Capital, Labour and Value… I Really Don’t Understand These Terms at All…

For most of my life, I’ve managed to avoid reading much, if anything, about political theory. I have to admit I struggle reading anything from a Marxist perspective because I don’t understand what any of the words mean (I’m not convinced I even know how to pronounce some of them…), or how the logic works that tries to play them off against each other.

The closest I do get to reading political books tend to be more related to organisational theories – things like Parkinson’s Law, for example…;-)

So at a second attempt, I’ve started reading David Graeber’s “The Utopia of Rules”. Such is my level of political naivety, I can’t tell whether it’s a rant, a critique, a satire, or a nonsense.

But if nothing else it does start to introduce words in a way that gives me a jumping off point to try to make my own sense out of them. So for example, on page 37, we have a quote claimed to be from Abraham Lincoln (whether the Abraham Lincoln, or another, possibly made up one, I have no idea – I didn’t follow the footnote to check!):

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. labor is the superior of capital, and deserves much the higher consideration.

This followed on from the observation that “[m]ost Americans, for instance, used to subscribe to a rough-and-ready version of the labor theory of value.” Here’s my rough and ready understanding of that, in part generated as a riffed response to the Lincoln quote, as a picture:


The abstract thing created by labour is value. The abstract thing that capital is exchanged for is value. That capital (a fiction) can create more capital through loans of capital in exchange for capital+interest repayments suggests that the value capital creates – value that corresponds to interest on capital loaned – is a fiction created from a fiction. It only becomes made real when the actor needing repay the additional fiction must acquire it somehow through their own labour, though in some situations it will also be satiated through the creation of capital-interest, that is, through the creations of other fictions.

Such is the state of my political education!

PS here some other lines I’ve particularly liked so far: from p32: “The bureaucratisation of daily life means the imposition of impersonal rules and regulations; impersonal rules and regulations, in turn, can only operate if they are backed up by the threat of force.” Which follows from p.31: “Whenever someone starts talking about the ‘free market’, it’s a good idea to look around for the man with the gun. He’s never far away.”

And on international trade (p30): “(Much of what was being called ‘international trade’ in fact consisted merely of the transfer of materials back and forth between different branches of the same corporation.)”


    • Tony Hirst

      @Joss Thanks for linking to those… At the risk of being making a category mistake along the lines of “But where is the University?”, I guess my immediate response is: ‘but where’s the capital?” ;-)

      • Joss

        Money. As the universal equivalent form of value, capital is expressed in the form of money so that it can be used to produce more money. Marx referred to this as M-C-M’ or the ‘general formula for capital’ Money is used to produce Commodities, which are used to produce Money, and so on. Capital is only superficially a ‘thing’. Marxists argue that capital is a social relation based on the form of value, which those illustrations, especially Cleaver’s, tries to show.

  1. Joss

    I think starting with Graeber might have confused you. There’s no sleight of hand, but it is difficult to grasp because we’re trying to use abstract critical concepts to better understand naturalised features of how we relate to one another. We’re thinking and talking abstractly about the key features of contemporary social life. Forget about interest and finance until you’ve established the fundamentals of value theory. I’ve sent you an email and a book that might help :-) There’s also a glossary of terms that might be useful e.g. ‘value’

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