Abstract Labour and Social Mediation in Marxian Value Theory

By

Nicola M. Taylor

Bachelor of Economics (Honours)

Murdoch University

This thesis is presented as part of the requirement for the Degree of Bachelor of Economics with Honours in Economics, at Murdoch University.

4th November, 2000

Acknowledgments

I thank my supervisor, Paul Flatau, for his helpful suggestions and encouragement during the writing of the

dissertation, which also benefited from extensive and enjoyable discussions with Chris Arthur, Riccardo Bellofiore,

Andrew Brown, Jerry Levy, Fred Moseley, Alfredo Saad Filho, Geert Reuten and Michael Williams. Special thanks

are due to Geert Reuten and Alfredo Saad Filho for their invaluable comments and suggestions on earlier drafts and

chapters. Funding for the research was provided by a Murdoch University Honours Excellence Scholarship.

Abstract

The dissertation inquires into abstract-labour as the source of value in a capitalist economy. A key question is

whether value can exist prior to exchange as a physiological substance embodied in commodities, or whether it is a

social dimension brought into existence only as the result of market activity? A corollary question concerns the

measurement of value: is it measured as an amount of labour time expended in production or is it measured only in

money, as an exchange ratio between commodities?

A textual analysis of the starting point of Capital shows abstract-labour to be an ambiguous concept. Criticism

centres on Marxs lack of clarity with respect to method. First, it is unclear as to whether abstract-labour is a reductive category describing an amount of homogeneous labour embodied in commodities (a labour theory of

value), or a dialectical universal describing a real abstraction from particular types of labour, established in exchange (a theory of social form). Second, abstract-labour is conceptualised as a substance of value and this implies a logical order where value precedes price and, indeed precedes the existence of capitalism.

Theoretical and empirical problems associated with a variety of interpretations of Marxs abstract-labour-embodied value theory are identified and discussed. The main argument against labour-embodied theories (whether

physiological or social) is that they deny any ontological role to money (capital) in determining the character and

level of productive activity in a capitalist economy. As a result of this value-price dichotomy, the imperative of valorisation (the process of increasing value) driving the capitalist system is inadequately captured within these

theories.

I present and defend a dialectical reconstruction of abstract-labour and value as social categories that come into

existence only to the extent that markets transform the imperatives driving the production process. Causality is

systemic, determining abstract-labour as the form that social labour takes in capitalism and money as the sole

measure of the value of labour, labour-power and commodities. A further determination of the labour process as a

technical process and a valorisation process supports the main conclusion: labour (in the process of valorisation) is

the one and only source of value-added. The result is established without recourse to abstract labour as the value

substance, purging any reliance on autonomous labour-values underlying prices and money.

Contents

Statement of Originality i

Acknowledgements ii

Abstract iii

_1. Labour, Value and Money _6

2. Value Theory: Content and Concepts _12

2.1 Two Types of Abstraction _14

2.2 Hegels Logic: Principles and Implications _18 2.3 Abstract Labour: Analytic or Dialectic Abstraction? _22 2.4 Value-Form and Commodity Fetishism _28

3. Two Paradigms, Two Problems _35

3.1 The Technical Paradigm _36

3.2 The Social Paradigm _46

3.3 Abstract Labour: Substance versus Form _56

4. Abstract Labour: A Reconstruction _63

4.1 Critique and Reconstruction _65

4.2 A Systematic Dialectical Starting Point _68

4.3 Concrete Dissociated and Abstract Associated Labour _69

4.4 Reconstructing the Theory of Value-Form _71

4.5 The Concept of Abstract-Labour: a Criticism and a Defence _84 5. Conclusion _92

References _100

1. Labour, Value and Money

In a Postface to the second edition of Capital 1, Marx (1873) complained that his book had not been well understood

and made a number of remarks linking the content of his value theory to Hegels method and form theory. Yet, this Postface was itself notoriously ambivalent, especially concerning Marxs application of the Hegelian notions of doubling and appearance to his critique of the classical categories of labour, value and labour time (Arthur, 1993;

Murray, 1993; Reuten, 1993; Smith, 1993). Today the question of Marxs method remains disputed, as does his value theory. Is it a variation on the classical labour theory of value, arising from a critical transformation of

Ricardian concepts; if not, what kind of a theory is it?

Fischer (1982) suggests that this question constitutes the most comprehensive and controversial issue in Marxian political economy. At stake is the important question of what type of labour is abstract labour, and what is the

relation of that labour to the value of capitalist commodities. Here, Marxs exposition in the first Chapter of Capital is a notoriously difficult and enigmatic source. Not only does Marx derive abstract labour differently in the several

language editions of Capital that he edited in his lifetime, but he also presents different views on the concept within

texts (see Bellofiore, 1999; Rubin, 1928/1972). At times abstract labour appears as substance of value: a natural or physiological property of particular commodities, or a proposition in the derivation of a general law of value pertaining to all forms of economic organisation in which there is a division of labour. At other times, the concept

expresses a relation of equivalence between private labours that can come about only when diverse commodities are

brought into a form of social equality in the market. In the latter sense, abstract labour has a distinctly non-Ricardian flavour: it is a category with economic significance only to the extent that the practice of exchange

transforms and defines the imperatives driving the production process.

Marxs ambivalence regarding the ontological character of abstract labour manifests in contemporary debates as a serious epistemological disagreement over the meaning and measurement of concepts_. Did Marx see value as the

objective representation of a natural substance (abstract-labour) embodied in particular commodities prior to

exchange, therefore measurable in labour time (e.g. Sweezy, 1946; Mandel, 1990)? Or did he see value as an

historical expression of the social form that productive private labour assumes, as it is abstracted, alienated and

mediated by exchange, therefore measurable only in money (e.g. Arthur, 1999; Reuten, 1999; Williams, 1998)? Did

Marx present an original, if somewhat inadequate, synthesis of classical value theory and Hegelian form theory (e.g.

Reuten, 1993); or did he present two contradictory value theories, and shift irresolutely between them (e.g. Mirowski, 1990)? These questions pose critical problems for any evaluation of the theoretical consistency of

Marxs value theory, raising the question of how far the categories of Capital are in fact adequate to its subject matter (Bellofiore, 1998a).

This point about the need to re-evaluate Marxs concepts in terms of the cogency of his project provides the rational for the current inquiry. The dissertation has two objectives. The first object is to clarify the ontological

meaning and methodological status of a central concept of Marxs and Marxian value theory: abstract-labour. Subsidiary to this is a demonstration that the ambiguities arising out of different interpretations of abstract-labour

inhere in the text of Capital, and not in the great variety of appropriations of it. The second objective is to undertake

a critical investigation into a key proposition of Marxs abstract-labour theory of value: that abstract-labour embodied in commodities during production (independently of exchange) is the one and only source of surplus value. Special emphasis will be given to an alternative view of abstract-labour as a category in a theory of social value or value-form where money has ontological significance in determining economic outcomes, including the determination of abstract-labour as value. This leads up to a core research question: must Marxs abstract-labour (embodied) theory of value be abandoned as inadequate to the theorisation of capitalism, or can Marxian categories

be reconstructed to provide a theory of the social constitution of the nexus of value and money? This heuristic

question motivates the analysis throughout the dissertation. I hope to show that a theory of social value is implicit in Marxs Capital and, moreover, to suggest some ways in which that theory might be explicitly developed.

THESIS OUTLINE

A full inquiry into Marxian value theory would require a detailed analysis of the whole of Capital engaging the

contentious issue of Marxs theory of science - in relation to that of the classical economists as well as Hegels logic. Here, I focus in a more limited way on the opening chapter of the first volume where Marx introduces his central

concepts: the commodity, abstract-labour, value, exchange-value, money and value-form. Although these concepts

do not constitute the whole of value theory, the efficacy of the starting point is an important factor in current

disputes. Moreover, in making explicit criteria for evaluating (and reconstructing) Marxs starting point, I hope to show how the impasse concerning the ontological and methodological status of core concepts abstract-labour and value might be circumvented, if not resolved.

The first chapter poses a preliminary question concerning Marxs (1867a) development of the double character of commodities and labour in relation to their determination by social form. Marx clearly saw the value/use-value and

abstract-labour/concrete-labour dualities as crucial to his value theory, but what are we to make of these oppositions?

Are they analytic or dialectical oppositions and how does the answer given to this question prejudice the way that

Marxian value theory is understood? In the first two sections of his chapter, Marxs analysis appears to be similar to that of the classical political economists. He posits economic relations as the causal product of external

determination, particularly in nature; the concepts of abstract-labour and value are taken to be natural phenomena.

In the final two sections, however, Marxs method seems to be more closely associated with Hegels (1817) Logic. He suspends a priori presuppositions and understands economic relations only as a development within a social

(systemic) set of interconnected determinations; the concepts of abstract labour and value are social phenomena.

This juxtaposition of competing strands of capitalist thought in Marxs text suggests that Bellofiores (1998a) question concerning the cogency of Marxs project is not resolvable by reference to the text of Capital, but only by serious discussion of the analytic status of Marxian categories.

The second chapter reviews the major effect of Marxs ambivalent derivation of abstract-labour: a paradigmatic splitting of Marxs value theory into concrete-labour-embodied (technical) and abstract-labour-embodied (social) value theories (cf. de Vroey, 1982). Contemporary debates arising from the paradigmatic split are considered in

relation to the question of the source and measure of value. I identify theoretical and empirical problems in

technical versions of the labour-embodied theory of value, which reduces Marxs abstract-labour theory to a theory of prices derived from the quantity of labour time embodied in commodities. I then introduce social value theories,

which attempt to integrate technical (natural) and social (historical) elements of Marxs value theory, and thus establish the necessity of money (and exchange) to the existence of value. The main question is whether these

social theories succeed in resolving the difficulties of a theory of value immanently measured in labour time. I

introduce an argument for money as the only measure of abstract-labour and the only indicator of the actuality of

value.

The third chapter examines recent reconstructions of Marxs concepts, in accordance with systematic dialectical principles of logic (Hegel, 1812, 1817). The heuristic purpose behind reconstruction is to step outside the methodological and substantive inconsistencies of Marxian value theory and articulate the unity of production and

exchange within a specifically capitalist totality (Reuten, 1993). From this point of view, Capital is most fruitfully

read as a critical contribution to an ongoing inquiry into the social determination of value and labour, an inquiry

concerned with a problematic very different from that of Ricardo. In these new theories of value-form, Ricardian

(labour-embodied) elements of Marxian value theory are abandoned, along with all reference to abstract-labour as

the embodied substance of value.

The concluding chapter returns to the economic problem of whether value can exist - either ontologically or

conceptually before (market) exchange; I review the alternative responses to the question within contemporary Marxism. The main conclusion is that labour-embodied theories of value (whether physiological or social) are inadequate, to the extent that they deny any ontological role to money (capital) in the reproduction of the capitalist

economy. As a result of this value-price dichotomy, the imperative of valorisation (the expansion of value) driving

the capitalist system is inadequately captured within these theories. The analysis supports an argument for

systematic dialectical reconstruction of Marxs concept of abstract-labour as social value, measured only in money. Current reconstructions verify Marxs key insight: labour is the one and only source of value-added in the valorisation process. The result is arrived at without any reliance on labour-value substructures underlying prices

and money.

2. Value Theory: Content and Concepts

The subtitle of the first volume of Marxs (1867a) Capital identifies Marxs project as a critique of political economy. What is the salient feature, or definitive object, of Marxs critique? On this point, Marx is quite clear: the great merit of classical political economy was to have discovered the content of value in labour; its great defect

was never to have discovered the determination of value and labour by social form_. This raises a preliminary

research question: is Marxs social value theory a clarification and extension of the classical labour-embodied theory of value, or is it a refutation of it? That Marx is nowhere explicit as to the nature and extent of his break with

the classics has always confused discussions of value theory; it is here that controversy begins.

First, Marx is unclear as to the methodological status of his abstractions, in relation to those of the classical labour

theory of value. In his opening chapter, analytic and naturalistic elements of a labour-embodied value theory appear

to exist side by side - uncomfortably - with dialectical and historical elements of a theory of social form. Second,

these classical and Hegelian elements of capitalist thought seem to be related to the structure of Marxs argument which proceeds in two movements: the first introducing and elucidating the double character of commodities and

labour, the second determining the double form of commodities and labour. The dialectical mode of argument of

the second movement has been remarked by many writers (notably, Arthur, 1979b; Murray, 1993; and Smith, 1998).

Nevertheless, Marx prefaces this with a non-dialectical (analytic?) first movement from which he derives the dual

character of labour, claiming this as the pivot on which his political economy turns.

In what follows, I aim to show that the substantive problems in Marxs derivation of the dual character of labour cannot be understood apart from the problems of the method of Capital, itself the subject of a long and unresolved

dispute_. The methodological debate centres on interpretation of the Marxian dialectic in relation to Hegels (1812, 1817) logic, especially the role that dialectical thinking plays in Marx's analysis of social form (therefore his critique

of classical value theory). The first section begins by introducing what is meant by analytic and dialectical abstraction, identifies possible sources of terminological confusion, and relates alternative conceptions of

abstract-labour to two models of essence and appearance (Ricardian and Hegelian). The second section elaborates

the systematic dialectical mode of argument, and sets out some explicit criteria for judging Marxs presentation. The third and fourth sections present a textual analysis of the first chapter of Capital, focusing attention on Marxs problematic derivation of the concept of abstract-labour, in relation to his theory of value-form.

2.1 Two Types of Abstraction

Behind debates on Marxs method in Capital is a generally agreed presumption that this work is somehow distinct from all other works in political economy, a presumption fuelled by Marxs (1873) own claims about the dialectical character of the work. Marx was, however, never explicit about his understanding of dialectical reality in relation to his theory of capitalism. Are economic relations the product of historical processes, mirrored directly in the

concepts of Capital as Engels (1894a, 1894b) believed; or, do concepts appropriate reality at best circuitously, via a purely logical movement from abstract concepts to concrete determinations as Marx suggested in his (1857/1973)

draft Introduction?

Lack of agreement as to the particular meaning of the historical and/or logical dialectic in Marx turns on the

fundamental question of what, exactly, Marx learned from Hegel. As Arthur (1997) points out, Hegels work contains examples of both historical and systematic dialectics; the former exhibiting the inner connection between stages of development in a temporal process, the latter exhibiting the inner articulation of a given whole (p.10). It appears, from Arthurs account, that Engels conflates the two dialectics, although Marx makes it clear in his (1857/1973) draft Introduction that his intellectual debt is to Hegels theory of logical development. Arthur goes on to argue that Engelss misinterpretation of the Marxian dialectic as a logical-historical method has resulted in major terminological confusions, such that the meaning of Marxs concepts and the role that they play in his value theory have been widely misunderstood.

One pervasive effect of different understandings of Marxs method is that different Marxian writers use the same terms and concepts to mean different things. The term abstract-labour may be used for example to refer to a physiological substance embodied in commodities during production, or to a social form that labour assumes when

commodities are exchanged. In order to clarify these semantic confusions, I propose to use the term

abstract-labour-embodied whenever I refer to interpretations in which abstract-labour is seen to be a substance of value, a property of commodities with a natural existence independent of the social institution of exchange. I reserve the term abstract-labour for interpretations of value as a social dimension that acquires actuality only as a relation between commodities, establishing the equivalence of private labours through practical abstraction in the

market. This terminological decision should not be taken to imply a judgement on Marxs own use of the term abstract-labour. As I will demonstrate, any attempt to establish whether Marx held a social (abstract-labour) theory of value or a physiological (abstract-labour-embodied) theory of value founders on textual evidence for both

interpretations.

Although the terminological difficulties associated with the meaning of the concept of abstract-labour may be

over-come by this simple expedient of renaming the terms in a debate, the question of the analytic status of the

concept remains. The solution adopted in this dissertation is to relate alternative interpretations of value theory to

the two models of essence and appearance, distinguished by Murray (1993). In Ricardian models, a dichotomy of essence and appearance operates such that value (essence) is given as an axiom at the start of a linear derivation, or as something real that is embodied in commodities as the result of productive activity. Money (appearance) is then theorised as a phenomenal form, external to the essential character of value. In Hegelian models, essence and

appearance coexist as a unity in difference such that value and its monetary expression are mutually constituted by the essential character of the capitalist mode of production for exchange. The relation between these models and

interpretations of abstract-labour can be explicated as follows:

In the Ricardian essence-appearance model, value exists a priori and is conserved across analytic levels of abstraction. In axiomatic models, the value-price relationship is conceptualised in terms of hypotheses about

embodied-labour-values and the cause-effect relationships that result once market relations are introduced into the

basic labour-value models (e.g. Sweezy, 1946). In logical-historical models, capitalist relations impinge upon

earlier forms of productive activity, affecting modifications in a general law of value (e.g. Mandel, 1990). These analytic and logical-historical approaches posit an independence of value from its external expression in the value-form (money); in this respect, they are associated with abstract-labour-embodied interpretations of Marxian value theory.

In contrast with Ricardian models, Hegelian models apply a conceptual rather than an ontological dialectic; what Arthur (1979b) calls the logic of the concrete. Within the conceptual dialectic, all axioms are eschewed, and

concepts such as value and abstract-labour have a provisional existence, yet to be determined within the analysis:

the actual existent is first of all possibility, but without further determination it is only that (Reuten and Williams, 1989, p.10). What this means is that concepts are given provisionally as universal/particular oppositions that require

further grounding in more concrete determinations (I elaborate more fully this Hegelian mode of argument in section

2.2, below). Fundamentally, a view of value and value-form as internally interconnected and mutually determined

by an existent (capitalism) identifies Hegelian models as theories of social form, associated with an abstract-labour theory of value.

At this point, it might well be asked how any evaluation of Capital is possible? Given profound epistemological and

methodological disagreements about the meaning and status of value concepts, to what sort of test might Marxs theory be subjected? Is it an analytic or logical-historical theory concerned with theorising the implications of a

natural trans-historical law of value, or a systematic dialectical theory concerned with theorising the internal

connection between concepts applicable only to a particular social form?

In arriving at a decision, we have only Marxs cursory and ambivalent remarks on method to go by. At the time of writing the 1857 draft Introduction Marx seems to have agreed with Hegels conceptual dialectic, arguing that the object of a scientific inquiry is to grasp the essence of the phenomenon of interest as a concentration of many determinations, hence unity of the diverse (1857/1973, p.102). Hence, he concluded, the scientifically correct method is one in which abstract determinations lead towards a reproduction of the concrete by way of thought (p.101). Is it possible, then, to read the opening chapter as an attempt to ground abstract universal dualities (the first

movement, contained in sections 1-2) in the more concrete structures of commodity exchange (the second

movement, contained in sections 3-4)? With this question in mind, the next section sets out criteria for evaluating

Capital as a systematic dialectical theory. These criteria are derived from Hegels (1812) Science of Logic.

2.2 Hegels Logic: Principles and Implications

Williams (1998) identifies two moments in Hegels logical system of conceptual development. The first is a moment of inquiry into empirical perceptions of reality and existing theories of it: or, as Marx put it, the working-up of observation and conception into concepts (Marx, 1857/1973, p.101). Through this process of working-up the researcher arrives at an all-embracing abstraction determined by the interconnection of all the necessary moments of the totality (Reuten and Williams, 1989, p.20). The second moment is one of presentation, proceeding in the reverse direction to grasp the abstract-universal starting point in its internal (logical) interconnectedness, its concrete

conditions of existence. The moment of presentation is not concerned with analysis, but with systematic interconnection, specification, synthesis, reconstruction and concretisation from the most abstract starting point (Williams, 1998, p.189).

The first thing to note about the starting point of a systematic dialectical presentation is that it is a universal

abstraction, yet determinate in that it presupposes the totality of an empirical reality that has been interrogated in the

moment of inquiry. The second point is that thinking can make nothing of the abstract universal notion except by

opposing to it: (1) an abstract universal negation (what it is not), and (2) its concrete particularity. To take Hegels example: the abstract universal animal is further determined only by thinking through its abstract negation as plant or mineral and its concrete particularity as dog and cat. Third, negation and particularity are brought into existence

by applying opposing concepts to the empty abstraction, and in this very specific sense the doubling of concepts creates contradiction. Fourth, contradiction motivates transcendence of the abstract universal concept by demanding

concrete grounds, or conditions of existence. The grounding moment a movement of force, or tendency provides for the actual coming into being of the abstract identity of opposites (Reuten and Williams, 1989). Thus, the universal animal is grounded in the concrete determination of how precisely particular animals are different and how they are connected. It is this unity in difference that the systematic dialectic seeks.

At the start of the presentation, difference is still sunk in the unity, not yet set forth as different (Hegel, 1833, p.83). Opposed concepts are brought into being and united by the gradual transcendence of abstract determination towards concrete determination until the stage of a self-reproducing actual existence is reached (Reuten and Williams, 1989, p.24). The systematic dialectic is thus best apprehended as within itself a circle in which the first is also the

last and the last is also the first (Hegel, 1812, p.71). Indeed, the whole object of the presentation is to confirm what is first posited provisionally as possibility and to determine this possibility as indeed actual, concrete, self-reproducing, or endogenous existence, which requires no external or exogenous determinants for its systematic

reproduction (Reuten, 1993, p.93). If the method is applied to value theory, three crucial implications follow.

First, the relation of causality to determination is complex and given systemically rather than externally.

Determinations given externally are contingent rather than necessary to the existent_. Moreover, the totality and its

determinations are mutually constituted such that: theory culminates in a stage that is true for itself, i.e., concretely and actually, then this shows that an earlier stage leading up to it must have been true in itself, i.e. abstractly and potentially (Smith, 1990, p.49). Causality is therefore established retrogressively: the beginning is, as such, already something derivedand there is no need to deprecate the fact that it may only be accepted provisionally and hypothetically (Hegel 1812, p.841). The provisional character of the starting point as an abstraction that results from a process of empirical inquiry - will be confirmed by the capacity of logic to ground all

related elements in the system of mutual determinations that cause the existent to be what it essentially is.

Ultimately, value in its complete, finished form must make good the promise of a law of value (Arthur, 1997, p.33).

The second implication of Hegels system is that science alone determines its object, and comprehends it. In social science, the object of theory is to establish the mutable logic of social practices in a systematic form. Hegels logic is a method enabling this reconstruction in thought of a real subject that retains its autonomous existence outside the head just as before, but is knowable only as a product of a thinking head, which appropriates the world in the only way it can (Marx, 1857/1973, p.101). As a method, the systematic dialectic need make no claim to perfect correspondence with reality, or to perfectly reflect real entities. The systematic dialectical project is, in fact, far more modest in this respect than most Marxist theories with their ontological presuppositions and claims to directly

represent capitalist reality. Claims to success are based, rather, on the theorys capacity to comprehend the relevant concrete phenomena (prices, profits, labour-time) of the reality to be explained, as mediated and reconstituted by the

theory. Since theory approaches reality at best circuitously, the systematic dialectical project is explicitly

open-ended and can never be considered complete (Reuten, 1993).

The third implication of Hegels unity of ground and existence is that it does not allow for the isolation of essence and appearance within the analysis; in this it differs fundamentally from the linear (Ricardian) models introduced in

the last section (2.2). In the Hegelian model, value is not comprehensible as an essence behind the phenomenal appearance of price, as most Marxists would have it. On the contrary, the concept of value first appears only as the abstract negation of an opposite abstract universal, use-value. The exchange relation then constitutes the

ground, or first condition for the existence of value, by showing value that it cannot exist for itself but only as it

appears in the concrete body of an equivalent commodity or - more concretely still - the form of a universal

equivalent (money). Price, as the most concrete determination of money, cannot exist apart from value but

necessarily contains within it the antecedent abstract moment: appearance shows nothing that is not in the essence, and in the essence there is nothing but what is manifested (Hegel, 1817; cited, Reuten and Williams, 1989, p.23).

It is clear, then, that relative prices cannot be derived from value (or from labour-values) as propositions are derived in an axiomatic or in a logical-historical analysis. Indeed, both Hegel and Marx explicitly reject the

empiricist/materialist conflation of knowledge and reality constituted by an axiomatic identification of laws with

constant conjunctions of events. The proof of the theory rests solely on the adequacy of the theoretical (systemic) grounding of the abstract starting point; that is, on the intrinsic merits of the presentation itself Reuten (1993). With these criteria in mind, the next section turns to Marxs (1867a) starting point: his exposition of the double character of commodities and labour, which takes place over the first two sections of his opening chapter in Capital

1.

2.3 Abstract Labour: Analytic or Dialectic Abstraction?

The opening sentences of the first chapter of Capital set the stage for Marxs (1867a) analysis of the double character of the commodity, upon which so much depends:

The wealth of societies in which the capitalist mode of production prevails appears as an immense collection of commodities; the individual commodity appears as its elementary form. Our investigation therefore begins with the analysis of the commodity (Marx, 1867a, p.125).

From a Hegelian perspective, this paragraph suggests both the object of inquiry - capitalist wealth - and its most

abstract universal manifestation the commodity. Yet, having suggested the determinate character of the commodity as a starting point for his inquiry into the universal form of wealth in a particular type of society, Marx

immediately suspends the presupposition and moves towards to a generalisation of commodities as use-values for others, social use-values (Marx, 1867a, p.131). By the end of the first section, what is established is that the commodity is a useful object produced specifically for exchange - such that its useful property (its use-value) is

verified only when it is exchanged for use-values of a different type. Thus, the commodity is constituted in a very

broad sense as an entity of double character: use-value (quality) and exchange-value (quantity).

What has this duality to do with the commodity form as an appearance of capitalist wealth? Marx does not address

this important question, but embarks upon a digression into the exchange relation and the question of what it is that

enables diverse use-values to exchange in predictable proportions. It is in this context, that he first introduces value

as a term for the relation of equivalence between commodities the common factor in the exchange relation (1867a, p.128). Here, the substance of value is what is common in diverse commodities after the particular useful property (use-value) of the commodity is discarded. Since nothing is left but the property of being products of

labour, Marx concludes that congealed quantities of homogenous human labour give the exchange relation its phantom-like objectivity (p.128). In order that particular types of labour should be considered equal human labour, however, a similar abstraction must be made from the heterogeneous characteristics of particular concrete types of labour.

Thus, abstract labour makes a first appearance in Capital as a term used to describe homogenous labour, constituted as an abstraction from concrete particularity. What is common to labour once its heterogeneous characteristics are discarded is human labour-power expended without regard to the form of its expenditure, and in aggregate this constitutes the total capacity to labour, or total labour power of society (Marx, 1867a, p.128-129). Although, in particular instances, diverse labours are performed with different levels of intensity and skill, each unit of abstract

labour-power is the same as any other, to the extent that it has the character of a socially average unit of labour-power and acts as such (p.129). Given this simplification, the value of any commodity is measured by the average amount of labour time required to produce that particular commodity with a socially given level of skill and

technology. What exclusively determines the magnitude of value of any article is therefore the amount of labour socially necessary, or the labour time socially necessary for its production (p.129).

The first point to note about this derivation of the double character of labour is that Marx arrives at the concept of

abstract labour by way of a reductive abstraction from the heterogenous characteristics of material use-values and the

useful labour that produces them:

If then we disregard the use-value of commodities, only one property remains, that of being products of labour. But

even the product of labour has already been transformed in our hands. If we make abstraction from its use-value,

we abstract also from the material constituents and forms which make it a use-value.The useful character of the kinds of labour embodied in them also disappears; this in turn entails the disappearance of the different concrete

forms of labour. They can no longer be distinguished, but are altogether reduced to the same kind of labour, human

labour in the abstract (Marx, 1867a, p.128).

The remarkable thing about this passage, from a Hegelian point of view, is that the double character of labour as

abstract and concrete is not constituted as a unity in difference, presupposing a specific totality (capitalist commodity production). First, concrete-labour is not posited as an abstract universal opposed to abstract-labour, but

as particular labour transformed into abstract labour, apparently in the mind of the researcher. Second, there is no reference to the market - thus, no reference to the exchange relation as constituting the first condition of existence of

abstract-labour. If a concept of social abstraction is implicit in the derivation (in our hands?) it is only because an

exchange relation is already inherent in Marxs description of commodities as use-values for others. Given the social nature of the commodity, it is curious that Marx delays any explicit discussion of the activity of exchange as a

universal ground for his abstract-labour/concrete-labour opposition. When he does so, however, the difference with

the previous passage is striking:

But the act of equating tailoring with weaving reduces the former to what is really equal in the two kinds of labour,

to the characteristic they have in common of being human labour. This is a roundabout way of saying that weaving

too, in so far as it weaves value, has nothing to distinguish it from tailoring, and, consequently, is abstract human

labour. It is only the expression of equivalence between different sorts of commodities which brings to view the

specific character of value-creating labour, by actually reducing the different kinds of commodity to their common

quality of being human labour in general (Marx, 1867a, p.142; my italics).

Here the concept of abstract-labour is clearly given not as a property of commodities, but as a relation between

commodities arising as the result of a real social practice - the act of exchanging commodities. The different types

of physiological energy expended on weaving and tailoring are abstract only in so far as they create value, and value is a universal expression of equivalence or relation between commodities. How are we to understand this passage in relation to the last? Is abstract-labour intended to be a genus in a hierarchy, a reductive (mental)

generalisation from particular types of physiological energy expended in productive activity? Or, is it intended to

refer to the result of a social practice that requires for its existence and perpetuation an actual disregard for

use-values affected by a practice of bringing products of labour (and labour itself) into a form of equivalence on the

market as values? The point is that abstract labour cannot be both of these things: it cannot be at the same time an indeterminate category of productive activity in general and a determinate category of a particular system of

production for exchange. As early as 1928, Isaak Rubin made this important observation:

One of two things is possible: if abstract labour is an expenditure of human energy in physiological form, then value

also has a reified-material character. Or value is a social phenomenon, and then abstract labour must also be

understood as a social phenomenon connected with a determined social form of production. It is not possible to reconcile a physiological concept of abstract labour with the historical character of the value that it creates. The

physiological expenditure of energy as such is the same for all epochs and, one might say, this energy created value

in all epochs. We arrive at the crudest interpretation of the theory of value, one that sharply contradicts Marxs theory (Rubin, 1928/1972, p.135).

Rubin (1928/1972) was certainly correct to point out that the existence of value has a purely social reality for Marx, in that it makes an objective appearance only in the relation of commodity to commodity and does not therefore

include a single atom of matter. His statement that a physiological reading contradicts Marx is much more doubtful however. Marx (1867a) not only derives value as merely congealed quantities of human labour-power expended without regard to the form of its expenditure (p.128), but he goes on to introduce labour-power (the capacity to perform labour) as a simplifying assumption. Further, he justifies this purely by analytic convenience: we shall henceforth view every form of labour-power directly as simple labour-power; by this we shall simply be saving ourselves the trouble of making the reduction (Marx, 1867a, p.135). Thus, the magnitude of value comes to depend only on the average quantity of abstract labour socially necessary to produce a commodity, given some average level of skill and technology.

The extent to which this is important depends not only on the theoretical issue of whether value can exist prior to

exchange (as labour embodied in particular commodities), but also on the empirical issue of how the theory can be

usefully applied to a competitive money economy (Reuten, 1993). In Reutens view, any attempt to add up concrete (pre-market) labour hours must confront the actual discounting to simple labour that Marx sought to avoid. Even if

socially necessary labour time is taken as an immanent measure of embodied abstract-labour and the simplification

avoided, there is still a requirement to explain why it is that socially necessary labour must itself appear in money

form. The latter question constitutes Marxs critical challenge to the classics; the issue, then, is how well he answers it (Backhaus, 1969/1980).

2.4 Value-Form and Commodity Fetishism

Marxs answer to the riddle of money is presented in the third section of his opening chapter. For the first German edition of Capital, Marx wrote a special Appendix (1867b) on the The Value-Form, for he explains to Engels the matter is too decisive for the whole book (cited Arthur, 1979b, p.69). In my view, the decisive character of the value-form lies in the conceptual movement it inaugurates - from the double character of commodities and labour to

their determination by social form. In a crucial passage at the start of the third section Marx sets out to make the

transition, positing the commodity as a duality of natural form and value form (Marx, 1867a, p.138). Introducing the argument, Marx declares enigmatically:

Not an atom of matter enters into the objectivity of commodities as values; in this it is the direct opposite of the

coarsely sensuous objectivity of commodities as physical objects. We may twist and turn a single commodity as we

wish; it remains impossible to grasp it as a thing possessing value. However, let us remember that commodities

possess an objective character as values only insofar as they are all expressions of an identical social substance,

human labour, that their objective character as values is therefore purely social. From this it follows self-evidently

that it can only appear in the social relation between commodity and commodity (Marx, 1867a, p.138-9).

What does this passage mean? Firstly, Marx further elucidates the double character of the commodity: (1) it has a

material natural existence (objectively, it is a useful object) and (2) it has a non-material social existence (objectively it is a value). This is clearly an elaboration of the conceptual use-value/value distinction; the material

properties of the commodity are embodied in it and constitute its useful quality, yet it cannot be grasped in itself as a

thing possessing value. Secondly, diverse commodities are objectively commensurable have value only in so far as they express a social phenomenon namely, the equalisation of human labour. Moreover, the equalisation is affected not in production but exchange, when the diverse labours of private dissociated producers are verified as a

relation between commodities. It follows self-evidently that value is not a physiological substance but a purely social concept, referring to the historically specific form that social labour takes when its products are exchanged against one another.

At first sight, this passage appears to verify Rubins (1928/1972) social interpretation of the concept of abstract labour as the social form that private labour assumes when commodities are exchanged. On this reading, Marx explicates the necessity that the value of a commodity be represented in the bodily form of an equivalent commodity:

human labour creates value, but is not itself value. It becomes value only in its coagulated state, in objective form (Marx, 1867a, p.142, also p.149). The notion that human labour is value only when it takes on an objective

(equivalent) form underwrites Marxs derivation of money as the universal equivalent commodity against which all other commodities exchange. This leads to an important argument, introduced in the fourth section: namely that in a

system of generalised production for exchange, a reification takes place such that the social character of the relationship between private producers appears inverted as a monetary relationship between the objects they

independently produce. This inversion is a social phenomenon specific to the bourgeois mode of production, as Marx argues:

The value-form of the product of labour is the most abstract, but also the most universal form of the bourgeois mode of production; by that fact it stamps the bourgeois mode of production as a particular kind of social production of a

historical and transitory character. If then we make the mistake of treating it as the eternal natural form of social

production we necessarily overlook the specificity of the value-form, and consequently of the commodity form

together with its further developments, the money form, the capital form, etc (Marx, 1867a, fn.34, p.174).

In this footnote, and elsewhere in this section on commodity fetishism, Marx denounces the classical political

economists for their failure to comprehend the specificity of the value form as a historically unique form of social domination over value content. Where value and its measurement (in labour time) appear in classical value theory

with self-evident and nature-imposed necessity as economic laws or external determinations relevant to any form of productive activity, these formulas are, for Marx, but ideological manifestations of the social form itself (Marx, 1967a, p.175). The secret of the structure and development of the capitalist economy is therefore to be found in the

material abstraction of commodity exchange, and the inverted reality of value-forms that it creates. In other words, the entire system has to be grasped (within limits yet to be specified) as form-determined (Arthur, 1993, p.66).

Is this social interpretation of Marxs value-form theory convincing? One difficulty is that Marx retains a reference to value as labour in its coagulated state thereby creating a link to the classical theories that he explicitly criticises. The objective form into which socially equalised human labour necessarily coagulates might then be interpreted as a physiological labour embodiment (in the body of a particular commodity, or universally in the

money commodity) that takes place independently of any monetary abstraction from concrete-labour in exchange.

A physiological interpretation of social equalisation implies a Ricardian model of reification, in which the relation of things is constituted as a form of appearance autonomous of the real social relations hidden behind it. In other words, labour as essence is defined, in contrast to the form of appearance, in a formal, logical way as the universal, typical and principal (Backhaus, 1969/1980, p.101).

Given Marxs retention of physiological references, Backhaus concludes that the social mediation implied by Marxs theory of value-form can only be construed as a pseudo-dialectical movement of pseudo-dialectical contradiction (p.101). The main point is that Marx fails to explicate the double character of labour as the essential opposition of

capitalist production, grounded in the internal social structures that constitute labour in this double form. Thus, the

value-form appears not as an abstract-universal mode of association determining the social form of private productive activity in capitalism, but more ambiguously as a theory of commodity money derived from the exchange relation.

Conclusion

Returning to the preliminary question posed in this chapter: is Marxs abstract-labour theory of value a clarification and extension of the classical labour-embodied theory of value, or is it a refutation of it? The textual analysis presented here confirms that Marx is nowhere explicit as to the nature and extent of his break with the classics.

Especially problematic is Marxs (1867a) retention of abstract labour as the substance of value, viewed ontologically as a real property of commodities, motivating the exposition towards a natural trans-historical theory of value. Indeed, the whole of the opening chapter is replete with naturalistic references to value as congealed quantities of [abstract] labour or labour in a coagulated state, suggesting that abstract-labour and embodied-labour are not intended to be opposites in Marxs value theory. The status of the commodity as an all-embracing concept for capitalist production is therefore ambiguous and the theory of commodity fetishism

obscure, based apparently on a separation of the form of appearance of things from its genesis in the social relations that give rise to it. In this regard, Marxs first chapter seems to accord better with the Ricardian model of essence existing autonomously of its appearance than it accords with Hegels conceptual unity of essence and ground; the latter requiring that abstract universals are validated by the more concrete determinations that give rise to them.

On the other hand, Marx claimed in his 1873 Postface to the second German edition of Capital, to have utilised a

variation of Hegels method to distinguish between the social (value) and material (use-value) characteristics of the commodity-form, so introducing into political economy a unique critique of classical value theory. In this sense, I

think that it is justifiable to ask how well the conceptual development of concepts in Capital accords with criteria

derived from Hegels (1812) Science of Logic. Indeed, good reasons for judging the whole of Capital a systematic dialectical work have been summarised by Smith (1993, 1998) and by Arthur (1998b, 2000). Here, I have not set

out to dispute their conclusions, but only to establish some of the difficulties involved in the interpretation of Marxs value concepts as universal abstractions at the start of a systematic dialectical exposition.

The main difficulty in the conceptual development of the opening chapter lies in the reductive character of Marxs core concepts. Most crucially, abstract-labour is first derived as a generalisation from concrete particularity. This

accords better with an analytic derivation of concepts than it does with the contradictory (abstract universal)

oppositions that motivate the Hegelian mode of argument. Nevertheless, Marxs theory of value-form does set out a rudimentary theory of the social (form) determination of the twofold character of entities and processes in capitalism.

It also suggests the methodological direction required for a systematic dialectical development of that theory (see

chapter 4, below). Before turning to this development, the next chapter explores the lasting effects of Marxs attempt to synthesise classical value theory and Hegelian form theory: a paradigmatic splitting of the Marxian

abstract-labour-embodied theory of value into a technical and a social paradigm.

3. Two Paradigms, Two Problems

The first two sections of this chapter examine two distinct Marxian paradigms derived from

abstract-labour-embodied interpretations of Capital: the technical and the social paradigm (cf. de Vroey, 1982). The value theories arising from this splitting of Marxian theory are discussed with reference to two core problems.

Firstly, what type of labour is socially equal abstract labour: is it a substance embodied in commodities prior to

exchange, or is it a form that social labour assumes when human activity takes the value-form and is brought under

the aspect of time? Secondly, what is the appropriate measure of abstract labour: is it labour time, or money?

These questions ultimately return to the core question of whether in a capitalist economy - value can be said to have any meaningful existence prior to exchange. The third section answers the question in the negative.

Throughout the chapter, I aim to show that paradigmatic splits within Marxism are explicitly related to the way in

which the interconnection of value and money is theorised within the two models of essence and appearance

described in the last chapter (section 2.1). Both technical and social interpretations tend to adopt an ontological (Ricardian) approach to value and its measurement, so that paradigmatic differences turn primarily on alternative

conceptions of the relation of production to exchange in the circuit of capital (Clarke, 1980). Conceptual dialectical

(Hegelian) approaches occupy a minority position within the social paradigm and are distinguished from all other

positions by their rejection of labour-embodied value theory and by an explicit attempt to develop Marxian

categories to accord with Hegels logical principles. Since the current chapter is concerned with interpretations of Marxs (1867a) value theory rather than reconstructions of it, conceptual dialectical approaches are not discussed here but in the next chapter.

3.1 The Technical Paradigm

Rubins (1928/1972) insight into the social character of abstract labour lay dormant in the literature for almost fifty years. During this time, physiological interpretations of the concept dominated studies of Marxs Capital. Sweezy (1946) proposes, for example, that abstract labour is equivalent to labour in general; it is what is common to all productive human activity (p.30). Although this conflation of physiological labour and abstract labour can be traced to Marxs first chapter, it eliminates by assumption any determining role for the value-form in the constitution of value; hence, money doesnt matter, but is only a veil over the exploitation of labour. This section examines the implications of this reading of Marxian value theory in two influential views of the economy seen as a system of

technical production: the orthodox view (e.g. Dobb, 1940; Meek, 1956; Sweezy, 1946) and the Sraffian view (e.g. Lippi, 1980; Steedman, 1977).

THE ORTHODOX VIEW

Arthur (1997) traces the origins of the orthodox view to an epistemological standpoint linking conceptual development to historical development, in such a way that the former is taken to be a corrected reflection of the latter. What results is a logical-historical methodology, according to which Marx begins the first volume of Capital

by describing a stage of simple commodity production in which value attains its classical form, then goes on to describe capitalist production as a secondary derivative form of value production_. Hence, Marxs law of value is a natural law which applies universally - up until the time when it is modified by the onset of the capitalist form of production (Engels, 1894a, p.103; 1894b, p.1037). Given this linear view of historical processes, the role of Marxian value theory is taken to be an investigation of the general law of value, and of its capitalist modifications.

The idea that values might play a determining role in the elucidation of the general laws governing historical development has permitted a great variety of labour-embodied interpretations holding to some variant of

logical-historical methodology. In extreme historicist versions, labour is simply collapsed into value, as in Mandels (1990) bald statement that labour is value; indeed, Mandel posits several historical modes of production in which the allocation of labour is determined by value. Sweezy (1946), in contrast, favours logical aspects of the

method and foists on Marx a procedure of successive approximation, where the structure of Capital is seen to provide a series of analytic models, each a more complex approximation to capitalist reality than the last. In these

models, value is reduced to an axiom in a theory of general equilibrium developed in the first instance with reference to simple commodity production and later on adapted to capitalism (Sweezy, 1946, p.53). Labour embodied in commodities is conserved within these modifications, irrespective of whether they are proposed to capture historical processes, or to be a stage in logical approximation to reality.

Locating value in the natural/physical dimension constitutes Marxs central problem as one of labour allocation in any society where there is a division of labour and a high degree of labour mobility (Sweezy, 1946, pp.31-34). A

reductive abstraction from heterogeneous concrete labour is seen to be necessitated by the existence of an aggregate social labour force which is capable of transference from one use to another in accordance with social needs (p.32). In this vein, Sweezy argues that the value of a particular commodity is a share of materialised abstract labour expended by societies total labour force: a part of the total wealth-producing activity of society (p.33). As a proportion of social labour, the abstract labour embodied in a commodity is inevitably implied in the very notion of a total labour force available to society (p.31). From a different perspective, Steedman (1977, p.38) provides a similar argument for abstract labour as a social average derived from adding up and averaging out the labour productivity of different sectors of the economy to arrive at the vector of labour-values for different commodities. The immediate implication of conflating physiological labour and abstract-labour is that the substance of value must be theorised at the concrete-physical dimension as a pre-market phenomenon where concrete heterogeneous

types of labour are reduced to homogenous quantities of abstract-labour embodied in commodities in the form of

labour-time. That is, quantities and qualities of time - such as the intensity and duration of work - are taken to be

the common elements in diverse expenditures of energy, constituting commodities as values. If a measure of

duration is used, particular labours (for simplification, i and j) might be considered in terms of respective concrete

hours of labour expended in production (Li and Lj) and summed: Li + Lj = L, where (L) is the total labour expended

in an economy, materialised abstract labour. Whether values are realised in money-form in actual exchange is irrelevant to the actual creation of value since value clearly pre-exists the market as a proportion of expended labour.

Given that physiological abstract-labour is susceptible to measurement in time units, which I dispute, it is a short step to say that the labour values derived in volume one of Capital are intended as an approximation to the prices and

profits discussed in volume three (Sweezy, 1946, p.33). Value theory then becomes the unifying quantitative principle enabling economists to make postulates in terms of the general equilibrium of the economic system (Dobb, 1940, p.5), with the rate of profit also interpreted as a ratio among labour embodied magnitudes (Meek,

1956). Simple though this is, the concrete-labour embodied theory has inherent difficulties concerning the actuality

of value, both at the empirical level, and theoretically. Firstly, an argument that value magnitudes exist before the

determination of exchange ratios is obliged to trace the relationship between labour-values and prices of production_ once competition (and a general rate of profit) is introduced into the model. Secondly, it must answer to the question of how the labour-values presupposed axiomatically at the start of the analysis can be operationalised and measured independently of the market.

The first problem concerning the divergence of labour-values and prices of production given a general rate of profit - has received a great deal of attention in the economics literature under the rubric of the transformation problem. This problem concerns the structural relationship between Marxs value analysis in the first volume of Capital and his derivation of prices of production in the third volume, and is therefore outside the scope of this dissertation_. Here, I focus on the second problem, which has to do with Marxs transformation of concrete-labour into abstract-labour in the first chapter of Capital, and the problems of abstraction arising therefrom. The main issue

is the reduction to simple labour required in order that the units of time devoted to particular productive tasks can be

summed as labour-values. Consider, for example, an hour of labour devoted to making sausages. Does that hour of expended labour produce the same amount of value as an hour of labour devoted to making a computer chip?

Presumably an empirically useful measure of homogeneous labour embodied in commodities requires some adjustment for intensity and skill. Given that measures of skill and intensity simply do not exist in national

accounting statistics, how then are these adjustment coefficients to be arrived at?

Related to the issue of measurement is the issue of the theoretical relationship between the value of simple labour

and the value of labour power. In Marxs conceptual framework, the value of labour power is determined by the value of the subsistence bundle of goods plus a moral element. In a superb analysis, Philip Harvey (1985) points out

that this theory of the value of labour power implies no necessary relationship between the value of skilled labour

and its physical or value productivity. Moreover, there is evidence for unsystematic differences in the rates of

exploitation of simple and skilled labour. Harvey concludes that it is doubtful that any solution to the problem of reducing skilled to simple labour exists which is simultaneously consistent with Marxs theory of the value of labour power and with the theory of value (1985, p.95). Even if the reduction to simple labour were possible in practice, the calculation of surplus value in Marxs framework still depends upon the difference between the value of labour power and the value of the labour contained in the commodity.

This gives rise to a third problem: that the value of labour power cannot be known until the value of the subsistence

bundle is known. In other words, the real equivalent of money wages is known only at the end of the circuit and not

at the beginning. The consequence seems to be that it is impossible to calculate the amount of surplus value in production, since before exchange we do not know the value of labour power to subtract from the value created (Bellofiore, 1989, p.9). Bellofiore concludes that a discounting to simple labour cannot - either in fact or in theory -

be arrived at before a monetary (market) evaluation of the social value of different types of labours. If

labour-values cannot exist before exchange, it becomes meaningless to attempt to demonstrate that allocation in accordance with prices of production modifies - but does not supersede - allocation in accordance with labour-values.

In sum, it is difficult to see how a technical privileging of value-creation in production is sufficiently explanatory in a

monetary economy where the production of commodities presupposes (and is dependent upon) the competitive

exchange of commodities and labour in output and labour markets. It is also not obvious how a natural or physical-technical theory of the allocation of productive labour is a theory of capitalism - a system based on the

production of useful objects for profit. Finally, it is not obvious how the technical interpretation of Marxian

abstract-labour differs from Ricardian concrete-labour, or indeed from Steedmans (1977) adaptation of Sraffian theory where class distribution of the social product is derived directly from technical conditions of production and

real wage rates.

SRAFFIAN-MARXISM De Vroey (1982) cites Lippis (1980) Value and Naturalism and Steedmans (1977) Marx after Sraffa as seminal works in the assault on orthodox Marxian value theory, from within the technical paradigm itself. The assault

targets a core proposition of the technical reading of Capital - that labour embodied in commodities in production is

the sole source of value, as against the Smithian view in which capital is also identified as a contribution to value.

For both of the writers identified by de Vroey, the Sraffian framework provides an alternative method for arriving at

the same result. The key is to see profit as a subtraction from wages, the magnitude of which is determined once the exchange between labour-power and capital has taken place (Lippi, 1980, p.95). In this way the rate of profit

can be calculated without recourse to any concept extraneous to the logic of exchange_. Thus, Lippi writes:

It is no longer a matter of analysing production in terms of embodied labour, from which it follows that surplus-value

is the material pre-condition for profit. Rather the origin of profit lies in a social relationship: the reduction of labour-power to a commodity and the manner in which its price is socially determined makes it possible for surplus

labour to appear in commodity production (Lippi, 1980, p.101).

Lippis (1980) main argument is that the key to understanding profit is to see labour power as a commodity traded on the labour market, hence the (value) price of living labour is socially determined before its expenditure in production,

giving rise to the possibility for profit ex-post. The Marxian view of value as the real social cost thus contains a rational kernel that must be extricated from the naturalistic law of value which sees value as labour embodied in commodities at the end of the production process. Lippi argues that the Marxian retention of these naturalistic

elements can only lead to a failure to grasp the radical historicity of capitalism as a unique form of commodity

production in which the equalisation of various sorts of useful labour comes about only in and through exchange.

As an exchange phenomenon, abstract-labour is a real abstraction that must be interpreted precisely as an aspect of labour that becomes social in opposition to the immediately private character of the concrete labour expended in the production process.

I much agree with Lippis insight into the role of the exchange relation, but not with his conclusion; namely, that the main insights of Marxian value theory can be demonstrated more effectively by replacing value analysis with a

Sraffa-based analysis of prices of production. Steedmans (1977) analysis proceeds in exactly this way to locate Marxian value theory in a conceptual and mathematical framework constrained by the technical question of whether Marxs two aggregate equalities total profit and surplus value, and total price of production and value can be made to determine prices simultaneously. In effect, capitalism is theorised as a production matrix involving

the relationship between two sets of equations, one representing the value system and the other the price system, with

money a numeraire. From a demonstration that equilibrium prices (hence the distribution of the social product) can

be derived directly from technical conditions of production and real wage rates, Steedman is able to argue that the Marxian (orthodox) labour-embodied theory of value is redundant as a price theory.

The Sraffian critique advanced by Lippi (1980) and Steedman (1977) is of interest here only to the extent that it

reflects on the character of the labour-embodied interpretation of value theory_. As a critique of labour-embodied

theory it is - as de Vroey (1982) rightly points out - a palace revolution which misses completely the critical debate in the 1970s on the role of abstract-labour and money in Marxian value theory. Although Lippi advances a valuable

insight into abstract-labour as a real abstraction in exchange, he uses this to endorse a shift from Marxian value analysis to a Sraffa-based analysis of prices of production. Yet, the Sraffian analysis, especially as it is elaborated

by Steedman (1977), wholly neglects the determination of the commodity and labour by the unique form of capitalist

production and focuses instead on types of productive activities, the method of production and the concrete goods

produced. Money has no role to play except as a numeraire, and labour appears explicitly as the product of labour employed in each sector for the average wage, so must be interpreted as concrete labour. This interpretation of the object of Marxian value theory (as a naturalistic price theory) identifies the Sraffa-based critique as a variant within

the technical paradigm, or as de Vroey (1982) succinctly puts it, a naturalistic deformation of the social reality of capitalism (p44).

The technical paradigm is, in my view, globally inappropriate as an interpretation/critique of Marxs abstract-labour-embodied theory as he developed it in Capital. Marx emphatically does not propose to add up

specific (concrete) labour hours into a concrete-labour-embodied total. On the contrary, he starts out from abstract

unobservable entities, crystals of social substance: ALi+ALj = AL, where ALi and ALj are the amounts of socially necessary labour required to produce commodities i and j. Marx also makes it clear that these abstract magnitudes have no observable manifestation, but require further grounding in a social or determinate system of commodity exchange. Hence, the simplifying assumption does not say, as Sweezy (1946) and Steedman (1977) would have it,

that Li + Lj = L, or that L is equivalent to materialised abstract labour - given certain axiomatic assumptions about

discounting to simple labour. Nor does it imply that Marxian value theory can be read as an axiomatic, or formalist,

equilibrium theory of distribution and prices. These arguments are taken up in a variety of Marxian value theories,

collectively identified by de Vroey (1982) as constituting a social paradigm.

3.2 The Social Paradigm

De Vroey (1982) characterises the shift from a technical to a social paradigm as a shift from value theory constructed

without any consideration of circulation or money to an argument for the necessity for a connection between the physical-technical dimension and the social dimension of economic activities (p.40). In this section, I consider the development of the social paradigm as it is currently affected by two debates: the first associated with the English

publication of Rubins (1928/1972) Essays and his (1927/1978) Lectures, the second associated with the Italian writing on abstract-labour (reviewed by Bellofiore, 1999).

ISAAK RUBIN: PRIVATE AND SOCIAL LABOUR

In a series of scholarly essays and analyses of Marxs published texts and unpublished drafts, Rubin (1928/1972) undertook an extensive refutation of physiological interpretations of abstract labour and the associated interpretation

of Marxian value theory as a natural law of labour distribution, or price determination. In the process, he introduced into the literature a critical and subsequently influential distinction, that between private and social

labour.

Rubins (1928/1978) main argument was based on the insight that private labour cannot be immediately social labour in an economy where production and consumption are separated and organised into independent individual units. In such an economy, the problem of social cohesion is such that one cannot conceive of the labour embodied in

commodities as socially necessary in isolation from the exchange process. Private labour is validated as socially

necessary only if: (1) it produces the average number of commodities typically produced in an hour in a particular

industry (a technical production criterion), and (2) the labour expended must produce a quantity of commodities exactly equal to social needs (an exchange criterion). If either condition fails, then the ideal labour-value of a commodity will not be equal to its actual value, reflected in price. Rubin (1927/1978) explored this dialectic of production and exchange (of value and its money form) as the essence of Marxs double characterisation of labour:

The labour of a commodity producer is directly private and concrete labour, but together with this it acquires an

additional ideal or latent characteristic as abstract universal and social labour. Marx was always amused by the Utopians who dreamed of the disappearance of money and believed in the dogma that the private labour of a private individual contained in (a commodity) is immediately social labour (Rubin, 1927/1978, pp.124-2).

Rubin (1927/1978) concluded that: Abstract labour and value are created or come about, become in the process of direct productionand are only realised in the process of exchange when commodities are traded for money (p.125). The important point is that private labour is validated as social labour only when the commodity is sold.

From this perspective, the Marxian theory of value cannot be a production theory since, in the absence of sale, no

value is realised. On the other hand, it is not a circulation theory, since the magnitude of value realised depends

upon the average technical conditions of production (and the average level of skill) prevailing in an industry at the

time of exchange.

The immediate impact of Rubins focus on the role of money in value theory was to enlarge the scope of the debate on Marxian value theory, raising the crucial question of the order of determination in a capitalist economy. De

Vroey (1982) argues, for example, that exchange creates value, but production determines its magnitude (p.40). Elson (1979) on the other hand holds onto a production theory a value theory of labour allocation in which value has both an immanent measure in labour hours and an external measure in money. Himmelweit and Mohun (1981/1994) hold to an intermediate position in that the market carries on as a real process the commensuration of the products of labour under commodity production (p.158). What is common to all of these theories, is an argument that the mutual interdependence of production and exchange within the circuit of capital denies the validity

of any axiomatic derivation of price from concrete hours of labour expended in producing a commodity. Given a

dynamic process in which each firm competes to capture extra profits through revolutions in production there is, in

fact, no reason why the labour embodied ideally in any particular commodity should be realised actually in its price (Fine, 1988). Equilibrium theorising must therefore be eschewed; the nature of capitalism is such that the object of the value-founded theory of price is permanently impeded by the working of a diachronic logic which irreversibly modifies these norms (de Vroey, 1982, p.41).

Rubins (1928/1972) distinction between private-concrete labour and abstract-social labour has been seen by some writers as a conflation of Marxs categories of abstract and social labour (Likitkijsomboon, 1995). This is incorrect; abstract-labour is not, for Rubin, immediately social labour (measured in money), but embodied labour (measured in

labour time, but realised in exchange). What Rubins distinction does imply is a theorisation of circulation not as a mere stage in the analysis of production, but as integral both to the realisation of value and to reproduction, itself the

result of two exchanges (of money capital for labour power and of commodity capital for money). In the circuit of

capital, value and price exist in a co-constitutive relationship such that socially necessary labour time is the immanent measure of value, but price is its necessary and only objective expression (Murray, 1993, p.50). In short, the necessity that abstract labour is validated as social labour precludes the adding up of concrete pre-market labour

times - the aggregation suggested by Sweezy (1946, p.33) - or the adding up of vectors the aggregation in Sraffian-Marxist theories (eg Steedman, 1977).

In sum, where the technological paradigm sees abstract-labour as a reduction from concrete particularity and related

to the problem of aggregation or commensurability, the social paradigm sees abstract-labour as a real abstraction or an abstraction in practice brought about only through the process of exchanging commodities in the market. Although this allows a role for money in the realisation of value it does not imply as some writers have argued - that money is the sole measure of abstract labour: that labour only becomes abstract in the act of exchange between the commodity and money (Gleicher, 1983/1994, p.175). Most of the writers identified by Gleicher as belonging to the Rubin school are, in fact, unequivocal defenders of Marxs abstract-labour-embodied theory of value, and Rubin maintains that quantities of abstract-labour, measured in time, causally determines the exchange ratios of commodities (Eldred, 1984). The shift to a social paradigm does not, therefore, entail an abandonment of

production as the moment of value-creation, so much as it entails an attempt to integrate this moment more

effectively within the circuit of capital as a whole.

THE ITALIAN DEBATE

A second development within the social paradigm also holds to an abstract-labour embodied interpretation of value

while attempting to develop the monetary side of Marxs value theory (see Bellofiore, 1989; Bellofiore and Finelli, 1998). This monetary interpretation derives from Collettis (1972) view of the abstraction affected in the market - not as an abstraction from the concrete objectivity of labour, but as an alienation of the subjectivity of individuals:

abstract labour is alienated labour, labour separated or estranged with respect to man himself (p.86). From this perspective, the essential feature of commodity exchange is that it transforms human capacities into a congealation of labour which is value, turning it into a distinct entity, an entity which is not only independent of man, but also

dominates him (p.87).

The complexities of Collettis argument, explored in Bellofiores (1999) review of the Italian debate, are beyond the scope of this analysis. Here it is sufficient to point out that Collettis interpretation of Marxs value theory as a theory of fetishism retains the Ricardian essence and appearance model, to the extent that value is assumed to have

an autonomous existence determining the (alienated) character of productive activity in capitalism. In this respect, it

is subject to the critique advanced by Backhaus (1969/1980): namely, that severing the essential interconnectedness

of form and essence renders the phenomenon of reification unfathomable (pp.101-4). Colletti certainly recognises the problematic character of a value theory of alienation: I cannot yet state whether the idea of an inverted reality is compatible with a social science (cited Bellofiore, 1999, p.40). In the 1970s Napoleoni sought to resolve this difficulty by suggesting that abstract-labour-embodied is value first regarded as activity, and afterwards as its product or result (Napoleoni, 1975; cited Bellofiore, 1999, p.48).

Napoleonis argument is traced out by Bellofiore (1999): (1) commodities are ideal money before exchange; (2) actual money is the necessary phenomenal form of an immanent measure of value as embodied labour time; (3) the transition from ideal money in production to actual money in exchange cannot be assumed; (4) labour-power systematically produces money only when it takes the wage-form, and this entails the separation of workers from

means of production; (5) when the technical labour process is fully subsumed under the valorisation process (the

process of increasing value), objectified abstract-labour embodied in technical inputs (Marxs constant capital) dominates the living labour of the worker (Marxs variable capital) and extracts surplus value from it; (6) the centre of the valorisation process is this real and immediate process of production, and it is here that living labour is alienated as value. This real hypostatisation (process of substantive creativity) is behind the reification of human

relations in the capitalist system of production for exchange.

The modern monetary theory emerging from the Italian debate is an extremely rich and sophisticated attempt to retain Marxs abstract-labour-embodied value theory while, at the same time, emphasising the crucial role played by money (and the exchange relation) in constituting value as actual in a capitalist economy. The interconnectedness of exchange and production is conceptualised, within this theory, as a relationship between potential value/abstract-labour created in production and measurable (in principle) in labour time, and actual value/abstract labour that comes into existence only when commodities are exchanged for money (Bellofiore, 1989; 1999).

Through this distinction between potential and actual abstract-labour/value, the privileging of production is

maintained since the alienation-abstraction of objectified labour arising from exchange is posited by the more fundamental abstraction-alienation of living labour in the production process (Bellofiore and Finelli, 1998, p.53). In other words, money and capital are theorised in terms of two relationships with labour: (1) the (quantitative)

market driven exchange of labour-power for wages, and (2) the (qualitative) production driven subordination of

living labour to its quantitative aspect, the expansion of value.

At the centre of these twin relationships is the domination of capital over labour. The crucial point is that

abstract-labour, although actual only in exchange, is derived not from the exchange relation, but as a consequenceof the subjection to capital of wage workers living labour (Bellofiori and Finelli, 1998, p.54). Hence, the human capacity to labour (labour-power) is sold on the market for a quantity of money (wages), but this

exchange of labour-power for wages itself presupposes the existence of an exploitative production process

subordinating living labour under its quantitative aspect (the production of value). This constitutes value as more

than a regulator of circulation or labour allocation; it is the autonomous determinant of the form of the production process and grounds the intrinsic dynamic of capitalist society (Postone, 1993, p.278).

In his contribution to the critique of Napoleoni, Arthur (1999) suggests that the Italian conflation of the abstract

character of the exchange relation with the abstract character of the labour that constitutes value is a tempting conceptual mistake since both are, in fact, determined by the value-form (Arthur, 1999). That is, value creation is enabled not by the abstraction from heterogeneous particularity (in money/exchange), nor by the existence of

productive activity under the aspect of time, but specifically by the subordination of productive activity to the

imperatives of profit. In other words, the exchange of labour-power for money and the subjugation of living labour

under the aspect of time presupposes a form of productive activity dominated by the requirement for valorisation,

and it is this domination of form over content that demands the representation of abstract-labour in money. Marx

(1867a) says as much:

the labour objectified in the means of production can only be increasedto the extent to which it sucks in living labour and objectifies it as money, as general social labour. It is therefore, pre-eminently in this sense which pertains to the valorisation process as the authentic aim of capitalist production that capital as objectified labour (accumulated labour, pre-existent labour and so forth) may be said to confront living labour (immediate labour,

etc)(Marx, 1867a, pp.993-994).

Here, Marx identifies labour power expended in the technical production process as the fundamental source of value,

but labour power expended in the process of valorisation is the fundamental determinant of the authentic transformation of labour into capital. The logical order is therefore exactly the reverse of that advanced by Bellofiore and Finelli (1998). Labour time (calculated as intensity or duration) acquires practical reality only because labour-power has taken the value-form (wages) and is bought by capitalists on the market as an input to

production. As an actual abstraction affected by the subordination of the productive process to the imperatives of

valorisation abstract-labour can have no measure other than money. Thus, Arthur (1999) concludes:

Money is the only measure of success; it is the existent form of abstract wealth (Marx) and this means that the activity producing it is itself posited as abstract, that the living labour employed in the capitalist labour process

counts only as an abstraction of itself, as a passage of time (Arthur, 1999, p.149).

Arthurs concludes that the constitution of labour as abstract in the capital relation is in truth more fundamental than its constitution as abstract in exchange (Arthur, 1999, p.146). If the argument is granted, it seems meaningless to isolate the technical labour process (the source) from the valorisation process (where the measure is cons