The Ghost in the Machine

Value and the Economist’s Blindness

^{Credit: David Moorhouse}

We are drowning in monetary wealth, yet we are starved of value. Financial assets multiply, stock markets hit record highs, property valuations inflate, sovereign and private debt expand. Measured in the swelling mass of liquidity, the world has never appeared wealthier. And yet, beneath this glittering surface, immiseration is spreading. Wages stagnate, housing becomes unaffordable, public services crumble, and the social bond—the fragile trust that holds communities together—is coming undone. The more wealth accumulates in the form of financial assets, the more precarious life becomes for the many who must sell their labour to survive.

This paradox cannot be understood if we treat wealth, money, prices and value as interchangeable terms. They are not. The failure to distinguish them is the reason why mainstream (neoclassical) economists are incapable of grasping the ongoing implosion. They see only the surface—price fluctuations, yield curves, liquidity injections—and ignore that money, under capitalism, functions as the form in which abstract social labour is validated. They ignore that for money to become capital it must be advanced against labour power in commodity production.

Beneath the monetary surface the system has already reached its limits, with spectacularly destructive consequences. Consider the paradigmatic case of NVIDIA: a company with a market capitalisation of over $5 trillion yet employing only 42,000 people. Its market cap per employee is on the order of $120 million. This is not value created by labour; it is fictitious capital, a financial claim on projected future returns that floats free of the social substance from which all value creation ultimately derives.

This piece is not a defence of capitalist valorisation but a diagnosis of what ignoring it means. Today, a major crisis is threatening to erupt again. When it comes, it will demand the usual repertoire of monetary manipulation and financial alchemy. The signs are unmistakable: sovereign debt is reaching breaking point, and central banks are already flooding markets with liquidity. Geopolitical disruptions—like the prolonged crisis in the Strait of Hormuz—appear to be deliberately left to fester, as though a significant social emergency were being cultivated to justify the next round of extraordinary fiscal intervention; just as it happened with the “pandemic”. The present conditions mirror those of September 2019, when the Repo crisis opened the way to extraordinary liquidity injections that were then legitimised, on a grotesque scale, by the timely arrival of COVID. Precisely because the system is blind to its deeper structural contradiction, it responds to crisis with escalating doses of the same poison that created it.

I begin with dissecting the meaning of value because, more than any other category, it holds the key to understanding why our world is collapsing. To this end, I draw on a short extract from Robert Kurz’s 2012 book Geld Ohne Wert (Money Without Value), translated by my friend Nick Gruber. Kurz, a late German theorist of the value-critique tradition, offers something rare: a reading of Marx that strips away the individualist assumptions that have plagued both bourgeois and Marxist economists for over a century. His insight is that value is not a physical property of individual labour transmitted to individual commodities. It is a society-wide, non-empirical substance.

1. There is no transformation...

Kurz tackles the famous “transformation problem” in Marx’s work:

‘This is how the discrepancy between the first volume (individual determination of value) and the third volume (society-wide determination of value) arises. The famous transformation problem... is therefore an illusory problem that results solely from the break in the course of Marx’s exposition. As far as the magnitude of value is concerned, the individual amount of labour has absolutely no direct relation to its individual result, there is only a society-wide total magnitude of value...’

To unpack Kurz’s point, we need to recall the different levels at which Marx develops his argument. In Volume I of Capital, Marx abstracts from the complex mediations of competition, credit and the redistribution of profit to analyse the basic social relation of exploitation through which capital extracts surplus labour. By Volume III, the analysis moves towards the more concrete forms through which this process appears at the level of capitalist society as a whole: competition, prices of production, interest and rent.

This shift created one of the most famous headaches in the history of political economy: the “transformation problem”. How do the magnitudes derived at the level of value, generated by labour, relate to the prices and profits that emerge through competition? For more than a century, Marxist and bourgeois economists alike have treated this question as either an unsolvable puzzle or a fatal flaw—a mathematical embarrassment supposedly serious enough to invalidate Marx’s entire critique. Yet these positions often share the same assumption: that Marx’s theory begins with an individual worker contributing an individual quantity of labour-time which somehow attaches itself to an individual commodity—a little packet of value leaving the factory gate and awaiting mechanical conversion into a price tag.

This is the positivist impulse in its purest form, and probably the deepest fetish of modernity: what cannot be directly measured must either be reduced to something quantifiable or dismissed as meaningless. But value is not an empirical property waiting to be discovered inside a commodity. Once we assume that value is a quantum that emerges directly from labour and congeals in the commodity, the problem writes itself. For if prices systematically diverge from individual labour-times, how exactly are we supposed to “transform” one into the other?

Here is Kurz’s core insight, which is worth reading twice:

Under capitalism, the individual amount of labour you put into a product has no direct relationship to the value of that product.

The answer is disarmingly simple: there is nothing to transform. This does not mean that labour is irrelevant to value—quite the opposite. Living labour is the only source of value. But under capitalism, 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.

If I spend five hours assembling a smartphone, it does not follow that the smartphone is “worth five hours” of my labour. Those five hours are initially private expenditure: labour performed by a particular worker under particular conditions. Whether that labour contributes to the reproduction of society is not decided inside the factory. It is determined ex post facto, through a social process of inverted causality that no individual producer controls—or, in any meaningful sense, understands.

This is where most readings of Marx go wrong. If Volume I is read as a theory of isolated workers producing individually measurable quantities of value, Volume III appears to present an insoluble dilemma. But this is to mistake Marx’s level of abstraction for an atomistic ontology. And the mistake is not confined to bourgeois economics. It also haunts the traditional socialist version of the “work society”: the idea that workers should receive the full monetary equivalent of their labour, or that value could be rationally measured and allocated by a planned economy. These positions remain trapped within the same ontology of direct causality—the assumption that a cause produces its effect in a straightforward, linear manner. They treat value as an individual’s property that can be calculated, possessed and redistributed, rather than as a social relation between money and labour-time that retroactively projects its shadow upon the world. The problem, therefore, is not simply who controls value. It is the value-form itself.

This is why the “break” between Volume I and Volume III is not an algebraic failure. Rather, it reflects the fundamental schizophrenia of capitalist modernity: private capitals act separately, within the narrow horizons dictated by the imperative of profit-making, while the social validity of what they produce and sell is determined behind their backs by a logic they neither see nor control. The “value” of capital is a form that determines its own content “after the fact”: what appears to be the effect of production becomes, through its social validation, the condition of production itself—and of a society organised around that mode of production. Value is not simply an effect of capital’s mobilisation of wage labour. It is an effect that retroactively posits itself as cause.

2. Value as a social totality

Let us qualify further the above claim. If there is no direct relationship between the labour I individually expend and the value of the commodity I produce, then how does my labour acquire social validity? Marx’s answer is seemingly straightforward: socially necessary labour-time. Yet the category points towards a deeper tension: the social character of labour is established a posteriori, through the monetary mediation that validates labour as profitable, or devalues it as useless.

Suppose I spend ten hours assembling a smartphone when the prevailing conditions require five. The additional five hours are real as personal exertion, but they acquire no corresponding social validity. Capitalism recognises only labour that conforms to the prevailing social norm. And who establishes that norm? No one—and everyone. It emerges behind our backs through competition and exchange, as millions of independent producers confront different technologies, productivity levels and conditions of production. Some expand, some survive, some disappear. Through this 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 the validity of every private labour.

Competition is the impersonal mechanism through which capitalism turns private labour into a social verdict. This is the strange logic of capitalist socialisation: labour doesn’t contribute to social reproduction unless and until it is retroactively validated. The individual capitalist encounters this relation as competition; the worker encounters it as the pressure to produce more in less time. Neither sees the totality directly, yet both are compelled to obey it.

As a social totality, value is what determines whether a worker’s labour counts as socially useful, whether a firm survives, whether a state collects taxes, whether public services are funded. The entire edifice of modern society—welfare, infrastructure, education, healthcare—rests on the extraction and realisation of this social substance. When value shrinks at the level of the totality, so too does the material basis for everything that holds society together.

Now reverse the above example. Suppose a producer introduces a technology that reduces the time required to assemble a smartphone from five hours to two, while the prevailing social standard remains five. For a time, that producer enjoys an exceptional competitive advantage: producing more cheaply while selling at or below the prevailing price allows them to realise a higher profit. But the surplus the capitalist realises is a larger share of the surplus value generated by living labour and socially authorised through exchange—a share that the more productive capitalist can temporarily capture through competition. The market validates this claim ex post: because the capitalist can produce below the social average, they can sell at the existing market price—or undercut it—while still earning an exceptional profit.

The paradox is that the capitalist’s individual profit can rise even as the value of each commodity falls. Once the new technology becomes widespread, the social standard itself falls towards two hours, and the exceptional profit disappears. Each smartphone now embodies less living labour. The machine, then, has not created value; it has enabled one capitalist temporarily to capture a larger slice of a shrinking pie.

Here we reach the crucial distinction. 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. Meanwhile, they allow living labour to produce more with less labour-time. The same social mechanism that compels capital to increase productivity also continually 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, however, it points towards the deeper crisis of the capitalist mode of production: a system that must constantly increase productivity to survive, yet in doing so progressively undermines the living labour on which its value creation depends.

3. Technological productivity, de-valorisation, societal decomposition

Socially necessary labour-time is therefore not a neutral benchmark. It is the disciplinary mechanism of competition: every producer must match the social norm or risk destruction. And what appears at the level of the firm as technological innovation appears at the level of labour as redundancy and precarity.

Here, again, we encounter the specifically capitalist contradiction. Every individual firm has an incentive to reduce labour costs by increasing technological productivity. Yet if the general source of new value is living labour, this strategy undermines the very substance upon which the reproduction of the system depends. At the empirical level, the contradictions of this process appear in many forms: recurrent crises, devaluation, debt expansion, geopolitical conflict and increasingly authoritarian forms of political management. They are the visible symptoms of a non-empirical substance rapidly undergoing decomposition.

The norm is a social standard that claims to represent the value society requires. But the very process of establishing that norm—the relentless competitive struggle to match or beat the average via technological productivity—actively erodes the social link that makes society possible. Competition forces every producer to treat others as rivals to be crushed, not as fellow humans to be cooperated with. While this drives productivity, it does so by rendering human labour increasingly redundant, suppressing wages, eroding job security, and pulverising communities that cannot keep up with the pace of “progress”. The result is a society that might be more productive, but it is also more atomised, precarious, and desocialised. A society that produces more while holding less together.

This logic is captured with brutal clarity in Park Chan-wook’s black comedy No Other Choice (2025), a film which makes visible the abstract logic of de‑valorisation in concrete images of work, competition and automation. The protagonist, Man-su, has devoted 25 years to a manufacturing company called Solar Paper, building his identity around his role as a paper-industry specialist. After being abruptly laid off after an American buyout, he becomes desperate to reclaim his former status and targets a job at rival company Moon Paper. He realizes the job market is too competitive and concludes that the only way to secure the position is to eliminate his rivals, one by one. He starts a fake company, collects résumés from top candidates, and sets out to murder them, just as his old company had “eliminated” him. When he finally gets the job at Moon Paper, he enters an AI-run, fully automated factory where machines have replaced workers. He had once tried to protect his fellow workers and defended the tradition of union solidarity; now he is the last man standing, surrounded by high-tech machinery that has made his fellow workers obsolete. The contrast between the cold automation and Man-su’s hollow happiness at being back at work is a chilling image of a system that has reduced him to supervising the very technology that renders workers obsolete. His victory is thus 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.

And—back in the real world—the damage does not stop there. As productive workers are systematically replaced by dead machinery, capital is forced to generate wealth through non-value-productive channels: speculation, asset bubbles, debt, and the sprawling casino of financialisation. The circuit of capital—which was once based on the mediation of labour (M-C-M’)—is increasingly bypassed in favour of direct financial expansion (M-M’). This creates an imbalance so severe that it can no longer be managed through ordinary means. Instead, the system resorts to the regular deployment of systemic violence, dressed up as “emergencies,” “austerity measures,” or “national security.” Higher doses of authoritarianism become the default response to a terminal crisis that capitalism itself cannot resolve.

This is the unwinding of the value-form today: it continues enforcing a standard that desocialises society, making it more prone to mass manipulation and authoritarian crackdown. The norm destroys the very social substance it claims to regulate. And all the while, we are told to accept it as inevitable. The cruellest part is that we are taught to call this cannibalism “progress.”

4. Neoclassical blindness

Neoclassical economics is founded on methodological individualism: social reality is approached as the aggregate of individual choices, preferences and transactions. Its categories therefore have no place for value as a historically specific social relation mediating production as a whole. When Marxists adopt this framework, they fall into the same trap. They assume that value must be a physical property, a tangible substance that sticks to individual commodities. This is also the unspoken assumption behind the traditional Marxist ontology of the proletariat as the revolutionary subject—a category error that mistakes the worker’s position within the value-form for a privileged standpoint outside it.

The problem is not simply that neoclassical economics has failed to discover a hidden quantity called “value.” The problem is that its conceptual framework makes such a category unnecessary. Because they cannot measure it, they conclude it doesn’t exist. Economic reality is approached through individual preferences, marginal decisions, scarcity, supply, demand and observable prices. There is no need, within this framework, for a historically specific social abstraction. What disappears from view is precisely the distinction between wealth and value; between the accumulation of monetary claims and the social process capable of validating them.

The neoclassical economist is like a physicist who declares that gravity doesn’t exist because they cannot see it; they only see falling apples. They mistake the empirical form in which value appears for the social relation that produces that form. This is not just an academic flaw, but a blindness with real, material consequences for billions of people. If you believe that value is ultimately just “whatever the market prices,” then you cannot explain why the global economy has been gripped by chronic, structural crisis since the 1970s. You cannot explain why real productive investment has stagnated, wages have flatlined, and capital has fled en masse into financial speculation.

Here is the explanation that neoclassical blindness cannot see: the displacement of living labour has reached a stage at which the compensatory mechanisms that once offset the falling rate of profit—credit creation, monetary intervention, financial asset inflation—now just deepen the contradiction. Technological innovation can temporarily counteract the pressure, but it does so by displacing more living labour. Capital cannot escape its own internal paradox: it needs labour to generate profit, but it destroys labour to boost efficiency and profitability.

5. Financialisation: the destructive flight forward

So how has capitalism survived its structural crisis since the 1970s? Not by extracting more value—the falling rate of profit made that impossible—but by doubling down on speculation. It has created vast quantities of financial wealth that are not themselves new value; they are claims on future returns, capitalised into present asset prices. Capitalism, of course, did not cease to extract surplus value after the 1970s. The problem, rather, is that the expansion of financial assets, supported by credit created out of thin air, has increasingly outstripped the capacity of the underlying process of valorisation to sustain them.

Instead of investing in factories, wages, and innovation, capital fled into asset bubbles—real estate, stocks, derivatives. It plunged into debt—sovereign, corporate, and household. And it 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.

This is where neoclassical blindness turns from dangerous to criminal. By discarding the category of value, mainstream economists lose the ability to distinguish between the real and the fictitious. Real value is grounded in living labour and productive investment. Fictitious capital is the speculative froth of financial markets. From a neoclassical perspective, these distinctions are invisible. A derivative contract is just as “real” as a factory. A stock price is just as “empirical” as a wage. They treat all prices as equally valid expressions of subjective preference, and in doing so, they erase the very category that would expose the system’s terminal crisis.

Financialisation, then, is not a sign of capitalist vitality; it is a symptom of systemic decay. It is the desperate attempt to inflate paper claims on a shrinking productive base. The 2008 financial crash was the inevitable reckoning of this insubstantial expansion. And the fact 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 emergency that legitimises the very same destructive logic.

So when the neoclassical economist says, “value doesn’t exist; only prices do,” they are not being neutral scientists. They are performing an ideological function, erasing the very diagnostic tool needed to understand why our world is burning. They stare at the dancing shadows on the wall—prices, financial indices, GDP—and declare that shadows are all there is. No one dares to turn around and see the fire. The fire is value itself: the social substance that capitalism is consuming, and which it can no longer rekindle.

6. Modernity’s self-grounding narrative

We can now push the argument one step further. If value is the ghost in the machine —an invisible, non-empirical social substance—how on earth did it manage to conquer the world? If it is neither a physical property of things nor a rational subjective preference in our heads, why do billions of us wake up every morning and sacrifice our lives to feed this abstract matrix?

This is where we must make the Hegelian move—the same move that inspired Marx’s deepest insights. Hegel famously argued that “the ground grounds itself”: a system does not come into existence through some external rational justification; it exists by retroactively validating its own starting point, by creating and naturalising the very conditions that make it appear necessary. In plain English: capitalism is not true because it is grounded in human nature or rational design; it is true because we act as if it is true. Value is not discovered in the world. It is a “real abstraction” that exists not in thought but in social practice. We may never consciously believe in it, yet we reproduce it every day.

Think about it. The modern reality of capitalism was built on a single, historically specific social form: the correspondence of money and labour-time. At a certain point in Western history, money began to represent a quantifiable amount of labour-time. With this abstraction, the modern “free worker” was born. Free, of course, to sell their labour power on a market—or to starve.

Here is the circular logic of capital. Society organises labour-time and production around wages. Wages become the sole access point to survival. Society forces you to labour for money. And because you labour for it, money is “proven” to represent labour. The circle closes; the narrative legitimises itself through praxis. Capital was born as this self-moving matrix, which sucks in living labour, turns it into value through competition, and uses that profit to buy more labour. This loop reveals that labour is not a calculable human potential to be liberated. It is a ghost-like substance that capital formats retroactively to feed its own insatiable drive toward profit-making. The very spectral quality of labour is reproduced as the spectral quality of capital: a value-form condemned to chase surplus as its own lacking substance.

This social narrative had no substantive ground except for grounding itself through habit, and, eventually, law. Initially, there was no guarantee that it would “stick” as a social bond. Yet, slowly, it did—at the expense of all the other possibilities that were never realised. There is no conspiracy here. No one invented “value” in a smoky backroom. The abstraction emerged historically—chaotically, violently—through enclosures, the separation of humans from the land, the collapse of feudalism, and the brutal imposition of wage labour as the only means of survival. Once the conditions existed for its reproduction, it acquired a life of its own. What began as a historically specific way of mediating social relations ossified into an objective reality standing over and against the individuals who reproduce it—an “objective law” that governs our existence as surely as gravity governs falling objects.

This is why value is so difficult to see. It is neither an object nor an illusion. It is not hiding inside commodities, waiting to be measured, but neither is it merely a fiction that could disappear if we stopped believing in it. It is a social abstraction with real consequences because we are compelled to act through it without ever fully realising why. The worker who needs a wage cannot simply decide that value is a fiction. The capitalist who must compete cannot simply opt out of the law of socially necessary labour-time. Competition, money and the need to reproduce oneself enforce the abstraction behind our backs.

But we should be clear: within the capitalist matrix, “value” has nothing to do with human ethics, dignity, or meaning. Value is a cold, spectral, society-wide accounting system that uses human labour as its raw fuel and stops at no mass violence to reproduce itself. The search for personal meaning within the value-form is a fool’s errand, because the system is structurally indifferent to our individual existence.

The tragedy of capitalism is not simply that it has created an unjust distribution of wealth. Nor is the problem merely that greedy financiers have accumulated too much money. The deeper contradiction is that a social order built around the continual valorisation of labour eventually destroys the conditions required for that valorisation to continue. And when the production of value can no longer sustain the expanding mass of monetary and financial claims, the system compensates through emergency-justified debt creation, further asset inflation and ever more elaborate anticipations of a future that will never arrive.

The machine continues to run, but the ghost that gives it life is fading. This is why our era feels so profoundly unreal. Financial wealth multiplies while the social world deteriorates. Money is created in ever greater quantities while the material and institutional foundations of collective life are allowed to decay. And yet we continue to experience all this as if the underlying system were eternal. We are told that there is no alternative to “the market”, that technological displacement is “progress”, that austerity is “necessary”, that permanent monetary intervention is merely prudent management, that increasingly precarious forms of life are simply “the new normal”.

Liberation lies not in finding better meaning inside capitalism. There is no liberation in nostalgia for the “good old days” of productive valorisation—those days are gone, and they were never as good as we imagine. Any liberation would, initially at least, be cognitive: the realisation that this self-grounding narrative—this 500-year historical detour, in which we worship the self-expanding idol of a circular equivalence between commodity-producing labour and money—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. Before we can imagine another form of social mediation, we must recognise the historical contingency of the one we inhabit. The first step is to stop mistaking “capitalist progress” for the world—the latter is much bigger and immensely richer in possibilities. 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.