Use value
Use value (German: Gebrauchswert) or value in use is a concept in classical political economy and Marxist economics. It refers to the tangible features of a commodity (a tradeable object) which can satisfy some human requirement, want or need, or which serves a useful purpose. In Karl Marx's critique of political economy, any product has a labor-value and a use-value, and if it is traded as a commodity in markets, it additionally has an exchange value, defined as the proportion by which a commodity can be exchanged for other entities, most often expressed as a money-price.[1]
Not to be confused with value-in-use.Marx acknowledges that commodities being traded also have a general utility, implied by the fact that people want them, but he argues that this by itself says nothing about the specific character of the economy in which they are produced and sold.
Origin of the concept[edit]
The concepts of value, use value, utility, exchange value and price have a very long history in economic and philosophical thought. From Aristotle to Adam Smith and David Ricardo, their meanings have evolved. Smith recognized that commodities may have an exchange-value but may satisfy no use-value, such as diamonds, while a commodity with a very high use-value may have a very low exchange-value, such as water. Marx comments for example that "in English writers of the 17th century we frequently find worth in the sense of value in use, and value in the sense of exchange-value."[2] With the expansion of market economy, however, the focus of economists has increasingly been on prices and price-relations, the social process of exchange as such being assumed to occur as a naturally given fact.
In The Economic and Philosophic Manuscripts of 1844, Marx emphasizes that the use-value of a labour-product is practical and objectively determined;[3] that is, it inheres in the intrinsic characteristics of a product that enable it to satisfy a human need or want. The use-value of a product therefore exists as a material reality according to social needs regardless of the individual need of any particular person. The use-value of a commodity is specifically a social use-value, meaning that it has a generally accepted use-value for others in society, and not just for the producer.
Transformation into a commodity[edit]
"As exchange-values, all commodities are merely definite quantities of congealed labour-time", wrote Karl Marx.[8] The discrepancy of the true purpose of value came to be one of the biggest sources of conflict between capital and labour. The transformation of a use-value into a social use-value and into a commodity (the process of commodification) is not automatic or spontaneous, but has technical, social and political preconditions. For example, it must be possible to trade it, and to transfer ownership or access rights to it from one person or organization to another in a secure way. There must also be a real market demand for it. And all that may depend greatly on the nature of the use-value itself, as well as the ability to package, store, preserve and transport it. In the case of information or communication as use-values, transforming them into commodities may be a complex and problem-fraught process.
Thus, the objective characteristics of use-values are very important for understanding (1) the development and expansion of market trade, and (2) necessary technical relationships between different economic activities (e.g. supply chains). To produce a car, for example, you objectively require steel, and this steel is required, regardless of what its price might be. Necessary relationships therefore exist between different use-values, because they are technically, materially and practically related. Some authors therefore write about an "industrial complex" or "technological complex", indicating thereby how different technological products are linked in a system. A good example would be all the different products involved in the production and use of motor cars.
The category of use-value is also important in distinguishing different economic sectors according to their specific type of output. Following Quesnay's analysis of economic reproduction, Marx distinguished between the economic sector producing means of production and the sectors producing consumer goods and luxuries.[9] In modern national accounts more subtle distinctions are made, for example between primary, secondary and tertiary production, semi-durable and durable goods, and so on.
Marx's concept of use-value seems akin to, but in reality differs from the neoclassical concept of utility:
In summary, different concepts of use value lead to different interpretations and explanations of trade, commerce and capitalism. Marx's main argument is that if we focus only on the general utility of a commodity, we abstract from and ignore precisely the specific social relations of production which created it.
Some academics such as Professor Robert Albritton, a Canadian political scientist, have claimed that according to Marx, capitalists are basically "indifferent" to the use-value of the goods and services in which they trade, since what matters to capitalists is just the money they make; whatever the buyer does with the goods and services produced is, so it seems, of no real concern.
But this is arguably a misunderstanding of business activity and the bourgeoisie as a class.[15] Marx thought that capitalists can never be totally "indifferent" to use-values, because inputs of sufficient quality (labour, materials, equipment) must be bought and managed to produce outputs that:
For this purpose, the inputs in production must moreover be used in an economical way, and care must be taken not to waste resources to the extent that this would mean additional costs for an enterprise, or reduce productivity.[16] The Theory of Use Values relates directly to human labour and the power of machines to destroy value, "Living labour must seize on these things, awaken them from the dead, change them from merely possible into real and effective use values".[17]
It is just that from the point of view of the financier or investor, the main concern is not what exactly is being produced as such or how useful that is for society, but whether the investment can make a profit for him. If the products of the enterprise being invested in sell and make a profit, then that is regarded as sufficient indication of usefulness. Even so, the investor is obviously interested in "the state of the market" for the enterprise's products—if certain products are being used less or used more, this affects sales and profits. So to evaluate "the state of the market", the investor needs knowledge about the place of a product in the value chain and how it is being used.
Often, Marx assumed in Das Kapital for argument's sake that supply and demand will balance, and that products do sell. Even so, Marx carefully defines the production process both as a labour process creating use-values, and a valorisation process creating new value. He asserts only that "capital in general" as an abstract social power, or as a property claim to surplus value, is indifferent to particular use-values—what matters in this financial relation is only whether more value can be appropriated through the exchanges that occur. Most share-holders are not interested in whether a company actually satisfies customers, they want an adequate profit on their investment (but a countertrend is so-called "socially responsible investing").
In modern times, business leaders are often very concerned with total quality management in production, which has become the object of scientific studies, as well as a new source of industrial conflict, since attempts are made to integrate everything a worker is and does (both their creative potential and how they relate to others) in the battle for improved quality. In that case, it could be argued not just labour power but the whole person is a use-value (see further Richard Sennett's books such as The Culture of the New Capitalism, Yale (2006). Some regard this practice as a kind of "wage-slavery".
From beginning to end, and from production to consumption, use-value and exchange-value form a dialectical unity. If this is not fully clear from Marx's writings, that is perhaps mainly because he never theorised the sphere of final consumption in any detail, nor the way in which commerce reshapes the way that final consumption takes place.