Marxman
19th September 2002, 17:58
Commodity
A commodity is something that is produced for the purpose of exchanging for something else, and as such, is the material form given to a fundamental social relation — the exchange of labour.
Marx saw the commodity as the “cell” of bourgeois society (i.e., capitalism), as expressed in the opening words of his most important book, Capital:
“The wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities,’ its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.
“A commodity is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another. The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference. Neither are we here concerned to know how the object satisfies these wants, whether directly as means of subsistence, or indirectly as means of production. ...
“The use-values of commodities furnish the material for a special study, that of the commercial knowledge of commodities. Use-values become a reality only by use or consumption: they also constitute the substance of all wealth, whatever may be the social form of that wealth. In the form of society we are about to consider, they are, in addition, the material depositories of exchange-value.” [Capital, Chapter I]
As these paragraphs makes clear, for Marx, products of labour may be either goods or services, but in the way Marx understands the term, remain commodities provided only that they are produced for the purpose of exchange.
“For example, when the peasant takes a wandering tailor, of the kind that existed in times past, into his house, and gives him the material to make clothes with. ... The man who takes the cloth I supplied to him and makes me an article of clothing out of it gives me a use value. But instead of giving it directly in objective form, he gives it in the form of activity. I give him a completed use value; he completes another for me. The difference between previous, objectified labour and living, present labour here appears as a merely formal difference between the different tenses of labour, at one time in the perfect and at another in the present. ... “ [Grundrisse, part 9. Original accumulation of capital]
Nor is it important whether they are foodstuffs, clothing and suchlike, satisfying very basic human needs, or we are dealing with labour which meets more ephemeral needs, such as with designer labels, romantic movies or tarot-readings.
Labour is a commodity, provided only that the producer works to meet the needs of someone else, as a means to satisfy their own needs. A good or service produced for the labourer’s own immediate consumption may be a “use-value”, but it is not a commodity.
Likewise, if a woman produces a meal for the consumption of her loved-ones, as part of a domestic contract, whether made before God, before the law or out of simple love, she produces not a commodity, but labour directly to meet the needs of another person, but not just so as to satisfy her own needs, not for payment.
It matters not whether the person actually proffering payment is the ultimate consumer, nor what may be the manner of payment, nor whether payment is made before during or after the labour is carried out, only that the good or service is provided in exchange for payment, to earn a living.
So things in general and products of labour in particular are not necessarily commodities and do not necessarily have value:
“A thing can be a use-value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, etc.
“A thing can be useful, and the product of human labour, without being a commodity. Whoever directly satisfies his wants with the produce of his own labour, creates, indeed, use-values, but not commodities. In order to produce the latter, he must not only produce use-values, but use-values for others, social use-values.
“And not only for others, without more. The mediaeval peasant produced quit-rent-corn for his feudal lord and tithe-corn for his parson. But neither the quit-rent-corn nor the tithe-corn became commodities by reason of the fact that they had been produced for others. To become a commodity a product must be transferred to another, whom it will serve as a use-value, by means of an exchange.
“Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value.” [Capital, Ch. 1, Section I]
So for example, the work of a teacher is a commodity whether the teaching is paid for by the pupil, the pupil’s parents or by the State. On the other hand, a mother’s education of her child is not a commodity and nor is the work of a preacher who spreads the word of God — the point is only whether the labour was done in exchange for something else.
Marx points out how the circulation of the product of our labour in the market, and how it takes on a “market value” independently of us, and moves from hand to hand through the market until it finds its ultimate consumer, all beyond our control, creates illusions which remind him of animism and fetishism, of primitive religious points of view that endow inanimate objects with human capacities:
“the existence of the things qua commodities, and the value-relation between the products of labour which stamps them as commodities, have absolutely no connection with their physical properties and with the material relations arising therefrom. There it is a definite social relation between men, that assumes, in their eyes, the fantastic form of a relation between things. ... This I call the Fetishism ... of commodities.” [Capital, Ch. 1]
Even though what goes on in the market is nothing but the collective action of human beings, the market manifests itself like a force of nature. Even though the product only has value because it embodies human labour and satisfied human needs, its value appears to be a natural attribute of the product, like its weight or density.
In general, commodities are exchanged at their value, i.e., at their “exchange-value”. That is when one commodity is exchanged for another, on average, in the given society in which the exchange takes place, the two commodities exchanged for one another are of equal value.
“Every owner of a commodity wishes to part with it in exchange only for those commodities whose use-value satisfies some want of his. Looked at in this way, exchange is for him simply a private transaction. On the other hand, he desires to realise the value of his commodity, to convert it into any other suitable commodity of equal value, irrespective of whether his own commodity has or has not any use-value for the owner of the other. [Capital, Ch. 2]
The value of a given quantity of labour offered for exchange on the market, is determined by value structures specific to the given social and historical conditions, and Marx analysed this process of value determination in the same Chapter One of Capital.
“Let us take two commodities, e.g., corn and iron. The proportions in which they are exchangeable, whatever those proportions may be, can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron: e.g., 1 quarter corn = x cwt. iron... The two things must therefore be equal to a third,. ...
“This common “something” cannot be either a geometrical, a chemical, or any other natural property of commodities. Such properties claim our attention only in so far as they affect the utility of those commodities, make them use-values. But the exchange of commodities is evidently an act characterised by a total abstraction from use-value. ...
“If then we leave out of consideration the use-value of commodities, they have only one common property left, that of being products of labour. ... Neither can it any longer be regarded as the product of the labour of the joiner, the mason, the spinner, or of any other definite kind of productive labour. Along with the useful qualities of the products themselves, we put out of sight both the useful character of the various kinds of labour embodied in them, and the concrete forms of that labour; there is nothing left but what is common to them all; all are reduced to one and the same sort of labour, human labour in the abstract.” [Capital, Ch 1, Section I]
Since commodities are exchanged at their value, there arises the question: how is it possible to make a profit? Marx shows that commerce on its own cannot generate new value, but can only distribute value around; both parties to an exchange gain in the sense that they both get what they want, but neither profits, since each give in exchange, a commodity of equal value.
“We are, therefore,” says Marx, “forced to the conclusion that the change originates in the use-value, as such, of the commodity, i.e., in its consumption. In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power.” [Capital, Ch. 6]
So, profit does not arise in the process of circulation, and nor can it arise outside of the market, but has its origin in the purchase of labour power (paying wages), the consumption of labour power — i.e., getting someone to work for you — and the sale of the product of labour at a profit. Thus Marx established the relation between wage labour and Capital.
“By labour-power or capacity for labour is to be understood the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of any description.” [Capital, Ch. 6]
Thus Marx introduces a crucial distinction here: labour-power, the capacity to work, is a commodity; it can be sold to someone else to use for their own purpose so the wage-worker can earn a living; labour on the other hand, - the actual activity - is a use-value which may or may not be exchanged as a commodity. In the normal, factory-based labour process which was dominant in Marx’s day, labour took place in the form of wage-labour, and the goods, the objects in which this labour was embodied or crystallised as Marx would say, sold as commodities.
There were and are still today however, instances where the labour itself is delivered in the form of a commodity, and is consumed in the very act of labour itself: this is the case in two broad kinds of labour.
Firstly, with servants and other domestic labour where either to earn a living or out of personal commitment, people labour to satisfy another’s needs, but these needs are not the production of goods for sale, as is the case when a capitalist employer uses wage-labour to produce commodities of whatever kind, for sale.
Secondly, there is the so-called services sector most broadly defined: retail trade, personal services, education and health, knowledge work of all kinds, as well as contract labour in, for example, the building trade, where what is bought and sold is not a tangible product but the labouring activity itself.
It should be remembered that in Marx’s day there was no such thing really as a capitalist service sector. Service workers were invariably people who offered their services directly on the market, not as the employees of capitalists who profited from provision of their service. Consequently, Marx writes about the “service sector” in this sense:
“The pay of the common soldier is also reduced to a minimum — determined purely by the production costs necessary to procure him. But he exchanges the performance of his services not for capital, but for the revenue of the state.
“In bourgeois society itself, all exchange of personal services for revenue — including labour for personal consumption, cooking, sewing etc., garden work etc., up to and including all of the unproductive classes, civil servants, physicians, lawyers, scholars etc. — belongs under this rubric, within this category. All menial servants etc. By means of their services — often coerced — all these workers, from the least to the highest, obtain for themselves a share of the surplus product, of the capitalist’s revenue.
“But it does not occur to anyone to think that by means of the exchange of his revenue for such services, i.e. through private consumption, the capitalist posits himself as capitalist. Rather, he thereby spends the fruits of his capital. It does not change the nature of the relation that the proportions in which revenue is exchanged for this kind of living labour are themselves determined by the general laws of production.” [Grundrisse, part 9. Original accumulation of capital]
Also, Marx had to fight against the view that the worker and capitalist were not respectively sellers and buyers of labour-power, but rather simply two equal economic agents that perform useful and profitable services for one another.
“If a capitalist hires a woodcutter to chop wood to roast his mutton over, then not only does the wood-cutter relate to the capitalist, but also the capitalist to the wood-cutter, in the relation of simple exchange. The woodcutter gives him his service, a use value, which does not increase capital; rather, capital consumes itself in it; and the capitalist gives him another commodity for it in the form of money. The same relation holds for all services which workers exchange directly for the money of other persons, and which are consumed by these persons. This is consumption of revenue, which, as such, always falls within simple circulation; it is not consumption of capital. Since one of the contracting parties does not confront the other as a capitalist, this performance of a service cannot fall under the category of productive labour.
“From whore to pope, there is a mass of such rabble. But the honest and ‘working’ lumpen-proletariat belongs here as well; e.g. the great mob of porters etc. who render service in seaport cities etc. He who represents money in this relation demands the service only for its use value, which immediately vanishes for him; but the porter demands money. .... Adam Smith was essentially correct with his productive and unproductive labour, correct from the standpoint of bourgeois economy.
“What the other economists advance against it is either horse-piss, namely that every action after all acts upon something, thus confusion of the product in its natural and in its economic sense; so that the pickpocket becomes a productive worker too, since he indirectly produces books on criminal law (this reasoning at least as correct as calling a judge a productive worker because he protects from theft). Or the modern economists have turned themselves into such sycophants of the bourgeois that they want to demonstrate to the latter that it is productive labour when somebody picks the lice out of his hair, or strokes his tail, because for example the latter activity will make his fat head — blockhead — clearer the next day in the office.
“It is therefore quite correct — but also characteristic — that for the consistent economists the workers in e.g. luxury shops are productive, although the characters who consume such objects are expressly castigated as unproductive wastrels. The fact is that these workers, indeed, are productive, as far as they increase the capital of their master; unproductive as to the material result of their labour. In fact, of course, this ‘productive’ worker cares as much about the crappy shit he has to make as does the capitalist himself who employs him, and who also couldn’t give a damn for the junk.
“But, looked at more precisely, it turns out in fact that the true definition of a productive worker consists in this: A person who needs and demands exactly as much as, and no more than, is required to enable him to gain the greatest possible benefit for his capitalist.” [Grundrisse part 5., Capital and labour]
Marx however was concerned however to understand the relationship specific to bourgeois society: the consumption or use of labour power in the labour process in order to realise a surplus value. To understand this relationship, the distinction between labour and labour-power is crucial.
The significance of the distinction between labour and labour-power is many-fold. For example, the value of any product of labour is equal to the total labour embodied in the product itself, on average. The value of labour power, however, is what it costs to produce it, to recreate the capacity to work day after day and generation after generation, and this is in general less than the labour itself. It would have to be so, for in any normal, civilised country, people produce more than they need to live and work. In other words, they create a surplus value.
Or to put it another way, under normal conditions, people must work for a certain necessary labour time each day to produce the equivalent of what they need to live, but then go on working for a further surplus labour time, producing more than what they need themselves, and this surplus-value belongs and remains the property of their employer.
How is it that some people sell their capacity to work and by doing so, produce more than they need to live on and allow this surplus to be stolen by someone else? The simple answer to this is that most people have nothing to sell other than their labour power. If they did have something else to sell, then it is more likely that they would sell that something else, rather than their own labour power, because at least then they would not be ripped off.
This whole class of people who do not own a pile of commodities, and who have nothing to sell except their capacity to work is called the proletariat; or the working class.
However, if these people with nothing to sell but their labour power either cannot or will not sell their labour power on the market, then we do not have wage labour.
“For the conversion of his money into capital, therefore, the owner of money must meet in the market with the free labourer, free in the double sense, that as a free man he can dispose of his labour-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realisation of his labour-power.” [Capital, Ch. 6]
For example, in slave society, the slaves have nothing to sell, but they do not get the opportunity to sell their capacity to work on the market — they themselves are owned like cattle by the slave owner who does not buy their labour power as a commodity, but freely uses it just as he uses the strength of his draft horses and the fertility of the land.
The feudal serf did not need to sell his labour power on the market because (for a start) he had the opportunity to work his own land. When the enclosures kicked millions of peasants off their land, then they became free to sell their labour power, but there were not yet capitalists wanting to purchase it, and during Georgian times these paupers were hounded from pillar to post, until the industrial revolution got going and there was a market for wage labour.
When the early capitalists returned home to their grand estates they wanted to live in the style of the nobility and employed these same paupers as servants. These people however were selling their labour directly to the capitalist by tending his needs and their labour did not contribute to the expansion of capital.
“In the case of personal services, this use value is consumed as such without making the transition from the form of movement into the form of the object. ... The money which he exchanges for living labour — service in kind, or service objectified in a thing — is not capital but revenue, money as a medium of circulation in order to obtain use value ....” [Grundrisse, part 9. Original accumulation of capital]
When a capitalist gets someone to work for them it is important whether the worker is being used to satisfy the personal needs of the capitalist, or to expand his capital.
“a schoolmaster is a productive labourer when, in addition to belabouring the heads of his scholars, he works like a horse to enrich the school proprietor. That the latter has laid out his capital in a teaching factory, instead of in a sausage factory, does not alter the relation.” [Capital, Chapter 16]
This is the distinction between productive labour and unproductive labour, which however useful it might be, does not expand capital.
“Capitalist production is not merely the production of commodities, it is essentially the production of surplus-value. The labourer produces, not for himself, but for capital. It no longer suffices, therefore, that he should simply produce. He must produce surplus-value. That labourer alone is productive, who produces surplus-value for the capitalist, and thus works for the self-expansion of capital.” [Capital, Ch 16]
There is another instance where workers, those who have nothing to sell but their labour power, not only work for capitalists but also succeed in expanding capital, but still they do not sell their labour power and consequently do not work for wages: this is the case with contract labour, such as in the building trades or with out-sourcing in the clothing trades and so on. In these cases, the workers, i.e., those who actually do the productive work, are forced to act as if they were independent economic agents, private labourers, proprietors in their own right. How is it possible that a profit is made here? Whether a builders labourer is paid an hourly wage or is paid by piece work is a secondary question, (see Chapter 21 of Capital). The piece rate is simply so adjusted to keep the worker’s nose to the grindstone struggling to earn a living. It is much the same with contract labour which is essentially the same as piece work.
How does the labour-hire firm make a profit where the independent contract labourer or out-worker remains as exploited and as proletarian as the conventional wage-worker? This raises much the same question as to how any capitalist makes a profit nowadays.
The labourer has nothing to sell but her labour power. The capitalist owns the social means of production as private property. The labour process of our times cannot be carried on as simple private labour; or rather:— the simple expenditure of the labour of an individual labourer which is not socially coordinated, does not produce enough to live on, let alone make a profit for someone. In Marx’s day, the pre-requisite for socially developed labour were the big factories and materials such as steel and coal which were used in the productive process. In order to work at the socially average level of productivity in those days, one had to have access to factories and so on. These were the private property of a class of people called the bourgeoisie, and these people used their privileged position of ownership of these social means of production to exploit those that had no other means of support other than to work in their factories.
Nowadays, most of these factories are either rust buckets, or take the form of temporary set ups in the enterprise zones of Third World countries. But productive work cannot be carried out without a certain amount of this kind of material, including land, buildings, computers, electricity supply, paper and so on, all of which one needs money to buy, and most importantly, there is always a substantial lead time between productive labour and the return coming back, and in order to be socially productive labour will always be complex, involving the coordinated labour of very many people, including not only immediate co-workers, but the vicarious labour of other in the form of software, science, texts, and so on. Even though the ownership of stuff as such is no longer so important to capital, the ability to bring developed social labour to bear is vital to making a profit, to working at better than subsistence level, and for that invariably an accumulation of money is necessary, i.e., Capital.
Like labour power, money is a very special commodity. And when we say money, this is meant to include all those ephemeral kinds of money which circulate nowadays — paper money, credit card values and so on. Money is a commodity whose use-value is to be the bearer of exchange-value.
In Section III of Chapter One of Capital, Marx shows how value develops through a series of historical forms in which it gradually takes on the form of a distinct material substance, gold, and then as we know, continues to develop till today money is almost explicitly a pure social relation, having no material form whatsoever. But nevertheless, money remains a commodity. It is not till we get to Volume III of Capital, put together by Engels after Marx’s death, that we learn of Marx’s views on credit, and that comes only after Marx deals with the rate of profit.
Capital is an accumulation of commodities, but as Marx explains in Chapter 4 of Capital, an accumulation of value which does not expand itself both in and outside the process of circulation is not capital, but simply a big pile of loot, the like of which was to be found in all civilisations since time immemorial. Only in modern bourgeois society do we see the phenomenon of a mass of value which is able to expand itself though the consumption of labour-power; and only such an accumulation of value is Capital.
Now, cooperative labour is not only an ancient phenomenon, but as time goes on and the labour process becomes more and more developed, cooperative labour is more and more essential to life. How is it possible one might ask to live without exchanging labour? Are we to aspire to living in isolated communes working in extended families?
No. the point is that capitalism is built around exchange of labour; in bourgeois society, exchange of labour is the form under which collaboration, working together, is achieved. However, collaboration can happen without exchange of labour. For example, within the traditional enterprise, be it a public service institution or a capitalist firm, people collaborate without exchanging labour. Exchange takes place when we sell our energies to the employer, and when we take our wages and go out an buy the means of subsistence.
One of the features of the way collaboration is achieved is division of labour, where the kind of labour possessed by different people is different, all stand to benefit by exchange of labour.
“So far as the labour-process is purely individual, one and the same labourer unites in himself all the functions, that later on become separated. When an individual appropriates natural objects for his livelihood, no one controls him but himself. Afterwards he is controlled by others. A single man cannot operate upon Nature without calling his own muscles into play under the control of his own brain. As in the natural body head and hand wait upon each other, so the labour-process unites the labour of the hand with that of the head. Later on they part company and even become deadly foes. The product ceases to be the direct product of the individual, and becomes a social product, produced in common by a collective labourer, i.e., by a combination of workers, each of whom takes only a part, greater or less, in the manipulation of the subject of their labour. As the co-operative character of the labour-process becomes more and more marked, so, as a necessary consequence, does our notion of productive labour, and of its agent the productive labourer, become extended. In order to labour productively, it is no longer necessary for you to do manual work yourself; enough, if you are an organ of the collective labourer, and perform one of its subordinate functions. The first definition given above of productive labour, a definition deduced from the very nature of the production of material objects, still remains correct for the collective labourer, considered as a whole. But it no longer holds good for each member taken individually. [Capital, Ch. 16]
There are many examples nowadays of relations and labour processes which were formerly carried out outside the market, and have now been “commodified”. For example, “women’s work” — cleaning, cooking, caring, rearing, teaching, washing, sewing, and so on — is now carried out by women selling their labour power in factories producing white goods, hospitals, restaurants, clothing factories, child-care centres, and so on, and then purchasing the products on the market as commodities. This process is everywhere today; everything has a price tag, everything has become a commodity.
This process of commodification began a long time ago when for example a farmer produced more strawberry jams than he needed himself in order to exchange it for some cloth. Barter like this is limited, you couldn’t depend on it unless you were pretty much self-sufficient. For human life to develop and become richer and more complex, exchange relations had to become much more complex and ubiquitous and for this the form of value had to develop as well. Once trade got going, the form of value developed rapidly from barter to the use of gold and silver to paper money and credit cards.
Another way in which commodification is taking place is privatisation:
“A special class of road-workers may form, employed by the state.... The workers are then wage workers, but the state employs them not as such, but as menial servants.
“Now, for the capitalist to undertake road building as a business, at his expense, various conditions are required, which all amount to this, that the mode of production based on capital is already developed to its highest stage. ... The separation of public works from the state, and their migration into the domain of the works undertaken by capital itself, indicates the degree to which the real community has constituted itself in the form of capital. A country, e.g. the United States, may feel the need for railways in connection with production; nevertheless the direct advantage arising from them for production may be too small for the investment to appear as anything but sunk capital. Then capital shifts the burden on to the shoulders of the state; or, where the state traditionally still takes up a position superior to capital, it still possesses the authority and the will to force the society of capitalists to put a part of their revenue, not of their capital, into such generally useful works, which appear at the same time as general conditions of production, and hence not as particular conditions for one capitalist or another — and, so long as capital does not adopt the form of the joint-stock company, it always looks out only for its particular conditions of realisation, and shifts the communal conditions off on to the whole country as national requirements. Capital undertakes only advantageous undertakings, advantageous in its sense. ... Capital must be able to sell the road in such a way that both the necessary and the surplus labour are realised, or in such a way that it obtains out of the general fund of profits — of surplus values — a sufficiently large share to make it the same as if it had created surplus value. The highest development of capital exists when the general conditions of the process of social production are not paid out of deductions from the social revenue, the states taxes — where revenue and not capital appears as the labour fund, and where the worker, although he is a free wage worker like any other, nevertheless stands economically in a different relation — but rather out of capital as capital. This shows the degree to which capital has subjugated all conditions of social production to itself, on one side; and, on the other side, hence, the extent to which social reproductive wealth has been capitalised, and all needs are satisfied through the exchange form; as well as the extent to which the socially posited needs of the individual, i.e. those which he consumes and feels not as a single individual in society, but communally with others — whose mode of consumption is social by the nature of the thing — are likewise not only consumed but also produced through exchange, individual exchange.” [Grundrisse, Part 10, Circulation costs]
In recent times, we have seen the expansion of the exchange relation within productive enterprises, too, in the form of out-sourced and contract labour, corporatisation of large enterprises and quality-control and intensive cost-accounting; instead of MacDonalds growing in the form of a big retail firm with lots and lots of outlets, it has instead taken the form of a franchise, with commercial relations of exchange pertaining between its parts (rather than gods being distributed to the outlets according to a plan), thus reducing the franchisees (who “look like” petty capitalists) to de facto middle-managers, with the franchise-owner raking in all the profit.
But contrariwise, we have seen the labour process itself become more and more collaborative, and this “commercialisation” of the labour process can become a hindrance to productive work.
The achievement of socialism means transcending this commodity relation, learning to collaborate rather than the “you scratch my back and I'll scratch yours” of bourgeois society.
A commodity is something that is produced for the purpose of exchanging for something else, and as such, is the material form given to a fundamental social relation — the exchange of labour.
Marx saw the commodity as the “cell” of bourgeois society (i.e., capitalism), as expressed in the opening words of his most important book, Capital:
“The wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities,’ its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.
“A commodity is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another. The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference. Neither are we here concerned to know how the object satisfies these wants, whether directly as means of subsistence, or indirectly as means of production. ...
“The use-values of commodities furnish the material for a special study, that of the commercial knowledge of commodities. Use-values become a reality only by use or consumption: they also constitute the substance of all wealth, whatever may be the social form of that wealth. In the form of society we are about to consider, they are, in addition, the material depositories of exchange-value.” [Capital, Chapter I]
As these paragraphs makes clear, for Marx, products of labour may be either goods or services, but in the way Marx understands the term, remain commodities provided only that they are produced for the purpose of exchange.
“For example, when the peasant takes a wandering tailor, of the kind that existed in times past, into his house, and gives him the material to make clothes with. ... The man who takes the cloth I supplied to him and makes me an article of clothing out of it gives me a use value. But instead of giving it directly in objective form, he gives it in the form of activity. I give him a completed use value; he completes another for me. The difference between previous, objectified labour and living, present labour here appears as a merely formal difference between the different tenses of labour, at one time in the perfect and at another in the present. ... “ [Grundrisse, part 9. Original accumulation of capital]
Nor is it important whether they are foodstuffs, clothing and suchlike, satisfying very basic human needs, or we are dealing with labour which meets more ephemeral needs, such as with designer labels, romantic movies or tarot-readings.
Labour is a commodity, provided only that the producer works to meet the needs of someone else, as a means to satisfy their own needs. A good or service produced for the labourer’s own immediate consumption may be a “use-value”, but it is not a commodity.
Likewise, if a woman produces a meal for the consumption of her loved-ones, as part of a domestic contract, whether made before God, before the law or out of simple love, she produces not a commodity, but labour directly to meet the needs of another person, but not just so as to satisfy her own needs, not for payment.
It matters not whether the person actually proffering payment is the ultimate consumer, nor what may be the manner of payment, nor whether payment is made before during or after the labour is carried out, only that the good or service is provided in exchange for payment, to earn a living.
So things in general and products of labour in particular are not necessarily commodities and do not necessarily have value:
“A thing can be a use-value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, etc.
“A thing can be useful, and the product of human labour, without being a commodity. Whoever directly satisfies his wants with the produce of his own labour, creates, indeed, use-values, but not commodities. In order to produce the latter, he must not only produce use-values, but use-values for others, social use-values.
“And not only for others, without more. The mediaeval peasant produced quit-rent-corn for his feudal lord and tithe-corn for his parson. But neither the quit-rent-corn nor the tithe-corn became commodities by reason of the fact that they had been produced for others. To become a commodity a product must be transferred to another, whom it will serve as a use-value, by means of an exchange.
“Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value.” [Capital, Ch. 1, Section I]
So for example, the work of a teacher is a commodity whether the teaching is paid for by the pupil, the pupil’s parents or by the State. On the other hand, a mother’s education of her child is not a commodity and nor is the work of a preacher who spreads the word of God — the point is only whether the labour was done in exchange for something else.
Marx points out how the circulation of the product of our labour in the market, and how it takes on a “market value” independently of us, and moves from hand to hand through the market until it finds its ultimate consumer, all beyond our control, creates illusions which remind him of animism and fetishism, of primitive religious points of view that endow inanimate objects with human capacities:
“the existence of the things qua commodities, and the value-relation between the products of labour which stamps them as commodities, have absolutely no connection with their physical properties and with the material relations arising therefrom. There it is a definite social relation between men, that assumes, in their eyes, the fantastic form of a relation between things. ... This I call the Fetishism ... of commodities.” [Capital, Ch. 1]
Even though what goes on in the market is nothing but the collective action of human beings, the market manifests itself like a force of nature. Even though the product only has value because it embodies human labour and satisfied human needs, its value appears to be a natural attribute of the product, like its weight or density.
In general, commodities are exchanged at their value, i.e., at their “exchange-value”. That is when one commodity is exchanged for another, on average, in the given society in which the exchange takes place, the two commodities exchanged for one another are of equal value.
“Every owner of a commodity wishes to part with it in exchange only for those commodities whose use-value satisfies some want of his. Looked at in this way, exchange is for him simply a private transaction. On the other hand, he desires to realise the value of his commodity, to convert it into any other suitable commodity of equal value, irrespective of whether his own commodity has or has not any use-value for the owner of the other. [Capital, Ch. 2]
The value of a given quantity of labour offered for exchange on the market, is determined by value structures specific to the given social and historical conditions, and Marx analysed this process of value determination in the same Chapter One of Capital.
“Let us take two commodities, e.g., corn and iron. The proportions in which they are exchangeable, whatever those proportions may be, can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron: e.g., 1 quarter corn = x cwt. iron... The two things must therefore be equal to a third,. ...
“This common “something” cannot be either a geometrical, a chemical, or any other natural property of commodities. Such properties claim our attention only in so far as they affect the utility of those commodities, make them use-values. But the exchange of commodities is evidently an act characterised by a total abstraction from use-value. ...
“If then we leave out of consideration the use-value of commodities, they have only one common property left, that of being products of labour. ... Neither can it any longer be regarded as the product of the labour of the joiner, the mason, the spinner, or of any other definite kind of productive labour. Along with the useful qualities of the products themselves, we put out of sight both the useful character of the various kinds of labour embodied in them, and the concrete forms of that labour; there is nothing left but what is common to them all; all are reduced to one and the same sort of labour, human labour in the abstract.” [Capital, Ch 1, Section I]
Since commodities are exchanged at their value, there arises the question: how is it possible to make a profit? Marx shows that commerce on its own cannot generate new value, but can only distribute value around; both parties to an exchange gain in the sense that they both get what they want, but neither profits, since each give in exchange, a commodity of equal value.
“We are, therefore,” says Marx, “forced to the conclusion that the change originates in the use-value, as such, of the commodity, i.e., in its consumption. In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power.” [Capital, Ch. 6]
So, profit does not arise in the process of circulation, and nor can it arise outside of the market, but has its origin in the purchase of labour power (paying wages), the consumption of labour power — i.e., getting someone to work for you — and the sale of the product of labour at a profit. Thus Marx established the relation between wage labour and Capital.
“By labour-power or capacity for labour is to be understood the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of any description.” [Capital, Ch. 6]
Thus Marx introduces a crucial distinction here: labour-power, the capacity to work, is a commodity; it can be sold to someone else to use for their own purpose so the wage-worker can earn a living; labour on the other hand, - the actual activity - is a use-value which may or may not be exchanged as a commodity. In the normal, factory-based labour process which was dominant in Marx’s day, labour took place in the form of wage-labour, and the goods, the objects in which this labour was embodied or crystallised as Marx would say, sold as commodities.
There were and are still today however, instances where the labour itself is delivered in the form of a commodity, and is consumed in the very act of labour itself: this is the case in two broad kinds of labour.
Firstly, with servants and other domestic labour where either to earn a living or out of personal commitment, people labour to satisfy another’s needs, but these needs are not the production of goods for sale, as is the case when a capitalist employer uses wage-labour to produce commodities of whatever kind, for sale.
Secondly, there is the so-called services sector most broadly defined: retail trade, personal services, education and health, knowledge work of all kinds, as well as contract labour in, for example, the building trade, where what is bought and sold is not a tangible product but the labouring activity itself.
It should be remembered that in Marx’s day there was no such thing really as a capitalist service sector. Service workers were invariably people who offered their services directly on the market, not as the employees of capitalists who profited from provision of their service. Consequently, Marx writes about the “service sector” in this sense:
“The pay of the common soldier is also reduced to a minimum — determined purely by the production costs necessary to procure him. But he exchanges the performance of his services not for capital, but for the revenue of the state.
“In bourgeois society itself, all exchange of personal services for revenue — including labour for personal consumption, cooking, sewing etc., garden work etc., up to and including all of the unproductive classes, civil servants, physicians, lawyers, scholars etc. — belongs under this rubric, within this category. All menial servants etc. By means of their services — often coerced — all these workers, from the least to the highest, obtain for themselves a share of the surplus product, of the capitalist’s revenue.
“But it does not occur to anyone to think that by means of the exchange of his revenue for such services, i.e. through private consumption, the capitalist posits himself as capitalist. Rather, he thereby spends the fruits of his capital. It does not change the nature of the relation that the proportions in which revenue is exchanged for this kind of living labour are themselves determined by the general laws of production.” [Grundrisse, part 9. Original accumulation of capital]
Also, Marx had to fight against the view that the worker and capitalist were not respectively sellers and buyers of labour-power, but rather simply two equal economic agents that perform useful and profitable services for one another.
“If a capitalist hires a woodcutter to chop wood to roast his mutton over, then not only does the wood-cutter relate to the capitalist, but also the capitalist to the wood-cutter, in the relation of simple exchange. The woodcutter gives him his service, a use value, which does not increase capital; rather, capital consumes itself in it; and the capitalist gives him another commodity for it in the form of money. The same relation holds for all services which workers exchange directly for the money of other persons, and which are consumed by these persons. This is consumption of revenue, which, as such, always falls within simple circulation; it is not consumption of capital. Since one of the contracting parties does not confront the other as a capitalist, this performance of a service cannot fall under the category of productive labour.
“From whore to pope, there is a mass of such rabble. But the honest and ‘working’ lumpen-proletariat belongs here as well; e.g. the great mob of porters etc. who render service in seaport cities etc. He who represents money in this relation demands the service only for its use value, which immediately vanishes for him; but the porter demands money. .... Adam Smith was essentially correct with his productive and unproductive labour, correct from the standpoint of bourgeois economy.
“What the other economists advance against it is either horse-piss, namely that every action after all acts upon something, thus confusion of the product in its natural and in its economic sense; so that the pickpocket becomes a productive worker too, since he indirectly produces books on criminal law (this reasoning at least as correct as calling a judge a productive worker because he protects from theft). Or the modern economists have turned themselves into such sycophants of the bourgeois that they want to demonstrate to the latter that it is productive labour when somebody picks the lice out of his hair, or strokes his tail, because for example the latter activity will make his fat head — blockhead — clearer the next day in the office.
“It is therefore quite correct — but also characteristic — that for the consistent economists the workers in e.g. luxury shops are productive, although the characters who consume such objects are expressly castigated as unproductive wastrels. The fact is that these workers, indeed, are productive, as far as they increase the capital of their master; unproductive as to the material result of their labour. In fact, of course, this ‘productive’ worker cares as much about the crappy shit he has to make as does the capitalist himself who employs him, and who also couldn’t give a damn for the junk.
“But, looked at more precisely, it turns out in fact that the true definition of a productive worker consists in this: A person who needs and demands exactly as much as, and no more than, is required to enable him to gain the greatest possible benefit for his capitalist.” [Grundrisse part 5., Capital and labour]
Marx however was concerned however to understand the relationship specific to bourgeois society: the consumption or use of labour power in the labour process in order to realise a surplus value. To understand this relationship, the distinction between labour and labour-power is crucial.
The significance of the distinction between labour and labour-power is many-fold. For example, the value of any product of labour is equal to the total labour embodied in the product itself, on average. The value of labour power, however, is what it costs to produce it, to recreate the capacity to work day after day and generation after generation, and this is in general less than the labour itself. It would have to be so, for in any normal, civilised country, people produce more than they need to live and work. In other words, they create a surplus value.
Or to put it another way, under normal conditions, people must work for a certain necessary labour time each day to produce the equivalent of what they need to live, but then go on working for a further surplus labour time, producing more than what they need themselves, and this surplus-value belongs and remains the property of their employer.
How is it that some people sell their capacity to work and by doing so, produce more than they need to live on and allow this surplus to be stolen by someone else? The simple answer to this is that most people have nothing to sell other than their labour power. If they did have something else to sell, then it is more likely that they would sell that something else, rather than their own labour power, because at least then they would not be ripped off.
This whole class of people who do not own a pile of commodities, and who have nothing to sell except their capacity to work is called the proletariat; or the working class.
However, if these people with nothing to sell but their labour power either cannot or will not sell their labour power on the market, then we do not have wage labour.
“For the conversion of his money into capital, therefore, the owner of money must meet in the market with the free labourer, free in the double sense, that as a free man he can dispose of his labour-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realisation of his labour-power.” [Capital, Ch. 6]
For example, in slave society, the slaves have nothing to sell, but they do not get the opportunity to sell their capacity to work on the market — they themselves are owned like cattle by the slave owner who does not buy their labour power as a commodity, but freely uses it just as he uses the strength of his draft horses and the fertility of the land.
The feudal serf did not need to sell his labour power on the market because (for a start) he had the opportunity to work his own land. When the enclosures kicked millions of peasants off their land, then they became free to sell their labour power, but there were not yet capitalists wanting to purchase it, and during Georgian times these paupers were hounded from pillar to post, until the industrial revolution got going and there was a market for wage labour.
When the early capitalists returned home to their grand estates they wanted to live in the style of the nobility and employed these same paupers as servants. These people however were selling their labour directly to the capitalist by tending his needs and their labour did not contribute to the expansion of capital.
“In the case of personal services, this use value is consumed as such without making the transition from the form of movement into the form of the object. ... The money which he exchanges for living labour — service in kind, or service objectified in a thing — is not capital but revenue, money as a medium of circulation in order to obtain use value ....” [Grundrisse, part 9. Original accumulation of capital]
When a capitalist gets someone to work for them it is important whether the worker is being used to satisfy the personal needs of the capitalist, or to expand his capital.
“a schoolmaster is a productive labourer when, in addition to belabouring the heads of his scholars, he works like a horse to enrich the school proprietor. That the latter has laid out his capital in a teaching factory, instead of in a sausage factory, does not alter the relation.” [Capital, Chapter 16]
This is the distinction between productive labour and unproductive labour, which however useful it might be, does not expand capital.
“Capitalist production is not merely the production of commodities, it is essentially the production of surplus-value. The labourer produces, not for himself, but for capital. It no longer suffices, therefore, that he should simply produce. He must produce surplus-value. That labourer alone is productive, who produces surplus-value for the capitalist, and thus works for the self-expansion of capital.” [Capital, Ch 16]
There is another instance where workers, those who have nothing to sell but their labour power, not only work for capitalists but also succeed in expanding capital, but still they do not sell their labour power and consequently do not work for wages: this is the case with contract labour, such as in the building trades or with out-sourcing in the clothing trades and so on. In these cases, the workers, i.e., those who actually do the productive work, are forced to act as if they were independent economic agents, private labourers, proprietors in their own right. How is it possible that a profit is made here? Whether a builders labourer is paid an hourly wage or is paid by piece work is a secondary question, (see Chapter 21 of Capital). The piece rate is simply so adjusted to keep the worker’s nose to the grindstone struggling to earn a living. It is much the same with contract labour which is essentially the same as piece work.
How does the labour-hire firm make a profit where the independent contract labourer or out-worker remains as exploited and as proletarian as the conventional wage-worker? This raises much the same question as to how any capitalist makes a profit nowadays.
The labourer has nothing to sell but her labour power. The capitalist owns the social means of production as private property. The labour process of our times cannot be carried on as simple private labour; or rather:— the simple expenditure of the labour of an individual labourer which is not socially coordinated, does not produce enough to live on, let alone make a profit for someone. In Marx’s day, the pre-requisite for socially developed labour were the big factories and materials such as steel and coal which were used in the productive process. In order to work at the socially average level of productivity in those days, one had to have access to factories and so on. These were the private property of a class of people called the bourgeoisie, and these people used their privileged position of ownership of these social means of production to exploit those that had no other means of support other than to work in their factories.
Nowadays, most of these factories are either rust buckets, or take the form of temporary set ups in the enterprise zones of Third World countries. But productive work cannot be carried out without a certain amount of this kind of material, including land, buildings, computers, electricity supply, paper and so on, all of which one needs money to buy, and most importantly, there is always a substantial lead time between productive labour and the return coming back, and in order to be socially productive labour will always be complex, involving the coordinated labour of very many people, including not only immediate co-workers, but the vicarious labour of other in the form of software, science, texts, and so on. Even though the ownership of stuff as such is no longer so important to capital, the ability to bring developed social labour to bear is vital to making a profit, to working at better than subsistence level, and for that invariably an accumulation of money is necessary, i.e., Capital.
Like labour power, money is a very special commodity. And when we say money, this is meant to include all those ephemeral kinds of money which circulate nowadays — paper money, credit card values and so on. Money is a commodity whose use-value is to be the bearer of exchange-value.
In Section III of Chapter One of Capital, Marx shows how value develops through a series of historical forms in which it gradually takes on the form of a distinct material substance, gold, and then as we know, continues to develop till today money is almost explicitly a pure social relation, having no material form whatsoever. But nevertheless, money remains a commodity. It is not till we get to Volume III of Capital, put together by Engels after Marx’s death, that we learn of Marx’s views on credit, and that comes only after Marx deals with the rate of profit.
Capital is an accumulation of commodities, but as Marx explains in Chapter 4 of Capital, an accumulation of value which does not expand itself both in and outside the process of circulation is not capital, but simply a big pile of loot, the like of which was to be found in all civilisations since time immemorial. Only in modern bourgeois society do we see the phenomenon of a mass of value which is able to expand itself though the consumption of labour-power; and only such an accumulation of value is Capital.
Now, cooperative labour is not only an ancient phenomenon, but as time goes on and the labour process becomes more and more developed, cooperative labour is more and more essential to life. How is it possible one might ask to live without exchanging labour? Are we to aspire to living in isolated communes working in extended families?
No. the point is that capitalism is built around exchange of labour; in bourgeois society, exchange of labour is the form under which collaboration, working together, is achieved. However, collaboration can happen without exchange of labour. For example, within the traditional enterprise, be it a public service institution or a capitalist firm, people collaborate without exchanging labour. Exchange takes place when we sell our energies to the employer, and when we take our wages and go out an buy the means of subsistence.
One of the features of the way collaboration is achieved is division of labour, where the kind of labour possessed by different people is different, all stand to benefit by exchange of labour.
“So far as the labour-process is purely individual, one and the same labourer unites in himself all the functions, that later on become separated. When an individual appropriates natural objects for his livelihood, no one controls him but himself. Afterwards he is controlled by others. A single man cannot operate upon Nature without calling his own muscles into play under the control of his own brain. As in the natural body head and hand wait upon each other, so the labour-process unites the labour of the hand with that of the head. Later on they part company and even become deadly foes. The product ceases to be the direct product of the individual, and becomes a social product, produced in common by a collective labourer, i.e., by a combination of workers, each of whom takes only a part, greater or less, in the manipulation of the subject of their labour. As the co-operative character of the labour-process becomes more and more marked, so, as a necessary consequence, does our notion of productive labour, and of its agent the productive labourer, become extended. In order to labour productively, it is no longer necessary for you to do manual work yourself; enough, if you are an organ of the collective labourer, and perform one of its subordinate functions. The first definition given above of productive labour, a definition deduced from the very nature of the production of material objects, still remains correct for the collective labourer, considered as a whole. But it no longer holds good for each member taken individually. [Capital, Ch. 16]
There are many examples nowadays of relations and labour processes which were formerly carried out outside the market, and have now been “commodified”. For example, “women’s work” — cleaning, cooking, caring, rearing, teaching, washing, sewing, and so on — is now carried out by women selling their labour power in factories producing white goods, hospitals, restaurants, clothing factories, child-care centres, and so on, and then purchasing the products on the market as commodities. This process is everywhere today; everything has a price tag, everything has become a commodity.
This process of commodification began a long time ago when for example a farmer produced more strawberry jams than he needed himself in order to exchange it for some cloth. Barter like this is limited, you couldn’t depend on it unless you were pretty much self-sufficient. For human life to develop and become richer and more complex, exchange relations had to become much more complex and ubiquitous and for this the form of value had to develop as well. Once trade got going, the form of value developed rapidly from barter to the use of gold and silver to paper money and credit cards.
Another way in which commodification is taking place is privatisation:
“A special class of road-workers may form, employed by the state.... The workers are then wage workers, but the state employs them not as such, but as menial servants.
“Now, for the capitalist to undertake road building as a business, at his expense, various conditions are required, which all amount to this, that the mode of production based on capital is already developed to its highest stage. ... The separation of public works from the state, and their migration into the domain of the works undertaken by capital itself, indicates the degree to which the real community has constituted itself in the form of capital. A country, e.g. the United States, may feel the need for railways in connection with production; nevertheless the direct advantage arising from them for production may be too small for the investment to appear as anything but sunk capital. Then capital shifts the burden on to the shoulders of the state; or, where the state traditionally still takes up a position superior to capital, it still possesses the authority and the will to force the society of capitalists to put a part of their revenue, not of their capital, into such generally useful works, which appear at the same time as general conditions of production, and hence not as particular conditions for one capitalist or another — and, so long as capital does not adopt the form of the joint-stock company, it always looks out only for its particular conditions of realisation, and shifts the communal conditions off on to the whole country as national requirements. Capital undertakes only advantageous undertakings, advantageous in its sense. ... Capital must be able to sell the road in such a way that both the necessary and the surplus labour are realised, or in such a way that it obtains out of the general fund of profits — of surplus values — a sufficiently large share to make it the same as if it had created surplus value. The highest development of capital exists when the general conditions of the process of social production are not paid out of deductions from the social revenue, the states taxes — where revenue and not capital appears as the labour fund, and where the worker, although he is a free wage worker like any other, nevertheless stands economically in a different relation — but rather out of capital as capital. This shows the degree to which capital has subjugated all conditions of social production to itself, on one side; and, on the other side, hence, the extent to which social reproductive wealth has been capitalised, and all needs are satisfied through the exchange form; as well as the extent to which the socially posited needs of the individual, i.e. those which he consumes and feels not as a single individual in society, but communally with others — whose mode of consumption is social by the nature of the thing — are likewise not only consumed but also produced through exchange, individual exchange.” [Grundrisse, Part 10, Circulation costs]
In recent times, we have seen the expansion of the exchange relation within productive enterprises, too, in the form of out-sourced and contract labour, corporatisation of large enterprises and quality-control and intensive cost-accounting; instead of MacDonalds growing in the form of a big retail firm with lots and lots of outlets, it has instead taken the form of a franchise, with commercial relations of exchange pertaining between its parts (rather than gods being distributed to the outlets according to a plan), thus reducing the franchisees (who “look like” petty capitalists) to de facto middle-managers, with the franchise-owner raking in all the profit.
But contrariwise, we have seen the labour process itself become more and more collaborative, and this “commercialisation” of the labour process can become a hindrance to productive work.
The achievement of socialism means transcending this commodity relation, learning to collaborate rather than the “you scratch my back and I'll scratch yours” of bourgeois society.