The Commodity

Venkatesh Athreya
 The Commodity
• A commodity is ... an object outside us, a thing that by its properties satisfies
human wants of some sort or another. (Capital, Vol I, Chap. 1)

• A commodity is anything produced not for own use but with a view to sale in a
market on private account

• In the Marxist framework, every commodity has two aspects: use value and value.

• Use value of a commodity results from its natural - physical and chemical -
properties which make it useful in some way.

• Value on the other hand is the social property of a commodity that it is the result
of expenditure of some proportion of society’s total labour time.

• In the Marxist view, value is a social property of commodities, a social

relation: ‘The value of commodities has a purely social reality...’, and ‘...is the
very opposite of the coarse materiality of their substance; not an atom of
matter enters into its composition.’ (Capital, Vol I, Chap. 1)
 The Commodity
“ If we leave out of consideration the use value of commodities, they have only
one common property left, that of being products of labour. But even the
product of labour itself has undergone a change in our hands. If we make
abstraction from its use value, we make abstraction at the same time from
the material elements and shapes that make the product a use value; we
see in it no longer a table, a house, yarn, or any other useful thing. Neither
can it any longer be regarded as the product of the labour of the joiner, the
mason, the spinner, or of any other definite kind of productive labour. We
put out of sight both the useful character of the various kinds of labour
embodied in them, and the concrete forms of that labour; there is nothing
left but what is common to them all; all are reduced to one and the same
sort of labour, human labour in the abstract.” (Capital, Vol I, Chap 1)
 The Commodity
• In all societies, every product of human labour is a use value. But it is only at a
definite stage of social development, a specific historical epoch, that these
products become commodities, and the labour expended in the production of a
use value is expressed as an objective characteristic of it, that is, as its value.
• To the use value aspect of the commodity corresponds the specific, concrete labour
that went into its production (spinning for yarn from cotton and weaving for cloth
from yarn, for instance). To the value aspect corresponds the fact of expenditure of
human labour in general, that is, abstract labour involved in production.
• A use value, or useful article, therefore, has value only because human labour in
the abstract has been embodied or materialised in it. How, then, is the magnitude
of this value to be measured?

• The magnitude of the value of any article is the amount of labour socially
necessary, or the labour time socially necessary for its production
Value and Surplus Value
 Circuit of Capital
• Capitalism is driven by profit. The key to making profit is the circuit of capital,
namely, M – C – M”.
• This is a circuit where money is both the starting point and the end point. The
circuit makes sense only on the basis of the expectation that the money at the end
point is greater than the money at the starting point. By its very nature, this is
limitlesss: ‘Capital is nothing but self expansion of value.’ (Marx)
• Historically, the most familiar and earliest method of acquiring more money from
an initial outlay was through money-lending (M – M”) . Later comes trade: (M – C –
M”) . In the case of both money-lending and trading, nothing is produced, and for
all parties to the transactions taken together, there is no gain.
• The secret of expansion of the initial capital advanced has to be sought in
productive or industrial capital :
M – C - - - -P - - -C” - - -M”
 Secret of Surplus Value
• The difference M” minus M is surplus value expressed in money terms.
What is the secret of surplus value?

• Going beyond Adam Smith and Ricardo, Marx put forward the concept of
labour power as distinct from labour. This was the crucial step in
understanding where the surplus value came from.

• Under capitalism, the capitalist purchases labour power just as he

purchases raw materials, machinery and other necessary means of
production. Labour power is thus a commodity under capitalism.

• In developing the labour theory of value, Marx begins with the assumption
that commodities exchange at their values. Remember that the value of a
commodity is the socially necessary labour time required to produce it.
 Secret of Surplus Value
• The capitalist buys raw materials and other means of production from
other capitalists. We assume he pays full value for those purchases.
• The capitalist buys labour power from the worker. We assume that he pays
the worker the full value of his labour power.
• What is the value of labour power? As with other commodities, it is the
amount of socially necessary labour time directly and indirectly required to
produce/reproduce labour power. However, there is also what Marx calls a
‘moral and historical element’ in the determination of the value of labour
power.
• Now look at the production process in capitalism from the standpoint of
the relationship between the two classes: Capitalist class and Working class.
• Year after year, workers produce society’s output using the means of
production owned by the capitalist class and get in return a portion of this
output as wages . A part of the output goes to replace used up means of
production. The rest is the surplus. It does not come to the workers but is
appropriated by capitalists, landlords and other owners of means of
production. How does this happen? To answer this, let us look at the labour
process under capitalism.
 The Labour Process

• The first thing about the labour process as such is that it is a process in which man
interacts with Nature. Through such interaction man changes the world around him
and, in the process, changes himself as well. It follows from the first point that in
the labour process, man engages in conscious and purposive activity.

• Marx on the labour process: In the labour process . . . man’s activity, with the help
of the instruments of labour, effects an alteration, designed from the
commencement, in the material worked upon. The process disappears in the
product. . . . That which in the labourer appeared as movement, now appears in the
product as a fixed quality without motion. . . . If we examine the whole process from
the point of view of the result, it is plain that both the instruments and the subject
of labour are means of production and that the labour itself is productive labour.”
 The Capitalist Labour Process
• Under the capitalist labour process, the labourer is ‘alienated’ in a double sense: he
is alienated from the control of the labour process, the purpose and control of his
own activity being determined by the capitalist. He is alienated also from the
product of his own labour, for the product becomes the property of the capitalist.

• The active element in the labour process, namely, the living labour of the worker,
does three things: (i) it preserves the value of the raw material in the product; (ii) it
transfers a portion of the value of the machine to the product; and (iii) it adds fresh
value to the product by direct labour.

• The capitalist labour process is not only a process of production of value but of
surplus value as well. To answer our question, “ How is the surplus value created?”,
we must move from the ‘passive’ elements of the labour process – the means of
production – to the ‘active’ element: living labour.
 Secret of Surplus Value
• The secret of surplus value is the following:
The commodity ‘labour power’ that the worker sells to the capitalist has the
specific property that the length of time for which it performs labour is
greater than the labour time required to produce it.

• Surplus value is nothing but the difference between the length of the
working day and the value of labour power.

• Since the capitalist class owns the means of production, it gets to

appropriate the surplus value.

• This process needs to be looked at in class terms, and not at the level of the
individual capitalist and the wage labourers employed by him.
Dynamics of the Capitalist Mode
of Production
 Capitalist Accumulation

• Absolute Surplus Value

• Relative Surplus Value: Mechanization

• Centralization and Concentration of Capital

• Reserve Army of Labour

 Laws of Motion of Capitalism

• General law of Capitalist Accumulation

• Historic Role of the Working Class

• Crisis Tendencies of Capitalism

• Imperialism/Monopoly Capitalism
 Contemporary Capitalism

• The Crisis of Capitalism 1914-1945

• The Long Boom, 1945-1973

• Rise of International Finance Capital

• Capitalism today