Letters from Tomis

An ongoing series of reflections on Marxist economics after reading What is Marxism: An Introduction into Marxist Theory by Rob Sewell and Alan Woods. The thoughts, opinions, and any errors are mine alone.

It is an unfortunate hallmark of the modern intellectual landscape that, despite the magnificent ruins of capitalism crumbling around us, its apologists continue to prop up its most dubious justifications with the kind of earnestness that only blind faith can muster. Among the most sacred tenets of this embattled orthodoxy is the so-called utility theory of value, which, like a conjurer’s trick, purports to explain economic value in terms of individual preference and subjective satisfaction rather than the social relations of labor. As we shall see, not only does this theory suffer from grievous conceptual inadequacies, but it also serves a most convenient ideological function: to obfuscate the exploitative mechanisms of capitalism and render them invisible to the unsuspecting layman.

The Utility Theory: A Flimsy Justification for Market Mysticism

According to the utility theory of value, the worth of a good or service is not determined by the labor that went into its production, as Marxist economics would argue, but rather by the degree to which individuals desire it. Here, value is cast as an ephemeral, subjective phenomenon—existing not in the objective conditions of production but in the ever-changing appetites of consumers. A diamond, in this view, is expensive not because it is the product of backbreaking labor in the mines of South Africa, but because some millionaire or oligarch happens to covet it more than they do a loaf of bread.

It is worth pausing for a moment to recognize the sheer intellectual slipperiness of this proposition. The utility theorist does not deny that labor is involved in the creation of goods, but he insists that this labor is economically irrelevant unless it satisfies some subjective preference. If no one desires the baker’s bread, then it is, according to this doctrine, worthless—even if it was produced through hours of diligent work. Conversely, if someone irrationally covets an object of no intrinsic usefulness (say, a digital orange president drawing in the form of an NFT), then this item magically acquires value simply because a fool was found to pay for it.

This is not a theory; it is a theology. It is an act of mystification designed to distract from the undeniable reality that all commodities must, at some stage, be the product of human labor. To insist otherwise is to engage in a kind of economic sorcery that renders production an incidental footnote to consumption, when in fact it is the very basis of it.

The Marxist Alternative: Value as Socially Necessary Labor

By contrast, the Marxist labor theory of value offers a far more rational and empirically grounded account of economic worth. Here, the value of a commodity is determined by the socially necessary labor time required to produce it under given conditions of productivity. This explains why a chair takes more labor and resources to produce than a toothpick and why, barring market distortions, it will generally command a higher price. Value is not some arbitrary expression of individual desire but a reflection of the real labor embodied in a product.

The utility theory of value fails precisely because it abstracts the question of value away from the material process of production and places it in the ethereal realm of consumer preference. If demand alone determined value, we would have no way to explain why two commodities requiring vastly different amounts of labor do not sell for the same price simply because they are both “wanted.” Likewise, we would be forced to conclude that the labor performed by workers is of no economic consequence unless it happens to correspond to the fickle whims of the market.

This is, of course, the ideological function of the utility theory: it allows the capitalist to pretend that his profits have nothing to do with the unpaid labor of his workers. If value is merely a matter of subjective preference, then there is no exploitation to speak of—only mutually agreeable exchanges between rational individuals. Never mind that the factory worker who produces thousands of dollars’ worth of goods each day is paid only a fraction of that sum. Never mind that capitalists contribute no productive labor yet accumulate vast fortunes. According to this sleight of hand, capitalism is not a system of exploitation but a neutral, voluntary arrangement dictated solely by human desire.

The Reality of Exploitation and the Collapse of Market Illusions

The greatest irony, of course, is that even capitalism itself does not behave according to the principles of the utility theorists. If markets were purely governed by subjective value, then price fluctuations would have no discernible relation to production costs or labor inputs. Yet, time and again, we see prices responding to real material conditions—supply chain disruptions, technological advancements, and most crucially, the cost of labor. If tomorrow every worker in the world refused to labor, would the stock market continue to function on the strength of “demand” alone? Hardly. The entire edifice would collapse precisely because value is derived from labor, not from the daydreams of consumers.

To believe in the utility theory of value is to accept a comforting illusion, a fairy tale in which economic injustice does not exist because value is merely whatever people will pay for it. It is to overlook the sweatshops, the factory floors, the fields and the mines, and to pretend that the toiling masses are irrelevant to the wealth they create. It is to see only the final transaction at the market stall and to ignore the exploitation that made that transaction possible.

Marx, as ever, cuts through this nonsense with a single, brutal truth: capitalism does not generate wealth; it extracts it. The utility theorists may continue their mystifications, but they cannot conceal the simple reality that without labor, there is no value. And without exploitation, there is no capitalism.