In talking of Labour here, what is meant is free human labour. The labour undertaken by beasts of burden, or the work done by machines is not free human labour. The work they do creates no new value, but only transfers a portion of their own value to the new product. But, for the same reason the labour performed by slave labour creates no new value either. The slave is no different than any other beast of burden, and the labour they perform also only transfers a portion of their own value to the end product. As Marx puts it,
“... in the relations of slavery and serfdom…The slave stands in no relation whatsoever to the objective conditions of his labour; rather, labour itself, both in the form of the slave and in that of the serf, is classified as an inorganic condition of production along with other natural beings, such as cattle, as an accessory of the earth.” (Grundrisse p 489)
Labour is the essence of value, and the natural measure of its quantity is time. Value is measured by the quantity of labour-time. Some use values arise naturally, and have required no labour for their production. As a result these use values have no value. But, all use values that are the product of human labour have value. These use values, as distinct from those that are not the result of human labour, are products. Every product has an individual value equal to the labour-time used in its production. Every society seeks to reduce this value, i.e. to reduce the labour-time required for the production of these products, because in this way it can increase its wealth by increasing the number of products. This is a fundamental element of the Law of Value.
As societies begin to trade one with another - as Marx says this first arises with one nomadic tribe exchanging products with another, often in wedding ceremonies – these products themselves are brought into a social relation with each other, such that the value of each product is measured against the value of the product with which it is exchanged. The more these exchanges are developed into actual trade, the products are transformed into commodities, and the value of the product in its social relation with other products becomes visibly stamped upon the commodity as its exchange value.
What each participant exchanges is then not commodities, but equal amounts of labour-time. The apparent exchange of commodities, thereby creates the impression that it is the commodity, which has innate value because of some quality it possesses. This is commodity-fetishism.
The more trade develops, the more the measurement of value has to be done accurately. As Marx says, individual producers who are still close to the production process of a small range of products know how much labour-time is required on average to produce any item. In a study of the Guatemala Indians of Panajachel Professor Sol Tax tells us that exchanges and equivalences are strictly calculated and a woman who could not read or write was able to state within a penny the exact cost of production of a carpet on which she had worked the whole of one day. Sol Tax “Penny Capitalism” (pp 18, 15, 80). The corporations of Antiquity and in those of China and Byzantium and in the European and Arab Middle Ages fixed rules, known to all, laid down alike the labour time to be devoted to the making of each object, the length of apprenticeship, its cost and the equivalent normally to be asked for each commodity. Georges Espinas “Les Origines du Capitalisme” (pp 118, 140-2)
Even where commodities are produced by a large number of individual producers these commodities are sold by a smaller number of merchants so that the social value becomes more accurately measured via the exchange of large masses of commodities.
In the same way that sunlight is more intense than candlelight, but an amount of sunlight can be expressed as so much candle-power, so the same duration of different types of concrete labour, may represent different amounts of abstract labour. Or put another way, light can be measured in candles, and labour can be measured in terms of some basic unit of simple labour. The product of an hour of the concrete labour of a carpenter, may have the same value as the product of two hours concrete labour of a cotton spinner. This can only be determined in the market place by examining in what proportion the product of the one exchanges for the product of the other. Marx calls the basic unit of labour simple labour, whereas the concrete labour which represents a multiple of this simple labour, he calls complex labour. It stand in the same relation to simple labour as a yard stands to a foot, or a kilometre to a metre.
Labour, as the essence of value, has no value itself. That would be like saying a photon is equal to a photon. The statement, "the value of an hour of labour is equal to an hour of labour", is meaningless. It is only the products of labour that have value. When the phrase "price of labour" is used by economists, or in general vocabulary, , this is equally meaningless, therefore, because price is only value expressed in money terms. The price of labour is only the phenomenal form of the value of labour-power, a commodity sold by workers whose value like that of any other commodity is determined by its cost of production – here the cost of production of the worker themselves.
It was this confusion over the value of labour as opposed to the value of labour-power that caused Adam Smith, David Ricardo and their followers to end up in an unsolvable contradiction about the source of surplus value, a contradiction that it was left to Marx to resolve.