This is the second portion of the Classics of Marxism Vol 2- Value, Price, and Profit by Karl Marx.
I’ve taken extensive notes on the books points, and then indented my own comments or questions.
Preface
This work was never published in Marx’s lifetime. It was found among his papers after his death.
From Wikipedia, we read: In this polemic, Marx sought to refute the theoretical basis for the economic policy of Ricardian socialist John Weston. Weston said that “(1) that a general rise in the rate of wages would be of no use to the workers; (the idea being that raising wages would cause an increase in prices. The inflation of prices would correspondingly offset the inflation of wages and result in no gain to the workers;) (2) that therefore, etc., the trade unions have a harmful effect”. In the process of criticizing Weston, Marx’s explicates his theories of surplus value and the falling rate of profit in simple and concise English.
Chap 1- Production and Wages
Marx says Weston rests his argument on two premises. The first is that the amount of national production is fixed; and second, the amount of real wages (the quantity of commodities they can buy) is fixed as well.
Marx states that the first is clearly wrong, since production does fluctuate. But even supposing it correct, that doesn’t mean wages must remain fixed. He offers an example. If we choose a number, say 8, the absolute limit of this number doesn’t mean the relative limits of its component parts can’t change. If out of that 8, profits were 6 and wages 2, profits could decrease to 2 and wages increase to 6 without affecting the total number.
But even conceding this point, it would naturally mean that this fixed amount can’t be changed, i.e; wages can’t be diminished. Yet Weston knows that capitalists not only do try and cut wages, the continually do so. Therefore workers are justified in reacting against that.
Chap 2- Production, Wages and Profit
Weston’s argument rest on the unproven existence of a law that determines wages, rather than the will of the capitalist. But there is no such law. Wages can be changed by the will of the capitalist.
Dave note:
I’m interested to see where Marx goes with this, because it seems to me that his assertion is true, but also somewhat fatal to his own argument against capitalism. He seems to rely on a very simple model of capitalism that runs on fixed laws that inevitably lead to the demise of the system. But in my mind, I don’t see the laws he saw as laws. Business owners can make decisions to sell to a more exclusive market, rather than trying to compete over price. Buyers can make informed decisions about what kind of business they want to buy from. At every level, will enters into the equation, which means the things Marx saw as inevitable laws that would break capitalism, don’t really exist. They exist as general principles, but not as fixed laws.
Marx argues that working class wages are generally spent in necessaries. A general rise in wages might result in a corresponding rise in the demand for, and consequently, the price of necessaries. The capitalists that produce these necessaries would then be compensated by the rise in prices. But for those capitalists not involved in producing necessaries, the price for their goods would not increase. Relatively, their income would decrease. The effect of this would be what always happens- capital would flow from the less profitable areas of production to the more profitable, until the overall profit levels reach equilibrium.
Chap 3- Wages and Currency
Marx challenges another point of Weston’s: if the currency is fixed, how can a capitalist pay higher wages? Marx says that this is based on his previous errors, which if negated, this would consequently prove a non-issue. But even so, this point has nothing to do with the subject before us.
He then uses several examples to show that the currency isn’t fixed
Chap 4- Supply and Demand
Marx argues that ‘high’ or ‘low’ wages only have value in reference to something. How are their magnitudes to be measured? Weston answered supply and demand regulated wages. Marx counters by asking what regulates that? If supply and demand regulates wages, then wages should rise at times as well as shrink, but if one doesn’t accept that, why is a wage set where it is?
Marx’s point here is that while supply and demand regulates ‘fluctuations’ in the market, it doesn’t itself count for the general value of a thing. This holds true of wages as well.
Dave note:
I’m not sure this is true. Supply and demand will cause fluctuations, but it seems me that it can also be the root value. If no one has any use for 8-track tapes, then the demand is 0 and therefore the value is 0. It may cost 3 bucks to make one, but since nobody wants one, its value is still 0.
The value of the skill set an NFL caliber football player is very high. It wouldn’t have been nearly so high 200 years ago, but now it is because the demand for such a skill set is very high.
So yeah, fluctuations in supply and demand will account for fluctuations in price, but those fluctuations may also include 0 and a million bucks.
Perhaps what Marx is ultimately referring to is the cost of producing the thing; including raw materials, labor, and skill required to produce the labor, etc. That would set some sort of baseline ‘value’, but no matter the cost of something Armani makes, much of the price is going to be the fact that it is the name Armani. If there is a high demand, and the supply is low enough, then there will be stiff competition for the product and the price will go up.
Chap 5- Wages and Prices
Marx attacks the dogma that prices are determined by wages. He gives examples of where higher wages in one country’s markets produce a product that undersells other countries’ markets, and vice versa. Clearly then, wages don’t determine prices.
Chap 6- Value and Labor
Up to now, Marx has committed himself to answering Weston’s ideas. He now says he will tell us how the values of commodities are actually determined. The value of a commodity is the proportional quantity in which it exchanges with other commodities. You can exchange wheat with silk, gold, or any other commodity. But we must be able to reduce any commodities value to an expression common to all.
Commodities have exchangeable values only as social functions. The common social substance of all commodities is labor. A man can produce something for his own use. He creates a product, not a commodity. A commodity is something he produces that would satisfy a social want.
Marx adds:
This labor “must form a part of the total sum of labor expended by society. It must be subordinate to the labor within society. It is nothing without the other divisions of labor and on its part is required to integrate them.”
I’ll be honest, I’m not quite sure what he’s talking about here, but I’ll leave it for now.
If we consider commodities as values, they can only differ by the amount of labor. A commodity has value because it is a crystallization of social labor. Be aware however that the reward of labor differs from the quantity of labor. This crystallization of social labor, I believe, means the quantity of labor used in obtaining the raw materials, making the tools or machinery that assists the labor, etc.
The use of the term social labor is understood as the quantity of labor necessary for production, under average conditions. Otherwise, the lazier, or clumsier worker may take more time, and therefore his work would be worth more. But when understood as an average, we eliminate this counterpoint.
The quantity of labor necessary for the production of a commodity varies with all the changes in the productive power of labor. The greater the productive power of labor, the less labor is bestowed upon a commodity.
Price is a peculiar form assumed by value. It is the monetary expression of value. This market price will fluctuate with supply and demand. The natural price is the average price to which commodities continually gravitate. The history of prices is that they do seek their equilibrium and sell at their respective values. The general nature of profits is that commodities are sold at their real value, and profits are derived from selling them at their values. This might seem a paradox, but it isn’t.
Chap 7- Labor Power
Man doesn’t sell his labor. He sells his labor power. Thomas Hobbes, in Leviathan, wrote: “the value or worth of a man is his price, so much as would be given for the use of his power.”
Labor power exists only in a person’s individuality. A certain quantity of necessaries must be consumed by a man to grow up and maintain his life. But like machines, man too grows up and wears out. He needs a further set of necessaries to bring up a certain quota of children to replace him and perpetuate the race of laborers. Beyond that, another set of resources will be needed to acquire and develop a skill set and education to be used in producing his labor power.
Marx acknowledges here that equality of wages is an inane wish. Different kinds of labor require different kinds of labor power requiring different values. “What you think is just or equitable is out of the question. The question is: What is necessary and unavoidable with a given system of production? The value of laboring power is determined by the value of necessaries required to produce, maintain, and perpetuate the laboring power.”
Dave note:
This is an interesting take. But it also seems like Marx has gone way out of his way to define everything in life in terms of economics. Then he will turn around and complain that everything in capitalism is based on economics. Perhaps that’s because he spent all his time thinking purely in terms of the materialist economic view.
But of course these things he talks about are true in any society. People have always married and had families and sought food and shelter and progress. Marx has simply rearranged them here to consider them purely as parts of an economic system. One can do that, but why? Perhaps this is why the fascists claimed he was off base- his considerations are purely materialistic.
Chap 8- Production and Surplus Value
Marx notes here the rather obvious notion that capitalism is founded on the capitalist not merely replacing the value of the labor power, but making a profit off of it. If a laborer would reproduce what he needs for his own necessities through 4 hours of work, the capitalist, by making him work 8 hours, gets the excess value created.
Chap 9- Value of Labor
Marx uses his days monetary values here. If a laborer produces 3 shillings worth of labor power in 6 hours, enough to maintain him, yet works for 12 hours for a price of 3 shillings, then the capitalist has paid him only 3 shillings for 12 hours. But the value of his labor is 6 shillings. The extra 3 shillings has gone into the pocket of the capitalist.
The first issue is that the value of the laborer is made to look like half of what it is.
The second is that only half of the worker’s labor is paid for.
Marx then notes two examples, slavery and serfdom.
Under slavery, the master pays a slave trader for the use of the slave. There is no deal between the slave and master.
Under serfdom, a serf might work for 3 days on his own land, and owe the master 3 days on the master’s land. Here, Marx says, at least the division is obvious. Yet liberals would chafe at the idea of forcing a man to work for nothing.
Under both serfdom and capitalism, the division is the same, but under capitalism, the division is hidden and “the gratuitous labor appears to be voluntary.” This makes all the difference.
Dave note:
The idea that the worker is being made to work for nothing doesn’t seem fair to me either. The worker needs a job, one which he wouldn’t be able to do had the capitalist not provided the means for it. The capitalist himself shouldn’t be expected to take on all the risk, and put in his time as well for nothing.
The serf didn’t have his own land. He is given some to work, in return for working part of his time on the owner’s land too.
Chap 10- Profit is Made by Selling a Commodity at Its Value
Marx makes a point that commodities aren’t sold above the true value, they must be sold at their actual value. The profit then comes not from selling above value, but by taking some out of the labor value.
Dave note:
As in the last chapter’s note, I don’t think Marx is considering what the capitalist is supposed to make here. The capitalist after all, has provided everything necessary for production. He can’t be expected to do all this for free.
Chap 11- The Different Parts into Which Surplus Value is Decomposed
Marx calls profit surplus labor, or unpaid labor. It is the portion of the laborer’s input that adds value, but for which the laborer himself gets no wage. Marx notes that not all of this profit is pocketed. Some will be paid for rent, etc. The main point is to expose the exploitation of labor inherent in capitalism.
Chap 12- General Relation of Profits, Wages, and Prices
More of the same argument from Marx. Essentially, the price is driven by the market, so that’s more or less set. The price/value is derived from the raw materials, machinery, etc. needed plus wages- the total amount of labor required to produce the commodity. Profit must be pulled from the wages, which Marx calls unpaid labor because the capitalist appropriates profit for himself from this value that the laborer has created.
Chap 13- Main Cases of Attempts at Raising Wages or Resisting Their Fall
Marx notes a few cases where workers and capitalists have clashed over attempts to change wages. The first is when money is devalued, the second is changes in the length of the work days.
Marx is undoubtedly just in denouncing conditions that occurred in some industries.
Chap 14- The Struggle Between Capital and Labor and Its Results
Marx sees three things in the struggle between labor and capital:
1. A general rise in wages would result in a general fall in profit, but not affect prices.
2. The general tendency of capitalist production is to sink wages.
3. Trade unions resist the encroachments of capitalism, but ultimately the entire wage system needs to be abolished.