Use value
Use value or value in use is a concept in classical political economy and Marxian economics. It refers to the tangible features of a commodity which can satisfy some human requirement, want or need, or which serves a useful purpose. In Karl Marx's critique of political economy, any product has a labor-value and a use-value, and if it is traded as a commodity in markets, it additionally has an exchange value, most often expressed as a money-price.
Marx acknowledges that commodities being traded also have a general utility, implied by the fact that people want them, but he argues that this by itself tells us nothing about the specific character of the economy in which they are produced and sold.
Origin of the concept
The concepts of value, use value, utility, exchange value and price have a very long history in economic and philosophical thought. From Aristotle to Adam Smith and David Ricardo, their meanings have evolved. Smith recognized that commodities may have an exchange-value but may satisfy no use-value, such as diamonds, while a commodity with a very high use-value may have a very low exchange-value, such as water. Marx comments for example that "in English writers of the 17th century we frequently find worth in the sense of value in use, and value in the sense of exchange-value." With the expansion of market economy, however, the focus of economists has increasingly been on prices and price-relations, the social process of exchange as such being assumed to occur as a naturally given fact.In The Economic and Philosophic Manuscripts of 1844, Marx emphasizes that the use-value of a labour-product is practical and objectively determined; that is, it inheres in the intrinsic characteristics of a product that enable it to satisfy a human need or want. The use-value of a product therefore exists as a material reality vis-a-vis social needs regardless of the individual need of any particular person. The use-value of a commodity is specifically a social use-value, meaning that it has a generally accepted use-value for others in society, and not just for the producer.
Marx's definition
Marx first defines use-value precisely in A Contribution to the Critique of Political Economy where he explains:The concept is also introduced at the beginning of Das Kapital, where Marx writes, but in the extract below he holds it up as a critique of Hegel's liberal "Philosophy of Right". He remained a sharp critic of what was to the Marxian view a destructive philosophy:
This was a direct reference by Marx to Hegel's Elements of the Philosophy of Right as Marx adds:
Marx acknowledges that a nominal price or value can be imputed to goods or assets which are not reproducible goods and not produced by human labour, as correctly noted later by Engels that a product is not necessarily a commodity. However Marx generally holds that only human labour expended can create value compared with Nature, through instrumentation known as modus operandi, or the method of working.
Transformation into a commodity
"As exchange-values, all commodities are merely definite quantities of congealed labour-time", wrote Karl Marx. The discrepancy of the true purpose of value came to be one of the biggest sources of conflict between capital and labour. The transformation of a use-value into a social use-value and into a commodity is not automatic or spontaneous, but has technical, social and political preconditions. For example, it must be possible to trade it, and to transfer ownership or access rights to it from one person or organization to another in a secure way. There must also be a real market demand for it. And all that may depend greatly on the nature of the use-value itself, as well as the ability to package, store, preserve and transport it. In the case of information or communication as use-values, transforming them into commodities may be a complex and problem-fraught process.Thus, the objective characteristics of use-values are very important for understanding the development and expansion of market trade, and necessary technical relationships between different economic activities. To produce a car, for example, you objectively require steel, and this steel is required, regardless of what its price might be. Necessary relationships therefore exist between different use-values, because they are technically, materially and practically related. Some authors therefore write about an "industrial complex" or "technological complex", indicating thereby how different technological products are linked in a system. A good example would be all the different products involved in the production and use of motor cars.
The category of use-value is also important in distinguishing different economic sectors according to their specific type of output. Following Quesnay's analysis of economic reproduction, Marx distinguished between the economic sector producing means of production and the sectors producing consumer goods and luxuries. In modern national accounts more subtle distinctions are made, for example between primary, secondary and tertiary production, semi-durable and durable goods, and so on.
Role in political economy
In his textbook The Theory of Capitalist Development, American Marxist Paul Sweezy claimed:Curiously, Sweezy disregarded that in consuming, producers and consumers might also be socially related.
Likewise, in his influential Principles of Political Economy, the Japanese Marxist Kozo Uno sums up the theory of a "purely capitalist society" in the three doctrines of circulation, production and distribution. Apparently it did not occur to him that even in the purest capitalist society, consumption would have to occur as a necessary aspect of economic reproduction, and that capitalist relations extended to, and included, the way in which consumption was organised in capitalist society—increasingly substituting private consumption for collective consumption.
Marx himself explicitly rejected Sweezy's and Uno's interpretation. In a draft included in the Grundrisse manuscripts, which inspired the starting point of A Contribution to the Critique of Political Economy and Das Kapital, Marx explicitly states:
In an important essay Roman Rosdolsky shows the important role of use value in Marx's economics. The fact is that Marx himself, in the introduction to his Grundrisse manuscript, had defined the economic sphere as the totality of production, circulation, distribution and consumption. He did not however live to finish Das Kapital, and did not theorise how commercial relations would reshape the sphere of personal consumption in accordance with the requirements of capital accumulation.
Minor issues remained from the redundant neoclassical theories, such as the question of the proper empirical definition of capital and labour in the laws factor substitution. Other empirical issues include the so-called Solow Residual in which the heterogenous nature of labour is thoroughly explored for its qualitative elements beyond differentiation. and the concept of total factor productivity, prompting some to consider such things as technology, human capital, stock of knowledge to name a few tested. It was only later that scholars such as Walter Benjamin, Fernand Braudel, Ben Fine, Manuel Castells and Michel Aglietta tried to fill this gap in Marx's unfinished work. In modern times the theory has been extended to conclude that conversion of energy-driven work does not rely on labour-intensive inputs; thus use can be unsupervised work that develops a notion of human capital.
Equation: A = P + hL
+ h, the units of energy
Utility
Marx's concept of use-value seems akin to, but in reality differs from the neoclassical concept of utility:- Marx usually assumes in his analysis that products sold in the market have a use-value to the buyer, without attempting to quantify that use-value other than in product units of price, and commodity value.. "The utility makes it a use value," The neoclassicals, on the other hand, typically see prices as the quantitative expression of the general utility of products for buyers and sellers, instead of expressing their exchange-value. For "Price is the money-name of the labour realised in a commodity".
- In neoclassical economics, this utility is ultimately subjectively determined by the buyer of a good, and not objectively by the intrinsic characteristics of the good. Thus, neoclassical economists often talk about the marginal utility of a product, i.e., how its utility fluctuates according to consumption patterns. This kind of utility is a "general utility" which exists independently from particular uses that can be made of a product, the assumption being that if somebody wants, demands, desires or needs a good, then it has this general utility. According to his supporters Marx would have allegedly rejected the concept of marginal utility precisely because it accentuated profit on capital returns over the usefulness or utility of labour. Thus the wider application of general utility lay in variable rates of productivity, since higher labour inputs could raise or lower the price of commodity. This was the true concept of Use as a Value system: the higher the rate of 'productiveness' the more labour 'crystallised' in the article.
- Marx rejects any economic doctrine of consumer sovereignty, stating among other things in his first chapter to Das Kapital that "In bourgeois societies the economic fictio juris prevails, that every one, as a buyer, possesses an encyclopaedic knowledge of commodities".
"Indifference" of capitalists
Some academics such as Professor Robert Albritton, a Canadian political scientist, have claimed that according to Marx, capitalists are basically "indifferent" to the use-value of the goods and services in which they trade, since what matters to capitalists is just the money they make; whatever the buyer does with the goods and services produced is, so it seems, of no real concern.But this is arguably a misunderstanding of business activity and the bourgeoisie as a class. Marx thought that capitalists can never be totally "indifferent" to use-values, because inputs of sufficient quality must be bought and managed to produce outputs that:
- will sell at an adequate profit;
- are legally permitted by the state to be sold;
- do not destroy the reputation of the supplier.
It is just that from the point of view of the financier or investor, the main concern is not what exactly is being produced as such or how useful that is for society, but whether the investment can make a profit for him. If the products of the enterprise being invested in sell and make a profit, then that is regarded as sufficient indication of usefulness. Even so, the investor is obviously interested in "the state of the market" for the enterprise's products—if certain products are being used less or used more, this affects sales and profits. So to evaluate "the state of the market", the investor needs knowledge about the place of a product in the value chain and how it is being used.
Often, Marx assumed in Das Kapital for argument's sake that supply and demand will balance, and that products do sell. Even so, Marx carefully defines the production process both as a labour process creating use-values, and a valorisation process creating new value. He asserts only that "capital in general" as an abstract social power, or as a property claim to surplus value, is indifferent to particular use-values—what matters in this financial relation is only whether more value can be appropriated through the exchanges that occur. Most share-holders are not interested in whether a company actually satisfies customers, they want an adequate profit on their investment.
In modern times, business leaders are often very concerned with total quality management in production, which has become the object of scientific studies, as well as a new source of industrial conflict, since attempts are made to integrate everything a worker is and does in the battle for improved quality. In that case, it could be argued not just labour power but the whole person is a use-value. Some regard this practice as a kind of "wage-slavery".
From beginning to end, and from production to consumption, use-value and exchange-value form a dialectical unity. If this is not fully clear from Marx's writings, that is perhaps mainly because he never theorised the sphere of final consumption in any detail, nor the way in which commerce reshapes the way that final consumption takes place.