Law of value

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The law of value is the general Marxist description of the functioning of capitalist economies.

The law of value regulates social production as independent and impersonal force in capitalism through the disciplining private producers.


Labour Theory of Value

The Labour Theory of Value (LTV) was the accepted theory of value in classical economics. The LTV was associated primarily with political economists Adam Smith and David Ricardo. Presently, Marx is most associated with the LTV even though he never described his value theory as such.

The LTV holds that the source of value of commodities is labour. In capitalism, the relative exchange-values of those products in trade, usually expressed by money-prices, are proportional to the average amounts of human labor-time which are currently socially necessary to produce them.

Social labour

Labour in capitalism is a social process. The point between the cultivation of natural resources to the point of selling of a common commodity tens of thousands of workers have contributed to that commodity directly and indirectly.[1]

Directly and indirectly social labour

Social labour can be directly or indirectly social. The coordination of social labour is indirect in capitalism. No direct social links exist for this purpose to allocate labour-power for productive purposes. Coordination of social labour therefore takes place indirectly via commodity exchanges. Labour in capitalism is executed privately (within separate, reciprocally independent, enterprises, businesses, and firms) and this private labour of private producers only becomes social when the products of this private labour enter into the market where it confronts the products of the private labours of other private producers.

The indirect social character of labour is asserted via commodity production and commodity exchange. The commodity-form is established. This causes commodity fetishism.


Value is the common characteristic to commodities that allows them to be exchanged.


Exchange-value is the ratio at which one commodity exchanges for another.


The price is a particular form of exchange-value, namely exchange-value expressed in monetary terms.


Use-value is the usefulness of a particular commodity. Use-value is sometimes used synonymously for 'utility' and sometimes it is used an objective characteristic, that is, a commodity has a use-value in that it satisfies a usefulness in some way, whereas utility is the degree to which it satisfies the usefulness or preference to an individual consumer (or, the subjective characteristic).

Value and Price

Value and price gravitate around each other.


Law of Value

The Law of Value disciplines private producers.

Law of Value in Communism

The law of value will not operate or exist in communism. As Engels pointed out,

"From the moment when society enters into possession of the means of production and uses them in direct association for production, the labour of each individual, however varied its specifically useful character may be, becomes at the start and directly social labour. The quantity of social labour contained in a product need not then be established in a roundabout way; daily experience shows in a direct way how much of it is required on the average. Society can simply calculate how many hours of labour are contained in a steam-engine, a bushel of wheat of the last harvest, or a hundred square yards of cloth of a certain quality. It could therefore never occur to it still to express the quantities of labour put into the products, quantities which it will then know directly and in their absolute amounts, in a third product, in a measure which, besides, is only relative, fluctuating, inadequate, though formerly unavoidable for lack of a better one, rather than express them in their natural, adequate and absolute measure, time. Just as little as it would occur to chemical science still to express atomic weight in a roundabout way, relatively, by means of the hydrogen atom, if it were able to express them absolutely, in their adequate measure, namely in actual weights, in billionths or quadrillionths of a gramme. Hence, on the assumptions we made above, society will not assign values to products. It will not express the simple fact that the hundred square yards of cloth have required for their production, say, a thousand hours of labour in the oblique and meaningless way, stating that they have the value of a thousand hours of labour. It is true that even then it will still be necessary for society to know how much labour each article of consumption requires for its production. It will have to arrange its plan of production in accordance with its means of production, which include, in particular, its labour-powers. The useful effects of the various articles of consumption, compared with one another and with the quantities of labour required for their production, will in the end determine the plan. People will be able to manage everything very simply, without the intervention of much-vaunted “value”."[2]


  1. An ordinary battery is made of lithium, metal, zinc, carbon electrodes, etc. Lithium is derived from mines such as those in Bolivia and Australia. They are extracted using various equipment and tools, such as machinery, excavators, cards, rails. Each of those tools were composed by perhaps as much as hundreds of workers. The lithium is then transported using roads, trucks, airplanes, each of which are the product of labour of hundreds if not thousands of workers, and then the lithium is processed and made into batteries. This of course being merely one ingredient for a battery.
  2. Anti-Dühring.