Value of Labor: Islamic Economics vs. Marxist Economics – [Imam Musa Sadr Translation Series]

This is the second installment of Basira Press’ translation series of Imam Musa Sadr’s profound work on Islamic economic theories, an important task in challenging the prevailing capitalist and Marxist doctrines of the day. This installment addresses the issue of the value of labor, which allows Islamic economic thought to stand out and differ from both capitalist and Marxist thought.

The original Arabic text can be found here. The previous installment of the series can be read here.

Work determines value:

Although economics is currently one of the most important and influential issues in the social sciences, it is a modern science, the foundations and origins of which were codified only four (or five) centuries ago, and it became like all other sciences with principles and laws.

Therefore, when we talk about economics in Islam, we mean the rules and laws that are closely related to the issues of this science, even if that specific name or its origins – as a science – are not mentioned in religious texts.

By reading this research, the reader will be well aware that Islamic economic laws were formulated and presented to the world with the utmost precision, taking into account the changes of time, avoiding both the exploitation of the worker or the harboring of hatred for the employer, and characterized by a special insight that confirms that they are among the effects of divine laws.

Since the clarification and defense of the dimensions of this school need several introductions in order to respond to the criticisms that may be directed against these principles, so we invite readers to read this series of research.

The basic elements of the economy can be summed up in three: labour, money and machine.

By knowing these three elements and the role of each of them in production, the origins of the different economic systems in the world can be shown.

The founders of these systems differed about the role of each of these elements in the production process, and in the end, they divided the world into two original groups and several different economic units.

A group of old and new economists gave the largest and basic role in this division to capital, and they recognized the worker makes wages, that is, the amount that would support his own livelihood and enable him to continue working.

This system – which they called capitalism throughout history – has undergone important quantitative changes, as wages increased and the living situation of the worker improved alongside material development, corresponding with a rise in the standard of living.

Yet these improvements were mainly cosmetic changes, and the worker had no share in the product of the work, and the employer’s view of his value did not change: “It is one of the means of production, and it should be maintained (as such), and made more appealing (to the employer) in order to continue to extract value from the lowest (labor) costs and wages that match global conditions and transformations.” This method was followed by the Mercantilists (one of the ancient economic doctrines, whose followers generally lived in the sixth century AD in Spain and Portugal), and the Physiocrats (the scholars and founders of this doctrine lived in the late eighteenth century in France and the rest of Europe) which most contemporary economic trends followed.

A number of later economists, especially in the nineteenth century, took a completely opposite turn, and said that the entire product is the share of the worker, not acknowledging any share for capital and means of production. They called the profit that the employer derives from production as “surplus value.” They considered this a kind of theft and infringement on the rights of the worker, and directed their political and intellectual struggle against profit, which is the basis of capitalism, according to their belief.

The Marxists who follow Marx – the well-known German economist – are among the most prominent proponents of this second theory.

The third group divides profit on the three aforementioned parts- i.e. labour, capital, and machine – and considers the necessity these three elements given various differences. Within this group fall the welfare capitalist systems (ie, the proponents of state intervention and regulation in production).

In this research, we have tried to study – accurately, objectively, and in clear terms and far from fanaticism – this great difference, which is the basis of the most important problems of the era, fully understanding the goal of the founders of these approaches, critiquing them while recognizing to the truth in any approach.

We will study this goal within the answer to the following questions:

I- Is work the only factor in determining the value of things?

II- Is man’s wealth going to increase?

III- How should the product produced and the profit obtained from it be distributed?

IV- What are the sources of the emergence of existing capital? Can it be considered legitimate?

V- Is work the only factor in determining the value of things?

We shall first clarify, as an introduction, the meaning of production, as well as what is meant by economic needs in relation to the subject of our research.

Production, contrary to its apparent concept in economic research, does not refer to the creation of a specific substance, but rather to the activity that leads to the creation of new production and value, provided that this makes the existing product usable.

For example: the metal smelting factory isolates iron ore compounds from each other in a special way, and puts pure iron in the hands of the manufacturer, who in turn transforms this pure metal into iron poles, a car, a door, a lock and a key, or, rather he transforms a precious metal into ornate items.

In these examples, refining iron and changing its shape, making it pure and usable, as well as turning a precious metal into something beautiful, is called production. While nothing was created in these three examples, the innovation was what is apparent and a special result appeared from these assetsthat give added value to the consumer.

The farmer is also not excluded from this law, since his activities of plowing, watering, and planting, and with the help of various natural factors such as water, air, and sunlight, transform the grain of wheat or other crops and make it edible. This type of transformation is called quantitative transformation in economics.

Economists have also regarded commerce as a productive labour, because it brings a new state to a commodity through transport, transmission, and distribution, making it accessible to the consumer.

This is how they defined economic needs: In economics, the need does not refer to human suffering only when he is deprived of something, but all human desires are considered a need from an economic point of view.

Based on this, everything that a person desires and tends to is considered among the economic needs, whether this thing is one of the necessities of his life, a means of entertainment, or a luxury.

We do not want to go into more details in this regard, but rather talk about the question related to the research. Through a preliminary study of various things, we conclude that their value depends on the following two factors:

I- The economic need for that thing, so greater the need for it is and the more it is consumed, the higher its value.

II- Its lack or abundance in nature, and in other words: the greater its availability, the lower its value, and the less its existence, the higher its value. Accordingly, the relationship between value and its availability in nature is an inverse relationship. What has been proposed so far is clear and undoubtedly, but they considered such a value to be subjective and natural, and did not recognize it because it differs according to the situations and peculiarities that exist in the human being.

They put forward another value in the name of commercial value and defined it as “measuring the economic importance of two or more things in the economic relations between members of society.”

In clearer terms: they called the specific relationship in which various commodities are exchanged the exchange value, whether this exchange was direct and without the intervention of money, or with money which is in fact a pure means, an expression of purchasing power and a document of the amount of the goods. There has been research on this type of value and the factor that determines it, as Marx believes that labor alone determines this value because it is the only common factor between what is produced and what is exchanged. He says that embodied in every commodity is a quantity of labor, or, rather, that labor is the essence of exchange value, as he puts it. Accordingly, the exchange of goods is in fact an exchange between different businesses.

He also says: If we remove the labor from the equation, there will not be any common factor that combines the goods that are completely different from each other in terms of type and quality.

Marx says in his well-known book Capital: “Suppose that 75 kilograms of wheat equal 100 kilograms of iron. What does this equality mean? It means that there is a common factor between these two things (wheat and iron), and this common factor cannot be one of their properties. Natural, because these characteristics do not enter into the calculation except to the extent that they give them a consumption benefit. If we drop the natural properties, that is, the consumer benefit, from the calculation, there is only one characteristic left for the goods, which is that they are the result of work.”

Then he discussed the explanation of labor that he considers the determining factor of value, and he explained it with social work, considering the non-social works outside the research, and then divided the works into simple and complex, embodied and abstract, and considered simple and abstract work to be the standard.

In clarifying this aspect, we will talk about Marx’s opinions and beliefs. We will discuss in general this theory, which is one of Marx’s most important economic ideas: “Labour is the only factor in finding exchange value and the only common factor in the exchange of goods.”

To begin with, we ask two questions. After illustrating the examples, we begin to critique this theory:

i- There are two commodities that are equal in terms of human need, and are also equal in terms of abundance, and if one of them exhausts more labor than the other in production, in this case are these two labor commodities equally exchanged or not?

ii- If the two commodities consume equal labor in production, but one is more economically needed or more available than the other, are their values ​​equal?

For example, there are goods which are naturally available and of high value, but on which little work is done, and are sometimes of much more value than goods that have consumed much labour.

The value of crude oil, mineral water, and precious stones is much higher than the value of building stones, bricks, plaster, and firewood brought into the city as fuel.

Rather, there are high-value goods without any work being done in them, such as springs of water, and conversely, the value of manufactured jewelry, which takes many and complex work to craft it, is much less than the value of natural jewelry.

Two tailors in the production of two pieces of clothing, or two painters to prepare two paintings, or two artists for two works of art all may exert equal effort, but factors such as skill, fame, fashion, and chance interfere and make the value of one more than the other.

Finally, we note the shortcomings of this theory in justifying and explaining the reasons for the cheapness of the production of the mechanical industry compared to the production of handicrafts, such as carpets, for example.

By reflecting on the previous two questions and studying these and other examples, one realizes that labor was not the only factor influencing the quantity of exchange value. Rather, the greatest influence is for the former workers, i.e. the amount and abundance of the commodity, which can be expressed by supply and demand in the broad sense.

It is self-evident that the two factors are averaged or evaluated together, says Marx.

By studying the above topics, we can choose the following fraction of the value equation: the

value of the commodity (exchange and natural) = the economic need for it and its abundance.

What is striking in the previous equation is that these two factors, expressed in the form of the numerator and denominator, are involved in all commodities and are not limited to labor, and thus can be the most important evidence of the previous theory was rejected.

Due to the difficulty of materializing this equation, its average or total, and avoiding its errors, money was made the unit of value, and it became the purchasing power and the measure of exchange value, in addition to being a representative of the amount of the commodity that is offered and presented to the community.

And about the factor of determining value, other theories were put forward by the classical school (from the old British economic schools), and by scholars of the spiritual school who appeared in the late nineteenth century AD.

However, in view of the detailed research on Marx’s theory and the explanation we have given in the field of clarification, we do not believe that there is a need to independently criticize and examine these other theories.