An interview with Michael Heinrich: the Interpretation of Capital (Part II)

by Xiaoping Wei on October 22, 2013

Xiaoping Wei, professor, director of History of Marxism Philosophy in the Philosophy Institute of the Chinese Academy of Social Sciences, vice-director of History of Marxism Philosophy Society of China, vice-director of Western Marxism Society of China, author of The Reflection on the Historical Subject and Historical Object (1999), On the Tracks of Karl Marx (2005), German Ideology, re-read and analysis from MEGA (2010), Rethinking China’s Economic Transformation (2010).

Michael Heinrich is Professor of Economics at Hochschule fuer Technik und Oekonomie, Berlin, Germany. He is managing editor of PROKLA: Zeitschrift fuer kritische Sozialwissenschaft [PROKLA: Journal of Critical Social Sciences], and author of An Introduction to the Three Volumes of Karl Marx’s Capital (Monthly Review Press, 2012), Die Wissenschaft vom Wert [The Science of Value] (1999, English translation forthcoming 2013). Further texts can be found at

Continued from part I.

You have spoken about these four “breaks,” but what is the result of all these considerations?

With these four breaks a completely new field of science is constituted: this was the scientific revolution Marx was partaking in, he entered this new field of science. In some respect, what Marx did is similar to what Galileo did. Galileo constituted a new field of physics. Galilean physics provides not only some new results, it is a new science, completely different from what was called physics in medieval or in ancient times. Marx did the same in the field of economics and social sciences. But nobody is perfect. Marx opened up and entered this new field but he himself was not at any step completely free from the old ideas and concepts. In Capital you can sometimes find a certain mixture, old concepts merged together with new concepts although these new concepts imply a deep criticism of the old concepts. This mixture leads to what I have called “ambivalences”—notions and arguments that are oscillating between old and new concepts. And these ambivalences create a number of problems, like for example the famous transformation problem which was discussed so often in 20th century. Had Marx been more consequent with his own concepts, the transformation from values to prices of production wouldn’t appear as a problem. Another problem of this type is Marx’s notion of money commodity. He insisted that there must be a money commodity, what is not really the consequence of his own concept of value (only the money form is necessary, but it is not necessary that the bearer of this form has to be a commodity, which can be represented by a paper, the bearer of the money-form can also be a paper which doesn’t represent a money commodity). If my view is correct, that these problems result from basic ambivalences in Marx’s theory, then you cannot change some single points but you have to discuss the question of what really is the core of Marx’s approach, which arguments fit to this core, and which do not. Such an inquiry was the main aim of my book Die Wissenschaft vom Wert.

Marx was occupied with classical political economy, but today neoclassical economics is dominating. What is the difference between classical and neoclassical theory?

There are several differences. One very visible difference is the extensive use of mathematics in neoclassical theory. But very often the price of the use of mathematics is the unrealistic abstraction of the neoclassical models, for example the model of the single-good-economy: it is assumed that a whole economy produces only one single kind of goods.

Another difference is the importance of the notion of marginal utility. Adam Smith argued that utility cannot explain the exchange value of goods by using his famous example of water and diamonds: water has much more utility for men than diamonds but a diamond has a bigger exchange value than water. From this Smith concluded that utility cannot explain exchange value. Neoclassical economists agree with Smith, but they distinguish between “utility” and “marginal utility.” Marginal utility is the additional utility we receive by an additional quantity of something. Water for example has a very high utility for men, we cannot live without water, but fortunately we have a lot of water at our disposition (outside a desert). So when we receive an additional quantity of water the additional utility (the “marginal utility”) is very low. But because I have no or nearly no diamonds the additional utility (marginal utility) of even a very small diamond I receive is very high. In this way these economists started to explain exchange value by using marginal utility.

What is also characteristic of neoclassical economics is the static character of its modeling. The classical economists were interested in dynamic processes like growth or the long-run development of the profit-rate and so on. Neoclassical models mainly formulate a kind of economic equilibrium, a balanced situation which has the tendency to remain stable if there is no disturbance from outside.

On such points you have a lot of differences between classical and neoclassical economics, and neoclassical economists would say we represent modern economics, whereas the classical political economy of Smith and Ricardo represents old-fashioned economics; and regarding Marx they argue (if they argue, mostly they neglect Marx) that maybe he has some points in criticizing Smith and Ricardo, but we neoclassical economists are beyond Smith and Ricardo and therefore we cannot be affected by Marx’s critique.

But when you consider the four points of break I mentioned, then it quickly becomes very clear that Marx criticized not only single points or results of Smith and Ricardo, but he also criticized the foundations of their science, foundations which are still shared by neoclassical economics. Therefore with these four points in mind, I can argue, Marx’s critique is so fundamental that it also impacts on modern neoclassical economics. Marx is still up to date.

Yes, that is very clear. But what do you think was the idea behind Marx’s critical research, and to what extent did he achieve his aim? For example Marx had a certain theory of value that can explain exploitation. So, for him, was this enough?

What was the central point for an author is a difficult question. Marx formulated a labor theory of value and based on this a theory of exploitation. But this result was not very original. It existed before Marx. The so-called “Left Ricardians,” leftists like the young Thomas Hodgskin, used Ricardo’s ideas in order to formulate a kind of labor theory and a theory of exploitation in the late 1820s and 1830s. It is a very simple conclusion: when all the wealth is produced by workers, but workers live in such misery, then there must be a kind of exploitation of the workers. In the early workers’ movement, exploitation was a very common idea long before Marx.

If we only stress that Marx had a labor theory of value and theory of exploitation then we neglect his originality and reduce him to something which was already reached before him. Specific to Marx is the certain character of his labor theory of value and his theory of exploitation. For example, in contrast to all former theories, Marx’s labor theory of value was a “monetary” theory. His main criticism of Ricardo and the Left Ricardians was that they didn’t understand what money is. Marx appreciated Ricardo a lot, but he criticized him for not understanding the connection between commodity producing labor and money.

Also in contrast to former theories of exploitation, Marx’s exploitation theory is not a theory of robbery. When Marx uses the word exploitation, he doesn’t have robbery in mind. This he stressed in the second section of volume I of Capital: we have to explain the existence of capital gains even when there is always an exchange of equivalents. And in the Notes on Wagner, probably Marx’s last economic manuscript, he is really angry that the economist Wagner states that Marx would argue with a kind of “robbery.” Not to do this is one of the main differences between Marx’s theory of exploitation and the older theories of exploitation.

But the surplus value was produced by the laborer and the laborer didn’t receive it. This is a kind of robbery. But if there is no robbery at all, how does Marx understand surplus value?

Marx expresses how he understands surplus value in the second section of volume I, “Transformation of money into capital” (fourth chapter in German edition, fourth to sixth chapters in English editions). The worker doesn’t sell labor time, he sells his labor force. The labor force has an exchange value, these are the costs of reproduction (plus a certain historic element, expressing what is a normal reproduction in a certain society). If these costs of reproduction are paid to the worker, the worker has received the value of his commodity and no robbery took place. But the labor force has a certain use-value: labor force can be used to work, to spend labor time and when this happens under the conditions of commodity production, this labor time creates new value. When the labor time lasts long enough, then the newly created value is bigger than the value of the labor force, which the capitalist has to pay to the worker. The difference between these two amounts of value is the surplus value.

Is it “robbery” that the use of the bought commodity brings a bigger value than the commodity’s value itself? In the next chapter (“Labour process and valorization process,” fifth chapter in German edition, seventh chapter in English edition) Marx clearly says “no” and uses oil as an example. When a person sells oil the buyer has to pay the value of the oil. When after the deal the buyer enjoys the use-value of the oil, for example by enjoying the heat that emerges when the oil is burned, then the seller cannot come back and ask from the buyer an additional value for consuming the use-value of the good. Buying a good includes enjoying its use-value. And the use-value of the labor force is to produce new value, which is bigger than its own value. Enjoying the use-value of the bought labor force makes life nice for the capitalist, but it is not a robbery.

But when workers produce something for which the capitalist doesn’t pay full value, can we then say that labor is paid is fair?

The problem is, what does “fair” mean? “Fair” according to which rules? According to an eternal justice? Several times in Capital Marx points out how ridiculous Proudhon’s ideas of eternal justice are. But Marx didn’t want to replace Proudhon’s ideas about eternal justice with better ideas about eternal justice. In volume III Marx argues that there is no such thing as eternal justice. Justice always belongs to a certain society. In a commodity producing society we have the justice principle of commodity exchange: to receive the value of my commodity is just (and fair), and not to receive the value is not fair. The worker does not sell his labor time, he sells his labor force (and nothing else is possible, see chapter 17 in German edition, chapter 19 in English edition) and when he receives the value of the labor force then this transaction is fair—according to the rules of commodity production.

To stress that capitalist exploitation is not robbery and that the payment is “fair,” when the value of the commodity is paid, means not to justify capitalism. Marx shows in the analysis of the production process, that although exploitation is not the same as robbery, the capitalist production process is disastrous for the workers. Marx criticized the understanding of exploitation as “robbery” in order to criticize a certain way of (in his eyes very limited) criticizing capitalism, the “moral” criticism. Instead of discussing fairness and justice, Marx wants to show that capitalist production is necessarily destructive—for the single worker, for society and also for nature (see for example the end of chapter 13, chapter 15 in the English edition, “Machinery and large scale industry”).

How do you regard Marx’s labor theory of value when it is criticized and even denied by some Marxists? For example John Roemer who says that it is wrong, totally wrong, forget it.

I think what is very fundamental for John Roemer and all these guys from “Analytical Marxism” is the transformation problem. From this problem they conclude that values cannot explain prices, therefore we don’t need a value theory and when we use it, it is misleading. But this is a very limited picture of value theory. They think value theory is a necessary tool to explain prices, and when I can explain prices without such labor quantities then labor theory of value is not necessary; and when I use it, it leads to wrong quantitative results. But I’ve already criticized the starting point of this whole debate that you presuppose two different quantitative systems, a quantitative system of labor values and a quantitative system of prices of production, and then you have to search for the quantitative relation between the two. In volume III of Capital Marx indeed used such an approach and it led to all the mathematical problems extensively discussed in the 20th century. But as I tried to show in Die Wissenschaft vom Wert such an approach is not necessary regarding the monetary character of Marx’s value theory. That Marx used such an approach belongs to the ambivalences I mentioned above: Marx is not clear here, he is falling back to the field of classical political economy which he already overcame. In the second section of volume III, when Marx discusses the transformation of values in prices of production, he used a non-monetary value theory instead of amonetary value theory. What would be necessary is to criticize the old elements, and to use the achievements of Marxian value theory in order to criticize Marx’s specific presentation at such points, where it falls back behind what Marx already reached. Roemer, Steedman and other authors do just the opposite. They rely heavily on such relics of the old field of classical political economy, considering these relics as essential content of Marx’s argumentation and then argue (with a lot of mathematics) that this argumentation is wrong. But what these guys really show is that the discourse of classical political economy is wrong. But they totally miss the real achievements of Marx’s value theory.

I think Roemer and similar authors have not only a wrong understanding of Marx’s value theory, but also too narrow an understanding of what has to be explained. They want to explain quantitative price relations but Marx wanted to explain how the capitalist society as a whole is functioning. He wants to understand the specific character of a capitalist society compared with pre-capitalist societies. For all this the double character of commodity producing labor, fetishism etc. are enormously important—elements of Marxian value theory which play absolutely no role for Roemer and others.

Marx is less appreciated in Eastern countries. He is sometimes treated negatively not only in China, but also in East Germany, Eastern Europe, and Russia. A lot of young people think the labor theory of value has already been proved wrong. Also it is said that value is not only produced by labor time, but by mental abilities or by management.

This discussion is also very common in Germany. I would say that some very basic notions of Marx are confused: use-value and exchange value, concrete labor and abstract labor are confounded. In some respects it is a bit similar to the 19th century, when bourgeois economists said that it is the machine which is producing surplus value and not the worker. But machines only raise productivity of human labor. It is a change on the side of concrete labor, if you use machines. But for value abstract labor is decisive. The same counts when the working process is changed and physical labor is replaced by mental labor. Also this is a change in the character of concrete labor. However, abstract labor means not simply the duration of spending labor force. What you can measure with a clock is only the duration of concrete labor, spent by an individual worker. Abstract labor is the result of a social process which validates the concrete, individual labor spent as a part of the total social labor. And in this process complicated (mental) labor is validated in a higher degree than simple (physical) labor.

But what about the argument that capitalists, the managers, produce value? What about, for example, Microsoft?

I think you can understand all this using categories already developed by Marx. Companies like Microsoft are almost monopolists and they can at least for a certain time sell their commodities at a price above its value. So they receive an extra-profit. But this extra-profit was not created by Microsoft, they take it from others who paid a price above the value of the commodity, it is just a redistribution of value in favor of the monopolist.

But how should we judge a businessman? Is he also a laborer? Is he producing value?

Here we have to distinguish different cases. Take a small businessman, a self-employed person. This person is working, producing something, which he sells by himself. He combines two functions in one person, the laborer who produces value and the capitalist who receives surplus value. The same counts when the business becomes a little bigger and has a small number of employed persons, but he is still forced to spend the biggest part of his time by working like one of his employees. Then he is still mainly a worker. Only when he can employ so many workers that it is no longer necessary for him to work really like the others, when he can focus only on supervising, on controlling the process of exploitation, only then is he a real capitalist: the workers produce value and he receives the surplus value.

But how do we judge, for example, the case where we have two factories and the manager of one factory is better, cleverer, and this factory then has more profit than the other? How do we judge a manager’s created value and a worker’s created value?

The cleverness of the manager has nothing to do with value production. What is the clever manager doing? Perhaps he finds a new type of advertisement, so that consumers are convinced they must buy this product. In this case he can raise the price of the product over the value; the company will have a higher profit, but not because someone in the company produced more value, but because people were convinced to pay a higher price, which led to redistribution of value: the consumers receive a product of low value and pay a high price.

Or let us consider another case. Maybe the manager is not so good at advertising, but he goes to the workers and tells them: “You lazy workmen have to work much quicker. Do it or I will throw you out. There are enough unemployed people who will be happy to take your job.” The workers will be in fear and they work quicker. Let us say in the past it was usual that a worker produced 10 units per hour. Now he produces 12 units per hour and in the evening he feels much more damaged than before. The cunning manager receives 20 percent more output, but the wages remain the same. Selling this additional 20 percent output will increase the profit a lot. In this case indeed a higher value was produced, but it was not the manager who produced the additional value, the workers produced it. The manager didn’t produce anything. He just used his power to threaten the workers and press them to produce more.

Many people are talking about material and immaterial work. What about these?

Often people speak about “immaterial work,” meaning a labor process which doesn’t lead to a material product, which exists independently and which you can move through space and time. In most cases they mean services. The difference between a material product and a service exists only on the side of use-value: regarding a material product, the process of production and the process of consumption can take place at different times and in different locations (the baker produces bread during the night in his bakery, I consume the bread in the morning in my kitchen); but regarding a service, the process of production and the process of consumption happen necessarily simultaneously (a taxi-driver takes me from my apartment to the station: at the same moment the driver produces the change of location, I have to consume it). Whether a product or a service becomes a commodity depends on whether or not it is sold. If a friend takes me in his own car to the station, that also is a service, but he doesn’t sell it as a commodity like the taxi-driver.

The point gets more interesting when we come to such things like “fictitious capital” where you have prices without value. Marx analyzes this in volume III of Capital. Shares and bonds are fictitious capital, they are not the product of any labor, they just include a claim. For example, a share is the claim to receive a part of the profit of a company. When this claim is sold you receive a price, but this price doesn’t express a value; the claim and the legal right to do something is not the product of labor. When I invent something to increase the price of my shares (maybe I can convince some journalists to write a good article about my company) I don’t produce any value, I am just successful in receiving more value from others.

I think you give a very good defense of value theory, so now I want to ask: for you, are there any essential criticisms of Marx? Do you think there is any criticism of Marx’s labor theory of value that is not easy to refuse?

It depends on what you understand as “labor theory of value.” I think there is a very narrow understanding which is shared by some critics of Marx and also by some Marxists. This very narrow understanding says that labor theory is mainly to explain the exchange relations in everyday life and that this is done just by the quantity of labor, which was spent. There are good reasons why you can criticize such a narrow and reduced value theory. But Marx’s labor theory of value is not such a narrow and simple construction. It aims not only to price relation but to the way a capitalist economy is functioning: on the one hand people depending on each other by the division of labor, but as commodity producers they behave as if they are independent atoms. And this crazy economy is not breaking down at once, it is functioning in a certain way. How this is possible, how this functioning leads to crisis, all these are explained by Marx’s labor theory of value. In this sense I don’t see any serious challenge against the labor theory of value.

Nevertheless not every critic rests on false arguments. Marx’s presentation of this theory is not free from ambivalences, as I mentioned at the start of this interview. Such ambivalences can give reason to some critics. But we can remove these ambivalences, we can do this—not against Marx but guided by the scientific revolution he started. This was the project I followed in my book Die Wissenschaft vom Wert. When we do this we receive a labor theory of value purged from ambivalences and old elements which do not belong to the new field. This theory, a real social theory, which explains the functioning of a capitalist economy, is indeed unchallenged.

(End Part II, orginally published at

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