Your pay envelope

by John Richard Meader

Marx separated value into two classes: value in use and value in exchange. “Use-value” means the value that an article has in satisfying some human need. “Exchange value” means the value that an article has when we come to exchange it for something else—for money or for other articles. Thus, an article may be very valuable for use and still have no value in exchange. For example, both water and air are necessary to human life and so are very useful, yet, should we desire to exchange them for clothes or fuel, we should find it a difficult matter to make such a bargain, simply because water and air are usually free to all.

Articles that have exchange value are those for which men are willing to give something “in exchange,” but as the articles we can’t sell are frequently just as useful as those for which we can get a price in the market, Marx argued that there must be something in one that the other does not contain—some one factor upon which exchange-value depends—and he decided that this common element is human labor (“Capital,” p. 4).

Was Marx right in this assumption? Is it “labor that makes value”?

When you go to the store to buy an article, you do not ask what it cost the manufacturer to produce it, do you? You don’t care whether the man who made this article has profited by its manufacture or not. It doesn’t occur to you to ask how many hours of labor were put into it, or how much the workers who made it were paid. The question uppermost in your mind is: “How badly do I want it?” If you want it so badly that you would rather own it than spend the same amount of money for something else, you purchase it and take it away with you. If you prefer to spend the money in other ways, you go away without buying this article.

Now, what is the principle that influences you to make this decision? It is what this article is worth to you for your own use, is it not?

Has labor anything to do in making you form this decision? Neither capital nor labor has anything to do with the question. If the article has cost the manufacturer ten times as much as you are asked to pay for it, if ten times as much labor had been expended in making it, you wouldn’t give one penny more than it is worth to you for its use, would you?

Let us take another illustration:

Marx points out that labor—and he measures the value of labor by the time necessary to perform a given piece of work—is the sole source of exchange-value. As a result, Socialists propose to substitute what they call labor certificates for our present system of money, so that a man who spends four hours making cigars can buy with his labor certificates anything that represents a proportionate amount of labor.

Would this be a fair basis of exchange?

Would it be fair if a man working four hours in making cigars were to exchange the product of his labor for the gold or the diamonds that it had taken some other man four hours to extract from the earth? And is there no difference in the value of a silk dress and a cotton dress, if both kinds of cloth take the same time and skill in the making? Would it be fair to figure the value of any article on the amount of labor-time expended in producing it? There are mines in which gold is produced at a cost of less than $5 an ounce, and there are other mines where it costs so much to extract the gold that there is no profit in mining it. Is anybody so silly as to believe that the labor-time spent in one mine is as productive of value as the time expended in the other?