Essay On History Of Economics
What for Marx is a commodity?
Marx analyzed the product and its properties in the first volume of "Capital". The richness of modern society consists of goods. This product is a product of labor, not produced for own consumption of the manufacturer or persons related to him, and to exchange it for other products. Consequently, not natural, and social features of the product make it a commodity.
Marx identifies two factors of product:
1) Consumption value. This product is an external object (thing) which satisfies any human needs because of its properties. Commodity body is use-value or benefit. The use-value is realized only in the use or consumption. The exchange value is represented as a quantitative relation, as the proportions in which the use-values of one sort are exchanged for use-values of another kind. As use-value products differ primarily qualitatively as exchange-values they may have only quantitative differences, therefore, the goods does not involve the use value. Socially necessary labor time is that the working time required for the manufacture of any use-value in the presence of normal social conditions of production and the average level in the society skillfully and intensity of labor;
2) the substance of value, the value of the cost. The magnitude of the cost of the use value is determined only by the quantity of labor, or the quantity of labor time socially necessary for its production. Thing can be a use-value and be worth. This is what happens when its usefulness to humans is not mediated by labor (air). Whoever his product meets their own needs, creates a use-value, but not a commodity.
What is the significance of Marx’s analysis of the “two-fold character of labor embodied in commodities” and “socially necessary labor”?
The two-fold character of labor was opened by Marx, which he notes in "Capital". This discovery of Marx is of paramount importance to determine the internal contradictions of commodity production, the essence of capitalist exploitation and other major political and economic problems. Labor embodied in a commodity is both specific and abstract. Labor creates use values, called concrete labor. Concrete labor "is defined by its purpose, nature of operations, subject, means and results" (Marx, K., 1867). The specific work of producers also differs from concrete labor, the other producers, as different from each other or producing use values. Labor tailor, baker, carpenter, gunsmith have specific work. As a result of these particular labor producers are qualitatively disparate consumers', the cost of grain, cloth, metal. As the creator of use-value concrete labor is the eternal and natural condition of society, does not depend on the form of social production. Various types of labor not only differ from each other, but also have something in common. Labor baker and gunsmith work is notable for its useful activities. Various types of labor are different as the expenditure of human labor power, muscles, brain and nerves. "Apart from the specific nature of productive activity, and, therefore, on the usefulness of labor, there is only one thing - that it is the expenditure of human labor" (Marx, K., 1867). Work of producers, considered as labor costs, in abstraction from its specific appropriate forms in the exchange acts as abstract labor. Abstract labor creates value goods and is a historical category. Not each expenditure of human labor is an abstract labor. Labor costs acts as an abstract work only when various kinds of equalization occurs through the exchange of work items. Therefore, the abstract labor embodied in the product only, and expresses certain relations of production. Marx writes: "On the basis of capitalist production, where everyone works at their own risk is particularly difficult at the same time forced to express itself as its opposite, as an abstract universal, and in this form of social labor " (Marx, K., 1867). The objective necessity of information specific to the abstract labor in a commodity economy makes the abstract work of public relations.
How are they related to Smith’s distinction between “productive” and “unproductive” labor?
Smith, unlike their predecessors, the industry is not limited to the definition of productive and unproductive labor. He believes that any work is productive, no matter what it is applied for. However, Smith maintains a hierarchy of industries regarding their performance. At the forefront, he puts agriculture, then industry and trade. But this is not important in his theory of productive and unproductive work. Smith defines productive and nonproductive labor not only depending on where it is applied, but also on what is produced with it. He has two approaches to the definition of productive and unproductive labor. The first approach refers to values. Labor productivity is the one that creates value. Unproductive work does not create value. Thus, labor manufacturing worker adds value to materials that it processes. Work together servant does not add value to anything. For the purchase of productive labor capital is expended and for unproductive – income is expended.
The second approach to the definition of productive and unproductive labor is associated with its materialization, objectification. Productive work is the labor of worker, which is fixed and realized in some subject or product suitable for sale. And the work is not fixed and servants cannot be realized in commodities. Its services are disappearing at the time of delivery. According to this definition of productive labor the whole sphere of immaterial production declared unproductive. This sphere Smith classifies activities of the state and its officials, church, army, navy, etc (Bhaduri, A., 1969).
This approach to the definition of Smith productive and unproductive labor has been criticized by many of his contemporaries, who treated the wider productivity. The classical economists on the contrary - embraced this approach. Marx agreed with Smith’s point of view (with certain reservations). His concept of socially necessary labor refers to unproductive labor.
Smith considered the importance of the concept of productive and unproductive labor because he associated the amount of productive labor with the rise of the national wealth.
What determines the value of labor? Do Smith, Ricardo and Marx share essentially the same theory of value?
Adam Smith made a significant step forward in explaining the nature of the cost. He separated the "use-value" (value for the consumer, utility) from "exchange value" (the cost of which regulates the relations in the exchange). Adam Smith showed what a huge role for the economy and national wealth plays an increase in labor productivity, in particular due to the division of labor and by the use of machines. With this perfected skills of employees and achieved savings of working time, a prisoner in one product. Adam Smith did not cause the cost of labor costs of a particular person, and the average length of productive labor required for a given level of development of society. Labor theory of value Adam Smith contradicts the observations of practice. For example, often the price not only temporarily deviates from the theoretical value, but also grouped around a certain value, which is clearly different from the cost. David Ricardo more strongly divided exchange value and value to the consumer (use value). He consistently elaborated the theory of labor as the sole source of exchange value (Ricardo, D. 1817).
Further development of the theory of value did Karl Marx. In its main economic work "Capital", exploring the labor force as a specific commodity, Marx identified and analyzed the added value that generates profit. Marx noted that the cost of goods depends not only on working time with their direct production, but on the working time for the production of similar products in the current environment.
Considering the various manifestations of value, Marx believed that the cost directly to the product is invisible and cannot be studied in isolation. Cost of goods occurs only through the relationship between the owners in exchange for other goods. The cost of doing physically different products is comparable (Marx. K., 1891).
In economics we consider other theory of value, which the focus is on cost, the subjective assessment of the consumer, the factors of production and various forms of public contracts. Many modern economists do not recognize the labor theory of value and adhere to the theory of marginal utility.
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