Tadayuki Tsushima, 1956

Understanding “Labor Certificates” on the Basis of the Theory of Value
―The Law of Value and Socialism―

Japanese title: “Rōdō shōsho no kachiron-teki kaimei―kachi hōsoku to shakaishugi”;
Source: Chapter two of Kuremuren no shinwa (Myths of the Kremlin), 1956;
Translated: for marxists.org by Michael Schauerte;
CopyLeft: Creative Commons (Attribute & ShareAlike) marxists.org 2006.

1. Is “Abstract Labor” a Supra-Historical Category?

When Stalinism was at its height, which is to say around 1931, the German Communist Party published a book entitled Theory of Capitalism and Imperialism^[1], which was subtitled: "An Introduction to Marxist-Leninist Political Economy." I read the Japanese translation of this work that was published around the same time. In the book, there is the following passage explaining "value as a historical category":

What we said about the category of value within socialism [in terms of the law of value withering away under socialism―Tsushima] is also applicable to abstract labor. Abstract labor is an action that is socially limited and determined as the expenditure of labor-power by mutually independent commodity producers. In a society based upon the satisfaction of needs rather than the exchange of labor products, labor would once again be regarded as labor that creates concrete, beneficial use-values. This shows that the abstract labor that creates value is a historical category just like the category of value.

Marx tells us that "as a general rule, articles of utility become commodities, only because they are products of the labor of private individuals or groups of individuals who carry on their work independently of each other," and that "only in the social situation where the connection of social labor appears is manifested in the private exchange of individual products does the labor expended on the product appear as the value of this product, and as a material quality that this product has." Incidentally, what constitutes the substance of this value is what is called abstract human labor, and value is the objective form of abstract human labor., it is abstract human labor that forms the substance of this value, and value is the objectified form of abstract human labor. Marx adds that, "a use value, or useful article, therefore, has value only because human labor in the abstract has been embodied or materialized in it"^[2]. And he tells us that the value of the commodity is the social labor expended on its production in an objectified form.

The book published by the German Communist Party emphasized that under socialism the law of value withers away, and at the same time abstract human labor, which forms the substance of value, also disappears.

Is this view correct? In Japan, scholars affiliated with the former rōnō-ha tendency―who, unlike dyed-in-the-wool Stalinists, learned from the doctrines Marx, Engels and Lenin to recognize the disappearance of the law of value under socialism―opposed the view that abstract human labor is a "historical category." For example, Itsurō Sakisaka wrote:

A moment ago I spoke of the nature of value, saying that its essential determination is abstract human labor, but the nature of this abstract human labor, as can be understood by considering the labor of Robinson Crusoe [in a world without commodities―Tsushima], is included within all of the various work he performs. However, in the case of Robinson, this human labor does not have the character of value. This is because his products do not become commodities. When a product is exchanged to become a commodity, human labor becomes value as the determinant of the rate of this exchange, i.e. what determines exchange-value.

Looking at this, the difference between the commodity world and the non-commodity world (of which socialism is one example) is said to be whether abstract human labor is objectified to have the "character of value" or not, and "this abstract human labor" that provides the substance of value seems to be a supra-historical category. The person who has been the most active in insisting on this view is Samezō Kuruma. His comments have been directed against Shigeru Aihara, who has expressed doubts about this view. Kuruma writes:

In a socialist society, the labor-power of individuals is placed under the management of society, in some manner or another, so the labor that is the expenditure of this labor-power is directly social labor, having a social character from the outset. Therefore, needless to say, there is no need, as in the case of the commodity producer, for a product to assume the material mediating form of value in order to become social. Still, this certainly does not mean that the role played by labor in its abstract determination ceases. This is because, first of all...when the total labor-time is divided between the various sectors of production―in other words, when a production plan is created―this plays an indispensable role. Although in this case, unlike for commodity production, the character of abstract labor is not first constituted in the form of the value of the product via the relation of product exchange. Also, it is not the case that labor only obtains its social character, which is to say its character as one part of the total social labor, by being abstracted in that form and reduced to something general.

Rather, labor has an intrinsic social character as the expenditure of social labor-power. And when labor is dealt with in terms solely of its quantity, it appears in this abstract determination. When a plan of production is established, it is above all in this determination that labor appears. The starting point of a plan is the quantity of total labor-power society has at its disposal and how many hours of labor can be obtained for the year. The next question is how to distribute this total labor-time to the various production sectors in line with the needs of society at that given time...

Abstract labor plays an indispensable role, not only when the production plan is created, but also when products are distributed. First of all, the quantity of labor provided by each individual for the sake of social production must be determined, which means that the concrete form of labor and individual differences must be abstracted from by reducing them to abstract, socially-average labor. It is by doing this that this can be expressed in labor-time as their common measure. Thus, those participating in social labor receive a labor certificate indicating the socially average labor-time they provided...They can then take these labor certificates to a distribution center to receive in exchange the articles of consumption that are products of the same labor-time, and in this case there would be a need to indicate the various products available at the distribution center, within the range of choices allowable, as so much labor-time per kilogram or so much labor-time per liter, etc. In other words, in this case as well, the magnitude of labor is expressed as abstract labor in temporal terms alone...The difference is that instead of being indicated as a certain quantity of gold, this is indicated directly as labor-time^[3].

According to the view expressed by Kuruma, the explanation in the textbook of the German Communist Party would seem to be incorrect. Is this indeed the case? I do not think so, and believe that generally their textbook is correct, or at least closer to the truth.

I have reached the conclusion that generally speaking in a communistic social formation the role of abstract human labor is of no importance. However, within the distribution relations at the lower stage (socialism) it cannot avoid playing a certain "indispensable role." This is a fact. Still, the existence of abstract human labor is not due to the society being communistic, but rather exists as a remnant of the old, commodity production society, and is a non-communistic element. Once the communistic social formation grows, so that it develops upon its own basis, such remaining categories of commodity production society will disappear. Here I will present my views on why this is the case.

First of all there is the question of whether abstract human labor will generally play an indispensable role for the production plans in a communistic social formation, whether in its first or second stage.

Of course, if by progressively abstracting in our own minds, all human labor becomes what could be called abstract human labor, and in this sense this concept encompass and is premised upon the labor of any human society. Abstract human labor in this sense, as something pertaining to the content of the value determination, is certainly a fact as that exists as a "natural law." However, this is not where the issue lies. The question is whether this sort of abstraction is something that plays a certain social role and is carrying out a social action. We need to consider whether this abstraction exists in the sense of a certain society not being able to exist without it―or to borrow Marx's words, an abstraction that is carried out everyday in the production process of society. Engels has the following to say about a communistic social formation in Anti-Dühring:

It is true that even then it will still be necessary for society to know how much labor each article of consumption requires for its production. It will have to arrange its plan of production in accordance with its means of production, which include, in particular, its labor-powers. The useful effects of the various articles of consumption, compared with one another and with the quantities of labor required for their production, will in the end determine the plan. People will be able to manage everything very simply, without the intervention of much-vaunted "value." (note: As long ago as 1844 I stated that the above-mentioned balancing of useful effects and expenditure of labor on making decisions concerning production was all that would be left, in a communist society, of the politico-economic concept of value. (Deutsch-Franzosische Jahrbucher, p. 95) The scientific justification for this statement, however, as can be seen, was made possible only by Marx's Capital.)

Here it is indicated that what remains in a communist society of the concept of value is not the law of value, but rather something that pertains to the content of the value determination (the regulation of labor-time and the distribution of social labor to different production sectors, etc.). At any rate, however, ultimately the plan of production will be determined by "the useful effects of the various articles of consumption, compared with one another and with the quantities of labor required for their production." Engels speaks of a comparison to the labor needed for "their production" ―i.e. the useful objects that have useful effects. But in this case, all of the labor is already specific concrete labor, whether it be the work of engineering or spinning. Of course, in any society, the existence of a given laboring population is premised. But in establishing a production plan, a simple labor population is of no use, and it must always appear as specific concrete labor whether spinning labor or engineering labor.Of course if we abstract from this sort of concrete shape of labor in our minds, we arrive at the abstract labor which is encompassed in it. It is true, as Kuruma notes, that "when labor is actually realized it takes some sort of concrete form" but that "prior to this there is labor-power as a potentiality that can be realized in various forms of labor. However, this abstraction itself does not play any sort of special social role, and therefore it is not at issue as a social action. What is at issue is whether or not such an abstraction is needed or necessary qua social action. The question is whether the given society is feasible without this. It is in this sense that the question is raised of whether or not it is a historical category. The fact remains that in a communist society, whether in the first or second stage, such an abstraction is not necessary. In formulating a production plan, the starting point is all of the concrete labor, and this is adequate. It is not the case, as in commodity production society, that society is not feasible without "abstraction" as a social action.

But in the lower stage of communism (i.e. socialism) such "abstraction" is carried out as a social action in the realm of the distribution relations alone. (Unlike commodity society, however, this is consciously rather than unconsciously done.) Marx notes that in socialist society:

Labor-time would, in that case, play a double part. Its apportionment in accordance with a definite social plan maintains the proper proportion between the different kinds of work to be done and the various wants of the community. On the other hand, it also serves as a measure of the portion of the common labor borne by each individual, and of his share in the part of the total product destined for individual consumption.

Here for the labor-time apportioned for the former case, in the production plan, it is sufficient for it to always involve the time for the creation of concrete use-values alone. This can be done without carrying out "abstraction" as a social action. Yet, for the former, which is labor-time to measure distribution, it is true that this is labor-time as abstract human labor, and could not be measured otherwise. Indeed, as long as it is the measurement of a common mass, this is unavoidable. On this point, the matter is as Kuruma indicated in the passage cited earlier.

However, the question at issue is not limited to the recognition of this alone. It is important for us to bear in mind the following two points.

First of all, as already mentioned, the role of abstract labor within distribution, fundamentally speaking, is not a communistic aspect but rather a non-communistic one that is a remnant of the former commodity production society, and this will gradually wither away with the ripening of the communistic social formation. And secondly, despite this role played by abstract labor, this certainly does not mean that the law of value is in effect. ― It is decisively important to bear these two points in mind.

2. Why Does “Value” Not Emerge under Socialism?

Let me begin by commenting on the first point I raised.

In the first stage of communist society (socialism), as Marx notes, rather than distribution being carried out "according to need," as in the second stage, it is "according to labor," which is to say "the rights of producers are proportionate to the amount of labor the person contributes." In other words, Marx is saying here that an "exchange of equal labor" measured by labor-time is carried out. Fundamentally speaking, the mode of distribution will change along with the particular mode of the social organism of production itself, and along with the corresponding level of historical development among the producers, and distribution relations where equal labor is exchanged is one major economic index for distinguishing between the first and second stages of communism. At the same time we must bear in mind that these distribution relations of the "exchange of equal labor" is a "birthmark" of the old society that remains in the society of communal labor that is socialist society. Marx writes:

What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society―after the deductions have been made―exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor-time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another.

Here it is shown that the abstract labor-time which measures the distribution relations in which there is an exchange of equal labor is completely a "birthmark of the old society" (from capitalistic commodity production society). This is not something intrinsically communistic, but rather a non-communistic remnant from the old commodity society. When communist society has become a communist society that develops upon its own foundation (upon the primary foundation of a communistic social formation), these distribution relations where labor is equally exchanged cease to exist, so that distribution is carried out "according to need." This means that labor-time to measure distribution, and therefore abstract human labor as well, disappear. The category of abstract human labor that plays a certain social role will cease to exist. In this sense, the position of the German Communist Party, which views the abstract labor qua substance of value as being a historical category particular to commodity production society, just like the category of value, is the correct one. Still, this position is problematic in terms of seeing the extinction of both taking place at the same time. That is, it is problematic in terms of overlooking the fact that in the case of abstract human labor, which constitutes the substance of value, it changes its appearance somewhat, which is to say, as I will explain next, that it still exists for a period of time after the disappearance of value without being the substance of value, as a remnant of commodity production society. In other words, the category of abstract human labor accompanies the exchange of equal labor and is a historical category whose fate is tied up with this exchange.

Now let's turn to the important second problem.

Does the fact that the "birthmarks of the old society" remain in the distribution relations of socialist society mean that abstract human labor remains as the substance of value and that the law of value remains? The answer is: definitely not. There seem to be some who have tried to show that the bugaboo example of a "transfigured law of value" is such a case, but this view is too silly to merit comment. On this point, all Marxists apart from Stalinists would likely agree. But it is not easy to truly understanding this. Marx writes in his "Critique of the Gotha Programme":

Here [in the distribution relations in socialism based on the equal exchange of labor] obviously, the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered circumstances no one can give anything except his labor, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labor in one form is exchanged for an equal amount of labor in another form.

Everything is dealt with in this clear explanation provided by Marx. In the exchange of equal labor within socialistic distribution relations, "the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values."

In the world of commodities, abstract human labor is the substance of value, the measure of its intrinsic value. The magnitude of value is gauged by the quantity of this labor, and the quantity of the labor itself is measured by the continuous period of time during which it is carried out. As long as commodity exchange is the exchange of equal values, included within this exchange are equal quantities of social labor. In the case of the distribution relations within socialism (i.e. relations where the producer "receives a certificate from society that he has furnished such-and-such an amount of labor...and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost" so that the "same amount of labor which he has given to society in one form, he receives back in another") the "same principle" as the case of the exchange of commodities of equal values applies. In other words, equal quantities of labor are exchanged. (The labor exchanged in this case is abstract human labor, and could not be the measure of exchange otherwise. Here "abstraction" is carried out as a social action, which is why Marx speaks of the "same principle" prevailing.)

But the fundamental difference pointed out by Marx is that the "content and form are changed." In other words, labor does not appear as the value of a product in terms of being objectified or as a material trait of the product. In a word, labor is not manifested as value or in the value-form. Why is this?

He says there are "altered circumstances"; i.e. society has already become a society of communal labor where the means of production are commonly owned. This is because "no one can give anything except his labor, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption." The law of value can only arise in a society where the linkage of social labor is carried out through the private exchange of the products of private labor." In the case of socialism, however, there is no such exchange of products. No individual has things of equivalent value. This is because already "no one can give anything except his labor" For example, no individual possesses anything akin to a product of individual labor. The products are directly social products, and no individual has a product for exchange. What can be given is only their own labor, and what they can possess is merely the given individual means of consumption distributed by society. But would the possibility exist for the private exchange of these individual means of consumption? That may be so, but Hilferding explains this point in the following way:

It is of course true that exchange may also take place in a socialist society, but that would be a type of exchange occurring only after the product had already been distributed according to a socially desired norm. It would therefore be merely an individual adaptation of the distributive norm of society, a personal transaction influenced by subjective moods and considerations. It would not be an object for economic analysis. It would have no more importance for theoretical analysis than does the exchange of toys between two children in the nursery, and exchange which is fundamentally different in character from the purchases made by their fathers at the toy shop. ^[4]

In other words, this does not go beyond the relation where the producer "receives a certificate from society that he has furnished such-and-such an amount of labor...and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost" Here there is the exchange of equal quantities of labor but the exchange of equivalent products is not carried out. There is the distribution of products but not exchange. This is because products are directly social products and no products of individual labor exist. And lacking these elements, social labor is not objectified, and therefore value does not arise.

In Capital, Marx says: "Human labor-power in motion, or human labor, creates value, but is not itself value. It becomes value only in its congealed state, when embodied in the form of some object." For an understanding of value it is important to grasp it in terms not simply of abstract labor in general but "objectified" abstract human labor, and in a case where products are not exchanged such objectification is not possible. It is decisively important to grasp this point. To repeat, then, labor is the substance of value and the intrinsic measure of value, but is not itself value. It is only able to become value when objectified. And this only occurs through the exchange of products. At first glance, this distinction appears to "turn upon minutiae," but herein lies an important point for understanding of the theory of value.

For example, as noted in the article by Sakisaka quoted from earlier, if one only speaks in terms of the character of value and its essential determination being abstract human labor, this is not sufficient to understand why there is actually no value in a socialist society. According to Professor Sakisaka, in the world of Robinson Crusoe, as well as in a socialist society, the category of abstract human labor is able to exist. Moreover, if value's essential determination is abstract human labor, it is hard to understand, given this, why there is no value. No matter how much one pleads that this is because there is no exchange of products, this would not solve the riddle because it is said that value's essential determination is abstract human labor. It is only possible to solve this by grasping that this is not simply abstract labor in general, but rather that value is the objectified form of abstract human labor. (Lenin, for his part, in his notes on the "plan of Hegel's dialectic" clearly writes that "value=congealed labor.") In Professor Sakisaka's article he discusses the historical character of value, and attempts to explain that it ceases to exist in a socialist society, but this is a peculiar article that does not determine what exactly is the core of value. Initially he sets out to determine this. This is why he says that, "in a case where there exists unplanned exchange of products, social labor becomes value qua general abstract human labor." But this cannot constitute a correct determination of value. We should speak of "becoming the substance of value" or "social labor becoming value qua objectified general abstract human labor." Marx tells us that labor forms value but is not itself value, and only becomes value in its objectified form. Professor Sakisaka says that, "in the case of Robinson, however, this human labor does not have the character of value, because his products do not become commodities." But this is nonsense. I say this because in the case not only of Robinson but commodity production as well, "this human labor does not have the character of value." Indeed, Engels in his criticism of Duhring says that it was "Marx, who first demonstrated that labor can have no value, and why it cannot! Professor Sakisaka has forgotten this "trivial point"!

Granted, in the distribution relations of socialist society, there does exist a category of abstract human labor (which is the substance of value in the world of commodities). Nevertheless, this does not become value because there is no exchange of products, and therefore this labor is not objectified. And the explanation of Professor Sakisaka suffers greatly from not grasping this. Furthermore, here "objectified" means signifies the upside-down situation where it appears that the labor expended on a product is materialized within it to become one of its material properties. Marx says that "every product of labor is, in all states of society, a use value; but it is only at a definite historical epoch in a society's development that such a product becomes a commodity, viz., at the epoch when the labor spent on the production of a useful article becomes expressed as one of the objective qualities of that article, i.e., as its value." He then goes on to add:

A commodity is therefore a mysterious thing, simply because in it the social character of men's labor appears to them as an objective character stamped upon the product of that labor; because the relation of the producers to the sum total of their own labor is presented to them as a social relation, existing not between themselves, but between the products of their labor. This is the reason why the products of labor become commodities, social things whose qualities are at the same time perceptible and imperceptible by the senses.

In socialist society, not only does value not arise, but also the value-form that is its phenomenal form cannot exist. As I have already noted a number of times, commodity-value is the objectified form of the social labor expended on its production, and this social labor-time determines the magnitude of the commodity's value. Labor, or labor-time, is the intrinsic measure of value. But in the world of commodities, value is expressed in another commodity, not labor-time. "The value of a commodity is expressed in the use-vale of another commodity."― Here we have the genesis of money, and to explain this I would like to quote from Engels' eloquent summary in Anti-Dühring:

Therefore when I say that a commodity has a particular value, I say (1) that it is a socially useful product; (2) that it has been produced by a private individual for private account, (3) that although a product of individual labor, it is nevertheless at the same time and as it were unconsciously and involuntarily, also a product of social labor and, be it noted, of a definite quantity of this labor, ascertained in a social way, through exchange; (4) I express this quantity not in labor itself, in so and so many labor-hours, but in another commodity. If therefore I say that this clock is worth as much as that piece of cloth and each of them is worth fifty marks, I say that an equal quantity of social labor is contained in the clock, the cloth and the money. I therefore assert that the social labor-time represented in them has been socially measured and found to be equal. But not directly, absolutely, as labor-time is usually measured, in labor-hours or days, etc., but in a roundabout way, through the medium of exchange, relatively. That is why I cannot express this definite quantity of labor-time in labor-hours―how many of them remains unknown to me―but also only in a roundabout way, relatively, in another commodity, which represents an equal quantity of social labor-time. The clock is worth as much as the piece of cloth.

But the production and exchange of commodities, while compelling the society based on them to take this roundabout way, likewise compel it to make the detour as short as possible. They single out from the commonalty of commodities one sovereign commodity in which the value of all other commodities can be expressed once and for all; a commodity which serves as the direct incarnation of social labor, and is therefore directly and unconditionally exchangeable for all commodities―money. Money is already contained in embryo in the concept of value; it is value, only in developed form.

At any rate, even though labor-time is the intrinsic measure of value, the quantity of this value is not expressed in labor-time, but rather in the use-value of another commodity. Value is a social relation, but it can only be manifested in the relation between one thing and another thing, as the attribute of a thing. And eventually this reaches the general equivalent form―money. Marx notes in A Contribution to the Critique of Political Economy how the advocate of "labor money" John Gray raised the question of "why use another extraneous standard as well" if "labor-time is the intrinsic measure of value." (A Contribution), and Marx shows that an external measure necessarily arises in the world of commodities. (For more on this see section three of the first chapter of Capital.)

In the prehistory of the world of commodities there is originally barter exchange without money. Within the theory of the value-form in Capital, the world of the "simple, isolated, or accidental value-form" and the "overall expanded value-form do not directly pertain to the world of barter exchange that has existed historically, but this is precisely the world of commodities of such barter exchange (exchange of products). Incidentally, Engels says that the outcome of the transition from such barter exchange to metallic money is that, "the determination of value by labor-time was no longer visible upon the surface of commodity exchange," or stated in opposite terms, in the case of the world of barter exchange that predates metallic money the determination of value according to labor-time is perceived in the surface of commodity exchange. Engels says this in his "supplement" to the third volume of Capital. But even if it is said that such a world of commodities is, to begin with, narrow and undeveloped as a world of commodities, this is merely in comparison to the period after metallic money appears. At any rate, as long as we are dealing with a world where commodities circulate, the value of a commodity will be expressed not directly in labor-time, but in the use-value of another commodity. Otherwise, the general equivalent―money―would not have arises. (Rosenberg, for his part, says that "what could be called the fundamental core of Marx's doctrine regarding the value-form is that the value of one commodity is first able to be indicated in another commodity," and I share this view.)

In contrast, in the relations of the "exchange of equal labor" under socialism, which has already broken free of the law of value, there is no need at all for an external measure and instead the duration of labor-time itself directly as the measure. The fact that this is a society where the means of production are commonly owned and there is communal labor means that any sort of external measure is eliminated so that it is possible to utilize the measure of direct labor-time―the natural measure of labor. Engels writes:

From the moment when society enters into possession of the means of production and uses them in direct association for production, the labor of each individual, however varied its specifically useful character may be, becomes at the start and directly social labor. The quantity of social labor contained in a product need not then be established in a roundabout way; daily experience shows in a direct way how much of it is required on the average. Society can simply calculate how many hours of labor are contained in a steam-engine, a bushel of wheat of the last harvest, or a hundred square yards of cloth of a certain quality. It could therefore never occur to it still to express the quantities of labor put into the products, quantities which it will then know directly and in their absolute amounts, in a third product, in a measure which, besides, is only relative, fluctuating, inadequate, though formerly unavoidable for lack of a better one, rather than express them in their natural, adequate and absolute measure, time.

Indeed as Marx says, a "perfectly simple and intelligible" world opens up, where labor-time "serves as a measure of the portion of the common labor borne by each individual, and of his share in the part of the total product destined for individual consumption" (Capital). The society, based on this principle of the exchange of equal quantities of labor makes use of labor-time to proportionally distribute the consumption goods to each individual. This proportion could likely be thought of in terms of something direct or indirect.

Engels says that labor certificates can be replaced by any other token, just as Weitling replaces it by a "ledger" in which the labor-hours worked are entered on one side and means of subsistence taken as compensation on the other. This very well expresses the character of labor certificates. The fundamental consumption goods are basically directly allocated. For example, a certain quantity of rice, meat, and clothing per year. Individuals can freely, as they see fit, receive this from the communal distribution center for consumption. The exchange of equal quantities of labor according to time is already carried out by society so that it is not carried out on a one-by-one basis.

But the needs of individuals for consumption goods are manifold. So choice must be allowed. In this case, time calculation for each person is necessary. This is relatively simple, however. Once society knows the quantity of labor-time expended on a given article, this can be always be posted socially. Based on such statements, each individual can receive distributed goods within the range of the labor-time provides that is written on the labor certificate.

At any rate, the specific method used to carry out such distribution based on the equal exchange of labor will likely be devised in the most appropriate way based on society's own experience. There is no real need here to tie our hands to a particular method.

3. Robert Owen's “Labor Money”

One point regarding labor certificates that we need to bear in mind is that they are unable to circulate upon being exchanged for consumption goods.

There are probably some who think that these certificates would in fact circulate. They might think, for instance, that the case of labor certificates involves nothing more than replacing the current 1,000-yen, 100-yen and 10-yen notes with 1,000-hour, 100-hour and 10-hour ones. But this way of thinking is mistaken.

Labor certificates (Arbeitszertifikat), as the term indicates, are a type of certification of proof. As Marx notes, labor-time serves as "a measure of the portion of the common labor borne by each individual, and of his share in the part of the total product destined for individual consumption."― This is the sort of certificate we are talking about. Such a certificate confirms that an individual has performed such-and-such an amount of labor, and is thus entitled to such-and-such an amount of consumption goods. This is certainly not something that is able to circulate upon being exchanged for consumption goods.

If it were possible for the certificates to circulate upon being exchanged, this would mean that, unknowingly, the objectification of abstract human labor has occurred, and these certificates would become a general equivalent (its token). In short, they would become money, becoming paper money as a token of money. Money, as is well known, is a commodity that is seen as the direct embodiment of social labor, and therefore can be unconditionally exchanged directly with any other commodity, and paper money is a token of money. If labor certificates were able to circulate upon being exchanged, they would necessarily have to be such a thing. Otherwise they would be unable to circulate upon exchange. Robert Owen's paper money based on labor-time was indeed such a thing and more or less had this tendency. Marx has the following to say in Capital about Owen's labor money:

Why does not money directly represent labor-time, so that a piece of paper may represent, for instance, x hours' labor, is at bottom the same as the question why, given the production of commodities, must products take the form of commodities? This is evident, since their taking the form of commodities implies their differentiation into commodities and money. Or, why cannot private labor―labor for the account of private individuals―be treated as its opposite, immediate social labor? I have elsewhere examined thoroughly the utopian idea of "labor-money" in a society founded on the production of commodities (l. c., p. 61, seq.). On this point I will only say further, that Owen's "labor-money," for instance, is no more "money" than a ticket for the theatre. Owen pre-supposes directly associated labor, a form of production that is entirely inconsistent with the production of commodities. The certificate of labor is merely evidence of the part taken by the individual in the common labor, and of his right to a certain portion of the common produce destined for consumption. But it never enters into Owen's head to pre-suppose the production of commodities, and at the same time, by juggling with money, to try to evade the necessary conditions of that production.

From Marx's comments above, it is often thought that Marx equated "labor certificates" with Owen's "labor money." But this is certainly not the case. Here Marx is indicating the distinction between the "labor money" of Owen and that of Grey, Proudhon and others, while at the same time saying that "it never enters into Owen's head to presuppose the production of commodities," suggesting that there is something in Owen's view that must be approved of. That is, unlike Grey and Proudhon, Owen presupposes that labor has become directly social labor, which is to say a form of production completely inconsistent with commodity production, and that therefore "labor money" is not in fact money. Nevertheless, Marx also alludes to the defect in Owen's thought that arises from the insufficiency with which he carries this out. The point that Marx is alluding to is made clearer by Engels. If we look at the chapter on distribution in part three of Anti-Dühring, we can see that Engels, like Marx, is clearly aware of the distinction between the "labor money" of Grey and Proudhon and that of Owen. Still, in a separate chapter of the same book, Engels writes the following, which at first glance seems to go against this view:

[Owen] introduced labor bazaars for the exchange of the products of labor through the medium of labor-notes with the labor-hour as the unit; institutions necessarily doomed to failure, but completely anticipating the much later Proudhon exchange bank, and differing only from the latter in that they did not claim to be the panacea for all social ills, but just a first step towards a much more radical transformation of society.

As we can see, Engels says that Owen's idea "completely anticipated" the later idea of Proudhon. Why does Engels write this? Doesn't this contradict what he wrote in the other chapter? In fact, the only contradiction is the contradiction that exists within the world of Owen's labor money. That is to say, rather than the shallow utopian idea of labor-money founded upon commodity production, Owen presupposes directly social labor, which is a form of production entirely inconsistent with commodity production. Therefore, his "labor money" is unable to be money. Nevertheless, Owen, by treating this money as something that circulates upon being exchanged, is saying that it has in fact become money. His premise and the outcome are in contradiction. He is an advocate of abolishing money, who saw money as the "root of all evil." In fact, he does not think that his "labor money" is money. Still, he betrays this premise by saying that it circulates upon being exchanged. The world does not give rise to such exchange, and these circulating things, unless it is composed of objectified abstract human labor. On this point, Marx's theory of the value-form is clear. If we are speaking of something that is able to circulate upon being exchanged, it must be the general embodiment of objectified abstract human labor or a token of this. Engels says that the new society "will not express the simple fact that the hundred square yards of cloth have required, say, a thousand hours of labor for their production in the oblique and meaningless way involved in stating that they are worth a thousand hours of labor." But in the world depicted by Owen, this contradiction occurs. And the reason he ends up in this contradiction seems his inadequate and insufficiently thorough grasp of "labor that has become directly social," which is his idea's premise. Even if we set aside his utopian world, in the case of Owen's "National Equitable Labour Exchange," which was his experimental endeavor, labor certainly did not become directly social labor. That is, the communal ownership of the means of production and a society of communal labor was not achieved. This was a society where the exchange of products was mediated by labor-time paper money. This is why Engels says that this institution "completely anticipated the much later Proudhon exchange bank."

Even more fundamental, though, is the fact that the problems concerning Owen's labor money are linked to his peculiar labor theory of value, and it could be said that on a more profound level this is his starting point. In a subsequent endnote, I discuss Owen's labor theory of value, which surprisingly resembles the famous theory of "value as human sacrifice" that Professor Hajime Kawakami proposed at one time. Kawakami moralistically grasped Marx's theory of value in terms of it being a "cost value seen from the perspective of humanity," and he said that from this perspective, the cost needed to produce a thing comes down to the quantity of labor that had to be sacrificed for its production. He added that this law of value is distorted in class society, whereas in simple commodity production and under socialism, what Marx calls "value" has currency, as is, as the value of society, and the exchange of products is carried out with the quantity of social labor necessary for the products' production as the standard. Owen likewise grasps value in a moralistic way, and like Professor Kawakami says that under capitalism the theory of value is destroyed, whereas in the future society exchange based on the law of value will be possible. This mistaken labor theory of value seems to be the basis for the problematic aspects of Owen's labor money^[7].

At the beginning of this article, I quoted the following passage from Samezō Kuruma.

Thus, those participating in social labor receive a labor certificate indicating the socially average labor-time they provided...They can then take these labor certificates to a distribution center to receive in exchange the articles of consumption that are products of the same labor-time, and in this case there would be a need to indicate the various products available at the distribution center, within the range of choices allowable, as so much labor-time per kilogram or so much labor-time per liter, etc. In other words, in this case as well, the magnitude of labor is expressed as abstract labor in temporal terms alone...The difference is that instead of being indicated as a certain quantity of gold, this is indicated directly as labor-time.

If in this passage, when he speaks of receiving "in exchange" or "the difference is that instead of being indicated as a certain quantity of gold, this is indicated directly as labor-time," if this includes the idea that labor certificates could be exchanged and circulate, or that they are at labor-time notes of such-and-such labor time and that would be fine, then I could not agree with this. This could be thought of us a sort of revival of the Owen-style contradiction already looked at. Because in the case of the latter as well, labor certificate are seen as being able to easily circulate upon exchange. Of course, if the premise of direct social labor is thoroughly in effect overall, even if it were possible for the certificates to easily be exchanged and circulate this would not likely be the case in reality. Still, if a thing exists that can easily circulate upon being exchanged, then there would probably be posited the possibility of infringing upon this. ("Pure" socialism does not exist, and socialism has the sort of exchange that is equivalent to two children exchanging toys.)

Labor certificates, from the outset, must be sealed against such a possibility. They must have the character appropriate to not being able to circulate upon exchange. They must be something that, from the outset, cannot become paper money. It is important to have the awareness that labor certificates must not circulate after being exchanged for products, and that otherwise they will become paper money.

Basically this concerns the fact that whereas the utopian world of Robert Owen is premised on "labor that has become directly social," and is a world that sought to abolish money, in reality it leans toward the contradiction noted above. That is, while wishing for the death of the law of value (in Marx's sense), the law of value remains alive, or at least in a tortured state of existence.

4. Stalin Speaks of the “Death of Value,” But...

There is another person who, while speaking of the death of the law of value, in fact completely speaks to its existence. I am speaking of the "political economy" of Stalin!

As can be understood by reading his well-known book, Economic Problems of the USSR, which was published with great fanfare just prior to his death, Stalin does not admit that the lower stage of communism (socialism) is a world where, as a rule, the law of value has died out. It is precisely for this reason that Stalin, claims that, "the trouble is not that production in our country is influenced by the law of value" ―a country said to be an advanced society where socialism has fundamentally been achieved and is in a period of transition to the second stage. If we stop to think about it, in Stalin's "socialism" the system of "labor certificates," which should be the economic symbol of socialist society, does not even exist! But Stalin, true to character, also recognizes that in the second stage of communism―which plays the same role as heaven in religion―the law of value will die out. He does not account for why this occurs but does at least accept this. In Stalin's book, when the issue becomes the future, he become strikingly eloquent, and is in fact scolded by comrades Sanina and Venzher regarding this. He writes: "But we, Marxists, adhere to the Marxist view that the transition from socialism to communism and the communist principle of distribution of products according to needs preclude all commodity exchange, and, hence, preclude the conversion of products into commodities, and, with it, their conversion into value."

But does Stalin, who held such views, truly understand the situation? In terms of the issue here, a lack of understanding of Marxist political economy is manifested in many parts of his book, which suggests that he in fact does not grasp the situation.

That is to say, he views a world in which the law of value has died out as being constituted by a sort of barter exchange. He thinks that a system of "products-exchange" excludes commodity circulation, and this is his starting point. In the course of his criticism of Yaroshenko, Stalin speaks of "three main preliminary conditions" to pave the way for the second stage of communism, with the following as the second condition:

It is necessary, in the second place, by means of gradual transitions carried out to the advantage of the collective farms, and, hence, of all society, to raise collective-farm property to the level of public property, and, also by means of gradual transitions, to replace commodity circulation by a system of products-exchange, under which the central government, or some other social-economic centre, might control the whole product of social production in the interests of society. The task, therefore, is to eliminate these contradictions by gradually converting collective-farm property into public property, and by introducing―also gradually―products-exchange in place of commodity circulation.

Further, he directs the following comments at Sanina and Venzher:

In order to raise collective-farm property to the level of public property, the surplus collective-farm output must be excluded from the system of commodity circulation and included in the system of products-exchange between state industry and the collective farms. That is the point. We still have no developed system of products-exchange, but the rudiments of such a system exist in the shape of the "merchandising" of agricultural products. For quite a long time already, as we know, the products of the cotton-growing, flax-growing, beet-growing and other collective farms are "merchandised." They are not "merchandised" in full, it is true, but only partly, still they are "merchandised." The task is to extend these rudiments of products-exchange to all branches of agriculture and to develop them into a broad system, under which the collective farms would receive for their products not only money, but also and chiefly the manufactures they need. Such a system would require an immense increase in the goods allocated by the town to the country, and it would therefore have to be introduced without any particular hurry, and only as the products of the town multiply. But it must be introduced unswervingly and unhesitatingly, step by step contracting the sphere of operation of commodity circulation and widening the sphere of operation of products-exchange. Such a system, by contracting the sphere of operation of commodity circulation, will facilitate the transition from socialism to communism.

The origin of the term "merchandising" used here was the providing of backing (exchange) using actual industrial goods in order to spur the generation of surplus agricultural goods during the period of War Communism." In this sense, the term literally manifests a tendency towards commodification. But Stalin doesn't find the term problematic, and views "merchandising" within a system for the advance purchases of agricultural products as the rudiments of a system of products-exchange. Stated in different terms, Stalin thought of his system of products-exchange as first something whose rudiments lie in "merchandising," which then secondly, as noted in the passage cited above, excludes commodity circulation.

Is it really the case, however, that a system of products-exchange with rudiments in "merchandising" will exclude commodity circulation? The answer is: of course not.

"Merchandising" involves money of account. In this case, at the very least, money (ruble) is very much playing a role as a measure of value. The ruble is functioning ideally as money of account. Even developed further, where there is a situation of products-exchange without money―i.e. pure barter exchange―this still does not exclude commodity circulation. This barter exchange itself is in fact embryonic commodity exchange. Anyone can understand this by reading the passages on the "value-form" and "process of exchange" in the first volume of Capital. Stalin, for his part, emphasizes that the replacement of "commodity circulation by a system of products-exchange," but―even setting aside the impossibility of this system―it would only be a setback for developed commodity production, replacing it with undeveloped commodity production. As Marx notes in A Contribution to the Critique of Political Economy, "Direct barter, the spontaneous form of exchange, signifies the beginning of the transformation of use-values into commodities rather than the transformation of commodities into money."

The death of the law of value is the elimination of all commodity circulation, including the products-exchange system. Stalin intends to speak of the death of the law of value but in fact is speaking of its life. It wasn't Lenin who said it, but we cannot accept to confuse the process of the birth of a person with the process of his death.

Even if Stalin says that the law of value will disappear in the second stage, this is in words alone, as we have already seen that Stalin does not understand the essence of the matter. And this is no surprise. If he had truly "digested well Capital so that it was in his blood and bones," (Sakisaka's expression) he would emphasize that as a rule the law of value would disappear already in the first stage (socialism) without having to wait for the second stage. Stalin should have acknowledged that if the law of value has not withered away, a society is far from being socialism. The basis for saying this is Marx's theory of value according to which a communistic social structure―whether in the first or second stage―is premised on labor that has become directly social labor, which is to say a form of production that is diametrically opposed to commodity production, so that the law of value withers away and this law of value only arises under the opposite case. This question has no room for any sort of scholastic philosophy to be introduced and is instead perfectly clear. Stalin and the Stalinists have rejected this pillar of Marxist political economy, both theoretically and practically.

In Japan a blatant example of this can be seen in the following ramblings of a "Marxist" named Toshio Hiradate. If his statement is taken at face value, Hiradate must be considered a "Marxist" who lacks the gumption of the Russians who rejected Marx and Engels. In a June 1949 article that appeared in the journal Hyōron he writes:

"Many of the things written by Marx and Engels indicate that they rejected the need for the operation of the law of value and money and commerce in socialist society." (Kazrov)―Marx and Engels only said that there is no need for capitalistic commerce or money in a socialist society, but they never said that about socialistic commerce or socialistic money. In this manner, Kazrov is misinterpreting Marx. As Kazrov himself notes, when reading Marx's sentences, one must distinguish between the letter and the essence.

"One must distinguish between the letter and the essence"! Is that so? What would Marx have to say about this variety of "Marxist"? No doubt he would say: "I am no Marxist"! Marx laughed caustically at the followers of Proudhon who sought to shake free of the hell of money on the basis of commodity production. And yet here, conversely, "socialist commerce and socialist money" are being dragged into socialism, which is a society of communal labor. In either case we are dealing with terrible idiots. The difference is that in the case of the former, money is unable to be pushed into hell or knocked off, while in the case of the latter, socialism is truly pushed into hell! But since such socialism is not feasible, it must be said that both share the common trait of calling for the impossible. Under socialism, the category of commodity value, and therefore all commerce and all money, wither away. This is the necessary corollary of Marx's theory of value, and this is also what Marx and Engels themselves spoke of. They clearly stated that labor certificates do not become money. It is ridiculous to say that Marx never said anything about this. Hiradate is not thinking straight. I would like to ask him whether "money" and "commerce" are possible without the law of value. Or we could ask him whether it is possible for the law of value to arise when labor has become directly social labor? If it is said that it could arise, this is the view of commodity production as something supra-historical, which would mean that Marx's labor theory of value in Capital is mistaken!

In the early 1930s, during the initial period of Stalin's government, a Soviet economist had the following to say:

The emasculation of the essence of Marxism in order to eternalize capitalism to demonstrate the inevitability of the restoration of capitalism in the Soviet Union involves eternalizing the main categories of capitalism and mechanically applying these categories to a transitional economy or a socialist economy. For example, the theorist of the worldwide social fascists, Karl Kautsky, along with the Menshevik theorists and the theoretical luminaries of social fascism in Russia, say that "the law of value still penetrates in some form in a socialist society" and that "socialism should not do away with money" (Die proletarische Revolution und ihr Programm, 1922), and they offer the explanation that in a socialist economy the contradiction between use-value and value still remains and that even capital and surplus-value are maintained. All of these theories do away with the qualitative limits that fundamentally separate capitalism from socialism, thereby mechanically identifying these two different social structures, which is the basis for demonstrating the possibility of capitalism to develop peacefully into socialism without a revolution. ^[5]

The passage above expresses some sound ideas. But who was it that ended up tailing after the idea that "the law of value still penetrates in some form in a socialist society," which was expressed by the "theorist of the worldwide social fascists, Karl Kautsky"? Who were the ones to "do away with the qualitative limits that fundamentally separate capitalism from socialism"? It was none other than the Stalinists themselves!

To borrow the expression of Engels from Anti-Dühring, the law of value "is the fundamental law of precisely commodity production, hence also of its highest form, capitalist production" Bluntly stated, the law of value becomes an even more fundamental law once it becomes the highest form of commodity production. And yet Stalin says that in a society that has fundamentally achieved socialism, and is shifting to the second stage, it is not problematic if this basic law (Grundgesetz) is operating. Here it must be said that he is "doing away with the qualitative limits that fundamentally separate capitalism from socialism." He also says that, "our enterprises cannot, and must not, function without taking the law of value into account" It must be said, though, that it functions when socialism has yet to be "fundamentally realized, during a "transitional economy" or in other conditions. A socialist economy can function without "taking the law of value into account," at least when it is dominant. And even in a "transitional economy" the law of value no longer functions to an extreme extent, as Bukharin said, and Lenin deemed was "correct" (see Lenin's comments on Bukharin's Transition Period Economy).

Some may think that it is too simplistic or straightforward to say that the law of value withers away under socialism, must do so, and that otherwise we are not dealing with socialism. But such views are off target.

A "pure" phenomenon cannot exist in either nature or society. It is Marx's dialectic that teaches us this, indicating that the concept of simplicity itself shows the narrowness and one-sidedness of human cognition that does not grasp an object in its manifold complexity. In this world, "pure" capitalism does not, and could not, exist. What does exist is a capitalism that is a mix of feudalistic, petty-bourgeois and perhaps other elements, as Lenin also notes, and I fully agree with this as well. As Kōzō Uno originally said, the remnants in the case of socialism will likely be different from the remnants under capitalism. Still, just as there is no "pure" capitalism, there will probably not be "pure" socialism either. "Pure" socialism itself, as noted earlier, is "stamped with the birthmarks of the old society from whose womb it emerges." Still, here I am not dealing with "pure" socialism, but rather the dominant tendency and the fundamental aspects.

Socialism is a world where able person works will work in order to live. And by engaging in a certain amount of labor, one receives nearly free, or free, the insurance of a relatively high level of life. The dictatorship of the proletariat, as something transitional, must also wither away, and can only enter the path of withering away under a "commune-style state" (half-state). I am merely stating, as a Marxist-Leninist, that unless the fundamental, dominant social structure is headed in this way, it cannot be said at all that socialism has been fundamentally realized. And I am merely saying that under the rule of the Stalinist government, the Soviet Union gradually headed in the opposite direction.

This was in fact a bureaucratic dictatorship and state capitalism. (Of course, this state capitalism was not merely state capitalism, but rather, to borrow the expression of Trotsky, "complete state capitalism.") The three fundamental merkmal [characteristics] expressing this system are the transformation from the dictatorship of the proletariat (commune-style state=half-state) to a bureaucratic dictatorship, the operation of state-run enterprises according to khozraschyot (economic accounting), and the non-egalitarian piece-work wage system. Precisely because of this, despite the national ownership of the means of production, labor could not become communal social labor or direct social labor. It was upon the basis of this bureaucratic state capitalist system that the Communist parties in various countries became enslaved―becoming tools of Soviet foreign policy―and military invasions, unworthy of a socialist state, were carried out during and after the Second World War. Here I won't go into this topic further because it was already dealt with in the latter half of the first chapter of this book, "The Significance of Labor Certificates' under Socialism."

This is a bit of an aside, but finally I would like to say a word about the following theory of labor certificates. Namely the views of Sakisaka Itsurō, who has already appeared on a number of occasions in this article. Sakisaka once wrote:

Once the productive power of society has risen to a sufficient point, it will be possible for individuals to work according to their individual capabilities, and for them to consume according to their needs. However, in this society (socialism), this is not yet possible. People who still have unequal capabilities and needs, work for an average period of time and average intensity. And they are given average products in accordance with this labor-time. Thus, by being treated with formal equality, the principle of inequality prevails. This is the case because originally unequal capabilities and unequal needs are treated equally. ^[6]

He seems to be offering an interpretation of the Critique of the Gotha Programme, but he is perfectly mistaken, and quite off-target.

According to Sakisaka, because people "work for an average period of time and average intensity" and "are given average products in accordance with this labor-time," after deductions are made for the common resources out of the aggregate product, what would remain would be equally distributed as an allotment. Although he is an advocate of the remarkably un-egalitarian "Soviet socialism," strangely his own "socialism" is so egalitarian that it is almost too egalitarian. He says: "In socialist society, generally there will be a six or five hour labor system. However, this cannot be uniform given the particularities of production sectors, ages, etc. Furthermore, it would be difficult to have uniformity in the intensity of labor in every production sector." In fact, Marx did not speak in terms of people "working for an average period of time and average intensity." Indeed, to some extent he expected the opposite.

Sakisaka speaks of people "being treated with formal equality" so that "the principle of inequality prevails," as the reason "originally unequal capabilities and unequal needs" being "treated equally" (an allotment per person according to average labor-time and the intensity of labor). But this is not the meaning of what Marx says that, "the right of the producers is proportional to the labor they supply; the equality consists in the fact that measurement is made with an equal standard, labor." In other words, labor-time is the measure. And in the case where this measure is used, what seems equal at first glance in fact leads to some inequality in distribution. This is the case because labor-time is an equal measure but "this equal right is an unequal right for unequal labor." So there is not necessarily equal time and an equal intensity of labor that is supplied. This indicates a situation where even though the equal measure of labor-time can be utilized, or because it is utilized, inequality arises to some extent ? so that "one will in fact receive more than another, one will be richer than another, and so on" (Marx). Sakisaka completely fails to understand this. For him, it is not possible for one person to "in fact receive more than another receive more than another."

However, true equality only begins when "the right of the producers is proportional to the labor they supply" has been shed. True equality begins when distribution is "according to needs" regardless of the labor supplied. This is not achieved during the "prologue" of a communistic social structure, but rather during the second stage that is its "main act." And the shift to this second stage comes about naturally through the enormous development of productive power under socialism after capitalism has been eliminated. There is no need for any social revolution during this move from the first to the second stage.

Endnotes

1. Translated from the Japanese title: Shihonshugi―teikokushugi.

2. In most cases Tsushima does not provide information about the source of a citation, page numbers, etc.

3. Sakisaka and Uno, eds., Shihon-ron kenkyū (Research on Das Kapital) (Tokyo: Kawada Shobō, 1949), 271-2, 277-8.

4. Hilderding Finance Capital (London: Routledge & Kegan Paul), 28.

5. Ivanov and Kofman et al, Lenin's Political Economy (title translated from Japanese).

6. Sakisaka, Vol. 1 of journal Shakaishugi kōza (Socialism).

7. As mentioned above, Prof. Kawakami in the past viewed value in terms of human sacrifice. Owen's own labor theory of value is remarkably similar to this. Indeed, it seems that he is the forerunner who influenced Kawakami's theory.. In The History of Political Economy written by D.I. Rozenberg and Briumin [name transcribed from Japanese], based on works by Owen such as "Report to the County of Lanark" (1820), they offer the following overview of his labor theory of value:

Owen viewed value in the Ricardian fashion as being determined by labor. In other words, it is determined not by the labor that can be purchased with the commodity but rather by the labor expended on the production of the commodity. But Owen's view matched that of Adam Smith in terms of thinking that the law of value breaks down under capitalism. He did not think, however, that this breakdown was natural. The question is what can be done so that the law of value does not break down.

Owen thought it necessary to reorganize society along new principles. Engels says that, "the entire communism of Owen, so far as it engages in polemics on economic questions, is based on Ricardo." [preface to Capital vol. 2] Based on Ricardo's determination of value by expended labor, Owen sought to create the conditions so that this value-determination could be strictly carried out. He believed that by organizing a national union of producers and a National Equitable Labour Exchange, these necessary conditions could be brought into existence. These two organizations―which as already noted were to form a single complete structure according to Owen's conception―were supposed to make possible exchange based on the law of value.

...We have already indicated that Owen, drawing socialistic conclusions from Ricardo's theory of value, was the first person to accomplish the feat of calling for the abolishment of unearned income. But Owen, unlike the petty-bourgeois socialists who were to follow, understood that this demand could not possibly be achieved upon the basis of commodity production and would require a separate organization of labor to be achieved. Despite this, however, he was unable to understand that value is a category particular to the commodity-capitalist system, and that the law of value only has currency under this system. Owen interpreted the principles of the law of value in a moralistic way. He demanded that labor must be the measure of value, but he did not understand that labor is indeed this sort of measure, and moreover that it is only so under a certain economic structure. (Translated from the Japanese)