An economic crisis is also a time of ideological crisis. It’s a time when people start to reevaluate their ideas about the world, questioning some of the most basic assumptions they once had. Every capitalist crisis in history has brought about a rethinking and regrouping of mainstream economic thought. Interestingly this rethinking has always happened within the context of some sort of radical challenge to the economic order.

Marginal Utility theory, which still serves the basis of modern mainstream economic theory, emerged from the Great Depression of the late 1800s (yes there was another Great Depression prior to 1929) as an answer to the challenge of Karl Marx’s thorough critique of capitalism. Keynesianism emerged from the Great Depression of the 1930’s as a response to the failures of liberal economics, the challenge of a successful Bolshevik revolution and strong worker movements in the Western world. Neoliberalism emerged from the crisis of the 1970’s both as a backlash against the failures of Keynesianism to manage crisis and as an assault against the growth of large popular left-movements like the anti-war, student, civil-rights and women’s movements and the power of entrenched labor.

Alan Greenspan:

“Remember that what an ideology is is a conceptual framework with the way people deal with reality. Everyone has one… to exist you need an ideology. The question is whether it is accurate or not. And what I’m saying to you is: Yes, I’ve found a flaw- I don’t know how significant or permanent it is but I’ve been very distressed by that fact.”

With such admissions of failure from the neoliberal establishment we can’t help but begin to question the dominant economic ideas of our time. Yet it is not clear that we are entering this ideological crisis in the context of any viable challenges to the economic order. The failures of centrally-planned Soviet-style economies have largely purged the idea of alternatives to capitalism from the popular consciousness. At such a time in may be useful to re-exmine the ideas of Karl Marx, to see what exactly he was trying to say in his critique of capitalism- not because we have some desire to repeat the political experiments of Lenin, Mao, Stalin or any of the others who claimed to embody the ideas of Marx, but because Marx presents a systematic, and thorough critique of capital that is wholly different, wholly unique in the history of economic thought. Such radical ideas are crucial in our search for a new understanding of our present condition and possibilities for social transformation. A society without the ability to critique itself is a dangerous society to live in, especially as it enters a long period of crisis.

There is a crucial difference between all the great bourgeois economists and Marx. They all saw crisis (except Keynes maybe) as something that came from outside of capitalism, disturbing the natural equilibrium of the market. When confronted with the reality that capitalism was prone to inequality, exploitation and crisis- that is, when it becomes apparent that there is a discontinuity between their theories and reality- bourgeois economists always blame reality for not conforming to their models. Reality has been poisoned by invading external forces, they say, in the form of state intervention, labor-movements, human greed, etc. We see this same reactionary approach today in rising right-wing populism which blames the invasive influence of foreigners, left-intellectuals, homosexuals, non-Christians, and black presidents for the problems of society.

Marx takes the opposite approach. He sees the social antagonisms of capitalism as internal to the system. These social antagonisms are so basic to the system that they drag all other parts of society into their gravitational field.

Bourgeois economists have always seen the market as a realm of great freedom and equality. The fact that there is so much inequality, crisis and unfulfilled freedom in market societies is seen as an imperfection in reality, not theory. Contrary to what some lay people think, Marx does not start with an analysis of these social bads and then proceed to a critique of market relations. Marx doesn’t begin by talking about monopoly, poverty, exploitation, or state violence. He begins with this same realm of market freedom that his bourgeois critics are so enamored with, and then shows how all of these social antagonisms spring out of this basic productive relation. For Marx it all starts that the fact that capitalist production is production for market exchange. This basic form of production takes on law-like properties that he calls “The Law of Value”.

The Law of Value

What did Marx find so interesting about capitalist societies? It wasn’t just the freedom to buy or sell anything you wanted. It was the fact that in order to participate in the social life of a market society one has to buy and sell things. In order to survive, in order to participate in society, one has to enter the market to buy things and to sell the products of their own labor. This is a distinctly different organization of society than previous societies where working people largely supported themselves with their own labor- that is, they labored to make things for their own use. (Or more specifically, laboring classes supported themselves with their own labor and supported the ruling class.) In a capitalist society people don’t make things that have any use for themselves at all. They produce things in order to exchange them. Thus the coordination of the social labor process happens indirectly through exchange.

In a society of private producers, coordinated indirectly through the market, the social relations between these people take the form of relations between things, of commodity relations. The relations between people become value relations expressed in commodity prices. Economically, people can only relate to each other through money prices, through value. This world of commodity relations takes an independent form, outside of the control of individuals, that acts back upon and directs the flow of human affairs. Adam Smith called it the “hidden hand of the market.” Marx calls it “the law of value.”

What is the law of value? It is the impersonal, blind forces of the economy exerting their influence upon society. It is unique to a society in which the dominant form of labor is production for market exchange. The relations between people become value relations between commodities. And these value relations become impersonal forces which have unexpected consequences for society. For instance, we get capital:

People have always used tools and other resources in their labor. These are called “means of production”. In a capitalist economy means of production become capital. Tools, machines, materials, and even workers are all commodities with values. This makes it possible to buy means of production in the market and sell the products of those means of production for a profit. That is, a person can invest money in production merely for the sake of getting more money. The pursuit of value as an end in itself becomes the dominating force in the society. This is what capital is, the expansion of value for its own sake, regardless of the social cost. Capital takes the form of a class that owns the means of production and another that must produce the profit for capital.

Capital is inherently asymmetrical, great poles of wealth and poverty spreading out from it in geographical and economic space. Capital is also self-negating. Although it represents an impersonal force above society, dominating the worker, it also relies on the worker to create profit for it. There is a social antagonism at it’s root. This social antagonism leads to periodic crisis and constant instability.

All of these radical implications and many more are part of Marx’s theory of value.

This video series will cover various topics in Marx’s theory of value: The difference between use-value, exchange value and value, the relation of supply, demand and price to value, abstract labor, exploitation, crisis, socially necessary labor time, and even what an understanding of value can tell us about changing the world. It is hoped that they can contribute to a better appreciation of the importance of value theory to radical movements today as they seek ideas with which to articulate their demands and strategies.

How much do you know?

Many people, supporters and opponents of Marx, think that they already know all there is to know about Marx’s theory of value. Let’s take a brief quiz to find out how much you know. Here are 10 True or False questions. Take out a paper and pencil and keep track of your answers. I’ll give the answers at the end.

True False Quiz:

1. Marx’s theory of value holds that any human labor creates value.

2. Marx’s theory of value is intended to be a theory of market prices.

3. Marx’s theory of value is the same as his predecessor David Ricardo.

4. Marx didn’t believe the forces of supply and demand were relevant to explaining value.

5. Marx’s theory of value is a theory of what workers should get paid.

6. Marx’s theory of value was a theory about how a communist society should be run.

7. Marx didn’t think consumer demand played a role in prices, value or other economic phenomena.

8. Marx’s theory of value doesn’t work in free markets.

9. Marx’s theory of value can’t explain why useless things like mudpies don’t have value.

10. Marx hated babies.

The answer to all of these questions is “FALSE”! If you answered “True” to any of them then perhaps you don’t know enough about Marx’s theory of value to actually make an informed judgement about it. If you are interested in understanding one of the most thorough theoretical critiques of capitalism ever created then perhaps this video series might be a good starting point. If you already know that you are going to hate Marx’s analysis then perhaps watching this video series would be a good starting point in educating yourself so that you don’t sound like a total idiot when you go mouthing-off all over the internet.

How you should watch these videos

The internet has given us access to more information than any generation before us. It has allowed for a great leveling of our access to information, allowing everyone to contribute to the sharing of information. But this hasn’t necessarily made our culture better informed, more intelligent, or better at critical thinking. In our rush for instant information we are losing our ability to properly contextualize information, to synthesize ideas, and to discern what sources of information we can trust. Let’s face it- in our consumer-culture we are conditioned to want instant gratification for no effort. We want easy answers that don’t require any personal sacrifice. (Neo, matrix, downloading information into his brain.)

You can’t learn everything you need to know about capitalism from a YouTube video. On the internet any fool can and will explain their inarticulate and half-formed personal theories into a web cam. These videos are not like that. They don’t represent my ideas at all. I am trying, to the best of my ability, to explain a complex body of intellectual work that spans a long history of debates as people grappled with these ideas. By acquainting ourselves with the history of ideas we can make sure that we don’t repeat the mistakes of the past, and that we are aware of the implications of our arguments.

But a video or a blog cannot substitute for the real thing. I am dealing with complex, difficult ideas and I am not perfect. I may make mistakes. I may leave things out. If you really want to understand Marx you must go to the source.

We should also be aware of the ability of video to manipulate us on an emotional level. Images, tone of voice and background music can all be helpful in helping us understand things. But they can also evoke emotional responses that are not necessarily rational. We should be aware of the way media effects our understanding of material and not let this get in the way of rational intellectual thinking. There is already enough of a shortage of rational thinking in our society.

There are a lot of ideas in each of these videos. One viewing may not be sufficient to absorb everything. That’s why I post the full text on my blog. The blog sometimes also contains tangents and side-arguments that were cut from the video as well as references and suggestions for future reading. I hope that the references on my blog might be a good starting point for people who are interested in learning more.

As we move through these different topics in the Law of Value our understanding of the Law of Value will deepen. At the end of each video there is a summary of the new layer of meaning we have added to the law of value. It would be wise to keep returning to this basic question as we progress through these videos: What happens when the relations between working people take the form of value relations between commodities?