Hobgoblin Journal


Labour and Value: from the Greek Polis to Globalized State-Capitalism

By David Black

A Leftist Aristotle? Nature, Labor and Telos

Alisdair MacIntyre, in Whose Justice? Which Rationality?, says that whereas the Idea of the Good, as represented in Plato’s Republic, was irreconcilable with the realm of the Greek polis, the concept of telos in Aristotle’s philosophy was implicitly embodied and acknowledged within the actual social practices of his time:

“Aristotle understood that movement from human potential to its actualization within the polis as exemplifying the metaphysical and theological character of a perfected universe.”[1]

In Aristotle’s teleology, nature was characterized by “meaning.” Development in nature involved not just causality and mechanical motion but also the potentiality for form in the material itself. Nature, within its own order and hierarchy, was always striving towards the “good.” Just as form and cosmos struggled to overcome boundlessness and chaos, so Aristotle’s polis sought to control the “unlimited desires” of those within its walls and subdue the “untamed nature” of the foreign “barbarians.”

Aristotle advocated a polis in which principles of “excellence” and “justice” would be upheld and imposed by men educated in the required “virtues.” As education was only possible those who were “self-sufficient,” i.e., able to command the labor of others and live a life free of toil, Aristotle advocated that slaves, women, artisans, manual workers, merchants and bankers be excluded from citizenship. But although Aristotle divided society into free men and non-citizens, he recognized a meaningful hierarchy within the ranks of the “excluded.” As Murray Bookchin points out in his Ecology of Freedom, Aristotle, in taking into account the “higher” level of labor, in which the manual and mental are combined, rated the “master craftsman” of “practical intelligence” as superior to the artisan because of his understanding of the “why” as well as the “how” of “good works.” Aristotle also saw such men of practical intelligence as more virtuous than those who desired simply to accumulate wealth.[2]

Jose Perez Adan’s Reformist Anarchism examines the influence of Thomas Aquinas’ “Aristotelianism” on anarchist economics. In the Christianized telos, Aquinas considered production and exchange as subservient to ultimate (divine) ends as well as proximate (earthly) ends. In Aquinas’ “commutative justice,” mercantile exchange of goods was only legitimate in order to make useful and necessary things available for the public good. Like Aristotle, Aquinas saw money as simply the translation of fixed and invariable value into an easy measure of exchange. Usury – generating money out of want without contributing to the creation of value – was considered a sort of ontological disorder, because it implied that money, rather than the labor and moral order, created value. In contrast to the political economists of later times, for whom wages were determined a posteriori by the fluctuating whims of the market, the Mediaeval Scholastics saw wages as representing an “objective value,” upheld by the mediaeval guilds that stabilized prices and ensured the compensation of producers for their toil and costs of replacing the materials used up.[3]

MacIntyre describes an Aristotelian and Calvinist theology in eighteenth century Scotland for which the basic unit of the “good society” was the household of the small-holding farmer – guided from above by definite social, moral and theological principles. Against this tradition, there arose the new “Anglicising liberalism” of David Hume and Adam Smith, for whom the basic unit of society was the acquisitive individual. The liberals saw land, like everything else, as just another commodity; and saw the continued existence of the Scottish peasantry as an obstacle to economic development. After the Civil Wars and the Jacobite rebellions of the seventeenth and eighteenth centuries, the bourgeoisie wanted no more talk about how “higher” principles should govern the “natural” order of society. The time had come to recognize that society had become a mass of competing passions and needs which functioned “naturally” through the market. What was needed was a political and social structure to facilitate trade, protect private property and quell any “lawless” resistance. This structure, Hume claimed, was essentially what had been established by the “Glorious Revolution” led by “Dutch William” in 1688.

Labor and Value

In the political economists’ Labor Theory of Value, the price of a commodity, representing its exchange value, was determined by the toil of making it or the toil saved by having it. In Adam Smith’s development of the theory, the “natural price” of the commodity was what was sufficient to pay “the rent of the land, the wages of the labor, and the profits of the stock employed in raising, preparing, and bringing it to market.” In David Ricardo’s formulation, price = wages + profit. The fact that the source of profit lay in the surplus value obtained in the process of production was for Ricardo too “obvious” to be investigated i.e., it was just a fact of “natural productivity” that the process resulted, at the end of the working day, in a commodity more valuable than the inputted labor-time. In the interpretation of William Godwin, the original “reformist anarchist,” the Labor Theory of Value showed the injustice of a system in which those who labored were impoverished by those who did not labor yet owned the wealth produced by those who did. Godwin went further than Smith and Ricardo’s call to free industry and enterprise from the fetters imposed by old institutions such as church and state. In the Godwinian telos, radical political and moral reforms were urgently needed to dismantle the power of “Old Corruption.” Godwin advocated these measures as “proximate ends” on the way to the “final destination” of the good life for all in a free society.[4]

Malthus led the counter-attack on Godwin’s assertion of the claims of political philosophy against political economy. For Malthus, the most serious obstacle to progress and morality was not old institutions but “human nature,” which stubbornly refused to accept wage-slavery and destitution as “natural.” Malthus predicted that any substantial increase in the population would lead to universal pauperization, and that Poor Law “welfare” would in time consume all public revenue. He supported the protectionist Corn Laws because he saw the prosperous landowners who benefitted from them as providing an ideal market (an “effective demand,” in Keynesian terms) for the output of industry (landowners, unlike workers, being consumers-par-excellence).

Ricardo, whilst accepting Malthus’ theory of population and “welfare,” took the opposite view on the Corn Laws and the empowerment of the landlord class. In early nineteenth-century England, the big land-owners, having long expropriated the peasantry, had brought in the Corn Laws for their own enrichment through their domination of Parliament. Also, since the rich landowners had loaned the government the money to fight the Napoleonic Wars, a massive “National Debt” had accrued, which required the state to extend indirect taxation on manufactured goods in order to pay the interest owed to the landowners. Ricardo, recognizing the potentially dangerous power of the landowning class, predicted that, as more and more land was cultivated to provide food for the ever-growing industrial population, the cost of production on the least productive farms would set the price-norm for the whole of agriculture. The landlord class would profit more and more from the ever-rising price of food and rent for land; and, having suppressed free-trade, might monopolize the wealth of society to such an extent that the industrial capitalists would find themselves so starved of investment that the economy might wind down into a “stationary state.”

According to Marx’s estimation of Ricardo:

'Closely bound up with this scientific merit is the fact that Ricardo exposes and describes the economic contradiction between the classes —as shown by the intrinsic relations — and that consequently political economy perceives, discovers the root of the historical struggle and development.' [5]

Marx argues that although the political economy of Ricardo and his predecessors was “scientific” in its “analytical” method – of proceeding from the phenomenal forms of value to their essence (labor) – it had failed to hold the abstracted essence to account for the concrete forms it assumes in the “real” world. Marx criticizes Feuerbach’s approach to the history of religion in a similar vein: it is one thing to discover the “earthly kernel of the misty creations of religion” by analysis of its “apotheosized” forms, but something else to develop these forms from the “actual given relations of life”; the former method (Feuerbach’s) is “easier,” but it is the latter – Marx’s method to be developed in Capital – that is truly “scientific.”[6]

As the exchangeable value of a commodity was based on the relative quantity of labor contained in its production process, Ricardo thought of the value represented by the quantity of labor as separate and independent of exchange relations. But in attempting to determine relative prices quantitively, Ricardo had assumed that there was no fundamental conflict between the private labor of the workers and abstracted social labor under the rule of capital (though Ricardo argued that wages should never exceed the level necessary to reproduce the “class of laborers,” he did acknowledge that “subsistence” had an historical aspect, in that the provisions for reproducing the class of laborers might need to be more generous for succeeding generations).

Marx, in investigating the qualitative relation in the value-form, challenges Ricardo’s assumptions and also criticizes those who drew socialist conclusions from them. Whereas Ricardo saw money as the “medium” of exchange, the Ricardian socialist, John Gray, imagined that it would be easy to replace money with “time-chits” representing labor-time: the worker could then “spend” the time-chits on commodities produced by other workers paid in the same way. The problem with this, in Marx’s view, is that in commodity production there is always a conflict between the private labor of the workers and the social labor imposed by the rule of capital. Marx says that if it is seen as necessary to transform labors and products into exchange-values, this view has come about because “individuals now produce only for society and in society,” and because “production is not directly social, is not the ‘offspring of association’, which distributes labor internally.”[7]

Post-Godwinian reformist anarchism, theorizing a non-exploitative economy with no conflict between private and social labors, tends to see in Marx’s Capital an unfortunate “deviation” from the Labor Theory of Value which seems to rule out “co-operative enterprises” in which workers would receive the “full fruits of their labour,” with no appropriation of their product by the capitalist “middle-man.” Bookchin sees in Marx a denigration of the category of use-value, which the Utopian socialists, such as Fourier, counterposed to exchange-value through the “force of association.” In reformist anarchism the Labor Theory of Value becomes the ideological expression of the struggle through the “force of association” to “rescue the market” from monopolistic intervention rather than of the struggle between labor and capital at the point of production (in present-day campaigns to put “Fair Trade” labels on the products of co-operatives or “eco-friendly” companies in the Third World there is a similar underlying assumption of identity between “private” associated labor and the social labor of the world economy; for as these goods compete with cheaper “unfair” products, made according to socially-necessary labor time, the challenge to the law of value is reduced to the subjective “generosity” of the consumers).

Value, Price and Profit

Andrew Kliman, in Marx’s Concept of Intrinsic Value, takes up some “Common Misconceptions about Marx’s Theory.” Schumpeter, for example writes:

'Marx’s theory of value is the Ricardian view… He was under the same delusion as Aristotle, viz, that value, though a factor in the determination of relative prices, is yet different from, and exists independently of, relative prices or exchange relations. The proposition that the value of a commodity is the amount of labor embodied init can hardly mean anything else.' [8]

Schumpeter does recognize that Ricardo’s “absolute” values really only functioned as “exchange values or relative prices,” whereas for Marx “values” existed independently of exchange values. Schumpeter says that if we could accept Marx’s differentiation, much of his theory would become meaningful and tenable. “Of course,” he says, “we cannot.” But what if we can?

Marx, in Kliman’s account, is indeed investigating exchange value as “the mode of expression” and as the “form of appearance” of “a content distinguishable from it.” Kliman describes how Marx, in his Notebooks of 1861-3, begins to argue for the first time that, since two commodities of differing materiality are qualitatively equal as exchangeable objects, then they must share a common property of substance: a “third thing,” which belongs to each commodity as its “intrinsic value.” Kliman contends that in the opening pages of Capital, Marx, rather than offering a theory of exchange ratios based on relative quantities of labor, aims “to break from the conception of value as a ratio in exchange.” Value, in Kliman’s interpretation, is “an intrinsic property of the commodity itself”; whereas exchange-value is, as Marx says, “the mere form of appearance,” not its “proper content.” Whilst it is true that the common property of commodities is that they are “useful” (at least in some sense) and are “products of labor,” this labor, as labor-power, in finding its expression in value, “no longer possesses the same characteristics as when it is the creator of use-values.” What remains from the commonality of use-values, is only a “residue,” a mere abstraction. Although, as use-values, different commodities appear as independent of each other, their exchange value is the relative expression of the abstract social labor time that is their substance.

Marx identifies the components of value production as constant capital and variable capital. Constant capital provides the value transferred from used-up means of production (raw materials and depreciation of equipment). Variable capital is what the capitalist spends on wages in order to obtain the labor-power of the living laborer. Living labor adds new value, whereas constant capital transfers old value created by labor in the past. In Ricardian terms, prices = wages (as cost of production) + profit. However, competition between capitals leads to uniformity of the rate of exploitation of labor, so that prices tend to equal costs of production plus an average profit. Marx says that, given labor-time measured as exchange ratios, the equilibrium of profitability must be undermined if various industries, employing the same amounts of variable capital, have to input different proportions of fixed and circulating constant capital (the relationship between the two Marx calls the “organic composition of capital”). Firms with smaller profit rates will be starved of investment and forced either to adopt different lines of production or go under. But if the enterprises with different organic compositions of capital are owned by the same capitalist, or a like-minded group of capitalists, acting “en bloc, as totality,” then what we have to deal with is the “collective capitalist, the total capital appears as the share capital of all the individual capitalists together” [[9]

Capital and Temporality

Critical interpreters of Marx’s Capital have objected to his argument that the accumulation of capital through abstract labor produces a tendency towards crisis. According to the “physicalist” (or “neo-Ricardian”) school - notably Sraffa, Okishio and Steedman - the value-price distinction becomes meaningless and irrelevant if profit is measured in purely physical terms. In the simple case of Ricardo’s corn-model, grain as seed-corn is the input of the means of production, grain as food is the wages of the workers, and grain is the profit for the capitalists, either as food or as seed-corn for further production. If input prices are assumed to be the same as output prices (i.e., valued simultaneously) then the value of grain sold at harvest time will have the same value per bushel as it had when the fields were sown. This assumption is of course unwarranted if other factors are allowed for, such as the effect of a change in climate on the quality and quantity of the harvest – the bushel price at harvest time might be lower than it was when the corn seed was sown, in which case the profit might be nil. But the point is that even when physicalists move on to more complex models, of multi-commodity economies in which machines are employed, they still stick to a physicalist (and “simultaneist”) method which sees no need to implicate “value” in a relationship with labor-time.
Physicalist and simultaneist critics of Marx argue that rises and falls in the rate of profit are determined by levels of technology-driven productivity rather than by the dialectic of capital and labor. In attempting to prove that Marx’s “transformation” of “values” into “prices” in his “Law of the Tendential Fall in the Rate of Profit” in Capital Vol. III is internally inconsistent, they have sought to “correct” Marx by splitting the theoretical totality of Capital into two separate “systems”: of labor-time values and market prices. Whereas Marx allows the values of inputs and outputs of production to change over time the physicalists/simultaneists bid the values to stand still. But in recent decades a number of theorists (such as Kliman), have argued for a “Temporal Single-System Interpretation” (TSSI) of Marx’s Capital. TSSI claims that the critics have either ignored or misunderstood the fact that Marx defines the profit rate as the expansion of value over time. Kliman points out that all of the physicalist and simultaneist critiques of Marx can be traced back to one written by Vladimir Dmitriev in 1897; and if they weren’t influenced by Dmitriev they repeat him by accident, having a common method. Kliman takes a simple case of Dmitriev’s method to illustrate his general procedure. Recall that in the Ricardian corn-model, there was no machinery, nor any other fixed capital. In contrast, in Dmitriev’s machine-model there is no human labour. Dmitriev imagines four machines that last for one year and, without any human inputs of labor, produce five machines of the same type in that time, wearing themselves out in the process. In this model therefore, the machine industry is able to generate an ever increasing output unrestrained by any natural resource limitations or additional cost of wages. The rate of profit is always 25 per cent because Dmitriev assumes that the extra machine will have a positive price. But, Kliman suggests, it is quite plausible that under such circumstances the machines’ cost would fall to zero; and if the machines were free then not only would there be no value, but there would be no profit. But even assuming that the machines were not free, Dmitriev makes another error: as a simultaneist he assumes that the machine’s input price equals its output price. Marx’s theory implies that the value of the output transferred from the inputs, plus new value added by the living labor, will decline; the total value of the output (5 machines) will only equal the total value of the 4 inputted machines, and therefore the profit will be zero. Lastly, it might be pointed out that Marx’s claim that the value per machine declines is what tends to happen in the real world.

Counteracting Tendencies to the Falling Rate of Profit

Once living labor is allowed for, Marx’s Law of the Tendential Fall in the Rate of Profit becomes “meaningful and tenable.” In an industry in which the rate of surplus value is 200 per cent and 20 per cent of the total capital advanced is spent as variable capital, the rate of profit will be 2 X 20 per cent (= 40 per cent). But if the percentage of the variable capital falls to 15 per cent then the rate of profit falls to 30 per cent. So if the capital advanced is $1 million and 5 workers are employed to supply 5 hours each of surplus labor per day, then the profits will be 25 unpaid hours of labor-time (expressed monetarily). But if, with technological innovation, only 1 worker is needed per $1 million, then the total daily surplus labor must fall to 5 unpaid hours of labor time (or monetary equivalent) and so must the rate of profit.

There are however, counteracting tendencies to the Law of the Tendential Fall in the Rate of Profit. In one period a worker on a 40 hour week may produce the subsistence value of her labor-power in 10 hours, thus allowing the capitalist to expropriate the remaining 30 as surplus value. But if more efficient technology is introduced, she might produce a sum of value equivalent to the value of her labor power in 5 hours. The value of her wages falls by half, because the capitalist now expropriates 35 hours of her 40 hours of labor-time instead of 30; although she can still buy the same amount of goods, i.e., her wage remains the same in physical terms.

Another counteracting tendency related to rising productivity is the devaluation of the means of production. Profits can rise if the lowering of the value of the capital advanced cheapens the cost prices of constant capital inputs, However as Dunayevskaya says, because of the constant revolutions in new techniques that reduce the time necessary to reproduce a product, “there comes a time when all commodities … have been ‘overpaid’. The crisis… follows.” [10] Value as “self-moving substance” suffers interruptions due to “revolutions in value”: technological development causes the destruction of already existing sums of value advanced by individual capitals that cannot meet the changing conditions. Capitalists, who borrow money in “good times” in order to invest in industries with rising productivity and cheapened means of production, may fall into debt when the value of the constant capital they invested in previously is wiped out by this process of devaluation. Kliman points that Marx does not predict that the rate of profit will display a declining trend in the long run, or bring on a final crisis. Rather, the Law is constantly overcome by crises. These two points are related: since the devaluation of the means of production is made manifest through crises, the counteracting influences operate to some extent in and through crises.

Beyond Capital, Beyond Value

Marx’s critics are more concerned with quantitatively determining how things behave rather than (as was Aristotle) with what things are. To know the nature of the “commodity itself,” Kliman says, is to know that it is a “value in addition to a use-value, an artifact which exists only in a specific kind of society.” In Marx’s words (to Adolph Wagner), “neither ‘value’, or ‘exchange value’ are my subjects, but the ‘commodity’… the simplest social form in which labor is presented in contemporary society.” Marx thus approaches “value” not from a concept, but from a “concretum,” the commodity. Kliman, in Marx’s Concept of Intrinsic Value, points out that here Marx appropriates Hegel’s concept of the “concrete totality” — a unity of diverse elements. In political economy, although value in exchange is clearly a social activity, it is equally an “object-object relationship.” Kliman concludes that, in “getting behind” this fetishized relationship, Marx reveals “the relationship of the individual product to its producer. The enquiry into value has thus shifted … to one that refers to a subject-object relation… an alienated one”:

The subject matter remained always the relations among the commodities themselves. Conversely, by clearly distinguishing between value and exchange value, Marx in effect created a category that expressed an internal relation between labor and value, worker to product.[11]

If capitalist production is, as Marx puts it, “the rule of things over man… the inversion of subject into object and vice versa,” then the concept of “value, i.e., the past labor that dominates living labor” does, as Kliman claims, take on “a much greater meaning.” In the Critique of the Gotha Program, Marx conceives of an immediate post-revolutionary change in the first phase of socialism/communism, in which the worker would be paid according to the amount of work she or he does, so that for the “same amount of work… given to society in one form, he receives back in another.” The “revolution” would have to overturn the relationships in the factory, in which, as Marx puts it in the Grundrisse,

'…the association of the workers... is not posited by them but by capital. Their combination is not their being, but rather the being of capital. To the individual worker it appears fortuitous. He relates to his own association with other workers and to his co-operation with them as alien, as to modes of operation of capital.'[p505]

Any “anti-capitalist” revolution worthy of the name would have to break with the totalizing and all-consuming “logic” of capital from day one of any revolutionary transformation. In “teleological” terms, the first stage of a post-value-producing society – proximate aims – would have to contain the higher goal of breaking down the division between mental and manual labor – the “final” destination.

(A longer version of this essay appeared in Hobgoblin #6, 2004)

1. Alisdair MacIntyre, Whose Justice? Which Rationality? (University of Notre Dame Press: 1988), 149-53. Jose Perez Adan, Reformist Anarchism 1800-1936 (London: Merlin 1992).

2.Murray Bookchin, The Ecology of Freedom, (Palo Alto: 1982), 106-9, 221-2.

3. Adan, Reformist Anarchism, 216-223.

4. Adan, 184-86.

5. Marx, Theories of Surplus Value II (London: Lawrence and Wishart 1969), 166.

6. Marx , Capital Vol. I (London: Penguin 1976), 493-4.

7.Marx, Grundrisse (London: Penguin 1973), 158-9.

8. I have made use of the following texts by Andrew Kliman:
‘The Transformation Non-Problem and the Non-Transformation Problem’ (with Ted McGlone), Capital and Class 35 (1988).
‘A Physicalist Approach to, and Critique of, Marx: A Conceptual History’ (paper presented at International Working Group on Value Theory symposium at the University of Greenwich, 29 June, 2000)
‘Marx’s law of the falling tate of profit today’, in Explorations in Dialectical and Critical Theory (Chicago: News & Letters Pamphlets, 2002), 49-55.
Marx’s Concept of Intrinsic Value – On the unity of value, fetishism and the analysis of capitalist production in Capital (Chicago: 2003), 3.
As well as these texts I am indebted to years of correspondence and discussion with Kliman. He bears no responsibility for my analysis. Kliman’s book, Reclaiming Capital – A Refutation of the Myth of Inconsistency is now published (2008) by Lexington Books.

9.Marx, Capital Volume II (London: Penguin 1978), 509.

10. Dunayevskaya, State-Capitalism and Marxism (1947). Available at:

11. Kliman, Marx’s Concept of Intrinsic Value, 25.


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