‘Labour and Value: Rethinking Marx’s Theory of Exploitation’ by Ernesto Screpanti reviewed by Bill Jefferies

Labour and Value: Rethinking Marx’s Theory of Exploitation

Cambridge, Open Book Publishers. 2019. 144 pp. £25.95 hb.
ISBN 9781783747801

Reviewed by Bill Jefferies

About the reviewer

Bill Jefferies’ book Measuring National Income in the Centrally Planned Economies; Why the …


Screpanti’s Labour and Value is an examination of what he deems to be the manifest and insurmountable flaws of Marx’s value theory.

Screpanti opens with a discussion of whether Marx had an ethical opposition to capitalism. His view leans strongly on Althusser’s separation between the young-Hegelian, naive, ethical opponent of capitalism, influenced by Feuerbach (14), and the older, wiser and more cynical scientist who was “not interested in a moral condemnation of the abuses of capitalism” (16). Screpanti points out that Marx “argues that capitalists extort surplus labour in the production process” (16). Extort means to obtain from a person by force, intimidation, or undue or illegal power, while the extraction of surplus value is exploitation. Notwithstanding, Screpanti counterposes normative and descriptive (moral and amoral) connotations and makes an “unequivocal choice” in favour of the latter (17).

Screpanti provides an explanation of the relationship between value and abstract labour in Marx, and considers that for Marx “all surplus value is a result of exploitation” (20). But, “Marx the scientist does not aim to demonstrate the existence of exploitation. He endeavours to explain it” (Screpanti’s emphasis, 20). If the existence of exploitation cannot be demonstrated, how can it be explained? Sidestepping this dilemma, Screpanti explains that in his view “labour values are variables of a purely technological nature” (21) that ““do not play any role in determining the production of surplus value”   theory only serves as an instrument of measurement” (22). The theory of value does not determine the social relations which explain the production and distribution of value and “in fact, labour values are determined independently of profits. They hold in a non-capitalist economy and are therefore unsuitable for measuring surplus value” (22). Not only do labour values not determine the social laws that determine the nature of capitalist production, they are not even unique to capitalism but exist generally. They are both nowhere and everywhere.

Marx asserts that in the exchange of twenty kilos of coffee for ten meters of fabric labour is the common factor to the exchange. Screpanti insists: “the fact that 20 kilos of coffee exchange for 10 meters of fabric does not imply that the two commodities have some substance in common” (32). Certainly, taken in isolation, this relationship is merely incidental, but Marx’s example was of capitalist manufacturing production, with repeated, innumerable, essentially unlimited exchanges, wherein competition forces commodities to sell for their “natural price”.

Following Smith and Ricardo, Marx made the axiomatic, indeed tautological observation (tautologies are true) that assuming the production of these commodities was multiplied without any assignable limit, to paraphrase Ricardo, and that these commodities were not scarce or finite, then what determined this natural price was the substance that they all shared as products of human labour. This is basic set theory. If there is one set of natural products, and a subset of human products, then what differentiates human products from natural products is humanity. Humanity alone is the property that they all share. Therefore, it was the quantity of this socially necessary (i.e. not unnecessary as in wasted or superfluous) human labour embodied in the product, that determined its value. Screpanti nonetheless claims that “the identification of the value magnitude as a quantity of embodied labour is a result of the restrictive hypothesis of zero profits. Therefore, the proposition that abstract labour is, in general, the substance of value is not proved. It has to be assumed axiomatically” (32). Citing Chris Arthur, Screpanti claims that “Marx assumes it in the first pages of Capital, in which the zero-profits hypothesis is implied by the model of simple commodity production” (32). This is explicitly not assumed by Marx, who famously explains that wealth within capitalism consists of a mass of commodities, that is useful products, produced for sale. Profits, let alone zero profits, are not mentioned. Nonetheless, Screpanti sums up “the meaning of ‘creates’ in the metaphor of value creation by abstract labour is obscure and devoid of any scientific merit!” (34). Following Sraffa, Screpanti asserts that “knowledge of the technical coefficients is sufficient to determine labour values, while knowledge of the rate of exploitation is not necessary” (34).

Screpanti then describes what he understands by Marx’s theory of surplus value. The wage buys a worker’s labour power, or the use of their labour for a given period and activity and not the labourer themselves. This is what distinguishes the free labour of wage-slavery from slavery. According to Screpanti “in exchange for the wage paid to the worker, the capitalist obtains the establishment of a relationship, not a thing”. This relationship prompts the “utilization and appropriation of labour”. This process is “qualitatively different from the exchange of commodities and is its direct opposite” (42), but of course it is not. Labour power is a commodity. Marx’s theory of surplus value explains how, on the basis of the laws that govern the exchange of all commodities, surplus value is extracted. Commodities cost the amount of necessary labour to produce them, but some of that labour is unpaid. As only humans can own property, so only humans can be unpaid for their property. Thus, only human unpaid property, the amount of labour extorted from the producers in production, can be the source of surplus value. This explanation rests on the distinction between the reproduction cost of labour, the wage, and labour power, the thing bought. Screpanti refers to some of these points, but his discussion is confusing. He explains that “A commodity is a thing, an object produced by a subject using concrete labour” but of course a commodity does not have to be a thing; it may be a service, and so a relationship, or an object. He continues “Value, contrarily, is not a thing, and cannot be supposed to be created by a subject”. But if value is not created by a subject, how does the labourer embed value into the product during production? Screpanti maintains value “is an economic relationship among commodities, and a result of the social relations prevailing in productive activity” (54), but of course value is not a relationship between commodities, but people. The exchange of commodities is merely a vehicle for the alienated social relationship of people, not something separate from it.

Screpanti observes that “exploitation occurs when the value added for commodities is higher than wages” (54). Yet this does not account for “the production of surplus value” (54). According to Screpanti “surplus value is explained as the result of the capitalist’s ability to compel workers to attain a labour productivity higher than the wage” (54).  Yet wages do not have productivity while labour does. As earlier noted, assuming exchange is a one off, then only relative prices exist, so “the labour unit only serves as an instrument of measurement. Thus, one of the implications of the analysis […] is that the labour theory of value is not necessary to explain exploitation” (54).

Screpanti illustrates his argument in a perfectly competitive economy, with constant returns to scale, no scarce resources or fixed capital or joint production or luxuries or complex labour or growth. Screpanti’s model is a non-capitalist, utterly stagnant, slave society (80). Screpanti continues, “two equations may refer to an economy that produces a single good, in which case all symbols represent scalars and I=1” (80). Assuming away production (a labour process which physically transforms inputs into different outputs and so conceptually requires at least two goods, where the output is incommensurate and physically different to the input); Screpanti notes that this model can “also be interpreted as referring to an economy producing n commodities” (80), not one, but a definite and finite number of physically identical inputs and outputs. Assuming away free labour, capitalism and production, it is possible to demonstrate that labour values are superfluous. Who would deny it?

Screpanti notes that “Marx uses labour values to measure exploitation” and claims that he “often provides examples based on a single commodity” (80). This is quite wrong and indeed absurd. Marx never refers to a single commodity example, not once anywhere in Capital or anywhere else. Sraffians widely criticise Marx for exactly this mistake. But of course, it is no mistake, there are no physical constants in a real economy. When Marx refers to means of production or means of consumption, he is well aware that these are constantly changing, physically incommensurate quantities of physical inputs and outputs. Screpanti later explains that to simplify the model “assume that each sector produces a single commodity, a consumer good (sector 1) and a capital good (sector 2)” then the “equations represent two conditions of equality between demand and supply” (111). Marx apparently is damned if he does and damned if he doesn’t. He doesn’t. For Marx (and Leontief) the consumer and means of production sectors produced use value types, not single use values, with labour as the only scarce commodity.

Screpanti necessarily concludes that that “there is no need” for an “essentialist philosophy” to “determine value”, to “explain capitalist social relations”, or “the rate of surplus value” (95). He embraces the refutation of labour values attributed to Nobuo Okishio (95) and considers that the transformation of values into prices of production, which contradicts the requirements of linear algebra, means that “reproduction conditions in a capitalist economy cannot be determined in labour values” (111), when all it in fact means is that the transition itself was disproportionate.

Screpanti’s discussion of Marx’s theories of labour and value is their total rejection. Screpanti is hardly alone in this endeavour and there is not much original in this presentation. The problem Screpanti faces (as all Sraffians do) is the other worldly, paradoxically mystical nature of the assumptions necessary to achieve this mathematically correct (if not logically consistent) objective. As the Sraffians reject an external standard of value (to physical production), so they must find an internal one. This requires physical constants (or that inputs be physically identical with outputs) to allow commensurability and so measurement. As production is a process which physically changes inputs into physically different incommensurate outputs, this assumption precludes all actual production. As physical constancy requires one, or a finite quantity of products, so relative prices must be fixed, so that one commodity may be substituted for another, such that relative prices become absolute prices. As capitalist production is a process that constantly revolutionizes physical prices, this assumption precludes capitalist production. As the cost of production is the quantity of physical inputs destroyed (although somehow not destroyed) in producing the output, and as surplus is the difference between costs and prices, this identity precludes all actual profits. As class society requires exploitation, this precludes class society. As there must nonetheless be a surplus, so surplus appears without equivalent from nothing. This assumption precludes material reality, the conservation of energy, and the physical universe.

17 November 2020


  1. When Screpanti says that “the fact that 20 kilos of coffee exchange for 10 meters of fabric does not imply that the two commodities have some substance in common”, I think he is correct.

    The only thing required, is that people want to exchange them, on terms that are agreeable. Commodities can exchange on all sorts of terms, under all sorts of conditions. And we might also say, that they normally can be exchanged, simply because they are priced goods (although they need not even necessarily to be priced, in order to be exchanged). In that case, the common factor would be simply that the traded commodities are priced, which they normally are.

    The question is, however, what *regulates* the terms of exchange for great masses of commodities which are all traded at the same time – in particular, because the transactors must be both willing to cooperate with the exchange, and because they compete to get the best deal. For economic science, that issue of regulation is not primarily a logical problem, but an empirical one.

    When Marx argues that ultimately the regulating value of commodities is regulated by the current replacement costs in labour time, he cannot provide a conclusive *logical* proof of this. This has been known for more than a hundred years. In fact, Marx himself already explicitly rejected the very idea of a “logical” proof of the concept of value (in a famous letter to Kugelmann, 11 July 1868 – unfortunately the MIA archive did not publish the entire text online). Marx said that “all that palaver about proving the concept of value” was ridiculous, and that, anyway, his analysis as a whole showed the validity and coherence of his concept, even if he had never written a specific chapter on the value of commodities.

    Instead, Marx considered that the problem was to explain how the regulation of exchange value of commodities by comparative expenditures of labour time actually operated, when great masses of commodities are traded all at the same time, forming a universal market. In his own era, the econometric data to test all this out was very sparse, and a lot of the evidence that Marx used was anecdotal.

    What you can do today, is to provide proofs of the logical coherence and consistency of the theory, you can test it out against the available facts of experience, and you can compare the theory with rival theories for their relative explanatory and predictive power. Marx’s theory of the regulation of commodity values by labour is in fact *not* the only possible labour theory there is, there are many such theories.

    The main problem you strike with theories of economic value is, that they are often tautological, i.e. they are purported to be true, in virtue of the definition of the terms used. If, for example, it is argued that prices are determined by other prices, then you strike the problem of an infinite regress of prices which determine other prices… which determine other prices. It leads to the conclusion, that prices are simply determined by “the market”, that is the totality of priced transactions across an interval of time.

    Marx regarded such theories as pretty vulgar and superficial, that is, from the point of view of the explanatory and theoretical task of economic science. Such theories might be able to explain particular instances of trade in commodities, but not the trade in commodities in total. The obsessive focus on the trade in particular commodities either omitted the “big picture”, or ran into major contradictions with it.

    Already around the time that Adam Smith wrote “The Wealth of Nations”, utility theories of value existed, and Joseph Schumpeter documents this in some detail. Marx and Engels knew that already, at the time they wrote The German Ideology manuscript (where they refer to it). But they regarded the utility theories as implausible and vulgar, insofar as those theories made no sense of the overall movements of markets across longer intervals of time.

    If those movements are to be explained simply by individual preferences, which can change at a moment’s notice, you don’t obtain a theory with a lot of predictive power. If demand rose more than supply, or supply rose more than demand, all you can say is that individual preferences changed. Why did preferences change? It may be hard to say, there could be all sorts of different causes, in all kinds of different cases. It yields a bunch of eclectic theories, and it becomes difficult to know which theory might actually explain any particular case, or how this was consistent with other theories. That does not provide much orientation or guidance, or predictive power. The least that we might expect of a theory is, that it provides a useful general orientation.

    This does not mean that preferences are not important in the political economy of consumption, but that those preferences themselves are also shaped by objective circumstances that people confront. Among other things, the consumer is usually *simultaneously* a worker. If we place workers and consumers in different theoretical baskets, we disregard very important realities about their connection.

    Any plausible theory of value must refer to both objective and subjective conditions. It is merely that in economic theory, the worker is often portrayed as an abstract object (an input or cost, among other inputs and costs), rather than as the living subject of production. There seems to be an abstract “labour force”, but it has no role in markets, except as wage costs. Labour as a living subject appears only in management theory and organization theory.

    A lot of the trade in assets does not occur on terms which are in proportion to total labour costs. It never did. Marx knew this very well, judging by his comments on banking and credit. That is probably a reason, why Marx never called his own theory a “labour theory of value”. He was not talking about *all* value, but the value of commodities, labour-power and physical capital.

    The label “labour theory of value” only emerged sporadically after David Ricardo published his Principles of Political Economy, and became common when people began to contrast it with the newer marginalist theories of value from the late 1870s onward, that is, after Marx’s Capital Vol. 1 was published.

    Probably, the growing popularity of marginalist theories of value owed much not only to the growth of markets with relatively stable prices, but also to the search for a reply to the growing power of the labour movement in the political sphere, which sought the right to vote, a reduction of working hours, fair wages, and a say in the organization of production. The labour movement protested and campaigned against the exploitation of workers. The global impact of the Russian revolution decisively changed the developmental paths of economic science.

    It is quite possible in global markets for a significant dissynchrony to emerge between trading prices for products and their true total labour costs of production. But Marx argues that no escape from the regulation of product prices by the law of value is possible in the long term; at a certain stage, when the dissynchrony between market prices and labour costs for products has become too great, the market and the value-chains cave in, “like a house of cards”, and price-levels are realigned with real costs through competition.

    Does a labour theory of value still have a lot of explanatory and predictive power nowadays, with such large trade in assets, services and information, that do not directly involve significant tangible or material products, and when enormous global disparities occur in the organic compositions of capital, wages, and terms of trade?

    I think the evidence tells us it does, but (1) it is probably more difficult to observe and test, insofar as the people collectively producing (part of) the products and the people consuming them are often far removed from each other in space and time; (2) the exact ways in which services and information are priced in markets, and what regulates those prices, is still often not very well understood; (3) the total economic reproduction process is changed greatly by the enormous growth of assets which are neither an input nor an output of current production (durables, real estate and financial assets).

    The traditional Marxist economic reproduction models assumed, that the earnings from the output value of production are either reinvested or consumed, but this is in reality not true. It is an error, to equate the “mode of production” in a society with “society as a whole”, or “production” with “the whole economy”. That is easily verifiable from the national accounting systems we now have.

    Perhaps the more important point is that labour theories of value, and Marx’s theory of value in particular, cannot be the basis for the political unity of labour movements and Leftwing parties. They never were either. Yes, there is still exploitation, there always was. But its critics are better off showing what particular cases of it tell us about the state that society is in.

  2. One thing that struck me in Screpanti’s eclectic text (which I think also contains some big mistakes) is his propensity to conflate clear conceptualization and theorizing with algebraic formalization.

    Mathematical equations cannot substitute (1) for conceptual precision in the definition of measuring units and concepts and (2) for the defence of theoretical assumptions with empirical evidence; they can only reveal logical and quantitative implications of concepts, theories and measurement units.

    Screpanti makes it seem that the results of formalization can simply and straightforwardly “prove or disprove” the plausibility of the concepts, theory or measurement units. One crucial mathematical equation seemingly suffices to rule out or enthrone a concept. Prima facie, it seems to be a very erudite, rigorous and “scientific” approach.

    In reality, that is not the case, since the conclusion of the formalization holds, only if a particular definition of the concept (and its assumptions) is already accepted. Only if you accept the definitions, the logical implication follows. But that can be, and often is, a big “if”.

    The crucial question for modelling and theorizing is then, “where we get our concepts, assumptions and measurement units from”, and how they can be combined in a coherent theory.

    For Marx, the main flaw of Hegelian thought was, that it imported assumptions and premises into the inferential system *speculatively*, while subsequently suggesting that one definition derives *logically* from another.

    In this way, Marx says, “Hegel fell into the illusion of conceiving the real as the product of thought concentrating itself, probing its own depths, and unfolding itself out of itself, by itself, whereas the method of rising from the abstract to the concrete is only the way in which thought appropriates the concrete, reproduces it as the concrete in the mind. But this is by no means the process by which the concrete itself comes into being.”

    It is certainly true that to achieve something, we need an idea, but it is a mistake to attribute its achievement only to an idea. The apparent rigour of Hegel’s dialectical reasoning turns out to be spurious, because it repeatedly assumes what it intends to prove. And it is illusory, because ultimately the object is considered to arise out of its concept, rather than the other way around (“the real” is “the product of thought”).

    Already at the beginning of The German Ideology manuscript, Marx and Engels recognize this view as a grotesque error. Mockingly, they tell the anecdote of a “valiant fellow” who believed that men were drowned in water, only because they were possessed with the idea of gravity. If they could only get rid of this idea of gravity, they would be safe from any danger of water.

    By contrast, Marx does not try to import his categories and establish their interconnections speculatively, but develops them out of (i) a critical inspection of the empirical facts, (ii) from the actual historical development and practices which give rise to them, in various formulations, and (iii) through the criticism of the theories which try to combine them in a coherent whole, in order to explain them rationally.

    In this way, the inferential process in Marx’s own story often mirrors the actual way in which the relevant concepts were formed and developed in the real world, from very simple beginnings to quite complex structures.

    Thus, Das Kapital begins with analyzing the meaning of the simplest observable object of commercial trade, the commodity, which already existed for thousands of years prior to industrial capitalism, and builds a theory out of that, which step by step incorporates more complex objects of trade – without needing to abandon the original definition of a commodity at all. It is merely that at the end of the analysis, the same traded object appears as the product of capitalist production, and not just as its most basic precondition.

    Screpanti is by no means a Hegelian, but his procedure suffers a similar defect, mainly due to a reification of mathematization, as a seemingly infallible rational authority to adjudicate the veracity of concepts. First an idea is imported in the inferential system, and then the idea is presented as the product (or a waste product) of the inferential system itself.

    Formalization (just like speculative thought) certainly has its place, but it should not be made to do more than it can validly do. Hayek and Keynes admitted that. Michael Polanyi among others noted, that to formalize a concept, we need to be able to identify it in the first instance without mathematization.

    The idea that mathematization can prove the valid meaning of a concept, and rule out all other meanings, is flawed. Algebra can only be an aid to understand the semantic and objective relations of phenomena, but these phenomena also exist beyond mathematics.

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