There is a very widespread notion saying that it is a labor value theory and this labor value theory, opposed to a utility value theory, seems to say that labor is the source of value. Marx himself never spoke about a labor value theory. He always used the term value theory. Of course, labor played a crucial role, but not in such a simplistic way that the amount of labor you need to produce something gives to this something the value. Things are a little bit more complicated in Marx.
First, we have to make clear that there is a difference between use value (the utility of something which satisfies certain needs) and the exchange value (that in exchange I can get a certain amount of other things). The question of what determines exchange value was not raised for the first time by Marx. It is an old question and already Adam Smith had criticized the idea that the utility of the thing will determine the exchange value. Adam Smith’s very famous example is water and diamonds. Water for humans is the most important, and the most used, thing. Without water we would die very quickly. But the exchange value of diamonds is much higher than the exchange value of water. Therefore, already Adam Smith concluded its not utility that determines exchange value and he argued it is labor. At least in the European countries, it is very easy to find water and to have water, but to find diamonds is very difficult. First, you must search for the diamonds, you must construct a mine and this mine (after a rather a short time) will be exhausted and the process has to start anew. Therefore, Adam Smith argued that the quantity of labor necessary for the production is determining the exchange value.
Marx, on the one hand, made this theory a little bit more precise. He argued that since the commodity has a double-character – use value and exchange value – then also, the commodity-producing labor must have a double character. One character is responsible for the use value, the other character is responsible for the exchange value. And Marx introduced a new distinction: the distinction between concrete labor and abstract labor. With this distinction he doesn’t mean two different kinds of labor – it is more two different sides of the labor process producing a commodity. The concrete labor is what we can see when we observe a person working. This person is doing very concrete measures, for example, a carpenter is working with wood using very special instruments and the result is, for example, a table. And, of course, the carpenter needs very special qualifications. When we see a tailor, then we see a person using, for example, linen and instruments very different to the instruments of the carpenter and they are producing something very different – not a table, let us say, a jacket or trousers. And, of course, very different qualifications are needed. The experienced carpenter will not be able to do the job of the tailor and vice versa. This is concrete labor resulting in a concrete use value. But both, when they produce commodities, also produce an abstract economic value which is expressed as exchange value. And here, Marx argues that the source of it, the reason for it, is the fact they spend labor time (as such, whether in the form of a carpenter’s labor time or a tailor’s) and that this labor time is accepted by the society as a part of the total social labor time. And this acceptance comes by the exchange of the product as a commodity.
So, when we go into more detail, we must say first: labor (as such) does not create value. Only the labor which produces a commodity can also produce this abstract economic value. This production is done not just by the act of producing. When nobody wants my commodity, I produce nothing. I also produce no value. Nevertheless, I put in a lot of effort to produce this. Marx stresses the point in the beginning of Capital that concrete labor is a necessity of human life in every society. In every society we must produce use values. But the production of abstract economic value is not a necessity of human life. It is only necessary in an economy which rests upon the production of commodities. But the commodity is a special, historical social form of the labor product. Only when this historical social form exists, value exists, and only then labor can produce value and only then can we speak of abstract labor. So, the two sides – the concrete labor and the abstract labor – (which are not distinguished by the classical political economy, by Adam Smith and David Ricardo) represent two very different sides of the labor process and also of the commodity. Concrete labor, use value, is a necessity of human life in every society. Abstract labor – the production of abstract economic value – only exists in commodity production. So, in all societies without commodity production, we do not have this abstract value.
By putting it together (like Adam Smith and David Ricardo do) this historically specific attribute – abstract value – is put together with the transhistorical necessity of producing use values. Therefore, for the bourgeois economists the abolition of commodity production is identical with the abolition of production as such.
When you say, “We don’t want to have commodity production. We don’t want to have abstract labor.” And instead seek an economy resting on a planned cooperation of producers who communicate with each other, who see the social process of production as a common process, for the bourgeois economist, this is the end of the world because then he thinks it is no longer a kind of useful and qualified production. Therefore, the critique of political economy (Marx’s project to criticize the whole science of political economy) already starts with this very first distinction he makes at the beginning of the first chapter of Volume 1 of Capital – the distinction between concrete labor and abstract labor. There in the second subchapter of Volume 1 he says, “This is the pivot of the understanding of political economy.”
