“Real” value Ruthless Criticism

“Real” value:
Comments on the “labor theory of value”
and the wealth of capitalist society

In the wake of the crisis and the disappointments caused by finance capital – first for itself and then for the rest of the world – the so-called “real economy” has attained a new and good reputation. For years, no mention was ever made about this peculiar sector of the national economy. In fact, as long as banks and stock markets succeeded in making money with their own particular methods, nobody knew of any difference between a real and an unreal economy. Not only that, daily quoted stock prices were considered by all to be a valid indicator for the state of the overall economy, including manufacturing and trade. The “real economy” was completely subsumed under finance capital's speculation on it. The profitability of production and sale were derived from the prices investors were willing to pay for shares in various industries.

In the meantime, huge security holdings have collapsed, while the value of stock prices has, at times, dropped by more than half. Economic experts who had never heard of value in the economic sphere, or who rejected the term as Marxist metaphysics, all of a sudden became self-critical. They suddenly found it inexplicable that investment bankers, and themselves as their customers and admirers, could ever have believed that wealth could be generated merely through the marketing of securities, without any labor. They now unveil their revolutionary discovery that you can’t eat securities; and they uphold the real value created by labor, unlike the mere paper value circulating in the financial world, as the solid and genuine kind of value which matters in the economy, as the good on which the society ultimately lives. Leftists did not need the financial crisis to teach them that; they see Marx's “labor theory of value” confirmed by the crisis and “fictitious capital” convicted of its nullity. They proclaim that “only labor creates value!” – partly as a constructive call for an economic and political change of direction, partly as a kind of intellectual’s “told you so!” against the “illusory world of finance capital.” Both factions, the bourgeois and the left, see the crisis as having set the market economy “on its feet” again, as having brought it to reason, so to speak. With or without invoking Marx, they celebrate labor as the source of real value – and thereby demonstrate that they have not understood the dubious social idyll in which labor creates value.

Especially among Marx experts, there are many who interpret the crisis as a “revenge of the law of value” on high-flying speculation and as proof that banks and stock markets simply can't increase capitalistic wealth. They take Marx's conceptual determination that “socially average necessary labor is the substance of value” to mean that the wealth of capitalist society is material wealth, encompassing those products created by labor. They distinguish finance capital from this material basis of value as a dependent superstructure that redistributes value, but that cannot replace it through credit operations. Now, the financial crisis demonstrates just how much what they call the “base” depends on the superstructure, how much this superstructure turns the real economy – the production and sale of commodities – into its instrument, and how much it subjects the real economy to the ups and downs of financial speculation. Undauntedly, these leftists insist that the collapse of banks and stock markets is merely an appearance, an after-shock from a crisis outside of the financial world, namely in the production of “real value.” Or rather, they regard this collapse as a mere correction of excessive speculation, which must be scaled back to the degree that surplus value has really been produced. They are not bothered by the fact that such a “scaling-back” is nowhere to be seen. Fictitious financial value doesn’t get annulled until only real value is left. It’s just the other way around. The many government bailouts for their nation’s respective banking system demonstrate that the ever more uncertain financial power of the banks is to be preserved from collapse at nearly all costs. And in order to rescue their liquidity, financial institutions stop or reduce financing for the “real economy,” thereby destroying the “real value” in production plants and merchandise stocks. In the financial crisis, material wealth in the form of products and means of production gets sacrificed in order to rescue the “fictitious values” of the “financial industry.”

To even describe the crisis in this way, not to mention explaining these facts, is for some “Marxists” to sin against the so-called labor theory of value. They insist on interpreting the crisis in line with what they have gotten out of Marx’s account of commodity value and value-creating labor. They maintain that the decades-long successful accumulation of finance capital – which creates, sells and buys property titles, making profits which other sectors can only dream of – can't really have happened. This sector can’t trade real values, because the latter can only be created by labor! That the facts contradict their understanding of Marx’s theory doesn’t lead them to question their understanding, but the facts themselves.

If the facts of the financial crisis are rejected in the name of the “labor theory of value” or reduced to mere appearances of a different reality, then unfortunately it seems that both the starting point of Marx’s three volumes of Capital, the analysis of the commodity, and the subsequent derivation have not been understood correctly. Perhaps it is worthwhile to clarify what Marx's commodity analysis means when he concludes that exchange value results from value and that labor is the source and measure of that value.

Value is not the useful product of labor, but the social power gained from the subordination of labor to property.

It is mistaken from the outset to explain the value of commodities as a result of labor without addressing the relations of force and the absurd type of social division of labor under which labor produces exchange value. By itself, labor produces useful things, use values. Every child knows that, but what doesn’t seem so clear is that “value” is something entirely different from use-value.

Marx writes that the labor expended in the production of a commodity creates value in accordance with its duration. However, this should not be confused with the triviality that a certain amount of purposeful human activity is always needed to create use-values. After all, this truism is merely the basis for another peculiar feature of these labor products, one which is neither natural nor material, but entirely social: In addition to their concrete usefulness, these products are at the same time bearers of value. By no means does every instance of labor that produces useful goods also produce things of value; only labor with three peculiar attributes does that: private, abstract and average socially necessary. The explanation of these special qualities of value-creating labor also clarifies what value is.

Labor products become commodities only if labor is done privately, i.e. if the product of labor is private property over which somebody exercises an absolute and exclusive right of ownership. Whether a product is private property, public property or not property at all has nothing to do with labor itself. If labor is said to create private property, then only because the system of law imposed and enforced by a state power gets expressed as a property of the labor performed under these force relations. This characteristic of labor does not characterize labor itself, but the political-economic purpose for which it is performed. Its product may be useful for satisfying a concrete need, but that usefulness is made contingent on the right of ownership. The real economic product of this kind of labor is not a use-value, but an object of ownership. This makes clear that “private labor,” which creates property, doesn’t refer to the labor performed by hermits; it doesn’t refer to the opposite of social labor, but a particular type of labor in and for society. The exclusive right of ownership to the product of labor would be meaningless if the producer lived alone, since there would be nobody who could be excluded from using the product of his labor. This exclusion only becomes economically “productive” if others depend on the product from which they are excluded. Private producers produce use-values that meet the needs of others, but not in order to meet these needs, but in order to exploit them. The division of labor through which the material life process of society is carried out is correspondingly antagonistic. Producers produce in order to sell their product as a commodity; the person in need must obtain ownership over the product he needs by giving up money – his own property in readily usable form. Both sides benefit from the exchange to the extent that they deny benefits to the other side.

In this sense, regardless of what private producers produce in terms of concrete goods, their labor creates one and the same thing: the means to get hold of others’ property. The very thing that makes labor rational and useful – a concrete, purposeful activity that results in a thing or service with a specific benefit – is unimportant, or rather that is a mere prerequisite. This kind of labor is abstract, because it produces nothing but the power of ownership sans phrase, regardless of what is actually owned. Its only concrete determination is its size, a pure matter of quantity.

This abstraction takes place in the act of sale. Before that, the labor product is still a concrete object with a concrete use. Only its equation with, and its exchange for, money frees the seller from the concrete thing that does not matter to him. The money the producer receives for his commodity is the socially valid form of his product, the only form he is interested in, which is the power of access and ownership as an independent object. The act of exchange is what determines how much new property labor has created. Labor itself does not determine how much money it generates, rather the money earned in the sale of the product determines how much average socially necessary labor an individual instance of labor represents. The usefulness of a concrete product and the need for that product only affect the kind of labor that produces property with concern to the quantity of money, an abstract good, paid for that product. Obvious and natural aspects of useful labor – the fact that it is done because of a need for a certain product, and the fact that it should be done efficiently in order to avoid unnecessary effort – represent under these circumstances external constraints on labor’s capacity to produce property. In order for labor to produce power of access and ownership, there must actually be a need for its concrete product, and the latter must be produced under average conditions of productivity, otherwise labor creates no such social power – regardless of how much effort workers expend and regardless of how much they actually produce. The amount of property created by labor is not determined by individuals and their labor; even if the actual labor process doesn’t change at all, its value-creating power changes with every shift in people’s needs and the productivity of labor elsewhere. “Private” labor thus doesn’t create value in accordance with its duration; value doesn’t remunerate expended labor. It isn’t a mechanism for fairly dividing up work and the benefits it creates, rather it is the result of a struggle between the antagonistic interests of property owners. The abstract benefit of the product of labor for its owner, measured in money, is decided by competition.

This might not be news to people that have studied Marx’s “Capital.” However, whoever maintains that labor per se – and only labor – creates value has not understood Marx’s classic formulations: Labor does not create value, but only labor in the service of property. And by looking at the way labor is performed in capitalism, it is apparent that abstract, property-creating labor does not represent a natural relationship between humans and nature, one in which labor is performed for the purpose of use and consumption, but a kind of labor that has been subordinated to a different purpose. Ever since the early Social Democrats, leftists have interpreted Marx's claim that average socially necessary labor is the substance of value as evidence of the importance and decisive role that labor plays in this economy. [1] In fact, to say that labor creates value is a condemnation of this kind of labor. This kind of labor does not attain its economic purpose by creating concretely useful goods; if that were the case, the rising productivity of labor would mean that these goods could be had with less and less expenditure of time and energy. Instead, labor creates value to the degree that labor is necessary – and if less labor per product is necessary, then that product’s value also sinks. In the world of property, the downside of labor, which is the fact that it costs time and energy, and which anyone working on their own account would try to minimize, is the very quality that determines the social validity of labor. Value, the economic quality of the product, is created only to the degree that labor is performed. Wealth in this society has its measure in toil, regardless of how productive labor is, and thus how relatively superfluous it is for creating material wealth. Workers produce value, abstract wealth, through their own wear and tear.

This wealth does not come about, therefore, as a result of people’s own free decision, but as a result of labor's subordination to the property of others. The source of value is not labor, but the power to command others’ labor. The contradictory role of labor in the production of property only exists where the burden of labor and its yield fall to different subjects. For workers, the equation of labor and property creation means that they earn money to the degree that they work like dogs, and that they are able to enjoy more wealth to the degree that they sacrifice their health and time. For the other side, this equation works out nicely: Owners of capital make use of large sums of value, i.e. they spend money to make more money. Their monetary power grants them the power to command the labor power they can buy on the market, using it in such a way that a growing social power of access and ownership accumulates in their hands: The value that labor creates is the power that commands labor and forces it to perform this service.

Stages in the escalation of value's domination and emancipation from its source

1. When labor creates value, value commands labor ...

The kind of labor that creates value is performed under the command and in the interest of capital. Educated Marxists know that labor not only has to create value for its employer, but surplus value – more value than workers receive in the form of wages. Capitalists can achieve this difference between cost and yield by having their employees work long, intensive, and productive hours; and they can just as easily get the same effect by paying their workers poorly. In any case, the latter work longer than would be necessary for them to produce the means of subsistence they can buy with their wages. So when they are paid by the day or by the hour, they perform “unpaid labor,” the fruits of which fall to capital and make up its profit.

That is all true, but to construe that as a great injustice in which the wealthy non-workers take away the workers’ product and appropriate it for themselves is to underestimate the matter. If one only criticizes how the fruits of labor get distributed, then production itself gets left aside as a neutral, reasonable matter, as if production in capitalism was about performing the labor needed to create means of consumption. According to this view, the problem with the economy – and what makes it truly capitalistic – is that workers receive too little of their value-product, which gets conflated with the concrete goods they produce, because others nab the lion’s share. Or the problem is that workers are forced to work longer than necessary – i.e., necessary for producing society’s collective means of consumption. By equating capitalism with other systems of exploitation throughout the history of humankind, however, one fails to grasp the irrationality of the most modern system of exploitation.

Marx is more fundamental than these Marxists. He rejects the idea of denouncing the relations of distribution while ignoring the relations of production. Indeed, the distribution of wealth is already decided by the capitalistic nature of production. Marx takes aim at “this inversion, indeed this distortion, which is peculiar to and characteristic of capitalist production, of the relation between dead labour and living labour” (Capital Vol.1, p. 425). In capitalism, the relationship between the laborer and his product is upside-down: The result of the kind of labor that produces value, i.e., created and accumulated value, puts labor at its own service. [2] This economic process does not begin with – somehow autonomously performed – labor and end in value; rather, value stands as an “automatic subject” of the economy both at the beginning and at the end of the process. It expands itself and makes use of labor as its means for doing so. That surplus value is the purpose of the capitalist production process expresses the fact that what counts is not value as a product of labor, but value as the product of value advanced, i.e., a difference in value. Therefore, labor does not determine whether value is created, rather value determines whether labor takes place; and value only has labor performed if that labor augments the power of access and command in which value consists. Marx's dictum that, in this society, surplus labor is the condition for necessary labor and not an addition to it, is to be understood not only quantitatively but qualitatively. The expansion of value is not merely the prerequisite for workers’ ability to do the labor necessary for their own livelihood and earn money, rather what counts as necessary labor does not derive from people’s needs at all and does not merely take the form of value-creating labor for capital. That would make value a perhaps odd way of calculating necessary labor for social needs, but still a way of doing so. The reality is just the opposite: Value’s drive to grow determines which labor is socially necessary at all.

The consequence is not only that useful things and services which cannot be sold at a profit (because of the poverty of the customers) simply aren’t a part of necessary labor, no matter how urgent the need for them may be. It also follows that the greater part of the labor necessary for the expansion of value has nothing to do with the production of material wealth, but is only necessary because of the value-form of wealth, and is useful only for wealth in that form. Millions of people work in commerce, advertising, insurance companies, banks and financial agencies, and in the offices of industrial companies too – not to mention offices and positions of public power. And none of them contribute anything to the production of the “immense accumulation of commodities,” but only to the security, efficiency and profitability of capital. In this system, value determines what is socially necessary labor; the converse is that everything that benefits value and its growth is also necessary labor. [3]

Necessary labor in a material sense, both in the sense that it is necessary for the class that “needs work” in order to earn money for their livelihood, and in the sense of the total labor time needed to produce a society’s means of consumption, is and remains the foundation of property’s power of self-expansion. But this is different from how the fans of the “labor theory of value” conceive the matter. Because and as long as labor is necessary for humankind’s “metabolism with nature,” the dependency of the population on the instruments and products of labor is the great lever that the private owners of these means put in motion in order to make the masses subservient to the power of their property and its growth.

2. ... and acts as its own source

It is wrong to conceive of self-expanding value as being dependent on social labor (conceived independent of the force relations described above) and its capacity to create value, such that this labor determines the demands and the limits on the amount of surplus-labor that self-expanding value can extract. Capital does not obey any guidelines imposed by labor, but brings about the productive capacity of labor for its own profits and according to its own profit needs. In doing so, it treats the source of its expansion, the labor and the laborer, very shabbily in several different ways.

First, there is the fact that workers cannot produce value on their own power under the given property relations. Because they have no property, and thus no means of production, they cannot produce value on their own account, but are forced to perform wage labor for others. Only accumulated value, which uses laborers for its growth, extracts socially valid, value-creating labor from workers who are powerless and who enjoy a correspondingly low level of social esteem.

Secondly, it is accumulated value – in the shape of the capitalist – that organizes labor in a way that corresponds to its purpose. All advances of science and technology are applied to get more and more out of paid workers, i.e., to reduce the amount of labor needed for their livelihood, to shorten the time they spend producing the value-equivalent of their wages, and to extend the additional labor they perform for the company. All the mental capacities involved in labor – the work plan, the necessary knowledge about the means and ends of their work – confront workers in the shape of computers, production lines and machinery. These productive capacities represent capital’s means for commanding labor, rather than workers using them as their own instruments of labor. In its striving for ever higher productivity, capital even emancipates itself from the skills and good will of the workers, reducing the latter to powerless appendages of a more or less automated production apparatus, which dictates the aim, method, and speed of labor. Separated from the machines to which they are assigned, the modern worker is useless – a mockery of the productive power of labor. With its control over the achievements of science and technology, the power of money brings about and augments the ability to create value, harnessing the worker to that power and employing it as the power of capital. In short, the productivity of labor is the achievement and property of capital.

At the same time, capital increases the productivity of labor in order to save on labor costs, paying fewer workers to produce the same amount of commodities for less pay. Although that increases the amount of surplus labor per worker, it also reduces the total amount of employed and exploited labor in relation to the amount of capital advanced. In its boundless drive to squeeze more labor out of workers, capital reduces the amount of labor it uses. It treats labor not as the source of its surplus, but – because labor is also a cost factor – as a hindrance to profit. It thereby degrades labor to one production factor among others, placing it on the same level as the instruments and materials of labor. It saves on the capital it advances in the form of wages by increasing the capital advanced for machinery. As factors of production, machinery, raw materials and labor are all the same: necessities for production and cost factors that reduce profit. Therefore, the less capital needed to employ them, the more they contribute to profit.

In practice, capitalists are not interested in surplus value as such. Surplus value and the exploited labor that produces it are only the means for generating a yield over the capital advanced. Because that yield is the point, not the absolute quantity of surplus product, this society does not always have more workers work longer and produce more surplus product, which the exploiters can then acquire and gobble up. Millions of unemployed prove how little capital is interested in labor and potential surplus labor, and how much the expansion of value has freed itself from having to mobilize every bit of mobilized labor-power and every last labor hour.

Capital is the subject of the economic process, and in fact it is the source of what its production factors achieve. Capital itself, not exploited labor, is the measure and source of its own success. Mind you, this is not a delusion on the part of the capitalists, but the principle of their competition and their calculation, a fact they put into practice in all seriousness. [4] They compete – both within and beyond their respective sector – over a maximum return on invested capital. They don't measure the profit they make according to the amount of labor they employ and exploit, but to the amount of capital they invest. They therefore demand profits proportional to the capital they have advanced, and are not at all interested in whether their company operates in a labor-intensive industry or in a highly automated one in which hardly any labor is employed and exploited at all. The competition of capitalists denies labor as the source of the value they appropriate; they attribute their profit not to labor, but to their capital. And in practice, they are right in doing so: Value is a set of relations of production and realizes itself in a process of expanding value. If these relations of production have been established, that is, if labor can be purchased like any other element of production, then everything depends on the ability to set this process in motion. Under these circumstances, the necessary and sufficient condition for appropriating a surplus consists in advancing a sufficient amount of money. In this system, money buys not only commodities, but the whole process of expanding value. And in this role, money functions as its own source.

3. Credit: Money, the power over capital’s expansion process, becomes a commodity of its own and gets a price.

Everyone knows that in capitalism, money is lent at interest and borrowers can borrow money because, as a general rule, they use it to do business. In Volume III of Capital, Marx explains the service credit provides to productive and commercial capital. Borrowed capital performs the same services for an entrepreneur as does his own capital: It frees his capital expansion process from the limited size of the property he has previously accumulated by exploiting labor and that he can use for further accumulation. Credit allows him to accumulate without first having accumulated a sufficient amount of money for doing so. The borrowing capitalist therefore assumes that having and advancing more capital means making more profit. He treats money as the source of its own increase, assuming in practice what Marx developed in the chapters on cost-price and profit: Because an advance of capital is what initiates the expansion process, capital is the power to generate a surplus.

What is not understood so often – a topic Marx also discusses in these same chapters – is the service productive capital provides for bank capital: The latter expands without its owner having to first turn it into means of production and labor power, without having to organize a production process. The legal act of transferring the right to use a sum of money for a period of time is the entire expansion process of banking capital. By conceiving of the money lender as a business partner that merely shares in the expansion process carried out by his borrowers, who turn the borrowed money into capital, generate a profit and pays a portion of that profit to the bank, one misses the step to the “externalization of the capital relation,” as Marx puts it. In this way, interest is understood as a part of profit, profit as a part of surplus value, and everything is attributed to the exploitatively appropriated fruits of labor. Although that is true and, in the case of successful business, interest actually is paid out of industrial profit, it is wrong to reduce interest to a form of surplus value, instead of addressing the next step in Marx’ derivation and analyzing what happens when – in Marx's words – surplus value takes the externalized form of interest.

Once money becomes capital and expands through the sheer act of lending, the expansion process of capital is independent of labor and its exploitation. In the hands of finance capital, the power of money no longer directly uses labor for its growth, but the total industrial or commercial expansion process that goes on outside of the credit system. When it comes to credit, capital consists in property’s power to command wealth as such; it is the determining subject that enables the real economic expansion process, judges it as a means of its own expansion, and advances or puts a stop to it, all in accordance with its business calculations. The whole real capitalist business is reduced to a means of expanding monetary power that remains independent of that business. The separation becomes evident once one realizes that the actual use the borrower makes of the sum he lends does not decide upon whether this money in fact becomes capital and yields interest. That is already decided by the legal act through which a sum of money is transferred to a borrower for a certain duration. The borrower must pay and repay the interest on time, regardless of whether he has successfully used the money as capital and makes a profit or not. It doesn't even matter whether he attempts this at all or whether he spends the borrowed money on consumption. The bank is also happy to lend money to consumers and governments, neither of whom invest it, but instead spend it on consumption. As far as the bank is concerned, this makes no difference. As credit, the bank’s money is capital regardless of whether its borrowers use it as capital. This capacity for unmediated self-expansion is the privilege that the productive process of value-expansion, which dominates the whole society, grants to property. Because money is the power over this expansion process, it can also assert itself as capital separate from that process and demand tribute wherever the need for money arises.

4. If value guarantees growth, then whatever promises growth is also value.

The financial industry takes up the equation between value and its expansion and stands it on its head, or rather on its feet. Whatever promises future returns – stocks, securities and other financial products – is traded on the capital markets; it gets a price and is sold and purchased as currently existing value. Through this reversal, not only individual capitalists but the whole system of value frees itself from the limits of its past achievements in exploitation. Here, the commanding power over productive forces no longer consists in accumulated value; rather, opportunities for expansion mobilize the means for taking advantage of these opportunities. The expansion of value doesn't wait and see what exploited labor happens to yield and thus makes available for reinvestment. Rather, wherever there are good prospects for expanding value, value authorizes the creation of money power in order to make the necessary advances. [5]

This sounds crazy, and it is crazy. But in its own way, finance capital thereby sets the relation of value and value-expansion on its feet and teaches us about the foundation of the system of value: If the power to command production no longer has its source and its limits in the value created by past labor and appropriated by the capitalist class, but if instead those who have the power to credibly promise a surplus have no problem obtaining the necessary capital, then a social relation of force itself becomes productive: The source of capital is no longer the amount of capital at the disposal of the capitalist, but the power of property to force the propertyless into its service, i.e., the functioning social command over the labor process. Value as the effected expansion process is not only the automatic source of its own growth, rather growth is the source of the value advanced.

The social relationship constituted by value is only complete, its domination over labor is only really free, if the power of property is no longer a requirement fulfilled by previous accumulation, but a function of its future expansion. This reversal is the great motor of growth and the source of capitalism’s legendary dynamism.

It is neither a mystery nor a problem that, in this self-liberation, value becomes an anticipatory, speculative quantity. The risk associated with this form of value is not denied, rather it is the basis of another, novel kind of business: Financial alchemists and hedge fund managers market risks and consider their investments and de-investments in various securities as a service to the liberation of the power of financing, as their contribution to the escalation of the self-expansion of value, one for which they deserve their pay. Their clients and customers agree with them. If, as the bourgeois world always maintains, the size of the salary expresses society’s esteem for the service, then the services provided by investment bankers, who engage in swaps and contract or terminate futures positions, are the most important services in the entire system. People who make the irrationality of the mode of production itself into a source of money earn bonuses in the millions and buy very real Porsches with them.

It is absurd to want to measure the incomes and the speculative values created by this branch according to whether they contain labor or not. What is definitely true is that these incomes and values grant control over both objectified and living labor. It is even more inappropriate, therefore, to dismiss this consummate power of value as unreal, illusory, [6] as a theoretical or practical violation of the labor theory of value. Value just isn’t the product of labor, but of the social power over labor. What goes on in the dizzying heights of financial speculation is nothing but the power of money, guaranteed by a whole social relation of production. The financial sector, the sector of the emancipated self-creation of value, requires and is based on the functioning of the world of exploitation, to which it does not let its growth be limited. Exploited labor and the whole material life process, the production and consumption of the society defined by this role of the masses, have the honorable task of providing the foundation for the self-expansion of value.

The crisis demonstrates not the nullity of anticipated value, but its domination over material production

Advocates of “real” value invoke the crisis as the best and the ultimate proof of the illustory nature of the values that circulate in the financial system. These values have dissolved in the billions, and thus are considered to have been “without substance.” The “fictitious accumulation” speculators engaged in is regarded as having been exposed by the creation of “truly produced value,” which lagged far behind.

Certainly, the crash exposed financial accumulation, but it is not the case that illusory value alone was destroyed, leaving only real value behind. The relation of master and servant, the domination of value over material wealth and social labor, remains untouched. And indeed the harsh nature of that domination is demonstrated by the crisis: If finance capital has overaccumulated and its investments are no longer worthwhile, finance capital does not so much become critical of itself as it becomes critical of what it has invested in. The whole real economy – especially labor – has disappointed the expectations of the power of money. To rescue their claims, banks and investment houses stop financing industry and trade, liquidating any production that is unfit for its raison d’etre: Companies have been split up, sold off cheap or shut down; workers have been thrown out on the street and unsellable commodities have been auctioned off in order to fetch a price at all. Material wealth gets sacrificed – partly directly destroyed, partly devalued – in order to rescue the value form. To the degree that it does not contribute to the expansion of fictitious value, the material reproduction of society is brought to a halt. This clarifies what the value of “real values” is all about: This wealth is real, in the sense of tangible, only as use-value. Its value is less tangible, and is solely a question of its economic usefulness – and that is judged by the power of money in terms of what these values contribute to the expansion of that power. If, as happens in the crisis, machines, materials and people are not suitable for generating a surplus out of the capital advanced, then they get devalued. No financier is interested in how much social labor is in manufacturing plants and raw materials, or what it once cost to purchase them; their value as elements of capital is determined by what they promise in terms of profit.

The financial crash shows something else as well: The subsumption of value under its mission to increase is all-embracing. The subjection of material wealth to the expansion of value, which in the crisis takes the form of devaluation, applies all the more to the monetary power brought about in the financial system. If monetary power, which can avail itself of all the levers of exploitation, is always allocated to whereever there is a promise of expansion; if prospects for accumulation generate the funds for achieving accumulation, then as soon as future profits become dubious, anticipated surplus over the advance is not the only thing to disappear. The speculatively generated monetary power for the advance of capital vanishes as well. Under the credit system, value either succeeds in its mission to expand, or it doesn’t exist at all. “Expansion,” successful command over labor, is – if one wants to use the word – the substance of these values.

It should be obvious that there is no place for a two-realm theory of value. Nowhere is there a transition from real to unreal, solid to bogus – only ever new stages of escalation in the power of property over labor.


[1] Fans of the “labor theory of value” make the mistake of regarding value not as the result of the use of social labor – this necessary “metabolism of man with nature” – for an alien and hostile purpose. Instead, similar to bourgeois economists, they regard value as a useful abstraction, a way of equating various instances of labor and various products for the purpose of easier comparison and addition. They consider labor done for property to be a quite rational way of organizing the necessary labor of society. The only thing they find worthy of criticism is that the bourgeois world refuses to admit that value, this precious thing, derives entirely from labor. They regard Marx's critique of value-creating labor as an ode to labor and pit their proletarian pride as the “creators of all wealth and all culture” against the bourgeois standpoint, pointing to their drudgery as the one and only source of wealth. The ideological advocates of the workers take the service that this class performs for the community and conclude that the “full proceeds of labor,” to which they are entitled, are in fact greater than the wage that they are paid. Marx, however, was not a fan of real value. He did not congratulate the workers on being the sole creators of value. In his Critique of the Gotha Programme (1875) he explicitly criticizes the former Social Democrats for praising the labor of the working class: “Labor is not the source of all wealth” – at least not in the sense of material goods. Just as important are nature and the state of science and technology. “The bourgeois have very good grounds for falsely ascribing supernatural creative power to labor,” Marx adds: they are the beneficiaries of the labor that creates value. A socialist program, however, would have to refrain from such “bourgeois phrases.”

[2]  “Capital is dead labor, which vampire-like, lives only by sucking labor, and lives all the more, the more labor it sucks.” (Capital Vol.1, p. 342)

[3] Marx explains how productive labor performed in the production of commodity values is the basis, but only the basis, of the expansion of value, the accumulation of capitalistic command power: In Volume II of Capital, he deals with labor involved in circulation – buying and selling, and bookkeeping – and in Volume III he deals with the labor performed by those involved in trading commodities and money. This kind of labor does not create value inasmuch as it does not increase the material wealth of society; it does not contribute a new product containing a certain amount of commodity value. However, these kinds of labor contribute to accelerating the turnover of capital; capital advanced transforms back into money in a shorter time period. It can then be advanced again sooner and more often. That certainly increases value in the sense that really counts, i.e., value as a result of the movement of capital, as the yield of capital. For capital, this labor is no less useful than labor in production, and capital exploits salespersons no less than steel workers. And because value is what determines the usefulness of labor in this society, activities that have nothing to do with labor in the true sense, and which otherwise would not be needed and would not exist, count as “labor” that nobody can distinguish from labor that is productive in the sense that it creates use-values.

[4] Some who have made their way to the third volume of Capital, reading about cost-price, profit, and how capital acts as its own source, interpret Marx’s account as an ideological critique of the capitalists' worldview: While capitalists believe that their capital is the source of their surplus, Marx-readers know the truth from the first volume: The unpaid surplus labor that the worker performs for the capitalist is the source of surplus value. These readers take the statement that “profit is thus the same thing as surplus-value, save in a mystified form” (p. 127), cling to “surplus value” and can only understand “mystified form” as referring to the distorted conception of capitalists. However, by merely tracing the later steps in Marx’s derivation back to the starting point, the exploitation of labor, one misses the explanation of the real, and not only imaginary, insanity of capitalism.

[5] However, the credibility of growth prospects also depends on the credit power of capitalist nations. And nations differ greatly in this respect. Capital can find inexpensive and willing workers almost anywhere, but some states’ national financial systems lack the capacity to create debt that is credible and in demand. They therefore cannot mobilize the capital that extracts value-creating labor from people’s willingness to work.

[6] This is not to be read into Marx's polemic against “illusory” and “fictitious capital,” which he repeatedly distinguishes from “real” capital: By noting that “the nation was not a penny poorer by the bursting of these soap bubbles of nominal money capital” (p. 599), he highlights the absurdity of a mode of production in which the power of disposal over material wealth takes on a life of its own and becomes increasingly independent from it. In terms of material wealth, of use value and material benefit, society loses nothing in the wake of a general destruction of financial values. Under capitalism, however, a crisis of fictitious capital, the subject and means of command of the whole economy, pulls the plug on real production – and society gets to feel the contraction of financial values first hand.