William J. Blake: An American Looks at Karl Marx

13
Absolute Surplus-Value

So far we have considered only the foundations of capitalism. The Marxian analysis now proceeds to the labor process, or working capitalism. Its logical foundations, value, exchange, money, capital, surplus-value, are now available, but the system itself, in motion, has not yet been studied. The Marxist study of labor antecedent to capitalism (of labor as an element in any production) is abridged here to cover only those aspects that are closely relevant to its behavior in capitalist production.

The purchaser of labor-power consumes it by putting the seller to work, who then produces use-values.

The capitalist buys, in the market, all the necessary factors of the labor process, its objective factors, the means of production, and its subjective factor, labor-power. He consumes labor-power by making it consume the means of production. (This consumption is distinguished by Marx from personal consumption.)

The labor process itself is not altered by the fact that the worker is employed by a capitalist. The capitalist subordinates labor to his own requirements, but at first he takes over the labor-power as it has been employed before his intervention. But two distinguishing features appear at once:

(a) The laborer works under the capitalist’s control.

(b) The product is the property of the capitalist.

The capitalist sees that the worker is diligent and thorough, and that the means of production are used intelligently and no raw material is wasted. The second feature is self-evident: both the processes of production, the means of production and the labor-power, belong to the capitalist. The laborer has sold his power and consequently all that proceeds from it.

The capitalist now sets about producing use-values, but only because they are depositories of value, that is, because they command the products of the abstract labor of others. He aims, then, to produce commodities in order to realize not merely their value, for that would give him nothing for his pains, but surplus-value. As for labor, just as the commodities it makes are at one and the same time value and use-value, so the production process must be a labor process and also a mode of creating value.

Unique Features of Capitalist Production

Let us now examine the capitalist mode of production to see in what way it differs from any other form of production.¹

Marx cites cotton-spinning, for at the time he wrote his Capital the cotton mills of Lancashire (England) were the largest capitalist enterprises, certainly the ones that employed the largest number of workers.

The production of 10 pounds of raw cotton requires 20 hours of work. As the production of gold called $2.00 would require the same amount of labor, we say that the value of 10 pounds of raw cotton is $2.00. The hourly value of that labor would be 10 cents. But this cotton has to be turned into yarn. The raw material has 20 hours in it. The spindle used to convert raw cotton into yarn is worn by this operation to the extent of 50 cents. The labor-power of the spinner (the worker’s cost of living) is $1.50, and this laborpower is used for 6 hours. Then the 10 pounds of finished yarn will have cost in labor time, $2.00 for raw cotton, 50 cents loss due to use of the equipment, and $1.50 labor-power in spinning. The total is $4.00. The value per pound of yarn is 40 cents. That is a fair price for the yarn.

But where does the employer come in? The question here is not one of depreciation (that is, reserve for replacement) of his mill and machines. That is included. But if all he obtains is 40 cents a yard, he has covered raw materials, replacement of factory and tools, and purchase of labor-power. Where is his surplus? The answer is, nowhere. He must sell it for more than its value to “make money.”

(In this case Marx shows that the labor-time incorporated into a commodity is not that of its last process but of all the times put into every necessity to production, such as raw material and that part of machinery and plant depreciated by each operation. The labor-process for him is one, but the specific kinds of labor incorporated into one value are cotton-growing, bricklaying (for the factory), spindle-making, spinning. But they all are abstracted by the single process into one shape, value.)

In the foregoing illustration the labor-time computed was just enough for the production of the cotton yarn under average social conditions. But the capitalist who has paid in full for this has no surplus. If I pay for the value of a house I get the house, but nothing beyond. When the capitalist pays full value for everything, he gets the yarn but nothing beyond. The explanation of the mystery of surplus-value must be that somewhere, somehow, he must get something he does not pay for. Not even the consumption of labor-power at its value will explain surplus-value.

Has the Capitalist Class an Alternative to Production?

What is the attitude of the capitalist when after all his investment and purchases and hiring he gets no more for the yarn than its value? He argues that he is injured because he went into all this only in order to obtain more money than he put in. He may argue, I will speculate in cotton and let the other fool trouble to produce it. But someone must produce it, the class of capitalists cannot speculate, since they must have the very commodities the future of whose prices they have to guess.

He can stop producing altogether. Then his machines and factories rot, his raw materials decay. He can sell to another fool. But, for a class, money is still the same in amount; does it matter which capitalist uses it? We are discussing the relation of the whole class of capitalists to the class of workers from whom they buy labor-power.

They may all try to stop producing? Then their hoards will disappear in the consumption of use-values, and that world in which their money has some meaning will go to the devil. Their money will buy nothing, for nothing will be produced.

The reserve of the ages would not last more that a few weeks in consumables. Labor renews life. And, at best, the capitalist would be no better off than if he produced the yarn and recovered its value. For there he has made nothing but lost nothing also, and the circulation of goods, in which money must function, at least would exist.

Wages of Management Examined

Then as Marx says, since the capitalist must use the means of production he turns from threats of what he might do, to the claims of justice. He holds that no laborer can produce anything with his bare arms and it is he who gave him tools and raw materials, a chance to work. He ought to be paid for this social service.

But, as we have seen before, when he sells goods at their value, his raw materials and tools have been incorporated into that quantity, and he is compensated.

From that point on, the capitalist changes his reasoning. I have, he argues, been a workingman like any other. I have managed the works, watched the laborer, organized his production, bought the right raw materials, put up the factory in a good site, convenient to shipping etc., and for all this labor—inspired labor, but still labor—I am entitled to wages of superintendence, to wages of management, put it as you will.

My initiative and energy and foresight are forms of work, and they are the creative elements in value, and are even more fruitful in consequence that the brute mechanical labor of a man who does what he is told. Why your solicitude for this lower form of labor? Why not compensate the higher form? For this I claim a just reward over and above the price paid for factory, tools, raw materials, and the labor-power of common or even skilled workers.

Marx puts forcibly the case of the capitalist as it is given in a multitude of apologies for that class, and the reasoning of which appears irrefragible to the leaders of industry. Here the argument is on a different plane from the previous discussion in the section on the history of manufacture.

There Marx argued that the capitalist is a leader of industry because he is a capitalist and not a capitalist because he is a leader of industry. He means, not that some poor boy with a certain idea did not make a go of it in business by employing other people. Here as in everything Marx speaks socially, that is, he means that the capitalists are leaders of industry because they are capitalists. That is, under capitalism no one without the ownership of the means of production or the utilization of the labor-power of other men, can possibly make big money. (We are not speaking of financial jugglers, opera singers, charlatans, but of the industrial and commercial class who produce the wealth with which financiers juggle and which is handed over, once produced, to opera singers and clairvoyants.)

Since no one can make big money except by being a capitalist, naturally all the control and initiative of industry appears to originate in the capitalists. That it usually does not, even so, originate with them, but with a paid staff, is beside the theoretical question. If yellow hats are to be manufactured for ladies, there has to be some Schwartz & Co. to act as sponsors of yellow hats. If rubber bibs replace cloth bibs for babies, the battle for rubber bibs must be conducted by some Luke Jones & Co. against their deadly enemies, the cloth-bib house of Mark Smith & Co. In other words, these men are capitalists; there is no other system of production now existing; and so they are covered with the glory of producing use-values merely because that is the historic mode of production.

Economic Refutation of Wages of Management

That was Marx’s social discussion. But the wages-of-management argument is economic. The capitalist asks for wages, nothing more. That is his economic (not ethical) justification of his need for surplus-value. Let us examine closely the actual production of surplus-value, to see what part he really plays, and what is more, knows that he plays.

For the question of surplus value will not be solved by saws, proverbs, or ethical arguments. It is an economic fact. The Scriptural idea, “It must be that the offense come, but woe to him by whom it cometh,” is not the same as “It must be that production takes place, so glory unto him by whom it occurreth.” Marx shifts the question to an internal analysis of the process of production.

The labor-time incorporated into the goods consumed by the worker, required by him so he can produce with his labor power, has already been utilized. The food and beer that gives power to his muscles is already there when he takes his place at the loom. The past labor-time put into the worker gives him his exchange-value, that is, enables him to receive pay for his labor-power.

But the living use of his labor-power is not fixed, it is not past. It can be used—that is, its use-value availed of—not for the hours that are required to keep the laborer alive, but beyond. If the laborer reproduces his cost of living, and the continuation of his race, in four hours, that does not mean that he can say to the capitalist, “I sold you my labor-power for its value, the labor-time required to reproduce it. Good-bye, I’m going home, I gave you that value in four hours.”

The boss would (if he did not ring for the lunatic asylum ambulance) say to him, “Go home and don’t come back. Collect your four hours’ pay and consort with yourself. You’re through.”

This Charlie Chaplin conversation might take another turn if the capitalist were sympathetic. He would say, “But, my boy, that’s not cricket. You sold me your laboring-power. Our contract called for an eight-hour day. It didn’t say how many hours were required to reproduce your labor-power. It said eight hours, in time. Unless you give me eight hours of your commodity, labor-power, which I honestly bought from you, you are a welcher.”

To which the worker would reply, “But you should pay for value. My value is the labor-time required to produce my labor, or rather, to reproduce it. That takes four hours. I’ve given you your money’s worth in four hours. Why don’t you pay me for the next four?”

“Because I have paid you full value. Your value is four hours, you got that. I was honest. You sold me eight hours. I want that. I am honest.”

On this high ethical plane, with both sides righteous, the economic fact crashes through. The value of labor-power and the value that labor-power creates are two different quantities. Use-value in production is not the question, since in order to create value, work must be of some use. The capitalist bought the specific use-value which the commodity alone possesses of being a source not only of value but of more value than it has itself. That the time required to reproduce labor-power is less than the time bargained for in the sale is a piece of good luck for the capitalist, but since the worker received his value, it is on the face of it no injury to the worker. Marx does not, as it is often phrased, say that the worker is “robbed at the point of production.” He says that there are differing magnitudes of value, one part of which is appropriated by the capitalist. This is not Tweedledum and Tweedledee. Later we shall see the consequences of Marx’s reasoning for the labor movement.

How Gratis Labor-Time Figures as Surplus-Value

In this calculation 20 pounds are utilized instead of 10, because the labor-power is used for 8 hours instead of 4. The cotton cost per pound is the same. The spindle use is doubled. But labor works for 4 hours more than its value, so that the 4 hours are given gratis to the capitalist. This cuts the cost per pound from 40 to 32½ cents and enables the employer to make a surplus of $1.50 on 20 pounds where he had been unable to make a penny on 10 pounds. This happy result came because he paid nothing for 4 hours’ work.

Money has been converted into capital, the investment of $6.50 turned into $8.00, or into 20 yards at 40 cents. And yet equivalent has been exchanged for equivalent, everything paid for at its value. The capitalist did what every consumer does, he consumed use-value. He sold the yarn at 40 cents which, as we saw, was its value. The conversion of money into capital is explained and the enigma cleared.

Surplus-Value Related to Production and Circulation

The conversion into surplus value takes place in the sphere of circulation, for labor-power is a commodity bought in the market. It takes place outside the sphere of circulation because the production of surplus-value is confined to the sphere of production.

The labor-process creates surplus-value the moment it is prolonged beyond the point where it delivers a simple equivalent for the paid-up value of labor-power. By turning his money into commodities that serve as materials with which to make a new product, by incorporating living labor with inert substances, the capitalist converts value—that is, materialized labor, which is past labor, incorporated into labor-power—into a value that is pregnant with more value, that increases and multiplies.

The difference between ordinary production and capitalist production is patent. Production means that the labor-process is the adaptation of natural substances by labor so as to make a living. Commodity production is a combination of the natural process of labor with the production of value, which is manifested in exchange.

But capitalist production is something else. It is the super-imposition on the labor-process of the production not only of a living, and of value, but of surplus-value, of the dedication of a part of the laborprocess, unpaid, as a gift to another.

That can take place only when one class is in control and the other subjugated (whatever the appearance), for no class voluntarily gives so great a continuous stream of presents to another. It is necessary, too, for the capitalist to supply the most adequate raw materials and the most effective machinery,² so as to reduce the time the worker requires to produce his own living and increase that he must give to the employer. Hence, according to Marx, this is the real spur of the capitalist, the initiative for which he demands “wages of management.” He receives not “wages of management” but surplus hours of labor for this activity.

As for the difference between skilled and unskilled labor, Marx shows that vis-à-vis the employer, this difference is not significant. The previous analysis of skilled labor counted as compound unskilled labor is reaffirmed. That part of his time required by a skilled workman for the reproduction of his type of skill (training plus survival), is used by him to produce value, plus the hours for which he is not paid, that produce surplus-value.

Two Common Objections to Surplus-Value

Given the tight analysis of Marx all the way from value and exchange and money and capital and the increase of capital, and his masterly exposé of the enigma of surplus-value, it would seem as though his conclusion of the nature of surplus-value is unescapable. Nevertheless its conclusions have been hotly contested on two grounds.

The first objection is the one of competition. The analysis of Marx assumes that the capitalist can continue to produce the yarn for 32½ cents and sell it for 40 cents. How about competition? Doesn’t the need to get sales mean that someone will bring the price to 37 cents and then someone else to 34 cents, thus leaving a skeletal rate of profit?

True, competition will never eliminate the rate of profit, so that Marx may be right in his assumption that any rate of surplus-value, or rather some rate, may be explained by his analysis. But is it rather not the least conceivable rate? Would not the appropriation of unpaid hours be rather small?

This plausible denial of the quantitative importance of Marx’s theory led him to another phase of his theory, the law of profits, in which his explanation of surplus-value is made a guide to the competitive need for the reduction of profit. Incidentally, as we shall soon see, Marx does not identify surplus-value and profit. They are distinct, as rates.

The second objection is superficial. If the laborer is paid for four hours and he works for eight, then he is fully paid for eight hours at half the rate. Where is the time taken from him? His hourly wages are lower, that is all. As this reasoning identifies exchange-value and price and wages with the value of labor-power, and holds that bookkeeping items are economic analyses, at this stage of Marxian analysis, the student should be able to handle it himself.

Footnotes

1. Marx repeatedly states that the differences between slavery and wage-labor lie only in the mode by which part of the produce of the laborer is extracted from him.

2. That is why the capitalist system has been the most constructive in history.

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