Marx's Theory of Value: A Sympathetic Yet Critical Perspective

This paper critically analyzes the important notion of value or exchange-value from a Marxian perspective as opposed to a neoclassical one. It is argued that the value of a commodity is a historically determined social relation between producers, rather than a subjective relation between man and commodities á la Eugen von Böhm-Bawerk and Stanley Jevons. Value, in the Marxian scheme, tends to assume certain specific forms more often than others depending on the particular stage of economic history, reaching its fullest expression under capitalist production—the highest form of commodity production based on private property. In turn, exchange value—a quantitative relation--is the manner in which value expresses its character of being the product of social (abstract) labor. The paper highlights the classical view of value as expounded by David Ricardo, and focuses on how Marx develops and attempts to resolve key problems in Ricardo’s labor theory of value. It is argued that Ricardo dealt not only with the problem of relative value, but, like Marx, also grappled with the concept of positive (absolute) value. The paper also reviews important challenges to Marx’s theory of value, ranging from the role of the composition of aggregate demand in determining “socially necessary labor†to the issue of whether the transformation of labor values into prices of production is an unnecessary and irrelevant exercise. Finally, the paper turns its attention to the economic role of time from a Marxian perspective as it relates to the determination of interest-bearing (loan) capital and Adam Smith’s important distinction between productive and unproductive labor—one whose clear comprehension rests on viewing value as a social relation.