FAQ U: What is Marx's Critique of Value?

Sometimes, I (try to) talk about economics and end up bringing up a weird phrase: “social” value, or even “value” by itself. When I talk about social value, I refer to economic value, specifically following Marx’s critique of value in his Capital, Volume One [1]. You can read that volume for yourself, or read Marx’s seminar Value, Price and Profit where he discusses the concept in isolation [2]. I’ve also written about the implications of value in the context of so-called market socialism [3], or how the book Debt: The First 5,000 Years does not adequately account for value in discussing monetary units across history [4]. There was also an article I wrote a while back talking about value as a form of abstraction [5].

This is my attempt, though, to explain Marx’s critique of value in my own words, directly and not in the context of something else, in case some of you have not read Marx and want a simpler starting point than getting knee-deep in eighteen-hundreds (anti-)economics textbook-land. My emphasis is slightly different than what Marx focuses on, and I worry that it’s a bit disorganized, but I hope it’s still useful. I apologize for anything brushed over or too hastily summarized; please feel free to correct any points or ask questions! Ultimately, this is a reference page for me to refer to when I talk about value in the future.

1. Use-Value vs. Exchange-Value

Value is not an immediately discernible thing; it is not an intrinsic quality of an item that we can observe or measure directly, because it is a social construct. Don’t roll your eyes: if anything is a social construct, if there were one social construct in the entire world, it would have to be which things are valuable and why.

Marx starts from a type of thing called a commodity, which is a composite of two things: use-value and exchange-value. These two categories are the things with which we, as people who participate in a society, interact directly. Use-value is the particular use of a commodity; or, more accurately, it is a function of the item or service which is understood by society to fulfill some need or want. You eat food and wear clothes; you pay to ride a bus; or you enjoy feet pictures from Twitter catfish. Use-value is what you make of it, but it’s a reason (or a pretense) for something to be available on the market. There are also items which have use-value but are not commodities, like if you were to grow your own food and eat it yourself. Just because something can be consumed or otherwise used does not mean it’s a commodity, because a commodity must also have exchange-value and, thus, be on the market.

Exchange-value is, at a first glance, how much a commodity costs to purchase. When I order McDonald’s, I pay $5 to $10 depending on how hungry I am. But I can also spend $10 to buy really cheap shoes at Walmart, or I can watch a movie in the morning. If I buy a nice big book for $30, that’s three to six McDonald’s orders or three pairs of really cheap shoes. Thanks to money, though, I don’t have to trade a cheap pair of shoes to watch a movie at 11 AM on a weekday (not that we ever lived in a barter society). The $10 is an equal exchange-value to both of those things, meaning that they are equal in exchange-value despite whatever different actual, specific uses (i.e. use-value) they might have.

1.1. Forms of Exchange-Value

Marx investigates exchange-value formally, almost like a math problem. Step by step, he shows the nature of how exchange-value signifies equivalences between commodities in increasingly complex ways. Keep in mind that he is not arguing for a barter myth, like some people (even Engels!) thought he was. Instead, he is illustrating how money as the privileged unit of account and exchange implies quantitative equivalences between the things being valued in money. Simply put, you can spend $10 at McDonald’s or on a movie ticket because those things are equal in exchange-value (despite whatever their uses are).

The operator ab I use below signifies that the exchange-values of a and b are equal.

Step A: Basic equivalence (“Elementary Form”)

One quantity of commodity A is worth another quantity of commodity B.

20 yds of linen ≈ 1 coat

Step B: Expanded equivalence (“Extended Form”)

We can express a whole set of commodities (or, really, quantities thereof) as all being of equal worth.

20 yds linen ≈ 1 coat ≈ 10 lbs tea ≈ 40 lbs coffee ≈ 2 oz gold ≈ 500 lbs iron

Step C: Relative equivalence (“General Form”)

We can express the exchange-value of different commodities (and quantities) with respect to one singular commodity (and its quantity).

1 coat          |
10 lbs tea      |
40 lbs coffee   | ≈ 20 yds linen
2 oz gold       |
500 lbs iron    |

What this means is that every commodity's value is expressed in the basic form (step A) with respect to the same commodity, in this case yards of linen.

Step D: Privileged equivalence (“Money Form”)

Rather than exchange-value just being expressed in terms of one commodity, one commodity has acquired a special status in society as the commodity by which all other commodities are measured [6]. It emerges as a unit of account (i.e. of equivalence, of exchange) with no other use, that is, money!

20 yds linen   = |
1 coat         = |
10 lbs tea     = | 2 oz gold
40 lbs coffee  = |
500 lbs iron   = |

Marx uses gold as a stand-in for a stereotypical currency, rather than talking about any specific reason why one commodity should arise above the others and become (or be imposed as) money. Historically, money takes forms arbitrary as valuable metal or shells or sheets of paper. Although the different forms which money takes may certainly inform the nature of that money, here we are concerned with the function of money with respect to commodity equivalence and exchange.

2. Exchange Value vs. Value

We have seen Marx’s argument that money as a unit of exchange relies upon equivalences between different quantities of different commodities, regardless of the use-cases of those different commodities. You can’t get much use out of eating a movie ticket, but it costs the same as eating at McDonald’s (at least given how much I spend at McDonald’s, hypothetically). This is the big point that Marx is making here: why are those things valued the same? With respect to what are they equal? It definitely is not money, since money is just a unit of measure for those costs. In other words, it is not just because gold is shiny that 20 yards of linen is worth 2 oz of gold, even if gold is what we use (hypothetically) to buy or sell everything. This is even less the case when we start considering fiat currency which, as we know, has no inherent value at all except for what you can buy with it.

Value is the quantity represented or measured by exchange-value. Let’s relish, for a while, in not knowing anything else. We have identified that money measures something, or that when we make any statement that X of A is worth Y of B, that the thing being measured is obscured from the statement of equivalence itself. Moreover, this equivalence is one that appears or emerges in practice as exchanges, since there is no good reason to compare values if you are not going to exchange them. So these exchange-values, insofar as they are not just hypothetical (and what good is a price tag for an item that won’t sell?), emerge only in the context of exchange, particularly on a social scale where items are understood by society at large to be valuable for production and sale.

What is value, though? What is exchange-value abstracting, or what does it mean for society at large to value something at $10 versus $100? How are commodities assigned value? Who or what is assigning them these values, and why?

3. Creating Value

There is one thing or substance common to all commodities: labor, but not without some caveats. We are talking about commodities which are produced and consumed on a social scale. This does not necessarily mean a mass scale, especially when considering pre-industrial societies that nevertheless operated on exchanging produce. However, it does mean that we are not talking about collectible items that are exchanged outside the typical social sphere of exchange (for increasingly ludicrous amounts of money than would be expected if such items were mundane, so to speak). It also means that we are talking about items for which society has a demand, i.e. they are recognized to fulfill some use or purpose worthy of investment (i.e. they have use-value). These are also items whose raw materials can be sourced from society. Factors like supply and demand thus have an impact on whether society desires or is able to produce certain commodities, but this is already encapsulated (or abstracted) in the form of society’s time and resources. Considering then a typical commodity with reliable supply and consistent demand [7] we can return to the source of value and the greatest cost of capital: labor.

We are not talking about labor as such, but we are again in the realm of vast abstraction. Labor can only be quantified, or objectified, in terms of time. Yet no one knows how much time went into the production of this or that item; or, even if they did, you could not persuade someone to buy a more expensive instance of the same commodity because more time went into producing that specific instance of the item (i.e. just because you spent eight hours making a pie does not mean it is worth more than a pie made in two hours—on the contrary, you may have wasted six hours). For these reasons, society does not care about how much time goes into the production of each commodity instance, but only how much time each certain type of commodity takes on average to be produced by an average person. Marx calls this “socially necessary labor time” or SNLT, but that can be a verbose and obscure term for something otherwise intuitive: how much time does society want to invest into making one thing-unit, looking at labor capabilities in the abstract rather than specific individuals?

3.1. Circulation of Value

If value is an abstract thing, rather than a tangible quality of something, "where" does it exist, and how can it be created? We're working with a social construct here. No one is keeping track of how much time or how many resources (again, which also cost time) something should take to produce and, therefore, how much it should be worth. All we really have are price-tags which are conjectures of a commodity's value, and which even change in order to reflect fluctuation in the commodity's value. So, again, where does value exist, and how can it be created?

3.1.1. Circuit of Commodity Exchange

Marx starts with the commodity. We know that commodities have an exchange-value in money. It is possible, theoretically, to start off with some commodity C1, exchange it for money M, and then exchange that money for another commodity C2 of the same value.


Barring atypical factors (such as negotiation or price fluctuation between the two exchanges), we know that C1 is equal in value to C2 because they are exchanged for the same quantity of money M, i.e. they have the same exchange-value. This is called the circuit of commodity exchange: commodities are exchanged for money which can then be exchanged for other commodities.

The problem is that basic commodity exchange does not help us very much. The commodities already exist and are in circulation. If there are a bunch of commodities and a bunch of money in a marketplace, we can exchange them as much as we want. But nothing happens. In fact, if commodities were eventually consumed instead of exchanged, they exit circulation altogether. Their use-value is used. Their exchange-value is defunct. Their social value might as well have been eaten. Even worse, eventually we run out of commodities.

How are new commodities created? Where does value come from? These questions are ultimately asking the same thing. Let's see why.

3.1.2. Circuit of Capital

The circuit of capital is much more useful. On a superficial level, it tells us about how you can invest some money M1 into producing some commodity C, and then end up with money M2.


M2 > M1

Remember that, since abstract labor time generates value, we should expect M2 to be greater in quantity than M1. Indeed, if M2 is less than or equal to M1, the whole operation is a bust because society has decided that nothing of worth was produced or performed, and so nothing is gained. This is all that capital sees: how to turn money into more money. However, the circuit of capital tells us much more if we look closely. It is the very mechanism of how new value is created.

The circuit of capital represents, on one hand, the basic operations of a stereotypical capitalist firm. Some amount of money is invested, to hire employees and purchase materials. A good is produced or a service is rendered, taking time and exhausting resources. By the end of it, the firm hopes to have generated enough revenue in order to make up what they have spent, and also to have some leftover. We understand that, in this case, M1 represents an initial capital investment, C represents the process of production (or, rather, its product), and M2 represents the returns on the investment.

But the circuit of capital also represents commodity production in general. Commodities do not come out of nowhere. They are produced, requiring time and resources. Both of these things are expenses. This is represented in the abstract by M1. Even if you do not spend any money producing a thing, you still invest something (since, if you did nothing, what would you have to show for it?). Besides, more likely than not, whatever you spent has already been valued by society, but that does not even have to be the case. M1 could be zero for all we care. Maybe you have a golden goose and everyone else has to raise chickens like a normie.

You better hope to have made something valuable, though, enough that you would not have wasted whatever time or resources you spent. This is the key point: if a commodity were just worth what had been spent to make it, there would be no point. If you spent $10 to produce something worth $10, you have gained nothing. This is the sort of circular nature of commodity production. A commodity is valuable because it was produced, and it was produced because it was (expected to be) valuable. If something were free to acquire and consume, why invest time and effort into producing and selling that thing to others? Moreover, you should hope to have produced that thing in the same or lesser timeframe as others, since otherwise you are underperforming with respect to social expectation.

3.1.3. Circuits in Society

A society organized around commodity production must generate new value. This does not mean that all societies with commodity production seek out new value, but those where commodity circulation is the predominant way of receiving use-value (food to eat, stuffed animals to cuddle, feet pictures to admire) must generate commodities in order to meet those demands. Whether or not the commodity-producers, or society at large, is aware of this drive is arbitrary. Knowingly or not, value must flow; it must be created, circulated, and consumed or else everything is fucked. It is in this sense that Marx says that the wealth of capitalist societies presents itself “as an immense accumulation of commodities”.

The “immense accumulation of commodities”, of value, is none other than capital itself. The circuit of capital, on a superficial level, appears to just be money begetting money—and indeed that’s all that money-holders (capitalists) see or care about when they invest in a firm and hope to make returns on it. But what underlies this circuit is the creation of new value, the creation of a commodity which society agrees was worth the time and effort spent making it.

More importantly, the “intense accumulation of commodities” is more than the production of physical goods or services: it is the organization of society around producing value. A commodity basically does not exist if it is standing still. If commodities are not circulating, neither is value. If commodities are not being created, neither is value. Value can be understood this way as the movement of society itself. Rather than just what a society is producing or consuming, it is how society is oriented around those activities. 

Ultimately, a society that is organized around commodity production must create new value (new commodities) lest it runs out of value. Thus this society must be geared towards the creation of value. This is the basic mechanism we call capital, operating not just on the scale of individual firms, but on a social level as far as it can reach. And reach it must, since new value must flow.

3.2. Labor, Time, and Value

Capitalist society requires mass production of commodities, and this is only really possible if labor is available en masse. In England, this was made possible when peasants were forced off their land and, without anything with which to make a living, were ultimately forced to sell their time to those who could afford it. There is a similar effect in colonized countries where people who lose their original livelihood are forced to sell their time to international firms instead (if not local ones, but there are typically few to be found with the purchasing power to employ mass labor). These are the sorts of conditions under which commodity exchange begins to organize social relations around itself.

So, mass production means mass labor, and mass labor under capitalist society means wage labor. As we discussed, though, what industrial firms purchase is not labor itself, but the time it takes (on average) to expectedly perform some labor and produce some value. Thus labor time, like any other commodity, has value. It is just a special commodity in that its consumption (use-value) results in the creation of new value, since it is only by production that new commodity-objects come into existence on the market (or, more broadly, that value is created).

The "theoretical" ground floor of labor time value is the amount of value which can be exchanged in order to compensate for that expense of time and energy: think of costs of food, rent, utilities, and other things deemed necessary to live. But there are different 'kinds' of labor, some considered more valuable than others. Valuation of a commodity implies a division of social outputs, i.e. the existence supposed of different commodity types (e.g. loaves of bread, yards of linen, pairs of shoes). By extension, there is a division of social inputs: some labors are valued by society more than others, since they are considered to generate greater value than lesser labors in an equal amount of time. You can literally compare two wage rates in aggregate and see which is valued more! For one type of labor to be considered more valuable than another is more of a political question than one necessarily having to do with the skill or difficulty of the actual activity itself.

3.3. Constant & Variable Capital

Value is a feedback loop. Capital employs labor by employing time, during which surplus value is produced in the form of new commodities to be sold according to how society receives and values them. Capital is driven to minimize the costs of labor in order to maximize the exploitation thereof or, in other words, to maximize the difference between M2 and M1.

There are other costs of production, such as those associated with machinery or raw materials, but these are goods on the market whose prices can, at best, be negotiated—and one cannot typically expect a vendor to sell a product for less than they would expect from someone else, so the capital investment c into these expenses is virtually constant with respect to society at large (i.e. considering the average situation).

Labor meanwhile is a variable investment v of capital, in that the expense imposed by labor (or ‘suggested’ by capital) is the basis of new, derived value. A commodity fresh on the market contains new value precisely because it has been produced or otherwise worked, whether raw materials have been processed into a new item or whether items have been carried from place to place [9]. The proportion of 'new' surplus value to variable capital (wages) spent, i.e. the rate of exploitation, is central to capitalist conflict since it is something which can be socially determined and for which workers must struggle.

3.3.1. Discovering Surplus Value

M1 is ultimately reducible to constant capital c and variable capital v:

M1 = c + v

And surplus value s can be expressed in terms of M1 and M2 (which is equal to c + v):

s = M2 - M1

s = M2 - c - v

s + c + v = M2

Our first hunch might be to look for a rate of profit, a proportion of s to M2 or c + v. But that's not immediately handy, since we know that c is generally pegged to market values and does not contribute new value to a production. It is just a socially expected (i.e. average) expense that is compensated in the total value of the product on the market.

s / (c + v)

So, instead, what Marx favors is the rate of exploitation which is the ratio of v to s. This is the ratio of what new value was created (expressed in exchange-value) minus what was spent in wages in order to create it.

s / v

Marx draws a couple of conclusions from this ratio. First, that it can be expressed in terms of time rather than in terms of money. In a given work period, only some time is spent producing new value; the rest of the time is spent creating value with which the worker is compensated. Thus for a rate of exploitation of 25% (one to five) and a work week of five days, we might consider four of those days as the worker producing for their own compensation, while one of those days is spent working for free, as it were. We already know that the worker is paid for their time, not for their produce; this is just a mathematical expression of that relationship.

3.3.2. Increasing Surplus Value

Second, there are two ways that the capitalist can increase how much surplus value they generate from their workers. The first is by simply increasing the duration of the working period, adding another hour of work for example. Marx calls this absolute surplus value since it hinges on increasing the value of s per v (increasing their total sum, s + v). Industrial capitalists historically opposed the demands to reduce the work week because they are attempts to directly reduce s.

Absolute surplus value is bound by human limitations. You cannot work more than twenty-four hours in a single day, and some of that time must be spent sleeping and eating (at least). Capitalists who increase the length of the working day risk losing productivity, since workers who don’t sleep or eat are less productive than those who do. Although, to some, this is an issue that can be solved by firms competing on the labor market, but a firm that goes against the tide is less competitive in the commodity market than those who totally fuck their workers (if so enabled). Governments thus often impose restrictions on the working day or work week since, while trying to keep capitalist society functional, they cannot risk individual capitalists trying to one-up each other in this respect (to a degree).

The second way is what Marx calls relative surplus value since it does not modify the work week directly, but modifies the proportion of s to v, while their total sum stays the same. The capitalist is incentivized to either decrease v (by devaluing wages or lowering costs of living to avoid raises), or increase s (by improving productivity in the same amount of time). Meanwhile, when workers demand an increase in wages, they are not demanding to decrease the total s + v but to allocate “points” from s to v (keeping the total the same).

Relative surplus value is bound to market forces since the total duration of work is set. The three examples mentioned—improving productivity, lowering wages, or improving costs of living—depend on inventing new technology, competing with other firms, or improving productivity in entire industries (in particular, consumer industries).

3.3.3. Things Fall Apart

Improving productivity is certainly a way to generate more value, but how do you improve productivity? We can’t exactly make human beings stronger or faster or smarter across the board, at least not without extremely suspect policies (didn’t stop some people from trying!). Automation via machinery vastly improves efficiency of labor, decreasing the time it takes to produce value.

As one firm improves productivity, they produce at a faster rate than others and thus generate more value (and more profit) in the same amount of time. Marx calls this additional revenue “super-profit”, since it does not result from the generation of new value.

However, as other firms catch up and society “expects” less time to make the thing, the value of the commodity decreases overall and becomes pegged to the value of the machinery expected to help make it. This is because machines don’t produce new value, but transfer existing value to a product (i.e. they are constant, not variable, capital investments). Someone had to make them before they be could used, whether that means firms buy machines wholesale, or they vertically integrate in order to produce those machines themselves. If society fully automated the production of pies, the value of a pie would be pegged to the value of the pie-making machine and whatever ingredients are used (insofar as this machinery or its products would be widely available, becoming the socially expected way of making pies).

Either way, this results in a rat race where firms must continually develop their productivity in order to stay on top of the market, or else suffer in terms of relative productivity. Production itself meanwhile requires less and less new effort, instead drawing from the value already contained in the helpful machines. Commodities are increasingly composed of dead labor, i.e. of other non-labor-time commodities Therefore, Marx claims, the rate of profit decreases over time as increasingly efficient machines cause less new value to be created (assuming at most a constant rate of exploitation).. The drive of capital to increase itself leads to its own destruction.

The tendency of the rate of profit to fall (lovingly abbreviated as TRPF) is an extensively argued topic, with some analysts arguing about whether or not it is empirically proven, others arguing that it is not necessarily a formal conclusion of capitalism like Marx argues, and others still arguing that it need not be true to arrive at a crisis theory of capitalism. That discourse is outside the scope of this post since I don't at all feel equipped to have an informed opinion. Crazy, though.

4. Conclusion

If labor is the source of value—and such a statement must be levied with caveats given the different ways in which value appears to society—it is only insofar as labor itself is already valued by society, and is thus already subject to all kinds of abstraction and social pretenses. Marx therefore does not really suppose a labor theory of value, but he critiques the very notion as something which contains social presuppositions about what constitutes value and thus ‘valuable’ labor (and vice versa, given the circular nature of value). Value is ultimately a social relation which governs capitalist production, circulation, and society. It is not an intrinsic product or substance of labor itself, but something imposed onto it by capitalist economy.

The struggle of workers within capitalism revolves around forcing employers to better compensate for time and effort spent while working, i.e. forcing them to recognize the cost of labor as greater than it is currently recognized by society, by advocating to raise wages and fight for better conditions in general. Meanwhile, the aim of a workers’ movement to abolish themselves (and the capitalists) as a class must entail the abolition of value itself, the Gordian Knot of commodity production and circulation. This involves, on a superficial level, the abolition of firms, wage labor, and money, but on a deeper level it entails the reorganization of society around production for use.


[1] Marx, Karl. 1867. Capital, Volume One: The Process of Production of Capital.

[2] Marx, Karl. 1865. Value, Price and Profit.

[3] B., Marcia. 2022-07-12. "Markets Without Capitalism? Reevaluating Commodity Circulation in Capital Volume I", Traverse Fantasy.

[4] B., Marcia. 2022-08-02. "David Graeber's Debt: An Informal Review", Traverse Fantasy.

[5] B., Marcia. 2022-04-12. "Abstraction, the Basis of Capitalism", Traverse Fantasy.

[6] This has interesting implications for Graeber’s theory of money in Debt: The First 5,000 Years wherein, rather than money ever emerging naturally from some set of commodities in a barter economy, money is a unit of account imposed onto some society by a political power. See [4].

[7] I hope it is clear that a change in supply or demand will impact society’s capability or willingness to produce a commodity, with respect to how much time it can invest or how much it is willing to. Some people argue that price tags fluctuate around a value which itself must considered over aggregate time, meaning that price tags abstract and obscure the underlying value they signify. Therefore there is not any function that converts value into price tags, but Marx is dealing with a more abstract category in ‘value’ than he discusses later in the concrete form of ‘price’. This is a topic I’m still trying to better understand.

[8] To be precise, a commodity contains the value of what has been expended in its production (constant capital and variable capital) plus the new value which has been 'created' (surplus value).

[9] And thus, with respect to wherever they travel, become more valuable than where they had been produced if those same items could not just as well be produced locally. Otherwise, what gain is it to transport goods and compete with firms who do not have to pay those costs of transport?


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