This blog started out as a companion piece to my book, Musings from the Christian Left (excerpts of which can be found in the July 2004 link) and to support a planned radio show. Now, its simply a long term writing project from a Christian Left Libertarian perspective (meaning I often argue for liberty within the (Catholic) Church, rather than liberty because the church takes care of a conservative view of morality.

Sunday, October 29, 2017

Looking at Marx’s Wage Labor and Capital

Introduction (by Engels)

Let’s look more closely at our 27 shillings of daily production and profit. Is Engels correct in assuming that the worker is entitled to all 3 shillings of profit? If the worker was the owner of the lathe and steam engine and purchased the materials required, then obviously he would be. If the capitalist owns the steam engine and lathe, then he is entitled to the profit on the one shilling of input he provided, assuming materials are easily disposed of if not used with no loss, and raising the price for easy calculation to 28 shillings, the worker should receive 3 shillings profit and the capitalist, one shilling.

Most capitalists would not concede that point. They consider themselves at risk for the material costs as well. The risk to capital is now 3.5 shillings per day, but even that calculation leaves half a shilling more in the pocket of the machinist.

If the machinists were unionized, the wage would be higher and the day shorter, but the profit entitlement would be higher as well, hopefully higher than the dues paid to the union. Of course, the capitalist may also be a sales worker, entitled to a share of the profit from the labor of selling the machines. If it were just the machinist and the capitalist, they should organize as partners, although the assumption should be many machinist and one capitalist, who may or may not employ separate workers to sell the machines.


Marx could be describing the expulsion of the working class from the middle class under the rule of the neo-liberals, with the eventual election of the abomination, Donald Trump, as an ersatz billionaire who pandered to the worst racial and misogynist hatred still existing in the unradicalized working class.

What are Wages? How are they Determined?

Labor power can also be called the supply cost of labor, which may be over or under the wage, the price of labor. The price of the materials, like the wool to be made into cloth, include the labor power of the farmer and the broker. The sheep gets food for her trouble or may already be mutton. The farmer’s landlord gets his share, probably an out-size one (and he may even be the capitalist).

Marx poetically demonstrates that the capitalist risks only property. The worker contributes a portion of her very life, which cannot be replaced. The comparison to the slave and serf are interesting, because, however, badly, the master or lord must make sure the workers’ needs are met by the system. There is no guarantee for the worker in capitalism.

By what is the price of a commodity determined?

Marx starts by highlighting the goals of monopoly and monopsony and goes from there to how these things effect prices and how they relate the the cost of production. I am sure if he were here today, he would have something to say about the artificial oil price boom of the last decade. He then relates cost of production to labor-time included in the cost.

By what are wages determined?

Supply and demand influence the price of labor power, but in general it is the supply cost of labor (living and education/training) that determines the price of wages or labor power. His observations on the lower cost of training translating into subsistence wages is as true today as a century and a half ago, although if the collective pays for training and education, a more equal price can be paid for having it. Likewise, he is equally correct about the need to pay for replacement workers, aka children. Both Milton Friedman and a number of Roman Catholic Popes agree with him on this. The sad factor of the matter is that the economy does not pay people enough to propagate themselves (i.e., have kids). Immigration covers some of the lack, bringing in workers used to a lower standard of living, i.e., slaves.

The Nature and Growth of Capital

Marx identifies capitalism as a set of social relations rather than as a necessary thing. It consists of both physical and human means of production but also of the exchange values and commodities. This allows shifting commodities within the same system. Commodification provides a common scale for trading or sales. The fact that we have classes of people who can only labor makes them the servants of the accumulated labor of others in machines and commodities, the essence of capitalism. Of course, we don’t have to use money. If we shift to a standard labor hour based currency and have workers determine the means of production, commodification diminishes and capitalism is doomed because it is deprived of workers and growth.

Relation of Wage-Labor to Capital

Capital reproduces itself from workers generating profits for capital or building capital equipment. This provides jobs for workers, but jobs which produce no value above subsistence. Of course, when consumer surpluses build up, the working class gets a better life, which is why revolution has never come to an industrialized society. It is not how workers work that must change for revolution, it is how we consume. We control production as shoppers but not workers. This is what we must change, allowing more control of commodities available from working. Under capitalism, workers subsist while capitalists live in luxury. During the mid-20th century, this was reduced through progressive income taxes, but low taxes again allowed CEOs to minimize wages and the mansions built as a result are again recreating class division. owning the means of production through collective action takes care of that.

The General Law that Determines the Rise and Fall of Wages and Profits

Here Marx assigns all profits to productive labor. Even before machines could think this ignored the financial risk of the capitalist, who in turn ignores the fact that the worker has risked a portion of the only possession he really has, time on earth, in spending the day employed. In this part, Marx discusses the rise of real wages in comarison to the relative share of labor and capital. In the U.S., since the early 70s, relative profits have gone through the roof while relative wages have not. Capital is stronger than ever. Automation provides some of this, as does monetary policy designed to control inflation, however the biggest factor has been tax policy that rewards CEOs for cutting labor costs by lowering their tax rates, which Trump wants to do again.

The Interests of Capital and Wage-Labor are diametrically opposed
Effect of growth of productive Capital on Wages

In the start of the industrial age, growth in capital meant more workers at lower pay. Unions and a consumer surplus, where technical efficiency produced too many commodities to maintain price levels took the steam out of revolution, although the economic booms and busts of capitalism have made it harder for workers to advance as a class unless they are radicalize. Therefore, Marx’s surmise of the desperation of the working class is a bit overblown, at least until you examine the working conditions of undocumented workers in America, some of whom are actually slaves, kept under peonage to company stores or until they pay back what the capitalist paid to Coyotes who provided them. The growth of capital often involves monopolization, where higher cost producers go belly up, which means in some industries everyone must use slave labor or its equivalent. Then the entire market brings down the price (consumer surplus), although slaves don’t get the benefits. Not so in an employee-owned firm that uses much of its production internally because the workers control the means of consumption.

Effect of Capitalist Competition on the Capitalist Class, the Middle Class and the Working Class

Marx describes very well how we get to a consumer surplus domestically without identifying how that benefits workers. He then addresses how power comes from being able to fire workers on an international scale. He could be writing today and would be as accurate on trade. The decrease in wages for some and the low wages in Asia testify to how globalization works against workers. The antidote is employee - ownership across borders and an equal standard of living for each worker. Are machinists immune to downward wage pressure? Not then and not so much now.  Now it is the workers who can program the machines, although if the collective pays them to get that knowledge then the collective shares the reward, although the educated worker may get a stock bonus rather than higher wages. Female and child labor were identified as lowering wages. Child labor has been outlawed, although some places it rears its ugly head. No one nowadays talks seriously about women working being a problem, although maybe a non-working spouse could be subsidized to provide child care to children. At various times, including ours, an excess of workers was a problem. Then and now, solidarity is the solution.


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