A Debate on Value Theory Guest Post by Pete Green

On the recent (2018) debate over value theory between David Harvey and his critics

A short essay by David Harvey, raising some questions about value theory in Marx, has  provoked the polemical responses he may well have expected. First onto the field to defend his version of orthodoxy came the redoubtable Michael Roberts, who was soon supported, though from a rather different angle, by Paul Cockshott. Links to the relevant pieces, including a response from Harvey to the Roberts critique, can be found most easily on the Michael Roberts blog. In what follows I  attempt to evaluate some of the central points of difference along with two other critical concepts (‘anti-value’ and ‘devaluation’) thrown into the debate by Harvey in his response. I will also refer to Harvey’s recent book Marx, Capital and the Madness of Economic Reason which ranges much more widely across the whole terrain touched on by his essay. Roberts refers to this text but does not appear to have read the whole book, as that might well have obliged him to correct, or at least qualify, his dismissal of Harvey as an under-consumptionist.

Harvey’s essay is titled “Marx’s Refusal of the Labour Theory of Value” and this in itself has provoked the ire of his most prominent critics. For Harvey the labour theory of value ‘belonged to Ricardo’ and Marx himself only ever refers to ‘value theory’. Harvey also gives a complimentary nod to Diane Elson’s ‘seminal article’ “The Value Theory of Labour”, an article which whilst certainly insightful effectively dismissed the quantitative dimension of Marx’s work.[i] (Elson was conceding the terrain of price determination to the Sraffian or neo-Ricardian school whilst defending the ‘qualitative’ dimension of Marx’s analysis of value-forms and the alienation of labour). Insofar as Harvey’s critics insist on defending the coherence and empirical relevance of the quantitative dimension of Marx’s theory they are, in my view, correct to do so. But that does not settle the arguments discussed below.

Cockshott, in particular, insists that on ‘ key components’ of value theory Marx and Ricardo were in agreement. He vigorously challenges the most problematic two sentences in Harvey’s essay which are as follows:

Ricardo’s hope was that the labour theory of value would provide a basis for understanding price formation. It is this hope that subsequent analysis has so ruthlessly and properly crushed

Harvey is seriously mistaken on this point and curiously it’s not a claim he makes in his latest book. Cockshott references studies by himself and others, such as Anwar Shaikh, revealing the strong statistical relationship between changes in the labour content of diverse commodities as a result of changes in the productivity of labour, and the movement of market prices. Marx’s claim that values are the underlying regulators of prices amidst the turbulent fluctuations of the market place is validated by these studies (and this is what Marx meant by the law of value in my view, a law which capitals seek to resist or overcome via price-fixing and monopolization). Yet little of what Harvey has to say about prices in his book, as distinct from the essay quoted above, is incompatible with what Shaikh and others have elaborated in detail.

However Cockshott’s own summary of how Marx progressed from Ricardo with, for example, the introduction of the concept of surplus-value, exposes a significant lacuna in his analysis. Neither Cockshott nor Roberts appear to attribute any weight to Marx’s critique of  Ricardo’s theory of money and the latter’s disregard for the specific social form of value. As Marx noted in Theories of Surplus-Value:

But Ricardo does not examine the form – the peculiar characteristic of labour that creates exchange-value or manifests itself in exchange-values – the nature of this labour. Hence he does not grasp the connection of this labour with money or that it must assume the form of money. Hence he completely fails to grasp the connection between the determination of the exchange-value of the commodity by labour-time and the fact that the development of commodities necessarily leads to the formation of money. Hence his erroneous theory of money. Right from the start he is only concerned with the magnitude of value…” (Marx 1968, p.164.)

See also the much-quoted footnote on p.174 of Capital Volume 1 in the Penguin edition, 1976.

Michael Roberts argues correctly that Marx’s distinction between abstract and concrete labour also distinguishes his value theory from that of Ricardo and on this he seems to differ from Cockshott who strangely claims that this distinction can be found in Adam Smith. In brackets Roberts defines abstract labour as “value measured in labour-time when ‘socially’ tested on the market”. This is to equate the concept of abstract labour with that of ‘socially necessary labour-time’, and at the same time disregard  the necessary connection between ‘abstract labour’ and money proposed by Marx himself. Those who share such a perspective might well be puzzled as to why Marx spends so much effort in the opening chapters of Capital Volume 1 on elucidating the forms of value and the ‘development of money’.

I am not going to dwell further on the complex question of Marx’s intellectual relationship with Ricardo or other classical economists, a relationship which certainly evolved over time.  Instead I want to focus on some critical issues raised by Harvey which deserve more serious consideration than either of his critics have managed to provide.

On “the contradictory unity of production and realization”

That’s a quote from Marx, and Harvey, who deploys the phrase (without a page reference!) in his response to Roberts, is certainly correct to emphasize its importance. This should not be controversial amongst serious Marxist scholars. Value is created in the process of production but it can only be realized in the course of exchange in the market, when the produced commodities are actually sold. Harvey suggests that the value created in production is only a potential value until it is realized, and just a little reflection on the meaning of the term ‘realization’ should support that interpretation, although as far as I am aware the word ‘potential’ (or its German equivalent ‘Potenzial’) is not used by Marx himself. If the commodity is not sold it has no value, or rather loses whatever value it potentially had (although it may reappear on the market at a lower price and as such ‘devalued’ – on which more below). It is also the case that a commodity can be exchanged for a sum of money whose value (or representation of value) is greater or less than the potential or ‘intrinsic’ value contained in the commodity as it goes to market – although, as Harvey notes, Marx  explicitly assumes that this is not the case, or that prices correspond to values, from Part 3 onwards in Volume 1 when he focuses on the production of value.  But Marx never forgets that the process of  exchange is always uncertain, and the possibility of a failure of realization ever-present.

Harvey also emphasizes in his own distinctive way that constant changes in the productivity and intensity of labour ‘under pressures of competition in the market’ entail that:

Value becomes an unstable and perpetually evolving inner connectivity (an internal or dialectical relation) between value as defined in the realm of circulation in the market and value as constantly being redefined through revolutions in the realm of production”

Unfortunately,  ‘value as defined in the realm of circulation’ is  an example of the loose phraseology found elsewhere in his essay which opens Harvey up to serious misrepresentation of his argument. But his response, which insists on the distinction between production and realization as noted above, should be welcomed for its clarification of the fundamental issue. Harvey is also right to emphasise the instability which results from technological and organizational innovations but manifests itself in the process of circulation in the market.

What’s critically at stake, as far as both Harvey and Roberts are concerned, is a broader question about the relationship between the process of production and circulation not simply of commodities but of capital as a totality. Harvey in his earlier work on Volume 2 of Capital has quite correctly emphasized that the process of circulation of capital is essential to the capitalist mode of production, and should not be  regarded as secondary, or neglected because Volume 2 is such a tedious volume by comparison with the sparkling prose of Volume 1.[ii]

Harvey’s Companion to Capital Volume 2 is replete with illuminating insights into the multiple dimensions of that work. In particular, he emphasizes that for Marx the time spent in the circulation phase of capital’s circuit is time in which capital is not engaged in the production of surplus-value. Capital is therefore driven by competition not just to speed up the labour process within the factory but to reduce the time spent in transportation to and from the market-place itself, as well as the time lost waiting for commodities to be sold. Hence of course the need for massive spending on infrastructures which often only states with their capacities for taxation and borrowing can manage to deliver. But the consequence for capital will be a reduction in turnover time which will counteract any tendency for the rate of profit to fall.

In his latest book Harvey begins with the notion directly derived from Marx of capital as ‘value in motion’. He develops an extended analogy in diagrammatic form between the circuits of capital and the hydrological cycle of water. All such analogies can be overstated and Harvey acknowledges this. But I share his appreciation of the parallel between the ways in which H2O changes its forms (water, steam, rain, ice, snow, fog etc) and the diverse speeds at which they move, and the diverse forms taken by capital (money, commodities, means of production etc) and their differential turnover times. Only close attention to Volume 2 of Capital will enable us to grasp why Marx understood that it was necessary to explore these issues before developing an adequate theory of capitalist crisis. But as I’ve suggested in an earlier contribution to this blog, Michael Roberts prefers to ignore Volume 2 and in effect leap straight from the focus on production in Volume 1 to the fragments on profitability and crisis in Volume 3.

In the short essay, however, Harvey prefers a different analogy, ‘simple but crude’, with the circulation of blood inside the human body in which ‘the two phenomena are mutually constitutive. Value formation likewise cannot be understood outside of the circulation process that houses it. The mutual inter-dependency within the totality of capital circulation is what matters’.  But this analogy could be misleading if it implies that we can only talk about value formation as he suggests ‘under conditions of capital accumulation’. My own view is that value formation is necessarily tied to the existence of money and commodity exchange but these are themselves preconditions of capital accumulation and predate the consolidation of capitalism as a mode of production (which is not to endorse the notion of a simple commodity mode of production proposed by Engels). But how we analyse the necessary connection between value and money is itself controversial.

 The Question of Money

Harvey in his essay introduces money as a ‘material representation of value’. There is of course much, much more to be said about Marx’s analysis of money and the materiality of money is today certainly in question (see in particular the recent collection of essays by Costas Lapavitsas).[iii]  Arguably it is preferable to follow Marx in Chapter 2 of Volume 1 and introduce money as, in the first instance, the ‘universal equivalent’. But there should be no dispute that for Marx money serves as the external measure of value and the ‘social incarnation of labour’, and is “the necessary form of appearance of the measure of value which is immanent in commodities, namely labour-time” (Volume 1 p.188). So without money there is no ‘value’ as such and, at least in one sense of the term, no ‘abstract labour’.

Michael Roberts, who indirectly quotes the same passage from Marx I have just used, also agrees that without money there is no value. However, he also quotes at length Murray Smith’s critique of those whose emphasis on the ‘value-form’ lead them to “sever commodity values entirely from any determination in the conditions of production, and the way is paved for an effective identification of value and price”. Roberts extends this critique to Harvey without any justification other than the latter’s emphasis on the necessity of the realization of value in the exchange of commodities for money.

In this respect Roberts’ polemical arrows are aimed at the wrong target.  There are certainly writers in the ‘value-form’ tradition, dating back to the work of Backhaus and Reichelt in Germany in the late 1960s (rather than to Rubin whose earlier work is sometimes blamed for this construction) for whom money is the only possible measure of social value and who therefore cannot effectively differentiate value and price, or have any concept of unequal exchange. I have commented critically  on  examples of this tendency in a review essay in the Historical Materialism journal.[iv] (22.1, 2014 pp. 200-222)

But nothing that Harvey says in his essay justifies tarnishing him with the same brush. Indeed  in Chapter 5 of his book, headed ‘Prices without Values’, Harvey focuses in on the examples of commodities with prices but no values that Marx himself mentions, such as land and unique works of art, and argues that this has become a more widespread phenomena. Harvey is very interesting on how the ‘free gifts’ of human creativity, and scientific knowledge are being enclosed and  commodified via the enforcement of intellectual property rights. He then proceeds to explicitly reject any ‘monetary theory of value’ stating that

To ignore the money-value contradiction altogether is to cut off an important, though admittedly complicated avenue to understand the dilemmas of contemporary capital accumulation’.[v]

There are two treacherous paths that Marxists need to avoid in these debates, not just one. On the one hand there are those value-form theorists who deny that it is possible to measure socially-necessary labour-time independently of exchange and end up collapsing value into exchange-value or price. On the other hand, there are those for whom the moment of realization is always subordinate to the production of value, and who collapse the social category of value into the physical performance of labour, and even forget that value which is not realized is either devalued or negated completely. David Harvey, despite occasional hesitations, avoids the first path but Michael Roberts appears to be travelling along the second, although he would no doubt vigorously protest at the suggestion. 

‘Underconsumptionism and crises’

For Michael Roberts there is no doubt that Harvey’s cardinal sin is his ‘underconsumptionist theory of crisis’.  Everything that Harvey says about the necessity of the realization of value, or the significance of the circulation of capital, is interpreted by Roberts as a challenge to his own insistence that only a ‘falling rate of profit’ can explain each and every crisis of capitalism. In a sentence which opens. as I’ve already shown. with a serious distortion of Harvey’s argument Roberts sums up his critique:

If value is created only at the moment of exchange for money and ‘money rules’, then it will be (effective) demand that will decide whether capitalism smoothly  accumulates without recurring crises”

In his essay  Harvey  raises the  question of the reproduction of labour-power today in conditions which to some extent, given rising levels of poverty and precarity, recall those described by Marx and Engels in mid-19th century Victorian Britain. He also references the insights of social reproduction theory as explored in the recent collection edited by Tithi Bhattacharya (Pluto Press 2017) and this is a welcome development in my view. But typically Harvey offers up one sentence which for Roberts confirms Harvey’s cardinal sin:

As Marx notes in Volume 2 of Capital, the real root of capitalist crisis lies in the suppression of wages and the reduction of the mass of the population to the status of penniless paupers

Roberts rather predictably counters with another classic Marx quote (“It is sheer tautology to say that crises are caused by the scarcity of effective consumption….”) and a misguided attempt to downplay the significance of final demand by emphasizing the demand for intermediate goods and materials as if the two were not deeply interconnected. Roberts is on stronger ground when he emphasizes in his own book (The Long Depression) that investment has always been the component of demand which fluctuates most violently across the cycles of boom and slump. But as Anwar Shaikh has argued investment in capital accumulation depends on ‘expected profit-rates for the regulating capitals’.[vi] (Shaikh 2016 Capitalism). Such expectations are influenced not simply by past profit-rates as Roberts assumes but also by changing levels of effective demand and business confidence.

This is not the place for me to expand on my own pursuit of a ‘multi-dimensional crisis theory’. However, two distinct questions are frequently confused in these arguments and a little clarification might be helpful to those looking to move beyond the polarization evident in the Harvey/Roberts exchange.

Firstly, there is the fact that the limited consumption of the mass of the population is for Marx a precondition, or the ‘real root’ of capitalist crises simply because if all the net product is consumed by the masses, capitalism itself could no longer exist. But this ‘under-consumption’ is of course a permanent condition, and cannot by itself explain the periodic crises punctuating the  cyclical fluctuations which have beset capitalism since the early 19th century.

Secondly, there is the empirical question of the role played at specific historical moments by changes in wages, and levels of mass consumption (which in contemporary capitalism can also be financed by credit mechanisms and state distribution of benefits). The evidence presented by Atif Mian and Amir Sufi in their book House of Debt suggests that the housing crisis in the USA which first emerged 2006-7 led to a sizeable reduction in levels of consumption spending by those households squeezed by falling house prices and a high level of debt, as well as a fall in housebuilding. It is this fall in consumer spending along with a rise in the price of raw materials which explain most of the fall in the mass of profits in the course of 2007-8  in the USA which Roberts himself has highlighted. This preceded the sharp drop in non-residential investment spending which followed the collapse of Lehman Brothers and the paralysis of the credit system globally. Certainly that fall in the mass of profits cannot be explained by rising wages or a change in the underlying organic composition of capital and Roberts himself provides no alternative explanation. See the comment on Mian and Sufi’s analysis in a previous post by Jim Kincaid on this blog.

Harvey could have avoided some of the misrepresentation of his position if he had clarified the difference between the two claims made above. But we need to examine the specific features of each major historical crisis and not assume, as Roberts and others do, that the same mechanisms are at work in every crisis. The pattern of crisis in 2007-8 was very different, for example, from that in 1974-75 or in the early 1980s, when the combination of a fall in the rate of profit in the core economies with sharp hikes in interest-rates was the critical determinant. Harvey has certainly not provided a definitive account of the decade long period of crisis and stagnation which began in 2007 but he has drawn on Capital Volume 2 to outline a framework – the circuit of capital – which enables us to identify the multiple fault-lines in the system as distinct from the single fault-line on which Michael Roberts focuses. 

Anti-Value and Devaluation

In his response to Michael Roberts’ critique Harvey makes a passing reference to his own original conception of anti-value or not-value which he explores in a whole chapter of his 2017 Madness book. He connects this to the need for a ‘strong theory of devaluation to account for what happens in the market-place’. I agree with Harvey’s emphasis on devaluation and the fact that this critical process ‘rarely appears in Roberts’ accounts’. I am, however, reluctant to endorse his category of anti-value.

‘Anti-value’ is a new category in Harvey’s work and one which is explored in detail in a chapter of the book. Harvey’s analogy is with the concepts of matter and anti-matter in physics but as a non-physicist I suspect that the concept of ‘anti-matter’ is rather more precisely defined than ‘anti-value’. Harvey’s first examples are all about devaluation as a necessary moment of the circulation process. He draws primarily on quotes from the Grundrisse to argue that capital which for whatever reason suffers from a pause or even a slowdown in its movement through the phases of circulation will experience a loss  of value, or a virtual devaluation which may be overcome if capital’s movement is resumed. Harvey notes that in the Grundrisse capital lying ‘at rest’  is variously termed ‘negated’, ‘fallow’, ‘dormant’ or ‘fixated’ and this is clearly relevant to the mechanisms of crisis when unsold inventories accumulate or surplus money capital is immobilized rather than reinvested in production.[vii] This is a whole dimension of Marxist crisis theory which is widely ignored in the contemporary literature.

However, Harvey proceeds to extend the category of ‘anti-value’ to embrace other quite diverse phenomena and processes, such as resistance at the point of production or struggles over commodification of essential goods such as water, education  and health-care. He also regards debt as a ‘crucial form of anti-value’, which I find very curious indeed and finally throws various types of unproductive labour into the mix as well. By the end of the chapter the category of anti-value has become so copious and slippery that it is unlikely to be  widely adopted in the way that Harvey’s equally compendious but rather better focused category of accumulation by dispossession has been.

That said we should welcome Harvey’s efforts to stimulate debate on this and related questions. We need to hold onto all the core categories of Marx’s thought, but not treat their application to the contemporary world of global capital as a simple matter of finding correlates for those categories in the national income accounts constructed by economists and statisticians with very different models of the world. Harvey may get it wrong on occasions, as I’ve suggested above, but he is certainly right to challenge the reduction of the contradictions of capital as ‘value in motion’ to the sphere of production alone.


Harvey’s Critique of Moseley.

As a rather technical aside, I need to criticize Harvey’s own misrepresentation of Fred Moseley, whose book Money and Totality is the only work referenced in a footnote as an example of a ‘monetary theory of capital’. Moseley is certainly not someone who ‘ignores the money-value contradiction’ and has himself criticized adherents of value-form analysis such as Reuten for that error. Moseley’s primary target in his book is  the ‘physicalism’ of those neo-Ricardians who have turned to Sraffa’s equations for a solution to the so-called transformation question of the relationship between values and prices of production when profit-rates are equalized across sectors. Moseley is correct in my view to argue that both the constant and variable capital on which profit-rates are calculated are monetary quantities for the purpose of Marx’s transformation and once this is accepted the supposed ‘inconsistencies’ in Marx’s solution disappear. This, however, presupposes acceptance of a version of the MELT or the Monetary Expression of Labour-Time as an alternative to locating the value of the money commodity (Gold or Silver in Marx’s day) in the labour-time necessary for its production as Marx himself did. Shaikh, Fine and Saad-Filho are the most prominent critics of the so-called “New Interpretation” in this respect but on this they are stubbornly wrong-headed. Harvey does not directly address this question but it would be  consistent with his wider outlook to adopt the MELT formulation himself.

[i] The essay is in Elson (ed.) 1979.

[ii] Harvey 2013.

[iii] Lapavitsas 2017.

[iv] Green 2014, pp. 200-222.

[v] Harvey 2017, p. 105.

[vi] Shaikh pp. 619-637.

[vii] Harvey 2017, p.74.


Bhattacharya, Tithi 2017, Social Reproduction Theory: Remapping Class, Recentring Oppression, London: Pluto.

Elson Diane (ed.) 1979, Value: The Representation of Labour in Capitalism, London: CSE Books.

Green, Peter 2014, Review of Two Books edited by Riccardo Bellofiore et al., Historical Materialism, 22,1. pp. 200-222.

Harvey, David 2017, Marx, Capital and the Madness of Economic Reason, London: Profile Books

Harvey, David 2013, A Companion to Marx’s Capital Volume 2, London: Verso.

Lapavitsas, Costas 2017, Marxist Monetary Theory. Collected Papers, Leiden: Brill.

Marx, Karl 1968, Theories of Surplus Value, Volume 2, London: Lawrence and Wishart.

Mian, Atif and Amir Sufi 2014, House of Debt, Chicago: Chicago University Press.

Moseley, Fred 2015, Money and Totality, Leiden: Brill.

Shaikh, Anwar 2016, Capitalism, Oxford: Oxford University Press.

One thought on “A Debate on Value Theory Guest Post by Pete Green”

  1. I agree with much in this post. As I say in my book Marx and Engels’ Theories of Crisis, there is a tendency amongst Marxist economists seeking to avoid being labelled “underconsumptionist” to ignore the question of demand, of the difference between supply determined by value, and demand determined by use value.

    As Marx points out in TOSV, these are two components of a single unity, just as is production and consumption, but they are two poles standing at opposite ends of this unity, which is a contradictory unity, with these two poles standing in a dynamic tension against each other. The basis of Say’s Law, and of all of the arguments of Ricardo, Mill and others was that because these things comprised a unity, they were not separable, so that no overproduction could occur. Modern day Marxists who ignore the question of demand, and assume that, as Marx does in his examples in Capital I, the question of demand can simply be assumed away, make exactly the same mistake as did Ricardo, Mill and Say.

    Marx’s point is that just because production-consumption, supply-demand, exchange-value-use, each form poles standing at each end of a unity that does not at all mean that these opposing, and contradictory poles have to remain united, and cannot fly apart. On the contrary, as Marx demonstrates in Capital II, looking at the process of circulation as well as production of commodities, money and capital, it is precisely as these poles do fly apart that there unity is restored by the process of crisis! The crisis does not represent the flying apart of the unity, but its forcible restoration.

    As you say a lot of this problem seems to come, as I also say in my book, and in my books on Marx’s Capital, from the fact that many people read Capital I, then skip to Capital III, missing out the hard work of Capital II, where Marx sets out in great detail the potential causes of crisis, as the circuit of capital can break down at each point where capital value must be metamorphosed into its different forms of commodity-capital (following production) to money-capital, and then from money-capital once more into productive-capital. A further problem also seems to be a failure to study properly Theories of Surplus Value, where Marx again examines the potential for such crises in all commodity production and exchange, but the specific reasons why this potential only becomes realised when industrial capital based upon large scale machine production arises, which is precisely the point where this question not just of producing surplus value arises, but where the problem of realising that surplus value, by the need to continually enlarge the market for that output arises. I think we have both spoken about this, and agreed with each other, on MR’s blog, about the fact that in TOSV, Chapter 17, where Marx sets this out in describing his Theory of Crisis, nowhere does he even mention the Law of the Falling Rate of Profit!

    Its ironic given the extent that Marx attacks the ideas behind Say’s Law, in that Chapter, that some modern Marxists desperate to avoid the charge of underconsumptionism have effectively adopted it themselves so as to deny the possibility that crises could arise as a result of a contradiction between demand-supply, in order to be able to argue that, therefore, any crisis that arises must have its roots in the realm of production, in the production of surplus value, and the law of falling profits!

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