Part 7 (1/2)
3. _Wages and Labour._
The worker appears to receive wages for his work. In reality he receives wages as the equivalent for the labour power expended by him, quite in accordance with the law of value, inasmuch as he receives by way of exchange as much means of sustenance as is usual and customary to replace the labour power he has expended, just as the working horse receives as much oats and hay as are necessary to maintain it capable of work.
The capitalist and the worker exchange certain quant.i.ties of commodities in proportions determined by economic laws (means of subsistence against a quant.i.ty of the commodity, labour power, of equal value, commodity for commodity, exchange value for exchange value).
As, therefore, the wages of labour signify a certain quant.i.ty of the means of subsistence, so they increase even if their money form remains unaltered with a fall in the price of the means of life, for the worker is then in the position, with his unaltered wage, to buy a greater quant.i.ty of the means of life. In the reverse case, if the prices of the means of life rise, the wages of labour fall, even if their money form remains the same as previously. This law of wages, formulated by Ricardo, was accepted by Marx, but he did not content himself with this acceptance. Ricardo regarded the capitalist world as the only possible and reasonable one, at least at the time when he wrote his ”Principles,” while Marx from the year 1843 adopted a critical att.i.tude towards it, and sought to negate it. Consequently, he investigated further, and expressed himself somewhat as follows:
The capitalist theoricians believed that the wages question was disposed of when it was settled by the law of value. We know, however, that every commodity possesses not only an exchange value, but also a use value, and is bought for the sake of the latter. The use value of the commodity labour power is distinguished in a very remarkable way from the use value of all other commodities.
The use or the employment of labour power creates exchange value, and can create much more exchange value than itself possesses.
The employer can make use of labour power so long that it not only creates its own exchange value (the value of the means of subsistence), but double this. To create the value of wages, the worker needs five or six hours daily, but he is obliged to produce for the capitalist during ten or twelve hours. If the worker were independent he would only produce during one half of the working day in order to receive his means of subsistence. This period of producing Marx called ”necessary labour.” As he is dependent on the capitalist, the worker must not only perform ”necessary labour” but also surplus labour: the worker can generally only find employment under the conditions that, besides the time needed for himself, he also works a definite number of hours for the capitalist without payment. Or, as Marx says: ”The fact that half a day's labour is necessary to keep the labourer alive during the 24 hours, does not in any way prevent him from working the whole day. Therefore, the value of labour power and the value which labour creates in the labour process are two entirely different magnitudes. And this difference in the two values was what the capitalist had in view when he was purchasing labour power. The circ.u.mstance that on the one hand the daily sustenance of labour power costs only half a day's labour, while on the other hand the very same labour power can work during a whole day; that consequently the value which its use during one day creates is double what he pays for that use, this circ.u.mstance is, without doubt, a piece of good luck for the buyer, but by no means an injury to the seller.”
”No injury to the seller,” which is quite correct from the standpoint of Ricardo, but not from that of Marx. He often calls surplus value ”unpaid labour,” and says, for example, ”the capitalist appropriates one half of every day's labour without payment.” In other words, he takes away something without return. This is a very distinct ethical judgment.
On the other hand, it is very important that in our consideration of the wages question we have come up against the Marxian doctrine of surplus value. For this doctrine is the cornerstone of the whole economic system of Marx.
4. _Surplus Value._
We have already noted that Marx followed the cla.s.sical economics in his treatment of the theory of value, but improved the definition of it, and brought it to bear on wages. In doing this he laid stress on the conflict between Capital and Labour.
The beginning of this dialectical process, so far as England was concerned, was the work of the anti-capitalistic critics, who uttered their protest about 1820, or three years after the appearance of Ricardo's work. They declared, according to Ricardo, labour is the source and the measure of value. And yet according to his opinion labour is nothing and capital everything.
This should be reversed: labour must be all, and capital nothing. This literature was contemporaneous with the emergence of the English revolutionary Labour movement, from which Chartism arose at a later date. Piercy Ravenstone (1821) called capital a metaphysical (airy, impalpable) ent.i.ty. Hodgskin (1827) called it a fetish, whereas they described labour as the economic reality. The expressions surplus-product and surplus-value were already known to this anti-capitalist school, with which Marx also connected himself when he set to work to elaborate his criticism of political economy.[7] But this literature supplied him with much less material for the construction of the theory of surplus value than the formulation of the theory of value of the cla.s.sical economy. Besides, while the English anti-capitalist critics, like Ravenstone, Gray, Hodgskin, and J.F. Bray merely condemned surplus value as immoral and as the source of all social wrongs, Marx used the theory of surplus value as the key to unlock the mechanism of the capitalist system and to reveal its workings, its tendencies, and its final destiny. This appears to be the real difference between the English anti-capitalist critics and Marx. In this matter he was obliged to perform most of the work himself. The question he put was no longer ”What is the substance of wealth and how is it measured?” but ”How is its growth and continual accretions to be explained?” Capital is that portion of wealth which is employed for the purpose of gain, of increase. Whence comes this gain, this increase? The answer is as follows:
All capital that is embarked on a productive undertaking consists of two parts: one part is expended on the technical means of production--on buildings, machines, tools, and raw materials, the other on wages. The first part Marx calls Constant Capital (c), the other part Variable Capital (v). The first is called constant, because it only adds to the commodities just as much value as it loses in the course of the productive process; it creates no fresh value: Marx also calls it the pa.s.sive portion. The outlay on wages is called variable capital because it undergoes an alteration in the process of production: it creates new additional value: Marx also called variable capital the active portion, for it creates surplus value (s).
This composition of capital of constant and variable parts Marx calls its organic composition. He calls it average or normal composition when the capital of a business is 80 per cent. constant and 20 per cent. variable. If the constant part is higher, and the variable part lower, he calls it capital of a high composition.
Capital of under 80 per cent. constant portion and over 20 per cent.
variable portion he calls capital of a lower composition. And rightly, because the higher the ladder of capitalist production is, the more costly and extensive are the machinery and factory buildings and the greater is the outlay on raw materials, whereas primitive businesses employ less machinery, cheaper workshops, but a relatively greater number of workers. The relation between (c) and (v) reveals at the same time the stage to which production has developed.
Thus, according to Marx, it is solely the variable capital which creates surplus value, or, as it is commonly expressed, profit. We have seen above, in the explanation of the nature of wages, why variable capital creates more value than it is paid for by the capitalist; the worker does indeed receive the exchange value of his labour power, but the use value of the labour power functions, we have a.s.sumed, twice as many hours as are necessary for its reproduction.
This surplus labour is embodied in surplus value. While the worker receives, let us say, a daily wage of three s.h.i.+llings, for the reproduction of which five hours of work suffice, his labour power will be used for ten hours. These five hours of surplus labour appear in the exchange value of the commodity, so that the value of the commodity is composed of the transferred portion of the constant capital, the outlay on wages, and the added surplus value. Immediately before the production process only constant and variable capital existed, or, in brief (c) and (v); after the completion of the production process, the commodity embodies constant and variable capital and also surplus value, or (c) and (v) and (s). This is the actual value of the commodity, (c) or, shortly expressed, c + v + s.
The relation between wages and surplus value, or between paid and unpaid labour, or, shortly, s/v, Marx calls the rate of surplus value: it expresses the degree of the exploitation of labour.
If wages amount to three s.h.i.+llings, which can be produced in five working hours, and if the worker works in the factory ten hours for these wages, so that he creates exchange value to the amount of six s.h.i.+llings, then the rate of surplus value is 100 per cent. The whole of the surplus value which arises in this manner in the process of production is called the ma.s.s of the surplus value, or shortly, m.s., that is to say, the individual rate of surplus value multiplied by the total number of workers engaged in an undertaking, or the total amount of wages.
5. _Profit._
The ma.s.s of surplus value appears to the capitalist in the shape of profit. Surplus value is a Marxian scientific term which exactly expresses the principle of profit. Profit is a commercial expression which describes surplus value as it appears in practical life as a subject of experience, i.e., empirically.
The distinction between the Marxian theoretical and the commercial empirical conception is, however, not so simple: it arises from the different conceptions of the influence of capital and labour in the economic process. Let us explain it more distinctly.
As is known, Marx divided the capital embarked in industrial enterprise into two parts: into constant (technical means of production) and variable (living labour power, wages). He a.s.sumed that only the living labour power (wage labour) creates surplus value, whilst the constant capital only adds its own value to the new products.
The capitalist divides his capital outlay otherwise: into fixed (buildings and machines) and circulating (raw materials and wages) capital. The fixed capital is only used up slowly and only pa.s.ses entirely into production during a series of years--let us say 15 years: thus of a fixed capital of 75,000, 5,000 would each year be consumed in the production of commodities, and written off in the balance sheet. On the other hand, the circulating capital (raw materials and wages) are wholly consumed in every period of production, and must be renewed at the beginning of a new period of production.