Price, says Smith, is an expression of value based on the component parts of price. Smith defines a separate market and natural price, in which the market price is dependent on its natural price. Natural price is latent in that it controls the market price, because “the market price of any particular commodity, though it may continue long above, can seldom continue long below, its natural price” (Smith, 70). Therefore the market price is the manifest expression of the natural price specifically in the market.
A real world example of this is the 2013 H&M scandal involving the production of Beyoncé’s clothing line in Bangladeshi sweatshops. Within the global market, H&M is the largest buyer of Bangladeshi clothing, importing roughly $1.5 billion worth of garments annually. In 2012, the garment industry comprised $19 billion in Bangladeshi exports, out of a total $24 billion. Profit acts as the byproduct of producers’ attempt to generate as many products as possible with the lowest wages possible. This is why the model of sweatshops works so well for both the Bangladesh economy and H&M, because it maximizes profit by minimizing wages, thus allowing for low price points on H&M products in America. According to Smith, “the natural price itself varies with the natural rate of each of its component parts, of wages, profit, and rent” (Smith, 71). Because the market price cannot drop below the natural price of any given commodity and be sustainable, H&M manipulates the natural price through the use of sweatshops in order to effectively lower the market price. This proves that the market price can be manipulated by the latent natural price by altering the conditions of labor and, therefore, wages. As much as it benefits a capitalist society, this undermines the laborer.
To explore further the concept of manifest and latent, let us turn to Marx’s perspective on these topics. We understand that value and use-value are entirely different entities, in that “[a] thing can be a use-value, without having value. This is the case whenever its utility to man is not due to labor” (Tucker, 307). However, Smith and Marx acknowledge the role of both use and exchange in determining the nature of the commodity in relation to a capitalist society.
Marx suggests that use-value is a form of appearance for exchange-value, as in exchange-value exists only in relation to the exchange of two or more use-values. Exchange-value is only possible if you make a total abstraction from use-value. “Of commodities, use-value is the difference in qualities,” and it is relative to man and the utility it provides him (Tucker, 305). In contrast, exchange-value is the difference in quantities relative to other commodities. “Then one use-value is just as good as another, provided only it be present in sufficient quantity” (Tucker, 305). If there is no difference in quality between commodities derived from their use-values, then an exchange cannot occur–therefore, exchange-value never manifests because it is only a mode of expression for equivalence. This is all to say, that use-value is a determinant in exchange-value, because it is not immediately apparent: it maintains a latent characteristic. Use-value, therefore, makes exchange-value manifest, specifically in the market.
Use-value and exchange-value constitute a notable part of the method through which we can analyze a commodity. What is a commodity?
First, let us look at Marx’s definition:
To become a commodity a product must be transferred to another, whom it will serve as a use-value, by means of an exchange. Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value. (Tucker, 308)
We found collectibles to be an interesting example in discussing commodities within the scope of Marx’s definition. Beanie Babies, for instance, are one of the most iconic examples of the collectibles industry. A simple Google search will yield thousands of results for what seem to be overpriced eBay listings, despite the Beanie Baby bubble having burst decades ago.
Based on Marx’s definition, these objects are not commodities because they have no apparent use-value, other than serving the purpose of being owned and being a part of a larger collection. But Beanie Babies seem to have high exchange-value, as it is constantly “transferred [from one owner] to another”, which could classify it as a commodity (Tucker, 308). This begs the question, could we define a Beanie Baby, or any other collectible, as a commodity, since they have a manifestation of value through exchange yet have no obvious use?