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Karl Marx was right: Workers are systematically exploited under capitalism

Even among Marx-friendly economists, the labor theory of value has fallen out of favor. But its technical validity is less important than the core message: workers are exploited because the value they create is undemocratically taken by capitalists.

by Ben Burgis  

Part 2 - Marx’s Analysis of Labor and Capital

Marx spends the first five chapters of Capital analyzing several economic concepts, starting with commodities, money, and value. He then considers them in relation to capital, using his famous three-letter diagrams.

For instance, even a subsistence farmer might sell some of the goods he and his family don’t need to buy products they can’t make — a chain of transactions that Marx renders as C-M-C (commodities-money-commodities). The capitalist does the opposite: M-C-M (money-commodities-money). While a miser simply keeps his money, perhaps filling a swimming pool with gold coins like Scrooge McDuck, the capitalist turns his cash into commodities and turns those commodities into more money (representing an underlying increase in value) — whether by selling them (in the case of the merchant capitalist) or using them to manufacture new goods and selling those (in the case of the industrial capitalist).

Crucially, the capitalist drive to accumulate money isn’t primarily about individual capitalists being bad, greedy people but rather the relentless pressures of the system itself. A capitalist who doesn’t ruthlessly pursue profits will be outcompeted by those who do — as Marx says, the capitalist is a kind of “rational miser” (while the miser is a “capitalist gone mad”).

But, Marx asks, how does the store of value held by the capitalists increase?

To be sure, some people are better at business than others and can buy cheap and sell dear, but how does the supply of value in society as a whole increase over time? Where does the new value come from? Marx’s answer is that a worker’s capacity to work — her “labor power” — is a “c” that has the capacity to turn “m” into more “m.”

At this point in the discussion, any good defender of capitalism will counter that the capitalist provides the physical means of production — the factories, equipment, and so on. Isn’t the capitalist the source of that value? But Marx points out both that the physical means of production are a source of value insofar as they are used by workers and that these are themselves the result of the activity of previous workers — in Marx’s phrase, “dead labor” used by “living labor” to produce more value.

And yet, despite being the source of value, labor is dominated. In a striking passage at the end of chapter six, Marx portrays a stylized exchange between the “owner of money” and the “owner of this peculiar commodity, labor-power,” who meet in a marketplace to exchange their property. They meet as equals to make this exchange, but then:
 
                          When we leave this sphere of . . . the exchange of commodities, which provides the “free trader vulgaris” with his views, his concepts, and the standard by which he judges the society of capital and wage-labor, a certain change takes place, or so it appears, in the physiognomy of our dramatis personae. He who was previously a money-owner strides out in front as a capitalist; the possessor of labor-power follows as his worker. The one smirks self-importantly and is intent on business; the other is timid and holds back — like someone who has brought his own hide to market and now has nothing to expect but — a tanning.

As the book continues, turning at last to the key concept of class struggle, Marx writes at length about what the “tanning” looks like and how it works. He describes “half-starved widows” giving up their children to toil in the match-making industry — working all day every day and facing very early death because of the industrial process. He writes about groups of desperate workers and their families petitioning local governments to reduce their worktime to eighteen hours a day.

But Marx’s key analytic point is that mainstream economists who ignore the class antagonism at the heart of capitalism are obscuring a central element. Under feudalism, the direct producers (peasants) are clearly forced into giving up some of their “surplus labor” (the time they spend working but not to meet their own needs) to the ruling class. The coerced transfer is out in the open. Under capitalism, the immediate producers (workers) are legally free to make contracts with anyone or — if they’re willing to simply go hungry — no one. The coercion is disguised.

Yet the underlying reality, Marx insists, is a crude relationship of domination and extraction.

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