The commodity law of exchange and labour-power

The distinction between labour and labour-power is one of the defining characteristics of the Marxian approach. By labour-power Marx meant the capacity to work. When an individual is in possession of (sufficient) means of production, she can exercise her capacity to work, and the work then done is her labour, which eventuates in a produced use-value, to be directly consumed and/or traded for other use-values.

In these circumstances labour-power is commoditized, with, like any other commod­ity, a use-value, a value and a price. Its use-value is straightforward, for the purchaser of labour-power can set it to work in a production process, producing value of greater amount than the value of labour-power. This excess is called surplus-value, and it accrues to the purchaser of labour-power (just as the use-value of a loaf of bread accrues to its purchaser, who can consume it or throw it to the ducks, or whatever). The existence of surplus-value requires that the capitalist purchaser of labour-power can extract from the worker labour producing more value than he paid for it. Hence the value of labour­power requires careful specification.

Labour-power is a peculiar commodity, because it is a human attribute, and the (re)production of people takes place outside of capitalist relations of production, which lends some analytical complexity to the concept of the value of labour-power. By definition, the value of labour-power, like any other commodity, is the socially neces­sary labour time required to produce it. Marx hypothesized that this was equivalent to the value of the subsistence wage-bundle of commodities, although he modified the Malthusian perspective with a focus on social norms. Hence, continuing the presump­tion of equivalent exchange, and if H is the total number of hours worked, then, at the prevailing value of money, the value of labour-power (λ_tp) per hour of hire is the hourly wage rate (w), which in turn is spent on the (hourly) wage bundle of commodities (b/H) at prices p*_b:

However, it is not only equivalent exchange that underpins equation (2); it is also that people are perfectly mobile and that labour-power is fungible across all potential and actual employments. Only then could there be a uniform value of labour-power, or, equivalently, a uniform wage rate.

The importance of the distinction between labour and labour-power cannot be overemphasized. The seller of labour-power meets the purchaser in the marketplace as a juridical equal, and sellers and purchasers contract over only what is their own property. Exchanges only take place if they are mutually advantageous, and sellers and purchasers are free to walk away if this does not obtain. However, sellers of labour-power are not only free to walk away from unsatisfactory contract propos­als. They are also “free” of possession of the means of production (and of resources through which to possess them) via the historical processes of dispossession that created a property-less working class. Thus they must strike a bargain with some (capitalist) owner of means of production or withdraw from the social division of labour altogether in circumstances in which relying on their own use-value produc­tion was tantamount to destitution and starvation. This dual freedom is summarized in the notion of perfect labour mobility: while workers are free to sell their labour­power to whomever they choose, they are compelled to sell it to someone in order to participate in the social division of labour. And the purchaser of labour-power is free to enjoy its use-value by consuming it, which means putting it to work in a produc­tion process, creating more value than labour-power possesses. In capitalist society, freedom in exchange, with exchange of equivalents, is the precondition of exploitation in production.