The Marxian Theory of Value: A Response to David Pena (Part Two)

Pena’s metaphysical concept of “value”

Read Part 1 here

We now turn to consider, in more depth, what is the basic flaw in Pena’s whole argument which I briefly alluded to earlier.

According to him:

A viable ecological socialism must build a classless society that meets fundamental human needs without destroying the environment. To accomplish this, we must discover theoretical and practical approaches to value that bring human society into harmony with the requirements of a thriving ecology. Human beings can reassess value in this way because value is indeed a human construct.

As noted, this is fundamentally at odds with Pena’s own idiosyncratic notion of value as outlined in his original article:

Value in its original and grounding manifestation, the dual form of matter and energy, pre-exists human and all other life forms. The worker is an arranger and discoverer of values, but not a creator. Nature is the source of all values, not only use values, as Marx erroneously believed.

Pena then makes a rather odd comment.   In response to my criticism of his statement, he remarks:

This is supposed to reveal my obliviousness to history. It makes no difference to Cox that the passage cites the historical fact that the existence of matter and energy predate the evolution of life. He is not one to sweat such petty details, for he has more important matters to attend to, like knocking down strawmen.

Talking of knocking down strawmen, of course, I understand perfectly well the “historical fact that the existence of matter and energy predate the evolution of life.”  But so what?  What on earth has this got to do with the argument about value? If value is a human construct, as he says, then it cannot logically be said to predate human beings, as he has also said. That is the point I was making.

Pena loudly protests that he has been misunderstood.  For example, he complains:

Nature creates value, not labor, and that quanta of energy are fundamental determinants of value. I use these terms in senses much different than Marx’s, but Cox devotes not a whit to understanding them. He insinuates that if my theory were true, the worker would offer the capitalist “a particular bundle of energy (measured in joules) in exchange for a wage.

This ridiculous distortion is beneath mentioning, except to illustrate the level at which Cox plays his game.  Again, I think Cox’s problem is exceedingly simple: I am critical of Marx and my views are contrary to his, so they must be attacked with whatever tools are available.

But if Pena thinks I have engaged in a “ridiculous distortion” then, frankly, he has only himself to blame for his own inept and clumsy wording and his complete lack of clarity about how precisely quanta of energy are supposed to be the “fundamental determinants of value”. What does he think the worker sells to the capitalist if not her labour power – her working skills?

If he agrees that it is indeed her labour power that the worker sells to the capitalist, then his theory runs into a problem. For he just claimed that “nature creates value, not labor”.  But why then would the capitalist bother to purchase the labour power of our worker if this was the case?  Does not the capitalist seek an economic return on his investment and does this not entail an increase in value over and above his initial capital outlay?  In which case, who or what is responsible for this increase? “Nature” or his employees? A straight answer to a straight question would be appreciated.

This is the problem with Pena’s argument.   It is so vague and woolly that it is difficult, if not impossible, to see where, or even if, he is attempting to join up the dots.  I get it that the “existence of matter and energy” is foundational to life and our evolution as a species and so, in that metaphysical sense, of supreme “value”.  But in the economic literature, whether mainstream or Marxist, when commentators use the term “value” they use it in a much more precise and narrow sense; it is inextricably bound up with a notion of commodity exchange.

So when Pena says “I use these terms in senses much different than Marx’s, but Cox devotes not a whit to understanding them”, he is quite mistaken.  I understood fully what he is trying to say but I am saying that what he is attempting to do makes no sense in the context of this debate which is about Marx’s theory of value. What he is offering is a metaphysical treatise, not a serious contribution to economic thought, for all his efforts to pass it off as one.

In Marx’s theory, “exchange value” is seen to be the quantitative aspect of value (in the economic sense we are talking about) while “use value” is its qualitative aspect.  A commodity must have use value to a potential customer in order to be a commodity at all but use value or utility (which differs from one person to the next and at different times to the same person) cannot, in itself, explain the ratios in which commodities exchange and therefore has to be analytically distinguished and separated from exchange value as a concept.

By contrast, subjectivist theories of value, such as that espoused by the Austrian School of thought, tend to conflate exchange value and use value: value is in the eye of the beholder. Prices are said to be determined by the “subjective value judgements” of individuals.  Apart from the fact that this overlooks the point that without purchasing power — how much money you’ve got in your pocket or your bank account — one’s subjective value judgement counts for nothing in a market-based economy (as a hungry beggar would attest), this claim is epistemologically nonsensical.  Prices are the emergent outcome of millions of individuals interacting, each of whom are external (objective) to everyone else.

There are other problems with the subjectivist theory.  Prices are said to be determined by subjective value judgements but it is equally clear that the latter can, in turn, be determined by prices themselves.  Thus “bargain offers” are meant to induce us to buy something we may have previously ruled out buying perhaps because we considered it to be too expensive.  This boils down to circular reasoning: subjective values are said to determine prices but prices are said to determine subjective values.

A final, albeit less well known, problem with subjective theories of value centres on the difficulty of “reconciling the theory of prices resulting from supply and demand with a theory of prices resulting from the quantity of money in circulation”. According to Mandel:

It can be said that the Marginalist school was never able to solve the problem of the “marginal value of money”, and that for this reason it remained dualistic, combining a subjective theory of value with an objective theory of money (e.g. the quantity theory). It is clear that an increase in the “stock of currency” does not necessarily reduce the “marginal value” of this stock, as would happen in the case of an increase in a stock of corn, since money can be used to buy, one after another, commodities which correspond to different needs of equal intensity. The dualism of the theory is seen if one imagines an increase in the stock of currency suddenly causing a rise in wages, without any change in the marginal value of the commodities concerned.

So much for the subjectivist theory of value.  But what of Pena’s theory? He seems to go to the opposite extreme. He is an extreme “objectivist” in contradistinction to the extreme subjectivism of the Austrian School.  Value, for him, exists completely independently of the beholder “and the worker is just “an arranger and discoverer of values, but not a creator”.  But this, too, is nonsense.

The use value of a commodity may not determine its exchange value but very clearly it is indispensable to it being a commodity in the first place.  How does Pena imagine a bicycle would be sold if the consumer did not desire it? The “perceived utility” of a bicycle is inseparable from the individual doing the perceiving and not something external to this individual, waiting to be “discovered”.

On use value, note what Pena has said: Nature is the source of all values, not only use values, as Marx erroneously believed.  Presumably that includes exchange values too – a ridiculous claim which I will deal with shortly. But as far as use values are concerned it should be noted that a use-value is only “useful” because it serves some useful purpose – by definition. The point is that the purpose it serves cannot be separated from the individual who makes this judgement.  Any kind of value or valuation implies the existence of a “valuer”.

In response to my quote from the 19th century economist, McCulloch, Pena comments “That nature is not a laborer who demands cash payment for its products is too obvious to mention”.  But if that is too obvious to mention why is it not equally obvious that nature cannot possibly be the source of all values, not only use values and that use values are only use values by virtue of the human subject perceiving them to be this? Nature is the source of much that we “value” but that is not at all the same thing as saying nature is the source of our values.

Thus, Pena hovers between two conflicting conceptions of “value”, unable to quite bring himself to completely reject the notion that value is a human construct yet ideologically committed by the very logic of his own argument to doing precisely that. Hence this “dog’s breakfast” of an argument that he serves up for our delight and delectation:

Although “value” is not an independently existing substance, it is not purely fictitious. It is an epiphenomenon of the utilization of natural substances and processes for human purposes.


The reality of human labor is far more mundane than Marx’s metaphysical fantasies suggest. What work accomplishes, be it human or otherwise, is consumption and manipulation of quantities of matter and energy. These quantities can be identified with value, while abandoning the view that labor is an act of creation in the sense of generating a metaphysical value substance and bestowing it on objects.”

So what exactly is “value” then if it is not, on the one hand, “an independently existing substance” yet, on the other, something that can be identified with “quantities of matter and energy” that have happily existed quite independently of human beings for countless aeons?

He goes on:

McCulloch’s description of the human relationship with nature is also misleading because it exaggerates the ease with which humans appropriate natural products. Does Cox really endorse McCulloch’s minimizing of the natural obstacles that humans face, the untold quantities of “blood, sweat, and tears” that it takes to wrest a living from nature.

Oddly enough, there is not even a flicker of awareness on Pena’s part that what he is saying here is not in the least helpful to his case; rather, it helps to undermine it.  For contrary to his claim that “nature creates value, not labor” Pena is providing us here with a powerful reason why the contribution of labour should indeed be highly “valued”.  For how could we not value the toil required to “wrest a living from nature” when our very lives have depended on it!

If, according to Pena “A scientific theory of exchange value must account for quantities of energy consumed in the production process” what about the labour performed in the production process? Does labour not contribute to value as a “cost of production”? Goods don’t just miraculously assemble themselves without human intervention.  If “rationally expended energy is the “common element” of all commodities” that implies the existence of a human agent – a worker – who manipulates these quantities of energy for some rational end.  “Quantities of energy” in themselves don’t have a purpose and the consumption of these in the production process for a rational end is precisely what “labour” entails.   So why then dismiss labour as the source of value as Pena does?

Of course, labour involves the “expenditure of physical energy”. So does love-making or tending to one’s allotment. But these latter do not necessarily entail an exchange value expressed in money prices.  A prostitute charges for sex by the hour but we don’t (or, at least, don’t normally) charge our partners for having sex with them.  So why does having sex entail a price in one context but not in another? In both contexts the expenditure of physical energy is plain to see (and even, in some cases, to hear)

Similarly, a commercial farmer sells her food to a wholesale distributor.  The crate of tomatoes she produces has an exchange value precisely because it is a commodity. But the tomatoes I grow on my allotment for my own consumption has no exchange value whatsoever for that very reason – it is not a commodity – yet I expended energy on producing them as did the commercial farmer on producing hers.

Needless to say, this makes nonsense of Pena’s claim “that a “scientific theory of exchange value must account for quantities of energy consumed in the production process”.  Such a theory does not begin to explain why one example of a production process entailing the “consumption of energy” produces something that has exchange value while the other example does not.   A proper scientific theory would have to look elsewhere for a plausible explanation of exchange value – commencing with the emergence of market exchange and the institution of private property upon which this particular form of exchange is predicated.  Unfortunately for Pena, his own somewhat eccentric musings on the question of value can be firmly ruled out as a candidate for any such scientific theory.

Now, none of this is to downplay the importance of “Nature” at all.  Of course, we need to develop a system of production that ensures the sustainable use of resources and minimises the despoliation we currently inflict on our physical environment.  Does Pena seriously imagine that those of us who do not share his absurd prejudice that the “worker is just “an arranger and discoverer of values, but not a creator” are somehow environmentally insensitive, crass philistines incapable of appreciating our deep connection with Nature?

The clue surely lies in the fact that it is “we” human beings who do the appreciating in this instance – a point that should not have entirely escaped Pena’s notice, given that he has already conceded that “value is a human construct”. But because of the cack-handed manner in which he has gone about trying to present his main argument, it is precisely this (rather significant) concession of his that seems to have been lost in translation.

Remarkably, he accuses me of using a Humpty Dumpty approach to language but who else but a Humpty Dumpty would employ a term like value in the way that he does in saying “nature creates value, not labor, and that quanta of energy are fundamental determinants of value”? Now, if Nature is, indeed, the source of all values, (meaning “not only use values” but, as I said earlier, exchange values as well as Pena seems to be saying) then presumably that means he must be quite comfortable with the notion that natural objects, like babbling brooks and rocky outcrops, were to be found intently engaged in a process of commodity exchange with each other long before there was human life on earth. It is not quite clear whether he considers that these mindless and mute objects of the natural world were similarly to be found vociferously haggling with each over the price of whatever it is they were meant to be exchanging but then neither Pena or anyone else, was around back then to enlighten us on this most enigmatic of questions.  In any event, if “exchange value” existed back then (“Nature” being its presumed “source”) then, clearly, so too must have commodity production and all that that entails because, as must surely be apparent to everyone, the term “exchange value” is meaningless outside of the context of commodity production.

But enough of such folly!  Obviously, Pena is not saying commodity production (with which the economic concept of value is inextricably bound up) is something that originated outside of human society — or, at least, I hope not for the sake of his own sanity! — even if his inept and clumsy way of expressing himself might make it seem like this is what he is saying. However, I am frankly more concerned with the practical implications of his whole way of thinking around the question of value.  The danger is that such thinking might present a certain superficial appeal to someone who may be passionately concerned about the environment but who has not thought too deeply about the economic consequences of what Pena is proposing.

For contrary to his assertion that the “labor theory of value promotes ecocide and is therefore fatal to ecological socialism”, I would contend that if anything is likely to promote “ecocide”, it would be precisely the application of Pena’s own idiosyncratic theory of value based on energy units.  Let me explain.

For Pena, it does not seem to be particularly relevant that commodities have in common the fact that they are products of human labour. Their commensurability hinges rather on the fact that they all require energy to produce. As he puts it: ‘Rationally expended energy is the “common element” of all commodities. The amount of energy expended as represented by the finished commodity is its objective exchange value.’

There are huge problems with this statement which Pena simply glosses over or sweeps under the carpet.  To begin with, how precisely does one go about calculating what this amount of energy is, given that “finished” goods require intermediate goods in order to be produced and that these latter necessitate yet other intermediate goods further down the production chain ad infinitum – all of which involve the “expenditure of energy”?   Pena does not really explain how he proposes to go about measuring all this “expended energy”.  Instead, he grasps at straws in a desperate attempt to sound remotely plausible.  He confidently declares that it “should be noted that measurement of human energy expenditure is a developed science with a history reaching back to 1919 with the formulation of the Harris-Benedict equation for estimating an individual’s basal metabolic rate”.

But how, pray, is an “individual’s basal metabolic rate” remotely relevant to the question of how you go about calculating the “amount of energy expended as represented by the finished commodity is its objective exchange value’? For instance, doesn’t the energy given off by burning coal in a coal-fired power station which generates electricity that drives the machine that churns out the “finished commodity”, count? It should do by Pena’s reckoning.  After all, it also involves energy.  Why focus only on an “individual’s basal metabolic rate”?

Rather than confront this question head-on he excuses himself from the onerous task of undertaking such a calculation on the feeble pretext that “in-depth treatment of the practical problems entailed by this theory are beyond the scope of this paper”.   I would have thought, to the contrary, that this task was absolutely central to his paper because in the absence of some plausible methodology to calculate objective exchange values in terms of the amount of energy expended to produce a finished commodity, all that he is offering us is just so much “hot air”.  But then again I guess that hot air is a likewise function of expending energy (albeit not for a particularly rational purpose as in this case).

How are two parties to a market transaction going to go about effecting such a transaction if they don’t know, and have no way of knowing, if it involves an exchange of equivalents (in energy terms)? That obviously necessitates some form of measurement.  Recall that Pena was criticising Marx for being “unscientific” for basing his labour theory of value on a concept that could not possibly be quantified or measured — though, at least in Marx’s case there are reasonable proxy indicators of abstract labour that could be relied upon.   So it should be easy-peasy for Pena to demonstrate his own “scientific credentials” by elaborating on how he proposes to measure “amount of energy expended as represented by the finished commodity is its objective exchange value’? But does he do this? No, he does not.

He doesn’t even begin to explain why the amount of energy expended in producing a finished commodity must somehow correspond with its “objective exchange value”.  He just assumes or asserts that this must be the case.  Perhaps it’s merely that he thinks this ought to be the case in which case he is simply making a normative statement.

Whilst we are discussing “objective exchange value”, there is another point to consider.  This centres on the relationship between exchange value and price. For Marx the exchange value of a commodity – the ratio in which it exchanges for other commodities – is not the same thing as its price.  As pointed out earlier, it is only on average or in the long run that value and price coincide.  Amongst other things, fluctuations in supply and demand, as we saw, cause prices to diverge from value.  It is this interplay between supply and demand that allows markets to eventually clear

Would this interplay between supply and demand continue to operate under Pena’s idealised schema where the “objective exchange value” of goods is determined by the amount of energy expended in producing them?  This presents his theory with a serious problem.  It firmly places Pena in a “catch 22” situation.

If he does not permit the interplay of supply and demand to influence price how can he be sure that markets will clear? What if consumers chose not to purchase a particular commodity, the price of which in this hypothetical situation would (supposedly) directly correspond, or be tied, to its object exchange value in Pena’s terms and cannot diverge from the latter precisely insofar as the interplay of supply and demand would not be permitted? Obviously if this commodity could not be sold because the consumers did not desire it for whatever reason, all that expended energy used to manufacture it would have to be written off – wasted.  How would Pena ensure this would not happen again and again?

On the other hand, if Pena did permit the interplay of supply and demand this presents his theory with a problem of altogether different kind.   For by allowing the consumer to influence price by exercising consumer choice, Pena is conceding that it is the consumer, not Mother Nature that determines the use value of commodity in question. In other words, he would have flatly contradicted himself.

Simply by virtue of the fact that he wants objective exchange values to correspond to the actual quantity of energy expended in producing them – when he has no means of demonstrating such a correspondence could exist – underscores the point that his whole perspective is that of a moralist rather than a scientist.   He is talking about how he would want society to run its affairs rather than how it actually runs its affairs.  The sentiment may be noble and well-meaning but it does little to enhance Pena’s pretensions to being “scientific”.

He contends, for instance, that there is no justification for arguing, as Marx did, that complex or skilled labour is more productive, and produces more value than, simple labour: “The evidence is overwhelmingly to the contrary: simple manual labor requires higher energy consumption than complex intellectual labor”. Since the expenditure of energy (measured in joules or whatever) is what for Pena should constitutes the metric of value it follows that “simple manual labor”, because it expends more energy than “complex intellectual labor” , should therefore be paid more – that is, receive a higher level of compensation.

So why then does that not happen? Why is it that complex labour tends to be rewarded more generously than simple labour in the real world of capitalism we actually live in? Pena has no answer to this taxing question and for good reason. He is trying to impose his own bizarre (and frankly impractical) concept of value on this real world which the latter stubbornly refuses to accommodate.  So who, one is tempted to ask, is being the metaphysician and non-scientist here – Pena or Marx?

One can well imagine some nebulous half articulated thought forming – or should that be “congealing”? — in Pena’s mind along the lines that if somehow we were able to ensure that the amount of energy expended in producing a finished commodity came to correspond with its “objective exchange value”, this would perhaps facilitate a more ecologically sound way of organising production. In short, increased energy consumption would entail an increased economic cost for the producers.  In this way, the “externalities” (or externalised costs) of energy consumption would be internalised by these producers.

But would this work? Unfortunately for Pena, it won’t.  To understand why not it would be useful to return to Marx’s distinction between abstract labour and concrete labour.   Abstract labour, as mentioned, is the socially necessary labour time or the average amount of time it takes to produce a given commodity from start to finish under prevailing industry-wide conditions.   Concrete or past labour is the actual amount of time it took to produce a given commodity.  The value of a commodity in Marxian terms has to do with the amount of abstract, not concrete, labour required to produce that commodity and, as mentioned, this is something that constantly changes even after the physical production of the commodity itself.

If concrete labour were the metric of value, what this would effectively mean is that the more concrete labour that went into producing a commodity, the more “valuable” would that commodity become.  This in turn suggests that a more labour intensive method of producing this commodity would always be favoured over a less labour intensive method because it would generate more “value”.   There would be no incentive to introduce technology that increased the productivity of workers by reducing the average amount of living labour “congealed” in this commodity and increasing the mass of commodities produced (which mechanisation enables).

This would affect its exchange value.  In theory, if concrete, and not abstract, labour was the metric of “value” this would mean that the exchange value of this commodity would rise by comparison with commodities produced by less labour intensive methods – meaning you could acquire more of the latter in exchange for your own commodity which you produced by labour intensive methods simply as a consequence of the law of equivalent exchange asserting itself. In this way, labour intensive methods of production would, over time, squeeze out capital intensive methods of production.

Of course, this is not the way capitalism works. In capitalism, businesses compete by undercutting each other price-wise and the most significant (though not only) way in which they do this is by increasing the productivity of their employees – that is, by introducing more capital intensive methods of production. Marx understood this very well and argued that there was a tendency for what he called “relative surplus value” (achieved by raising the productivity of the workforce) to replace “absolute surplus value” (achieved by lengthening the working day) as the primary source of “surplus value” in capitalism – that is, the difference in the value of what workers produce and what they receive in the form of wages.

If two businesses are competing to produce a given product — one using a labour intensive form of production, the other a capital intensive form — the value of the product is the average or socially necessary labour time it takes to produce that product across both these businesses. But the latter business, by increasing the productivity of its workforce, reduces its unit costs and is thus able to undercut its labour intensive rival in the market.

Now let us apply this argument to Pena’s metric of value as being based on the quantity of ‘rationally expended energy” required to produce a commodity.  What Pena is arguing for is actually analogous to arguing that concrete labour should be the metric of value in Marx’s theory — not abstract labour.  In fact, Pena has made it absolutely clear that he regards all talk of social averages as a mere abstraction, even metaphysical, because it is not amenable to empirical measurement and “scientific verification”.

So, for him, the value of a commodity is the actual amount of energy rationally expended on producing that commodity.  It follows, then, that the more energy expended on a commodity, the more “valuable” it is vis-à-vis other commodities that use up less energy.  That is to say, by lavishing more energy on a commodity you can thereby acquire more commodities in exchange for this commodity. Meaning you can augment its exchange value vis-a-vis these other commodities. This follows from the basic premise that market transactions are necessarily exchanges of equivalent values.

Just as in Marx’s theory, if concrete labour were the metric of value this would militate against technological innovation so, in Pena’s theory, a metric of value based on the expenditure of concrete energy would militate against energy conservation.  It would drive economic actors in precisely the opposite direction to that which Pena presumably intends — namely, towards the most profligate use of energy as a means of augmenting the exchange value of their products.

All this follows if you assume, as Pena does, that a “scientific theory of exchange value must account for quantities of energy consumed in the production process” by which he clearly means quantifiable (sic) and concrete quantities of “rationally expended energy”. Paradoxically, the outcome will be something that will be far from “rational”.  It will prepare the stage for something that will very likely resemble large scale ecocide.

Part 3 to follow

Robin Cox is a member of the Socialist Party of Great Britain (Britain’s oldest socialist party, formed in 1904).  He lives in Southern Spain and does landscape gardening and ground maintenance for a living. Robin can be reached at Read other articles by Robin.