Applying Marx's Theory of Value: The
Role of Knowledge in the Production of Commodities
By Jim Davis and Mike Stack
Cy.Rev Editorial Board
problem in discussing "knowledge" as a factor in production
is determining its "value," and what value it adds
to goods during production. Toffler, for example, says, "Knowledge
is "value?" An economics textbook defines "value
added" as simply "the revenue from selling a product
minus the amounts paid for goods and services purchased from
other firms." This definition is unsatisfactory. Is "value"
only realized through the "selling" and the "purchasing"--that
is, only in the realm of circulation? What about the production
process? Is value really only tied to the vagaries of fluctuating
supply and demand? What if the "goods and services"
can't be sold, say, because potential users do not have the
money to purchase the product? Does the product therefore have
less (or no) value?
the central role of commodities in capitalism, Marx began Capital
with an extended analysis of the question of the "value"
of commodities. He identified two different kinds of "value"
in commodities. In order to be exchanged, a commodity must fulfill
some need or want for another human being. Marx called this
subjective and qualitative aspect of a commodity its use value.
At the same time, in order to exchange goods of different use
values, Marx argued that there needs to be some common basis
of assessing a value of the commodities, some quantitative,
measurable aspect. Marx identifies "socially necessary
labor" as that "thing" common to all commodities.
It represents the amount of abstract human labor added during
production, and the "dead" labor embodied in the raw
materials and machinery used up during production. Marx called
this aspect of commodities exchange value. The purpose of production,
the reason that humans come toge in economic activity, Marx
argued, is to create use values, to satisfy needs and wants.
The process of production, however, is the expenditure of past
and present human labor, measured as exchange value. The exchange
value of knowledge, then, is the "socially necessary labor"
that goes into the research, the analysis, and the expression
required to develop it.
"socially necessary labor" as "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." The concept of "socially necessary labor"
that defines the exchange value of a commodity recognizes an
"average" technology stage or platform upon which
production takes place. The "socially necessary labor"
then, implies also a certain common level of knowledge about
production processes. The uses of computerized typesetting in
newspaper production, of robotics in automobile manufacture,
or of crop rotation in agriculture are examples of a technology
platform. Some producers may be ahead of the average, because
of some special knowledge or technique, and some may be behind
the average, because they are unaware of a technique, or have
not invested in state-of-the-art technology. A commodity made
by a worker employed by the "behind the average with outdated
technology or using outdated techniques does not have more value
because the worker took longer to make it. Nor does the commodity
have less value if an especially productive worker, using state-of-the-art
equipment with the latest techniques takes less time to make
In the latter
example, a capitalist enterprise can realize extra profit from
use of some particular knowledge as long as the knowledge enables
its workers to produce commodities whose value is less than
the "average" value of that commodity from all producers,
both slow and fast, both backward and advanced. The advanced
producer's commodities contain less labor than the socially
necessary labor-- the enterprise ahead of the innovation wave
is producing commodities more cheaply than its competitors,
but selling them at the same price on the market. Thus, certain
kinds of knowledge become sought-after resources; and competition
drives forward technological development, although in a haphazard
and socially haphazard way, because maximum profitability is
the overriding goal.
becomes the new social average (that is, it becomes widely disseminated
so now everyone is using the new technique), its ability to
enable the innovator to accumulate extra profit is lost. To
maximize profit from knowledge, then, the capitalist must enjoy
the exclusive use of it.
to preserve the value of knowledge for the originator, knowledge
used in production must be contained, and prevented from becoming
the social average. The innovator tries to keep new techniques
that give the firm an advantage hidden from competitors. At
the same time, however, competing capitalists want to get hold
of the newest technology to effectively compete. The patent
and copyright system was developed, and continues to develop
through laws and the courts, to attempt to resolve these two
contradictory demands by competing capitalists--protection of
profit (protecting the producer of the knowledge or technology)
vs. access to profits (access by competitors who want the knowledge
or technology). Copyrights and patents are the legal mechanisms
for maintaining exclusive rights to a particular technique.
They are treated as assets on company balance sheets, and represent
sources of revenue, like mineral deposits or trade routes or
of "knowledge production" is such that the initial
version requires a substantial investment (a high fixed cost),
but subsequent copies have a relatively low reproduction cost.
Thus, the exclusive, original copy of the knowledge has high
exchange value. But just as machinery loses value as cheaper
versions come into use, copies of knowledge, because of the
relatively low cost of duplicating knowledge (hence cheaper
versions of the original), quickly depreciate the exchange value
of the original knowledge. For subsequent users, the knowledge,
once it becomes the social average (i.e., widely known or distributed)
continues to add to the mass of use values, but transfers little
or no exchange value to commodities in the course of production.
Each copy (book, computer disk, tape, etc.) of "knowledge"
consumes almost no material relative to its development cost,
so has little exchange value to transfer to the final product.
Compare this with, say; a machine cut "copy" of the
cutting tool consumes additional steel, energy, labor, and so
forth, so it may have a substantial exchange value to transfer
to the final product.
and a half ago, Marx noted that "all means of production
supplied by Nature without human assistance such as land, water,
metals in situ, and timber in virgin forests" fall into
a category of things which transfer use value, without transferring
exchange value. Elsewhere, Marx referred to the "gratuitous"
work of machines, as the result of the machinery mobilizing
natural forces. He also recognized that "the productive
forces resulting from cooperation and division of labor cost
capital nothing. They are natural forces of social production.
So also physical forces, like steam, water, etc. when appropriated
to productive processes cost nothing." "Cooperation"
and "division of labor" -- learned ideas of how to
organize production -- are examples of knowledge. Once discovered,
knowledge costs nothing (i.e., transfers little or no exchange
value), but enhances productivity, and thus adds to the mass
of use values. This is the character contemporary productive
forces. So when Toffler says "knowledge adds value,"
he is correct in the sense that it adds to the mass of use values.
But in another sense he is wrong, because knowledge reduces
the exchange value of commodities.
to production increases the constant portion of capital. It
is development based on expansion of requirements - more raw
materials, more fixed capital. Knowledge, on the other hand,
reduces the constant portion of capital and production requirements,
while at the same time expanding output. The cost of computing
power, for example, has plummeted because of new materials and
new designs. Miniaturization, computerized controls, conservation
techniques and new composite "smart" materials reduce
raw material and energy requirements in manufacturing and agriculture.
Computerized inventory control and digital telecommunications
reduce inventory requirements and speed the turnover of capital.
Some economists assign a majority, and in some countries, more
than 75%, of the postwar economic growth in the West to improved
productivity via technology, as opposed to growth resulting
from increased inputs like more labor, raw materials and machinery.
Knowledge, as a special for information, now dominates production
itself, and overwhelms the contributions from traditional inputs
to the final product.