Louis B. Boudin wrote a series of articles in the first decade of the last century defending Marx’s economic and political conceptions against revisionists and opportunists for International Socialist Review. These important articles would be compiled in ‘The Theoretical System of Karl Marx in the Light of Recent Criticism,’ arguably the most important U.S. Marxist text on economy. Helping to inform a generation of revolutionaries in their own fight with the Socialist movement’s Right Wing, a foundational part Boudin’s argument was the elucidation and defense of Marx’s concepts of value. Part one here.

‘The Labor Theory of Value in the Light of Recent Criticism, Part II’ by Louis B. Boudin from International Socialist Review. Vol. 6 Nos. 6 & 7. December, 1905 & January, 1906.

We have seen the baselessness of the chief objections to Marx’s analysis by which he comes to regard labor as the “common something” of all the commodities which must be the cause and measure of value. The objections noted, while the most important, are not, however, the only ones. There are other objections urged against this analysis by Böhm-Bawerk himself as well as by the noted German economist, Professor Carl Diehl, not to speak of our old acquaintances, L. Slonimski and Professor Masaryk. We will attempt to exhaust the list and to pay our respects to all of them but one, who will be pointed out; and that one will not be considered here for the reason that certain other phases of the Marxian theory must be explained before the objection and the answer thereto can be properly appreciated. This task will, therefore, be left for the next chapter, which will be specially devoted to it. We refer to the so-called “Great Contradiction” between the Marxian theory of value and the theory of the Uniform Rate of Interest. Incidentally, we will have occasion to examine into the supposed contradictions between the first and third volumes of “Capital.”

In discussing these objections we will have to pursue the course adopted by us of following more or less closely on the heels of Böhm-Bawerk, except where others specially claim our attention.

The first objection to be noted here is, that Marx’s analysis must, of necessity, be faulty, for the reason that the field of his investigation was not broad enough; that he did not take as the subject of his analysis all “goods” which may be the subject of exchange, but only “commodities,” that is, goods created by labor. It is claimed that by thus limiting his analysis from the outset to the products of labor only, he prejudged the case and forced the result of leaving labor as the only “common something,” and that if the analysis were to be made on all exchangeable “goods” the result would be different. As Böhm-Bawerk puts it:— Marx purposely puts into the sieve only those things which can get through it. And he adds:— “Marx is careful not to give us any explicit statement of the fact that, and the reason why, he began his investigation, by excluding therefrom a part of the goods possessing exchange-value.”

It will be noticed that Böhm-Bawerk does not use the word, “analysis,” but “investigation.” This is one instance of the careless use of terms for which all Marx critics are well noted. While seemingly a mere trifle, this interchange of words is, in reality, a matter of quite some importance. An analysis is a purely logical operation used as a means to show the logical counterpart of some actual phenomenon. It serves to formulate, by bringing into play our powers of abstract reasoning, a general conception of the mass of particular facts. While, therefore, analysis is a helpful means in arriving at a generalization, it is no proof of its correctness. On the contrary, it is the correctness of the generalization that is usually the best proof of the faultlessness of the analysis. The mastery of a subject will be shown by the ability to recognize which phenomena are most typical for the subject-matter under consideration. But this can not be found out from the analysis itself, but must be gathered from outside sources. The best proof of the typicalness of the phenomena selected for analysis is usually obtainable only after the analysis has been completed, the generalization obtained, and the stage of proving the generalization arrived at. The proof of the generalization, if the same be correct, will itself reveal these typical phenomena.

Any analysis will, therefore, be justifiable, which will serve this purpose of arriving at a proper generalization. In making the analysis, therefore, we must not be guided by the “equitable” claims of different phenomena to be analyzed, but merely by the one consideration: to find those facts the analysis of which will best serve the purpose for which the analysis is undertaken. Usually, it is not the analysis of the greatest number of phenomena, but of the most typical phenomena that will serve the purpose best.

We have already seen in a preceding section that Marx had ample historical and logical justification and warrant to assume that the factory product was the most typical of the exchange-value-possessing commodities, and therefore, the most proper subject for his analysis. Just as, to borrow an example from another province of scientific research, in order to obtain exact knowledge of the chemical composition of water, we must not analyze as many sorts of water as possible, but, on the contrary, only one sort of it, the most typical, that is, pure unalloyed water. The proof, however, of the correctness of his assumption is furnished by the same facts which prove the generalization which is the result of the analysis. For, as we have already stated before, Marx does not depend on this analysis, nor on any other purely logical operation, to prove his theory, but on the facts themselves. In order, however, that the facts should prove anything, all the facts had to be examined and investigated. And if Böhm-Bawerk’s statement were true that Marx did not include in his investigation all “goods” possessing exchange-value, his theory would remain unproven,— and if the excluded “goods,” upon investigation, would prove something else than those included, his theory would be absolutely refuted.

Fortunately for Marx, however, and unfortunately for Böhm-Bawerk, Marx did thoroughly investigate these very “goods,” “which possess exchange-value although they are not the product of labor,” under which cloudy description is meant the soil and other “natural” objects which are the subjects of bargain and sale. Not only is Marx’s investigation of this particular branch of the subject thorough (it occupies about 200 pages of his book), but his theoretical explanation thereof is so convincing, that none of his critics, not even Böhm-Bawerk, have ever as much as attempted to refute it. We think, therefore, that we are very charitable to Böhm-Bawerk when we assume that he really did not mean to say that Marx excluded these particular “goods” from his investigation, but merely from his analysis; and that he simply fell a victim to the deplorable lack of precision which seems inseparable from all Marx-criticism.

We must add, however, that we dwelt at such length on this point not merely because we were anxious to “show up” the carelessness of terminology and lack of precision of thought, in even the greatest of Marx-critics, important as this may be, but because the subject-matter involved in this objection is of great importance in the opinion of all Marx-critics, as well as our own. It really amounts to this:— that the labor-theory of value does not take “nature” into account or consideration; “it denies the participation of nature in the production of goods.” Now, this, if true, is a very serious charge. The denial of the participation of nature in the production of “goods,” or anything, for that matter, is so manifestly absurd that it will vitiate any argument, analysis, or other logical operation, into which it enters. Could Marx have been guilty of anything like that? Countless expressions of Marx show that he was not ignorant of the participation of nature in the production of “goods,” if proof is necessary that Marx knew of the existence of nature, because that is what this charge amounts to. How, then, did he deny it? How could he deny it? Well, of course, he couldn’t. And . . . . he didn’t! We quote Böhm-Bawerk: “That they (commodities) are just as much the product of nature as of labor— nobody says more explicitly than Marx himself when he says:— ‘The bodies of commodities are combinations of two elements, natural matter and labor;’ or, when he cites with approval Petty’s remark that: — ‘Labor is the father (of material wealth), and the earth is its mother.’” The guileless reader is evidently puzzled. But there is really nothing to be puzzled about. Marx is simply at his old game of contradicting himself in the most stupid manner imaginable.

If Böhm-Bawerk himself were not so careless and slovenly in his expressions, he would have noticed that when Marx speaks of the “participation” of nature he always refers to the “bodies” of commodities, or “wealth”; and when he speaks of labor as its source of measure, it is always exchange-value that he has reference to. Marx does not claim that labor is the only source of wealth. On the other hand, he does deny the “participation” of nature in the creation of exchange-value. And rightfully so. Nature, including all the material substances and forces which go into the production of “goods,” has always existed, and remains unchanged. So has “wealth” (meaning in this connection an aggregation of useful articles), at least as far as we are concerned. Not so with exchange-value. Notwithstanding the existence of “nature” from time immemorial, and the application of labor thereto from the very beginning of the human race, this combination has failed to produce exchange-value, which makes a commodity out of a mere “good,” until the appearance of the capitalistic system.

It is evidently something connected with the capitalistic system, and not “nature,” that is responsible for this result and should be called upon to “account” for it. That is why Marx went in search of the social phenomenon which distinguishes the capitalistic system from its predecessors, as was already explained at length in a preceding section. It is interesting to recall here, however, that we have encountered the same trouble over Marx’s supposed neglect of “nature” when discussing the Materialistic Conception of History. An additional proof of the monism of the Marxian System, and of the opinion oft expressed here that all Marx-criticism suffers from the same vices.

In justice, however, to the Marx-critics, it must be stated right here that some of Marx’s own adherents, or supposed adherents, suffer from a good many of these vices. We shall have occasion hereafter to treat this subject more at length. Here we want to refer only to a historical incident, which is right in point, and at once illustrates the prevalent carelessness in the choice of expressions, and Marx’s quickness to “sit on them” wherever they are found, without any bias to friend or foe. In 1875 the socialists of Germany adopted a program at their national congress, held at Gotha, the opening sentence of which read: “Labor is the source of all wealth and of all culture.” On learning of the contents of the draft proposed by the leaders Marx wrote a letter containing some annotations. He started out by quoting the opening sentence quoted by us above, and made it the occasion for the following remarks: “Labor is not the source of all wealth. Nature is just as much the source of use-values (and it is of these that material wealth consists), as is labor, which is itself the manifestation of a natural force,— human labor power.”

There are other objections to Marx’s analysis. This time not to what goes into the analysis, but as to its result. In commenting on Marx’s statement that aside from the use-value of their bodies, commodities have only one common property left, that of being products of labor, Böhm-Bawerk asks: “Is that really the only common property left? Have not the exchange-value-possessing ‘goods’ still left to them, for instance, the common property of being scarce in comparison with the want for them? Or, that they are the subject of supply and demand? Or, that they are appropriated? Or, that they are ‘natural’ products?” And then he adds: “Why, then, could not the principle of value lie just as well in any one of these common properties, instead of that of their being the products of labor?” The last question, that of “Nature,” has just been disposed of by us. The one preceding it, that of “appropriation,” is a rather curious one to be broached by an anti-Marxist of the Böhm-Bawerk type, for it suggests a lot of discussion, which may prove uncomfortable to those who have “appropriated” to themselves everything, and we may yet return to this phase of the question. For the subject of our present discussion, however, the question of “appropriation” is beside the point. To begin with, being appropriated is not a property but a condition or relation, and that not of the “goods” themselves, but of men with reference to them, so that being “appropriated” could evidently not be a common property of the “goods.” We will not stand, however, with Böhm-Bawerk on small matters like that, for as we have already seen, precision of expression is not part of his equipment. But whether property, condition, or relation, or anything else, “being appropriated” is no objection to Marx’s analysis. The “principle” of “value” of “goods” could not “lie” in their “being appropriated,” for the same reasons that it could not be due to “nature.” While “goods” were not “being appropriated” for quite as long a time as they were being produced by nature, they were so for sufficiently long a time before the appearance either of the capitalistic system or exchange-value to settle the question.

Being “scarce” or being the subject of supply and demand, can hardly be said to be something which all “goods” possess in common. But as we have already stated, we wouldn’t stand with Böhm-Bawerk on such things as precision of expression and other requirements of logical reasoning. There is, however, something else about these two questions to which we desire to call the attention of the reader: These two questions are really one; being scarce in comparison with a want is the same thing as being the subject of supply and demand. Why, then, put this up as two separate questions? This would be unimportant, but because of the frequency with which, as we shall have occasion to see later, Marx-critics employ this cheap manoeuvre of “criticism.” It is common practice among them to repeat the same matter in different ways, in such a manner as if they were stating separate objections, in order to make a “showing” by piling up a great quantity of objections.

Supply and demand is, as we have seen, not a property of the “good” but an accident of its existence. It is not something contained in it, nor is it anything in any way connected with its production. Its qualities and properties as a “good” are not in any way affected by the conditions of its supply and demand. There is no “common something” in goods which may be called their conditions of supply and demand, for no good contains in itself the conditions of its supply, and its demand can not only not be contained within itself, but it presupposes its absence. Logically, therefore, it could certainly not be said that being the subject of supply and demand could be the “common something” which is the source and measure of value. There is another good logical reason why supply and demand could be neither the source nor the measure of value. The proposition that value depends on supply and demand seems such a very simple one, so much a matter of “common sense,” that few take the trouble to inquire into its real meaning. A careful examination of the matter will show, however, that this is logically impossible. Let us see what it is: Supply and demand work in inverse directions; when the supply increases value diminishes, and when the supply diminishes value increases; and the reverse is true of demand. Now, let us suppose a condition (the ordinary condition for most goods), where the supply and demand are normal, that is, cover each other. What should the value of the commodity then be? Evidently, nil; for the two factors working upon it in opposite directions, the supply and the demand being equal, neutralize each other, balance each other. But as we know that “goods,” or at least some “goods,” and that the most characteristic, always have some value, there evidently must be something which causes commodities to have value when supply and demand balance each other, and have, therefore, no influence.

This question of logic is best explained and tested by the facts. Value is a relative term, and is ascertained by exchange. When we speak of the value of a commodity, we compare it with something else; in our highly developed society, we compare it with the universal commodity— money. When we make a sale or exchange we compare the values of the things exchanged by exchanging them in a certain proportion. Let us, therefore, take any two commodities, say, a chair and a table. Let us say that under any given conditions of supply and demand equal for both, say normal, they exchange at the ratio of two chairs to one table. What fixes their relative value? The conditions of supply and demand being the same for both, they ought to exchange as one to one. Again, let us increase their supply equally, say fifty per cent. Their “value” will diminish,— in comparison with other articles whose supply was not increased,— but their relative value to each other will still remain the same. The same thing will happen if, instead of increasing their supply we will diminish it; or, if we will increase the demand or diminish it. In other words, no matter under what conditions of supply and demand we will place them, as long as those conditions are equal, they will still retain their relative value of two to one. Evidently there must be something in them which makes their relative value remain the same under all conditions of supply and demand to which they may be alike subjected. What is it?

It was to find this “common something” contained in them, and which evidently is the source and measure of their value irrespective of the conditions of supply and demand to which they are subject, that Marx took up the analysis of the commodity. It was, therefore, simply puerile to point to supply and demand as the possible “common something” “wherein may lie” their value.

Again, the same commodity, under the same conditions of supply and demand, will have different values at different times if the methods of its production have changed. A fact which practically fills up the history of modern production.

The reader might ask: “While it seems to be true that supply and demand cannot be the source or measure of value, it is still a matter of experience,— and appears in the very examples examined here,— that the condition of supply and demand does influence the ratio of exchange of commodities, that is, their value. How do we account for it?” This consideration seems to be what led astray many economists. In fact, the matter does seem extremely confusing. It is evident that value must have some source outside of supply and demand, and yet there is no denying the influence of the latter on the ratio of exchange which fixes the relative values of commodities. This confusion is only apparent, however, and not real. It is due to a failure to distinguish between the value of commodities and the prices which they bring on a particular sale in the market.

We have already explained at length in a preceding chapter that value and price are different and distinct categories. This distinction must always be kept in mind, and a failure to keep this in mind will result in no end of confusion. When this distinction is borne in mind it will at once become apparent that the seeming influence of supply and demand on value is a mere optical illusion. What it does influence is the Price, which oscillates about the value as its normal resting place, to which it constantly gravitates. That is why, when supply and demand cover each other, the price is not nil: it is then at its normal resting-place,— Value; Price and Value then coincide. That is why different articles will under the same conditions of supply and demand, exchange in an infinite number of ratios to each other, as the same conditions of supply and demand will only result for all of them in the same relation between Price and Value, but the actual price of each will depend on its own value which may, of course, be different for each. That is, in fine, why the same commodity will, under the same conditions of supply and demand, have a different price at different times, if there has been any change in the method of its production; for its value depends on its production, and will be different if different methods of production are employed, and the equal conditions of supply and demand will only bring about the same relation between Price and Value.

Many opponents of Marx make a point of the fact that Marx’s theory of value does not show the formation of prices, is no guide to the actual prices paid for commodities. But a theory of value need not show that, and, as a matter of fact, could not. It would not be a theory of value if it did. This is admitted even by one of Marx’s greatest opponents. Professor Carl Diehl. He says:¹

“It must be settled right at the outset that for Marx, as for any other theorist on the subject of Value, there can be no identity between Value and Price. This follows necessarily from the radical difference between the two conceptions. The price of a commodity is a concrete quantitative determination: it shows us the quantity of goods or money which must be given in return for this commodity. Value, on the other hand, is an abstraction. When we speak of the value of commodities, we mean the regulative principle which lies at the basis of the formation of prices.”

This is, in effect, what Marx says in the passage already quoted by us. And the facts of experience, as we have seen, amply justify his position. It is with this, as with other appeals to the facts, some of which we have already disposed of, and others are to be gone into hereafter, for Marx-critics never tire of the assertion that the facts always and completely refute Marx.

“Experience shows,”— says Böhm-Bawerk,— “that the exchange value of goods stands in any relation to the amount of labor expended in their production only in a portion of them, and in that portion only incidentally. . . . We shall see that the ‘exceptions’ are so numerous that they hardly leave anything for the ‘rule.’” Then comes a long list of “experiences” and “exceptions,” which we will consider one by one, so that none escape our attention. It must, however, always be borne in mind that Böhm-Bawerk is not alone in these statements, assertions, objections and exceptions. On the contrary, he is ably supported by a large host of comrades in arms, who do not tire of blowing the big horn about what the facts are supposed to show.

And first of all “nature” looms up large again. We have disposed of her logically, but she still remains there to vex us in practical “experience.” Not that any exchange-value is claimed for nature as such. All the bounties of nature are admitted to be as free as the air, provided there is as much of them; but, it is claimed, when natural objects are scarce, they have exchange-value, although no labor whatever was expended on them. “How about the native gold lump which falls down on the parcel of a landed proprietor as a meteor? or, the silver mine which he accidentally discovers on his land?” asks Böhm-Bawerk. “Will the owner be unmindful of nature’s gift, and let the gold and silver lay there, or throw them away, or give it away as a gift again, only because nature gave them to him without his exerting himself?” “And why is it that a gallon of fine Rhine wine is valued at many times the value of some cheap grade of wine, although the work of producing them may be the same?” And Professor Knies asks: when a quarter of wheat is equivalent in exchange to a cord of wood, is there any difference between the wood produced by human labor in an artificial grove and that which grew wild in the primeval forest?² And Professor Masaryk chimes in: “Why is virgin soil bought and sold?”

As will have been noted, all the examples upon which these objectors rely are drawn from the sphere of agriculture, except, of course, when they are taken from the air, like the golden meteor. Yet, they comprise two different categories of objects. In the one category are to be placed those objects whose attainment without labor is purely accidental, and in the other those whose attainment without labor is the only way in which they are attainable, for the reason that they can not be produced by labor at all. The value of the articles of the first category does not contradict the general laws of value as they are laid down by Marx, nor does it even form an exception to the rule. The gold-lump accidentally found by a man will not be thrown away, no matter whether it was lost by somebody who spent labor for its production, or fell down from the clouds, for the reason that it has just as much value as if he had obtained it by hard labor. Its value, like that of all commodities, is the socially necessary labor which must be spent in its reproduction. The clouds not being in the habit of showering gold on us, and the necessarily prevailing method of obtaining gold being by spending labor on its production (strictly speaking,— on its extraction, as in the case of all products of the extracting industries), this gold, if wasted, as suggested by Böhm-Bawerk, could not be obtained again from the clouds, but would have to be produced by labor. The same is true of the silver found in the mine. Assuming, as Böhm-Bawerk seems to, that the mine was of such a character that it did not require any labor to extract the silver from it, the silver will still have the value represented by the labor socially necessary for its reproduction, owing to the fact that silver is usually obtained by working at its extraction. And it might as well be noted here, that, under the laws of Value as laid down before, it is the least productive silver mine necessarily in operation in order to satisfy the wants of society, that will set the norm for the value of silver, taking, of course, into consideration any by-product which may be obtained from such a mine while mining for silver. The case of the wine is akin to that of the silver.

It must be remembered that “good” wine only has a greater value than “cheap” wine where it is wanted in society,— just like silver. There are places where “good” wine is not wanted; and places where silver is not much in demand. In such places “good” wine will not be considered of any more value than “cheap” wine; nor will silver be more valuable than some “base” metal. In societies where “noble” metals and “good” wines are wanted, these become the objects of special industries, respectively. And just as the labor expended on its extraction in the least productive silver mine sets the value on silver, because this mine must be used for reproduction, so will the labor expended on the production of good wine by cultivation of the least adapted soil necessarily employed therefore set the value on good wine, and for the same reason.

The same principle applies to the wood question. Where the “natural grown” wood of the primeval forests is insufficient to satisfy the wants of society and it has to be “raised,” it is the labor expended on the “raised” wood that will set the value on all wood, and the wood of the primeval forest will have the same value as the wood artificially raised, for the reason that it can only be reproduced by means of raising; the cost of its reproduction is, therefore, the social labor necessary to be expended for “raised” wood.

It is entirely different, however, with the articles of the second category, chief and most typical among which is land. Why should land upon which no labor was spent for its production, and upon which no labor need or can be spent for reproduction have value? With all that, however, this does not refute Marx’s theory of value. We have already stated before that Marx went into the examination of this subject at length, and formulated a theory which none of his critics have even attempted to refute. Indeed, singularly enough, this branch of the Marxian theory has been passed by his critics with little or no comment. This theory, however, amounts to nothing less than this:— that land, as well as all other objects which are not produced by labor, has no value. This may sound strange in face of the fabulous prices that we know are sometimes paid for land. But these very fabulous prices are proof that the price paid does not represent the value of the land but something else entirely. Marx proves conclusively that rent is not the result of the value of the land, and the price of land is admittedly merely a “capitalization” of the rent. Marx calls attention to the fact, which is also mentioned by Böhm-Bawerk, who, however, fails to draw therefrom the proper consequences, that the price of land is a multiple of the rent by a certain number of years, the number depending on the prevailing rate of interest. In other words, it is not the value of the land that the price nominally paid for it represents, but the price of the rent. The transaction which formally and nominally appears as a sale of land, is in reality merely the discount of the rent. It differs absolutely nothing in character from the purchase of an annuity, which is not an exchange of present values but a mere banking operation. This is well known to real estate operators.

The best proof, however, of the theory that land has no value, is the fact that any amount of land can always be had on the largest portion of our Mother Earth without the necessity of paying for it. The query of Professor Masaryk, supposed to be a refutation of Marx by “the facts,”— “why is virgin soil bought and sold?” is to be answered: The fact is that virgin soil is not bought and sold. It is only after the soil has been husbanded and raped and has given birth to the bastard rent that it becomes the subject of purchase and sale, not before. And this fact ought to give the quietus, once and for all, to the claim that objects not produced by labor may still have value. It is true that it is pretty inconvenient for us to get to a place where land is obtainable without price because of no value, and that as far as we are concerned the argument of the places where land is free seems, therefore, far fetched. But, first of all, it is certainly no fault of the Marxian theory that our capitalistic class has abducted from the people all the soil, so that there is none left either in its virginity or in the possession of lawful husbandmen. And, secondly, we might ask the great host of Marx-critics to point out one place on the face of the globe, where a single article produced by labor can habitually be obtained without giving an equivalent therefor. Not on the whole face of this globe, nor even in the clouds or among the stars where Böhm-Bawerk can get gold-lumps free, can anybody find a place where chairs, coats or bicycles can be gotten free. Evidently there is a difference which the learned and astute Marx-critics failed to observe, but which is nevertheless very interesting, and ought to be for some people at least, very instructive.

There is another group of “commodities,” which, although of a different character, is to be considered in this connection. This group includes all those things which, although produced by labor, are essentially the product of some higher natural gift or power, and are, therefore, irreproducible by mere labor. This includes all works of art and the like. Not being the subject of production or reproduction by labor they are, naturally, not subject to the laws of value. But some ingenious Marx-critics, the indomitable Böhm-Bawerk among them, find great cause for rejoicing in this alleged “refutation” or “exception” to the laws of value as laid down by Marx. Ever faithful to their own confused nature and very consistently confusing economics with everything alien to it under the sun, they start out from their confusion of Value and Price, and adding to it the confusion of economic price with the colloquial application of the word price to every money-payment as a consideration for something, they declare that the Marxian theory of value must be false, for here are “goods” whose “value” is evidently not determined by labor. It does one good to see how these gentlemen who usually strut about like peacocks parading their lofty “moral sense” and “idealism,” and constantly berating the Marxists for their supposed gross materialism and “leveling” tendencies, come down from their high perch and place their “ideal” wares on a level with the grossest material things. Allured by the bait of making a point against Marx, they insist that high works of art embodying noble “ideas” are just as much “goods,” “wares and merchandise” to be trafficked in as anything else that comes down the pike in “due course of trade.” The willingness of these gentlemen to do so does not, however, make commodities of the works of genius, any more than their hypocritical phrases change the course of human progress. While the economic conditions of capitalist society reflect on the whole range of its ideas, creating there all sorts of distorted and shapeless beings, nobody is crazy enough to seriously apply the yardstick to these matters. While an “art journal” may sometimes quote a price of a great work of art because it “fetched” that much at a sale, no “dealer” even will dare say that the Sistine Madonna is equal in value to so many steam engines, or that a certain Raphael or Rubens has risen in value since J.P. Morgan became an art Mäcenas, thus augmenting the “demand.” It is true that the excesses of capitalism have tainted everything with a mercenary spirit, and have made art the subject of traffic, but this no more makes “wares” out of art-subjects than the traffic in white slaves turns love and affection into merchandise. Nor has the purchase-money paid for them any more to do with the economic categories of price and value than that paid to the harlot in compensation for her venal favors.

A different situation is presented in the case of commodities which are the result of so-called skilled or higher classes of labor. Masaryk thinks it a complete refutation of the labor theory of value that one man’s labor does not produce in the same space of time as much value as that of any other man’s. And Böhm-Bawerk considers it awful theoretical jugglery for Marx to say: “Skilled labor counts only as simple labor intensified, or rather, as multiplied simple labor, a given quantity of skilled labor being considered equal to a greater quantity of simple labor. Experience shows that this reduction is constantly being made. A commodity may be the product of the most skilled labor, but its value, by equating it to the product of simple unskilled labor, represents a definite quantity of the latter labor alone. The different proportions in which different sorts of labor are reduced to unskilled labor as their standard, are established by a social process that goes on behind the backs of the producers, and, consequently appears to be fixed by custom.” “If,” says Böhm-Bawerk, “the product of one day’s labor of one man is of the same value as that of another man’s five days’ labor, then, no matter how people consider it, it forms an exception to the alleged rule, that the exchange-value of goods depends on the amount of human labor incorporated in them.”

These objections evidently proceed upon the theory that Marx’s “alleged rule” claims that the value of commodities depends upon the amount of labor actually incorporated in them in the process of their production. It is needless to argue whether these objections would amount to anything were this the “alleged rule,” for the simple reason that no such rule was ever “alleged” by Marx. We have already seen, that Marx very specifically states that the value of a commodity does not depend on the amount of labor actually spent in its production. And this not only with reference to skilled and unskilled labor, but even with reference to unskilled labor itself. According to the Marxian theory of value, as expounded by us above, it makes absolutely no difference whatsoever, as far as its value is concerned, how much labor, of any kind, was actually spent in production of a commodity. The reason for this is, as already explained, that value, being a social phenomenon, depends entirely on social conditions of production and distribution, and does not depend on anything relating exclusively to the individual conditions of its production or exchange. This applies with equal force to the amount and kind of labor it cost its individual producer, as well as to the particular desires or wants of the persons immediately concerned in any of its mutations during the circulation process. This being so, it is evidently absurd to make a point of the fact that one day’s work of a skilled laborer may produce as much value as several days’ work of an unskilled laborer, and to consider skilled labor as an exception to the laws of value. There is no exception, for there is no such rule except in the perverted imagination of Marx-critics, and, perhaps, some “alleged” Marxists. Were this “allegation” of the rule correct, the exceptions would be too numerous to count. We have already noted before one such important “exception,” for instance, in the case of the introduction of improved methods of production before they are generally adopted, or the retention of obsolete methods of production. In either event the value of the commodities produced under the exceptional circumstances by ordinary unskilled labor will not depend on the labor actually spent in their production. Other “exceptions” will easily suggest themselves to the intelligent reader. The only trouble with all of them is that they are exceptions only to an imaginary rule, and not to the rule laid down in Marx’s theory of value. It is, therefore, very sad to see how some Marxists spend their energies in making futile attempts to explain away these objections to an imaginary Marxian theory. They would spend their time with more profit to themselves and their readers if they would leave fancy theorizing and see to it that Marx’s theories are not misstated; the objections would then take care of themselves.

The matter in itself is very simple. Skilled labor, whether the skill be personal with the producer, acquired by study and training, or impersonal, due to the use of better tools, is more productive. A skilled laborer produces in a given space of time more than the unskilled one. The value of a commodity being equal to the labor which it would cost to produce it, the value of the commodity will, in accordance with the laws of value already explained by us, be the amount of ordinary average labor necessary for its reproduction. For it is by this labor that society will have to reproduce it, the amount of skilled labor being by its very terms limited, and can not, therefore, be had in sufficient quantities to reproduce the commodities as they are wanted. When this labor becomes so common that it can be had in any quantity for the purposes of production and reproduction of commodities, it ceases to be “skilled,” and its product has no more value than that of any other average labor. The point to be remembered, however, is that while the measure of ordinary labor is the time during which it was expended, the measure of the time expended on any particular given commodity is the amount of product produced by its expenditure. In other words, the value of a commodity does not depend on the actual individual time spent in its production, but on the social time necessary for its reproduction, as was already stated at length before. When thus properly understood, the fact that the product of skilled labor is more valuable than the product of unskilled labor is no more an objection or an exception to our law of value than the fact that one man’s unskilled labor produces more value than another man’s unskilled labor because of a difference in the intensity of its application.

Another objection mentioned by Böhm-Bawerk, and the last to be considered by us here, is very characteristic of him and of most Marx-critics. They seem to be impregnably fortified in their utter ignorance of the Marxian theories which they criticise. In their blissful ignorance they very often prate like innocent children, so that one is often at a loss as to whether they ought to be pitied or envied. Says Böhm-Bawerk, very naively:

“The well-known and universally admitted fact that even in the case of those goods whose exchange-value coincides on the whole with the labor expended in their production, this coincidence is not always preserved, forms another exception to the labor principle. Because of the oscillations of supply and demand, the exchange-value of even such commodities is often pushed above or below the level of value which corresponds to the amount of labor incorporated in them. The latter forms only a gravitation point, not a fixed point of their exchange-value. It seems to me that the socialistic followers of the labor principle make too light of this objection. It is true that they state it, but they treat it as a small, passing irregularity whose presence does not in any way militate against the great ‘law’ of exchange-value.”

The simplicity of soul displayed in this passage seems to be of a higher world than ours. To intrude upon it with gross earthly notions about accuracy and the like seems almost criminal. It would also be manifestly futile to attempt to explain the subtleties of Marxian thought to one who, after a careful study of the Marxian system, has failed to grasp the difference between Value and Price in that system. To speak of the individual or actual Price (for that is what Böhm-Bawerk refers to), which, according to Marx, is usually different from Value, as an exception to Value, reveals a constitutional inability to understand the Marxian theory which ought to be admired, if not respected, for its elemental purity. And yet this is the mind which shows the way, and sets the pace, for the hosts of Marx-criticism!

Notes

1. Carl Diehl, Ueher das Verhaeltnis von Wert und Preis im Oekonomischen System von Karl Marx. Jena, 1898.

2. Karl Knies. Das Geld, p. 121.

The International Socialist Review (ISR) was published monthly in Chicago from 1900 until 1918 by AM Simons and later Charles H. Kerr and loyal to the Socialist Party of America and is one of the essential publications in US left history. During the editorship of A.M. Simons it was largely theoretical and moderate. In 1908, Charles H. Kerr took over as editor with strong influence from Mary E Marcy. The magazine became the foremost proponent of the SP’s left wing growing to tens of thousands of subscribers. It remained revolutionary in outlook and anti-militarist during World War One. It liberally used photographs and images, with news, theory, arts and organizing in its pages. It was closed down in government repression in 1918.

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