William J. Blake: An American Looks at Karl Marx
The change in value must take place in the commodity exchanged, since it cannot take place in the money, which is at both ends of the equation. The question of how M increases to M’ will not be answered by M or M’. It must, if there is a reply (and there must be one), lie in C, for it is by way of C that M is converted into M’. Since surplus-value cannot arise in circulation, that is, in exchange-value, it could only arise in use-value, and use-value is availed of only by consumption. Is there any commodity known that can satisfy this enigma? That can, by its very usefulness to the consumer of that commodity, become a source of value? For if there is such a commodity, then the surplus-value could originate outside of the circulation process, and yet become manifest in the circulation process. For use-values are acquired in the sphere of circulation. Put it this way: It is not in the sale of merchandise that surplus-value is to be sought. As for the money, by itself, as Ricardo says, it is productive of no profit. We are compelled to transfer our attention to the purchase of a commodity as the only alternative. If there is any commodity that can produce surplus-value by its very use, then the manner in which that commodity enters the sphere of circulation is in being bought and not in being sold.
Labor-Power
There is one such commodity, and that commodity is labor-power.
By labor-power, or the capacity for labor, Marx defines the aggregate of those mental and physical capabilities which every human being exercises in order to produce a use-value of any description.
How does Marx come to the surprising dogma that there is only one such commodity, and why among the universe of commodities does he select labor-power, and whoever said that labor-power is a commodity like any other? How can labor-power have the same commodity character as other commodities which embody labor-time? Is there not a jugglery here? More than that, why must the answer be only in consumption of use-values? Is there, within the sphere of circulation, any answer, we have not explored? For it must be realized in the sphere of circulation, this subtle, enigmatic surplus-value.
Why, for example, does Marx insist upon simplifying the question to exchanges of equivalences or non-equivalences? Might not the answer rest in departures from equivalence, but finding their social level at equivalence? True, they appear to cancel out each other, and this seems common sense, but common sense is not rigorous proof.
These are legitimate questions and, as labor-power as the source of surplus-value is the important message of Marxism, it is worth going into to the last detail. Engels said that the two contributions of Marx to science, ultimately, got down to historical materialism and the theory of surplus-value.
First let us get rid of the last questions in the process of circulation. Marx states that his analysis of the enigma does not mean that goods, even on the average, sell for their value, or approximate to their values. He points out that even if we assume that price and value ought to coincide, the formation of surplus-value cannot be attributed to any deviation of one from the other. He has made two commodities equivalent in exchange merely to illustrate that if prices differ from values, they must finally be equated to values so that we may see the question stripped of complications and thus perceive that, leaving out all disturbing elements, the equation of exchange gives us no warrant for surplus-value.
True, this abstraction is made not merely in theory but in fact, for every merchant assumes that all fluctuations of prices are at about an average level to which in the long run they conform. Otherwise he could do no general predictable business, if every transaction appeared as a new level of prices, with no general reference by way of which it could be pretty much anticipated.
He would ask, in merchant language, how can capital yield a surplus if prices are regulated by the average price? Average prices do not directly coincide with value but, since surplus-value cannot arise out of equivalence or non-equivalence, then average prices, whatever their deviations from value, could not explain surplus-value any more than social value could. It is still a matter of some kind of equivalence. So that all price deviations are ruled out in answering the enigma of surplus-value, whether the question is put as Marx put it, or as any businessman would put it in his own trade language.
Surplus-Value Results from Consumption
First it must be proved that surplus-value, if it can be explained at all, must be explained by the consumption of a commodity. The demonstration is:
(a) Neither in exchange of equivalents or non-equivalents is there any increase in the value of money capital.
(b) Money, by itself, without the intervention of commodities, certainly stands still and remains a mere hoard.
(c) No commodity can produce surplus-value by itself, for the only way a producer can add to value is by putting more labor into new goods or more labor into the goods he has now produced, that is, improving them. But he can never add surplus-value to present production.
(d) But all value, including surplus-value, must be embodied labor, for labor-time is the ingredient of value.
(e) A man does not buy his own labor; his own labor is seen only as the expenditure of his energy as put into use-values.
(f) But since labor embodied in goods is the only source of value, and the only possible source from which a surplus-value can come, one must be able to buy some laboring power which can be consumed in industry, that is, in creating values, so that by this consumption of labor-power there is an actual creation of value over and above the labor put into the production of goods.
How Consumption of Labor-Power Produces Surplus-Value
The last point requires amplification, for (a) to (e) are easily followed. We have seen that labor itself can produce only value, not surplus-value. How can labor be a source of surplus-value if it cannot produce it? But if labor-power is sold by the worker to someone else, that buyer purchases it as he would purchase any other commodity. He hopes to consume the eight hours of labor-power sold to him, because he has bought it to use it, to exploit it, exactly as he exploits the power of a dynamo he has bought.
Compare labor-power with any other commodity (we assume for the moment that it is a commodity). A capitalist buys woolens for $100. He uses that wool, that is, he consumes it, in making suits. The value of the woolens does not advance beyond $100. It remains what it was, the labor-time incorporated into it. The labor that fashions the suits is additional labor, creator of new value by its efforts. So that by the purchase for consumption and use of any $100 worth of goods no surplus-value can possibly arise.
It is not, then, by the purchase of commodities with dead labor in them (past labor, that is) that surplus-value can be brought into being. The commodity purchased must be one whose living use by itself produces surplus-value. Since there is no meaning to use-value unless it is consumed, it follows that surplus-value can come only out of the consumption of use-values, exactly as value itself comes out of the production of labor. This use-value (the use-value consumed) must have a special property, it must be a commodity not embodying dead labor—that is, it cannot be an article, or goods.
We are forced back, accordingly, to the purchase and consumption of labor-power as the only possible source of surplus-value because it alone answers every condition of the enigma. But how are we to demonstrate that the consumption of labor-power creates a value over and above its own value, that is, a surplus-value? That it is the only alternative, merely indicates that the explanation may be in it, not that is in it.
Dead versus Living Labor-Power
The value of labor-power, as of any commodity, is the amount of labor-time required for its own cost or upkeep or, in more recondite speech, its reproduction. In this the value of labor-power does not differ from that of ice cream or galoshes.
But there is one difference, and that is all-important to the buyer of labor-power. The laborer does not sell commodities in which his past labor is embodied. He sells a commodity which exists only in his living self. Now apart from humane or sentimental considerations, the economic difference is in the quantity of value. When a commodity other than labor power is bought, the quantity of value is the social labor-time already incorporated into it. The quantity consumed cannot exceed the quantity of value in the commodity. But labor-power has a value independent of its consumption. It does not incorporate a fixed, unchanging value, already congealed in the commodity. This special commodity can change its quantity of value by effort. Its quantity of value that can be consumed—its use-value, that is—is not fixed. As it is consumed, it can be augmented. The value of labor-power has nothing to do with the value which it can produce. Its own value (social time required for its reproduction), and the value it produces, are separate quantities, wholly different magnitudes. Here at last a commodity can be consumed which produces its own value and may produce other value besides. The riddle of surplus-value is solved.
Conditions of Labor-Power Sale
There are two conditions for the appearance in the market of this most peculiar commodity, labor-power. It must be sold by its owner, who is, in legal terms, free to sell it. He must not sell himself, as a bondman, serf, or slave, for then his labor-power is not a commodity. It could not then be sold over and over again in the market. His labor-power is an object of consumption, that is, of purchase, and it must circulate freely like all commodities. In the eyes of the law, the buyer of labor-power (the capitalist) and its seller (the worker) are free and equal parties to a contract. This is shown by the prohibition of peonage and life-contracts for labor in the United States, prohibition of immigration of contract (bound) labor, etc.
The second condition is that the owner of labor-power should own no other means of production. He must not himself be able to sell the products of his labor, he must sell only one commodity, labor-power. He has one possession, one object of sale. For if he had his own means of production, or had a host of commodities he could sell, he would not part with his labor-power as a commodity, he would not put himself in a position where there is a difference between the value that he produces and the value of the labor-power he sells. Therefore two conditions must be fulfilled, he must be legally free and effectively helpless.
In order that anyone can manufacture commodities he must have the means of their production, that is, tools, raw materials, and also means of subsistence until his products are sold. He must consume before and while he produces. But products are sold after production.1 He must be able to wait out both production and selling time. The worker, who sells labor-power, has nothing with which to realize his labor-power, though he is legally free to produce without a master, if he can.
The Essence of Capitalism
Despite the elaborate reasoning by which labor-power was discovered, alone, to be the source of surplus-value, it follows from the above that it can be only a historical situation in which masses of laborers and capitalists face each other in this relation. It is not in the nature of things. It is an event seen in a developed commodity society. Commodities already are made for the market, not for the use of the producer. Only in high capitalism, in developed machine industry, does the above relation of the labor-power sale by worker to capitalist become the rule, and latterly, universal. Unlike any other economic form, capitalism must have the sale and purchase of labor-power in the form described.
Other societies have money and commodity circulation, but only capitalism has this development of surplus-value. This is a special use of labor’s weakness. In older society the laborer was unfortunate and miserably treated, but the manner in which he remained poor while the rich took the fruit of his toil was wholly different from the production of this social surplus-value through the consumption of labor-power, sold as a commodity by its owner.2 For the development of capital, for its emergence as money, as a recipient of surplus-value, the purchase of labor-power is the essential. The system under which money freely buys labor-power is called CAPITALISM.
We said before that labor and the value of labor-power are differing qualities. How does the capitalist manage to separate the two so that there is a difference in his favor?
The Value of Labor-Power
Labor-power, in so far as it has value, has no more than the average labor of society incorporated into it. Since the individual who sells his labor-power must keep on living, to begin with, his labor-power must require that he be reproduced and maintained. He must obtain certain means of subsistence. The value of labor-power is the value of the means of subsistence necessary for the maintenance of the laborer. But labor-power also costs the worker energy, and this waste must be repaired.
This (maintenance) is a most indefinite quantity. In Cuba a laborer requires no heating, no expensive clothing to keep out the cold, nor does he need shovels full of calorie-producing foods to beat the Boreal blasts. In Chicago during the winter he needs three thousand calories a day, heat at sixty-eight degrees in his house, and a double-breasted coat and thick underwear. In the country workers need no carfare but in the city that is an item. In tropical countries, vacations can be shorter, because everyone has what the Northern worker must pay for, permanent sunshine and flowers. That, however, does not mean that the worker in hot countries is better off. Usually the contrary is true.
The means of subsistence that are required also have a traditional basis. Where workers participate in a tradition of freedom and opportunity, as in the United States, they will submit to much less privation than where the lord has kicked them in the face, just for the fun of it, as in the Poland of but yesterday. The value of labor-power has historical and moral bases that are not true, in that way, of any other commodity.
In any given country (or, rather, civilization) though, the amount required for mere survival is well known by experience. Even in rich America there are large sections of the population for whom this reproduction basis is almost at an animal level. If the class of persons selling labor-power is to keep going, the laborer must have children. Capital is immortal, the laborer mortal. Money never dies, but men come and go. The remuneration of labor must also include the sustenance of the number of children required at least to maintain a good supply of workers. That means, at the least, the production of more than one fertile daughter who will grow to maturity to every woman of child-bearing age. In England today one hundred women of that age are producing only seventy-five daughters and the capitalists look with real anxiety to the future.
Skilled Labor-Power Value
Labor-power requires still further compensation. For much labor (though not for as many as in Marx’s day), a special training is required. But nowadays, workers all must be able to obey much more complex instructions than in former ages. Reading and writing are almost indispensable. Truck drivers must sign receipts and account for inventories. The complicated systems of timing and measuring require a certain alertness. In the case of really skilled workers, the training takes many years and has to be compensated. Since the wants of the workers are paid for daily in the case of food, monthly for rent, quarterly for certain installment payments, etc., and their clothing is often renewed in part only twice a year (if that), the daily wages must take care of these expenditures on the formula
| 365−A plus 52−B plus 4−C etc. |
| ————————————— |
| 365. |
The quantity of labor, paid for each day’s work that compensates these socially required expenditures, is the value of labor-power daily reproduced. If half a day’s labor will suffice for this, and that is expressed in money as two dollars, then two dollars is the value of a day’s labor-power. The worker offers his labor-power for its value, and sells it for that. The capitalist buys it at its value (on the average). But it is clear that this value is indeterminate. For the worker it is the cost of reproduction of his labor-power on a traditional basis, and he interprets those needs liberally. For the capitalist, the nearer this interpretation comes to minimum survival, the cheaper the labor-power, the more nearly it seems to represent the value of labor-power. If labor-power is sold below its value (as today in Germany) it will leave the labor-power eventually very much impaired. It is sold below normal quality, in the long run.
Why Is Labor-Power Sold Only for Value?
Labor-power is sold for value, this value being based on the amount of labor-time to reproduce the goods necessary for its maintenance and reproduction at the social level prevailing. But it may be asked, why must labor sell its labor-power at its value? Why not above its value? Why is it so limited? Cannot the supply of labor become so scarce that its labor-power is compensated at more than its value? It is true that at certain boom times wages may rise temporarily, but the fundamental inequality of the situations, that the workers have no means of production and the capitalists all the means of production, determines the issue fundamentally.
When any other commodity is sold its use-value is immediately at the disposal of the purchaser. But labor-power is curious in this too. Its value is fixed before it goes into circulation. But its use-value is not available to the purchaser except subsequently. But labor-power is used by the purchaser for a week before it is paid for (if that is the arrangement). The use-value of the labor-power is thus advanced to the consumer, the capitalist, by the laborer until he is paid.
He gives credit to the capitalist. This may be laughed at as fiction, or at best nominal accountancy. But the number of firms that “go broke” owing wages show how real it is. Among the very poor, this delay causes them to eat inferior food because they are always short of even a few dollars. But in order to discover the pure surplus-value relation, this credit will, for the time being, be disregarded.3
Contractual Appearance of Labor-Power Sale
The moneyed man buys everything at full value. He buys equipment and raw materials. But when he consumes labor-power he not only produces commodities (values) but surplus-value as well. The consumption of labor-power never appears in the market, but like any use-value it takes place outside the sphere of circulation. Marx now penetrates the disguises of “fairness” in this relation, to extract the secret of profit-making.
The superficial appearance is idyllic. Labor and capital are free agents. Both agree to a contract on their free will. The contract is an expression of their common will. They are equal, for each one owns an equivalent, money or labor-power. Property is respected because each uses his own, labor-power and capital. It is also motivated by self-interest and everyone knows that the greatest good of the greatest number is obtained by a prudent consideration for Number One. But the real fact is that the moneyed man has all the means of production and the laborer sells only his hide, and that the two classes are as completely unequal as they can be, despite the legal veneer.
The Theory of Exploitation
Money is transformed into Capital by its purchase for consumption of that extraordinary commodity, labor-power. Money thus becomes capital by absorbing into its value the life-force of the working class. This is the synthesis known as the Marxist class-conflict theory. It is the pillar of socialism. If it is true, the Marxians have scored heavily. If it is false and capital itself gives a real value for which it is compensated, then the present order has a valid apologia, and can allow of the progressive betterment of working conditions and still maintain its integrity. But if Marx is right, that the surplus-value (all that capital has) is due to the consumption of labor-power, for which it pays nothing, then Capital could not negate its own continuance by making concessions that would prevent its very existence. The “class conflict” is beyond discussion and enters the realm of force.
1. By sale we mean realized sale. Products are often sold for future delivery before production is completed, but the sale is completed only by a delivery.
2. One can call the profit of a shoemaker, in the Middle Ages, out of his own apprentice, a surplus-value in a sense. But the social use of that labor was so different that the older word, “profit,” is more fitting.
3. The capitalist, of course, reasons exactly contrary. His capital is a fund, out of which he pays wages before his products are sold. The Wages Fund theory was an expression of this idea. (Taussig, The Wages Question, New York, 1896.)