In a recent television spot the economist, Mariana Mazzucato briefly touched on something which whilst hugely important is often left out of the public debate on economics. Whilst, unfortunately, she was unable to create the space to expound on it fully at 31:00 the following exchange takes place
Jo Coburn: What don’t we value enough?
Mariana Mazzucato: Well, first of all, we confuse price with value, it used to be that there were big debates about value and that turned into the theory of price, we only put into GDP things that have a price, if you marry your cleaner GDP will go down, if you pollute GDP will go up (laughing) I’ll let your viewers consider that one. The real question is, as I said before when we have a financial sector that basically just finances itself so in finance, insurance and real estate only ten per cent actually finds its way into the real economy, into the industry so you know that’s what we should be talking about in this country. When you have a corporate governance structure which has been spending more on corporate governance structures on share buybacks and dividend payouts rather than reinvesting back into the workforce and investing back into R&D you don’t get that kind of long-run growth and as also I mentioned before we have consumption lead growth where that consumption has been fueled by private debt so the level of private debt is at record levels compared to disposable income that’s what caused the financial crisis even though we obsessed about public debt so if you do have a general election that’s what we should be talking about and surprise surprise that has nothing to do with the European Union
This differentiation and how it plays out in policy is crucial for understanding certain assumptions made by within economic debates regarding how exactly we get to price from value, how value is derived and how, quite often the social relations which are a key part of building an understanding of value, which is briefly riffed on by Mazzucato, are often omitted from these debates.
In order to further delve into this, I’ll be touching on a recent paper by Mark Worrell called A Faint Rattling which as well as functioning as a critique of David Harvey’s reading of Capital explores this question in detail. Mark Worrell’s 2016 essay A Faint Rattling revisits the question of value, this time as it’s described by David Harvey in his 2008 lectures located on his website. Described as a close reading of Marx’s Capital Harvey makes an interesting observation early on which Worrell takes issue with.
Three fundamental concepts: use-value, exchange-value, and value. Value is what is passed on in the process of commodity exchange. It’s the hidden element in a commodity that makes all commodities, in principle, exchangeable with each other … Values are represented, now, by exchange-value … Exchange-value is a representation of value…
Harvey’s three form schematic breaks down value in the following way:
- exchange-value (which in Harvey’s reading is commensurate with price)
Meanwhile, Marx breaks down value in the following way:
- exchange value/value
This distinction is particularly important because much of Capital is devoted to understanding how exactly exchange-value is transformed into the market prices (or as it’s often called the transformation problem) but what’s key here, at least at first, is that value, at least by Marx’s definition, is not synonymous with price. Additionally for Marx value makes its appearance in the exchange-relation itself. That is to say, it’s largely determined by the participants involved in the exchange which differs somewhat from claims that a particular commodity has an intrinsic value. Harvey’s reading has a similar outlook to the latter with the idea that there is a value that exists outside of the exchange relation. As Worrell’s goes onto explain this poses a problem, value in Harvey’s schematic appears to exists both inside and outside the exchange relation.
Zizek attempts to resolve this contradiction by use of a sort of Kantian metaphysics
Value is created in the production process; however, it is, as it were, created there only potentially, since it is only actualized as value when the produced commodity is sold and the circle ‘M-C-M’ is thus completed. Crucial is this temporal gap between the production of value and its actualization: even if value is produced in production, without the successful completion of the process of circulation, there is strict sense no value – the temporality is here that of the future antérieur, in other words, value ‘is’ not immediately, it only ‘will have been’, it is retroactively actualized, performatively enacted. In production, value is generated ‘in itself’, while only through the completed circulation process does it become ‘for itself’. This is how Kojin Karatani resolves the Kantian [emphasis added] antinomy of value which is and is not generated in the process of production: it is generated there only ‘in itself’. (2008: 372–3).
So rather than a determinate value added during the production process, we have instead a kind of temporal potentiality a value in itself only fully actualized in the form of a commodity however this still leaves the question of a value that persists following the moment of exchange. Worrell then goes on to analyze the work of Webber and Rigby where they finalize their theory of the commodity as:
Commodities then are those things that store objective value: value is a property of some kinds of commodities. A commodity is a thing that stores objective value
Peculiarly rather than any kind of potentialized value as seen in Zizek’s formulation we have the idea put forth that some commodities inherently have value. Worrell then sets out his claim
In short, they tip their hand that value is, from this perspective, a reified substance rather than what it is in truth, a purely moral substance that is relationally constituted within the exchange system.
With this, the commodity does not have value in itself rather as described by Marx it is the exchange relation that confers upon a commodity the social quality of value. Any claim therefore to the objectivity of value in this framework then is a claim to value existing as a thing in the abstract as a thing of thought. Marx clarifies this later on
When at the beginning of this chapter, we said in the customary manner that a commodity is both and use-value and an exchange-value, this was, strictly speaking, wrong. A commodity is a use-value or object of utility, and a ‘value’. It appears as the twofold thing it really is as soon as its value possesses its own particular form of manifestation, which is distinct from its natural form. This form of manifestation is exchange-value, and the commodity never has this form when looked at in isolation, but only when it is in a value relation or an exchange relation with a second commodity of a different kind. Once we know this, our manner of speaking does no harm; it serves, rather, as an abbreviation
Which Worrell refers to as a contradictory schematic a commodity as a utility, value and finally the expression of that value, the price. What is also important to mention here is that value is still somewhat relationally constituted rather than, as an adherent of the subjective theory of value might suggest, entirely created by subjective evaluation, this is due to the fact within these evaluations is social content. For example, if we look at early Babylon, a mina of silver was divided into sixty shekels which corresponded to one gur of barley, which was then divided into sixty kur. Each kur was a half-day ration of food given to workers so one gur could then be said to represent a monthly ration. The prices in other words directly corresponded to the lived intentionality of workers and specifically commodity producers. Marx had a similar realization, a commodity for Marx revealed it’s moral status as a value in exchange for another commodity and we confront this value through the empty signifier of price.
There’s perhaps a more controversial statement further in the piece, value, as argued by Worrell is not created in the labour process. Rather value is abstract labour, that is to say labour in general rather than specific processes, measured in its socially necessary quantities or rather how much time is required to produce a specific commodity. This can change if production is organized around exchange rather than use, that is to say, if we produce items that have no use-value in themselves. In such a case value is added by the imagination however this again does not confer onto the commodity value, this only occurs during the moment of exchange but again this exchange is undergirded by social relations.
So we’re left with three main perspectives on value
- Realist perspectives where things are exchanged because they have an inherent value.
- Nominalist value where things are exchanged due entirely to individual subjectivity.
- Sociological realism where things have value only by virtue of the exchange relations, social content and varying dynamic processes.
or as Worrell puts it things are exchanged not because they have value but they have value because they are exchanged.
This is important because in the aforementioned nominalist critique we can see that the mystification and omission of underlying social and economic relations is quite often the obstacle of forming a substantive critique.
https://youtu.be/k1bux-QthpI [Mariana Mazzucato on Newsnight]
http://web.cortland.edu/worrellm/Papers_files/A%20Faint%20Rattling.pdf [A Faint Rattling]