William J. Blake: An American Looks at Karl Marx
Wages are defined by most political economists as the payment for the services of the worker in production. Labor is classed as a factor in production and its value is compensated in money and this money expression is termed wages. The Marxist political economy stands alone in considering this definition not merely wrong but the exact reverse of the truth.
Labor Has No Value
For Marx labor has no value. It is the stuff of value; all value rises from it. The cause of value can have no value. Since Marx defines value as merely another expression for the average socially necessary labor-time in a commodity, it follows by strict logic that labor itself cannot have that property which it alone gives to things, that quality of itself which they embody. It is best to justify this contention, for captious critics have considered it a nice scholastic distinction. But that it surely is not. Once the Marxian definition of value is postulated, then there is no escape from the conclusion that the expression “value of labor” is nonsense. Gravitational attraction is the definition of weight; who then can speak of the weight of gravity?
Wages Are Not a Payment for Labor
In the expression the “value of labor,” the idea of value is not merely completely obscured, it is actully inverted. Why then is this expression employed? Because, as Marx puts it deftly, in society all things are classified by the manner in which they are presented.
We see that the laborer receives every Saturday a certain sum of money and we know he would not have received it unless he had worked. He is paid for that part of the labor which is compensated, and he is not paid for that part of his labor which the capitalist has gratis, but both are under the form of one payment.
Hence the payment of money wages creates the impression that it is a full acquittance of the services of labor and wages are stated to be the price of labor. The form of this social appearance is thus the reverse of what it really is. But Marxian political economy takes the sleight-of-hand called the payment of wages and says, this is how the magician, the capitalist, pays, and the way in which he pays is the substance of an economic relation. That is the way one class pays another, and the reason for this form of payment is that it counterfeits the production relations so that, like bad money, it passes for something it is not. For the Marxist it is a necessity that the payment of labor appear as a compensation of a full equivalent, although actually one party, the capitalist, has received the gift of working time above the full value of the labor-power he bought.
Wages are the price paid for laboring-power or, more shortly, labor-power. That is, they are the price paid for that part of the day in which the laboring-power is reproduced. The capitalist buys laboring-power at a price equivalent only to this quantity of labor-power (its commodity-value). He receives a quantity of labor-power far above that, but the price of the section of labor-power he pays for, and only that part, is called wages.
It is a payment in full for the value of labor-power, yes, because the value of that labor-power is, like that of any other commodity, measured by the time it would take to reproduce itself. But it is not a payment for labor, for that cannot be bought or sold. Why? Because labor is not a commodity. Labor-power is. As this seems to be leading us into the full thicket of split hairs, let us retrace the logical path of Marxian thought.
Disguised Payments
In the case of a slave we see that all he does is unpaid for, but he receives some pay in the shape of cornmeal, overalls, a cabin. Paid and unpaid labor appear to be unpaid. In the case of the corvée system where labor-time is allocated and seen, so much to the serf, so much to the noble, there are no illusions. The labor given the aristocrat is clearly the surplus over and above what the serf must produce for himself on his own plot of land. But the payment of wages, as a result of an equal contract, is like the disguise of slavery, but in reverse. For there unpaid labor appears as paid.
The Marxists do not view this question as academic. To them the idea that labor has a value which is paid by wages is the cause of such ideas as that labor is entitled to a “fair” share of production and that labor ought to have a larger “share”; or the more derivative notion that the trouble socially is in distribution, and labor should “share” more in this distribution. Such ideas are based on the fact that wages reward labor’s part in production, and that it is a mere question of proportion that is involved and not of nature. For the Marxian this is due to the disguise in the wages payment of the fact that it is a mere compensation for the sale of a laboring-power, and that it is an equivalent of its full value, but evades the question of the surplus-value.
Since labor has no value but gives everything its value, and since it sells a part of its powers of work for a given space of time as a commodity, as an object of purchase and sale, its conversion into a commodity makes it subject to the law of value, that is, equates its value to labor-time required to reproduce it. But commodities sell at their value, that is, for the labor-time incorporated in them. The capitalist makes a profit by selling commodities at their value (not above as is commonly thought), and the reason he can do so is that he has paid wages also for the full value of another commodity, labor-power, but he has paid absolutely nothing for the time over and above its value, and that time is represented by surplus-value. Surplus-value is a part of value produced; it is not abstracted from labor-power value bought. It is a surplus, over and above that value. This gives the setting of wages, by explaining (a) value, (b) labor’s part in its creation, (c) commodities, (d) labor-power as a commodity, (e) its payment in the form of wages, (f) why that payment is the reverse of reality, and (g) the relation of all values to profits.
Practical Application of the Wages Theory
Has this a practical application? Take one common question. It is asked, if wages are raised, then the price of commodities is raised and then the cost of living goes up, and this cancels the benefit to labor, and so the struggle for high wages is deceit, since it cancels out its benefits in higher prices. This is based on what assumption? That labor is paid its value, that when it receives more money its value is increased, and that that value in turn is reflected in its products.
But Marx holds that if wages are increased it means that labor-power commands a higher price, labor gives less time gratis to the capitalist and, since labor-power is a commodity, it is only to the extent that this increased price of labor-power is reflected in an advance of the price of its reproduction, that is, in necessities, that the rise in wages is counteracted.
Social Implications of Identification of Labor-Power
As an illustration: let us say that wages are one billion dollars. The workers increase 10 per cent, they are paid one billion one hundred million dollars. If labor had a value which was paid for as a factor of production, then the cost of living should gain by a hundred million dollars. But if labor-power is a commodity, distinct from labor, then only to the extent that it must be reproduced (that is, the sustenance of the worker) will there be a gain in its value. The remainder it takes out of surplus-value.
And, if the composition of capital entering into production is three constant for one variable, and the constant capital is merely transferred into use-value, not new values, it would follow that the increase in value of labor-power is slight, although its gain in wages is high.
If labor could sell its labor-power so as practically to extinguish surplus-labor, that would mean that its value would rise to the extent of the increased labor-time required to reproduce it, but over and above that increase in value it would have a net benefit, since it would take the difference above value, which is exactly what the capitalist takes today.
Hence it pays for the worker to fight for higher wages, since he really fights to supplant the capitalist in obtaining a surplus above the value of his laboring-power. It will be seen that only by the Marxist method of isolating the absolutely different things, labor and labor-power, can the case of the workers be made intelligible. Otherwise the vicious circle theory would have to be granted as against wages increases.
It is apparent, then, that as against both distribution and cost of living theories, the distinction between labor and the value of labor-power is the fighting weapon of Marxist science.
On the Marxian assumptions, too, we can point out that labor has no value because that would be a tautological expression. For if value is the objective form of social labor, and the quantity of value is measured by quantity of labor, how is the value of twelve hours’ time to be determined? By twelve hours? Where then would science be? To advance the analysis one point further Marx was compelled to discover the commodity nature of the labor-power itself so that the absurdity of such a repetition was eliminated. Labor exists prior to selling its powers.
There is a social, rather a historical, aspect that is all-important. If money wages is the payment for the value of living labor—that is, if the equivalent of dead labor equals living labor—then the price of labor-power would be the price of its products. Where then is the profit? Out of what would capital arise and reproduce? But if labor sells its time to capital the relation forbids equivalence. There can, by this proof too, be no sense to the idea of a value of labor.
Elimination of Exchange of Forms Theory
It might be argued that there is an exchange of forms, the substance of dead labor against the substance of living labor; dead and living being equated as shapes, not quantities. But a dead commodity, dead labor, has only the value that living labor bestows. For example, a commodity takes six hours to make. It is on the market. A process is developed in which it takes three hours to make. It falls to half the value. It is not the dead labor that gave it value, for it still has that and yet it is worth half. Its value is made known by the reproduction of it that is being effected or can be effected by living labor. The exchange of form is nonsense, for it is always living labor that is the unique author of value. It is a one-way street.
The wages relation comes about not when capital faces labor, but when the capitalist, or the capitalistic company, trades with the laborer. These real people buy and sell. The capitalist does not conceive of the laborer except as the seller of a certain amount of time in which he will use his powers. As soon as these powers are sold for so many hours they belong to the buyer: the laborer no longer has them, for he has sold them. Labor is the substance, true, of these powers; labor is the immanent measure of value, true; but it itself has no value. (The reason why wages are considered to be a payment for the “value of labor” can also be attributed to biblical phrases that are the living tradition of the people, such as “the wages of sin is death.”)
Why the Labor Theory of Value is Circular
Wages must be explained by some inner connection. Nothing is less informative than to state that “supply and demand” determines the level of wages. Here as everywhere the phrase “supply and demand” is a cover for our refusal to state what causes a certain supply to emerge and what governs the limits of demand. There is a real function of supply and demand and that is to explain the temporary oscillations around a given level. But what explains the level itself? If demand and supply balance there is no movement of prices. It is the price of labor-power when supply and demand are in equilibrium that remains to be explained.
Classical political economy tackled the laws of wages. Adam Smith is a good example. The “value of labor,” he states, is determined by the cost of its necessaries. And these? By the cost of labor. We have not advanced one step.
So long as no distinction is made between labor, cause of value, and labor-power, a commodity expressed as value, this circle can never be broken. The so-called labor theory of value has been showered with contumely by modern economists. But their scorn is not that of analysis. It is based on a wholly different approach, a subjective one, mostly. Marx gave the objective reason for its shortcomings.
Conservative Function of the Wages Form
How does the price of labor-power (the money expression of its value) become transformed into wages? By the form of contract, whether written or in the presumptions of a code of laws. Why? Because it enables the unpaid labor to appear as paid. Why is a contract arranged to show the opposite of what happened? Because it gives three illusions in one flash, those of equality, liberty, and fair play.
It enables men like the late president of Harvard, Charles W. Eliot, to refer to the “scab” as a hero of liberty, a freeborn American who wants to sell his labor for what is is worth, with no man to say him nay. It enabled the late Samuel Gompers to declare that the object of trades unionism was “A fair day’s wages for a fair day’s work.” According to Marx, then, it stands the relation on its head, which is the unconscious social object of class society.
Further, we know from the study of value that use-value and exchange-value are not commensurable. But by the contract relation the expression “value of labor” seems to be the same as any other object bought and sold, such as “value of wheat.”
This assimilation of a use- and an exchange-value is subtle and so obstinate that it lingers even after hours of wearisome explanation as to the simplicity of the illusion. Since no one pays for wheat more than its worth, this seems also to be true of labor, so that wages appear entirely analogous with goods, and the unique nature of this surplus-value-producing commodity is totally obscure. It took hundreds of years of spade work to recover this buried treasure of analysis.
Finally, the capitalist appears to be paying for a use-value, tailoring or bricklaying, in the way one pays for canned salmon as a use-value. That labor has a universal value-creating element and that this is really what is paid for (not use)1 is hard to grasp. According to Marx, it is upon this rock of confusion that bourgeois political economy is wrecked.
The capitalist himself looks upon the purchase of labor-power as he does on that of cotton. He buys both at their value and he sells them for more because he is “smart.” He attributes his profits to guile and cunning, or to foresight, but to him all purchases are turned into profit in the same economic form. He cannot tell the difference. The appearance of buying and selling is enough for him.
Individual differences of pay, too, confuse the issue. The average social labor is not seen, the compounding of simple labor in the form of skilled labor is not seen.2 The act of purchase and sale is visible; of analysis, invisible.
For all that, liberal economists vaguely sense what is wrong. They are like the liberals in geography who, after seeing that a ship’s top first appeared on the horizon, granted that the earth might not be flat but only corrugated!
Time Wages
Only those characteristics pertinent to this mode of payment concern political economy. It should be measured by the working hours, since payment by day, week, or month may conceal great variations in time worked. If hours are increased, although wages are the same per week they have really been cut. If, however, hours are increased from forty to fifty a week and wages advanced ten per cent, then the increase of money wages covers a decline in the value of labor-power. Wages have risen, though, but that does not mean that the compensation of labor has risen; it has declined. The hourly unit makes these differences easy to measure.
On the other hand, if the working day is cut to four hours from eight, by a partial shut-down in the factory, the compensation of labor is the same per hour but money wages are halved. But as long as the rate of surplus-value is the same, it follows that the worker is fearfully injured. For if in four hours he reproduced his keep, giving four hours to his employer, if he now works for four hours or less, the tendency is for him to work for less than value, since his employer would still seek a profit. This hourly basis is often substituted in “short time” for just this purpose, since it partly does away with the assumptions of weekly wages, viz., that a certain number of minimum hours are required for sustenance.
Another device is that in which the normal hour-payments are depressed below their value, so that time-and-a-half for overtime must be worked in order to produce the value. Here the employer appears to be liberal, when in fact he is obtaining a larger surplus-value. Payment by the hour is often made low so as to lengthen the working day. The lower the price of labor, no matter how paid, the longer the day required to replace its labor-power. Overtime, too, tends to keep fewer workers on the job, and so by increasing the numbers unemployed diminishes the bargaining power of labor.
Piece Wages3
Wages by time is the converted form of the price of labor-power, but wages by the piece is still further off, for it is a conversion of wages by time. It seems otherwise. It seems as if labor is paid for its use-values, that is, not for time devoted to the work, but for the specific job turned out. Yet in one and the same shop, and for the same kind of work, the two forms of wages exist side by side.
The number of pieces turned out in a day’s average work must remain the basis of calculation. If in an eight-hour day forty blouses are finished, and this day is paid for by $3.20, then in piece-work the basis will be eight cents per blouse. Time is still the referent. The surplus-value in production measured by time is carried over into the basis of piece wages. The piece wages are not determined by individual productivity; they too are determined by average social labor; but the amounts paid are as so many multiples of units produced in that time.
But as a basis for cheating, piece wages are superior. The job is paid for only if “right.” Superintendence is reduced, because only inspection of the product is required. Since superintendence is less needed, the chance for homework or “sweating” is increased. It permits of subletting labor; in fact, in the piecework trades of New York (in men’s trousers, for example), the contracting system became general. The laborer under the piece system is impelled to overwork himself, so as to turn out the maximum number of pieces to increase his reward. The limitations of hours are swept away.4 So that he ruins his eyesight, his health, longevity, everything, to make more for his family.
He really sells his labor for less than it is worth, for he sells a few years of his life as he sells his products. He cannot escape, for even if he knows this he is helpless. But unlike the time worker he has an actual monetary interest in increasing length of the working day and intensity of labor. The advantage to the employers is manifest.5
In piece wages the differences of laborers are rewarded more diversely. But since the time basis is paramount, the average pay of all the laborers will be the same as on a time basis. The proportion between wages and surplus-value remains unaltered. As the workers emulate each other and compete with each other, their unit payments are diminished and so this system of raising individual wages operates, in the end, to lower average wages. No matter what they do, the workers must return to the necessary reproduction wages to maintain their average labor-power. Piece-work does lead to social conflicts, though, for it accustoms the worker to calculate the goods delivered and their price and he is more ready to contest the affirmations of the employer and his accountants.
National Difference in Wages
In calculating national differences in wages we must consider:
(a) Price and extent of necessaries of life (as historically developed).
(b) Cost of training of the laborers.
(c) Familial basis, that is, women, child, and aged labor (whether included in labor-supply).
(d) Productiveness of labor, as to intensity and time worked.
One must reduce the various working days of several nations to one average working day, and then translate, for once, the time wages into piece wages, because only a piece wage measures both productiveness and intensity of labor, where the social average time has such wholly differing historic bases.
The labor that is most intensive and productive, as in the United States, produces more value in less time, and this increased value is expressed as more money: the value of labor-power is high, and also the money expression of that value is high.
These differences between nations indicate that the same quantity of commodities produced in different countries at the same time, have unequal international values. But the higher value of labor-power in the more advanced countries may yet be relatively lower than in the backward countries, when compared to surplus-value and to the means of subsistence at the disposal of the laborer.
The high value of labor-power should be correlated with a country’s total commodities (in which case America and Great Britain are immensely rich), or with the relative participation of labor-power in the fruits of total production, in which case the labor of the richest countries may be the cheapest. It is well known that the unit cost of goods in America is lower than in cheap-labor China, and possibly than in Japan. This has long been a Free-Trade axiom; its basis is given in the equations of surplus-value.
1. Use is concrete labor: Abstract labor is the source of value.
2. Wages may be either nominal or real. Nominal wages are expressed as so many dollars; real wages represent what the money will buy, that is, into what commodities it can be transformed. The nominal wage is the first step in transforming labor-power into an equivalent (money), but the process is not completed except as real wages, as a real command over the necessaries of life.
3. Sidney Webb says that Marx’s study of piece wages was the first ever made.
4. A fictional study of piecework home sweating unsurpassed for graphic qualities is the portrait of Nigger’s home in Michael Gold’s Jews Without Money, Chapter XIX.
5. Since Marx’s time, two systems of piecework, the Halsey and the Rowan, have been introduced, as well as others, called premium bonus systems. The detailed treatment is found in Cole’s Payment of Wages. Many of these utilize collective contracts where the whole factory is paid by piece production, instead of only individual workers.