I-1. Utility Value vs. Exchange Value

         The value of all commodities is manifested in two variant expressions: “utility value” and “exchange value”.

          “utility value” refers to the commodity’s degree of usefulness in satisfying a specific need of the user, which is a manifestation of its certain innate quality (such as water’s usefulness in quenching thirst as is inherent in its inner make-up). This innate quality, as has originally been inherent in itself before it enters the market for exchange, would not vary no matter whether it’s abundantly available or running short on the market. Also, this innate utility value is hardly measurable without a comparison with other commodities on the market.

         “Exchange value”, then, is the rate of exchange or price ratio between different commodities, a quantified measurement of one commodity’s market value against another. No quantification of value is possible without a comparison or exchange with some other commodity. Therefore, besides its innate useful quality as the basic decisive factor, a commodity’s exchange value is also affected by its supply and demand conditions on the market. When economists are saying that a commodity’s value is decided by both its usefulness and degree of scarcity combined, they must actually be talking about its “exchange value”.

          … no matter how the exchange value shifts, it is first of all rooted in the commodity’s innate useful quality, i.e., its utility value, around which its exchange value fluctuates as the centerline. That is to say: utility value is the basis for exchange value. The former finally determines the latter in its existence and magnitude; while the latter is only a variant of the former, which is contingent on the ever-changing market situation. In a word, the use value is fundamental while the other only incidental. Therefore, when we talk about the source(s) of value, it should be meant to be that or those of use value, i.e., where the utility, the innate quality of usefulness, of all commodities comes from.

I-2. The Three Sources of Value

         … here is a comparatively more nearly complete and new set of viewpoints comprising a “Three-Source Value Theory”:

          1. The Nature-endowed potential value hidden in the primary raw materials for production is the primary source of value of all products….

          2. The collective wisdom of all humanity accumulated through all generations, as embodied in tools, equipments, skills, and processed materials of production, is the second important source of value of all commodities, especially of modern high-tech ones.

          3. Current labor of human individuals, labor in a broader sense, which includes:
          a. On-the-spot labor of front-line workers; 
         b. Past-labor-turned just capital (for “just capital” see below), such as savings from wage income used as current investment;
         c. Creative labor of scientists and technologists as embodied in new inventions and innovations (based, first of all, on accumulated collective human wisdom, of course);
         d. The organizing, operating and risk-taking work of entrepreneurs of business ventures and/or of new product developers;
         e. The work of managers running a business;
         f. The work of government workers supervising and servicing society on a macro scale, which is also an indispensable part of social production;
         g. The work of cultural and educational workers for the personal development of all laborers and all people;
         h. The supporting work of laborers’ family members for maintaining their working ability and for raising the young and assisting the old as future and past providers of labor.

I-3. Nature-Endowed Potential Value

         Just imagine: In the primitive times before humans learned to tame animals and till the land, they could only, with empty hands, collect wild plant fruits and seeds and hunt wild beasts and birds for food. At that time, they were still on a par with all animals, but those fruits, seeds, and animals had “life-or-death” values for them. Where did those values come from then? Their collecting and hunting activities were not essentially different from those of other animals, that is to say, not belonging to the category of “labor” as that after they had learned to breed animals and sow plants. Obviously, those fruits, seeds and animals had in themselves potential value for sustaining the lives of all humans and other animals. The collecting and hunting activities of humans were only realizing those potential values, but not adding any new value to them, just as our mouth’s activities of chewing and swallowing of food is not considered as labor for not adding value to your food.

          Later on, humans learned to breed animals and cultivate plants as their mind improved under the pressure of rough natural environments. People began to use tools and improve the qualities of their plants and animals, thus raising the latter’s value to them. Only then did human labor begin to add new value to those Nature-endowed potential values hidden in the plants and animals. Thus, Nature-endowed values and human labor values began to mix together in such a seamless way that later people almost forget the truth that labor only adds value to natural primary values but is not itself the primary value source….

I-4. Value of Collective Human Wisdom

          No production can proceed without material means and technological skills. Means of production contains, besides hidden potential value from Nature, also the value of collective wisdom of all humanity; while production technology contains, besides the current creative mental labor value of individual inventors and innovators, also collective human wisdom inherited from the long past.

         Like the Nature-endowed value in all materials, the value of collective wisdom to people can never be measured, calculated, indicated by any numbers, any math equations, and any economic theories. We should not, however, ignore the existence of their value just because they cannot be measured, just as one cannot ignore the existence of one’s own head just because one cannot measure its weight!

         Furthermore, the value of collective wisdom, like the Nature-endowed value in all materials, should also in principle belong jointly to all mankind of all generations to come on earth, not to any individual persons, any groups, or any regional communities (including nation-states).

( For the whole text of the above see: http://www.xinfajia.net/english/article.asp?articleid=5333 )

II-1. Capital as Labor

         … the money used as capital might have been gained from past labor (which can be called “capital from justifiable sources”, or to be brief “just capital”). If so, this capital is but a converted form of labor and is no different from current labor in its function of creating value, not superior nor inferior, not nobler nor the opposite. (If capital is not, or not totally, converted from past labor, then it would be another story. See below.)

II-2. Inalienability and Immeasurability of Values from the Three Sources

          All forms of individual labor in the broader sense join in the creation of new, extra value. … the total value generated from an organic integration of values from different sources should be greater than all the separate kinds of values mechanically added up….

          From the above description of the three-in-one integration and extra generation of values, we can deduce the following two conclusions:

          First, obviously, the values coming from the three different sources but integrated in the means of production can in no way be alienated from each other or measured/quantified, either separately or as a whole. The quantification of labor value in current economic theories is realized only by ignoring/obliterating the Nature-endowed values and values from collective human wisdom and counting human individual labor as the sole source of value, and is done only in the sense of exchange value, not the utility value of the final products, which is immeasurable without comparison. …

II-3. Labor as Capital

          The second conclusion is: Without the joining in of all forms of individual human labor, any Nature-endowed value or value of human collective wisdom could in no way be realized automatically and generate any “extra value”, or be converted into “surplus value”. Logically, all categories of labor investors have the right to have an equal share in the control of means of production, in the management of the production process and in the distribution of gains from production. If distribution only compensates the laborers for their cost of labor, then the values from the endowment of Nature and from collective human wisdom – both of which should belong to all mankind -- and the extra value from the three-in-one integration -- which should belong to all kinds of laborers contributing to its creation in the broader sense – would be usurped by capital owners alone. And this is the reality of today’s world. The essential nature of this reality is the forced subordination of labor to capital.

          Although the subordination of modern laborers to capital is different from that of slaves on slave-owners and of serfs on feudal lords in ancient and medieval times – the former have been enjoying greater freedom than the latter – in spite of this, modern laborers, within their working hours (or so-called “company time”), are still subjugated to the control and domination by capital-owners and/or their appointed managers while laborers have no right to choose or supervise over their managers (as against the spirit of “democracy”). And in places where capitalist social order is the “way of the world”, modern laborers, both within working hours and at their leisure or spare times, are universally subjugated to the befooling and manipulation by capitalist ideology, which permeates both academia and mass media. This physical and spiritual subordination cloaked under the rhetoric of “free exchange and free thinking” is an undeniable blare fact of the day.

II-4. Labor’s subordination to capital: why not co-operation between equals

         … if current capital can be regarded as a converted form of past labor, or “just capital” (in the case of “unjust capital”, that would be another issue, to be discussed later), then the question could be: Why not joint ownership and management of business and joint decision about distribution of gains on the basis of co-operation between equals, instead of one hiring the other and excluding the other in all decision-making?

II-5. Inalienability of labor

          To find the correct answer, some other scholars have put forward the concept of “inalienability”, which means, in brief, on-the-spot labor cannot be separated, or “alienated”, from its owner-provider as capital can; the delivery of labor, only in vague terms of working hours and working skills, cannot be so accurate in quality and quantity as that of material goods or money; and, so, the actual delivery of labor cannot be guaranteed by legally enforceable contracts, but only by direct supervision by the “buyer” of labor, i.e., the capitalist-employer, or his agent. In contrast, capital has high mobility: some one person’s capital can be split as separate investments in several different businesses in order to lower risk ratio, whereas the cost and risk for transferring one’s labor to another capitalist “buyer” is much higher than transferring one’s money investment. As a result, most of the laborers have to live with the domination by capital so as to earn bare survival for self and family, and the institution of domination has thus been taken for granted.

          It is obvious from the above that the so-called “free exchange” between labor and capital is actually an unequal deal enforced by objectively unequal positions of the related partie.…Compared with capital’s greater freedom in choosing labor, labor’s freedom in choosing capital is much more limited. That is to say, labor’s inalienability from laborer has led to the dominating position enjoyed by capital (even “just capital”) over labor. And at the same time, this domination, combined with the inalienability between values from all the three sources hidden in the means and results of production, has made it possible for capital to have unchallenged control of two of the three kinds of values belonging to the whole mankind. In this way, even originally just capital (not to say about originally unjust capital) also becomes the unjust usurper of all three kinds of values and, with these unjust gains as new capital, generates hundreds, thousands, and hundreds of thousands of times more unjust new gains and unjust new capital. There will be no end to this vicious cycle until, if unchecked, the final disintegration of human society by its spin.

          Wisdom tells us: the inalienability between labor and laborer and that between the values from the three sources are no reason at all for denying the equal role of any labor in creating new values and for denying laborers their equal rights in business governance. These two forms of inalienability are objectively existing disadvantages for all laborers, which are independent of their will, their personal effort and ability but are dictated by the nature of labor itself. Even if someday everybody becomes rich (which will never come true, however, if capital goes on dominating over labor) and so rich that everybody has abundant money to live on and to invest, there will still be the need for most people to be laborers. Labor is what distinguishes man from all other animals. Once it is trampled under foot, is detested and rejected, man will degenerate into beasts, and human civilization will degenerate and disintegrate. In fact, signs are showing already of this anticipated degeneration and disintegration. So, a just society should try every effort to keep laborers’ disadvantaged situation from being exploited, consciously or unconsciously, to subjugate them to an unequal status. Just as safeguarding (just) capital’s equal status can help nurture the spirit of diligence and frugality so as to increase investment for social production, realizing laborers’ equal status can as well greatly motivate their will and raise their productivity, and also help cultivate a healthy social-moral atmosphere for obtaining wealth through diligence while curbing the currently growing social tendency of trying to reap quick and short-term gains with little pains or even trying to get rich by unlawful or immoral means.