We are drowning in monetary wealth, yet we are starved of value. Financial assets multiply, stock markets hit record highs, property valuations inflate, and debt expands. Measured in the swelling mass of liquidity, the world has never appeared wealthier. Yet beneath this glittering surface, immiseration spreads. Wages stagnate, housing becomes unaffordable, public services crumble, and the social bond is coming undone. The more wealth accumulates as financial assets, the more precarious life becomes for those who must sell their labour to survive.

This paradox cannot be understood if we treat wealth, money, prices, and value as interchangeable. The failure to distinguish them is why mainstream economists are incapable of grasping our ongoing crisis. They see only the surface—price fluctuations, yield curves, liquidity injections—and ignore that money, under capitalism, is the form in which social labour is validated.

Consider NVIDIA: a company whose market valuation has risen to extraordinary heights (currently around $5.2 trillion) while employing only tens of thousands of people. This is not a measure of value created by NVIDIA’s employees; it is a financial valuation—a claim on projected future returns that can become massively detached from the social substance from which capitalist value derives.

The Illusion of the “Transformation Problem”

As the late German theorist Robert Kurz argued in his 2012 book Geld Ohne Wert, the famous “transformation problem” in Marx’s work is an illusion. Value is not a property of individual labour or commodities, but a social relation that exists only at the level of the totality.

In Volume I of Capital, Marx abstracts from competition and credit to analyse exploitation. In Volume III, he moves to concrete forms like prices, interest, and rent. The shift created one of the most famous headaches in the history of political economy: how do values derived from labour relate to prices and profits that emerge through competition? Critics of the “transformation problem” share a common assumption: that Marx’s theory begins with an individual worker’s labour-time attaching itself to an individual commodity—a little packet of value awaiting conversion into a price tag.

But value is not an empirical property waiting to be discovered. The problem writes itself only if we assume that a quantum of value emerges directly from labour. If prices diverge from labour-times, how are we supposed to “transform” one into the other? The answer is that there is nothing to transform. Under capitalism, individual labour has no direct relationship to value. This does not mean labour is irrelevant—living labour is the only source of new value. But an individual worker’s labour becomes socially valid only insofar as it counts as part of the labour of society as a whole, mediated by money and exchange.

Whether my labour contributes to society is not decided inside the factory. It is determined after the fact, through a social process no producer controls. If Volume I of Capital is read as a theory of isolated workers producing measurable quantities of value, Volume III appears as an insoluble dilemma. But this mistakes abstraction for atomism.

The same error haunts the traditional socialist vision of a “work society”—the idea that workers should receive the full equivalent of their labour, or that value could be allocated by a planned economy. These positions treat value as an individual’s property, rather than a social relation that retroactively determines its own conditions. The problem is not simply who controls value; it is the value-form itself.

Value as a Social Totality

If there is no direct relationship between individual labour and capitalist value, how does labour acquire social validity? Marx’s answer is socially necessary labour-time. But this category itself needs to be unpacked: the social character of privately expended labour is established only ex post facto, through the competitive and monetary mediation of exchange.

Suppose I spend ten hours assembling a smartphone when prevailing conditions require five. The additional five hours acquire no social validity. Capitalism recognises only labour that conforms to the social norm. And who establishes that norm? No one, and everyone. It emerges behind our backs through competition and exchange. Through such chaotic churn, a social standard asserts itself without ever being consciously designed. This is what we call the “free market”—an impersonal tribunal that judges every private labour.

Competition, therefore, is the mechanism through which capitalism turns private labour into a social verdict. The capitalist encounters this as competition; the worker encounters it as pressure to produce more in less time. Neither sees the totality directly, yet both are compelled to obey it. Value determines whether labour counts as socially valid and whether firms survive. The entire edifice of modern society rests on the extraction and realisation of this social substance. When value shrinks at the level of the totality, so does the material basis for everything that holds society together.

Now reverse the above example. Suppose a producer introduces technology that reduces assembly time from five hours to two. For a period, that producer enjoys an exceptional advantage. But the surplus realised is not new value created by the machine; it is a larger share of surplus value generated by living labour and socially realised through exchange, temporarily captured through competition.

The paradox is that individual profit can rise even as the value of each commodity falls. Once the technology becomes widespread, the social standard falls towards two hours, and the exceptional profit disappears. The machine has not created value; it has enabled one capitalist to capture a larger slice of a shrinking pie.

Machines can increase material wealth without becoming a new source of value. They transfer the value embodied in their own production (“dead labour”) into the commodities they help produce. The same mechanism that compels capital to increase productivity also reduces the labour required to produce each commodity. At the level of the individual firm, this appears as innovation and profit. At the level of the social totality, it points towards a deeper crisis: a system that must constantly increase productivity to survive, yet in doing so undermines the living labour on which its value creation depends.

Technological Productivity and Societal Decomposition

Socially necessary labour-time, then, is not a neutral benchmark. It is the disciplinary mechanism of competition: every producer must match the social norm or risk destruction. What appears as technological innovation at the firm level appears as redundancy and precarity at the level of labour. Every firm has an incentive to reduce labour costs by increasing productivity. Yet if the general source of new value is living labour, this strategy undermines the substance upon which the system depends. The contradictions appear as recurrent crises, devaluation, debt expansion, and increasingly authoritarian political management.

The capitalist norm is a social standard that claims to represent the value society requires. But the process of establishing that norm actively erodes the social link that makes society possible. Competition forces every producer to treat others as rivals to be crushed. The result is a society that might be more productive, but is also more atomised, precarious, and desocialised.

This logic is captured with brutal clarity in Park Chan-wook’s recent black comedy No Other Choice (2025). The protagonist, Man-su, after being laid off, concludes that the only way to secure a new job is to eliminate his rivals, one by one. When he finally gets the job, he enters an AI-run, fully automated factory where machines have replaced workers. His victory is purely formal: he secures a place within a production process that no longer requires the mass of living labour that constitutes the social substance of value.

Neoclassical Blindness

Neoclassical economics is founded on methodological individualism. Its categories have no place for value as a historically specific social relation. When Marxists adopt this framework, they fall into the same trap, assuming value must be a physical property that sticks to commodities. The problem here is not that neoclassical economics has failed to discover a hidden quantity called “value.” The problem is that its framework makes such a category unnecessary. Because they cannot measure it, they conclude it doesn’t exist. What disappears is precisely the distinction between wealth and value.

The neoclassical economist is like a physicist who declares gravity doesn’t exist because they cannot see it—only falling apples. They mistake the empirical form in which value appears for the social relation that produces it. If you believe value is ultimately just “whatever the market prices,” you cannot explain why, over the last 50 years or so, productive investment has stagnated, wages have flatlined, and capital has fled into financial speculation.

The displacement of living labour has now reached a stage where compensatory mechanisms—credit creation, monetary intervention, financial asset inflation—only deepen the contradiction. Capital cannot escape its own paradox: it needs labour to generate profit, but it destroys labour to boost efficiency.

Financialisation: The Flight Forward

How has capitalism survived since the 1970s? Not by resolving the underlying contradiction of valorisation, but increasingly by doubling down on credit, debt, and speculation. It has created vast quantities of financial wealth that are not new value; they are claims on future returns, capitalised into present asset prices. The expansion of financial assets has increasingly outstripped the capacity of valorisation to sustain the claims attached to them. By fleeing into asset bubbles, derivatives, and debt, capital has created huge quantities of fictitious capital: real social power exercised through monetary claims on value that has yet to be produced—and will never be produced in sufficient quantities to certify those claims.

By discarding the category of value, mainstream economists lose the ability to distinguish between the real and the fictitious. From a neoclassical perspective, a derivative contract is just as “real” as a factory. They treat all prices as equally valid expressions of subjective preference, erasing the very category that would expose the system’s terminal crisis.

Financialisation is not a sign of capitalist vitality; it is a symptom of systemic decay—the desperate attempt to inflate paper claims on a shrinking productive base. The 2008 crash exposed the fragility of this insubstantial expansion. That we responded with more quantitative easing, more debt, and more asset inflation tells us that capital has no exit strategy—only a permanent state of crisis to justify its monetary expansion.

The Self-Grounding Narrative

If value is an invisible social substance, how did it conquer the world? Here we must make the Hegelian move. Hegel argued that a system does not come into existence through external rational justification; it exists as self-caused, by retroactively validating its own starting point and presuppositions. Capitalism is not true because it is grounded in human nature; it is true because we act as if it is true. Value is a “real abstraction” that exists not in thought but in social practice.

The modern reality of capitalism was built around a particular social form: the correspondence of money and labour-time. The “free worker” was born free to sell their labour power on a market, or to starve. Modern society organises labour-time around wages, making them the sole access point to survival. And because you labour for money, money is “proven” to represent labour. The circle closes; the narrative legitimises itself through human behaviour.

This social form had no natural ground; it grounded itself through habit, coercion, and law. Initially, there was no guarantee it would stick. Yet it did—violently, through enclosures, the separation of humans from the land, the collapse of feudalism, and the brutal imposition of wage labour. What began as a historically specific way of mediating social relations ossified into an objective reality.

This is why value is neither object nor illusion. It is a social abstraction with real consequences because we are compelled to act through it. The worker who needs a wage cannot simply decide value is a fiction. The capitalist who must compete cannot opt out of the law of socially necessary labour-time. The tragedy of capitalism is not simply unjust distribution. The deeper contradiction is that a social order built around the continual valorisation of labour (the value-form) eventually destroys the conditions required for that valorisation to continue. The machine continues to run, but the ghost that gives it life is fading.

Liberation, then, lies not in finding better meaning inside capitalism. Any liberation would, initially at least, be cognitive: the realisation that this self-grounding narrative—this 500-year historical detour—is not a law of nature. It is a historical formation that grounded itself through beliefs, praxis, and modes of enjoyment. But what grounds itself historically can, one day, be un-grounded. The real question is no longer how to make the modern machine work more efficiently. It is whether we can learn to live without mistaking its ghost for the substance of human life.

The post The Ghost in the Machine: Value and the Economist’s Blindness appeared first on The Philosophical Salon.

From The Philosophical Salon via This RSS Feed.