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In Karl Marx's political economy, any labor-product has a value and a use value, and if it is traded as a commodity in markets, it additionally has an exchange value, most often expressed as a price (if money is used).
These concepts have a very long history in economic and philosophical thought, and their meanings evolved. Marx comments for example that "in English writers of the 17th century we frequently find worth in the sense of value in use, and value in the sense of exchange-value." With the expansion of market economy, however, the focus of economists has increasingly been on prices and price-relations, the social process of exchange as such being assumed to occur as a naturally given fact.
Marx emphasizes that the use-value of a labor-product is practical and objectively determined, i.e. it inheres in the intrinsic characteristics of a product which enable it to satisfy a human need or want. The use-value of a product therefore exists as a material reality vis-a-vis social needs regardless of the individual need of any particular person. The use-value of a commodity is specifically a social use-value, meaning that it has a generally accepted use-value for others in society, and not just for the producer.
The transformation of a use-value into a social use-value and into a commodity is not automatic or spontaneous, but has technical, social and political preconditions. For example, it must be possible to trade it, and to transfer ownership or access rights to it from one person or organisation to another in a secure way. There must also be a real market demand for it. And all that may depend greatly on the nature of the use-value itself. In the case of information or communication as use-values, transforming them into commodities may be a complex and problem-fraught process.
Thus, the objective characteristics of use-values are very important for understanding (1) the development and expansion of market trade, and (2) necessary technical relationships between different economic activities. To produce a car, for example, you objectively require steel, and this steel is required regardless of what its price might be. Necessary relationships therefore exist between different use-values because they are technically, materially and practically related.
The category of use-value is also important in distinguishing different economic sectors according to their specific type of output. Following Quesnay's analysis of economic reproduction, Marx distinguished between the economic sector producing means of production and the sectors producing consumer goods and luxuries. In modern national accounts more subtle distinctions are made, for example between primary, secondary and tertiary production, semi-durable and durable goods, and so on.
Marx's concept of use-value seems akin to, but really differs from the neoclassical concept of utility. Firstly, Marx mostly assumes in his analysis that products sold in the market have a use-value to the buyer, without attempting to quantify that use-value other than in product units (this caused some of his readers to think wrongly that use-value played no role in his theory). The neoclassicals, on the other hand, typically see prices as the quantitative expression of the utility of products for buyers and sellers, instead of expressing their exchange-value.
Secondly, in neoclassical economics this utility is ultimately subjectively determined by the buyer of a good, and not by the intrinsic characteristics of the good. Thus, neoclassical economists often talk about the marginal utility of a product, i.e., how its utility fluctuates according to consumption patterns. Thirdly, Marx rejects any doctrine of consumer sovereignity , stating among other things that "In bourgeois societies the economic fictio juris prevails, that every one, as a buyer, possesses an encyclopedic knowledge of commodities".
- Karl Marx, Capital Volume 1, Chapter 1.
- Karl Marx, Notes on Adolph Wagner's “Lehrbuch der politischen Ökonomie” (Second Edition), Volume I, 1897
- Roman Rosdolsky, The Making of Marx's 'Capital', chapter 1. (London: Pluto Press, 1977).
- Isaac I. Rubin, Essays in Marx's Theory of Value (Detroit: Red & Black, 1972), chapter 17: "Value and social need"
- Simon Clarke, Marx, marginalism, and modern sociology: from Adam Smith to Max Weber (London: The Macmillan Press, Ltd, 1982).
- Francis Green and Petter Nore, Economics: An Anti-Text (London: Macmillan, 1977).
- See also labor theory of value.
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