7. Karl Marx’s Theory of Value.

But the right arm of Socialism, as I have said, is Karl Marx’s Theory of Value. He presupposes the distinction between worth, or value in use, and value in exchange, or market-value. The worth of a thing is the esteem which its possessor has of its utility to him. Thus the convenience of being ferried across a river, thereby saving a seven miles’ walk when I am short of time, has a worth in my eyes equal perhaps to £1. The market-value of that same passage, the ferry being a public one, is 1d. Value in exchange is measured by the commercial price of any article, or of a service rendered. Karl Marx, then, reasoned thus. The exchange value of a commodity, he said, is the amount of human labour that has been put into it. Take, for instance, a regimental coat. There was, to start with, a sheep, a work of nature ; but the shepherd laboured to rear and feed it, and to shear it : there was the carriage of the wool, the dyeing it, the manufacture of it into cloth, the tailoring. There has been large use of machinery in these processes, but the machines were made by man. The value of the coat is all this labour added together, all the human labour that such a coat involves. Moreover, Marx goes on, labour is estimated by the time that it takes a man to do it. Thus the value of the coat is the amount of man’s time that has been spent in making it. It is obvious to object that at that rate the slower the workman, the more valuable the work. Marx replies that by time we must understand the time which an average workman would take over the task.

I waive for the present another objection with Marx’s reply to it, and proceed to show how this theory is pursued to the destruction of capital. Suppose we have before us a consignment of five thousand regimental coats, fresh from the premises of Messrs. X. Y. Z., military tailors and outfitters. The coats are of considerable value : that is, they represent not a little of man’s time spent in making them. Who created that value ? The man, it is answered, whose time and labour has been spent, and is contained as it were jellified in those coats. But who are those men ? X. Y. Z. ? Not a bit of it. Y. and Z. are away perhaps boating on Lake Lucerne; and X. has not been on the premises more than two hours a day, and has never laid a finger on the coats in any stage of their manufacture. The men who created that value are other workmen going before, and finally the workmen or “ hands ” of Messrs. X. Y. Z. But now who will pocket the price, the equivalent of that value? Messrs. X. Y. Z. will take it, and divide into three portions. With one they will pay for the raw material and machinery : one will be paid to their workmen as wages : the third portion, it is said, they will put into their own pockets, and on it live in luxury, doing no work, creating no value, but consuming the lives and devouring the labours of other men. Messrs. X. Y. Z. are capitalists. That third portion which they take to themselves, is termed “ surplus value.” Karl Marx proposes to abolish Messrs. X. Y. Z., and distribute that surplus value among the hands that created it, the workmen.

It is time to go back upon the objection that we waived just now. A carver in wood spends his time in turning out wooden imitations of cakes of Brown Windsor Soap. In ten days, working eight hours a day, he has turned out two hundred of these wooden tablets. No ordinary carver could have done the job in less. The man goes about to sell his products and can find none to buy them. In vain he relates how long he took to make them, and babbles of labour-jelly and Karl Marx : the public will not have them. They are no use. This brings Marx down to saying that by labour he means socially useful labour, or what society esteems such. Here is a vast alteration of the theory. Value, which had been all reduced to labour and time, is found to contain a totally different element, social utility. So the value of labour itself is not the mere labour and toil of it, not the mere time that it took, or would have taken an average man ; but the issue or outcome of the labour to society is an important factor in its value.

It further appears that there are various orders of labour, some more useful to society than others, and therefore more valuable, time for time. In other words, we must consider the quality of labour, not merely the quantity. The attempt to reduce labour of high quality, or the best skilled labour, to quantity by referring it to the time spent in education or apprenticeship, is futile and absurd. Lord Wellington drove the French out of the Peninsula in something like five years : how long would it have taken an ordinary soldier, with Arthur Wellesley’s education, to do the like? How long would the Duke of York, of Walcheren celebrity, have taken to do it ? As in war, so in medicine, literature, engineering, politics, business management, art, there are men whose labour is quite incommensurable with the labour of their fellows. There are born aristocrats, a nobility of nature’s own creation. And there is every grade of quality between one man’s labour and his neighbour’s, the difference arising partly from natural endowment, partly from advantages of position. Thus the little finger of Caesar or Crassus is thicker than the loins of Drom : half an hour of Caesar’s thought does what Dromo could not do in weeks, perhaps not in centuries. So blind, so misleading, so outrageously neglectful of the facts, is this conceit of reducing all value to labour, and all labour to time.

To return to Messrs. X. Y. Z., their “hands,” and the regimental coats. These coats are valuable, not merely as representing a certain amount of labour, but as being tolerably well adapted to meet a public need. But who thought of adapting them ? Who foresaw the need and was forward to meet it? Who set up the machinery, improved and perfected it, bought up the raw material, got together the workmen, inspected and controlled them? All this is the doing of capitalists, not of the hands. It is not hand-labour, but it is labour of the highest social utility. Unless this be done, all the labour of the workmen is of no use at all, and has no value. So I have seen four horses dragging a load of timber up the slope of a hill, straining and bending to the weight, and by their side at his ease walked a man urging the animals with low cries : the horses carted the timber, but the man carted it too, the former as physical causes, the latter in the way of mental and moral causation ; and as the man would have been helpless to move the timber without the horses, so the horses without the man could never have carried it to any good end. But it will be urged, the capitalist is a man and the workmen are men too : the workmen then may replace the capitalist. Not if they continue to be workmen, that is, hand-labourers. You cannot have every one working with his hands. There must, as Socialists allow, be directors, statisticians, managers, whose work is mental, not manual; there must be men set aside for mental labour, as others are made over exclusively, this to one, this to another narrow province of manual labour. The labour and use of capitalists, and the value they create, are proved by the vast bureaucracy which Socialists are compelled to think of instituting in order to replace them. It is no more fair to deny the capitalist his profit, and call it unjust gain, because one has imagined a contrivance to work in his stead, than it would be fair of a capitalist to defraud his labourers of their wages, in view of a dreamy vision of machinery to come whereby he shall no longer need them. The present actual creator of social utilities is to have his reward in the present ; the coming man may look for his at the justice of future generations.

It is only fair to X. Y. Z. to observe that they do not spend all the so-called surplus value in living riotously : that is what Socialists advise workmen to do with the said surplus, when it comes to be distributed amongst them. But X. Y. Z. capitalize great part of it, and provide for work and production to come. Their investments are not always judicious, it is true ; but it is generally better to invest than to squander. More production means of itself higher wages ; and less production, lower wages.

Pressed by arguments like these, Socialists sometimes change their key, and tell us that at any rate Messrs X. Y. Z. are wonderfully well paid for their personal contribution to the value of their goods. As one puts it, “ half the cake is a pretty dear price for overseeing its baking.” But how many capitalists get half the cake, or a net profit equal to the sum of wages and other working expenses put together? Perhaps there ought to be higher wages ; certainly the capitalist has other duties to his workmen besides paying them their wages ; but it is a law of nature, from which even the Socialist Commonwealth will not be exempt, that the superintendent be better paid than the journeyman baker.

Under the direction of intelligence, labour has vastly increased the wealth of the world, an increase which Socialists are never weary of enlarging upon, while they forget that it is due, not to common labour merely, but also to the intelligence of the capitalist setting common labour to work under advantageous conditions.