He declares it necessary to look for another measure of value than precious metals. That measure is labor. “By labor may the value of silver be measured as well as other things. As, suppose one man employed to raise corn, while another is digging and refining silver; at the year’s end, or at any other period of time, the complete produce of corn, and that of silver, are the natural price of each other; and if one be twenty bushels, and the other twenty ounces, then an ounce of that silver is worth the labor of raising a bushel of that corn. Now if by the discovery of some nearer, more easy or plentiful mines, a man may get forty ounces of silver as easily as formerly he did twenty, and the same labor is still required to raise twenty bushels of corn, then two ounces of silver will be worth no more than the same labor of raising one bushel of corn, and that bushel of corn will be as cheap at two ounces, as it was before at one, ceteris paribus. Thus the riches of a country are to be valued by the quantity of labor its inhabitants are able to purchase.”[23] Thus Franklin regards labor-time from the one-sided economic point of view, as the measure of value. The transformation of actual products into exchange values is self-evident with him and the only question is as to finding a quantitative measure of value. “Trade,” says he, “in general being nothing else but the exchange of labour for labour, the value of all things is, as I have said before, most justly measured by labour.”[24] Substitute the word “work” for “labor” in the above statement, and the confusion of labor in one form and labor in another form becomes at once apparent. Since trade consists e. g. in the exchange of the respective labors of the shoemaker, miner, spinner, painter, etc., does it follow that the value of shoes is most justly measured by the work of a painter? On the contrary, Franklin meant that the value of shoes, mining products, yarn, paintings, etc., is determined by abstract labor which possesses no particular qualities and can, therefore, be measured only quantitatively.[25] But since he does not develop the idea that labor contained in exchange value is abstract universal labor which assumes the form of social labor as a result of the universal alienation of the products of individual labor, he necessarily fails to recognize in money the direct embodiment of this alienated labor. For that reason he sees no inner connection between money and labor which creates exchange value, and considers money merely as an instrument introduced from outside into the sphere of exchange for purposes of technical convenience.[26] Franklin’s analysis of exchange value did not exert any direct influence on the general trend of science, because he discussed only special questions of political economy whenever there was a definite practical occasion for it.
The contrast between useful work and labor which creates exchange value agitated all Europe during the eighteenth century in the form of this question: what particular kind of labor constitutes the source of bourgeois wealth? It was thus assumed that not every kind of labor which is realized in use-values or yields certain products does thereby directly create wealth. With the physiocrats, however, as well as with their opponents, the burning question was not, what kind of labor creates value, but which is it that creates surplus value. They approached the problem in its complicated form before they had solved it in its elementary form; such is the historical course of all sciences leading them by a labyrinth of intersecting paths to the real starting points. Unlike other builders, science not only erects castles in the air, but constructs separate stories of the building, before it has laid the foundation. Without dwelling any longer on the physiocrats and omitting quite a number of Italian economists who in some more or less ingenious ideas came close to a correct analysis of the nature of commodity,[27] we pass at once to the first Briton who elaborated the general system of bourgeois economics, Sir James Steuart.[28] His idea of exchange value as well as all the abstract categories of political economy still seem to be with him in the process of differentiation from the material elements they represent and therefore appear quite vague and unsettled. In one place he determines real value by labor-time (“what a workman can perform in a day”), but immediately creates confusion by introducing the elements of wages and raw material.[29] In another place his struggle with the material substance of the subject he treats of is revealed even more strikingly. He calls the material of nature contained in a commodity, such as the silver in a silver plate, its “intrinsic worth,” while the labor-time contained in it he calls “useful value.” The former, he says “is ... something real in itself,” while “the value of the second must be estimated according to the labour it has cost to produce it.... The labour employed in the modification [of the substance] represents a portion of a man’s time.”[30]
What distinguishes Steuart from his predecessors and followers is his keen differentiation between specifically social labor which is represented in exchange value, and concrete labor which produces use-values. Labor, he says, which through its alienation creates a universal equivalent, I call industry. Labor as industry he distinguishes not only from concrete labor, but from all other social forms of labor.[31] It is to him the capitalistic form of labor in contrast to its antique and mediaeval forms. He is especially interested in the difference between capitalistic and feudal labor, of which he had observed the latter in its decaying forms both in Scotland and on his extensive travels over the continent. Steuart knew, of course, very well that products took on the form of commodities and commodities, the form of money in pre-capitalistic epochs as well; but he proves conclusively that it is only in the capitalistic period of production that the commodity becomes the elementary and fundamental form of wealth, and alienation [of commodities], the ruling form of acquisition and that consequently labor creating exchange value is specifically capitalistic in its character.[32]
After different forms of concrete labor, such as agriculture, manufacture, navigation, trade, etc., had each in turn been declared the true source of wealth, Adam Smith proclaimed labor in general, and namely in its general social form of division of labor, to be the only source of material wealth or use-values. While ignoring in connection with the latter the part played by nature, he is troubled by it when he comes to deal with purely social wealth i. e. exchange value. To be sure, Adam determines the value of a commodity by the labor-time contained in it, but relegates the actual application of the principle to pre-Adamic times. In other words, what seems to him true from the standpoint of simple commodity, ceases to be clear as soon as the higher and more complex forms of capital, wage-labor, rent, etc. take its place. This he expresses by saying, that the value of commodities used to be measured by labor-time in the paradise lost of bourgeois society, in which men dealt with each other not as capitalists, wage-workers, landlords, tenants, usurers, etc., but merely as plain producers of commodities which they exchanged. He constantly confuses the determination of the value of commodities by the labor-time contained in them with the determination of their value by the value of labor. He becomes confused in working out the details and fails to see the objective equalization of different kinds of labor which the social process forcibly carries out, mistaking it for the subjective equality of the labors of individuals.[33] The transition from concrete labor to labor creating exchange value, i. e. to labor in its fundamental capitalistic form he tries to derive from the division of labor. Yet, while it is true that private exchange implies the division of labor, it is false to maintain that division of labor implies private exchange. Among the Peruvians, e. g., labor was divided to an extraordinary extent, although there was no private exchange, no exchange of products, as commodities.
Contrary to Adam Smith, David Ricardo elaborated with great clearness the determination of the value of a commodity by labor-time and showed that this law governs also such relations of capitalistic production which seem to contradict it most. Ricardo confines his investigations exclusively to the quantitative determination of value and as regards the latter he is at least conscious of the fact that the realization of the law depends upon certain historical conditions. He says, namely, that the determination of value by labor-time holds good for commodities “only as can be increased in quantity by the exertion of human industry, and on the production of which competition operates without restraint.”[34] What he really means is that the law of value presupposes for its full development an industrial society in which production is carried on a large scale and free competition prevails, i. e. the modern capitalist society. In all other respects, Ricardo considers the capitalist form of labor as the eternal natural form of social labor. He makes the primitive fisherman and the primitive hunter straightway exchange their fish and game as owners of commodities, in proportion to the labor-time embodied in these exchange values. On this occasion he commits the anachronism of making the primitive fisherman and primitive hunter consult the annuity tables in current use on the London Exchange in the year 1817 in the calculation relating to their instruments. The “parallelograms of Mr. Owen” seem to be the only form of society outside of the bourgeois form with which he was acquainted. Although confined within this bourgeois horizon, Ricardo analyzes the bourgeois economy—which looks quite different to deeper insight than it does on the surface—with such keen power of theoretical penetration that Lord Brougham could say of him: “Mr. Ricardo seemed as if he had dropped from another planet.”
In a direct controversy with Ricardo, Sismondi lays stress upon the specifically social character of labor which creates exchange value,[35] and says it is “characteristic of our economic progress” to reduce the magnitude of value to the necessary labor-time, to the relation between the demand of society as a whole and the quantity of labor which is sufficient to satisfy this demand.[36] Sismondi is no more laboring under Boisguillebert’s idea, that labor which creates exchange value is adulterated by money; but just as Boisguillebert denounced money, so does Sismondi denounce large industrial capital. In Ricardo political economy reached its climax, after recklessly drawing its ultimate conclusions, while Sismondi supplemented it by impersonating its doubts.
Since Ricardo gave to classical political economy its final shape, having formulated and elaborated with the greatest clearness the law of the determination of exchange value by labor-time, it is natural that all the polemics among economists should center about him. Stripped of its puerile[37] form this controversy comes down to the following points:
First: Labor itself has exchange value, and different kinds of labor have different exchange values. We get into a vicious circle by making exchange value the measure of exchange value, because the measuring exchange value needs a measure itself. This objection may be reduced to the following problem: Given labor-time as the intrinsic measure of exchange value, develop from that the determination of wages. The theory of wages gives the answer to that.
Second: If the exchange value of a product is equal to the labor-time contained in it, then the exchange value of one day of labor is equal to the product of that labor. In other words, wages must be equal to the product of labor.[38] But the very opposite is actually the case. Ergo. this objection comes down to the following problem: How does production, based on the determination of exchange value by labor-time only, lead to the result that the exchange value of labor is less than the exchange value of its product? This problem is solved by us in the discussion of capital.