What the classical economists overlook, however, is that all this is true only within a certain set of social relations. Just as a Negro is not, as such, a slave, but can become a slave in a slave-owning society, so accumulated labour becomes capital only in bourgeois society.
The classical economists see capital as natural, rather than socially conditioned, because they see it as material products – machines, raw materials, etc. These material products, however, are also commodities. Commodities are items which can be exchanged against other items – for instance, a pound of sugar may be exchangeable for two pounds of potatoes, or half a pound of strawberries. They therefore have exchange-value. ‘Exchange-value’ is a key term in Marxist economics. It is contrasted with ‘use-value’. The use-value of a pound of sugar is its power to satisfy people’s desires for something sweet. The exchange-value of a pound of sugar is two pounds of potatoes or, expressed in terms of money, say, 20p. Use-values therefore exist independently of a market or any other system of exchange: exchange-values do not.
Now capital is really a sum of commodities, that is, of exchange-values. Whether it consists of wool, cotton, machines, buildings, or ships, it remains capital.
While all capital is a sum of exchange-values, however, not all sums of exchange-values are capital. A sum of exchange-values becomes capital only if used to increase itself by being exchanged for labour. Thus capital cannot exist without hiring wage labour. Nor can wage labour exist unless hired by capital. This is the basis of the claim made by bourgeois economists that the interests of the capitalists and the workers are one and the same.
Marx now examines this ‘much-vaunted community of interests between worker and capitalist’. He takes the case most favourable for the bourgeois economists, the situation in which capital is growing, and hence the demand for labour, and the price of labour, is rising.
Marx’s first point is one still made by critics of the modern consumer society:
A house may be large or small; as long as the surrounding houses are equally small it satisfies all social demands for a dwelling. But let a palace arise beside the little house, and it shrinks from a little house to a hut… however high it may shoot up in the course of civilization, if the neighbouring palace grows to an equal or even greater extent, the occupant of the relatively small house will feel more and more uncomfortable, dissatisfied and cramped within its four walls.
(WLC 259)
The reason for poverty and affluence being relative to the standard of our neighbours is, Marx says, that our desires are of a social nature. They are produced by our life in society, rather than by the objects we desire themselves. Thus rising wages do not produce greater satisfaction if the standard of living of the capitalist has risen even more. Yet this is exactly what happens when the growth of capital produces a rise in wages. Growth in capital means a growth in profit, but Marx, following the classical economist Ricardo, claims this can only happen if the relative share of wages is reduced. Wages may rise in real terms, but the gulf between workers and capitalists will increase.
There is also a more fundamental opposition between capitalists and workers. If capital grows, the domination of capital over workers increases. Wage labour ‘produces the wealth that rules over it’, and gets from this hostile power its means of subsistence, only on condition that it again assists the growth of capital.
Capital increases its domination by increasing the division of labour. This occurs because competition between capitalists forces them to make labour ever more productive, and the greater the scale on which they can produce, and the greater the division of labour, the more productive labour is. The increasing division of labour has several effects.
First, it enables one worker to do the work of ten, and so increases the competition among workers for jobs, thus driving wages down.
Second, it simplifies labour, eliminates the special skills of the worker and transforms him into ‘a simple, monotonous productive force’.
Third, it puts more small-scale capitalists out of business. They can do nothing but join the working class. ‘Thus’, says Marx, ‘the forest of uplifted arms demanding work becomes ever thicker, while the arms themselves become ever thinner.’
Finally, Marx says, as the scale of production increases and new markets are needed to dispose of the production, economic crises become more violent. Initially a crisis of overproduction can be relieved by opening up a new market or more thoroughly exploiting an old one. This room for manoeuvre shrinks as production expands, and Wage Labour and Capital closes with an image of capitalism collapsing into its grave, but taking with it the corpses of its slaves, the workers, who perish in economic crises.
And all this, Marx ironically reminds us, when capital is growing – the most favourable condition for wage labour!
Wage Labour and Capital contains no answer to a crucial puzzle common to classical economists like David Ricardo and Marx in his own early theory. Both held that commodities are, on average, exchanged for their value. They also held a ‘labour theory of value’, namely the theory that the exchange-value of a commodity corresponds to the amount of labour it takes to produce it. (Value is, Marx was later to write, ‘crystallized social labour’ (WPP 379).) But labour is a commodity too. Like other commodities, it should, on average, be exchanged for its value. The capitalist who buys a day’s labour should therefore, on average, have to pay the value of a day’s labour. This will add the value of a day’s labour to the production cost of the commodity the worker produces in that day. This commodity the capitalist will then sell for a price that, on average, corresponds to the value of the labour required to produce it. Where then does the capitalist get his profit from?
Marx first worked out his solution to this puzzle in unpublished notebooks written in 1857–8. These notebooks contain, in draft form, a good deal of material that was to appear in Capital, but the four fat volumes of Capital appear to be only a portion of the works projected in the notebooks. The notebooks were published only in 1953 and not translated into English until 1972. They are known as the Grundrisse, a German word meaning ‘outlines’ or ‘foundations’, since they were first published, in German, under the title Foundations of the Critique of Political Economy (Rough Draft).
The most intriguing point about the Grundrisse is that although it was written well into Marx’s maturity, it is closer, in both terminology and method of argument, to the 1844 Manuscripts than to any of the works published in Marx’s lifetime after 1844. Even if it were not possible to trace transformed Hegelian themes in Marx’s mature published works, the Grundrisse makes it plain that Marx did not make the decisive break with Hegelian philosophy that his reference to The German Ideology as ‘settling accounts with our former philosophic conscience’ has been taken to imply.
10. David Ricardo (1772–1823), the English political economist whose labour theory of value greatly influenced Marx
The key element of Marx’s mature economic theory appears in the Grundrisse. The worker, Marx writes,
sells labour itself as objectified labour; i.e. he sells labour only in so far as it already objectifies a definite amount of labour, hence in so far as its equivalent is already measured, given; capital buys it as living labour as the general productive force of wealth; activity which increases wealth.
(G 307)
What does Marx mean by this distinction between objectified labour and living labour? Objectified labour is the predetermined amount for which the capitalist pays – for instance, the worker’s labour for twelve hours. This is labour as a commodity. The exchange-value of this commodity is the amount needed to produce it, that is, the amount needed to keep the worker alive and reproductive. But there is a dual nature to the exchange of labour and capital. The capitalist obtains the use of the worker’s labour-power for the prescribed period – say, one day – and can use this labour-power to produce as much wealth as he is able to get out of it. This is what Marx means when he says that capital buys ‘living labour
’. The worker gets a fixed sum, regardless of what the capitalist can make out of his labour-power.
Here we have what Engels in his funeral oration described as the second of Marx’s great discoveries: ‘the discovery of surplus value’. Surplus value is the value the capitalist is able to extract from the labour-power he buys, above the exchange-value of the labour that he must pay. It is the difference between labour-power as a creative, productive force, and labour-time as an objectified commodity.
Suppose that the cost of keeping a worker alive and reproducing for one day is £1, and suppose that a day’s work consists of twelve hours. Then the exchange-value of twelve hours’ labour will be £1. Fluctuations above this figure will be short-lived. Suppose, however, that the development of the forces of production means that a worker’s labour-power can be used to add £1 to the value of some raw materials in only six hours. Then the worker effectively earns his wages in six hours. But the capitalist has bought twelve hours of labourpower for his £1, and can now use the remaining six hours to extract surplus value from the worker. This is, Marx claims, the secret of how capital is able to use the worker’s creative power to increase its domination over the worker.
Marx published some of his new economic ideas in 1859, in A Contribution to the Critique of Political Economy. This work is justifiably famous for the succinct summary of the materialist view of history contained in its Preface, which we have already discussed; but the economic ideas were insignificant compared with those published eight years later in the first volume of Capital. So we shall go straight on to this pinnacle of Marx’s writings.
Capital has a familiar-sounding subtitle – Critique of Political Economy – and once again the work criticizes classical economic theories, both within their own presuppositions and from a broader point of view. But Capital also contains historical material on the origin of capital, and detailed descriptions, drawn from government publications like the reports of factory inspectors, of the horrific nature of factory labour. We can see how all this fits in with Marx’s general theoretical system by examining the first chapter of Capital, on commodities, and particularly the final section of this chapter, intriguingly entitled ‘The Fetishism of Commodities and the Secret thereof’.
According to Marx, commodities are mysterious things in which the social character of human labour appears to be an objective feature of the product of that labour. He illustrates this with religion. In religion, Marx says, the productions of the human brain seem to be independent beings. Similarly, with commodities, a social relation between human beings appears in the form of the value of a commodity, as if that value were objective and independent of human relations. Like religious believers bowing before an idol, we make a fetish of commodities by treating them as more than they really are.
How does this happen? It happens only when we begin to produce things not because they directly serve our wants, but in order to exchange them. Since the exchange-value of a product corresponds to the amount of labour required to produce it, when we produce in order to exchange, the value of our labour becomes its exchange-value, rather than its use-value. When we exchange our products we are, without being aware of it, taking as equal the different kinds of labour embedded in them.
In a society based on the production of commodities there is, Marx says, a ‘mystical veil’ over these ‘life-processes of society’ which would not exist if we produced ‘as freely associated men’, consciously regulating our production in a planned way. Then the value of a product would be its use-value, the extent to which it satisfies our desires. Classical economists like Adam Smith and David Ricardo lifted the veil far enough to see that the value of a product (i.e. its exchange-value) represents the labour-time it took to produce it; but they took this as a law of nature, a self-evident necessary truth. On the contrary, says Marx, it bears the stamp of a society ‘in which the process of production has the mastery over man, instead of being controlled by him’.
The aim of Capital, then, is to rip aside this mystical veil over the life-processes of modern society, revealing these processes as the domination of human beings by their own social relations. Thus Capital, like Marx’s other writings, is based on the idea that human beings are in a state of alienation, a state in which their own creations appear to them as alien, hostile forces and in which instead of controlling their creations, they are controlled by them.
11. The round reading room of the old British Library, opened in 1842, where Marx worked on Das Kapital
Within this overall conception, the detail of Capital falls into place. The economic theory, contained mostly in the first nine chapters, is an attempt to display the real economic basis of production in a capitalist society. Here Marx debates with the classical economists, trying to show that, even on their own terms, he has a better account of the economic workings of capitalism.
Most of these first nine chapters prepare the ground for, and then introduce, the notion of surplus value. This involves a lengthy restatement, in plain language, of the point made in more Hegelian terms in the Grundrisse. The dual nature of commodities, which can be seen as use-values or exchange-values, affects labour too. What is special about labour, though, is that it is the measure of exchange-value. Thus a new machine which makes it possible to produce two coats in the time it used to take to produce one will increase the use-value of an hour’s labour (because two coats are more useful than one) but will not increase the exchange-value of the hour’s labour (because an hour’s labour remains an hour’s labour, and if a coat only takes half as long to make as it used to, it will, in the end, be worth correspondingly less). Increasing the fruitfulness of labour therefore increases its use-value but not the exchange-value of its output.
This is how capitalism enslaves its workers. Through machinery and the division of labour, capitalism greatly increases the productivity of human labour; but this increased productivity does not benefit the producers. If in pre-capitalist times people had to work for twelve hours to produce the necessities of life, doubling the productivity of their labour ought to mean that they can now choose between an extra six hours of leisure, twice as many useful products, or some combination of the two. Under capitalism, however, labour is geared to the production of goods for exchange. Paradoxically, under these conditions increased productivity does not lead to the production of more exchange-value. Instead, the exchange-value per item of what is produced drops. Small independent producers are forced to become wage-labourers, since they cannot produce as many items in a day as the larger producers who obtain economies of scale by the use of wage-labourers. Since wages tend to fall to the level at which they barely sustain the labouring class, the overwhelming majority of human beings have lost, not gained, by the increased productivity of human labour. That, at any rate, is Marx’s view.
But what happens to the increased productivity, if it does not improve the lives of the workers? Marx’s answer is that it is skimmed off from the worker’s output in the form of surplus value. The capitalist obtains the use-value of the worker’s labour-power, and pays only the exchange-value. Because labour-power is a commodity which can be used to produce more value than it has itself, the capitalist is able to retain the difference between the two.
The fact that the worker obtains only the exchange-value, rather than the use-value, of his labour, means that in order to earn enough to support himself he has to work a full day – say, twelve hours – whereas his labour produces the use-values of the necessary food, clothing, shelter, and so on in, say, six hours. The six hours in which the worker produces the value of the goods he needs Marx calls ‘necessary labour’ because it is labour that the worker would have to undertake in any economic system, given the level of development of forces of production; but the extra six hours are surplus-labour, which is in effect a form of forced labour for the benefit of the capitalist. The essential difference between a society based on slave-labour and one based on wage-labour lies, Marx says, only in the manner in which thi
s surplus-labour is extracted from the real producer, the worker.
The significance of all this lies in the fact that Marx regards the period in which people must work to keep themselves alive as a period in which they are not free:
The realm of freedom actually begins only where labour which is determined by necessity and mundane considerations ceases.
(C III 496)
In primitive societies property was held in common. People were not alienated from each other, or from the products of their labour, but at the same time human productive forces were so poorly developed that people had to spend much of their time providing for their needs, and for all that time were not free to choose what to do. The growth of the forces of production led to a feudal form of society in which the serf was subordinate to the feudal lord, and had to work a specified number of days on the lord’s land rather than on his own. It was then perfectly obvious when the serf was working to feed himself and when he was working for his lord. At neither time was he free to choose his own activity.
The vastly greater development of productive forces that takes place under capitalism provides the means, Marx believes, to reduce the domination of nature over us to insignificant proportions and increase human freedom proportionately; but this cannot take place under capitalism, because the forced labour of the serf for the feudal lord still exists as the forced labour of the worker for the capitalist. The difference is that under feudalism the nature and extent of the forced labour is apparent; under capitalism the nature and extent of the coercion is disguised. Workers appear to be ‘free labourers’, voluntarily making agreements with capitalists. In fact the position of workers as a class in relation to capitalists as a class means that they are not free. They must take the terms the capitalists offer them, or starve; and capitalists will only employ them under terms which allow surplus-value to be extracted from their labour. This is not because capitalists are cruel or greedy – though some may be – but because of the economic laws inherent in capitalist production which, through free competition, coerce individual capitalists as much as individual workers. (Though equally coerced, capitalists suffer less from this coercion than workers.)