Commodity - thing for sale.
Use value - capacity to satisfy human wants.
Value - embodied social labour-time.
Exchange value - ratio of exchange with other commodities.
Abstract labour, or average social labour - labour as expenditure under average conditions of a quantity of average labour-power. In earlier writings, Marx used the term 'universal social labour' instead of abstract labour. His argument is that in a commodity society labour becomes social labour only as abstract labour.
Despite the confusing terminology (taken by Marx from earlier writers), here use-value and exchange-value are not different sorts of 'value'. Exchange-value is the form of value. Value and use-value are the two rival factors united in a commodity.
2. Arguments for the labour theory of value
a) Average social labour-time is the only social substance common to commodities which can be the basis of social relations equating them as more or less of the same sort of thing. There's nothing else. Consider commodities as social equivalents, and they are jellies of labour, no more.
b) The labour theory of value starts from a real objective fact of (human-social) nature - labour. All other theories of value start from concocted subjective concepts (utility, etc.) which actually come down to assuming capitalist relations in order to prove capitalist relations.
c) The labour theory of value is the only one which gives us an independent way of valuing the inputs to production, the value added in production, and the outputs from production, and thus the only one which enables us to explain profit rather than just assuming it as a natural part of the costs of production.
d) The labour theory of value enables us to make broad predictions about the effects of class struggle on wages and profits and methods of production. Those predictions fit reality better than the predictions of other theories.
e) Without labour - when workers go on strike - no value is produced.
f) Compare a plastic chair with metal legs and some sand on it with a VCR. Both have the same raw materials. The VCR has much more value than the chair. Why? More labour.
Arguments against the labour theory of value.
a) Not just labour, but also other factors of production - land and capital, at least - contribute to creating new value.
Reply: Capital - and land in its actual form as an economic input, at least in developed capitalist economies - are products of labour. The idea of adding together the 'factors of production' assumes that we have a common measure for those factors of production. Their only common measure is labour.
b) Picasso used to pay his restaurant bills by doing a drawing on the back of the menu and giving it to the restaurant owner. The value was way, way out of proportion to the labour time.
Reply: Only relatively standard commodities, produced under relatively standard conditions, and thus embodying relatively definite quantities of average social labour, have clearly defined values. These are the vast majority of the commodities exchanged in modern society. It is impossible to estimate an amount of 'average social labour' in a Picasso drawing, and so its price is outside any proportion to labour-time. Actually the prices of such artworks vary erratically with fashion.
c) A lot of labour may have been spent producing something, e.g. writing a book, but if no-one wants it, then it has no value. Conversely, a lump of gold found by chance, without any labour, has value.
Reply: Value is constituted by average social labour, i.e. labour employed under average conditions producing something wanted by at least a few people. Notice, however, that something which is wanted only as a matter of whim and by a few people may have a large value, and something which is wanted very much by almost everybody may have a very small value.
3. Useful things that are the product of human labour yet not commodities —
for example, your notes from this session.
4. What is 'the twofold nature of the labour embodied in commodities'?
Abstract labour - labour considered as just so many hours of average labour under average conditions - which forms the substance of value; concrete labour, labour as a specific useful activity, which creates use-value.
Why 'the pivot on which a clear comprehension of political economy turns?'
a. Because the analysis of labour into abstract labour and concrete labour points to an understanding of the particular 'bourgeois form of labour'. It is central to the 'value theory of labour'. Marx's analysis of the labour process will show that as capitalist production develops, labour tends to become more and more abstract for the workers (more and more 'mere sacrifice of rest, freedom and happiness') and more and more concrete for capital (more and more productive of a rich variety of wealth).
b. Because the analysis of labour into abstract labour and concrete labour is closely linked to the distinction between labour and labour-power.
c. Because Marx will show that abstract labour is socially expressed in money, and the dichotomy of abstract labour and concrete labour is socially expressed in the dichotomy between money and other commodities.