1267361

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RRPXXX10.1177/04866134241267361Review of Radical Political EconomicsTonak

Note/Comment
Review of Radical Political Economics

The Value of Marx in

1­–7
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Political Economics
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DOI: 10.1177/04866134241267361
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E. Ahmet Tonak1

Abstract
This brief note concentrates solely on a section of the first part of The Value of Everything:
Making and Taking in the Global Economy, specifically “Karl Marx on ‘Production’ Labour.” I
discuss several issues: Mazzucato’s understanding of Marx’s distinction between productive and
unproductive labor (henceforth PUPL), her terminological vagueness and mistakes, and some
inaccurate bibliographic and factual information.
JEL Classification: B0, B5, P1

Keywords
labor theory of value, Marxian economics, productive labor, theory of value, unproductive labor

In his critical review of The Value of Everything: Making and Taking in the Global Economy,1
Adam Tooze contends that “the first part of Mazzucato’s whistle-stop tour of value theories
passes muster at a basic level” (Tooze 2018). He further adds, “But when we get to the 20th cen-
tury, things get messier. Only hasty writing and poor editing can account for her mangled treat-
ment of Keynes and the basics of value-added accounting.” Tony Aspromourgos also characterizes
her presentation of Keynes’s theory of aggregate employment as “astonishingly garbled.”2

1
The book is currently advertised on Amazon’s web site as shortlisted for the 2018 “Financial Times and
McKinsey Business Book of the Year Award” with the following comment by Martin Wolf of the Financial
Times: “Forces us to confront long-held beliefs about how economies work and who benefits.” Also, accord-
ing to the same site, Mazzucato “is winner of international prizes including the 2020 John Von Neumann
Award, the 2019 All European Academies Madame de Staël Prize for Cultural Values, and the 2018 Leontief
Prize for Advancing the Frontiers of Economic Thought. She was named as one of the ‘3 most important
thinkers about innovation’ by the New Republic, one of the 50 most creative people in business in 2020 by
Fast Company, and one of the 25 leaders shaping the future of capitalism by Wired.”
2
I would even consider Mazzucato’s interpretation of Keynes’s theory of aggregate employment beyond
being “garbled” since she blames workers for their own unemployment: “Keynes assumed that workers
would underestimate the purchasing power of their wages, and would therefore be willing to produce more
than they needed to. In this way, workers’ involuntary overproduction would in turn create involuntary
unemployment—fewer workers being needed to do the same amount of work—and the economy could find
itself in a low-output equilibrium” (Mazzucato 2018: 82, quoted by Aspromourgos 2018).

1
Smith College, Northampton, MA, USA

Date received: March 12, 2024

Date accepted: June 21, 2024

Corresponding Author:
E. Ahmet Tonak, Smith College, 5 Chapin Drive, Northampton, MA 01063, USA.
Email: [email protected]
2 Review of Radical Political Economics 00(0)

Figure 1. Mazzucato’s production boundary.

Source: Mazzucato (2018: 51).

In my opinion, the book’s messiness stems from more than “hasty writing and poor editing.”
It is not solely manifested in Mazzucato’s “mangled treatment” or “astonishingly garbled” pre-
sentation of Keynes’s ideas. Mazzucato’s chapter on the history of value theory is also highly
problematic: her grasp of value theories is scant, and her familiarity with the relevant literature is
quite weak. Moreover, her references and bibliographic and factual information are inaccurate.
This brief note concentrates solely on a section of the first part, specifically “Karl Marx on
‘Production’ Labour.”
I discuss several issues: Mazzucato’s understanding of Marx’s distinction between productive
and unproductive labor (henceforth PUPL), her terminological vagueness and mistakes, and
some inaccurate bibliographic and factual information.

1. The Distinction between Productive and Unproductive Labor

Mazzucato starts the discussion of productive labor in Marx justifiably with a claim that “under-
standing the nature of production” and identifying productive activities are crucial to answering
the questions of value creation and economic growth (Mazzucato 2018: 21). However, in the
context of discussing Marx’s criteria for classifying productive and unproductive labor,
Mazzucato follows an ad hoc procedure based on her own suggestive term, “production bound-
ary,” and imposes it on Marx by claiming that “Marx defined the production boundary in terms
of how profits are made” (Mazzucato 2018: 50, my emphasis).
According to Mazzucato, figure 1 represents Marx’s understanding of the “production
boundary.”
Mazzucato claims that “the darker blob within [the production sphere], called the ‘circulation
sphere,’ reflects Marx’s analysis. . . that some aspects of finance are essential to production and
deserve to be placed on that side of the production boundary” (Mazzucato 2018: 50). It should be
pointed out that “the distinction PUPL is not necessary for establishing (or even reinforcing) the
distinction between the spheres of production and circulation. This latter distinction is conceptu-
ally independent of and prior to the distinction PUPL, which itself is, in fact, predicated upon a
solid understanding of the difference between production and circulation” (Savran and Tonak
1999: 148).
Figure 1 has nothing to do with Marx’s classification of economic activities, including pro-
duction, distribution, circulation, and consumption. Mazzucato’s suggestion that some aspects of
financial activities be placed within production because they are essential (presumably meaning
Tonak 3

necessary) is inconsistent with Marx’s critique of necessity (or being indirectly productive) as a
criterion for PUPL.3
To illustrate her classification of some circulation capital as productive, Mazzucato cites two
questionable examples from modern capitalism: “to apply Marx’s theory to a modern-world
example, Amazon is a commercial capitalist because it is a means by which production capitalists
sell their goods and realize surplus value. Banks’ money transfer services are also an example of
commercial capital” (Mazzucato 2018: 53). The case of Amazon is not as straightforward as
Mazzucato assumes since, in many instances, the very act of transportation, that is, delivering the
commodities to the point of consumption, is conceptualized by Marx as the last phase of produc-
tion. So, strictly speaking, at least that part of Amazon’s capital should be considered productive
capital rather than circulation capital.4 In modern times, banks’ money transfer services have
nothing to do with the act of production. The vagueness of Mazzucato’s so-called production
boundary criteria makes her consider shuffling money a production activity by resorting to the
necessity criterion.

2. Production Activities versus Production Boundary

Marx’s definition of productive labor (and unproductive labor) requires a clear identification of
production activities rather than “the production boundary.” His argumentation, as with many
other concepts he develops in Capital, follows a two-step procedure: first, universally (i.e., cov-
ering all periods of human production) identifying economic activities as production activities as
such, and second, within capitalism, that is, historically, distinguishing production activities as
capitalist production activities per se. This procedure allows Marx first to distinguish productive
labor in general and second productive labor for capital. Such an important distinction, which is
very relevant to clarifying criteria for PUPL in modern capitalism, is completely missing in
Mazzucato’s discussion of Marx. The presentation of Marx’s arguments and classification of
various economic activities and PUPL are extensively discussed in the literature.5 As an

3
Mazzucato justifies her reasoning on the grounds that the income generated by the sales activities of cir-
culation capital is needed by production capital to buy means of production (no need for capital to hire
workers!): “The first two categories Marx identified were production (or industrial) capital and commercial
capital. The first produces commodities; the second circulates commodities by selling them, making the
money received available to production capital for buying the means of production” (Mazzucato 2018: 52).
As pointed out earlier by Savran and Tonak (1999: 130), “it is true that certain aspects of circulation (by
allowing, for instance, a more rapid turnover of capital) can contribute to an overall increase in production.
This increase in production finds its specifically capitalist expression in the additional mass of surplus-
value produced by the workers employed in production thanks to this more rapid turnover. This additional
amount of surplus-value is thus the product of the labour of these production workers. Were it to be equally
attributed, even indirectly, to the productivity of the workers of the sphere of circulation, we would be face
to face with a blatant case of double counting because the one and the same increase in surplus-value would
then have been attributed to two distinct sets of workers.”
4
These intricate aspects of the PUPL discussion require close familiarity with the relevant literature, which
Mazzucato lacks. There is an extensive body of literature on how Marx developed his distinction between pro-
ductive and unproductive labor (activity), to which there is no reference whatsoever except two marginally related
articles on finance and unproductive labor (activities) and the book by Edward Wolff (1986). Footnote 60 refers
to the last chapter of Isaak I. Rubin’s 1972 (1928) book, where Rubin discusses productive labor in Marx. This
is the only text partially related to the discussion of productive and unproductive labor that Mazzucato refers to.
5
Including Shaikh and Tonak (1994) and Savran and Tonak (1999). Interestingly enough, Mazzucato’s book
contains a chapter titled Measuring the Wealth of Nations, which shares its title with the 1994 book by Shaikh
and Tonak. Shaikh and Tonak’s (1994) book was used as teaching material in classes at the New School when
Mazzucato was a student there. However, throughout her own book, The Value of Everything: Making and Taking
in the Global Economy, Mazzucato does not reference Shaikh and Tonak’s book, not even in the bibliography.
4 Review of Radical Political Economics 00(0)

Figure 2. Classification of wage laborers under capitalism.

Source: Savran and Tonak (1999: 147).

alternative to Mazzucato’s figure 1 and to illustrate Marx’s classifications, figure 2 from Savran
and Tonak (1999) is provided. As seen in figure 2, being employed by private capital as a wage
laborer is not a sufficient condition for productive labor, contrary to Mazzucato’s claim.
In identifying production (and nonproduction) activities, Marx necessarily classifies specific
sectors and occupations based on his precise definition of production as an “appropriation of
nature on the part of an individual within and through a definite form of society” through which
inputs are transformed into outputs by human labor (Marx 1973: 87). In this regard, Mazzucato
dismisses Marx’s concern for classifying sectors/occupations: “in Marx’s theory of value every
privately organized enterprise that falls within the sphere of production is productive, whether it
is a service or anything else. Here, Marx’s achievement was to move beyond the simple catego-
rization of occupations and map them onto the landscape of capitalist reproduction” (Mazzucato
2018: 55, my emphasis).
Here, as elsewhere, there are imprecisions and ambiguities in Mazzucato’s reasoning. She is
now talking about the sphere of production, which, it seems, is the domain of productive labor,
but we know from her earlier discussion (her figure on p. 51, which we have reproduced above
as figure 1) that her “sphere of production” includes a “circulation sphere.” This is truly a magi-
cian’s job. On the face of it, the author restricts productive labor to the sphere of production, but
that sphere of production is also partially the sphere of circulation so that when she says produc-
tion, she means circulation also, thus “transcending” (!) the entire debate in the literature on
PUPL on the question of production versus circulation!
Tonak 5

That is not all she “pulls off,” though. The set of “privately organized enterprise[s] that fall
within the sphere of production” also includes noncapitalist producers, which remain outside the
domain of productive labor not because they are not engaged in production (they certainly are)
but because they do not produce surplus value.
And despite all this confusion, we are still not done. By using the qualificative “privately”
(organized enterprise), Mazzucato ipso facto crosses out all capitalistically organized enterprises
that are owned by government. State economic enterprises engaged in production appropriate the
surplus value produced by their workers no less than private corporations. The workers they
employ, therefore, are productive workers in the same capacity as those of “privately organized
enterprises.” Overall, then, Mazzucato’s slipshod definition presented as though it were a clear
and concise proposition turns out to be a Pandora’s box of inexactitudes.
Mazzucato’s confusion of Marx’s value theory manifests itself in many instances throughout
the book. To give a couple of examples, let us first look at how causally, and hence mistakenly,
she identifies the source value and surplus value: first, “the source of that inherent value is the
one special commodity workers own: their labour power” (48) and later regarding the source of
surplus value, both “labour power creates surplus value” (48) and “labour produces surplus
value” (Mazzucato 2018: 49).
As for the definition of a crucial category in Marx’s value theory, namely, the rate of profit,
the same imprecise language is used: “The rate of profit for an enterprise is the surplus value
divided by variable and constant capital” (Mazzucato 2018: 52, my emphasis). This definition is
problematic on two grounds: first, there is a concept in Marx called enterprise rate of profit,
which is different from the rate of profit of a capitalist firm since the former is a rate of profit net
of interest; second, constant capital is a flow variable. One should be specific about the term in
the denominator of the profit rate by specifying it as capital stock.
Mazzucato’s definition of the rate of surplus value ignores the significance of PUPL on which
some of the critical arguments of her book rely: “there is a ratio of surplus value to value used for
workers’ subsistence—what Marx calls simply the rate of surplus value.” Properly speaking, the
denominator of the rate of surplus value is not “value used for workers’ subsistence.” It is the
value of productive workers’ subsistence. Therefore, her following claim, “[the rate of surplus
value] determines what share of the economic product can potentially be used for accumulation
and growth” (Mazzucato 2018: 51), is only partially accurate since it also determines what share
of the economic product can be used for unproductive workers’ subsistence (wages).

3. Bibliographic and Factual Information Inaccuracies

Let me indicate some problems regarding the inaccurate bibliographic and factual information.
Considering the part of the book on Marx’s value theory, which primarily relies on his main
work, Capital, the reader expects the quotes and references to be carefully cited. Unfortunately,
that is not the case: first, the quotes from Capital are not always from the Penguin edition;
instead, they are from the International Publishers edition, which is not listed in the bibliography.
Moreover, the wording of Marx’s quote from Capital volume 3, chapter 17, is changed (Mazzucato
2018: 304, fn 54). The location of another quote from the same volume is mistakenly identified
as chapter 23 rather than chapter 21 (Mazzucato 2018: 304, fn 57).6
To sum up, I should add only a couple of inaccuracies regarding Marx’s life: Mazzucato sug-
gests that Marx’s “parents [were] both lawyers” and Marx himself “after being barred from tak-
ing a professorship at the University of Jena. . . became editor of a progressive newspaper,
Rheinische Zeitung” (Mazzucato 2018: 47, my emphasis). It is common knowledge that only
Marx’s father was a lawyer, and Marx never applied for a professorship at the University of Jena,

6
The title of William Baumol’s book is not accurate in the bibliography, either.
6 Review of Radical Political Economics 00(0)

where he only received his doctorate. However, Marx considered an appointment at Bonn
University under Bauer’s recommendation. Yet, Bauer was embroiled in his own difficulties and,
by March 1842, found himself ousted from his position at the university. This also ended Marx’s
aspirations for an academic career7 (Padover 1978: 59).

4. Conclusion
To many heterodox economists, the distinction and classification of PUPL are essential for a
“deeper understanding of the dynamics of capitalist economies as well as their possible phase-
change” (Paitaridis and Tsoulfidis 2012: 214). Mazzucato claims to offer this deeper understand-
ing in her book, The Value of Everything, where she emphasizes the conceptualization of “the
nature of production” and the identification of “production boundaries” as fundamental. The
book begins by asserting the need for “a better understanding of value” because of its “far-
reaching social, political, and economic consequences” (Mazzucato 2018: xviii). Mazzucato
argues, “if we cannot define what we mean by value, we cannot be sure to produce it, nor to share
it fairly, nor to sustain economic growth. The understanding of value, then, is critical to all the
other conversations we need to have about where our economy is going and how to change its
course” (Mazzucato 2018: xix).
Given these nonmainstream claims, one would expect theoretical clarity and rigorous formu-
lation throughout the book. Unfortunately, The Value of Everything fails to fully realize its mis-
sion. Mazzucato does not correctly identify which activities produce wealth (she uses “value”
interchangeably with “wealth”) and which activities sustain themselves by extracting surplus
value from others (including wages of unproductive workers).8 As a result, the book’s purpose of
“reinvigorating the debate about value [as]. . . the core of economic thinking” is not fully
achieved.

Acknowledgments
The author thanks Sungur Savran for insightful comments and appreciate feedback from two RRPE refer-
ees, Güney Işıkara and Daniel Hinze, as well as RRPE Managing Editor, Enid Arvidson. The usual dis-
claimer applies.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publi-
cation of this article.

Funding
The author received no financial support for the research, authorship, and/or publication of this article.

ORCID iD
E. Ahmet Tonak https://orcid.org/0000-0002-4159-8286

7
For a very informative and insightful analysis of the relationship between Marx and Bauer, see Kangal
(2020).
8
To illustrate the empirical significance of unproductive activities, consider the US economy: the share of
unproductive wages in total wages increased from 49 percent in 1965 to 66 percent in 2007. This increase,
supporting various unproductive activities such as financial and trade-related services, implies a steady rise
in the rate of surplus value of productive workers. Indeed, the rate of surplus value increased from 210 per-
cent in 1965 to 350 percent in 2006 (Paitaridis and Tsoulfidis 2012).
Tonak 7

References
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Author Biography
E. Ahmet Tonak is a research affiliate at Smith College in Northampton, MA. He coauthored In the Tracks
of Marx’s Capital: Debates in Marxian Political Economy and Lessons for 21st-Century Capitalism
(Palgrave Macmillan 2024) and Measuring the Wealth of Nations: The Political Economy of National
Accounts (Cambridge University Press 1994).