Imagine you decide to buy a new pair of sneakers. You look everywhere, and you realise that all price heavily exceeds your budget. Does it leave you wondering why the price is fixed so high? And who decides the price? Who profits the most; is it the workers?
- In this explanation, we'll be looking at the Marxist labour process theory, as well as the Marxist approach to labour relations (sometimes referred to as the theory of commodities).
- Next, we'll examine the Marxist labour theory of value.
- After this, we will go over the Marxist theory of labour exploitation.
- We'll also take a look at some labour theory of value examples in terms of its criticisms, such as the influence of alternative factors, and the difference between exploitation and profit-making.
- Finally, we'll examine Braverman's theory of monopoly capital.
Marxist labour process theory
Before we move on to explore what Marx really had to say about labour, let us first understand the context in which he proposed this theory. This will help us understand it better.
According to Marx, capitalist society is divided into two classes - the bourgeoisie (ruling capitalist class) and the proletariat (working class). Through the unequal distribution of resources and ownership, the ruling class exploits the working class.
The working class use their labour power to produce what is called a commodity, which is a good or service produced by human labour that is bought and sold on the market. Such a worker who sells his labour to the ruling class is called wage labour and the amount of money he receives from the bourgeoisie is known as a wage.
In other words, the value of a commodity is derived from human labour. Suppose it takes 6 hours to feed, bathe and shelter a worker in support of their capacity to work; Marx would argue that the wage should be equalled to 6 hours.
This contrasts with other thinkers such as Émile Durkheim. Durkheim (1893) stated that the division of labour is in direct proportion with the dynamic or moral density of a society, which is the combination of the concentration of people and the amount of socialisation in a group or society.
Thus, if a society becomes more dense due to increase in the number of towns, labour becomes more divided and jobs are even more specialised.
Marxist approach to labour relations
Marx explained that the wealth generated and distributed in a capitalist society is measured in terms of the commodity produced. He called this the ‘theory of commodities'. According to him, a commodity is characterised by two sets of values:
Use-value - by satisfying specific needs through its use, and
Exchange value - by being exchanged in a society
Labour is also such a commodity. It derives its use-value by satisfying specific needs through its use. This is what leads us to the Marxist theory of labour value.
Marxist labour theory of value
For Marx, the value of a commodity is derived from human labour.
The Marxist theory of labour states that the value of a commodity can be measured by the average number of labour hours required to produce that commodity.
The Marxist theory of labour value thus focused on the number of hours the labour took to produce the commodity rather than any other factor. It's easier to understand this with a simple example:
If a pair of gloves takes half the time to make than a pair of shoes, the shoes are two times more expensive to make than the pair of gloves.
Early experts, unlike Marx, offered a relatively simple explanation of the labour theory of value and the process through which the final goods produced by said labour created its socially derived value.
Marxist theory of labour exploitation
Through his theory of labour, Marx wanted to highlight a theory of exploitation. He argued that the socially derived labour was essentially being exploited when used to exchange every commodity.
By deducing that all commodities have a certain value and are exchanged for prices that reflect their true value (which in this case, is measured in the form of human labour/labour hours), its use-value creates an amount that is greater than the exchange value.
Therefore, the labour is exploited when the capitalists enjoy profits but pay them less than the actual value of their labour. In this way, the capitalists buy labour in the form of a commodity and exhaust its use-value, ensuring that the value of the ultimate good produced is more than the exchange value of the labour.
The amount of money the employer pays his workers (the wage) is always below the profit (the price of the commodity produced). Marx calls the difference between the two surplus value.
The theory is based on Marx’s analysis of the capitalist form of production - where profit and surplus are the driving forces.
A worker produces an item that, when completed, is worth £100 in hours. The item is sold for market price. The worker is paid £60 in wages. The £40 difference is the surplus-value, and it allows the bourgeoisie to make profits. Workers do not receive the same value as what they produced.
Fig. 1 - Marx believed that labour is a commodity.
Labour theory of value: examples of criticisms
Over time, sociologists have critically analysed the labour theory of value and come up with explanations to debunk it. Let us look at some of these arguments.
Influence of other factors in labour
In order for the Marxist theory of labour to hold up well, all other factors such as society demand must remain constant. In the instance that it changes, the price of a commodity will start being influenced by the demand as opposed to just the number of hours put into its production. Since this is unlikely to happen, the theory seems impractical.
No explanation for labour as the superior choice
Marx seems to have not provided any explanation as to why labour is the superior choice for determination of prices, as opposed to, say, a commodity like grain.
David Steele argued that labour is just another input in the production process and there is no clear justification why labour power should be the only parameter to calculate the price of a commodity.
Spending labour for value-less commodities
It is actually possible to spend labour time on producing something that has little or sometimes no value. For example, a person may spend hours thinking of a good joke, but the real value of the joke is close to nil. Thus, labour as a unit to solely determine the price does not seem appropriate in all circumstances.
Exploitation versus profit-making
Marx's notion about workers' exploitation, namely that the worker works for more hours and get paid less, seems to be inaccurate. Mainstream economists today believe that capitalists do not exploit workers but rather earn profits by taking risks and by organising production.
Austrian economist Eugen Von Böhm-Bawerk's argued that entrepreneurs give up a safe wage-earning job in order to work as an entrepreneur. Their reward for this risk is the profit they earn. The profit is not necessarily associated with exploitation of workers.
Beyond the Marxist theory of labour
The sociological perspective on the theory of labour has come a long way since Marx's theory. A defining part of this is Harry Braverman's discussion in his 1974 publication Labour and Monopoly Capital: The Degradation of Work in the Twentieth Century.
Fig. 2 - Some economists identify a distinction between exploitation and profit-making.
Braverman's theory of monopoly capital
Braverman distinguished between labour (capacity to work) and labour power (or actual work done). In his opinion, it is only a worker's labour power that is sold in the market, not his capacity to work. While one's actual work done is finite, one's capacity to work is an infinite commodity.
He affirms the Marxist theory by stating that it is indeed the labour of the working class that creates capital for the capitalists and workers are stuck in a circle of imbalance, which gives rise to monopoly capital. This is a situation when capitalists need more productive labour (labour which produces capital), as a result of which labourers are subjected to high levels of managerial control to increase their productivity.
Fredrick Winslow Taylor (1911) argued that flaws in a work process could be solved through improved management tools that optimise productivity. This is often referred to as Taylorism. Braverman argued that Taylorism results in capitalism management stealing workers' skills (deskilling) and routinisation of tasks, which reduces the pleasurable nature of work.
Once this happens, workers are easier to control and replace since all they need to do is follow managerial instructions as opposed to using their own intellectual skills. Ultimately, this allows capitalists to pay workers less than their work's worth and cut production costs to increase profits.
Marxist Theory of Labour - Key Takeaways
- The Marxist theory of labour states that the value of a commodity can be measured by the average number of labour hours required to produce that commodity.
- For Marx, the value of a commodity is derived from human labour.
- Marx argued that the socially derived labour was essentially being exploited when used to exchange every commodity.
- Marx's notion about workers' exploitation, namely that the worker works for more hours than needed to create the worker's labour power rests on a shaky assumption.
- As a result, mainstream economists today reject the labour theory of value and believe that capitalists do not exploit workers but earn profits instead by taking risks and by organising production.
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