Value. Frederick Harry Pitts
Mercantilism reacted to the shifting political economy of sixteenth- and seventeenth-century colonialism, wherein trade expanded and vast amounts of precious metals were extracted from colonies and transformed into currency. The latter came to convey wealth and prosperity, and the ‘production boundary’ between productive and unproductive was redrawn around ‘whoever bought, owned and controlled’ its supply. Where income was greater than expenditure, an enterprise was deemed productive, and those who drew down on this surplus as consumers without producing were deemed unproductive.8
The mercantilist understanding of the economy – which reappears today in the return of protectionist nationalisms – suggested that a system of equivalent exchange must always mean, in the words of Francis Bacon, that ‘whatever is somewhere gotten is somewhere lost’, justifying inter-country rivalry on the basis that ‘trade is a zero-sum game’.9 Value is here taken to be something conserved, and, to the extent that the exchange in which it features is conducted with the national currency, containable within the borders of the state from which it arose. Hence, the positive trade balance – back on the lips of the post-liberal right today – comes to represent the conservation and augmentation of the value substance.
Another element of classical substantialism that crops up in the intellectual imaginary of contemporary populisms of both right and left is the positioning of sections of the economy that are ‘productive’ of value against those that are ‘unproductive’ of value. Such a distinction is intrinsic to theories of value that rest on a ‘conservation principle’. No substantialism can successfully free itself of the presumption of the unproductiveness of one economic activity or another, because ‘the imposition of conservation principles in the context of a substance theory of value essentially dictates the existence of such categories’. The French physiocrats ‘were the first to make the postulation of unproductive sectors a hallmark of their analysis’, and from this it ‘became the hallmark of a substance theory of value’.10
The physiocrats were a mid-eighteenth-century school that sprang from the court of Louis XV in France, mainly gathered around the physician and royal advisor François Quesnay. Quesnay’s medical practice inspired a ‘metabolic’ vision of the economy, and specifically the role of agriculture within it. Quesnay was frustrated with the mercantilist policies of the French monarchy, which focused on trade and fundraising for military expenditure, rather than what he saw as the ‘productive’ agricultural sector.11 The physiocratic distinction of productive from unproductive had political implications, insofar as the ‘almost complete identification of productivity with the agricultural sector had an overriding aim. Their restrictive production boundary gave the landed aristocracy ammunition to use against mercantilism, which favoured the merchant class, and fitted an agricultural society better than an industrial one.’12 For a physiocrat such as Boisguillebert, the true value of things resided in the amount of labour-time that is expended in the production of the particular commodity, whilst the money that expressed different quantities of value in exchange ‘disturbs the natural equilibrium or the harmony of the exchange of commodities’. This is, in part, a result of the historical circumstances in which Boisguillebert operated, whereby the court of Louis XIV was characterized by a ‘blindly destructive greed for gold’.13 In language that invites evident parallels with present populist discourse, Boisguillebert referred to finance as a ‘black art’, championing a return to the ‘real economy’ long before it became fashionable to do so – indeed, around the time when such a distinction was still halfway plausible.
Assessing the contributions of Boisguillebert and others, Marx attributes to the physiocrats a laudable desire to investigate surplus value and relate it to labour-time, but without having first given thought to the form of value itself. In this way, the physiocrats were guilty of ‘discussing a complex form of the problem without having solved its elementary form’. This led to them ‘confusing the labour which is materialised in the exchange-value of commodities and measured in time units with the direct physical activity of individuals’.14
Smith and Ricardo
With the rise of classical political economy, Smith and Ricardo critiqued the physiocrats on the basis that burgeoning industry could not be accounted for within a framework that placed all productivity in the hands of agriculture.15 But this merely replaced the active agent in a similarly productivist appraisal of value. For Smith, value represented the time spent by workers in producing the object in which their labour is realized as productive. For Smith, labour was unproductive only when it did not result in an amount of value proportionate to that required to enable workers to subsist. The necessity of some other quantity through which this subsistence could be secured was what led Smith to conceptualize the role of the surplus in characterizing capitalist production. Workers who drew on the surplus to survive, as well as merchants who merely moved goods rather than created them, fell foul of this divide between the productive and the unproductive.16 Government, too, fell foul of this ideological distinction, the political consequences of which still cascade through capitalist societies today.
But Smith’s innovation was to retain an order-bestowing ‘substance’ embalmed in the product, associated not with direct labour itself but the cost of the inputs that contributed to a given thing’s production.17 Smith, for instance, demarcates unproductive labour that ‘consists in services, which perish generally in the instant of their performance’ – a live musician, for instance – from that which ‘fix[es] and realize[s] itself in [a] vendible commodity which can replace the value of the wages and maintenance’ of the labour expended in its production.18 For Smith, value comprised the so-called ‘natural’ prices of three elements: labour (wages), land (rent) and capital (profit). This has influenced political and sociological approaches to class which associate different classes with the different forms of capital or wealth they possess, and the relative productiveness and unproductiveness this implies. Smith’s approach forces us to question the social and political basis by which different groups benefit from the production of certain goods, undermining the apparent neutrality of economic value and ascriptions of worth. But this line of enquiry cannot overcome the circularity it conceals, almost fatal to its capacity to explain value. Wages, rents and profits are themselves prices expressing a value that must itself be explained, a requirement Smith tries unsuccessfully to absolve himself of with reference to the ‘natural’ value of labour, land and capital. Smith does not establish the ‘value structure’ behind the cost of production – the historical determination of the value of labour, land and capital, and the particular form in which this value is expressed in wages, rent and profit.19 In this way, Smithian approaches, right up to present-day pseudo-critiques of the inequities of class society, focus on the distribution of the different kinds of input and revenue drawn from by different actors and class, precisely without considering what needs to be explained: the underpinning, historically specific, class relations mediated in these forms of wealth.20 Whilst Smith captured the class-oriented character of the constitution of value, the underpinning relations were situated not in any social or historical specificity, but rather in a state of naturalized and ahistorical eternity.21
Moreover, whilst acknowledging the stratification of society necessary to the system of commodity production, and recognizing the ‘significance of labour’ in his theory of production costs, Smith incorporated labour only insofar as it cast producers as simple owners of commodities who enter the marketplace eager to exchange commodified portions of their own embodied, objectified labour with others. This process was not contextualized within capitalist society, but seen as an expression of ‘direct barter, the spontaneous form of exchange’ intrinsic to the human experience.22 In this ahistorical and asocial fashion, Smith’s analysis centred on the commodity as its key principle, labour’s significance relating only to its role in commodity production and exchange. Hence, it is not as simple as saying a labour ‘substance’ determines value in exchange, but rather there is a two-way process in which the one depends upon the other. This introduces a profound ambivalence in Smith’s value theory.23 The value of a commodity expresses the labour embodied in it, whilst at the same time positing