In Marx's critique of political economy, any labor-product has a value and a use value, and if it is traded as a commodity in markets, it additionally has an exchange value, most often expressed as a money-price.

Origin and definition

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

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

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

This was a direct reference by Marx to Hegel's Elements of the Philosophy of Right §63. Marx adds that:

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

Transformation into a commodity

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

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

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

The role of use value in political economy

In his somewhat influential text The Theory of Capitalist Development (1942), American Marxist Paul Sweezy claimed that:

.

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

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

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

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

Use value and utility

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

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

• In neoclassical economics this utility is ultimately subjectively determined by the buyer of a good, and not by the intrinsic characteristics of the good. Thus, neoclassical economists often talk about the marginal utility of a product, i.e., how its utility fluctuates according to consumption patterns.

• Marx rejects any economic doctrine of consumer sovereignty, stating among other things that "In bourgeois societies the economic fictio juris prevails, that every one, as a buyer, possesses an encyclopedic knowledge of commodities".

In summary, different concepts of use value lead to different interpretations and explanations of trade, commerce and capitalism.

Indifferent to use value?

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

Many non-Marxian economist refute that this is a misunderstanding of business activity and the bourgeoisie as a class http://www.mises.org/epofe/c5sec3.asp. It can be argued that capitalists can never be indifferent to use-values because inputs of sufficient quality (labour, materials, equipment) must be bought to produce outputs that:

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

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

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

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

See also

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

References

• Karl Marx, Capital Volume 1, Chapter 1.

• Karl Marx, Notes on Adolph Wagner's ?Lehrbuch der politischen Ökonomie? (Second Edition), Volume I, 1897

• Hans Ehrbar, Annotations to Marx's value page at the end of [[Grundrisse

• Roman Rosdolsky, The Making of Marx's 'Capital' (London: Pluto Press, 1977).

• Isaac I. Rubin, Essays in Marx's Theory of Value (Detroit: Red & Black, 1972), chapter 17: "Value and social need"

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

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

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