READ AND DISCUSS:

Value, Price and Profit (a lecture given to the ‘First International’ by Marx, 1865) ⁴⁰

“A commodity has a value, because it is a crystallisation of social labour. The greatness of its value, or its relative value, depends upon the greater or less amount of that social substance contained in it; that is to say, on the relative mass of labour necessary for its production.

… In calculating the exchangeable value of a commodity, we must add to the quantity of labour previously worked up in the raw material of the commodity, and the labour bestowed on the implements, tools, machinery, and buildings, with which such labour is assisted. For example, the value of a certain amount of cotton yarn is the crystallisation of the quantity of labour added to the cotton during the spinning process, the quantity of labour previously realised in the cotton itself, the quantity of labour realised in the coal, oil, and other auxiliary substances used, the quantity of labour fixed in the steam-engine, the spindles, the factory building, and so forth. Instruments of production properly so-called, such as tools, machinery, buildings, serve again and again for longer or shorter period during repeated processes of production. If they were used up at once, like the raw material, their whole value would at once be transferred to the commodities they assist in producing. But as a spindle, for example, is but gradually used up, an average calculation is made, based upon the average time it lasts, and its average waste or wear and tear during a certain period, say a day.

… It might seem that, if the value of a commodity is determined by the quantity of labour bestowed upon its production, the lazier a man, or the clumsier a man, the more valuable his commodity, because the greater the time of labour required for finishing the commodity. This, however, would be a sad mistake. … In saying that the value of a commodity is determined by the quantity of labour worked up or crystallised in it, we mean the quantity of labour necessary for its production in a given state of society, under certain social average conditions of production. … When, in England, the power-loom came to compete with the hand-loom, only half the former time of labour was wanted to convert a given amount of yarn into a yard of cotton or cloth. The poor hand-loom weaver now worked seventeen or eighteen hours daily, instead of the nine or ten hours he had worked before. Still the product of twenty hours of his labour represented now only ten social hours of labour, or ten hours of labour socially necessary for the conversion of a certain amount of yarn into textile stuffs. His product of twenty hours had, therefore, no more value than his former product of ten hours.

If then the quantity of socially necessary labour realized in commodities regulates their exchangeable values, every increase in the quantity of labour wanted for the production of a commodity must augment its value, as every diminution must lower it. … If, for example, … it should become necessary to cultivate less fertile soils, the same amount of produce would be only attainable by a greater amount of labour spent, and the value of agricultural produce would consequently rise. On the other hand, if, with the modern means of production, a single spinner converts into yarn, during one working day, many thousand times the amount of cotton which he could have spun during the same time with the spinning wheel, it is evident that every single pound of cotton will absorb many thousand times less of spinning labour than it did before, and consequently, the value added by spinning to every single pound of cotton will be a thousand times less than before. The value of yarn will sink accordingly.”

The Revolution Betrayed (Trotsky, 1936) ⁴¹

“ ‘All economy,’ said Marx [in ‘Grundrisse’ ⁴²] – and that means all human struggle with nature at all stages of civilization – ‘comes down in the last analysis to an economy of time.’ Reduced to its primary basis, history is nothing but a struggle for an economy of working time. Socialism could not be justified by the abolition of exploitation alone; it must guarantee to society a higher economy of time than is guaranteed by capitalism. Without the realisation of this condition, the mere removal of exploitation would be but a dramatic episode without a future. The first historical experiment in the application of socialist methods has revealed the great possibilities contained in them. But the Soviet economy is still far from learning to make use of time, that most precious raw material of culture. The imported technique, the chief implement for the economy of time, still fails to produce on the Soviet soil those results which are normal in its capitalist fatherlands. In that sense, decisive for all civilization, socialism has not yet triumphed. It has shown that it can and should triumph. But it has not yet triumphed. All assertions to the contrary are the fruit of ignorance and charlatanism.”

Protectionism, Free Trade, or International Socialist Planning? (CWI Scotland, 2026) ⁴³

“Productivity, shaped by accumulated investment, technology, infrastructure and the concentration of exploitable labour, determines prices on the world market. Falling prices do not make weaker economies efficient. The underlying gap in productive capacity and accumulated capital remains.

Some economies develop lasting advantages because capital, technology and labour power concentrate there over long periods. They can undercut rivals while still securing healthy profits through superior productivity rather than balanced exchange. The result is persistent trade surpluses for some countries and chronic deficits for others. These imbalances generate long-term capital flows rather than automatic equilibrium.

Surplus economies accumulate financial reserves and push their corporations and banks outward into overseas investment and lending. Deficit economies become increasingly dependent on foreign capital inflows and external borrowing. The world market is therefore structured by unequal economic power between states and corporations rather than harmonious exchange.

This describes the last three decades clearly. China’s rise was based on massive investment in manufacturing and infrastructure, producing sustained trade surpluses and outward investment by Chinese firms and state banks. The United States experienced relative decline in manufacturing alongside the expansion of finance, generating chronic trade deficits and dependence on global capital inflows, a contradiction increasingly weaponised by politicians such as Trump in nationalist rhetoric but rooted in material shifts rather than policy choice alone.”

1. Reading the extract from Marx’s ‘Value, Price and Profit’,

(a) How does Marx explain that the idea of ‘labour time’ can be used to work out the value of something that has gone through various stages of manufacture, like some cotton yarn?

(b) How does Marx explain that, after the introduction of the more efficient power loom, a hand-loom weaver now has to work for 20 hours to produce the same value of cloth that they used to produce in 10 hours?

(c) On the other hand, why had modern machinery dramatically cut the cost of a ball of yarn?

2. Reading Trotsky on ‘The Revolution Betrayed’,

(a) In terms of productivity of labour, how would Marx have summarised human historic progress?

(b) The Soviet economy’s average level of productivity of labour at that time was considerably below that of USA and Europe. Why did Trotsky therefore insist that socialism “has not yet triumphed” in the USSR?

3. Reading ‘Protectionism, Free Trade, or International Socialist Planning?’,

Could you link the concept of ‘socially necessary labour time’ to why the US has built up a huge trade deficit with China (about $200bn in 2025!) and why US capitalism has therefore been driven towards raising tariffs on Chinese imports?