Law of value
가치법칙
A central concept of Marx's critique of political economy. In a commodity-producing society the ratios in which commodities exchange (usually expressed as money prices) are regulated by the average labour time socially necessary to produce them. It coordinates producers who work privately yet depend on one another through the division of labour and exchange, acting like a law of nature without their being aware of it. In the twentieth century whether the law of value also operated in planned economies such as the Soviet Union became a major debate.
In depth
Marx's concept
Marx first set out the concept in The Poverty of Philosophy (1847), his polemic against Proudhon, with reference to Ricardo's economics, and refined it for more than two decades. Market prices usually deviate from values, but competition makes them gravitate around them. The law of value is often equated with the "labour theory of value", but strictly the law of value is a regulative principle governing commodity exchange, while the labour theory of value tries to explain how that determination actually works. Engels, in his supplement to the third volume of Capital, linked it to the history of simple commodity production.
Does it operate in a planned economy?
In The New Economics (1926) Yevgeni Preobrazhensky argued that within the Soviet economy the law of value and the planning principle, which took the form of the "law of primitive socialist accumulation", operated in a single economic organism and were counterposed to each other. This equation of the law of value with the market and of planning with the state-organised economy became the common assumption of left-wing Marxists. Stalin, in Economic Problems of Socialism in the USSR (1952), accepted that the law of value operated in the Soviet economy; Mao Zedong and others discussed his view critically.
Tony Cliff, who called the USSR state capitalist, argued in State Capitalism in Russia (1948) that although there seemed little internal evidence that the law of value regulated the Soviet economy, it was "the arbiter of the Russian economic structure as soon as it is seen in the concrete historical situation of today—the anarchic world market". Critics replied that the Soviet economy was largely autarkic and that foreign trade was state-directed and comparatively small. Ernest Mandel, who regarded the USSR as a degenerated workers' state, held that the law of value influenced non-capitalist societies to some extent as long as exchange persisted, but no longer ruled resource allocation because the state directed most resources. In 1960s Cuba Che Guevara, Charles Bettelheim and others debated the role of the law of value in the transition to socialism.