Socially Necessary Labour Time

Is a thing worth more the longer it took to make?

The labour theory of value holds that the value of a commodity is determined by the quantity of labour needed to make it. An objection follows at once: should a chair a lazy person spends three days on be worth three times as much as one a diligent person makes in a day? Marx raised the objection himself in the first chapter of Capital, volume I: "It might seem that if the value of a commodity is determined by the quantity of labour spent in its production, the lazier or clumsier a man, the more valuable his commodity, because he needs all the more time to make it."

Es könnte scheinen, daß, wenn der Wert einer Ware durch das während ihrer Produktion verausgabte Arbeitsquantum bestimmt ist, je fauler oder ungeschickter ein Mann, desto wertvoller seine Ware, weil er desto mehr Zeit zu ihrer Verfertigung braucht.

His answer was that the labour forming the substance of value is not individual labour but "equal human labour", an average share of the whole labour-power of society. That labour-power consists of countless individual labour-powers, but in value it counts as one and the same human labour-power. So only the time needed on average, the socially necessary time, counts in the production of each commodity.

What is the average taken over?

Marx's definition: "Socially necessary labour time is the labour time required to produce any use-value under the conditions of production normal for a given society and with the average degree of skill and intensity of labour prevalent in that society."

Gesellschaftlich notwendige Arbeitszeit ist Arbeitszeit, erheischt, um irgendeinen Gebrauchswert mit den vorhandenen gesellschaftlich-normalen Produktionsbedingungen und dem gesellschaftlichen Durchschnittsgrad von Geschick und Intensität der Arbeit darzustellen.

The definition contains three things: the tools and equipment normal in that society, average skill and average intensity of labour. An example (the figures are assumptions): most chair factories spend 2 hours on a chair, a small workshop with old tools spends 4 hours and a factory with the newest equipment 1 hour. The value of a chair is then 2 hours of labour. The old workshop spends 4 hours but its chair sells as 2 hours' worth, and the other 2 hours are labour society does not recognise. The modern factory spends 1 hour, sells at 2 hours' worth and earns more than the others.

Marx wrote that the individual commodity counts as "an average sample of its kind". Commodities containing equal quantities of labour, or which can be produced in the same labour time, have the same magnitude of value.

Why does value fall when machinery changes?

Socially necessary labour time is not a fixed figure; it changes with the conditions of production. Marx took the example of the power loom in England: "After the introduction of the steam loom in England, perhaps half as much labour as before sufficed to turn a given quantity of yarn into cloth. The English hand-loom weaver in fact still needed the same labour time for this conversion, but the product of his individual hour of labour now represented only half an hour of social labour and therefore fell to half its former value."

Der englische Handweber brauchte zu dieser Verwandlung in der Tat nach wie vor dieselbe Arbeitszeit, aber das Produkt seiner individuellen Arbeitsstunde stellte jetzt nur noch eine halbe gesellschaftliche Arbeitsstunde dar und fiel daher auf die Hälfte seines frühern Werts.

The weaver worked exactly as before, yet the value of his cloth halved: not because his labour had shrunk but because the social average had changed. This was the process by which the English hand-loom weavers of the nineteenth century were ruined by the power loom.

What happens if too much is produced?

In chapter 3 of volume I Marx shows another side of the concept. He follows the weaver to market. Even if every weaver has spent only the socially necessary time on his cloth, there is a problem if society does not buy all of it: "If the market's stomach cannot absorb the whole quantity of linen at the normal price of 2 shillings a yard, this proves that too great a portion of society's total labour time has been spent in the form of weaving. The effect is the same as if each individual weaver had spent more than the socially necessary labour time on his individual product."

Vermag der Marktmagen das Gesamtquantum Leinwand, zum Normalpreis von 2 sh. per Elle, nicht zu absorbieren, so beweist das, daß ein zu großer Teil der gesellschaftlichen Gesamtarbeitszeit in der Form der Leinweberei verausgabt wurde.

Marx added the German proverb "caught together, hanged together" (Mitgefangen, mitgehangen): all the linen on the market counts as one article of trade and each piece as an aliquot part of it. Many scholars therefore see two layers in "socially necessary". One is the average time technically needed to produce a commodity; the other is the share of society's total labour that falls to that branch, the quantity that money-backed demand allows for the commodity. The first determines the value of a single commodity; the second explains discrepancies between actual supply and demand, and so between market price and value.

What does the standard mean for an individual firm?

The concept explains the driving force of capitalist competition. A firm producing below the social average labour cost earns extra profit selling at the ruling market price, and one producing above it loses correspondingly. Firms therefore constantly try to cut labour costs, and over the long run the labour time needed to make a commodity keeps falling. The extra profit of the firm in front disappears once the new method spreads and the social average shifts, and competition begins again. Marx analysed this process as the working of the law of value and as the source of relative surplus value, gained by raising the productivity of labour.

How does it differ from classical labour time?

Adam Smith and David Ricardo also explained the value of commodities by quantities of labour. But scholars point out that Marx's exchange value is conceived not as individual labour hours but as a proportion (an "aliquot part") of society's labour time. Socially necessary labour time is labour time assessed in relation to social needs, not merely labour time performed, and value is therefore a purely social property of commodities. Marx himself, fearing readers would take his category for Ricardo's, urged them in the afterword to the second German edition and elsewhere to attend to the difference.

In a letter answering his critics Marx explained the idea: the masses of products corresponding to different needs require different and quantitatively determined masses of society's total labour, and what can change historically is only the form in which this law asserts itself. In a society where the interconnection of social labour shows itself in the private exchange of individual products, the form in which the proportional distribution of labour asserts itself is precisely the exchange value of those products.

What are the debates?

Marx did not define the concept in mathematically rigorous terms, which leaves room for interpretation. The libertarian philosopher Robert Nozick, in Anarchy, State, and Utopia, criticised the qualification "socially necessary" as an unjustified bolt-on to the theory. The historian of economic thought Philip Mirowski accused Marx of vacillating between a "field theory" of value (labour time currently socially necessary) and a "substance theory" (labour time embodied in the commodity).

Within Marxian economics too there is a debate over whether the value of a commodity is the quantity of embodied labour, including the indirect labour spent in the past on producing its means of production, or the average cost of reproducing it now. Those who read Marx as a field theorist hold that socially necessary labour is a current quantity, constantly changing, and that value can be fixed numerically only at a given moment when it is realised at specific prices. The question of how many hours of simple labour an hour of skilled labour counts for is also bound up with the concept; it is taken up under the dual character of labour.