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Value as Substance

Substantialist approaches to value posit the labour content of a good or service as 'an order-bestowing force', as opposed to anything external to it.1 Substantialist theories of value see value as carried and conserved within things, either inhering within the things themselves or inserted there by the labour that created them. They rest on a series of defining positions: the ascription of a natural basis to economic value; the suggestion that value is conserved from the production through to the exchange of products; the 'reification' of the economy as an orderly 'law-governed structure' akin to nature; the proposal of an 'invariant standard' of value; the policing of a boundary between activities productive and unproductive of value; the conviction that the sphere of production is where value is determined; and the resulting 'relegation' of money to a purely 'epiphenomenal status' expressive of embodied labour.2 As with so much else in value theory, we can trace this line of interpretation to Aristotle, who located in labour a common element underlying the mystery of the equivalent exchange of diverse goods.3

In the modern age, theories of value mimicked the development of Western physics.4 When the physics of energy conservation was the only science available, the first stirrings of substantialism in 'balance of trade' mercantilism took on the Cartesian insight that motion is an 'embodied substance . passed about from body to body by means of collision', reifying value as a substance 'conserved in the activity of trade to provide structural stability to prices and differentially specified in the process of production'.5 Taking this analogy forwards, where the substantialist approach really comes alive is in the work of the physiocrats and, later, the classical political economists. In the Wealth of Nations, Adam Smith suggests that 'It is natural that what is usually the produce of two days' or two hours' labour, should be worth double of what is usually the produce of one day's or one hour's labour', a position later taken up by David Ricardo and, to some extent, Karl Marx.6

From mercantilism onwards, the trajectory of substantialism and associated 'objective' theories of value from the seventeenth century was also deeply imbricated in social and political shifts, and served the purposes of different actors at different times in different places, with consequences by turns reformist, reactionary and revolutionary. Mercantilism buttressed the social power of the rising merchant class with a zero-sum understanding of value as bound within national borders in the face of expanding international trade; physiocracy buttressed the power of agriculturalists against mercantile interests; classical political economy, the power of industrialists against feudal remnants; and Marx's version of the labour theory of value, the power of the increasingly assertive proletariat against the industrialists. Today, the national populist tenor of the times grants conservationist appreciations of value as a zero-sum game or substance in time and space fresh political potency, rendering the study of substance theories of value newly relevant. The present-day salience of such thinking shows that the problem of value is by no means a drily academic topic, but one that touches everyday life and current affairs.

Mercantilism and Physiocracy

Substantialist theories of value first had real-world economic and political impact through so-called 'balance of trade' mercantilism, the 'first appearance of a conservation principle in Western economic thought'.7 Mercantilism reacted to the shifting political economy of sixteenth- and seventeenth-century colonialism, wherein trade expanded and vast amounts of precious metals were extracted from colonies and transformed into currency. The latter came to convey wealth and prosperity, and the 'production boundary' between productive and unproductive was redrawn around 'whoever bought, owned and controlled' its supply. Where income was greater than expenditure, an enterprise was deemed productive, and those who drew down on this surplus as consumers without producing were deemed unproductive.8

The mercantilist understanding of the economy - which reappears today in the return of protectionist nationalisms - suggested that a system of equivalent exchange must always mean, in the words of Francis Bacon, that 'whatever is somewhere gotten is somewhere lost', justifying inter-country rivalry on the basis that 'trade is a zero-sum game'.9 Value is here taken to be something conserved, and, to the extent that the exchange in which it features is conducted with the national currency, containable within the borders of the state from which it arose. Hence, the positive trade balance - back on the lips of the post-liberal right today - comes to represent the conservation and augmentation of the value substance.

Another element of classical substantialism that crops up in the intellectual imaginary of contemporary populisms of both right and left is the positioning of sections of the economy that are 'productive' of value against those that are 'unproductive' of value. Such a distinction is intrinsic to theories of value that rest on a 'conservation principle'. No substantialism can successfully free itself of the presumption of the unproductiveness of one economic activity or another, because 'the imposition of conservation principles in the context of a substance theory of value essentially dictates the existence of such categories'. The French physiocrats 'were the first to make the postulation of unproductive sectors a hallmark of their analysis', and from this it 'became the hallmark of a substance theory of value'.10

The physiocrats were a mid-eighteenth-century school that sprang from the court of Louis XV in France, mainly gathered around the physician and royal advisor François Quesnay. Quesnay's medical practice inspired a 'metabolic' vision of the economy, and specifically the role of agriculture within it. Quesnay was frustrated with the mercantilist policies of the French monarchy, which focused on trade and fundraising for military expenditure, rather than what he saw as the 'productive' agricultural sector.11 The physiocratic distinction of productive from unproductive had political implications, insofar as the 'almost complete identification of productivity with the agricultural sector had an overriding aim. Their restrictive production boundary gave the landed aristocracy ammunition to use against mercantilism, which favoured the merchant class, and fitted an agricultural society better than an industrial one.'12 For a physiocrat such as Boisguillebert, the true value of things resided in the amount of labour-time that is expended in the production of the particular commodity, whilst the money that expressed different quantities of value in exchange 'disturbs the natural equilibrium or the harmony of the exchange of commodities'. This is, in part, a result of the historical circumstances in which Boisguillebert operated, whereby the court of Louis XIV was characterized by a 'blindly destructive greed for gold'.13 In language that invites evident parallels with present populist discourse, Boisguillebert referred to finance as a 'black art', championing a return to the 'real economy' long before it became fashionable to do so - indeed, around the time when such a distinction was still halfway plausible.

Assessing the contributions of Boisguillebert and others, Marx attributes to the physiocrats a laudable desire to investigate surplus value and relate it to labour-time, but without having first given thought to the form of value itself. In this way, the physiocrats were guilty of 'discussing a complex form of the problem without having solved its elementary form'. This led to them 'confusing the labour which is materialised in the exchange-value of commodities and measured in time units with the direct physical activity of individuals'.14

Smith and Ricardo

With the rise of classical political economy, Smith and Ricardo critiqued the physiocrats on the basis that burgeoning industry could not be accounted for within a framework that placed all productivity in the hands of agriculture.15 But this merely replaced the active agent in a similarly productivist appraisal of value. For Smith, value represented the time spent by workers in producing the object in which their labour is realized as productive. For Smith, labour was unproductive only when it did not result in an amount of value proportionate to that required to enable workers to subsist. The necessity of some other quantity through which this subsistence could be secured was what led Smith to conceptualize the role of the surplus in characterizing capitalist production. Workers who drew on the surplus to survive, as well as merchants who merely moved goods rather than created them, fell foul of this divide between the productive and the unproductive.16 Government, too, fell foul of this ideological distinction, the political consequences of which...