This Life

by Martin Hägglund

  The contradiction in the capitalist mode of production is now apparent in our village. Capitalism can sustain itself only by extracting more and more relative surplus value, which is why we are committed to an annual growth of value. The extraction of relative surplus value depends on continually reducing the socially necessary labor time, which is accomplished by technological progress. The reduction of the socially necessary labor time could lead to more free time for everyone, but under capitalism that is not possible, since surplus time must be converted into surplus value. The reduction of the socially necessary labor time—which could be liberating—instead leads to a fatal contradiction. On the one hand, we must produce more and more commodities, since each commodity contains less of the labor time that generates surplus value for the capitalist. On the other hand, fewer and fewer people are required to produce the commodities. At one and the same time, we thus increase the number of commodities and decrease the number of people with an income to buy the commodities.

  The crisis of overproduction—when commodities flood a market that does not have sufficient means to purchase them—is therefore always on the horizon. To stave off the crisis, we must find ways of employing people in wage labor, regardless of whether the work they do is needed and regardless of whether the work is meaningful for those who labor. Moreover, we must get people to consume ever more, regardless of whether they need the goods they consume and regardless of whether consuming the goods is fulfilling for them. We must even produce commodities in view of having them break sooner rather than later, so that consumers are forced to buy the commodity again. Under capitalism, all questions of what we need, what we want, and what is durable, must be subordinated to the question of what is profitable.

  The privileging of the profit motive is not a moral failure of individuals under capitalism but expresses what we are collectively committed to in being committed to capitalism and its necessary requirement of an annual growth of value.

  To find profitable investment opportunities at a rate that generates an annual growth of value, we must commodify ever more of our natural resources and ever more aspects of our lives. The more of our natural resources that are commodified, the more profit they can yield. Likewise, the more of our activities that can be transformed into a matter of selling and buying—e.g., health care, education, public services, domestic chores—the more sources of profit we will have. The expanding commodification of natural resources and life-activities is not optional but necessary for capitalism to sustain itself. If we are committed to capitalism, we are committed to commodifying more and more aspects of our lives. This vicious circle can be broken only through an overcoming of capitalism, which requires a transformation of our conception of value.

  IV

  The term “capitalism” is often used loosely, but in light of Marx’s work we can give it a precise definition. Capitalism is a historical form of life in which wage labor is the foundation of social wealth. The deepest stakes of Marx’s critique of capitalism reside in his critique of the measure of value that is entailed by the dependence of society on wage labor. The measure of value is essential, since it determines how we calculate growth in our economy and thereby how we measure our social wealth. Under capitalism, the production of wealth depends on living labor time, which is the source of the surplus value that is converted into profit and gives rise to capital growth. What distinguishes the capitalist mode of production is wage labor for the sake of profit, which entails that socially necessary labor time becomes the essential measure of value.

  The most fatal mistake in reading Marx—a mistake as prevalent among his followers as among his critics—is to think that he accepts a general labor theory of value, which holds that labor is the necessary source of all social wealth. Such a theory was first formulated by the classical political economists Adam Smith and David Ricardo and supposedly further developed by Marx. For Smith and Ricardo, labor as the essential measure of value is a transhistorical fact. They assume that labor has always been and will always be the source of social wealth. For Marx, by contrast, socially necessary labor time as the measure of value is specific to the commodity form and becomes the essence of value only in the capitalist mode of production. Labor time as the measure of value is not transhistorically necessary but the historically specific essence of capitalism, which is contradictory and can be overcome.

  Everything in Marx’s critique of capitalism stands or falls on his analysis of the concept of value. Yet regarding this issue—the most seminal in all his work—Marxists have generally failed Marx, either by assuming that labor time is the transhistorical essence of value and/or by failing to explain why labor time is the measure of value for commodities, which forms the historically specific essence of value under capitalism. What is required is a rigorous account of why socially necessary labor time is the measure of value under capitalism and why such a measure of value is self-contradictory.

  The failure to provide such an account is especially significant since Marx’s argument that socially necessary labor time is the measure of value for commodities is widely held to be discredited by neoclassical economics, which began in the late nineteenth century and now holds sway among all leading economists as well as among the general public.35 What is known as the marginalist revolution of neoclassical economics seeks to explain the value of commodities not in terms of labor time but in terms of supply and demand. The supply and demand theory is the one that every student learns in an introductory course to economics. The theory shapes virtually the entire field and serves as an alibi for dismissing—without ever really engaging—Marx’s systematic analysis of capitalism.

  According to the supply and demand model of neoclassical economics, the demand for a commodity is determined neither by the amount of labor time required to produce the commodity nor by its overall utility, but by the “marginal utility” it has for the person who buys the commodity. A canonical example is the difference in value between water and diamonds. As a matter of overall usefulness—total utility as distinct from marginal utility—water is more valuable to human beings than diamonds, since we need water to survive but can live our whole lives without diamonds. Nevertheless, a diamond is generally held to be much more valuable than a gallon of water. The explanation is that the supply of diamonds is scarce, while the supply of water is abundant. If I only need to turn on the faucet to have all the water I need, the marginal utility of buying an extra gallon is low, since it does not add much to what I already have. By contrast, the marginal utility of a diamond is high, since the supply of diamonds is very limited and many of us do not have any diamonds. The value of the commodity is thus a matter of where supply and demand meet on a curve. If the supply increases there is a decrease in the marginal utility that determines demand, and if there is a decrease in supply there is an increase in the marginal utility.

  Far from challenging Marx’s insights, the model of supply and demand confirms his argument that socially necessary labor time is the measure of value for commodities. The categories of supply and demand, scarcity and abundance, cannot be understood merely in spatial terms but must be understood in temporal terms. When we say that water is in abundant supply, it means that the average time required for acquiring water (the socially necessary labor time) is minimal. The average citizen only has to turn on the faucet to have all the water she needs. Inversely, when we say that the supply of diamonds is scarce, it means that the average time required for acquiring diamonds (the socially necessary labor time) is nearly maximal. The average citizen would have to spend a lot of time to find a diamond. If these objective social conditions of production were to change, the value that results from supply and demand would also change. If we were able to transform carbon into diamonds through a simple operation, the marginal utility of diamonds would fall, since the socially necessary labor time for producing diamonds would diminish. Likewise, if we were deprived of our water supplies and
had to walk for hours to acquire a gallon of water, the marginal utility of water would rise, since the socially necessary labor time would increase.

  The idea that the notion of marginal utility challenges Marx’s arguments is thus an illusion, which stems from the failure of neoclassical economists to reflect on the conditions of intelligibility for their own categories. The categories of supply and demand, scarcity and abundance, are intelligible only in terms of the measure of value established by socially necessary labor time. This measure of value is in turn intelligible only in terms of finite lifetime, which makes it possible for anything to be understood as a cost or as a gain in the first place. Something can be scarce or abundant only for someone who stands to win or lose the time to lead a life that matters to her. The very notion of an opportunity cost—which is of central importance in neoclassical economics—is intelligible only for someone who values her own finite lifetime. This is why the marginal utility of water increases dramatically when the objective social conditions for producing water break down.

  For the same reason, the fundamental idea of neoclassical economics—the subjective theory of value—is undermined by its own account of the role of scarcity in the dynamic of supply and demand. The value of a commodity cannot be an aggregate of merely subjective preferences that are independent of the objective social conditions of production. The value you place on water is not simply a subjective preference but essentially related to the scarce or abundant supply of water, which depends on the objective conditions for producing water in the society of which you are a part. You cannot determine the marginal utility of water except in relation to the socially necessary labor time, which is a matter of how much time it takes on average to produce water in the society to which you belong.

  By the same token, we can clarify the distinction between price and value, which all the neoclassical critiques of Marx fail to understand. Marx is not arguing that the actual price of a commodity is directly correlated with the amount of labor time required to produce it. The price of a commodity can vary depending on a number of factors, but its value is measured by the cost of socially necessary labor time. Neoclassical economists deny such a distinction between price and value, in spite of the fact that their own account of marginal utility presupposes the measure of value in terms of socially necessary labor time.

  An instructive example is the leading light of neoclassical economics, Friedrich Hayek, whom I engage at length in the next chapter. “In a competitive society,” Hayek claims, “the prices we have to pay for a thing, the rate at which we can get one thing for another, depend on the quantities of other things of which by taking one, we deprive the other members of society.”36 If this were the case, it would be inexplicable how there can be an overall increase of value (“growth”) in a capitalist economy. The process of circulation—selling and buying, supply and demand—is a zero-sum game in the economy as a whole, since the gain of one actor from selling at a high price amounts to the loss of another actor from buying at a high price. For there to be an overall growth of capital wealth in the economy, there must rather be a source of surplus value in the process of production. That source—as we have seen—is the labor time of living beings.

  As living beings, we produce more lifetime than the amount of time it “costs” to keep ourselves alive. Thus, we have a surplus of time that can be sold in the form of labor-power. If we did not generate a surplus of lifetime we would have no labor-power to sell—since all our time would be consumed by the activity of merely staying alive—and nothing could be gained from employing us. Inversely, because we continually generate a surplus of time, a capitalist employer can in principle extract a surplus value by purchasing our labor-power for a wage. For the surplus value of our labor to be converted into profit, however, we must not only produce but also consume commodities, not only sell our labor-power but also buy the products of labor for more than it cost to produce them. The resulting profit for capitalist employers is the source of capital growth.

  The dynamic of wage labor thus defines all forms of capitalism, since wage labor for the sake of profit is the condition of possibility for generating capital wealth. Only the employment of living beings who both produce and consume commodities can give rise to a surplus of value—an overall “growth” of capital wealth—in the economy. This is why living labor time is the source of value in a capitalist economy and why socially necessary labor time is the measure of value for commodities.

  Hayek, by contrast, has no account of the source of surplus value, since he ignores how the social form of wage labor is constitutive of capitalism. In a manner that is typical of neoclassical economists, Hayek describes the determination of price in terms of the spatial process of circulation, while failing to consider the temporal process of production that makes circulation possible and requires labor time. In Hayek’s account, price is determined by the circulation of a quantity of things through selling and buying, supply and demand, which ignores the labor time that is required to produce and sustain the process of circulation itself. By thus ignoring the problem of labor time, Hayek’s account fails to render intelligible even the phenomenon of price. If we restrict ourselves to a spatial account of the process of circulation—selling and buying, supply and demand—it is unintelligible why anything has a price at all, since there is no “cost” of labor time involved. If something does not cost any labor time to produce or acquire, it is inconceivable that it has a price at all. This is why any form of price under capitalism—the price of any commodity—is essentially related to the value of labor time.

  In light of my analysis, we can see that the measure of value under capitalism (labor time) answers to the measure of value that is operative in the realm of necessity. When we labor in the realm of necessity—when we do something that is merely a means to an end—our labor time is normatively understood as a “cost” for us. The more time we spend working in the realm of necessity, the more expensive is our labor and the more value is contained in the commodities we produce. More labor time equals greater cost and thereby greater value. This is why each gallon of water is more “valuable” when it requires two hours of pedestrian labor than when we have running water at home.

  Such a measure of value, however, makes no sense on its own. Labor time is intelligible as a cost only because we value our finite lifetime as our own free time, which we in principle could devote to an activity that is meaningful in itself.

  Hence, my argument that finite lifetime is the originary measure of value makes it possible to pursue a critique of neoclassical economics on its own terms, while defending Marx’s arguments and developing their implications. Marx’s account powerfully demonstrates that the measure of value under capitalism is contradictory and traces the pernicious practical consequences of the contradiction. To understand why the measure of value under capitalism is contradictory, however, requires a level of analysis that Marx does not explicitly provide. That is why I proceed from analyzing the conditions of intelligibility for any economy of spiritual life, which must distinguish between the measure of value in the realm of necessity and in the realm of freedom. The deepest reason capitalism is a contradictory social form is that it treats the negative measure of value as though it were the positive measure of value and thereby treats the means of economic life as though they were the end of economic life.

  The real measure of value is not how much work we have done or have to do (quantity of labor time) but how much disposable time we have to pursue and explore what matters to us (quality of free time). The measure of social wealth in terms of free time is not an ideal that I impose as an external alternative to the measure of social wealth in terms of labor time. On the contrary, the value of having time in the realm of freedom—the value of disposable time—is the real measure of wealth because it is internal to the value and measure of labor time in the realm of necessity. The value of labor time in the realm of necessity
(i.e., the cost of labor time) can be understood as such only because we are already committed to the value of free time. Likewise, the purpose of accumulating dead labor—in the form of produced goods and technologies that allow us to reduce the amount of living labor required for production—is to enable us to lead our lives rather than merely secure the means of our survival. The value of dead labor is intelligible as a value only because it is for the sake of liberating time for the living. Having a hyper-well in the middle of our village makes us wealthier not because it cost people a lot of time to build it, but because the well liberates time for all of us to do something else than pump and carry water.

  Yet the capitalist measure of social wealth would have us believe otherwise. As long as we live under capitalism, the hyper-well in our village cannot generate any value for us by virtue of its own operation. The only way we can extract value from the well is by extracting surplus value from a person who has to operate the well in order to make a living. This is a direct consequence of measuring value in terms of labor time. If the quantity of labor time determines our wealth, then a machine that reduces the labor time reduces our wealth—unless we make up for the decrease in necessary labor time by increasing the amount of surplus labor time for the worker. The exploitation of workers is necessary under capitalism, since only the extraction of surplus value can generate any form of social wealth. Even if we developed our technologies to the point where we could provide the necessary means for everyone to lead their lives—with only a small amount of social labor required to operate the technologies—we would still have to exploit wage labor as much as possible, since capitalism recognizes no other source of value.