MARX'S LABOUR THEORY OF VALUE AND THE HUMBUG OF LIBERAL ACCOUNTANCY (Davide Ferri)
MARX'S LABOUR THEORY OF VALUE AND THE HUMBUG OF LIBERAL THOUGHT
By Davide Ferri
Shri Ram College of Commerce,
Delhi University, India
An article for the Journal "Radical Notes"
[the link is on the right column]
INTRODUCTION (ARTICLE PART I)
Karl Marx took for granted most of the Capitalist political economy of his time, precisely to prove that the very same Bourgeois economics — within the framework of its own intellectual poverty — hinted at the existence of human exploitation in commodity production, by means of the owner's appropriation of labour.
Classical economist David Ricardo — a staunch supporter of free trade — already developed a theory of value based on human labour. His theory saw the value of commodity as objectified by the labour necessary for the production of the same and that which is immediately necessary to its sale on the market (productive transportation e.g). Ricardo says on the matter:
[..] in estimating the exchangeable value of stockings, for example, we shall find that their value, comparatively with other things, depends on the total quantity of labour necessary to manufacture them, and bring them to market. 
This necessary labour is, for Ricardo, the source of all value.
Quite apart from his naiveté in supporting e.g. Say’s assumption whereby Supply of commodities is equal to the Demand of commodities , Ricardo committed the big mistake of regarding the value of commodity as objectified exclusively by the necessary labour for its production, whilst neglecting the crucial demand-related factor of the buyers in his Labour theory of value (LTV), namely the desire of consumers.
If the quantity of labour realized in commodities, regulate their exchangeable value, every increase of the quantity of labour must augment the value of that commodity on which it is exercised, as every diminution must lower it 
Building a house e.g. may even involve the labour of tens of workers. On the other hand, with no demand, the value of the asset would be zero; no matter how much labour is reified in the house.
As Karl Marx points out, demand is a crucial element for a magnitude of value:
The product supplied is not useful in itself. It is the consumer who determines its utility. And even when its quality of being useful is admitted, it does not exclusively represent utility.
Shifting away from the inconsistencies of David Ricardo's Labour Theory of Value (LTV), which inter alia legitimised the contradictions of Capital and Wage-labour, Karl Marx created his own LTV. He argued that the labour embodied in a commodity alone is not sufficient to generate value. For Marx, in fact, Labour must not be merely necessary but, in particular, must become socially necessary so to as give value to a determined commodity.
This commodity, to be sold, must be desired, therefore it must have a use-value: that which satisfies human needs.
Within the framework of Marx’s analysis on Capital, the origin of this use-value lies in the production process, which presupposes exchange; where all the desire-related evaluations of buyers take place.
The measure in which people can satisfy their needs is not the produce of ‘ideas’ or evaluations, but the produce of something more “concrete”; which goes beyond the phantoms of the brain.
Exchange is the last process before the sales of commodities, through which the Capitalist makes a profit.
Hence use-values cannot “originate” in exchange.
Karl Marx made it clear that only human labour can give value to the commodity: living labour (that of the workers) and dead labour (e.g. past labour embodied in the means of production). 
Human labour involved in production is, for Marx, the ‘origin’ of value. The buyers, in desiring the commodity, purely express the social necessity of the labour necessary for the production of this commodity. Need alone, however, cannot give value to the commodity.
While the buyers’ need is essential for the realisation of commodities on the market, their profitable sale, human labour is the essential prerequisite for the existence of the commodities on a definite market. The commodities will be exchanged at a certain ‘magnitude’ reflecting a determined ‘quantitative worth’, only after use-values, objectified by commodities, have been created by human labour.
I shall return to the matter later.
As we may notice, Marx considered both production and exchange in his LTV, in the most absolute dialectical and scientific 'spirit'; logically starting his analyses from the material origin of value.
Marx emphasised the determinant demand-related factor to his LTV as well, that is to say, the social need, which is neglected in Ricardo's theory; therefore giving a sense of 'reality' to the concept of value.
Moreover, Marx applied many more corrections to all Ricardian economics— on theory of rent, profit, crises etc.— which will not be discussed here, for a matter of relevance.
In essence, for Marx “a socially necessary amount of labour” was necessarily the only generator of value in commodity production. I shall dwell upon this topic later, in a more detailed way.
THE CHANGE IN BOURGEOIS ECONOMICS
(ARTICLE PART II)
As soon as Marx popularised his concept of exploitation arising from unpaid average labour — thanks to the above-mentioned Labour theory of value— Bourgeois economics started faltering under the threat of the very same inconsistency of its apologetic theories. Classical economics, due its internal theoretical contradictions, 'had to change its mind' so as to survive in the realm of apologetic phantoms. Now that the mystery behind pauperisation, alienation and surplus appropriation was unravelled by Marx’s Labour Theory of Value, mainstream political economy had to hide the exploitation motive lying behind the capitalist process of reproduction; namely, lying behind a pure appropriation of labour on the part of the Capitalist (a process on which I shall return later). The Liberal labour-based approach à la Ricardo and Smith had to fall into oblivion if the consistency of mainstream political economy were to be maintained. This was undoubtedly politically motivated, insofar as the exploitation and alienation within the framework of production became more than clear with Marx's discovery of surplus value, an appropriation of exchange value.
The exchange value represents the ‘quantitative worth’ of one commodity and is determined by the homogeneous human labour embodied in it. Marx showed that a commodity is something twofold: one entity having not only exchange-value but also use-value.
The use value — the value that satisfies human wants — is a necessary precondition for the existence of an exchange value, which has been already explained, in broad terms.
The latter simply reflects a market abstract evaluation allowed by production; wherein use-values are created. In fact, a commodity must, first of all, be needed and demanded to be exchanged at a certain monetary price or to be exchanged with other commodities. Strictly speaking, the exchange value does not always correspond to the commodity’s price, though the price may coincide with the exchange value. In fact, exchange value is not necessarily expressed in monetary terms, in the form of price. Even in Capitalism commodities may be traded in exchange for other commodities at a definite exchange value — corresponding to the quantity of human labour embodied in them, like in the case of capitalist countertrade (exchanging goods and services for other goods and services).
The commodities are all material expressions of some definite human (abstract) labour, which is equated in the market under the form of ‘exchange value’. Hence, the value of one commodity is the value of labour embodied in its production.
The natural matter acquired for free and used up for the production of one commodity does not give value to the commodity, insofar as no human labour is embodied in nature and no human labour concerned needs to be remunerated.
However, this does not mean that certain objects in nature don’t have use-value, that is, that value which satisfies human needs.
In fact, the source of all use-values in society is not human labour, as Lassalle (an old influential communist) wrongly thought, but also "nature".
Human labour in the realm of exchange is regarded ashomogenous insofar as, in commodity production, commodities are qualitatively equated. 
Why is labour considered as “abstract”?
Marx wrote “because abstraction is made from the deﬁnite usefulconcrete character of the labour contained in it[the commodity]”
Within the framework of the abstractions made through the exchange, no personal quality of any workers is taken into account, as far as the value of commodity is concerned.
In fact, Capitalism reduced personal qualitative and quantitative labour to simple (quantitative) labour, that is, repetitive and alienating daily performances. Simple labour has become central due to the subordination of the labourer to machinery and the extreme division of labour. Using few words, in Capitalism “time is everything and man is nothing”, Marx would say.
Personal quality cannot be taken into consideration insofar as commodity production made human labour monotonous and, in general, deprived with any subjective value.
The meritocratic “personal qualitative labour” — in broad terms, how much we boost up production with our creative and ingenious subjective qualities — is by no means considered in Capitalism, which merely has the appearance of a meritocratic system. Only the quantity of labour counts in commodity production, where alienation, repetition and boredom rules.
The sudden “change” in Bourgeois Economics started taking shape when Marx discovered the concept of surplus value; whereby that the owner appropriates quality-less (homogeneous) abstract labour with the realisation of one commodity's exchange value in the market.
The Capitalist — in employing the workers through a Capitalist market, where demand and supply of workers meet at an oscillating equilibrium point — buys the workers’ ability to work, namely, their labour power. The value of labour-power is that which is necessary to the maintenance of the basic needs  of a worker, the necessary condition on the basis of which s/he will work. A Capitalist would take more money as compared to the quantity of money advanced by her/him at the beginning of the production process, every time the sale of one of her/his commodity is realised.
This surplus-creating process is given by M-C-M’:
money —> commodity —> (money + additional money).
Since money bears a determined quantitative worth expressed in labour terms; money cannot create money, as the old Mercantilist school used to think.
The source of surplus — insofar as dead and living labour are the only real inputs of production — must necessarily come from an attack on labour on the part of the Capitalist, who owns constant capital (machinery, tools etc.) and the workers’ ability to work.
This value appropriated by the Capitalist— the surplus value — is determined by the difference between the value of labour (the labour embodied in the commodity) and the value of labour-power (the labour necessary for the survival of one worker, his/her reproduction).
The value magnitude of the products of labour is determined by the socially necessary labour-time, that is to say, “the labour-time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time”  
Labour alone does not give value to one commodity. This labour must be socially necessary insofar as “[…] nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value”. 
The concept of socially necessary labour time can be understood with the equivalence of human labour in the following example: the fact that artisan takes, say, 10 hours to produce a chair while an industrial worker takes only 2 hours, doesn’t alter the exchange relations.
In monetary terms, the price of a chair (let’s keep in mind that we are assuming no personal quality involved in production) would not be altered. One consumer interested in buying a chair doesn’t care if the artisan takes many more hours as compared to the industrial worker; his/her demand is therefore not altered.
If the demand for chair is unchanged, the price will be the same; with the only difference that the artisan has taken much more time as compared to the industrial worker, with all the relative economic and social disadvantages, to realise his commodity on the market. More of his labour time will be embodied in the chair, yet this does not increase the price of the commodity in which his/her labour is embodied. It goes without saying that the concept of socially necessary labour time takes into consideration the technological and scientific development of one society and all its human negative and positive consequences on the workers.
Another important Marxian concept is the market price, quite different from that of exchange value.
The market price expresses the average amount of social labour necessary; while the natural price merely reflects the exchange value of one commodity as given by the balance between supply and demand of commodities embodying socially necessary labour.
Assuming supply and demand to balance each other, the market prices of commodities will be equal to their natural prices, their respective exchange values.
However, the demand for commodities is not always equivalent to their supply, and the oscillations of market prices depend on the fluctuations of supply and demand. Hence the market price can fall below the natural price or rise above it. Monopoly — which, in broad terms, implies scarcity of supply and abundance of demand — makes the market price rise over the exchange value, as Marx points out:
[...] apart from the effect of monopolies and some other modifications I must now pass by, all descriptions of commodities are, on average, sold at their respective values or natural prices 
The abstraction of exchange value, as already discussed, is necessary for the realisation of the commodities on the market.
Individual quality, unlike in previous modes of production where such an abstraction is not made (see in the case of primitive barter e.g.), has no more relevance in Capitalism.
The owner of the means of production in Capitalism — a non-worker — without adding a minimum amount of social use-value would exploit the worker — the only producer of social use-values — whose homogeneous abstract labour is available on the market; determining the magnitude of value.
Needless to say, the owner of the means of production (the boss) is part of the “surplus-appropriating class”, which is often called bourgeoisie. The worker — who suffers a labour theft from the boss, as previously discussed — is part of the proletarian class: a class that is forced to sell itself as wage-labour on the capitalist labour market; in order to survive.
Marx has been attacked on his dual notion of class, regarded as “reductive”. I would argue that Marx’s concept of class is by no means anachronistic and that the main "epistemological" problem is to be found among the sermons of (vulgar) Marxists and Liberals: not in Marx's works.
In fact, concept of "Class" cannot be detached from Marx's Labour Theory of Value. “Class” — in broad terms — defines the way value is distributed and appropriated in a determined mode of production. Ownership "alone", of course, is by no means sufficient to give a clear picture of the concept of class.
"Bourgeoisie" and "Proletariat" are certainly reductive terms.
By no accident, Marx with the former refers to "high bourgeoisie" whilst with petty bourgeoisie he refers to all those societal members who — in broad terms — are neither pure "wage-labourers" nor pure "capitalists", though appropriate a surplus value from labourers, as the shopkeeper does, for instance.
In fact, within the framework of distribution, the shopkeeper as an owner of small Capital (therefore of commodities such as the means of distribution and workers’ labour power) does not produce use-value.
However, the shopkeeper as a capitalist and a worker — assisting his/her own employees — partly produces use-value.
The value appropriated by the petty bourgeois shopkeeper is usually not sufficient to consistently accumulate Capital.
It is merely used up for the individual consumption of the petty bourgeois concerned.
By analysing the entire topic in economic terms, the fact that the petty-bourgeois political character may often reveal itself as reactionary for the sake of small Capital, as pro-capitalist, is an interesting separate matter; which won’t be discussed here for a matter of relevance.
What is central to our analysis is that the present-day class struggle, here in India and almost everywhere — just like in the second half of the XIX century — is still between Wage-Labour and Capital, no matter what these contradictions produced in terms of “societal sub-classes”; and will always be until Capitalism is in business. The choices to be made in a revolutionary struggle — whether in terms of tactical alliances between petty bourgeoisie and proletariat or the use of parliamentary means to achieve pro-proletarian goals — will not to be discussed here.
Returning to the definition of class in broad terms, it is important to remark that there is still widespread confusion on the notion of class composition; which often hinders the growth of class-consciousness. For the sake of clarity, it’s opportune to point out that singers, commercial workers, inexperienced journalists, IT sector trainees, call centre employees e.g. — independently from the fact that many of them may earn more (or less, like here in India) than 'industrial proletarians' — are all wage-labourers exploited by the Capitalist; insofar as they produce a surplus value for the sake of Capital. As wage-labourers, their interest is, of course, antithetical to that of Capital.
The fact that many of these labourers are not enough conscientised on the matter and don’t take revolutionary action against Capital is a separate question. While the political problem of coscientisation is not topical to our economic analyses and won’t be discussed any further, the class-related topic will be analysed later — in detailed terms — by examining “the social character of productive and unproductive labour”.
In regard to class-biased sectarian considerations, the Keynesian school e.g. regards the Capitalist as a ‘value maker’ (as in the case of Joan Robinson’s analyses), therefore legitimising profit and the ownership of Capital in general.
Such school does not see the ownership of Capital as an historical contradiction, which uses up all its power to drive down wages and exposes both owners and wage-labourers to a never-ending destructive competition, which is especially destructive for the workers.
First of all, we must differentiate between “owner” — a non-worker who earns millions by virtue of owning (or having inherited ownership)— and the “supervisor”, whose supervising may be regarded as mental labour.
Marx, in mocking the figure of a capitalist “imploring for mercy”, outlines the difference:
Have I myself not worked? Have I not performed the labour of superintendence and of overlooking the spinner? And does not this labour, too, create value?"
His overlooker and his manager try to hide their smiles.
Whether in Communism the role of the supervisor is going to fade away or not is actually not relevant to our discussion.
I would argue that the growing development of productive forces and the social character of Communism would probably do away with such an historical figure, unless contradictions arise in a way they did in the USSR. Yet, this needs further investigation.
Marx describes the workers’ precarious situation in a memorable fictional dialogue between the two 'human opposites' of Capitalism.
In such dialogue, one worker asserts that the entire owner’s constant capital (machine, tools etc.) would rot and rust without the workers’ contribution.
As a reply to the worker, the Capitalist points out that without the “role of the boss” no constant capital would be provided in production; implying that a relative profit therefore needs to be there as a “fair” remuneration for the boss (of course, at the detriment of wages).
At this point, the worker start explaining in details that the capitalist charges the labourers for utilising his constant capital while the workers don’t charge the capitalist for working on his machines and maintaining the value-maintaining power at the benefit of constant capital! 
Such value-maintaining power doesn’t cost the worker any extra labour; it’s a natural faculty of his contribution.
As the worker doesn’t charge the capitalist anything for the above-mentioned reasons, the Capitalist cannot claim to charge the workers’ for ‘providing constant Capital’ 
The value-maintaining power generated by labour is something that several Marxists and Social Democrats have not observed, not to mention Neoclassical, Keynesian economists. For instance, such concept gives further logic to the reason why Marx has always considered the role of labour as central, in his theory of value. Hence, human Labour — beyond being the sole source of use-value in society — is the sole source of capital maintenance without which, as previously discussed, capital would rot and rust.
We should remark that the moral character of the above-mentioned dialogue is still relevant today, insofar as ownership in itself' — leaving aside its non-human consequences — is still regarded as a 'value' by Bourgeois economics.
A lot has been done by Bourgeois economics to hide what Ricardo hinted at and what Marx took for granted to prove Capitalistic exploitation. A lot has been done to promote the idea of commodity fetishism, whereby any consideration on the ‘production-based origin of value’ is abandoned.
Neoclassical economists of the likes of Von Mises, Schumpeter, Bohm-Bawerk and Menger e.g. started asserting that the value of one commodity can be objectified merely by the consumer's need, the individual psychological evaluation or the personal 'desire' 
These queer economists started focusing merely on the demand side of commodity production.
Any evaluation on Labour — and with it its alienation and exploitation— fell into the oblivion in bourgeois textbooks. Bourgeois economists struggled a lot in intellectual terms to cover up the economic inconsistency of Ricardian Economists who ended up pointing out the centrality of labour in the value determination and who — unbeknown to them — at the same unmasked the immoral raison d'etre of Capitalism; which is based on the appropriation of unpaid labour by the boss!
As previously discussed, the boss has a class interest relative to his/her appropriation of human labour, where ‘class’ is defined by the way human labour is appropriated and distributed in a determined mode of production. Old Ricardianism unwillingly raised the entire question of the immoral character of Capitalism and its contradictions.
A PERSONAL CONTRIBUTION TO THE MARXIST THEORY OF TRUTH (PART III)
The concept of Dialectical Materialism — as envisioned by Friedrich Engels in particular — is the most relevant tool to understand the concept of class antagonism and an important premise for a Marxist approach to the concept of truth. Class antagonism not only defines the economic exploitation of Capitalism, but also helps to define the immoral character of all the apologies of commodity production.
Engels proved that nature— wherein entities are regarded as contradictions, insofar as they are in opposition to other entities —always witnesses the withering away of its systemic contradictions. He provides the example of the life-process of barley. One seed of barley, after growing due to external stimuli (negations), changes and is in itself negated, becoming a plant; which is something qualitatively different from the old seed from which it was generated. Towards the end of the life-process, the plant grows, flowers and produces something, which resembles the original form of the negation (the seed of barley). But it does not produce one unit of it: it produces many units.
At the end of the life-process, once the stalk dies after the seeds have ripened, there is a quantitative change as well as a qualitative one, insofar as nature obtains many seeds of barley with improved qualities. 
Marx applied Engels’ amazing scientific discovery to human nature, showing that in the early stages of human society, human beings were far from suffering the burden of societal orders and all the produce of class antagonism in general. In fact, human societal contradictions were absent; the only existing contradictions were those of human beings and Nature, which saw people perpetually struggling against their surrounding material scarcity.
Contradictions started growing in the early contradiction-less society. The reasons are many: production requirements with growing population, interpersonal contradictions, the evolving structure of the family, productivity of the soil assigned to certain individuals by the community etc. etc. The scope of this article won’t permit us to develop the subject further. As envisioned by Marx, Communism is but the abolition of all the existing contradictions, which brings back the human beings to their natural contradiction-less equilibrium, in which they were at one with themselves; in which no class antagonism could forbid people from receiving the full produce of their labour. On the other hand, the abolition of all existing contradictions does not mean to go back to the early stage of human society:
Communism is the positive supersession of private property as human self-estrangement, and hence the true appropriation of the human essence through and for man; it is the complete restoration of man to himself as a social -- i.e., human -- being, a restoration which has become conscious and which takes place within the entire wealth of previous periods of development. This communism, as fully developed naturalism, equals humanism, and as fully developed humanism equals naturalism; it is the genuine resolution of the conflict between man and nature, and between man and man, the true resolution of the conflict between existence and being, between objectification and self-affirmation, between freedom and necessity, between individual and species. It is the solution of the riddle of history and knows itself to be the solution
Communism would simply be its ‘updated version’, qualitatively and quantitatively improved by the experience of centuries of development of productive forces (presence of advanced technology, political and social emancipation, more division of labour etc. etc.) and the return to the social essence of the human beings, which has been alienated, estranged, in Capitalism, as Marx emphasises:
In general, the proposition that man is estranged from his species-being means that each man is estranged from the others and that all are estranged from man's essence.
As we may notice from the above-cited words, Marx — who, in broad terms, is neither a modernist nor a postmodernist but a dialectical materialist — DOES have an objective understanding of human nature, though, as he himself recognises, human nature is "shaped", modified, by the dynamics of a mode of production. What I personally argue is that an objective conception of human nature may be based on the objective categories of individual needs that all human beings share, irrespective of religions, beliefs, gender, systemic hindrances etc.
This epistemological approach based on "human needs" appears quite neglected by the Postmodern advocate of "multi-truths". In fact, there is only one method, one "truth", through which human and systemic contradictions — and with them all the anti-human consequences — are abolished; that is to say, Marxist thought and praxis.
Only Marxist thought and praxis is able abolish in the system, in the individuals, all those contradictions that undermine the realisation of natural and objective human needs. This realisation, the "essence" of human beings, is achieved only if our actions are positively dialectical.
Marx's care for the objective essence of human needs is observable in his postulation of the motto of Communism: from each according to his contribution, to each according to his needs.
Human contribution may even vary from person to person, due to various contextual and non-contextual constraints, human categories of needs to be satisfied do not vary. Marx would have been inconsistent in glorifying the "meritocratic" and individualistic approach of Socialism, in which everyone would be remunerated according to his/her work. In fact, man, according to Marx, is a social being and without contradictions, in Communism, would fully express his essence as a social being. I shall return on this later.
In this regard, it is important to emphasise that a multi-philosophical post-modern approach — whereby "we should incorporate in our philosophical understanding the "best" we can get from each philosophy"— is substantially inconsistent one. When these queer intellectuals advice to "take what's good and leave what's bed" from, say, Christianity, they would probably hint at, say, the Christian qualities of "Humanistic Love". In such case, the fallacy would lie in a linguistic confusion. Humanistic love for Christianity would be "CHRISTIAN humanist love" and not simply (genuine) humanistic love. Such concept would imply humanistic love as historically distorted by the Christian religion which sees, among other things, the repression of certain (genuine/natural) needs that everybody shares (see e.g. sexuality) due to the religious internal beliefs, considered as true, when they are actually a mere conviction of truth. In fact, these beliefs may often conflict with the gratification of our natural needs, from the most-pressing, least-gratifying ones to the least-pressing, most gratifying one (say need for protection, cognition, social belongingness, sexuality, esteem, creativity, self-actualisation etc.). The illogical character of such a postmodern philosophical "multi-approach" reaches its peak when the prerogatives of any idealist doctrine or religion e.g. are implicitly (and dogmatically) considered to be "non-conflicting" and therefore "natural", which is false; it is a mere idealistic assumption. The prerogatives of reactionary and philistine religions that undermine human essence don't bother the pious post-modern so much. Being implies the realisation of needs, the essence of a human being, this is what a simple, trivial. materialistic observation of human behaviour can easily prove. Everybody needs to eat, sleep, drink, esteem, belong, express his/her sexuality, self-realise in one's activity (from cognition to creativity, work etc.), feel protected etc. etc.
Yet religion and Capitalism e.g. have internal contradictions that strongly conflict with the natural realisation of needs.
The "multi-philosophical" post-modern approach starts faltering whenever we raise the question of "needs realisation". What I argue is that a moral theory of truth can be only a materialist one that sees the individual drive towards the realisation of his/her needs, first of all, as true, as observable and then sees the aim of realising people's needs as a moral necessity, insofar as the human beings are by nature all (true) social beings, not isolated self-sustaining animals. Hence a moral theory of truth that is not genuine, that is to say, a moral theory of truth that doesn't take into consideration the genuine personal drive towards the maximum qualitative and quantitative realisation of one's needs (all, including the social ones), is not a genuine materialist one, but an idealist one. Hence it is a false theory of moral truth.
Communism, with his lack of contradictions, aims at providing the economic and political bases for the achievement of the realisation of natural human needs, the entirety of people's needs, through the provision of socially necessary use-values, and therefore at implicitly validating a pro-genuineness theory of truth.
Bourgeois intellectuals, who still cannot grasp dialectics and its implication in human history and political economy — leaving aside morality — don't see Capital as a human contradiction.
They see the ruling mode of production — namely, Capitalism — as something eternal, value-free, something dropped from the sky as a 'gift' and as 'the best of all possible worlds', not as an historical and transitory produce; like the plant Engels was talking about in his scientific example on the Dialectics of Nature; the very same plant which would give rise to an entity whose resemblance would be that of an “improved” original form.
In broad terms, they don’t see Capitalism as a “plant” in the process of giving rise to something quantitatively and qualitatively superior to commodity production: something which suffered contradictions to abolish them and return to an “improved” original status.
Mainstream economists and philosophers see Capitalism as something 'natural' without any understanding how contradictions like Capital, or Feudal ownership e.g., are by no means 'human', insofar as they objectively don't favour the human essence, the objective nature of human needs: its full realisation in a status in which the human being is at one with him/herself, far from alienation and exploitation of labour.
In overvaluing bourgeois individuality and underestimating the role of societal contradictions, any of their moral evaluation remains confined within the narrow limits of Capitalist apology.
In fact, the common Bourgeois is afraid of Communism because he rightly fears his methods of economic immoral appropriation — namely rent, interest and/or profit — are going to end soon with the abolition of Capital and Wage-Labour; and therefore the rise of Communism.
In doing so, s/he fears his (bourgeois) individuality is going to end since exploitation — according to this historically “modified” queer individual —is not an anti-human element but an element composing his true 'individuality'. As Marx suggests, such a Bourgeois would regard himself as an individual, only insofar as he's a Bourgeois. Such an individual would not regard himself as a social being.
For instance, Ricardo — unlike most of modern liberal economists — “perceived”, as an honest bourgeois, the conflict between Labour and Capital in commodity production.
His words on the effect of the introduction of machinery on the employment of workers are a clear testimony of this insightful, though limited, “consciousness”.
The great merit of Ricardo, according to Marx, has been of perceiving the connection between the quantitative worth of commodities (their exchange value) and the total labour-time necessary for their production.
For Ricardo, profit is regarded as a uniform rate, which is proportional to the size of the capital advanced (and is still considered as a 'legitimate' deduction from the commodity’s monetary realisation). However, how can Ricardo attempt to analyse the effects of a uniform rate of profit on prices, asks Marx, when nowhere he attempts to define what determines the level of this (uniform, according to Ricardo) rate of profit? 
Leaving aside an analysis of his inconsistencies for the sake of clarity, it is important to point out that modern bourgeois economics hasn’t even reached the witty conclusions of Mr Ricardo. Modern economics can’t even see ‘antithetical interests’ in Capitalism. By not grasping the relevance of the concept of opposite/contradiction, as intended by Engels’ concept of Dialectics — it even ends up neglecting its own dynamics.
In fact, nowadays e.g. Industrial Capital has to pay the services of financial capital so as to boost investment — and therefore survive within competition — while our mode of production is pervaded by the growing sharpening of societal contradictions; not only those of Capital and Wage-Labour or those of Exchange-Value and Use-value, but also those of “Industrial Capital” and “Financial Capital”; whose relative interests clash with each other
THE ACADEMICALLY WIDESPREAD "SUBJECTIVE APPROACH" (ARTICLE PART IV)
Within Marx’s LTV we find a strongly objective approach.
Human labour is regarded as central, and the process of production is considered as a whole. Bourgeois economics, after receiving the intellectual blow from Marx’s LTV, started working on economic theories which radically shifted from Marx’s labour-based economic notions.
As previously discussed, the very notion of “labour” in general started appearing quite uncomfortable within the framework of the Liberal thought, which legitimises profit. By no accident, the neoclassical school decided to sway the attention from production to exchange through its pure price theory, at the same time hiding the attention from labour exploitation in the process of commodity production.
In fact, by focusing the attention exclusively on prices, neoclassical economics stopped inquiring the very nature of profit, as labour ceased to be the central object of economic inquiry.
Prices, according to the neoclassical economists, are determined by buyers’ utility evaluations, as objectified by the demand and supply of goods. They are explained by the scarcity of certain goods relative to the demand for them 
The marginal utility of a buyer— that is to say, the quantity of buyer’s utility gained (or lost) with an increase in consumption of one commodity unit— became central to the economic analyses of Bourgeois economics.
With the marginal utility theory, we don’t find any distinction between use-value and exchange value anymore.
Marxist economist Paul Mattick — who assiduously studies Neoclassical economics, as well as Keynesian economics — says on the matter:
The subjective value theory was discredited, first, by a theoretical refinement so excessive that it lost any visible connection with reality, and second, by the frank renunciation of the attempt to explain price by value. Joseph A. Schumpeter may be mentioned in connection with the first of these endeavours.
From the standpoint of the Austrian School, from which he came, the value of final products, or consumer goods, depends on their marginal utility for the consumer, while the marginal utility of intermediate products, such raw materials and machinery is derived by a process of imputation from the marginal utilities of the final goods.
As we may have noticed, neoclassical economists tried their best to remove 'labour' from their worthy theories of value, insofar as such factor of production stopped turning out to be cosy after Marx's discovery of Surplus value. Marginal utility theory provides the suitable example of this intellectual attempt; the finest theoretical apology of Capitalism; an economic system of chronic unemployment, cyclical crises, poverty, profit on health, slums, pollution etc. etc.
In intellectually doing away with the concepts of Capital and Wage-labour, which inherently defines ‘exploitation’, mainstream economics could give us the funniest explanations about the nature of profit.
Mr Walras simply didn’t bother to explain it. He directly classified profit as a component of the aggregate wages!
Nassau W. Senior showed more ‘restraint’ and justified profit by regarding as a (millionaire) “compensation for the sacrifice of the Capitalist’s abstention from consumption”; a sacrifice undergone in favour of Capital investment (undoubtedly not requested by anyone except the Bourgeoisie!).
By implicitly legitimising the inheritance of Capital and the dual contradiction of Capital and Wage-Labour — Mr Schumpeter e.g. regarded profit as a prize for entrepreneurial activity. It is the chief aim of entrepreneurial activity to maintain ‘value’ of existing investment. 
Of course, this is wrong.
This ‘value’ — as long as for value Schumpeter indicates ‘exchange-value’, the value form — is by no means maintained by ‘entrepreneurial activity’, but by the only creator of use-values, namely ‘human labour’. That of maintaining values in society in general, it is a natural faculty of the workers’ labour. Labour, as previously discussed, has a value-maintaining power. Without the employment of productive workers, no production and circulation of values would be possible; the machines of the Capitalist would rot and rust. The process of value formation must necessarily start from productive workers’ labour.
We shall return on the matter of “productivity” later, in more detailed terms.
Furthermore, it is important to remark that Mr Schumpeter (curiously enough) went as far as to remove 'supply' from his concept of equilibrium. The main worry of this queer economist, by no accident shared by most of the Austrian economists, is exchange. For him, there is no need to deeply analyse the concept of value; insofar as all the real relations of production are neglected. In line with the marginalist thought, Schumpeter recognises only prices. Whatever lies behind the realm of exchange is not a matter of concern for him. It deals with exchange as represented by a process magically dropped from the sky, not presupposing both production and exchange consumers’ evaluations: a gift of ‘God’. In fact, Schumpeter paradoxically regards all the relations lying outside the category of exchange relations as immaterial.
In general, post-Ricardian mainstream economics has always remained confined within the narrow limits of exchange relations These “exchange relations” are just the ‘intellectual’ cell bars of this narrow-minded thought.
And the prison is called “subjective theory of value”.
During the second half of the XIX century on, the first most prominent subjective theories of value were formulated.
Liberal economics started asserting that to give value to one commodity was sufficient to crave it; as if by craving an electric guitar, it would materialise itself, ready to be played! 
An apple on a wild spontaneous tree e.g. may be 'craved' as much as we wish, but as soon as such an object is craved no “price tag” would appear, no exchange value in monetary form would take form. It would not occur simply because no human labour would be embodied in such an apple. The same goes for 'air', for instance. In fact, oxygen and the other chemical components of air are certainly desired, but desire alone is not sufficient to give air 'market value', Air is free because no socially necessary human labour is embodied in it.
However, investor-friendly economists à la Bohm-Bawerk have never bothered themselves much about investigating the source of value from the real genesis, from nature, namely from human labour. Basing his theories on the fact any production is merely for the sake of consumption and no investigation on production is needed in political economy, Mr Bohm-Bawerk e.g. proved himself unable of explaining the source of 'interest'. According to his theory, interest was neither stemming from a labour or capital, it appeared as a 'gift from heaven'.
As we may notice, without any inquiry on the ‘origin’ of value and on dual notion of ‘value’, its real essence remains a ‘mystery’ for neoclassical economics; while exchange-value appears as a ‘spiritual’ construct. We already discussed that human labour alone is not sufficient to give value to one commodity.
On the other hand, Desire alone is not sufficient too.
It follows that — dialectically (or genetically) speaking, namely ‘from the genesis of the process of value creation’ — both the process of production and exchange must be taken into consideration.
The consumer — with his/her evaluation — realises the commodity price appropriated by the Capitalist, from which the value of labour-power, expressed in monetary terms, will be deducted for the realisation of profit.
In realising the commodity price in the market, the buyer realises his/her own need and therefore the ontological character of the commodity use-value; insofar as the commodities are socially recognised incarnations of homogenous human labour. 
By doing so the buyer indirectly asserts the use-values as values generated by labour, insofar as labour is an objective production process, it exists in the Real, and its supply allowed the existence of social exchange along with consumers' demand in the goods market. Yet the buyer is not necessarily aware of this implicit realisation, in making an exchange abstraction. 
By a-priori refusing to analyse the concept of value within the framework of the opposites of use-value and exchange-value, Bourgeois economics remains intellectually confuse with a vague abstract notion of ‘price’. In general, the lack of ‘dialectical thought’, the liberal intellectual distance from any philosophico-economic analysis based on “antithetical opposites” simply cannot shine a light on the nature of factors such as exploitation, crises, negative externalities, greed and unemployment, which are merely effects of determined Capitalistic opposites: like those of Capital/Wage-Labour, and Exchange-Value/Use-Value.
The same goes for the social democrats and, in general, the Keynesians, who — instead of desiring to abolish these contradictions —try to make harmony out of it through workers’ benefits, government spending etc. etc.; as if the worker in Capitalist could stop being a wage-labourer and the capitalist could stop being a millionaire in their system of equality.
These liberal comedy persona — far less frank than neoliberals explicitly enjoying commodity production — merely attempt to bribe the workers with wage benefits whilst urging them to go back working during every labour attempt of Capital overthrow, powered by their “Red” rhetoric of equality, freedom, democracy and justice.
With their lack of understanding of dialectics and political economy, not only they fail to realise about the liberal and pro-capitalist character of their own beliefs, but also they leave undisturbed that system not allowing the all-sector workers to receive the full produce of their own labour.
THE SOCIAL CHARACTER OF PRODUCTIVE AND UNPRODUCTIVE LABOUR (ARTICLE PART V)
I will now deal with the general widespread confusion, within the framework of "Marxism" and Liberal economics, on the productive and unproductive character of labour. First of all, it is important to premise that unlike what is widely believed by Liberals Karl Marx never “neglected” the service sector in his theory of Value, whose economic analysis is fundamental to fully comprehend the differences between productive and unproductive labour. As Marx points out in Capital, exploitation is there in Capitalism, for the service sector as well.
For Marx, even commercial and immaterial workers (namely, those who contributes with mental labour) are regarded as wage-labourers, as long as they produce a surplus value for their boss.
Though the term “labourer” or “worker” — widely used by communists, trade unions, social democrats etc. — may suggest “industrial worker” or “peasant”, it is used, at least by Marx, to refer to the wage-labourer; whose ability to work (labour-power) is sold at a wage determined by demand and supply of labour in the labour market.
Marx says on the matter:
A singer who sells her song for her own account is an unproductive labourer. But the same singer commissioned by an entrepreneur to sing in order to make money for him is a productive labourer; for she produces capital.
Marx makes it clear that the materiality of the labour concerned by no means alters the entire issue. Service sector workers, for instance, suffer surplus appropriation just like industrial workers, irrespective of the fact the ‘source’ of value comes from real production of use-values (whether these satisfies ‘the stomach’ or ‘the mind’). Both material and immaterial workers may suffer surplus appropriation. We shouldn't fall in the narrow-minded credo whereby all those commodities and services, whose utility is far from the 'basic needs', are unproductive.
It goes without saying that with this kind of reasoning, we would also regard material production of commodities different from those necessary to subsistence as unproductive.
Unproductive is, in Marxian terms, what cannot directly produce Capital. It is important to remark that not necessarily all that human labour which lies outside the sphere of Capital is fully remunerated. In fact, human labour can also suffer an appropriation on the part of the State, for the sake of State Revenue. It would be interesting to analyse the entire question within the framework of the value appropriated by the State throughout the history of XX century “post-Capitalist” countries (e.g. Cuba, the USSR, North Korea, PRC etc.). For a matter of relevance, however, we will not discuss such a topic here.
On the question of State-employed labour Marx:
The pay [Sold] of the common soldier is also reduced to a minimum -- determined purely by the production costs necessary to procure him. But he exchanges the performance of his services not for capital, but for the revenue of the state. In bourgeois society itself, all exchange of personal services for revenue -- including labour for personal consumption, cooking, sewing etc., garden work etc., up to and including all of the unproductive classes, civil servants, physicians, lawyers, scholars etc. -- belongs under this rubric, within this category
Shaikh e.g., in his well conceived book “Measuring the wealth of nations”, outlines that we can differentiate between production and nonproduction: two concepts, which are distinct from productive and unproductive labour.
These are his words on the matter, which I will cite at length:
Production activity uses up wealth to create new wealth (i.e., to achieve a production outcome). Personal consumption uses up wealth to maintain and reproduce the individual (a nonproduction outcome). In like manner, military, police, administrative, and trading activities use up wealth in the pursuit of protection, distribution, and administration (also nonproduction outcomes). The issue is not one of necessity, because all these activities are necessary, in some form or the other, for social reproduction (Beckerman 1968, pp. 27-8). Rather, the issue concerns the nature of the outcome; protection, distribution, and administration are really forms of social consumption, not production.
It should be emphasized that the distinction being made is between production and nonproduction activities, not between goods and services. We shall see that a substantial portion of service activities (transportation, lodging, entertainment, repairs, etc.) will be classified under production, whereas others (wholesale/retail, financial services, legal services, advertising, military, civil service, etc.) will be classified as nonproduction activities.
The real distinction is between outcomes and output. All activity results in outcomes. Some outcomes are also outputs, directly adding to social wealth. But others preserve or circulate this wealth, or help maintain and administer the social structure in which it is embedded.
The distinction between production and nonproduction is fundamental to lay down the bases of a realistic accountancy and inquire on the real nature of profit. It goes deep to the genesis of use-values.
Production is related to use-value while non-production is related to consumption.
Private distribution e.g. is necessary only to the Capitalist and does not represent production; it is something, which is necessary for the boss' personal consumption. Says Mr Shaikh on private distribution:
Transportation from the orange grove to the consumption region is therefore productive transportation, a completion of the process of the creation of an object of consumption - that is, a completion of the process of production. It is internal to the process of production. It is important to understand that not all transportation constitutes production activity. Some part of commodity transport may be internal to the distribution process itself. Suppose our oranges are produced in California to be sold in New York, but are stored in New Jersey because of cheaper warehouse facilities. As already noted, the transport from California to New York is the productive leg of the journey, because it changes the objective useful properties of the orange. The loop through New Jersey has no (positive) effect on the useful properties of the orange as an object of consumption,5 but it does improve those properties which affect the orange as an object of distribution. As such, this loop is internal to the distribution system. It therefore constitutes distributive transport of commodities, a nonproduction activity.
[Ibid. page 23-24]
We may regard nonproduction as a form of social consumption, hence, in line with Marx's concepts of productive labour and unproductive labour, as something, which does not imply creation of surplus value, but mere realisation of use-value. Hence, the nonproduction sector cannot suffer appropriation of use-value.
Shaikh's analysis is definitely in line with Marx's considerations on production (e.g. goods/services, transportation), nonproduction (e.g. capitalist consumption, police, fire department et cetera) and circulation of use-values (e.g. trade).
Further, Shaikh differentiates between primary sector and secondary sector:
Sectors (such as production and wholesale /retail trade), which are directly involved in the production and domestic realization of the total commodity product, will be called primary sectors. Those (such as finance, land rental and sales, and general government) involved in the subsequent recirculation of the value and money streams originating in the primary sectors will be called secondary sectors.
[Ibid. page 39]
Transportation e.g. is not circulation of value, but a means to realise the use-value on the market, at its socially necessary value. It goes without saying that without the labour involved in productive transportation e.g., a lesser amount of use-value would be realised.
Transportation labour e.g. is also by no means 'individually necessary' or, to use Marx's term in Capital volume III, for private service. Workers in the transportation sector e.g. do add value to the commodity and are not to be categorised as workers within the framework of trade (which will be analysed later in a more detailed way).
I shall cite at length Marx’s very important lines about transportation regarded as productive activity and as an activity which is different from trade:
If the sailor, the carter etc. require only half a year of labour time to live a full year (if this is generally the proportion of labour necessary for subsistence), then the capitalist employs him for a whole year and pays him a half. By adding a whole years labour time to the value of the transported products, but paying only ", he gains a surplus value of 100% on necessary labour. The case is entirely the same as indirect production, and the original surplus value of the transported product can come about only because the workers are not paid for a part of the transportation time, because it is surplus time, time over and above the labour necessary for them to live. That an individual product might be made so much more expensive, owing to the transport costs, that it could not be sold -- on account of the disproportion between the value of the product and its surplus value as a transported product, a quality which becomes extinguished in it as soon as it has arrived at its destination-does not affect the matter. […]
The improvement of the means of transport and communication likewise falls into the category of the development of the productive forces generally. […]
If one imagines the same capital both producing and transporting, then both acts fall within direct production, and circulation as we have considered it so far, i.e. transformation into money as soon as the product has achieved its final form for consumption, would begin only when the product had been brought to its point of destination. This capitalists delayed return compared to that of another, who gets rid of his product on the spot, would resolve into another form of greater use of fixed capital, with which we are not yet concerned here. Whether A requires 100 thalers more for instrument, or whether he needs 100 thalers more in order to bring his product to its destination, to market, is the same thing. In both cases more fixed capital is used; more means of production, which is consumed in direct production. In this respect, then, no immanent case would be posited here; it would fall under the examination of the difference between fixed capital and circulating capital. 
Trade — the activity of buying and selling of commodities for the achievement of (commercial) profit —is something “socially necessary only to Capitalism”, and it is part of the primary sector, where production and circulation of use-values are involved. In fact, the function of trade — like that of credit — is that of speeding up the rhythm of production cycles of Industry.
Merchant’s capital — in doing this during a definite time period, say one year — allows the capitalist who pays its service to have more occasion of surplus appropriation. However, the commercial labour of trade is not production and does not add value to the commodities; it just represents circulation of use-values.
It is important to keep in mind that transportation doesn’t fall under the category of trade, as previously discussed. One of Marx’s important analytical examples in Capital volume III provides the reason for this
Leaving aside the catastrophic long-run consequences of the sharing of surplus value by trade and credit, we should point out that by means of these two categories— mere circulation activities —the Capitalist has to wait a lesser amount of time before selling his commodities and realising the profit on the market.
The commodities that once could be sold, say, in 5 months, now can be sold in 2-3 months, by means of the growing development of trade. Hence, in the meanwhile, the amount of investment — which, along with capitalist consumption stems from a part of the surplus value appropriated by the boss — has risen too, thanks to these circulation activities.
In this regard, it is important to remark that unlike what e.g. French classical economist J.B. Say thought e.g., there is always a time lag between purchase and sale of commodities, which creates not a few problems for the realisation of the Capitalist’s profit on the market.
Classical and Neoclassical economics — which shares the same conviction — are responsible for neglecting the time factor in production and exchange, which may explain, at least partially, crises, unemployment, speculation etc.
Marx’s LTV did not provide an equilibrium model in production and exchange of commodities simply for the fact that a real stable equilibrium will never be achieved in Capitalism. In a purely dialectical spirit, Marx understood that the contradictions inherent to Capitalism — fed by the time factor — may produce crises, unemployment, externalities etc. etc., which alter the system relations, by blows of value oscillations.
In commodity production, purchase and sale of commodities on the part of the Capitalist — for the sake of Capital reproduction and accumulation — are indeed separated; they are two distinct contradictions.
By neglecting the time factor and forgetting the real separation between these two processes, Bourgeois economics indirectly presupposes barter, where exchange value is glued to use-value and has not acquired an independent (bourgeois) form. In fact, in barter, objects are purchased for immediate wants and then sold again for the same reason. There, we find the unity between exchange-value and use-value; the latter is leitmotif of the system of production.
Marx says about it:
The separation and independence of the acts of purchase and sale is a general feature of the labour, which creates exchange-value, whereas in barter the exchange of one discrete use-value is directly tied to the exchange of another discrete use-value.
The metaphysical equilibrium of purchases and sales is confined to the fact that every purchase is a sale and every sale a purchase, but this gives poor comfort to the possessors of commodities who unable to make a sale cannot accordingly make a purchase either.
In barter, there is no profit maximisation logic; no logic of realising the commodity exchange-value on the market or a market price above the exchange-value (often called mark-up by vulgar economics).
The Capitalist is not interested in the use-values of the production factors he buys or their abilities to satisfy the social use-value. He is merely interested in the sale of the commodities produced for the sake of profit. The process of sale, needless to say, requires time, though in modern times trade and credit helps the speeding-up of production cycles. In a crisis the contradictions of purchase and sale manifest themselves in the most violent way through sudden and continual price fluctuations, as Marx points out discussing Ricardo’s naïve denial of possible occasions of overproduction in Capitalism:
If, for example, purchase and sale—or the metamorphosis of commodities—represent the unity of two processes, or rather the movement of one process through two opposite phases, and thus essentially the unity of the two phases, the movement is essentially just as much the separation of these two phases and their becoming independent of each other. Since, however, they belong together, the independence of the two correlated aspects can only show itself forcibly, as a destructive process. It is just the crisis in which they assert their unity, the unity of the different aspects. The independence which these two linked and complimentary phases assume in relation to each other is forcibly destroyed. Thus the crisis manifests the unity of the two phases that have become independent of each other. There would be no crisis without this inner unity of factors that are apparently indifferent to each other. But no, says the apologetic economist. Because there is this unity, there can be no crises. Which in turn means nothing but that the unity of contradictory factors excludes contradiction. 
We are not, here, going to investigate about all the possible matrices of crises, which may also arise from deferments in credit-related payments and, in particular, variations in market prices causing devastating effects due to the inefficient character of commodity production, as compared to socialised production. We are here merely interested in outlining the inherent contradictions of Capitalism in general, as the reason of all the problems relative to crises, unemployment, externalities, price variations etc. In fact, socially necessary labour-time may be wasted in commodity production, insofar as some commodities suddenly become unsalable for a definite time period, namely momentarily useless, as Marx points out whilst talking about the occurrence of crises:
When speaking of the destruction of capital through crises, one must distinguish between two factors.
In so far as the reproduction process is checked and the labour-process is restricted or in some instances is completely stopped, real capital is destroyed. Machinery which is not used is not capital. Labour which is not exploited is equivalent to lost production. Raw material which lies unused is no capital. Buildings (also newly built machinery) which are either unused or remain unfinished, commodities which rot in warehouses— all this is destruction of capital. All this means that the process of reproduction is checked and that the existing means of production are not really used as means of production, are not put into operation. Thus their use-value and their exchange-value go to the devil.
Secondly, however, the destruction of capital through crises means the depreciation of values, which prevents them from later renewing their reproduction process as capital on the same scale. This is the ruinous effect of the fall in the prices of commodities. It does not cause the destruction of any use-values. What one loses, the other gains.
From the above statement we may deduce both that capitalist crises are occasions for some Capitalist to despoil the wealth of other Capitalists, so as to concentrate (monopolise) production — and boosting profitability of his/her own Capital — and that many commodities suddenly become “temporarily useless”, while some are destined to rot. This clearly shows the parasitic character of Capitalism as one system for the sake of profit, insofar as wage constraints dialectically imposed by crises may reduce the demand for many commodities, despite the consumption of many of these may be still latent in many individuals.
The useless character of many goods during the occurrence of crises is in general not peculiar to exchange relations belonging to modes of production other than Capitalism. For instance, in Communism as envisioned by Marx— where production has become fully social after the overthrow Capitalist relations— there is no waste of socially necessary labour time. With this abolition of Capitalist contradictions, the contradiction between the search for exchange values (profit) and the satisfaction of use-values vanishes too. Similarly, in the case of barter e.g. there can be neither destruction of goods nor a violent depreciation of values due to overproduction, falls in market prices etc.
The destruction of goods, which are socially needed, is an exclusive parasitic outcome of Capitalism, as Marx remarks:
In a situation where men produce for themselves, there are indeed no crises, but neither is there capitalist production. Nor have we ever heard that the ancients, with their slave production ever knew crises, although individual producers among the ancients too, did go bankrupt. The first part of the alternative is nonsense. The second as well. A man who has produced, does not have the choice of selling or not selling. He must sell. In the crisis there arises the very situation in which he cannot sell or can only sell below the cost-price or must even sell at a positive loss
Within the framework of Credit, the separation between money as a means of value (debtor-creditor obligations) and money as a means of payment can give rise to crises, with the oscillation of the value of commodities.
The general possibility of crisis is given in the process of metamorphosis of capital itself, and in two ways: in so far as money functions as means of circulation, [the possibility of crisis lies in] the separation of purchase and sale; and in so far as money functions as means of payment, it has two different aspects, it acts as measure of value and as realisation of value. These two aspects [may] become separated. If in the interval between them the value has changed, if the commodity at the moment of its sale is not worth what it was worth at the moment when money was acting as a measure of value and therefore as a measure of the reciprocal obligations, then the obligation cannot be met from the proceeds of the sale of the commodity, and therefore the whole series of transactions which retrogressively depend on this one transaction, cannot be settled. If even for only a limited period of time the commodity cannot be sold then, although its value has not altered, money cannot function as means of payment, since it must function as such in a definite given period of time. But as the same sum of money acts for a whole series of reciprocal transactions and obligations here, inability to pay occurs not only at one, but at many points, hence a crisis arises.
If, for whatever reason, the commodity’s value changes during the interval between money at the time it acts as a measure of value and money at the time it acts as a measure of payment for the commodity concerned, a crisis in exchange arises.
Whatever the negative character of trade and credit in promoting crises may be, the workers employed by who owns the capital of such sectors are wage-labourers. It is important to remind the reader that commercial labour (that within the framework of trade) is wage-labour insofar as is exploited by the merchant who appropriates a surplus.
Merchants — as mere agents of circulation and bosses of commercial wage-labourers— are not like commercial employees: wage-labourers who would directly create social use value, like transportation workers, if Industrial Capital didn’t need Commercial Capital for the realisation of commodities on the market. Trade — as an activity of circulation — is nothing but what I may define as appropriation of appropriation of labour, weighing on productive Capital — the only creator of social surplus value.
Marx, as previously discussed, differentiates between unproductive and productive labour; the former regarded as 'a non-creator of surplus value for the sake of Capital', the latter as 'creator of surplus-value'.
The former does not create Capital, the latter does.
Unproductive doesn't necessarily mean individually necessary or for private service. What is unproductive can be both socially necessary and individually necessary/for private service.
For instance, an independent singer publishing media material in the public domain is a socially necessary worker, whereas an independent singer performing at a boss' gala party is worker employed for private service, employed thanks to the ‘theft of labour’ by the Capitalist.
The same goes for productive labour.
For instance, a servant and a sex worker working in the name of the glitz of a wealthy person and producing a surplus value for their relative boss would create surplus value for the boss while performing individually necessary labour. At the same time, productive labour can be socially necessary (industrial production, agricultural labour, transportation et cetera).
What I mean by individually necessary labour is labour which wouldn't be there if production was to be socialised and the contradictions of Capital and Wage-labour were to give rise to some dialectically higher mode of production, like Socialism or Communism. Individually necessary labour is labour employed for private service; producing a use-value, which is realised only thanks to the boss’ appropriation of surplus value.
For instance, capitalistic luxury consumption requires this form of labour.
Socialisation of production implies a society sufficiently far from dialectical contradictions, such as those of Capital and Wage-Labour; whose economic consequences negatively affect people's needs and people's tendencies whilst curbing a mature socially necessary production. It goes without saying the glitz of Mr Moneybags — which got constituted thanks to years of economic thefts — wouldn't take place in Communism, exclusively allowing the productive/unproductive workers involved in this luxury to employment to take place in socially necessary activities.
However, these are only moral evaluations made on the basis of the scientific character of Marx’s theory of value.
As Marx rightly points out:
For example, the service a singer renders to me satisﬁes my aesthetic need; but what I enjoy exists only in an activity inseparable from the singer himself, and as soon as his labour, the singing, is at an end, my enjoyment too is at an end. I enjoy the activity itself—its reverberation on my ear. These services themselves, like the commodities which I buy, may be necessary or may only seem necessary— for example, the service of a soldier or physician or lawyer; or they may be services which give me pleasure. But this makes no difference to their economic character
In regard to socially necessary labour, Marx outlines that we can also differentiate between direct appropriation of surplus value and indirect appropriation of surplus value.
I will cite at length his noteworthy considerations on the matter:
Since the merchant, as a mere agent of circulation, produces neither value nor surplus-value (for the additional value which he adds to the commodities through his expenses resolves itself into an addition of previously existing values, although the question here poses itself, how he preserves this value of his constant capital?) it follows that the mercantile workers employed by him in these same functions cannot directly create surplus-value for him
[…] The relation of merchant's capital to surplus-value is different from that of industrial capital. The latter produces surplus-value by directly appropriating the unpaid labour of others. The former appropriates a portion of this surplus-value by having this portion transferred from industrial capital to itself. It is only through its function of realising values that merchant's capital acts as capital in the process of reproduction, and hence draws on the surplus-value produced by the total capital. The mass of the individual merchant's proﬁts depends on the mass of capital that he can apply in this process, and he can apply so much more of it in buying and selling, the more the unpaid labour of his clerks. The very function, by virtue of which the merchant ' s money becomes capital, is largely done through his employees. The unpaid labour of these clerks, while it does not create surplus-value, enables him to appropriate surplus-value, which, in effect, amounts to the same thing with respect to his capital. It is, therefore, a source of proﬁt for him. Otherwise commerce could never be conducted on a large scale, capitalistically. Just as the labourer's unpaid labour directly creates surplus-value for productive capital, so the unpaid labour of the commercial wage-worker secures a share of this surplus-value for merchant's capital.
Marx may be probably 'misinterpreted' when in the above-mentioned phrase he states “the unpaid labour of these clerks, while it does not create surplus-value, enables him [the merchant] to appropriate surplus-value”. Insofar as Marx has always considered production in social terms, as a whole, his consideration is fully dialectical as it analyses the process of Capital formation, starting from the very genesis.
With the above-mentioned remark, Marx has not suddenly “downgraded” to one physiocrat in terms of economic consciousness, to a queer economist regarding all the agricultural labour — whose realisation allows the rest of social production — as the only source of value. Commercial labour for Marx circulates use-value but at the same the surplus value stemming from it is a share drawing on pre-existing surplus value; it would never materialise itself without industrial production in general.
The wealthier the industrial production is, the greater the trade surplus. 
The surplus value appropriated from commercial labour is only a share of industrial surplus value. It doesn’t add any value to the final product.  In fact, circulation in itself is a mere redistribution of pre-existing use-values. As previously discussed, if Industrial Capital were big enough to deal with large-scale transportation as well, wage-labourers wouldn’t be employed by the Merchant’s capital and would be productively employed under the banner of Industrial Capital.
Shaikh drew his important analyses taking for granted the above-mentioned Marx's considerations contained in Capital volume III. One important thing, which can easily be grasped throughout Shaikh's work and less easily in Marx's Capital VOL III is that Neoclassical economy will always have an inherent problem of accountancy. In fact, neoclassical economics would always commit the mistake of counting 'social consumption' as 'production' by the weird notion that all socially necessary activities, barring personal consumption, realise a product.
Any market activity — if it is socially necessary — absurdly represents production for the neoclassical economist. This narrow-minded politically motivated notion allows the use-value related to parasitic forms of social consumption (such as royalties, rent et cetera) to be counted more than once in national accounts; insofar as this value is not considered to be stemming from a single source of use-value: productive labour!
For Neoclassical economics every marketable activity is regarded as productive and is erroneously to be accounted in the growth of wealth of society. Hence, every time pre-existing circulating value appears in a marketable activity, say in the form of rent, royalties etc. it is counted as newly produced value, adding up to the nation’s wealth! Hence, according to the IO (input-output) liberal accounts, a nation with innumerable parasitic economic activities would falsely appear as a prosperous nation, at least in figurative terms.
Further, Shaikh tries to show that in 'liberal accountancy' the profit-wage ratio results to be far from inferior as compared to the rate of surplus-value. By regarding any non-productive activity and trade activity as 'productive', this accountancy magic is created!With such input-output 'investor-friendly method', the orthodox accounting system even gives a “milder” image of Capitalist exploitation of productive workers, beyond providing an interestingly false vision of society’s wealth.
In this regard, Mr Shaikh analytically proves that:
S*/V* (Marxian accounting) >> P/W (Input-output method)
S*/V* = Pp+Pt+[Wt+Mt]/Wp >> (Pp+Pt)/(Wp+Wt)
S*/V* = rate of surplus value
P/W = profit-wage ratio
Pp = profit in the production sector
Pt= trading margin
Wt = wages in trade/circulation of use-values
Mt= constant capital in trade/circulation of use-values
Wp=wages in production sector
The image is analytically clear.
According to the Input-Output standards, the profit-wage ratio is calculated with no distinction between wages in the production sector and wages in trade. It follows that an amount of use-value produced in the production sector may be counted again as new wealth in the nonproduction and circulation sector!
While in the accounting system derived from Marx's LTV it clearly appears that transactions relative to nonproduction and circulation of use-values —namely profits in the production sector, profits in trade, wages in trade, constant capital employed in trade — draws value from the wages in production sector, liberal 'accountancy' merely dwells with a dull profit-wage ratio, which hides the real nature of exploitation. In essence, the profit-wage ratio in the first place cannot give us a clear image of the determination of a nation's wealth; in its turn determined by production of use-values. Furthermore, such measure does not shine a light on how some transactions of some sectors entirely weigh on the shoulders of productive labourers, the only creators of wealth in society.
The orthodox method of accountancy is, of course, merely analytical and not dialectical, insofar as it doesn’t start its theorisations from the genesis of the marketable activities; namely, social production. The method of Bourgeois economics remains ‘suspended’ in the realm of exchange without even objectifying any serious inquiry within the framework of the constraints of one society’s wealth, given by real production; from which all the use-values allowing the functioning of an economy arise.
It goes without saying that for the above-mentioned reasons and for hiding the nature of Capitalist’s profit, Bourgeois economics — beyond being politically motivated in hiding labour exploitation — also lacks scientific rigor in many of its theorisations formulated for the sake of Capitalist apology.
END OF THE ARTICLE
 David Ricardo — On the principles of political economy and taxation, page 19
Marx says on the matter:
Ricardo’s and similar types of reasoning are moreover based not only on the relation of purchase and sale, but also on that of demand and supply, which we have to examine only when considering the competition of capitals. As Mill says purchase is sale etc., therefore demand is supply and supply demand. But they also fall apart and can become independent of each other. At a given moment, the supply of all commodities can be greater than the demand for all commodities, since the demand for thegeneral commodity, money, exchange-value, is greater than the demand for all particular commodities, in other words the motive to turn the commodity into money, to realise its exchange-value, prevails over the motive to transform the commodity again into use-value.
If the relation of demand and supply is taken in a wider and more concrete sense, then it comprises the relation of production and consumption as well. Here again, theunity of these two phases, which does exist and which forcibly asserts itself during the crisis, must be seen as opposed to the separation and antagonism of these two phases, separation and antagonism which exist just as much, and are moreover typical of bourgeois production.
[Karl Marx — Theories of Surplus Value, VOL II, Ricardo’s Denial of General Over-production. Possibility of a Crisis Inherent in the Inner Contradictions of Commodity and Money]
 By endorsing this principle, Ricardo let the reader grasp that Capital should not fear any adventurist investment, insofar as ‘the demand would appear automatically with the expansion of production’. Marx clearly criticises both Say and Ricardo’s naïve concept of equilibrium more than once in Theories of Surplus Value VOL II, Ch. XVII.We shall return on the matter later, within the framework of contradictions in Capitalism (Note by Davide Ferri)
 David Ricardo — On the principles of political economy and taxation. Page 5
 Karl Marx – Poverty of Philosophy, ch.1
 By turning his money into commodities that serve as the material elements of a new product, and as factors in the labour-process, by incorporating living labour with their dead substance, the capitalist at the same time converts value, i.e., past, materialised, and dead labour into capital, into value big with value, a live monster that is fruitful and multiplies.
[Karl Marx — Capital VOL I, Ch. 7]
 Ibid, Ch. 1
 Karl Marx — Appendix to Capital, 1st German edition, 1867
 If the mere quantity of labor functions as a measure of value regardless of quality, it presupposes that simple labor has become the pivot of industry. It presupposes that labor has been equalized by the subordination of man to the machine or by the extreme division of labor; that men are effaced by their labor; that the pendulum of the clock has become as accurate a measure of the relative activity of two workers as it is of the speed of two locomotives. Therefore, we should not say that one man's hour is worth another man's hour, but rather that one man during an hour is worth just as much as another man during an hour. Time is everything, man is nothing; he is, at the most, time's carcase. Quality no longer matters.
[Karl Marx — Poverty of Philosophy ch.1]
 It is very important to remark that the basic needs of one worker vary according to the societies in which they live and work. Human needs are objective factors but the personal need for their realisation varies according to cultural, ideological and social mores. The societal “basic needs” may include not only those relative to the worker’s vital subsistence but also higher needs relative to social belongingness, entertainment, self-realisation, protection, esteem etc. etc. with all the commodity requirements concerned. A psychological study based on behavioural empirical studies (e.g. Maslow, Wahba, etc.) on this matter goes now beyond the scope of our current investigation.
We should keep in mind that Marx was aware of the fact the value of labour power changes according to the society taken into account. He clearly emphasises the very same concept here:
His natural wants, such as food, clothing, fuel, and housing, vary according to the climatic and other physical conditions of his country. On the other hand, the number and extent of his so-called necessary wants, as also the modes of satisfying them, are themselves the product of historical development and depend therefore to a great extent on the degree of civilisation of a country, more particularly on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free labourers has been formed. In contradistinction therefore to the case of other commodities, there enters into the determination of the value of labour-power a historical and moral element. Nevertheless, in a given country, at a given period, the average quantity of the means of subsistence necessary for the labourer is practically known. [Karl Marx — Capital VOL I, Ch.6]
 “The character and tendency of the process M-C-M, is therefore not due to any qualitative difference between its extremes, both being money, but solely to their quantitative difference. More money is withdrawn from circulation at the ﬁnish than was thrown into it at the start. The cotton that was bought for £100 is perhaps resold for £100 + £10 or £100. The exact form of this process is therefore M-C-M', where M' = M + delta M = the original sum advanced, plus an increment. This increment or excess over the original value I call "surplus-value". The value originally advanced, therefore, not only remains intact while in circulation, but adds to itself a surplus-value or expands itself. It is this movement that converts it into capital”. [Karl Marx — Capital VOL I, Ch. 04]
 Ibid. Ch.1
 In relation to the exchange value, the expression of Value, Marx says:
“As use-values, commodities are, above all, of different qualities, but as exchange-values they are merely different quantities, and consequently do not contain an atom of use-value. If then we leave out of consideration the use-value of commodities, they have only one common property left, that of being products of labour. […] Let us now consider the residue of each of these products; it consists of the same unsubstantial reality in each, a mere congelation of homogeneous human labour, of labour-power expended without regard to the mode of its expenditure. All that these things now tell us is, that human labour-power has been expended in their production, that human labour is embodied in them. When looked at as crystals of this social substance, common to them all, they are — Values. We have seen that when commodities are exchanged, their exchange-value manifests itself as something totally independent of their use-value. But if we abstract from their use-value, there remains their Value as deﬁned above. Therefore, the common substance that manifests itself in the exchange-value of commodities, whenever they are exchanged, is their value.” [Ibid. Ch. 1]
 Ibid. Ch.1
 Karl Marx — Value, price and profit
 Marx talks about the separation of Capital and
Wage-Labour and its reciprocal antagonism many times and in many of his works, especially in Capital VOL III, Theories of Surplus Value VOL II (here within the framework of crises), Grundrisse etc…
 Karl Marx — Capital VOL I, Ch. 7
 "He [the labourer] will now say to the capitalist:
“Of these 5 lbs. of twist, say three-ﬁfths represent constant capital. They belong to you. Two-ﬁfths, that is, 2 lbs., represent my newly-added labour. Therefore you have to pay me the 2 lbs. So pay me the value of 2 lbs.” And thereby he would pocket not only the wages but also the proﬁt, in short, a sum of money equal to the quantity of labour newly added by him and materialised in the form of the 2 lbs.” “But,” says the capitalist, “have I not advanced the constant capital?”
“Well,” says the labourer, “you deduct the 3 lbs. for it, and pay me only 2.” “But,” insists the capitalist, “you couldn’t materialise your labour, you couldn’t spin, without my cotton and my spindles. You must pay extra for that.” “Well,” says the labourer, “the cotton would have rotted and the spindles rusted if I hadn’t used them for spinning. The 3 lbs. of yarn which you are deducting do represent, it is true, only the value of your cotton and spindles which were used up, and are therefore contained, in the 5 lbs. of yarn. But it is only my labour that has maintained the value of cotton and spindles unchanged, by using these means of production as means of production. I’m not charging you anything for this value-maintaining power of my labour, because it didn’t cost me any extra labour-time beyond the spinning itself, for which I get the 2 lbs. It’s natural faculty of my labour which costs me nothing, though it maintains the value of the constant capital. As I don’t charge you anything for it, you can’t charge me for not being able to spin without spindles and cotton. For without spinning, your spindles and cotton wouldn’t be worth a brass farthing.”
[Karl Marx — Theories of Surplus Value VOL I, On the Circulation of Money between Capitalist and
 [Paul Mattick — Economic crisis and crisis theory]
 Let us take a grain of barley. Billions of such grains of barley are milled, boiled and brewed and then consumed. But if such a grain of barley meets with conditions which are normal for it, if it falls on suitable soil, then under the influence of heat and moisture it undergoes a specific change, it germinates; the grain as such ceases to exist, it is negated, and in its place appears the plant which has arisen from it, the negation of the grain. But what is the normal life-process of this plant? It grows, flowers, is fertilised and finally once more produces grains of barley, and as soon as these have ripened the stalk dies, is in its turn negated. As a result of this negation of the negation we have once again the original grain of barley, but not as a single unit, but ten-, twenty- or thirtyfold. Species of grain change extremely slowly, and so the barley of today is almost the same as it-was a century ago. But if we take a plastic ornamental plant, for example a dahlia or an orchid, and treat the seed and the plant which grows from it according to the gardener's art, we get as a result of this negation of the negation not only more seeds, but also qualitatively improved seeds, which produce more beautiful flowers, and each repetition of this process, each fresh negation of the negation, enhances this process of perfection.
[Friedrich Engels — Anti-Duhring, XIII.
Dialectics. Negation of the negation]
 Karl Marx — Economic and philosophical manuscripts, Private property and Communism
 Ibid.. Estranged labour.
About the concept of “species-being” Marx, in the same chapter, says:
For in the first place labor, life activity, productive life itself, appears to man only as a means for the satisfaction of a need, the need to preserve physical existence. But productive life is species-life. It is life-producing life. The whole character of a species, its species-character, resides in the nature of its life activity, and free conscious activity constitutes the species-character of man. Life appears only as a means of life. The animal is immediately one with its life activity. It is not distinct from that activity; it is that activity. Man makes his life activity itself an object of his will and consciousness. He has conscious life activity. It is not a determination with which he directly merges. Conscious life activity directly distinguishes man from animal life activity. Only because of that is he a species-being. Or, rather, he is a conscious being -- i.e., his own life is an object for him, only because he is a species-being. Only because of that is his activity free activity. Estranged labor reverses the relationship so that man, just because he is a conscious being, makes his life activity, his being [Wesen], a mere means for his existence.
When the narrow-minded bourgeois says to the communists: by abolishing property, i.e., my existence as a capitalist, as a landed proprietor, as a factory-owner, and your existence as workers, you abolish my individuality and your own; by making it impossible for me to exploit you, the workers, to rake in my profit, interest or rent, you make it impossible for me to exist as an individual. — When, therefore, the bourgeois tells the communists: by abolishing my existence as a bourgeois, you abolish my existence as an individual; when thus he identifies himself as a bourgeois with himself as an individual, one must, at least, recognise his frankness and shamelessness. For the bourgeois it is actually the case, he believes himself to be an individual only insofar as he is a bourgeois
[Karl Marx — The German Ideology, Individuality]
 [Anwar Shaikh — “Marx’s Theory of Value and the Transformation problem” from the “Hidden Meaning of Things” page 117.]
 Ibid. page 117
 Paul Mattick — Economic crisis and crisis theory, Bourgeois economics. Ch. Bourgeois economics
 Joseph A. Schumpeter — Capitalism, Socialism and Democracy, Ch. VIII
 Market phenomena are one-sidedly regarded as mere 'economic quantities', and where possible they are expressed in mathematical equations. This tendency in modern theory is perhaps formulated most clearly in the works of Joseph Schumpeter. The process of production, as in fact all real relations in the economy, are excluded from analysis. In Schumpeter’s view the essence of economic relations consists of the relation 'between economic quantities', which is in fact reduced to the relation of exchange: all other relations between economic variables are neglected as being immaterial.
[Henrik Grossman: Marx, classical political economy and problems of dynamics part I]
 According to Ludwig von Mises, people’s needs are observable in their behavior, which requires no deeper investigation; they are to be taken as they are given
[Ibid. Ch. Bourgeois economics.]
 Ibid. Ch. Bourgeois economics
 Capital VOL I, ch. 3
 “Whenever, by an exchange, we equate as values our different products, by that very act, we also equate, as human labour, the different kinds of labour expended upon them. We are not aware of this, nevertheless we do it. Value, therefore, does not stalk about with a label describing what it is. It is value, rather, that converts every product into a social hieroglyphic. Later on, we try to decipher the hieroglyphic, to get behind the secret of our own social products; for to stamp an object of utility as a value, is just as much a social product as language”
[Karl Marx — Capital VOL I, Ch. 1]
 Karl Marx — Capital VOL III, Ch. 17
 Karl Marx – Theories of surplus value Vol I
 Karl Marx — Grundrisse, Surplus labour or surplus value becomes surplus capital. All determinants of capitalist
production now appear as results of (wage) labour itself. The realization process [Verwirklichungsprozess] of labour at the same time its de-realization process [Entwirklichungsprozess]
 Anwar Shaikh, Measuring the Wealth of Nations, page 2
 Ibid. page 2
 Karl Marx — Capital VOL III, ch. 17
 Karl Marx — Grundrisse, Exchange of labour for labour rests on the worker's propertylessness
 Karl Marx — Capital VOL III, ch. 17
 Suppose, the total industrial capital advanced in the course of the year = 720 c + 180 v = 900 (say million £), and that s' = 100%. The product therefore = 720 c + 180 v + 180s.
Let us call this product or the produced commodity-capital, C, whose value, or price of production (since both are identical for the totality of commodities) = 1,080, and the rate of proﬁt for the total social capital of 900 = 20%. These 20% are, according to our earlier analyses, the average rate of proﬁt, since the surplus-value is not calculated here on this or that capital of any particular composition, but on the total industrial capital of average composition. Thus, C = 1,080, and the rate of proﬁt = 20%
Let us now assume, however, that aside from these £900 of industrial capital, there are still £100 of merchant's capital, which shares in the proﬁt pro rata to its magnitude just as the former. According to our assumption, it is 1/10 of the total capital of 1,000. Therefore, it participates to the extent of 1/10 in the total surplus-value of 180, and thus secures a proﬁt of 18%. Actually, then, the proﬁt to be distributed among the other 1/10 of the total capital is only = 162, or on the capital of 900 likewise = 18%. Hence, the price at which C is sold by the owners of the industrial capital of 900 to the merchants = 720c + 180v + 162s = 1,062. If the dealer then adds the average proﬁt of 18% to his capital of 100, he sells the commodities at 1,062 + 18 = 1,080, i.e.,
at their price of production, or, from the standpoint of the total commodity-capital, at their value, although he makes his proﬁt only during and through the circulation process, and only from an excess of his selling price over his purchase price. Yet he does not sell the commodities above their value, or above their price of production, precisely because he has bought them from the industrial capitalist below their value, or below their price of production. Thus, merchant's capital enters the formation of the general rate of proﬁt as a determinant pro rata to its part in the total capital. Hence, if we say in the given case that the average rate of proﬁt = 18%, it would = 20%, if it were not that 1/10 of the total capital was merchant's capital and the general rate of proﬁt thereby lowered by 1/10 This leads to a closer and more comprehensive deﬁnition of the price of production. By price of production we mean, just as before, the price of a commodity = its costs (the value of the constant + variable capital contained in it) + the average proﬁt. But this average proﬁt is now determined differently. It is determined by the total proﬁt produced by the total productive capital; but not as calculated on the total productive capital alone, so that if this = 900, as assumed above, and the proﬁt = 180, then the average rate of proﬁt = 180/900 = 20%. But, rather, as calculated on the total
productive + merchant's capital, so that with 900 productive and 100 merchant's capital, the average rate of proﬁt = 180/1,000 = 18%. The price of production is, therefore = k (the costs) + 18, instead of k + 20.
The share of the total proﬁt falling to merchant's capital is thus included in the average rate of proﬁt.
[Karl Marx — Ibid. Ch.17]
 Karl Marx — Contribution to the critique of political economy, Ch. 2
 Karl Marx — Theories of Surplus Value, VOL II, Ch. XVII, Ricardo’s Denial of General Over-production. Possibility of a Crisis Inherent in the Inner Contradictions of Commodity and Money
Marx provides one interesting example of what Capitalist contradictions may produce in the form of crises:
If, therefore, through any circumstance or combination of circumstances, the market-prices of the commodities (of all or most of them, it makes no difference) fall far below their cost-prices, then reproduction of capital is curtailed as far as possible. Accumulation, however, stagnates even more Surplus-value amassed in the form of money (gold or notes) could only be transformed into capital at a loss. It therefore lies idle as a hoard in the banks or in the form of credit money, which in essence makes no difference at all. The same hold up could occur for the opposite reasons, if the real prerequisites of reproduction were missing (for instance if grain became more expensive or because not enough constant capital had been accumulated in kind). There occurs a stoppage in reproduction, and thus in the flow of circulation. Purchase and sale get bogged down and unemployed capital appears in the form of idle money. The same phenomenon (and this usually precedes crises) can appear when additional capital is produced at a very rapid rate and its reconversion into productive capital increases the demand for all the elements of the latter to such an extent that actual production cannot keep pace with it; this brings about a rise in the prices of all commodities, which enter into the formation of capital. In this case the rate of interest falls sharply, however much the profit may rise and this fall in the rate of interest then leads to the most risky speculative ventures. The interruption of the reproduction process leads to the decrease in variable capital, to a fall in wages and in the quantity of labour employed. This in turn reacts anew on prices and leads to their further fall.
[Karl Marx — Theories of Surplus Value, Ch. XVII, Crises]
 Ibid. Crises
 Ibid. Ch. XVII, Ricardo’s Denial of General Over-production. Possibility of a Crisis Inherent in the Inner Contradictions of Commodity and Money
 Ibid. Ch. XVII, On the forms of crisis
 Karl Marx — Theories of Surplus Value, Two Essentially Different Phases in the Exchange Between Capital and Labour
 Karl Marx – Capital VOL III, Ch. 17
 Ibid. Ch. 17
 Ibid. Ch. 17
 Anwar Shaikh — Measuring the Wealth of Nations, page 3