Reply to a Comment and Question Regarding ‘Socially Necessary Labor’

This is in response to a comment on my post entitled “The Phases of the Industrial Cycle.” Scroll to the bottom of that post to read the entire comment.

A friend commented, in part, as follows:

“[W]hen “there is an abundance of commodities of a certain kind in inventories then there is no social necessity for these commodities (from the bourgeois perspective—there may be an urgent need for that commodity to meet human needs). Then the socially necessary labor for their production is very low. Therefore anyone who tries to produce such commodities will end up using much more labor than the necessary, therefore will not be able to sell them at a profit and will end up losing money. On the other hand whoever produces gold doesn’t need to worry; he/she doesn’t need to sell their gold to get money, they already have money, gold is money. …

“Maybe I decide to produce the following commodity: a very complex camera, that can be mounted inside a refrigerator, record the contents of the refrigerator in infra-red spectrum, and live-feed it through wireless networks. This commodity will be expensive, but no-one will buy. This doesn’t matter for its value. It will still be high. Of course no capitalist would invest in such a camera. but if someone was stupid enough to do it they would lose a lot of money because the value of their unsold camera would be very high.

“Therefore the social needs and the ‘socially necessary labor’ are irrelevant. Then what does the phrase in question, ‘Prove that the labor … is indeed social labor’, mean?”

Our friend raises a very good question involving Marxist value theory. While my series of posts involves crisis theory rather than value theory, Marxist crisis theory does rest on the foundation of value theory.

Marx uses the term “socially necessary labor” in two different senses.

The first meaning of socially necessary labor

Marx distinguishes between concrete labor that produces use values and abstract labor that produces value.

Concrete labor is the labor that is actually performed. The real problem in Marxist value theory is to determine how actual concrete labor—real world human labor—is converted through the process of exchange of the products of that labor into abstract human labor.

One person can produce far more of a commodity of a given quality in a given amount of time than another person. People produce commodities with different use values involving different types of labor. No two people labor in exactly the same way or with the same productivity. Nor do they labor with the same productivity at all times. Some people work better in the morning than they do in the afternoon.

Does a person who takes more time than average to produce a given commodity of a given quality produce more value than a person who can produce the commodity in the average amount of time?

The case of a lazy shoemaker is often given to illustrate this point. Suppose in a given epoch under average conditions of production a shoemaker of average skill and industriousness can make one pair of shoes per hour. Assuming the workday is eight hours, the average shoemaker can make eight pairs of shoes per day.

But our lazy shoemaker makes only one pair of shoes every two hours, or only four shoes in an eight-hour workday. Does a pair of shoes of a given quality that takes two hours to produce by our lazy shoemaker represent twice the value of a pair of shoes made by an average shoemaker?

No, what Marx called the individual value of a pair of shoes made by the lazy shoemaker represents two hours of labor, but its social value is still only one hour of labor. In the marketplace, our shoemaker can’t sell the pair of shoes for twice the price simply because he or she is lazy. Therefore, over an eight-hour workday our lazy shoemaker is wasting four hours out of every eight hours worked. Of every 40 hours of concrete labor our lazy shoemaker performs, 20 hours consists of socially unnecessary labor.

Things would be no different if instead of a lazy shoemaker we had a lazy gold miner who produces the commodity whose use value is to serve as the money commodity. Suppose an average gold miner working under the average conditions of production of a given epoch can produce two ounces of gold in a 40-hour workweek. If a lazy gold miner produces one ounce of gold instead of the average of two ounces, our lazy gold miner will be wasting 20 hours of labor every week. Again, out of the 40 hours of concrete labor performed by our lazy gold miner, 20 hours would represent socially unnecessary labor.

Suppose, however, we reduce all concrete labor, the different types of labor producing different use values by workers, some “lazy,” some far more industrious than average, some producing gold, others producing shoes, into a common social substance—abstract human labor. This is human labor with all specific or concrete elements of the labor performed abstracted—that is, left out. This is exactly what happens in the process of commodity exchange.

Once we do this, we see that our lazy shoemaker and lazy gold miner, though they both put in a full 40-hour workweek in terms of their concrete labor, are as far as abstract labor is concerned only performing 20 hours of abstract value-producing labor.

The second meaning of socially necessary labor

From this point onward, I am dealing only with abstract human labor, not concrete labor. Is it possible to waste abstract human labor?

Our friend gives an example of a complex camera that, though it presumably takes a great deal of labor to produce, satisfies no human need whatsoever. Will the labor used to produce it be wasted?

First, remember how Marx describes a commodity: A commodity must have both a use value and a value. The camera described by our friend is indeed a product of human labor, but it has no use value. Where there is no use value, there is no value.

Human labor applied to production of items that meet no human need therefore is wasted human labor. For example, if takes a thousand hours of human labor to produce our friend’s camera, then all the 1,000 hours of human labor will be wasted. The entire 1,000 hours of labor is socially unnecessary labor.

The producer of the camera will find this out, when he or she tries to sell the camera on the market. The camera maker will find that on the market nobody is willing to part with a single cent in order to obtain the camera, let alone the amount of currency representing the quantity of gold that represents a quantity of labor equal to the quantity of labor used to produce the camera.

However, let’s take a less extreme example. Let’s say that smart phones are overproduced relative to the need—backed up, of course, by the ability to pay; the market knows no other type of need—for smart phones of a given type and quality. Suppose the exchange value, or what comes to exactly the same thing, the price, of the smart phones is $450. If the price of gold is $900 an ounce, this means that one smart phone exchanges for a half an ounce of gold.

Suppose, however, that the industrial capitalists are producing twice the quantity of smart phones that is actually demanded by capitalist society. Or what comes to exactly the same thing, too much of society’s labor time is being applied to the production of smart phones.

In capitalist society, there is no overall economic plan that distributes the labor available to society in such proportions that the needs of society are met. How then will our industrial capitalists realize that they are applying too much labor—that is wasting social labor—by producing twice the amount of smart phones members of capitalist society—those who are able to afford smart phones—actually need?

The industrial capitalists will find this out when they attempt to sell the smart phones at a price of $450 on the market. They will soon notice that half the smart phones they are producing are piling up unsold in warehouses. Instead of profits, they will make massive losses.

Perhaps our industrial capitalists will slash the price of smart phones in order to raise cash. But this will still mean major losses for our industrial capitalists. Soon, however, the production of smart phones will fall in half, and the industrial capitalists having corrected their mistake will now be able to sell all the smart phones they produce at the price of $450 per phone.

This is an example of the law of value in operation. The function of the law of value in a commodity-producing society—a society without any type of central plan—is to see to it that the labor that is available to society is in the long run distributed among the various branches of production in such proportions that needs of the commodity-producing society—bourgeois society—and its individual members are met, and society is thus able to reproduce itself.

In the case of gold—assuming gold functions as the money commodity—labor time can indeed be wasted in the case of a “lazy gold miner.” Labor can also be wasted in the case of labor applied, for example, by an industrial capitalist to a gold mine that has a very poor grade of ore, such that a given quantity of labor applied to the mine produces only half the amount of gold that would be yielded if the same quantity of labor were applied to an average mine. But this involves the wasting of concrete labor, not abstract labor.

Gold as money cannot be overproduced

The only way that the producers in a commodity-producing society can know if they are or are not wasting their labor is via their ability to realize the price of their commodities in the form of cold hard cash. Before a commodity is sold, it has an exchange value, or price, but it is not until the commodity is actually sold at its exchange value that its producer knows for sure that he or she has not wasted social labor time.

If the producer, however, produces the special commodity whose use value is to function as money, the producer will not have to worry about this. The producer will already possess, as our friend pointed out, the money that proves that he or she did not waste abstract social labor time.

Therefore, abstract labor applied to the production of the money commodity is directly social. There is no danger that anybody will be wasting abstract human labor by producing money material. In this respect, the commodity that serves as money differs from all other commodities.

This is the reason why the quantity theory of money as applied to metallic money is false. Unlike other commodities, the money commodity, since it is the medium in which price is measured, has no price, nor can it be overproduced. If the production of money material exceeds the needs of circulation, the metallic hoards grow in size relative to the needs of circulation, causing both the velocity of the turnover of the currency and interest rates to fall.

Assuming all the other conditions for capitalist expanded reproduction are favorable—or what comes to exactly the same thing, the possibility of producing surplus value on an ever larger scale exists—falling interest rates will mean a rise in the profit of enterprise, rising investment, and consequently all-around expansion of the market.

I hope this reply helps to clarify the extremely important questions raised by our friend.

4 thoughts on “Reply to a Comment and Question Regarding ‘Socially Necessary Labor’

  1. “Gold as money cannot be overproduced”.

    Do you mean that somehow the commodity money abolishes the laws of the relative value form? I think not.

    For a given period of time, the demand for gold is the sum of the demand for gold as object of use plus its demand as money — i.e. as a means of circulation, payment, and value storage. And that total is never an infinite figure. Gold has to be “purchased” with other commodities, which are not produced in infinite amount, since the productive force of labor is always finite. You seem to be conflating the qualitative determination of money as universally desirable (vis-a-vis other commodities) and its quantitative determination, which is necessarily bounded.

    Marx’s critique of the view that the inflows of gold into the New World led to price inflation do not imply that an oversupply of gold above and beyond the size of the social stomach for gold will not lead to a fall in the relative value of gold in terms of the other commodities. His view is that, on average, that relative value is determined by the requirements of social labor producing, respectively, gold and the other commodities. But fluctuations around that average are allowed. The aim of Marx’s critique is the misunderstanding that gold makes the commodities valuable, rather than their being products of labor.

    I suggest that you re-check that section on the quantitative determination of relative value in chapter 1. And also this, from Marx:

    “The expression of the value of a commodity in gold — x commodity A = y money-commodity — is its money-form or price. A single equation, such as 1 ton of iron = 2 ounces of gold, now suffices to express the value of the iron in a socially valid manner. There is no longer any need for this equation to figure as a link in the chain of equations that express the values of all other commodities, because the equivalent commodity, gold, now has the character of money. The general form of relative value has resumed its original shape of simple or isolated relative value. On the other hand, the expanded expression of relative value, the endless series of equations, has now become the form peculiar to the relative value of the money-commodity.”

  2. My reading of socially necessary labor time is that in order to be considered part of the social product, the item in question has to assume the quality of a commodity, which – among other things – requires it is exchanged in a market.

    This means that the camera, regardless of how much effort was invested in its production, has no value (exchange value), as it is not a commodity.

    You identify this point in your post very clearly.

    However, there are a couple of interesting points to note.

    If at some point in the future, industry determined that such a product could be produced and sold in the market, then the dusty old camera WOULD have value (assuming that it would be an acceptable commodity in the market).

    The value of the old camera would be determined by the socially necessary labor to produce such a camera. This is NOT the same as the average time to produce all exchangeable cameras. If that were so, we might be led to believe that the 1,000 (or say 1,000,000) hours that it took to create the original camera should somehow be accounted for in the socially necessary total.

    Instead, the socially necessary labor time is determined by the labor time of a typical camera of this type.

    For example, assume there are 1,000 cameras produced and sold, and each takes 1 hour to produce and we also have our original camera that took 1,000 hours to produce, the value of our original camera is 1 hour, NOT 2,000 hours / 1,001 cameras (also it is NOT 1,001 hours / 1,001 cameras – although that gives you the same result).

    There is a common confusion (not really helped by some of Marx’s writing) that labor is some kind of ethereal matter that gets “congealed” into commodities. This is a kind of mystification / fetishization that confuses a relation with a thing. It can be seen in the example above that as the relationship changes, the product that had no value, suddenly has value once the market deems it exchangeable.

    If we think of labor as some kind of material that gets incorporated into the item then it would follow that that value is always there. That would be false. Once we realize it is a relationship, then the nature of that relationship turns value on or off. Another way is to conceive of value as a potential, which can be expressed based on how it enters into the economy.

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