LAUSR

labour emerges from the passages in which Marx traces the origin of the error by which economists from Smith down to Marx’s contemporaries tended to ignore ‘the constant part of the value of the annual product’ (i.e. in terms of modern national accounting, the part of the value of the annual total sales which represents the consumption of the means of production). According to Marx, the confusion between concrete and abstract labour was what prevented Smith from seeing that, if it is true that the annual ‘concrete’ labour has created ( jointly with land and machinery) the entire annual product, it is equally true that, as ‘abstract’ labour, it has only created one part of the value of the annual product: this is the part added during the year to that other part which has been transferred to the product by the constant capital consumed during the year (and ‘created’ by the abstract labour in the preceding years); see Marx (1974b, pp. 381–382). 26. This treatment of the ‘twofold character of labour’ which permitted Marx thus to clarify the determination of prices, surplus value and rate of profit, also entailed a characterisation of mercantile production. The labour time of the individual producer becomes ‘abstract’ labour only with the sale of the commodities and to the extent to which it has been applied in accordance with the technical conditions dominant in the community (it is ‘socially necessary’ and has been employed in the production of commodities effectively required by the community). In other words, individual labour becomes ‘social’ (i.e. is regulated by society in both the direction and the manner of its application) only by becoming ‘abstract labour’ through exchange: this differs from the way in which individual labour becomes ‘social’ in other modes of production. Marx often used this characterisation of mercantile production in order to render evident the utopian character of socialist programmes such as those by Proudhon, Bray and Gray, who thought it possible to eliminate economic crises and the exploitation of labour by means of a ‘national central bank’ which would buy and sell products against ‘certificates’ proportional to the labour effected by the producers (e.g. Marx 1970, p. 83). Marx could easily trace the central confusion between ‘abstract’ and ‘concrete’ labour and the seeming circularity of the Smithian value measurement (see Paragraph 5 above), this representation of wages as ‘value of labour’ would therefore lead to the ‘trinity formula’ of the ‘vulgar economists’. This characterisation of ‘social’ labour in a mercantile society seems to retain its validity within a correct determination of the prices of production. The price of any commodity will depend upon the (quantity of abstract) labour socially necessary for its production and not upon the quantity of labour expended by the individual producer. Moreover, this price will be realised in the markets only to the extent to which the quantity produced does not exceed (to use Smith’s phrase) the ‘effectual demand’ of society. 638 P. GAREGNANI