Value work (economy)

The value work is an old concept used at the 18th century and 19th century by some economists, which fixed the value at the labor costs necessary to produce it well.

This approach did not take into account the cost of the raw materials, the cost of the intermediate goods, or the cost of the production equipment (the Capital), and was thus abandoned.

Certain traditional economists , followed in that by the Marxist , had production an analysis centered on the furnished effort by the workers on the value which according to them was to determine the “fair price”. Since the neo-classic this concept is hardly any more used in the standard economic analysis. Other approaches, based on the micro-economics and the observation of economic realities having been preferred.

The value work

According to Adam Smith

August 1st

According to David Ricardo

In Of the principles of the political economy and tax (chap. I, 1821), David Ricardo theorized the value work.

The exchange value of a product is not function of its utility, the proof is that very useful products as water do not have any exchange value. It is more the scarcity which determines the latter. If some goods are naturally limited, the majority have their function volume of the work which one agrees to devote to their production. Thus it is thus well the work which makes the value of the goods. Ricardo specifies that the difference in value between two goods which required the same work hour quantity finds its explanation in the aspect qualitatively different from this work, the point of view of their intensity or the know-how which they require. Variations of the wages, in other words monetary cost of work, do not mean evolution of but only the one fall exchange value of the profits. In addition, the quantity of work which the production requires includes/understands also that of the production of the goods which it requires, namely the fixed assets. The introduction of fixed assets into the production process modifies the rule of the value work. Because the production of the machine induces a carryforward in the time of the sale of the end product and thus of the profit, the value of a production requiring more fixed assets will have a higher exchange value in order to ensure for the same duration an equal profitability. The lifespan of the fixed assets while varying the methods of its damping has also an impact on the exchange value.

The relative value of a product with respect to an other is not thus proportional to the quantity of work which they required only if the lifespan of the fixed assets and its share in the quantity of work are identical for the two products.

The value of gold, fluctuates like that of any product. However the difficulty of its extraction, make a judicious monetary standard of it.

Distinction between value and richness

“A man is rich or poor according to the means it has to get the goods necessary, convenient and pleasant, of the life” Adam Smith

Ricardo worked on a distinction between value and richness.

“The value thus differs primarily from the richness because it does not depend on abundance, but on the difficulty or the facility of production. ”

In other words a better productivity varies with the fall the value of the goods but not the richness which they represent.

The increase in richness thus rests on the reduction in the value of the goods, permitted by the improvement of the techniques, the division of the labor, the discovery of new markets. In addition the contribution of nature comes to modify the richness and not the value.

Karl Marx

See also the articles Theory of value (Marxism) and Appreciation (Marxism)
Karl Marx takes again the Ricardienne theory of the value and from of deduced the clean characters from capitalism:

the workers are paid according to the cost of their work, i.e. their wages correspond at least vital which enable them to survive and to reconstitute their labor force. Thus in the capitalist model, the value of work is masked by a fiction which in fact goods. The result of this unfavourable commercial exchange to the worker is the “surtravail”. Indeed the quantity of necessary work to the reproduction of the labor force (i.e. the labor necessary to the creation of the goods of subsistence) is largely lower than the labor imposed by the capitalists to the workers. The difference between work actually achieved and actually remunerated work constitutes the “appreciation” (origin of the profit), resulting from the exploitation of the worker by the holder of the capital, of the proletarian by the middle-class man.

Si only work is source of the value, then the capitalist system is condemned. Indeed, more the economic history advances, more increases the volume of the capital to the detriment of the volume of work. The evolution of this capital work ratio/leads to the trend fall of the rate of profit, considering the capitalist reduces the use of the worker whom it exploits.

The neo-classic thinkers will propose other models while calling into question the theory of value work. According to them, the value of the things depends on the marginal utility which they get. The concept of value work is not dominating any more among the economic theories since the end of XIXe.

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