the duality of commodities come from? When we go to the source, we discover that labor used for commodity production has a dual nature: it consists of concrete labor on the one hand and abstract labor on the other.
To produce various use values, people have to engage in various purposeful production activities. For example, carpenters make tables, and peasants raise crops. They all have their own tools, their objects, and their methods. The labor of a peasant consists of using various farm tools to plow, rake, plant, and harvest, finally producing food crops. This labor expended in different concrete forms is called concrete labor. Concrete labor creates use value. There are many different use values for commodities. There are also many different forms of concrete labor in commodity production. Concrete labor in various trades and occupations is different, a manifestation of a complex division of labor.
Various concrete labor is different in nature and cannot be compared. But in the market, various labor products can be compared. This shows that labor expended on commodity production not only has an aspect of difference, but also an aspect of similarity.
What is this similarity? It lies in the fact that although labor is different in its concrete forms for the production of various commodities, it is basically an expenditure of physical and mental human labor. This homogeneous labor abstracted from its concrete characteristics is called abstract labor. The value of commodities is created by abstract labor. Earlier, we said labor embodied in commodities constitutes value. Now, after analyzing the duality of labor, we can be more specific about the meaning of value. Value is the abstract labor embodied in commodities.
Concrete labor and abstract labor are not two different types of labor. They are merely two aspects of the same labor. People must engage in various forms of concrete labor in the production of various use values for the satisfaction of various needs. Concrete labor expresses the relation between man and Nature. On the other hand, abstract labor provides a unified measure to compare the labor expended on the production of various commodities. Therefore, abstract labor expresses the social relation in which labor is exchanged among people under the condition of commodity production. The Value of Commodities Is Determined by the Socially Necessary Labor
The value of commodities is created by labor. Its level is determined by the labor expended on the production of commodities. And the volume of labor is measured by labor time. The longer the labor time needed for the production of a commodity, the larger the volume of labor and the higher the value.
Does this mean that the lazier and more unskilled a man is, the more valuable the commodity he produces would be? Definitely not.
The production of a given commodity requires different labor time from different commodity producers for obvious reasons. Some are more skilled than others. And some use better tools and equipment than others. The time required by those who are more skilled and use better tools and equipment is naturally shorter than the time required by those less skilled and using crude tools and equipment. Then, which labor time should be used to determine the value of commodities?
The labor time expended by various commodity producers on commodity production is called individual labor time. For example, some carpenters spend thirty hours to make a table, some twenty-five hours, and others twenty hours. These are all individual labor times. The value of commodities is not determined by the individual labor time, but by the socially necessary labor.
“Socially necessary labor is such labor time as is required for producing a use value under existing normal conditions of production and with the average amount of skill and intensity prevalent at the time.” 3
If under normal production conditions and with the average amount of skill and intensity the required time to make a table is twenty-five hours, then twenty-five hours are the socially necessary labor for making tables. Twenty-five hours’ labor is the socially necessary labor determining the value of a table.
When we talk about labor determining value, we must distinguish between not only individual labor and socially necessary labor, but also between simple labor and complex labor. Simple labor is labor that can be performed by a normal, healthy person without going through special training. Complex labor is labor performed by a skilled worker who has undergone certain special training. Therefore, in a given period of time, the value created by simple labor is less than that created by complex labor. Complex labor is multiple simple labor. The conversion between complex and simple labor is spontaneously carried out in the exchange process. The Contradiction between Private Labor and Social Labor Is the Basic Contradiction of Commodity Production
We have analyzed above the duality of commodities, the duality of labor in commodity production, and the value of commodities. With this basic understanding, we can further analyze the contradictions of commodity production.
Commodities are used as exchange for labor products. Commodity producers produce commodities not for their own needs, but for sale in exchange for the commodities they need. For example, the blacksmith does not make hoes because he needs them. What he is concerned about is selling the hoes to realize their value for the exchange of the rice and cloth he needs. Whether his commodities can be sold or not is of vital concern to the commodity producer.
Commodities are a unifier between the opposites of use value and value. Concrete labor and abstract labor in commodity production are also opposites in unity. They are unified in a commodity, but they are also opposites. If the commodity can be sold, their internal contradictions are resolved.
When a hoe reaches the hands of a peasant who needs it, concrete labor is converted into abstract labor, and the blacksmith obtains the value of his hoe. The use value and the value of the hoe are also unified. But if the commodity cannot be sold, the contradiction between use value and value and the contradiction between concrete labor and abstract labor are immediately revealed. Although the hoe obviously possesses use value, if it cannot be sold, its value cannot be realized, and the hoe is no better than a heap of scrap. In this case, the concrete labor of the blacksmith, which also obviously represents the expenditure of physical and mental labor, cannot be converted into abstract labor. In other words, his labor is not recognized by society and is as good as wasted. Under these conditions, the blacksmith has no means to purchase pig iron and charcoal with which to engage in more production. He certainly has no means to buy fuel, rice, oil, and salt to support himself. The contradictions between use value and value and between concrete and abstract labor bear directly upon the production and livelihood of the commodity producer.
How do these contradictions in commodity production arise? Where are their origins? There is one basic contradiction in commodity production under private ownership. This is the contradiction between private and social labor. Since commodities are labor products used for exchange and since the use value created by the producer is not for the satisfaction of his own needs but to satisfy social needs, the labor of the commodity producer is social in nature. It is a part of total social labor. But under the condition of private ownership, what and how much to produce and the size of his income are the private affairs of the producer. Therefore, the labor of the commodity producer also possesses the nature of private labor. This contradiction between private and social labor is the source of all contradictions of commodity production under private ownership. When the commodities produced by the private producer are sold in the market, it shows that his private labor is recognized by society and constitutes a part of the social labor. If the commodities cannot be sold, the private labor of the commodity producer is not recognized by society and cannot be converted into social labor. The concrete labor of the commodity producer cannot be converted into abstract labor. The value of commodities cannot, therefore, be realized. Marx’s Labor Theory of Value Is the Basis of the Theory of Surplus Value
Through the analysis of the duality of labor, Marx firmly created the labor theory of value. This theory scientifically demonstrates that concrete labor creates the use value of commodities, while abstract labor creates the value of commodities and labor is the sole source of value. Marx’s labor theory of value is the basis of Marx’s theory of surplus value and is an important constituent part of Marxist political economy.
Before the proletariat received the guidance of Marxist theory, they did not realize the source of their sufferings and could not identify the objects of their struggle. Some mistakenly thought that their sufferings were caused by machines and once resorted to destroying machines as a method of struggle. Marx summarized the long experience of the proletarian struggle and created the theory of surplus value to expose the secret of capitalist exploitation. This made the proletariat realize their historical mission and the fact that only through violent revolution and the replacement of capitalism by socialism could they be liberated. Marx’s theory of surplus value is based on the labor theory of value. Without the labor theory of value, the theory of surplus value could not have been established.
Because Marx’s labor theory of value provided theoretical guidance to proletarian revolutionary struggles, bourgeois economists tried their best to establish all sorts of antiscientific theories of value in a vain attempt to separate the relations between value and labor, to oppose Marx’s labor theory of value, and to conceal capitalist exploitation.
Among the vulgar economists, a production-costs theory of value was once much in vogue. This theory says that the value of a commodity is determined by the costs of production (the value of the means of production and labor wages) expended on its production. If the value of a commodity is in fact determined by the costs of production, then the capitalist would only get back the costs of production expended when the commodity is sold. How can he ever get rich this way? Where is the exploitation of the worker? Therefore, those vulgar economists who proposed that value was determined by the cost of production necessarily explained profit as a form of higher wage, a reward for abstinence, an award for risk. This fully exposed their ugly role as apologists for the bourgeoisie.
Among the bourgeois vulgar economists, another utility theory of value was also once in vogue. According to this theory, the value of a commodity is determined by the amount of utility it possesses. What then is “utility”? This is, in fact, the use value of a commodity. We said earlier that various commodities had different use values which were not comparable. It is simply not logical to say that the value of a commodity is determined by its use value. The utility theorists of value could not intelligently explain why such things as air and sunshine, which are essential for human survival, did not possess any value and could not be sold as commodities.
Another popular theory among the bourgeois vulgar economists was a supply-demand theory of value. This theory denied that there was any objective, intrinsic value in a commodity and thought that the value of commodities was determined by the supply and demand conditions in the market. When the supply of a certain commodity exceeded its demand, its exchange value for other commodities was lower, and its value was lower. But when the demand for a commodity exceeded its supply, its exchange value for 30 other commodities was higher, and its value was higher. This theory was obviously fallacious. The supply-demand theorists of value simply cannot explain what determines the value of a commodity when supply is equal to demand; neither can they explain why in the changing relations between supply and demand for various commodities, some commodities are consistently more expensive than others.
Although the bourgeois economists tried their best to negate the labor theory of value, truth can never be negated. Marxist labor theory of value has been proven to be the only correct theory in its struggle against various pseudoscientific theories of the bourgeoisie.
Money Is a Natural Product of the Development of Commodity Exchange
Money Is a Special Commodity Serving as a Universal Equivalent
Money is associated with commodities because in daily life the value of commodities is expressed in terms of money and commodities are bought with money However, the value of commodities was not expressed in terms of money from the start. Money is a product of the development of commodity production and exchange.
Commodity exchange started out as direct barter among commodities. In the beginning, the nomad tribes and agricultural tribes exchanged their surplus products. For example, sheep were exchanged for rice. At that time, the exchange of commodities was on an occasional basis and occurred mainly among clan communes. In the course of exchange, the value of a commodity was accidentally expressed in terms of another commodity. For example, two sheep equal one bag of rice. The value of a sheep could not be evaluated in terms of itself. But when sheep were exchanged for rice, the value of a sheep was expressed in terms of rice. In the above equation, commodities such as rice assumed the special role of an “equivalent.” They acted like a mirror and in them the value of another commodity could be reflected.
With the development of productive forces and social division of labor, commodity exchange daily developed. Both the volume and the variety of commodities being exchanged increased. In the course of exchange, one commodity could be traded for many other commodities. Its value could be expressed in many other commodities. At the same time, with the development of commodity exchange, the disadvantages of direct barter among commodities were increasingly evident. Direct barters could be concluded only when both sides happened to need what the other side had to offer. For example, suppose that the owner of sheep wanted to exchange them for food grains, but the owner of food grains needed a hoe instead of sheep and the owner of hoes wanted cloth instead of sheep or food grains. If the owner of cloth happened to want sheep, then, the seller of sheep could obtain food grains by first exchanging sheep for cloth, then cloth for hoes, and finally hoes for food grains. The expected purpose of exchange was realized only after much trouble. If the owner of cloth did not need sheep, then no matter how much trouble he went through, he still could not get what he wanted. Therefore, when commodity production increasingly developed, direct barters proved to be extremely difficult.
In the course of commodity exchange, people gradually realized that if they first exchanged what they had for some commodity (like sheep) which was generally needed and used it to exchange for what they needed, then the purpose of exchange could be realized in only two transactions. Therefore, in the long developmental process of commodity exchange, commodities such as sheep would be separated from other commodities and perform a role not possible for other commodities. Then, the values of all commodities were all expressed in terms of sheep. And sheep assumed the role of a “universal equivalent” in commodity exchange.
In the long process of the development of commodity exchange, nations used different mediums of exchange, including sheep, shells, cloth, and metals. Finally, they decided to use precious metals such as gold and silver as money. Because the precious metals are small in quantity but great in value, easy to carry, readily divisible, and not perishable, they are suitable for a medium of exchange. Hence, gold and silver are generally accepted as money. Note, however, that money is not an innate property of gold and silver; it is acquired. Gold and silver became money under certain historical production relations.
From the origin of money, one can understand the nature of money. Money is a special commodity separated from other commodities and serving as a medium of exchange.
The Five Functions of Money Evolved Step by Step
The property of money is manifested in its functions. Money possesses five functions which are evolved in the process of commodity exchange. These functions are to serve as (l) a unit of value, (2) a medium of exchange, (3) a standard of payments, (4) a store of value, and (5) a universal currency. Of these, the basic functions are as a unit of value and as a medium of exchange. But they have all evolved with the emergence of money.
The first function of money is as a unit of value. Just as a ruler is used to measure the length of things, money is used to measure the value of commodities. Money functioning as a measure of value can be conceptual money. This is to say, when people use money to evaluate the value of commodities, they need not have money in their hands. For example, a table is worth 32 ten yuan. But there is no need to put ten yuan on the table. When the values of commodities are expressed in terms of money, they are the prices of the commodities. Prices are the expression of values in money terms. The prices of commodities are determined by two factors. One is the value of the commodities themselves, and the other is the value of money (gold, silver). The prices of commodities are directly proportional to the value of the commodities themselves and inversely proportional to the value of money. For example, a buffalo is worth five hundred hours of social labor and one ounce of gold is worth five hundred hours of social labor. Then, the price of a buffalo is one ounce of gold. If the labor productivity of gold miners is doubled and one ounce of gold is now worth only two hundred and fifty hours of social labor, then, even though the value of a buffalo has not changed a bit, the price of a buffalo has doubled.
The second function of money is as a medium of exchange, namely, it serves as a medium of commodity circulation. Commodity circulation is commodity exchange by means of money. Before the appearance of money, commodities were bartered directly. In terms of a formula, it is expressed as commodity equals commodity. After the appearance of money, all commodities were exchanged in terms of money. In terms of a formula, it is expressed as commodity equals money equals commodity. This role of money as a medium in commodity circulation is the function of money as a medium of exchange.
The money used as a medium of exchange was originally gold and silver pieces of different sizes and weights. This was later replaced by coins. Coins were merely minted metal pieces of uniform shape, purity, and weight certified by the state. The coins of various countries were all different. In China’s late Shang dynasty, coins began to be minted with copper. The oldest coins were made of copper and shaped like farm tools. They were known as pu ch’ien. In the Chou dynasty, in addition to pu ch’ien. there were tao ch’ien and yuan ch’ien. Yin yuan [silver dollars] were first minted in the Kuanghsii period of the Ch’ing dynasty. Each vin yuan consisted of 0.72 ounces of silver.
In the course of circulation, coins were worn out and part of their value was lost. But even then, coins were still accepted at their full value. This was because the function of money as a medium of exchange was performed in one instant. People exchanged their commodities for money merely in order to use it to buy the commodities they needed. The primary concern of the commodity owners was whether the money could be used as a medium of exchange and not whether the money had its full worth. For this reason, not only could worn metal money be used as a medium of exchange, but even pure value symbols in the form of paper notes could take its place.
Since paper money in place of metal money serves as a medium of exchange in commodity circulation, the amount of paper money issued is limited to the amount of metal money needed for commodity circulation. Marx pointed out: “The amount of paper money issued, which is a token or symbol of real money, always equals the value of the gold (or silver) needed for commodity circulation.” 4 If the paper money issued equals the amount of metal money needed for commodity circulation, then the paper money shall possess the same purchasing power as the metal money. If the amount of paper money issued exceeds the amount of metal money needed for commodity circulation, then the value of the total paper money still equals the metal money needed for commodity circulation, but the unit value of the paper money shall fall in terms of the metal money. Hence, the value of the paper money depreciates, and commodity prices appreciate. For example, if, in a given period, the amount of metal money needed for circulation were 100 million yuan but the amount of paper money were 200 million yuan, then the value of paper money would be halved. The purchasing power of 1 yuan of paper money would be equivalent only to 0.5 yuan of metal money.
This depreciation of paper money resulting from the issue of paper money in excess of the amount of metal money needed for circulation is called inflation. In capitalist society, inflation is an important means by which the bourgeois state plunders its people. The result of inflation is the depreciation of paper money and rising prices. On the other hand, the increases in the money wages of the workers lag far behind the increases in prices, resulting in decreases of their real wages and their standard of living. At the same time, the exploitative income of the bourgeoisie increases rapidly. In old China, the issue of legal tender reached astronomical figures, leading to galloping inflation and quantum jumps in prices. Some people once calculated that the purchasing power of 100 yuan of legal tender in 1937 was two buffaloes. In 1938, it was one buffalo. In 1941, it was one pig. In 1947, it was one-third of a box of matches. In 1948, it could not even buy one-third of a matchstick.
The third function of money is as a means of hoarding. The development of the money relation of commodities increasingly made money into a symbol of social wealth. When the natural economy played a dominant role, the accumulation of wealth assumed the form of food grains, cloth, and silk goods. After the money relation of commodities was developed, because money could be used to purchase any commodity, the accumulation of wealth increasingly adopted the form of hoarding money (gold and silver). This money which was temporarily retired from commodity circulation and hoarded by its owner became hoarded money. It served the function as a means of hoarding.
The fourth function of money is as a means of payment. With the development of commodity production and exchange, transactions on credit increasingly developed. When a debt was due, payment had to be made in money. But at that time, commodity exchange had already been completed.
Here, money no longer served as a medium of exchange, but rather as a means of payment. As a means of payment, money was first used among commodity producers to settle debts. Later, its use went beyond the sphere of commodity circulation. This function was also instrumental in the payment of rent, interest, and taxes.
The fifth function of money is as a world currency. With commodity exchange proceeding beyond a nation-state, international trade developed, and a new function of money was created. This was the function of a world currency. Only gold and silver could serve as world currency.
In the world market, gold first served as a means of payment to settle international accounts. This was the major function of a world currency. Next, in the world market, gold was also used as a means of payment to buy various commodities. Finally, gold was transferred from one country to another as a symbol of social wealth. For example, the payment of war indemnities, capital export, and other transfers of gold and silver from one country to another served this function.
The above five functions of money are organically related and are different expressions of the nature of money. They are the expressions of the different roles assumed by a universal equivalent in the development of commodity circulation.
The Law of Value Is the Economic Law of Commodity Production
The Objective Requirement of the Law of Value Is Equivalence in Exchange
The law of value is the economic law of commodity production and exchange. The basic content of this law is this: The value of a commodity is determined by the socially necessary labor. Commodities must be exchanged according to their values. That is, there must be equivalence in exchange. Wherever and whenever the conditions of a commodity economy exist, the law of value has a role to play. Marx said,
“In the anarchic and constantly changing trade relations of private labor products, the socially necessary labor time for their production forcibly clears its own path as a regulatory law of nature, just as the law of gravity forcibly clears its own path when a house falls on a person’s head.” 5
In other words, in commodity exchange, although because of the influence of the supply-demand relation the proportions in which commodities are exchanged may change continuously so that the socially necessary labor (the value) embodied in two commodities being exchanged may not be exactly equal, in the long run, commodity exchange necessarily involves equivalence in exchange. The values being exchanged must be identical.
Why is the objective tendency of commodity exchange toward equivalence in exchange? This is because commodity producers are all concerned about how much of others’ commodities their own commodities can be exchanged for. Due to the influence of the supply-demand relations, the proportions in which commodities are exchanged constantly change. People increase production of commodities which are more profitable and decrease production of commodities that are less profitable. As a result, the supply of the former commodities exceeds the demand for them, and their exchange values decrease. The supply of the latter commodities falls below the demand for them, and their exchange values increase. This constant change in the proportions at which commodities are exchanged demonstrates that equivalence in exchange is an objective law which does not change according to people’s will.
With the appearance of money, all commodity exchanges depend on money as a medium. Values are expressed as prices. The law of value requires equivalence in exchange. In other words, it requires the equivalence between prices and values. Needless to say, the equivalence between prices and values must be understood as a long-term tendency. In fact, in a commodity economy based on private ownership in which production is uncoordinated, there are constant dislocations in the supply of and demand for commodities in the market, leading to constant fluctuations of prices. Although changes in the supply-demand relations lead to fluctuations in prices, the fluctuations are always centered around the equilibrium values. Therefore, nonequivalence between prices and values due to the influence of the supply-demand relations does not imply the negation of the law of value, but rather a necessary form through which the law of value operates.
The Three Functions of the Law of Value Which Arise in the Course of Market Competition
The law of value performs three functions in commodity production based on private ownership. These functions are realized through the spontaneous force of market competition.
First, the law of value is a regulator of production. It spontaneously regulates the distribution of social labor and the means of production among various production sectors. Commodity production based on private ownership is conducted under the condition of competition and anarchy. Nobody has direct information on what or how much society needs. But some order, allocations, and arrangements are necessary for the continuation of social production. These allocations and arrangements are regulated by the law of value and realized through the spontaneous influence of market price fluctuations. If the supply of a certain commodity does not meet the demand for it, its price will rise above its value, and the production of this commodity becomes especially profitable. The production of this commodity will thereby be increased. If the reverse is true, its price will fall below its value, and its production will be decreased. It is in this way that the law of value directs the activities of commodity producers and regulates the distribution of labor and the means of production among various production sectors.
Although the regulation of social production by the law of value imposes certain order in the commodity economy based on private ownership, this order is achieved under the condition of anarchy. It is constantly destroyed by blind competition, and a new order is again spontaneously formed. The establishment of this kind of order is achieved through an immense waste of social labor. Just as Marx said, “This orderless motion is its order.” 6
Second, the law of value stimulates the improvement of production techniques and labor productivity. Labor productivity is measured by the number of products produced in one unit of time. Expressed as a formula: labor productivity equals number of products divided by labor time. The level of labor productivity is determined by many factors. The most important ones are the skill of labor, the state of technology and its application to production, and the extent of division of labor and cooperation. According to the objective requirement of the law of value, commodities are sold according to the values determined by the socially necessary labor. Therefore, whoever is more skilled, more efficient, and uses less than the socially necessary labor time will get more profit. This stimulates the commodity producer to pay attention to improving his production techniques and labor productivity. But under private ownership, the improvement of production techniques by the commodity producer is for the sake of higher profits. Those who possess new techniques will naturally keep them secret. Under these conditions, the development of social productive forces is hindered.
Third, the law of value promotes polarization among commodity producers. This is because the production conditions of various commodity producers are all different. The individual labor time used to produce a certain commodity varies widely. But the law of value requires that commodities are sold according to the value determined by the socially necessary labor. Thus, those commodity producers with better production facilities and with individual labor time less than the socially necessary labor time will make a higher profit and develop faster. On the other hand, those commodity producers with poorer production facilities and with individual labor time higher than the socially necessary labor time will not survive the competition. Thus, the polarization among commodity producers is inevitable.
Expose the Mystery of Commodity Fetishism
Fetishism originally referred to religions in which people worshiped things believed to possess certain mystical power. When the level of social productive forces was low and the control people exercised over Nature was weak, they made natural forces mysterious. They thought natural forces like thunder, lightning, water, and fire were controlled by certain gods and therefore worshiped them. This also happened in the commodity economy under private ownership. Although commodities are made by people’s hands, they were worshiped as gods and believed to hold people’s destiny Marx called this phenomenon commodity fetishism.
How did commodity fetishism come about?
Under private ownership commodity production, the relations among men were manifested in commodity relations. Commodities were treated as if they were something above men, their master. The destiny of the commodity producer was entirely associated with the destiny of commodities. His destiny was entirely determined by whether and how well his commodities could be sold. If his commodities could be sold at profitable prices, the commodity producer would be well off. But if they could not be sold or could only be sold at very low prices, he would be poor. The commodity producer had no way of knowing beforehand whether there was a demand for his commodities or whether the commodities could be sold at good prices. The prices of commodities were not determined by the individual producers, but rather by the spontaneous forces of the operation of the law of value in the market. It was this condition that led the commodity producer to feel that his destiny was beyond his own control and was decided by the fate of his commodities in the market.
After the appearance of money as a universal equivalent which could be freely exchanged for all commodities, there arose an illusion that money itself had a special magical power that could affect people’s destiny. Therefore, commodity fetishism inevitably developed into money fetishism.
Marx was the first one to reveal the mystery of commodity fetishism. Marx’s theory on the relations between commodities and money permitted the revelation of the relations among people, while bourgeois economists could see only the relations among things and the social relations among them concealed by things. Marx’s theory irrefutably demonstrated that the relation between commodities and money will not hold eternally, but will be a passing historical phenomenon. Therefore, the capitalist economic system with commodities as its cells is not eternal. Things that were created under certain historical conditions will disappear when the historical conditions change. This is an objective law that cannot be changed according to people’s will.
Major Study References
Marx, Capital. Vol. 1, Chapters 1, 3.
Engels, Anti-Dühring. Part 2, Chapter 5.
Lenin, Karl Marx. (“Marx’s Economic Theories”).
Review Problems
- Why do we say that commodity relations embody all the seeds of capitalist contradictions?
- What are the major content and meanings of Marx’s labor theory of value?
- What are the roles played by the law of value in a commodity economy based on private ownership?
6 Footnotes
