Summary of Critique of Political Economy Chapter 1 by Karl Marx

(Chapter 2 to follow in a future post.)

Written before Das Capital, the Critique of Political Economy covers much of the theoretical ground of the opening chapters of Capital but in more detail. Sometimes readers have difficulty with the theoretically dense and stylistically strange nature of Capital’s opening chapters. For those interested in thinking more about these opening chapters, especially the stuff about money, it may be helpful to read the Critique.

The one caveat that is important to note however is that in the Critique Marx had not yet made the distinction between exchange value and value. The development of this important theoretical distinction is one of the most important aspects of the opening chapter of Capital.

What follows is a summary of the Critique. It is no substitute for reading the book itself. I write it mostly for self-clarification as I think about a future video on Money. The stuff on money is mostly in chapter 2, but I thought I might as well type up notes on chapter 1 while I’m at it. The origin of money in the commodity form is in chapter 1 though.

Chapter 1- Commodities

As we know a commodity has a use-value and an exchange value. The use-value of a commodity falls outside of the realm of political economy except in that it is a bearer of exchange value. Why? The use-value does not bear the mark of the social relations of production. We can’t tell that an object is a commodity by examining its use-value. The use-value is limited by the particular properties of the commodity, and is not a universal quality that can be quantified or compared with other use values in any meaningful economic sense.

[Of course, most of the uses that commodities serve are needs created by capitalism. So when Marx says that the use-value does not bear the mark of the social relations of production we should read this in the narrow, specific sense that the use-value has no relation to the division of labor or socially necessary labor time represented by a commodity rather than in the broad sense of the observation that uses and needs are created/conditioned by capital.]

Exchange value appears at first sight as a quantitative relation. Commodities are equivalent to other commodities despite having different, incomparable uses. Despite different uses Marx tells us they “represent the same entity.” (I take it this is a kernel of what later becomes the concept of ‘intrinsic value’) When two commodities have equivalent exchange values this means that they have equivalent volumes of the same time of labor. Though what Marx goes on to talk about is the quality of this labor (that it is abstract, simple labor, etc) it should be pointed out that he does seem to operate under the assumption at this point that equivalent exchange values represent equivalent labor content, on an individual basis. Of course, with his fully-fledged theory of price and value, as worked out in the 3 volumes of Capital (and in his comments in chapter 2 of this book), this identity of value and price, on the level of individual commodities, does not hold. He makes similar statements about quantitative equivalence in the beginning of Capital. My instinct is to take this as an opening assumption, abstracting from the complexities of the later stages of the analysis. But Marx does not state that this equivalence is merely a simplification.

What kind of labor forms the value of commodities? It is abstract, general labor. It is also simple labor. Labor time is the inherent measure of labor.

Simple labor is a real abstraction. There is a real process which reduces all labors to a common denominator. Labor does not appear as different, isolated labors. Instead, under capitalism, labors appear as different arms of the same social organ. As in Capital, Marx says that this is not the place to discuss the actual processes of the reduction of complex labor to simple labor. But tells us that it is a constant process. This makes it a real abstraction.

He covers the concept of socially necessary labor time.

In capitalism private labor produces exchange value. This is how it becomes universal labor, or social labor. This universal labor time is represented in the general equivalent. Hence, universal abstract labor is the specific type of labor of a capitalist society, not all human societies.

Marx enters into a brief discussion of the way the social relations between men appear inverted as social relations between things. This is obviously a precursor to the concept of the ‘fetishism of commodities’ introduced in the end of chapter one of Capital vol. 1.

Labor is both abstract and concrete at the same time. It is both social labor and natural labor. Concrete labor makes use-values. Abstract labor makes exchange values.

Use-values stay the same while the social relations around them change. Hence the labor time it takes to make a use-value can change and thus the exchange value changes. (It seems a simple enough point, yet we see the confusions that have been made in the 20th century by physicalist misreadings of value theory which seem to posit that exchange-value is the same as physical quantities!) Scarcity and abundance effect the productivity of labor and therefore APPEAR to effect exchange value directly.

The exchange value of a commodity is not revealed by examining one use-value in isolation (say, in the nature of a supply and demand graph), but by examining the relation of all commodities to each other. Exchange value manifests itself in the endless series of equations through which commodities demonstrate themselves as being the equivalent of another commodity in value. The universal equivalent is the one commodity that all other commodities measure their exchange value in.

The commodity is not a use-value for the seller, only for the buyer (if only this was understood by marginalists…). The commodity is only an exchange value for the seller and a potential use-value for the buyer. But it must be a use-value to a buyer in order for its labor to be social. (Though this is a condition for social labor it is not a determinate of the value of a commodity.) Private labor is not directly social. It must be socially useful to be social.

Here’s a puzzle: The commodity must enter exchange as social labor but this universality is only a result of exchange! How can this be? The puzzle is solved via the universal equivalent. The universal equivalent has two uses. It has its own use (if it is gold then it can make rings, microprocessors and stuff…) and it has a universal use in that it is used to measure the value of all other commodities. This resolves the contradiction of the commodity, that the commodity has a particular use value but a universal exchange-value. All commodities express their exchange-value not in an endless series of equations, but in one equation, their equivalence with the universal equivalent, money. This is expression of equivalence exists ideally before the purchase has been made. This is why we have price tags. We guess the exchange value of a commodity against money. But this price has to be realized in exchange in order for the process to be complete. Though exchange value has this ideal aspect this does not mean that money is a symbol. Money and value are quite real.

The fetish character of the commodity form is even more striking in money where money appears to have its own autonomous power.

Exchange value, of course, predates capitalist social relations. It originates at the borders of societies where trade begins between societies, not within societies. At first these exchange values are random. But as soon as a part of production begins to be production for exchange and not for use then exchange values begin take on predictable forms. This leads to the development of money.

Bourgeois economy treats barter as a natural form of exchange and sees money as a mere expedient. (This is true for contemporary bourgeois economy as well as the classical political economy.) Money is seen as a material instrument, a tool for simplifying barter, rather than as a social relation. But Marx knows that money doesn’t just solve the difficulties of barter in a technical sense. These difficulties arise from the development of exchange value and from the appearance of social labor as universal labor.

Notes on the History of the Theory of Commodites (a section at the end of Chapter 1) I didn’t take the best notes on this section…

Adam Smith thinks that the Labor Theory of Value applies to pre-capitalist societies. He sees it as a theory of subjective equalizations of labor time. Smith tries to derive exchange value from the social division of labor. Ricardo focuses on the quantitative determination of value rather than the qualitative side which would allow him to see the specifically capitalist nature of the value form. He sees capitalist labor as the eternal form of value. Sismondi focuses on the specific social character of labor, he develops an idea of necessary labor time and a critique of large industrial capital.

Ricardo represents the final shape of classical political economy. He leaves us with some controversies.

1. Labor itself has exchange value yet different types of labor produce different amounts of exchange value. We get into a viscous circle by making exchange value the measure of exchange value… Marx will later solve this by distinguishing between labor and labor power. The capitalist buys labor power but labor is what produces value. Marx says we need a theory of wages to explain this.

2. Point two seems to be a reiteration of point one. Marx says we need a theory of capital to explain this.

3. Supply and demand cause exchange-value to deviate from exchange-value. Marx says we need a theory of competition to explain this. Later, in Capital, when he develops the difference between value and exchange-value, this becomes a little clearer.

4. How do non-commodities have exchange value? For this, Marx says, we need a theory of rent.