MIA: Encyclopedia of Marxism: Glossary of Terms




The following section was written by:
Vladimir Lenin (edited)

A commodity is, in the first place, a thing that satisfies a human want; in the second place, it is a thing that can be exchanged for another thing. The utility of a thing makes is a use-value. Exchange-value (or, simply, value), is first of all the ratio, the proportion, in which a certain number of use-values of one kind can be exchanged for a certain number of use-values of another kind.

Daily experience shows us that millions upon millions of such exchanges are constantly equating with one another in every kind of use-value, even the most diverse and incomparable. Now, what is there in common between these various things which are constantly equated with one another in a definite system of social relations?

Their common feature is that they are products of labour. In exchanging products, people equate with one another the most diverse kinds of labour. The production of commodities is a system of social relations in which individual producers create diverse products (the social division of labour), and in which all these products are equated with one another in the process of exchange.

Consequently, what is common to all commodities is not the concrete labour of a definite branch of production, not labour of one particular kind, but abstract human labour – human labour in general. All the labour power of a given society, as represented in the sum total of the values of all commodities, is one and the same human labour power. Thousands upon thousands upon millions of exchanges prove this.

As a result, each particular commodity represents only a certain share of the socially necessary labour time. The magnitude of value is determined by the amount of socially necessary labour, or by the labour time that is socially necessary for the production of a given commodity, of a given use-value.

"Whenever, by an exchange, we equate as values our different products, by that very act, we also equate, as human labour, the different kind of labour expended upon them. We are not aware of this, nevertheless we do it."

Karl Marx
Capital, Volume I
Chpt. 1: Section 4

As one of the earlier economists said, value is a relation between two persons; only he should have added: a relation concealed beneath a material wrapping. We can understand what value is only when we consider it from the standpoint of the system of social relations of production in a particular historical type of society, moreover, or relations that manifest themselves in the mass phenomenon of exchange, a phenomenon which repeats itself thousands upon thousands of time. "As exchange-values, all commodities are merely definite quantities of congealed labour time." (Marx, A Contribution to the Critique of Political Economy).


After making a detailed analysis of the twofold character of the labour incorporated in commodities, Marx goes on to analyse the form of value and money. Here, Marx's main task is to study the origin of the money form of value, to study the historical process of the development of exchange, beginning with individual and incidental acts of exchange (the "elementary or accidental form of value", in which a given quantity of one commodity is exchanged for a given quantity of another), passing on to the universal form of value, in which a number of different commodities are exchanged for one and the same particular commodity, and ending with the money form of value, when gold becomes that particular commodity – once the universal equivalent.

As the highest product of the development of exchange and commodity production, money conceals the social character of all individual labour, the social link between individual producers united by the market. Marx analyzes the various functions of money in very great detail; it is important to note here in particular (as in the opening chapters of Capital in general) that what seems to be an abstract and at times purely deductive mode of exposition instead deals with a gigantic collection of factual material on the history of the development of exchange and commodity production.

"If we consider money, its existence implies a definite stage in the exchange of commodities. The particular functions of money, which it performs either as the mere equivalent of commodities or as means of circulation, or means of payment, as hoard or as universal money, point, according to the extent and relative preponderance of the one function or the other, to very different stages in the process of social production."

Karl Marx
Capital, Volume I
Chpt. 6: The Buying and Selling of Labour Power

See Also: Surplus value .


Vanguard & Mass

In any social movement there is a vanguard and a mass; these two concepts are meaningless outside of the movement of which they are integral parts, mutually constituted by their relation in development of the movement. The vanguard are groups of people who are more resolute and committed, better organised and able to take a leading role in the struggle, and on the other side, the mass, are larger numbers of people who participate in the struggle or are involved simply by their social position, but are less committed or well-placed in relation to the struggle, and will participate only in the decisive moments, which in fact change history. There is a continual movement and exchange between vanguard and mass.

The Marxist theory of the vanguard, in relation to class struggle under capitalism, holds that the working class (the mass) needs to be militantly lead through revolutionary struggle against capitalism and in the building of Socialism. The Communist vanguard is made up of those who are in the forefront of workers' struggle, engaged in struggles against the capitalist state and the management of the firms which are “branches” of the ruling class.

1. History of the Marxist Vanguard: An early archetypal implementation of the Marxist vanguard was formed in the Russian Revolution, namely, the Bolshevik party. Shortly before the revolution, the Bolsheviks made their position clear: "All power to the Soviets". Since the soviets were progressive representatives of the Russian masses, the Bolsheviks knew the Soviets would follow the Socialist path. In short course however, after the onset of the civil war, the Soviets were suppressed by both the Red and White Armies – their diversity was such that, at times they sympathised with either side.

From this came the Stalinist conception of the vanguard, where the party acts as the sole power in Socialist society – rather than arising out of the mass and leading it, the vanguard would administer the mass. This was justified practically by the need to defend workers against the imperialist armies, and the belief that educated, political leaders were needed to build socialism correctly, and not give into some of the "mistaken" views of the masses. Theoretically this was justified on the philosophical premise of objective truth; that the party is in sole possesion of the path towards "socialism", and thus is the ultimate leader of the working class. Since this vanguard believes it has sole claim to advancing the interests of the working class, anyone who opposes their methods is an enemy of the working class – up to and including workers, soviets, etc – and is thus suppressed.



Variable and Constant Capital

Constant capital is the value of goods and materials required to produce a commodity, while variable capital is the wages paid for the production of a commodity. Marx introduced this distinction because it is only labour-power which creates new value.

The constant capital includes that proportion of capital invested in the materials and components purchased but then embodied in the product when it is sold, as well as the materials, tools, machinery etc., which are used up, bit by bit in the course of production. If a million dollar machine, for example, is used in the production of 10,000 cars in the course of a year, before being worn out and replaced, then effectively every car has $100 worth of that machine in it. Thus constant capital includes both fixed and unit costs. The point is that no matter how much materials and components and machines are bought and sold, they do not create any new value. Whether they are stored in a warehouse before being sold, or used in factory, it makes no difference. Whatever value they had when a capitalist buys them for use in production, they still have the same value afterwards.

Variable capital means that proportion of capital which is invested in wages, in the purchase of labour-power. Marx called this capital “variable” because it is this proportion of capital which, if it is used wisely may produce a new, surplus value in the course of the labour process, over and above the “necessary labour time” which the worker needs to live and is paid in the form of wages. This investment is the only one which creates new value, because the worker is able to produce more than he needs in order to live.

So for example, let us suppose a worker earns $100 and consumes $1000 worth of materials and components to produce a product which is sold for $1300. This value could be represented as constant capital ($1000) + variable capital ($100) + surplus value ($200). That $200 of surplus value was added to the product solely by the activity of the worker. That is, of the capitalist’s investment of $1100, only the variable capital, $100, expanded.

Marx represented this relation symbolically:

c + v -› c + v + s

The ratio of constant to variable capital, (c/v), he called the “organic composition of capital”; the ratio of surplus value to wages, (s/v), he called the rate of surplus value, or the rate of exploitation of labour, and s/(c + v) the rate of profit.

The contradiction brought out by this analysis is this. Every capitalist works might and main to reduce the wages bill, and turn over as much material as he can, investing in expensive machinery and increasing c to cut labour costs, v; this produces a general increase in the “organic composition of capital”, c/v. However, since it is only the variable capital that produces profit, the result is a falling rate of profit.