Use value (german: Gebrauchswert) or value in use is a concept in classical political economy and
Marxist economics
Marxian economics, or the Marxian school of economics, is a heterodox school of political economic thought. Its foundations can be traced back to Karl Marx's critique of political economy. However, unlike critics of political economy, Marxian e ...
. It refers to the tangible features of a commodity (a tradeable object) which can satisfy some human requirement, want or need, or which serves a useful purpose. In
Karl Marx
Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
's critique of
political economy
Political economy is the study of how Macroeconomics, economic systems (e.g. Marketplace, markets and Economy, national economies) and Politics, political systems (e.g. law, Institution, institutions, government) are linked. Widely studied ph ...
, any product has a labor-value and a use-value, and if it is traded as a
commodity
In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.
The price of a comm ...
in markets, it additionally has an
exchange value
In political economy and especially Marxian economics, exchange value (German: ''Tauschwert'') refers to one of the four major attributes of a commodity, i.e., an item or service produced for, and sold on the market, the other three attributes be ...
, most often expressed as a money-
price
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the c ...
.
Marx acknowledges that commodities being traded also have a ''general utility'', implied by the fact that people want them, but he argues that this by itself says nothing about the specific character of the economy in which they are produced and sold.
Origin of the concept
The concepts of value, use value, utility, exchange value and price have a very long history in economic and philosophical thought. From
Aristotle
Aristotle (; grc-gre, Ἀριστοτέλης ''Aristotélēs'', ; 384–322 BC) was a Greek philosopher and polymath during the Classical period in Ancient Greece. Taught by Plato, he was the founder of the Peripatetic school of phil ...
to
Adam Smith
Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
and
David Ricardo
David Ricardo (18 April 1772 – 11 September 1823) was a British Political economy, political economist. He was one of the most influential of the Classical economics, classical economists along with Thomas Robert Malthus, Thomas Malthus, Ad ...
, their meanings have evolved. Smith recognized that commodities may have an exchange-value but may satisfy no use-value, such as diamonds, while a commodity with a very high use-value may have a very low exchange-value, such as water. 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.
In ''The
Economic and Philosophic Manuscripts of 1844
The ''Economic and Philosophic Manuscripts of 1844'' (german: Ökonomisch-philosophische Manuskripte aus dem Jahre 1844), also referred to as the ''Paris Manuscripts'' (') or as the ''1844 Manuscripts'', are a series of notes written between Apri ...
'', Marx emphasizes that the use-value of a labour-product is practical and objectively determined; that is, it inheres in the intrinsic characteristics of a product that enable it to satisfy a
human need
A need is dissatisfaction at a point of time and in a given context. Needs are distinguished from wants. In the case of a need, a deficiency causes a clear adverse outcome: a dysfunction or death. In other words, a need is something required for a ...
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
Social organisms, including human(s), live collectively in interacting populations. This interaction is considered social whether they are aware of it or not, and whether the exchange is voluntary or not.
Etymology
The word "social" derives from ...
use-value, meaning that it has a generally accepted use-value for others in society, and not just for the producer.
Marx's definition
Marx first defines use-value precisely in ''A Contribution to the Critique of Political Economy'' (1859) where he explains:
The concept is also introduced at the beginning of ''
Das Kapital
''Das Kapital'', also known as ''Capital: A Critique of Political Economy'' or sometimes simply ''Capital'' (german: Das Kapital. Kritik der politischen Ökonomie, link=no, ; 1867–1883), is a foundational theoretical text in Historical mater ...
,'' where Marx writes, but in the extract below he holds it up as a critique of Hegel's liberal "Philosophy of Right". He remained a sharp critic of what was to the Marxian view a destructive philosophy:
This was a direct reference by Marx to Hegel's ''
Elements of the Philosophy of Right
''Elements of the Philosophy of Right'' (german: Grundlinien der Philosophie des Rechts) is a work by Georg Wilhelm Friedrich Hegel published in 1820, though the book's original title page dates it to 1821. Hegel's most mature statement of his ...
'
§63as Marx adds:
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, as correctly noted later by Engels that a product is not necessarily a commodity. However Marx generally holds that only human labour expended can create value compared with Nature, through instrumentation known as modus operandi, or the method of working.
Transformation into a commodity
"As exchange-values, all commodities are merely definite quantities of congealed labour-time", wrote Karl Marx. The discrepancy of the true purpose of value came to be one of the biggest sources of conflict between capital and labour. The transformation of a use-value into a social use-value and into a
commodity
In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.
The price of a comm ...
(the process of
commodification
Within a capitalist economic system, commodification is the transformation of things such as goods, services, ideas, nature, personal information, people or animals into objects of trade or commodities.For animals"United Nations Commodity Trad ...
) 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 organization 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
Information is an abstract concept that refers to that which has the power to inform. At the most fundamental level information pertains to the interpretation of that which may be sensed. Any natural process that is not completely random ...
or
communication
Communication (from la, communicare, meaning "to share" or "to be in relation with") is usually defined as the transmission of information. The term may also refer to the message communicated through such transmissions or the field of inquir ...
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 chain
In commerce, a supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products to customers through a distribution system. It refers to the network of organizations, people, acti ...
s). 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
One classical breakdown of economic activity distinguishes three sectors:
* Primary: involves the retrieval and production of raw-material commodities, such as corn, coal, wood or iron. Miners, farmers and fishermen are all workers in the ...
according to their specific type of output. Following
Quesnay's analysis of economic
reproduction
Reproduction (or procreation or breeding) is the biological process by which new individual organisms – "offspring" – are produced from their "parent" or parents. Reproduction is a fundamental feature of all known life; each individual or ...
, Marx distinguished between the economic sector producing means of production and the sectors producing consumer goods and luxuries. In modern
national accounts
National accounts or national account systems (NAS) are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry ...
more subtle distinctions are made, for example between primary, secondary and tertiary production, semi-durable and durable goods, and so on.
Role in political economy
In his textbook ''The Theory of Capitalist Development'' (1942), American Marxist
Paul Sweezy
Paul Marlor Sweezy (April 10, 1910 – February 27, 2004) was a Marxist economist, political activist, publisher, and founding editor of the long-running magazine ''Monthly Review''. He is best remembered for his contributions to economic theory ...
claimed:
Marx explicitly rejected Sweezy and Uno's interpretation of use-value (see the previously cited quotation from 1859, in which use-value is distinguished from the general concept of utility). In a draft included in the
Grundrisse
The ''Grundrisse der Kritik der Politischen Ökonomie'' (''Foundations of a Critique of Political Economy'') is an unfinished manuscript by the German philosopher Karl Marx. The series of seven notebooks was rough-drafted by Marx, chiefly for ...
manuscripts, which inspired the starting point of ''
A Contribution to the Critique of Political Economy
''A Contribution to the Critique of Political Economy'' (german: Zur Kritik der Politischen Ökonomie) is a book by Karl Marx, first published in 1859. The book is mainly a critique of political economy achieved by critiquing the writings of the ...
'' and ''Das Kapital'', Marx states:
In his tex
''The Making of Marx's 'Capital Roman Rosdolsky
Roman Osipovich Rosdolsky ( uk, Рома́н О́сипович Роздо́льський ''Roman Osipovič Rozdol's'kyj'') (Lemberg, July 19, 1898 – Detroit, October 20, 1967) was a prominent Ukrainian Marxian scholar, historian and politica ...
explains the role of use value in Marx's economics. Marx himself, in the introduction to his ''Grundrisse'' manuscript, had defined the economic sphere as the ''totality'' of production, circulation, distribution ''and consumption''. However, as Marx did not live to finish ''Das Kapital'', he did not theorise how commercial relations would reshape the sphere of personal consumption in accordance with the requirements of
capital accumulation
Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form o ...
.
Minor issues remained from these neoclassical theories, such as the question of the proper empirical definition of capital and labour in the laws of
factor substitution
Factor, a Latin word meaning "who/which acts", may refer to:
Commerce
* Factor (agent), a person who acts for, notably a mercantile and colonial agent
* Factor (Scotland), a person or firm managing a Scottish estate
* Factors of production, suc ...
. Other empirical issues include the so-called
Solow Residual The Solow residual is a number describing empirical productivity growth in an economy from year to year and decade to decade. Robert Solow, the Nobel Memorial Prize in Economic Sciences-winning economist, defined rising productivity as rising output ...
in which the heterogenous nature of labour is thoroughly explored for its qualitative elements beyond differentiation, and the concept of total factor productivity, prompting some to consider such things as technology, human capital, and stock of knowledge. Later scholars, such as
Walter Benjamin
Walter Bendix Schönflies Benjamin (; ; 15 July 1892 – 26 September 1940) was a German Jewish philosopher, cultural critic and essayist.
An eclectic thinker, combining elements of German idealism, Romanticism, Western Marxism, and Jewish mys ...
,
Fernand Braudel
Fernand Braudel (; 24 August 1902 – 27 November 1985) was a French historian and leader of the Annales School. His scholarship focused on three main projects: ''The Mediterranean'' (1923–49, then 1949–66), ''Civilization and Capitalism'' ...
,
Ben Fine
Ben Fine (born 1948) is Professor of Economics at the University of London's School of Oriental and African Studies.
Background
Fine was born in Coventry in 1948. One of six brothers, he and all but one other followed their father and studied m ...
,
Manuel Castells
Manuel Castells Oliván (; ; born 9 February 1942) is a Spanish sociology, sociologist. He is well known for his authorship of a trilogy of works, entitled The Information Age: Economy, Society and Culture. He is a scholar of the information soc ...
and
Michel Aglietta
Michel Aglietta (born 1938) is a French economist, currently Professor of Economics at the University of Paris X: Nanterre.
Michel Aglietta is a scientific counsellor at CEPII, a member of the University Institute of France, and a consultant ...
attempted to fill the gap in Marx's unfinished work. In modern times the theory has been extended to conclude that conversion of energy-driven work does not rely on labour-intensive inputs; thus use can be unsupervised work that develops a notion of human capital.
''Equation: A = P + hL''
(A, the Concept of Substitutive Work = P, the loss of Primary Productive Energy (which is P/Ep, the coefficient of efficiency) + h, the units of energy (which is the energy consumed by workers during work done) * L, Labour time per hour)
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
Market is a term used to describe concepts such as:
*Market (economics), system in which parties engage in transactions according to supply and demand
*Market economy
*Marketplace, a physical marketplace or public market
Geography
*Märket, an ...
have a use-value to the buyer, without attempting to quantify that use-value other than in product units of price, and commodity value. (this caused some of his readers to think wrongly that use-value played no role in his theory). "The utility makes it a use value," The
neoclassicals, on the other hand, typically see prices as the quantitative expression of the general utility of products for buyers and sellers, instead of expressing their
exchange-value
In political economy and especially Marxian economics, exchange value (German: ''Tauschwert'') refers to one of the four major attributes of a commodity, i.e., an item or service produced for, and sold on the market, the other three attributes be ...
. For "Price is the money-name of the labour realised in a commodity".
* In neoclassical economics, this utility is ultimately subjectively determined by the buyer of a good, and not objectively by the intrinsic characteristics of the good. Thus, neoclassical economists often talk about the
marginal utility
In economics, utility is the satisfaction or benefit derived by consuming a product. The marginal utility of a Goods (economics), good or Service (economics), service describes how much pleasure or satisfaction is gained by consumers as a result o ...
of a product, i.e., how its utility fluctuates according to consumption patterns. This kind of utility is a "general utility" which exists independently from particular uses that can be made of a product, the assumption being that if somebody wants, demands, desires or needs a good, then it has this general utility. According to his supporters Marx would have allegedly rejected the concept of marginal utility precisely because it accentuated profit on capital returns over the usefulness or utility of labour. Thus the wider application of general utility lay in variable rates of productivity, since higher labour inputs could raise or lower the price of commodity. This was the true concept of Use as a Value system: the higher the rate of 'productiveness' the more labour 'crystallised' in the article.
* Marx rejects any economic doctrine of
consumer sovereignty
Consumer sovereignty is the economic concept that the consumer has some controlling power over goods that are produced, and the idea that the consumer is the best judge of their own welfare.
''Consumer sovereignty in production'' is the controlli ...
, stating among other things in his first chapter to ''Das Kapital'' that "In bourgeois societies the economic ''fictio juris'' prevails, that every one, as a buyer, possesses an encyclopaedic knowledge of commodities".
In summary, different concepts of use value lead to different interpretations and explanations of
trade
Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.
An early form of trade, barter, saw the direct excha ...
,
commerce
Commerce is the large-scale organized system of activities, functions, procedures and institutions directly and indirectly related to the exchange (buying and selling) of goods and services among two or more parties within local, regional, nation ...
and
capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
. Marx's main argument is that if we focus only on the general utility of a commodity, we abstract from and ignore precisely the specific social
relations of production
Relations of production (german: Produktionsverhältnisse, links=no) is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism and in ''Das Kapital''. It is first explicitly used in Marx's publish ...
which created it.
"Indifference" of capitalists
Some academics such as Professor
Robert Albritton
The name Robert is an ancient Germanic given name, from Proto-Germanic "fame" and "bright" (''Hrōþiberhtaz''). Compare Old Dutch ''Robrecht'' and Old High German ''Hrodebert'' (a compound of '' Hruod'' ( non, Hróðr) "fame, glory, honou ...
, a Canadian political scientist, have claimed that according to Marx, 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.
But this is arguably a misunderstanding of business activity and the
bourgeoisie
The bourgeoisie ( , ) is a social class, equivalent to the middle or upper middle class. They are distinguished from, and traditionally contrasted with, the proletariat by their affluence, and their great cultural and financial capital. They ...
as a class. Marx thought that capitalists can never be totally "indifferent" to use-values, because inputs of sufficient quality (labour, materials, equipment) must be bought and managed to produce outputs that:
* will sell at an adequate profit;
* are legally permitted by the
state
State may refer to:
Arts, entertainment, and media Literature
* ''State Magazine'', a monthly magazine published by the U.S. Department of State
* ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, United States
* ''Our S ...
to be sold;
* do not destroy the reputation of the supplier (with its obvious effect on sales).
For this purpose, the
inputs in production must moreover be used in an economical way, and care must be taken not to waste resources to the extent that this would mean additional costs for an enterprise, or reduce productivity. The Theory of Use Values relates directly to human labour and the power of machines to destroy value, "Living labour must seize on these things, awaken them from the dead, change them from merely possible into real and effective use values".
[Karl Marx, Das Kapital, vol.1, pp.45, 289.]
It is just that from the point of view of the financier or investor, the main concern is not what exactly is being produced as such or how useful that is for society, but whether the investment can make a profit for him. If the products of the enterprise being invested in sell and make a profit, then that is regarded as sufficient indication of usefulness. Even so, the investor is obviously interested in "the state of the market" for the enterprise's products—if certain products are being used less or used more, this affects sales and profits. So to evaluate "the state of the market", the investor needs knowledge about the place of a product in the
value chain
A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., good and/or service) to the end customer. The concept comes through business management and was firs ...
and how it is being used.
Often, Marx assumed in ''Das Kapital'' for argument's sake that supply and demand will balance, and that products do sell. Even so, Marx carefully defines the production process both as a
labour
Labour or labor may refer to:
* Childbirth, the delivery of a baby
* Labour (human activity), or work
** Manual labour, physical work
** Wage labour, a socioeconomic relationship between a worker and an employer
** Organized labour and the labour ...
process creating use-values, and a
valorisation
In Marxism, the valorisation or valorization of capital is the increase in the value of capital assets through the application of value-forming labour in production. The German original term is "''Verwertung''" (specifically ''Kapitalverwertung'') ...
process creating new value. He asserts only that "capital in general" as an abstract social power, or as a property claim to
surplus value
In Marxian economics, surplus value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cost ...
, 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 actually satisfies customers, they want an adequate profit on their investment (but a countertrend is so-called "
socially responsible investing
Socially responsible investing (SRI), social investment, sustainable socially conscious, "green" or ethical investing, is any investment strategy which seeks to consider both financial return and social/environmental good to bring about social ...
").
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 their creative potential and how they relate to others) in the battle for improved quality. In that case, it could be argued not just
labour power
Labour power (in german: Arbeitskraft; in french: force de travail) is a key concept used by Karl Marx in his critique of capitalist political economy. Marx distinguished between the capacity to do work, labour power, from the physical act of w ...
but the whole person is a use-value (see further
Richard Sennett
Richard Sennett (born 1 January 1943) is the Centennial Professor of Sociology at the London School of Economics and former University Professor of the Humanities at New York University. He is currently a Senior Fellow of the Center on Capitalis ...
's books such as ''
The Culture of the New Capitalism'', Yale (2006). Some regard this practice as a kind of "
wage-slavery
Wage slavery or slave wages refers to a person's dependence on wages (or a salary) for their livelihood, especially when wages are low, treatment and conditions are poor, and there are few chances of upward mobility.
The term is often used ...
".
From beginning to end, and from production to consumption, use-value and exchange-value form a
dialectical unity
Dialectic ( grc-gre, διαλεκτική, ''dialektikḗ''; related to dialogue; german: Dialektik), also known as the dialectical method, is a discourse between two or more people holding different Opinion, points of view about a subject but wi ...
. If this is not fully clear from Marx's writings, that is perhaps mainly because he never theorised the sphere of final
consumption
Consumption may refer to:
*Resource consumption
*Tuberculosis, an infectious disease, historically
* Consumption (ecology), receipt of energy by consuming other organisms
* Consumption (economics), the purchasing of newly produced goods for curren ...
in any detail, nor the way in which
commerce
Commerce is the large-scale organized system of activities, functions, procedures and institutions directly and indirectly related to the exchange (buying and selling) of goods and services among two or more parties within local, regional, nation ...
reshapes the way that final consumption takes place.
See also
*
Labor theory of value
The labor theory of value (LTV) is a theory of value that argues that the economic value of a good or service is determined by the total amount of " socially necessary labor" required to produce it.
The LTV is usually associated with Marxian e ...
*
Productivity
Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
*
Theory of value
*
Value-form
The value-form or form of value (german: Wertform) is a concept in Karl Marx's critique of political economy. Marx's account of the value-form is differently adopted in later forms of Marxism, in the Frankfurt School and in post-Marxism. When so ...
Notes
References
Bibliography
* Karl Marx, Capital, (1867) I, II & III, Progress Publishers, Moscow, 85,94.
* Karl Marx, Theories of Surplus Value, (1861) Parts I, II and III, Progress Press, Moscow.
* Karl Marx, Economic And Philosophic Manuscripts of 1844, (1845) International Publishers, New York.
* Karl Marx, (1859.) A Contribution to the Critique of Political Economy, Progress Publishers, Moscow.
* Karl Marx, (1857.) Grundrisse, Penguin, Middlesex.
*
*
Isaac I. Rubin, Essays in Marx's Theory of Value (Detroit: Red & Black, 1972), chapter 17:
Value and social need
*
*
*
*
* Marx-Engels-Lenin Institute, (Ed). (1951), 62. Karl Marx And Friedrich Engels: Selected Works, I& II, Foreign Languages Publishing House, Moscow.
* Mclennan, D. (1971.) Karl Marx: Early Texts, Basil Blackwell, Oxford.
* Meek, R.L. (1973.) Studies in the Labor Theory of Value, 2nd Edition, Lawrence & Wishart, London.
External links
* Karl Marx
* Karl Marx
1881
* Hans Ehrbar
Annotations to Marx's value page at the end of
Grundrisse
The ''Grundrisse der Kritik der Politischen Ökonomie'' (''Foundations of a Critique of Political Economy'') is an unfinished manuscript by the German philosopher Karl Marx. The series of seven notebooks was rough-drafted by Marx, chiefly for ...
{{DEFAULTSORT:Use Value
Classical economics
Marxian economics
Theory of value (economics)
Utility