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Socially necessary labour time in Marx's critique of political economy is what regulates the exchange value of commodities in trade and consequently guides producers in their attempt to economise on labour. Marx is a common German surname. ...
Political economy was the original term for the study of production, the acts of buying and selling, and their relationships to laws, customs and government. ...
In Marxian political economy, exchange value refers to one of three major aspects of a commodity, i. ...
The word commodity has a different meaning in business than in Marxian political economy. ...
A fruit stand at a market. ...
Unlike individual labour hours in the classical labour theory of value formulated by Adam Smith and David Ricardo, the Marxian value is conceived as a fraction (or 'aliquot part') of society's labour-time. The labor theory of value (LTV) is a theory in economics and political economy concerning a market-oriented society: the theory equates the value of an exchangeable good or service (i. ...
Adam Smith Adam Smith, FRS (Baptised June 5, 1723 – July 17, 1790) was a Scottish political economist and moral philosopher. ...
David Ricardo (April 18, 1772 — September 11, 1823), a British political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists. ...
Marx did not define this concept in mathematically exact terms, and he suggests it may be interpreted in various ways, because it connects average levels of labor productivity to social needs expressed as monetarily effective market demand.
Simplified explanation of the concept
In a market economy, labour expenditures producing outputs and the market demand for those outputs are constantly adjusting to each other. This is a complex process, in which enterprises operating at varying levels of productivity and unit-costs compete with each other in responding to the expansion and contraction of market demand for their output. In the third volume of Das Kapital, Marx discusses how the market value (or "regulating price") of a commodity may be determined under different conditions of demand and productivity. The term describes an economy where goods and services are traded. ...
Das Kapital (Capital) is a very large treatise of political economy written by Karl Marx in German. ...
A given mass of new value is produced in a given time, but how this new value will realised and distributed as income is finally established only after products are sold at specific market prices. If the market for a commodity is oversupplied, then labour-time was expended in excess of what was socially necessary. If the market for a commodity is under-supplied, nearly all the labour-time expended on its production is socially necessary. The word commodity is a term with distinct meanings in business and in Marxian political economy. ...
The simplest definition of socially necessary labour time is the amount of labour time performed by a worker of average skill and productivity, working with tools of the average productive potential, to produce a given commodity. This is an "average unit labour-cost", measured in working hours. The word commodity is a term with distinct meanings in business and in Marxian political economy. ...
If the average productivity is that of a skilled worker, and a skilled worker produces a commodity in one hour, and an unskilled worker produces a commodity in four hours; then, the unskilled worker will have only contributed one hour's worth of value in terms of socially necessary labour time. The excess hours worked by the unskilled worker do not produce social value. // Latin root meaning The term social is derived from the Latin word socius, which as a noun means an associate, ally, companion, business partner or comrade and in the adjectival form socialis refers to a bond between people (such as marriage) or to their collective or connected existence. ...
But the production of any commodity generally requires both labour and some produced means of production (or capital goods), like tools and materials. The amount of labour so required is called the direct labour input into the commodity. Yet the required capital goods have in their turn been produced (in the past) by labour and other capital goods; and so on for these other capital goods, and so on. The sum of all the amounts of labour, that were direct inputs into this backwards-stretching series of capital goods produced in the past, is called the indirect labour input into the commodity. Putting together the direct and indirect labour inputs, one finally gets the total labour input into the commodity, which may also be called the total embodied labour in it, or its direct and indirect labour contents.
If producers produce products below the socially average labour-cost for those products, they obtain extra profit when those products are sold at the ruling market prices. A constant incentive therefore exists to reduce labour-costs by increasing the productivity of the labour force. The law of value is a concept in Karl Marxs critique of political economy. ...
In economics the labor force is the group of people who have a potential for being employed. ...
This can be done through higher exploitation, economising and better equipment. The long-run effect is that it takes less and less labour-time to produce a product. Enterprises cannot do very much about reducing their fixed input costs usually, because these are rarely under their control. But they can always try to reduce their labour costs.
"Socially necessary labour" therefore refers to at least three economic relationships: between the specific productivity of a producer and the average productivity in his branch; between the outputs of the branch of production and social needs expressed through monetarily effective demand; and between the output of a producer, and the output of the whole branch (that can be sold).
Marx and Ricardo Marxist value theory treats economic value as an attribute of labour-products which exists by virtue of social relations of production. Thus, value is a purely social characteristic of labour-products. The substance of the value of a commodity is a determinate quantity of social labour. Value is a term that expresses the concept of worth in general, and it is thought to be connected to reasons for certain practices, policies, or actions. ...
Relations of production (German: Produktionsverhaltnisse) is a concept frequently used by Karl Marx in his theory of historical materialism and in Das Kapital. ...
That is, the existence of value presupposes social relations between people organised into a society. 'Socially necessary labour time' encapsulates this essential 'relatedness' of value - it is labour time assessed in relation to social needs, not merely labour time performed. Although Harvard University has featured a Department of Social Relations (in which Talcott Parsons played a prominent role), and although the term social relations is frequently used in social sciences, there is no commonly agreed meaning for this concept (see also the entry social). ...
This distinction demarcates Marx from other political economists, but is often overlooked in accounts of Marx's value theory. Marx understood that the casual reader might mistakenly treat his category as interchangeable with its Ricardian predecessor, and in later editions and the Afterword to the Second German Edition implores readers to pay particular attention to the mediations between that old category and the one his own theory sought to establish. Marx's concept of value is not intended to be an equilibrium price. He does not assume market equilibrium, but aims to explain how the process of convergence between supply and demand practically occurs. David Ricardo (April 18, 1772 — September 11, 1823), a British political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists. ...
Equilibrium price is the price at which the quantity in demand is equal to the quantity of that good supplied. ...
Criticism Marx's interpretation of value from the point of view of a society as whole proved elusive for many critics. Marx took a swipe at them, in a letter to a friend, Dr Kugelmann:
"All that palaver about the necessity of proving the concept of value comes from complete ignorance both of the subject dealt with and of scientific method. Every child knows that a nation which ceased to work, I will not say for a year, but even for a weeks, would perish. Every child knows, too, that the masses of products corresponding to different needs require different and quantitatively determined masses of the total labour of society. That this necessity of the distribution of social labour in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance, is self evident. No natural laws can be done away with. What can change in historically different circumstances is only the form in which these laws assert themselves. And the form in which this proportional distribution of labour asserts itself, in a state of society where the interconnection of social labour is manifested in the private exchange of the individual products of labour, is precisely the exchange value of these products" [Marx, letter to Dr Kugelmann, July 11, 1868, in Marx/Engels Selected Correspondence, p. 209 ].
Despite these comments, Marx has been criticised strongly for adding the "socially-necessary" qualification to labour time by the libertarian philosopher Robert Nozick, in his influential Anarchy, State and Utopia, for whom it is an unjustified 'bolt-on' aspect of Marx's theory. Robert Nozick (November 16, 1938 – January 23, 2002) was an American philosopher and Pellegrino University Professor at Harvard University. ...
One debate in Marxian economics concerns the question of whether the product-values formed and traded include both direct and indirect labor, or whether these product-values refer only to current production costs (or the value of current replacement costs). Marxian economics refers to a body of economic thought stemming from the work of Karl Marx. ...
Mirowski (1989) for example accuses Marx of vacillating between a field theory (labour-time currently socially necessary) and a substance theory of value (embodied labour-time).
See also The law of value is a concept in Karl Marxs critique of political economy. ...
Surplus labour is a concept used by Karl Marx in his critique of political economy. ...
Useful commentaries W. Paul Cockshott and Allin F. Cottrell, "Value's Law, Value's Metric", September, 1994 http://reality.gn.apc.org/econ/METRIC/metric.htm
Ernest Mandel, Introduction to Marxist Economic Theory. Pathfinder Press.
I.I. Rubin, Essays on Marx's theory of value. http://www.marxists.org/subject/economy/rubin/
Anwar Shaikh, Market value and Market Price http://homepage.newschool.edu/~AShaikh/pal3.pdf
Romand Rosdolsky, The Making of Marx's Capital. Pluto Press.
Makoto Itoh, Value and Crisis; Essays on Marxian Economics in Japan. Monthly Review Press.
Abelardo Mariña-Flores, Market price of Production: Articulation of Market Value and Production Price as a Way for a Structural Interpretation of Disequilibrium in the Framework of the Law of Labour-Value http://www.gre.ac.uk/~fa03/iwgvt/files/9-marina.rtf
James Heartfield, "The Economy of Time" http://www.heartfield.pwp.blueyonder.co.uk/economy.pdf
P. Mirowski, More Heat than Light. Cambridge: Cambridge University Press, 1989.
Note The concept of socially necessary labour time is discussed on the OPE-L list (Outline of Political Economy) http://ricardo.ecn.wfu.edu/~cottrell/OPE/archive/ | 
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