Commentary on Political Economy

Tuesday 1 November 2011

Utilitarianism and the Labor Theory of Value

The labour theory of value that forms the basis of all socialist interpretations of the capitalist economy draws a fundamental distinction between the use value of goods produced in an economy and their “exchange value”. What is fundamental is that not all use values have an exchange value, whereas all exchange values owe their ultimate ability to be exchanged to the fact that they possess a use value, but the two are not identical or equal to each other because the exchange value is in direct proportion to “the amount of labour” contained in goods or, in the Marxian version, to the “amount of labour-power” determined market competition so that it equals “socially necessary labour time”. In both versions of the labour theory of value, “labour” or “labour power” are quantifiable and determine the prices of goods sold on the market – the monetary equivalent of their “exchange value”.



The labour theory of value therefore seeks to determine the “substance” – labour or labour power – that is embodied by or “contained in” the goods that are exchanged on the market and whose “price” or exchange value are determined – although in different form because of the different component of constant and variable capital used in their production, whereby the “distribution” of their value is determined – by these “amounts”. Both Ricardians and Marxians therefore agree that it is possible to determine the prices of individual goods in terms of their objective content as “labour” or “labour power” – which is why Classical Political Economy from Petty to Mill and JB Say can be regarded as a scientific branch of Utilitarianism.



Utilitarianism from Hobbes to Bentham and JS Mill lays emphasis on the paramountcy of “pleasure” or “utility” as the “highest good” of social life. But this apparent “hedonism” is far from being “subjective” because at least in the sphere of economic activity the distribution of value is in proportion to the “amount of labour” that goes in the production of use values for exchange. Thus, despite the fact that the capitalist is not at all concerned with the use value of the goods he produces, still the market mechanism ensures that the goods consumed are those that most satisfy the “needs” of, or demand for use values by, consumers.



“Labour”, therefore, in its various descriptions, still provides for Utilitarian theory an “objective standard” for the calculus of pleasure and pain involved in capitalist production. For the Utilitarians like JS Mill, the “dismal science” is still based on “labour” as the “social synthesis” that brings together and thus is capable of “reconciling objectively” the various self-interests of individuals into one “common good” or “common wealth” – the greatest good for the greatest possible number. Utilitarian theory and philosophy together with Classical Political Economy hold open the door to both the inter esse, the common being, the social co-existence of individuals in capitalist society and even in the Socialist version holds open the possibility of an equitable “distribution” of the “fruits of labour”.



It is precisely this centrality of “labour”, this “essentiality” of human productive activity and of “effort” to the social synthesis, to the “division of social labour” – this philosophical and moral as well as “scientific” pre-eminence given to “Labor” of mediaeval monastic asceticism and the Arbeit of German Idealism – it is this “substance” and social “objectivity”, this “essentialism” that the labour theory of “Value” provides that is the object of the ferocious intellectual, philosophical, moral and scientific no less than political aggression mounted by the bourgeoisie after the “revolutions” of 1830 and 1848 by the urban proletariats of Europe.



We will look at this next.

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