What Karl Marx Got Wrong About Value

“As a matter of economics, scarcity is the source of all value, even if it is a combination of ‘manufactured’ scarcity via monopoly control and relative scarcity due to the costliness of extraction and the preferences of consumers.”

Editor’s note: The following constitutes the first part of Jonathan Church’s two-part critique of “Karl Marx on Value” by Matt McManus and Conrad Bongard Hamilton.

In a July 2020 essay for Areo, Matt McManus and Conrad Bongard Hamilton set out to explain what Karl Marx had to say about “value.” Responding to “conservative pundits” who regularly dismiss Marx’s oeuvre by dismissing “some variant” of the labor theory of value that supposedly underlies it, they begin by stressing that the labor theory of value derives originally from Adam Smith and David Ricardo. Marx develops a theory of value in which labor plays a crucial role, but “simply claiming that labor is the source of value,” as Kevin D. Williamson does in his measured analysis of Marx’s work, “misses out the dialectical and historical dimensions of Marx’s argument.”

For readers unfamiliar with the jargon of Marxian economics, “dialectical and historical dimensions” refer to the systemic clash of contradictory elements within a set of historical circumstances. For example, the main dialectical and historical dimension of capitalism is the class struggle between capital and labor. Marx’s analysis of value arises from his attempt to illuminate what he takes to be contradictions that are inherent to the historically situated system he calls “capitalism.” Marx seeks to demonstrate how these contradictions are destined to collapse under their own weight, ushering in a new era of communal economy in which class struggle dissolves and the means of production pass over from private ownership into collective ownership.

One contradiction that gets it all started emerges from the dichotomy between use value and exchange value.