Capital Reading Group: 5/27

Use Value vs. Utility | Central Brooklyn DSA – Capital Reading Group, Week 1

Marx gave Capital the subtitle ‘Critique of Political Economy,’ but the critique is not aimed at ‘political economy’ as it exists as a discrete intellectual discipline today. The political economy towards which it is directed is what has become known as ‘Classical Political Economy’ – the political economy of Adam Smith, David Ricardo, Sismondi, and others. All of these thinkers shared a ‘labor theory of value.’ Importantly, Marx never used the term ‘labor theory of value’ to describe his own theory. He always speaks of ‘value theory,’ which is a critique of the classical value theory. Establishing the relation of Marx’s own ‘value theory’ (and further, its relation to labor) and then the classical ‘labor of value’ (which it critiques) will of course be an important point of investigation in any reading of Capital.

The first Volume of Capital is published in 1867 (recall that the second and third volumes were not published in Marx’s lifetime, with the second being published and compiled by Engels in 1885 and the third in 1894 – meaning there is a nearly thirty-year gap between the appearance of the first and second volumes). Shortly thereafter, William Stanley Jevons and Carl Menger published The Theory of Political Economy and Principles of Economics respectively in 1871. In 1874, Leon Walras published his Éléments d'économie politique pure. These works – all formulated and published independently of each other – came to form what became known as ‘Marginal Utility’ theory. This first generation failed to break into the mainstream, but its fundamental theory about the subjective nature of value – the idea that an individual consumer assigns value to an item by determining the additional satisfaction of one additional unit of that item – was taken up by a second generation of utility theorists that came to theoretically ground much of what we take to be economics as a discipline, with its presuppositions around methodological individualism, rational expectations, utility maximization, general equilibrium (the idea that the laws of supply and demand tends towards an equilibrium), etc. These include Alfred Marshall, Vilfredo Pareto, and Eugen von Bohm-Bawerk.^[1] This ‘subjective’ theory of value has been traditionally contrasted with ‘objective’ theories of value, like the ‘labor theory of value’ of the classical school. The key point however, is that marginal utility theory arose after Marx’s ‘critique of political economy,’ and there are varying views on Marx’s awareness of these theories which, after around 1890, came to be completely dominant within the field.

Essentially, after the rise of marginal utility theory in the late 19th century, there emerged a new frontline in economic debates between labor theories of value and utility theory. In the context of this division, Marx was grouped with this classical school; i.e., he was depicted as simply another version of this classical school (this is one reason why we hear so often of Marx’s ‘labor theory of value’). This picture was broadly speaking accepted not only by ‘bourgeois’ economists. Many Marxists also accepted this division between the ‘classical’ labor theory of value and the ‘neo-classical’ marginal or a utility theory of value. To take just one more recent example – the analytical Marxists of the 1980s (otherwise known as the ‘no bullshit’ Marxists; John Roemer, GA Cohen, and Jon Elster are the notable names here) – attempted to reground Marx’s economic analysis on the grounds of utility theory. Roemer, for example, uses methodology derived from neoclassical insights to defend Marxist concepts of class and exploitation.

This intellectual detour is all simply to describe the way in which, according to marginal utility theory, ‘utility’ is a quantitative category. Going back as far as the Spanish Scholastic tradition of the 1300s and 1400s, the economic value of a good had been derived from its qualitative usefulness, upon which theories of price or monetary exchange were then based. With Menger and the marginal utility school came the idea that individuals essentially rank, according to a quantitative scale, the usefulness of various discrete units of economic goods (in economics, this property of goods and services is referred to as ‘cardinal’ or ‘ordinal’ utility’). ^[2] Economists assume a unit of measurement known as a ‘util’ which represents the amount of psychological satisfaction a specific good or services generates in various contexts (hence the way in which the marginal utility school’s theory of value is subjective). These ‘utils’ are measurable, making it possible to depict economic theory and economic relationships using mathematical calculations. The key point, again, is that utility is quantitative.

Setting aside the specific relation between the two, the point here is that this quantitative concept of ‘utility’ is not what Marx means when he discusses the usefulness of ‘use-value.’^[3] This can get confusing with the way the text is translated. For example, you’ll read the sentence, “A thing can be a use-value without being a value. This is the case whenever its utility to man is not mediated through labor.”^[4] ‘Utility’ here is not ‘utility’ in the marginalist sense – i.e., where you can compare or calculate the usefulness of a good quantitatively – but usefulness in a strictly qualitative sense; i.e., it has to do with the concrete physical properties of a given produced object that are the condition of actually using it practically. Throughout the chapter there are other phrases to a similar effect. “Use-values…constitute the material content of wealth, whatever its social form may be.”^[5] “The commodity is, first of all, an external object. A thing which through its qualities satisfies human needs of whatever kind.”^[6] “The usefulness of a thing makes it a use-value, but this usefulness does not dangle in mid-air. It is conditioned by the physical properties of the commodity, and has no existence apart from the latter. It is therefore the physical body of the commodity itself…which is the use-value of the useful thing.” The point though, is that you cannot quantify use-value.

To try and restate this more clearly – whereas the neoclassical concept of utility, as the basic economic category, is based on various statistical ways of projecting quantifications onto use value, use value within Marx’s model is the condition of exchange value, but has no quantitative in relation to it. This is important because, if the question is, ‘what is the value of a commodity?’ one historic answer from political economy leading to utility theory is that its value is in some way relative to its use. This is the idea that that useful things will be more valuable than useless things. Marx does not argue this. The distinction is just a categorial distinction between things that have use and things that don’t have use, although the quantity of value or the exchange value of things that have use, is not determined by its relation to use, it just has to have some relation to use. To have use-value the product has to – in other words and to put it colloquially – work, or at least have the promise of working. Use-value in this sense is a condition of commodity exchange, but is not itself involved in exchange. “Use values are only realized in consumption,” as Marx puts it. Use value, in other words, is only in ‘realized’ in its actual use (i.e., its consumption) and consumption necessarily follows from exchange (within generalized commodity production; i.e., within capitalism).

This is more of an aside, but there’s this interesting sense in which for Marx, what he calls ‘use-value’ is actually always the promise of use-value, because use-value has no actuality other than in consumption—in its actual use; i.e., like the physical act of using a cup. You buy things not because they are useful, but because they promise use. This is important because the whole subsequent history of the consumer society and the invention of advertising, etc., inserts itself into the conceptual gap between the promise of use and use. If what you’re actually buying is the promise of use—categorically speaking always, because of the temporal disjuncture that use is only expressed and only exists, in other words, after you’ve exchanged it—then use value is always speculative. This means that a lot of what within 20^th century capitalism appears as ‘new’ – like advertising and the manipulation of desire, all the things that people associate with post-war consumerism—can be slotted into the analytical space in Marx’s basic structure of use-value / exchange value structure of the commodity, and it’s just an exploitation of that space; of the space of the promise, but also of the production of ‘needs.’

In any case, this is a longwinded explanation of the way in which it is important to distinguish between Marx’s concept of use-value and the concept of utility that is not only inherited from marginalism, but also occupies an important place within popular understandings of what it means for something to be useful. Hopefully it helps also to clarify more precisely the ‘two-factors’ of the commodity – use-value and exchange value – that Marx opens the book by discussing.

^[1] I include Bohm-Bawerk primarily because he wrote a very influential neo-classical critique of Marx’s Capital in 1896, titled Karl Marx and the Close of His System.

^[2] https://en.wikipedia.org/wiki/Cardinal_utility; https://en.wikipedia.org/wiki/Ordinal_utility

^[3] “The usefulness of a thing makes it a use-value” (126).

^[4] Marx, Capital I, 131

^[5] Marx, Capital I, 126. This passage is important because it implies the concept of use-value is in a certain sense transhistorical; i.e., it is the material form of wealth irrespective of historically variable social forms.

^[6] Marx, Capital I, 125