What Is Money? Money is money of course! It is the currency of the nation with which you can buy things. Very simple, is it not? Money is a great mystery. Even those who have the most of it usually know the least about it. Even the bankers who handle so much of it may know little or nothing.
These days there is need for explaining the real nature and function of money. Many have come to the conclusion that money is the “invention of the devil,” or at least these devilish evil bankers. They have come to the conclusion that money was invented for the purpose of robbing them, and that the bankers by some sleight-of-hand trick rob them of the values they produce. This is due to their lack of understanding of what money actually is, and how the competitive system is reducing them to poverty.
The saying, “Money makes money.” is false. That crude old saying is but another way of expressing the fact that capitalist accumulation goes on by leaps and bounds in spite of the capitalists themselves. They can be utterly brainless and still accumulate vast wealth. Money makes nothing and the belief that it makes more money is an illusion. What is meant by “money making money” is that those who possess it in sufficient quantities can use it to purchase raw materials, machinery, labour-power, etc., and “make money” by exploiting the productivity of labour, the source of all values. There are many illusions in relation to money today. Common among these illusions is the belief that money circulates commodities, hence the petty-bourgeois outcry for “cheap” money, for a more “elastic currency, etc. But it is not money that circulates commodities. It is just the reverse. It is the circulation of commodities that causes money to flow. When trade is slow, money circulates slowly. When it is stagnant, money lies fallow. It goes to “sleep”, in the bank vaults. There is no work for money. It is “unemployed.” When the finance capitalists cannot find profitable and safe investments for their money, much to their disgust, they are obliged to hoard it. In the present crisis it is estimated that non-finance companies have bank deposit of 3 to 5 trillion dollars
Money is not the dynamic thing under capitalism. It is the production and circulation of commodities that is dynamic. Money is simply a medium through which commodities are exchanged with each other. It is like the wire that transmits power. The wire itself has no power but simply a medium for circulating power which is generated somewhere else. When the power is shut off, when the current ceases to flow, we say the wire is “dead.” It is so with money. Its resurrection, under capitalism, can only be brought about through the restoration of business, through the machinery of production again being set in motion, and that is outside of the power of money. Of course, a certain amount of stimulation can be made by spending money on non-essential work, or non-profitable business, Keynesian policies of “priming the pump”. But, if a natural flow does not respond to the “priming” then it should be obvious, that there is no profit in just pumping out what is poured in.
Money itself is simply a commodity set aside for the special purpose of circulating other commodities and measuring their values as well as expressing their prices. The commodity, for instance, of the automobile capitalists is the automobile. The commodity of the bankers is money. The banker, of course, does not sell money like the automobile capitalist sells autos, but he rents the use of it like a landlord capitalist rents out land or a house. Interest is the “rent” paid for the use of money. The banker aims to collect interest on his loans and also to receive the payment of the principal. But where does the interest come from? The debtor capitalist gives up part of the profit, which he realises by exploiting his workers, to the banker. If, however, he has enough capital and if he owns his factory buildings he can hold on to all of the profit instead of parting with some of it for interest and rent.
Money is not a supernatural thing or a mere “government issued script” as many present-day money reformers contend. It is real material. Money functions in three ways: (1) As a medium of exchange; (2) As a standard of prices, and (3) As a measure of value.
(1) The first function of money requires but little explanation. A medium is a go-between. It is the means whereby commodity owners exchange what they have for what they require. For instance, a certain quantity of lumber is sold for a certain quantity of the money commodity. Later the owner of that quantity of money can purchase with it, for instance, a certain amount of cloth. Money, the medium of exchange, has simply been the means of exchanging the lumber for the cloth. This is all there is to money as a medium of exchange.
(2) As for money as a standard of prices, that simply means that it gives nominal expression to value, so many dollars and cents in America, so many pounds, shillings and pence in Britain, and so on with the monetary units of other countries. Money, the golden yardstick that measures the relationship of commodities to each other, gives expression to their value in exchange through a standard of prices that vary with historic circumstances and the custom of different countries. For instance, American money, with exactly the same characteristics as the money of all other modern countries, expresses its standard of prices in dollars and cents; British money in pounds, shillings and pence; German money in marks and pfennings, and so on.
(3) But it is money as a measure of value that mystifies many. All commodities have value. So must money have value. Nobody would want to sell a commodity for something that had no value. Money is a commodity also. It is exchanged for other commodities. If you have a certain quantity of money to spend you can have your choice of an immense variety of things. So for money to measure value it must have value. You cannot measure something with nothing. The quantity of average labour in a table, which gives it value, can, for instance, be exchanged for a coat containing approximately the same quantity of average labour. That is the way exchanging (trade) began, through direct exchange or barter, before there was any medium of exchange. Money was brought into existence, or rather evolved, from trading. The trader who had wares to sell, yet did not desire immediately other wares in exchange, would accept, in preference, something of value that would be easily convertible later into things he did want. Thus money arose. Economists have shown that almost every sort of object has been used as money, such as cattle, corn, tobacco, and even human beings (slaves). Anything that has value could be used as money, but all are not equally as serviceable. Perishable things would function poorly as money. That is why the “precious metals” have crowded out tobacco, cattle etc., as money, and gold has crowded out the less “precious metals,” such as copper and silver, because it contains greater value in smaller bulk. “Precious” simply means big value in small bulk, a lot of social labour in a small quantity of metal. Silver and copper, in modern countries today, are not money any more than paper is. They are but tokens. They are representatives, substitutes for certain quantities of gold held in the bank vaults. If the tokens (the currency) have 100 per cent gold behind them, say, gold to the face value of a dollar, then it makes little difference if the gold itself is circulated, if it is also currency. But if the currency is in excess of the gold backing it, then for that reason gold is withdrawn from circulation, and the effect of the increased ratio of currency (tokens) to gold is that prices rise. The owners of commodities demand more of the “cheap money” (inflated currency) than they would of the dear money. Values are not altered but their monetary expression is higher, prices go up. When currency is deflated, prices fall. Of course, besides this basic factor, there are secondary factors in the rise and fall of prices; for instance, supply and demand.
In general, values are relatively constant, but prices fluctuate. If there is a lot of wheat available and not many buyers, its price falls. Sometimes the price of certain commodities falls below their value but, in general, prices fluctuate around their value, sometimes above value and sometimes below. These fluctuations, sometimes above value and sometimes below, cancel each other so that on the average commodities exchange at their value. We have previously remarked that we would explain how profits are made by exchanging commodities at their value. We are not forgetting that promise, but we wish to discuss money a little further.
Whenever a crisis develops, when commodities are unsaleable and, as a result money is not changing hands and credit has tightened up - the credit crunch - there usually arises much agitation against the existing monetary system. At present the great bankers with great hoards of gold are anxious to lend it out, but they can find few enterprises to which they can lend safely and at a profit. Countless numbers of businessmen are now trying to borrow. It is always so in a crisis, but fewer than ever can make the grade because of their insecurity. Therefore, at a time when the bankers have most to lend, and are very anxious to so, they find very few secure businessmen to whom they can lend. This condition creates the illusion that business is bad because the bankers will not let out their money. It is easy to see that there are plenty of people without money, but they can offer no security, and, in fact, many “securities” vanish in a crisis, leaving many bankers with no choice but to close their doors. However, the large bankers who survive have plenty of money on hand. Those who believe that the holding back of loans on the part of the bankers is responsible for the depression, or at least for its prolongation Or else they promote the belief that it is actually the extension of credit to create debt that is the problem and desire the abolition of fractional reserves. They all create various movements for money reforms, for new banking laws and regulations or agitate for the return to the gold/silver standard as Ron Paul and Libertarian Right demand. They all believe that a change in the monetary system would be enough to bring prosperity or at least, security. But, since money is merely a measure of value, we know full well that a mere change in its form would not add more value too that which it measures, any more than the shortening or lengthening of a yardstick would add length or quality to the cloth it measures.
This is the stumbling block of the money reformers of the Keynesian sort; they believe that a change in the measuring of value, a change in the money system, will bring about an alteration in the wealth it measures and changes in the possession of wealth. It is the latter, of course, that is aimed at and the belief is that: “If there is a vast increase in money, surely we will have more chance of getting hold of some.” This certainly is an illusion that the present conditions should expose, even if the “money reformers” are unable to follow the mechanism of the monetary system. It is just as great an illusion as the notion that there is an abundance of wheat everyone will have plenty to eat. Of course, there is a real reason for the repeated demands for inflation of the currency. Within the ranks of the capitalist class there are several divisions. One such division is that between those who have borrowed money and those who have loaned it, the debtor section of the capitalist class and the creditor section. If currency is inflated it causes prices to rise, as those who have commodities to sell demand a higher price. The small business people, such as the small farmers, most of them debtors, want inflation and higher prices so that they can pay their debts with the inflated currency. The creditor section of the business class, particularly the bankers, usually fight inflation so as not to be repaid in depreciated currency. The substance of the whole question is the conflict between big business and little business. For those who have no business and no job, it is not something to get exited about. However, where inflation takes place, whatever its ultimate outcome, its first effect amounts to a cut in “real wages,” the spending power of the workers. The cost of living goes up, often without an increase in wages and where increased wages are obtained it usually occurs after and not ahead of an increased cost of living.
Some liberal "money reformers" advocate variants of social credit ideas which aims to remedy all social ills by reforming the monetary system. Other such as Ellen Brown insist upon nationalised state banks and controlled currency is one of the main measures aiming at capitalist recovery. These schemes in themselves are fore-doomed to failure because no mere change in the means of measuring or medium of exchanging values will create new values or cause existing values to circulate more freely.
The banker’s income is in the form of interest. He is a capitalist whose “stock in trade” is money. He “rents” the use of it just as the landlord rents the use of a building, and just as the latter expects back his outlay, plus profit, so does the banker expect the return of his loan, plus profit. But the banker’s profit is no more made off the customer than the landlord’s profit is made off the tenant. The banker collects interest for the money he has “rented” out. If it is an industrial capitalist to whom he has loaned money, the latter has to give up, in the form of interest, part of the surplus-value exploited out of his employees, just as he may also have parted with some of the surplus-value in the form of rent to the landlord. Of course if a capitalist has plenty of his own capital and is able to own his factory buildings and does not have to borrow any of the banker’s capital, he neither has to pay interest nor rent and thus retains a larger share of the surplus-value.
At one time, the taking of interest was condemned by the Church, and the money lender, the forerunner of the modern banker, was a sinner in high disfavour. But now the gentleman who collects income through interest on loans is among the most respectable of citizen’s and usually occupies a prominent place in Church and State. Banking capital of late years has been very powerful. Its leading lights are men of vast wealth. But they produce no merchandise, neither in mill, mine nor factory. They grow no grain or other agricultural produce, but their wealth increases just the same.
This realisation that the banker is not engaged in production has caused many people to conclude that he gets his riches by some evil practice, some sort of financial sleight of and, but on close observation he can be found to be no more dishonest than other businessmen. There are “tricks in all trades” and the bankers have their little tricks, too, but their wealth is gained in the same “legitimate” way as the other capitalists acquire theirs, namely, through the exploitation of wage-labour. If the banker was to pay out as much in wages to his employees and in other expenses as his returns amounted to, he would make no profit. His business, like any other, makes profit or loses according to how much he can retain over and above his necessary outlay. If his employees received high enough wages there would be no profit for him, but he usually can hire all the assistants he needs, pay them on the average the regular wages for such labour, and have a balance left over, a profit.
During the last few years, thousands of banks have required bail-outs to avoid bankruptcy, (did other businesses such as GM Motors), and the general cause was the same. Loss of income in relation to expenditure wiped out so much of their capital that they became insolvent. Reckless speculation, casino capitalism, helped to hasten their downfall, just as in the case of other speculators. But not all banks failed. The large bankers, the real financiers, are still in a very powerful position today. At one time banking capital was simply auxiliary to industrial capital, the bankers played a secondary role. While banking capital is still at the beck and call of solvent industry, it has gained in many cases such a hold that it has practically absorbed the function of the industrial capitalist. This came about through the bankers becoming more than money lenders. They became direct investors in industry, purchasing large blocks of industrial stock, quite often sufficient to control the financial policies of large industrial concerns. Finance capital has taken the leading role in the directing of industry and commerce. When banking capital developed to the stage where it had a surplus over and above its requirements for industrial and commercial loans, the big bankers began to look for a way of using this surplus profitably. Permanent investments, not loans, were the answer to this problem, and the bankers were in a position to know where such investments would be the most secure and likely to yield the most profit. The “money power” has forged ahead and extended its holdings and consolidated its grip upon an ever-increasing share of the national production and foreign investments.
Finance capital is in the saddle and will probably be riding hard when the old horse capitalism runs its last lap.
It is not banks with their mythical creation of money/credit out of thin air that creates actual wealth. All profit is made by exchanging commodities at their value. When business is good, when there is a brisk demand for products, commodities are bought and sold. The capitalist runs his business for profit, but would never make any if the products were simply stored up in warehouses which is no use to anyone, so buyers must be found who have use for the produce. The capitalist sells commodities. How does a commodity get its value in the first place? Only when human labour is applied to nature that its “raw materials” are transformed and begin to take on value which can then be exchanged, in proportion to the amount of necessary labour expended.
Let us follow the production of a wooden table from the forest to the factory, and from the factory to the home.
a) The finest trees in the forest may rot and fall without ever taking on exchange value and likewise growing trees hold only potential value until human labour is applied. The labour of the lumberjack transforms what were trees into logs which are to be sawed into timber. These logs, we will assume, are the property of a lumber company. The company has no use for the logs but it is out to make profits and so it looks for someone who has a use for them. It offers them on the market at their real value. We will say in this case that the average log, when then tree is felled and trimmed and ready for transportation to the sawmill, exchanges for £10. We will further assume that it costs the company, on average, £1 per tree for wear and tear on its equipment and for auxiliary services used in its business. And let us further suppose that it costs, on average, £2 per tree for labour-power (wage paid to the workers). Thus, the cost to the lumber company will be £3 per tree, leaving a surplus of £7 in the hands of the company. But there may be other capitalists standing ready to collect a share in the surplus value.
This outlay of £3 by the company (£2 for wages and £1 for wear and tear on equipment, etc) comes back again when the £10 exchange value of the log is realised. The £1 for wear and tear on equipment, etc., replaces itself, no more and no less. It is what Marx called constant capital, but the £2 for wages, which he calls variable capital, not only reproduces itself but produces, in this case, £7 of additional value which he has named surplus value. This is the secret of capitalist profit. Its discovery was Marx’s greatest contribution to the science of political economy. With this discovery it was shown that profits arise during the production of commodities and not during the time they are being exchanged and, further, that the surplus-value arose out of the variable capital, the outlay for labour-power, and that the worker receives the value of his labour-power in wages but produces during his working day a much greater value. Of this value added by the worker, the capitalist gets back his outlay in variable capital, in this case the £2 for wages, plus the additional £7 of surplus value.
When we understand this we can see how it is possible for the capitalists to sell commodities at their value and still make a big profit. As all commodities sell at their value, on the average, this also holds good for the commodity of the worker, labour-power. Wages are the price paid for labour-power, and although the prices may fluctuate, sometimes above and sometimes below value, in the long run these variations cancel each other and thus, on the average, labour-power sells at its real value. But, of course, labour-power is unlike all other elements that enter into production and which simply replace their own value. During the time it is being used up, labour-power produces a value much greater than its own value, a surplus-value, as we have already pointed out. This surplus-value is appropriated by the owners of the means of production, the capitalists. The process Marx terms “the exploitation of labour.”
Let us return again to the example of the lumber company. We find that out of the £7 surplus-value extracted from the labour of the lumberjacks, the lumber company has to part with £1 to another capitalist, the landlord upon whose land the trees were cut down. The direct exploiter of labour does not always succeed in retaining the full amount of the surplus-value. He has often to share with other capitalists, and that, too, on an average, according to the amount of their capital that he is obliged to use in his business.
The lumber company may also have had to borrow money from another capitalist, a banker, whose commodity is money which he “rents” the use of to other capitalists. They may have to give up a further share of the surplus in payment of interest on this “rented” money. Then they may have to give up another portion in taxes, etc. What is left of the surplus-value (usually plenty) is the lumber company’s profit. Their logs are sold at their real value and their share of the surplus-value, the profit, is realised. It is collected at the point of exchange, where the logs are sold, but it is during the process of transforming the growing trees into logs or timber, during production, that the surplus-value has arisen.
The question may now be asked: “But what about the value of labour-power?” Its value springs from the same source as that of other commodities, namely, the amount of socially necessary labour required to produce or reproduce it. But this socially necessary labour is incorporated in the food, shelter, etc., that the worker must consume, plus that consumed by his family. Adult labour-power must raise a fresh crop of young labour-power for the future market. But this miserable allowance (£2 per tree in the case of the lumberjacks) only represents a fraction of the value that the applied labour-power produced.
And, further, we might point out that what the product sells for is not dependent upon what the worker receives in wages. Neither do his wages depend on the value of the products but basically upon the cost of living, upon what the capitalists must part with in order that labour-power can be reproduced for their service. And this despite the fact that the capitalist is always ready to howl that the product will go up in price if the workers get more wages. The capitalist takes all he can get for the product, whether wages go up or down. Often, when higher wages are paid, the capitalist gets less for the total product and at times he gets more for it when he has paid lower wages. If it was such a simple matter of passing on the increased costs to the consumer he would not resist an increase in wages so vigorously. The reason he fights so hard against wage increases is because its immediate effect is a cut in profits. If the worker gets more in wages, the capitalist gets less in surplus-value. The standard of the working class has not risen with the vast increase in wealth but, in fact, has fallen, taking the class as a whole. For large numbers, the standard of living is at times driven below the subsistence level, through an over-supply of labour and competition for jobs.
But let us see what now becomes of the timber logs. Who buys such logs? We started out to observe the production of furniture. So we will now suppose that the logs were purchased by a sawmill company. When the sawmill capitalists bought the logs they had them transported by railroad to their mill where they are again being transformed. The logs become finished or dressed lumber to be sold at so much per square foot to consumers, such as those who produce furniture, etc.
The first outlay after the sawmill company buys the logs was the cost of transportation, which we will assume brings the value of the logs to £12 each, an increase of £2 in their value, for necessary transportation is part of production and adds value, in this case through the exploitation of railroad workers. If these workers received wages equal to £2 for each log transported, there would be no profit for the railroad capitalists. But they don’t. They are exploited in the same way as other workers, by selling their labour-power at its value and creating much greater values for the railroad company.
At the furniture factory, the finished lumber is passed through the machinery by the furniture workers and it is transformed into useful furniture. It is then packed and shipped to the furniture stores where it is sold to the consumers, the buyers who use it in their homes.
As already happened in the case of the lumberjacks, the railroad workers and the sawmill workers, they (the furniture workers) receive wages and produce values much greater than they receive in wages. The sawmill company sells finished lumber at market price to the furniture producing company, holding on to as much as possible of the surplus-value added by the workers of the sawmill. And the owners of the furniture factory do likewise.
If the capitalists engaged in producing furniture could reach the consumers direct they would be able to retain most of the surplus-value themselves, but unless they have their own stores, they have to sell for less than the exchange value of the furniture. In other words, they have to share surplus-value with the capitalist retailer, the owner of the furniture store. If it also passes through the hands of a wholesale dealer the surplus-value is simply divided up differently.
Let us trace this process. If a table is produced to sell for £10, and it contains £2 in wages and £1 in raw materials, wear and tear on machinery, etc., then there is a surplus value of £7 in the production of the table. The factory capitalist may succeed in retaining only £2 of the surplus and the other £5 goes to the retailer, or may be divided in some proportion between the wholesaler and retailer.
Transportation may play a different part this time. It may be that in the competition between capitalists for markets that furniture makers located elsewhere may ship their goods into the district covered by other producers. Transportation of this kind is socially unnecessary and does not add value. In the case of small articles the costs of transportation may be so small in relation to the value of the commodities that, in practice, they are charged to “overhead” along with heating, window washing, etc., and have no appreciable effect on prices.
To sum up this process of furniture production and exchange, from the forest to the factory and from there through the hands of the dealers to the home, it will be observed that all the value put into the “raw materials” and the finished product has been put there by the workers, by those who did the producing (including transporting), and that the different capitalists have each taken their share of the surplus-value exploited from the employees.
Let us repeat ourselves in another way. Many people think that profits are made by buying cheap and selling dear. They think that by charging more than commodities are worth the merchants make their profits. That is only the appearance of things and appearances are often deceptive.
If we were to follow the circulation of a £5 note we would soon realise that no profits are made, since circulation, or exchange, as it is sometimes classed, adds no value whatever.
We will assume that a dealer, whom we will call number one – a hatter – sells a hat for £5. Now he can not eat this £5 but he can eat what the money will buy. He goes to the grocer, whom we will call number two, and he buys supplies to the extent of the purchasing value of £5. All that has happened, in effect, in these two transactions, is that the hat dealer has exchanged his commodity, hat, for the grocer’s commodities, sugar, bread, coffee, etc. £5 worth for £5 – value for value.
The grocer, no more than the hatter, can eat the £5 note, nor can he wear it. He needs shoes, we will say, so he goes to dealer number three – the shoe-shop – who exchanges a pair of shoes for £5. Now supposing number three needs to have some carpenter work done. He goes to number four, who owns a carpenter shop. Number four supplies him with £5's worth of joinery work.
The owner of the carpenter shop has now exchanged his woodwork commodity for the same £5. But we will assume that he, the owner of the carpenter shop, decides to buy an entirely different commodity; one that is not put up in cans, bottles or paper bags, one that is not weighed on the scales or measured by the yard. He buys a commodity that is wrapped up in human skin and dressed in overalls. One that is measured by the clock or, if it is piecework, by the amount of product – the commodity of the worker – labour-power.
After investing the £5 in the commodity of the working carpenter, at the end of a certain time agreed upon and covered by the £5 wages, let us say a day’s work, the carpenter has added to the raw materials so much more value than the product of the day’s work now brings, say, £30.
We will assume that the lumber and all other necessary expenses total £10. That amount is called constant capital and the £5 invested in wages is variable capital. These two investments bring the outlay of the boss carpenter up to a total of £15. But £30 was received for the carpenter work. Thus £15 dollars is surplus-value.
It is only the labour (variable capital) that adds value. The materials and wear and tear on the means of production (constant capital) only transfer to the finished commodity their own value – in this case £10 worth of materials, etc. It is the £5 spent on wages that produces the other £15 – the surplus value.
We have seen above that the first four commodity sellers exchanged their commodity evenly – value for value. Nothing was made in the way of profit and nothing lost on the exchange. “But,” you will say, “the hatter, the shoe dealer, the grocer and the boss carpenter are not in business for their health.” They certainly make a profit, but not upon each other as buyers. We have shown that they simply exchanged value for value. Now where does the profit come from? How is it made?
In the case of the hatter, his commodity, the hat, contained its full value when it reached the store. (On many commodities, transportation is often necessary and in this case this transportation expense adds value in proportion to the necessary labour contained in it. When we speak of production in a general sense we also add transportation.) It was the producers in the hat factory who gave the hat its value. The dealer could add no value to the already finished commodity. The hat manufacturer does not sell to the consumer direct. It is usually more economical to have the wholesale and retail dealers handle small quantities and single sales. He, therefore, sells to the wholesaler quantities of hats quite a bit below their value and still makes a profit, the surplus value being so large. The wholesale dealer receives a higher price than he paid but still sells it to the retailer – the storekeeper – at less than its value. The latter, under normal circumstances, sells it at its actual value.
We will say, for example, that the material in the hat cost the manufacturer altogether fifty pence, including other costs. The wages of the worker we will say amount to fifty pence or more. That makes a total cost of £1. However, it is a £5 hat – thus the surplus-value is £4. Of this £4 the manufacturer, the wholesaler and the retailer each get a share.
The hat which cost a £1 to produce we will say sells for £3 dollars in quantities to the wholesaler, leaving £2 of the surplus-value in the hands of the manufacturer. In smaller quantities the wholesaler sells to the retailer, say for £3.50 three, retaining fifty pence of the surplus-value, and the storekeeper, finally selling the hat for £5, keeps £1.50 as the surplus.
Let us repeat again, surplus-value is the difference between what it costs to produce a commodity and what it sells for. It is out of the social labours of the workers in industry that all surplus-values are obtained. The worker is not exploited when he buys things, as some people think, but as a producer where he sells something – labour-power. It is the collective labour of the workers that produces the vast volumes of wealth. In modern industry all functions, from the floor sweeper to the manager, are carried on by hired employees. Hired “hands” and hired “heads” are together engaged in carrying on production. The capitalist is no longer necessary. The future of civilisation is in the hands of the proletariat.
A worker that has been robbed is like a cow that has been milked. The poor dumb animal is incapable of worrying about what becomes of the milk, but the so-called “intelligent” worker takes sides in the quarrel which goes on over that which has been taken from him. When sections of the capitalists, industrial or banker, who exploit the working-class milch-cow squabble over their share of the surplus value, workers who line up and take sides in this quarrel are in the same position as the worker who has been robbed by thieves who then later fight over the division of the booty. It would be funny if it were not so sad and tragic to see the workers take sides, as they often do, with one gang of robbers that has plundered him as against the bunch of thieves.
Adapted from John Keracher here and here
These days there is need for explaining the real nature and function of money. Many have come to the conclusion that money is the “invention of the devil,” or at least these devilish evil bankers. They have come to the conclusion that money was invented for the purpose of robbing them, and that the bankers by some sleight-of-hand trick rob them of the values they produce. This is due to their lack of understanding of what money actually is, and how the competitive system is reducing them to poverty.
The saying, “Money makes money.” is false. That crude old saying is but another way of expressing the fact that capitalist accumulation goes on by leaps and bounds in spite of the capitalists themselves. They can be utterly brainless and still accumulate vast wealth. Money makes nothing and the belief that it makes more money is an illusion. What is meant by “money making money” is that those who possess it in sufficient quantities can use it to purchase raw materials, machinery, labour-power, etc., and “make money” by exploiting the productivity of labour, the source of all values. There are many illusions in relation to money today. Common among these illusions is the belief that money circulates commodities, hence the petty-bourgeois outcry for “cheap” money, for a more “elastic currency, etc. But it is not money that circulates commodities. It is just the reverse. It is the circulation of commodities that causes money to flow. When trade is slow, money circulates slowly. When it is stagnant, money lies fallow. It goes to “sleep”, in the bank vaults. There is no work for money. It is “unemployed.” When the finance capitalists cannot find profitable and safe investments for their money, much to their disgust, they are obliged to hoard it. In the present crisis it is estimated that non-finance companies have bank deposit of 3 to 5 trillion dollars
Money is not the dynamic thing under capitalism. It is the production and circulation of commodities that is dynamic. Money is simply a medium through which commodities are exchanged with each other. It is like the wire that transmits power. The wire itself has no power but simply a medium for circulating power which is generated somewhere else. When the power is shut off, when the current ceases to flow, we say the wire is “dead.” It is so with money. Its resurrection, under capitalism, can only be brought about through the restoration of business, through the machinery of production again being set in motion, and that is outside of the power of money. Of course, a certain amount of stimulation can be made by spending money on non-essential work, or non-profitable business, Keynesian policies of “priming the pump”. But, if a natural flow does not respond to the “priming” then it should be obvious, that there is no profit in just pumping out what is poured in.
Money itself is simply a commodity set aside for the special purpose of circulating other commodities and measuring their values as well as expressing their prices. The commodity, for instance, of the automobile capitalists is the automobile. The commodity of the bankers is money. The banker, of course, does not sell money like the automobile capitalist sells autos, but he rents the use of it like a landlord capitalist rents out land or a house. Interest is the “rent” paid for the use of money. The banker aims to collect interest on his loans and also to receive the payment of the principal. But where does the interest come from? The debtor capitalist gives up part of the profit, which he realises by exploiting his workers, to the banker. If, however, he has enough capital and if he owns his factory buildings he can hold on to all of the profit instead of parting with some of it for interest and rent.
Money is not a supernatural thing or a mere “government issued script” as many present-day money reformers contend. It is real material. Money functions in three ways: (1) As a medium of exchange; (2) As a standard of prices, and (3) As a measure of value.
(1) The first function of money requires but little explanation. A medium is a go-between. It is the means whereby commodity owners exchange what they have for what they require. For instance, a certain quantity of lumber is sold for a certain quantity of the money commodity. Later the owner of that quantity of money can purchase with it, for instance, a certain amount of cloth. Money, the medium of exchange, has simply been the means of exchanging the lumber for the cloth. This is all there is to money as a medium of exchange.
(2) As for money as a standard of prices, that simply means that it gives nominal expression to value, so many dollars and cents in America, so many pounds, shillings and pence in Britain, and so on with the monetary units of other countries. Money, the golden yardstick that measures the relationship of commodities to each other, gives expression to their value in exchange through a standard of prices that vary with historic circumstances and the custom of different countries. For instance, American money, with exactly the same characteristics as the money of all other modern countries, expresses its standard of prices in dollars and cents; British money in pounds, shillings and pence; German money in marks and pfennings, and so on.
(3) But it is money as a measure of value that mystifies many. All commodities have value. So must money have value. Nobody would want to sell a commodity for something that had no value. Money is a commodity also. It is exchanged for other commodities. If you have a certain quantity of money to spend you can have your choice of an immense variety of things. So for money to measure value it must have value. You cannot measure something with nothing. The quantity of average labour in a table, which gives it value, can, for instance, be exchanged for a coat containing approximately the same quantity of average labour. That is the way exchanging (trade) began, through direct exchange or barter, before there was any medium of exchange. Money was brought into existence, or rather evolved, from trading. The trader who had wares to sell, yet did not desire immediately other wares in exchange, would accept, in preference, something of value that would be easily convertible later into things he did want. Thus money arose. Economists have shown that almost every sort of object has been used as money, such as cattle, corn, tobacco, and even human beings (slaves). Anything that has value could be used as money, but all are not equally as serviceable. Perishable things would function poorly as money. That is why the “precious metals” have crowded out tobacco, cattle etc., as money, and gold has crowded out the less “precious metals,” such as copper and silver, because it contains greater value in smaller bulk. “Precious” simply means big value in small bulk, a lot of social labour in a small quantity of metal. Silver and copper, in modern countries today, are not money any more than paper is. They are but tokens. They are representatives, substitutes for certain quantities of gold held in the bank vaults. If the tokens (the currency) have 100 per cent gold behind them, say, gold to the face value of a dollar, then it makes little difference if the gold itself is circulated, if it is also currency. But if the currency is in excess of the gold backing it, then for that reason gold is withdrawn from circulation, and the effect of the increased ratio of currency (tokens) to gold is that prices rise. The owners of commodities demand more of the “cheap money” (inflated currency) than they would of the dear money. Values are not altered but their monetary expression is higher, prices go up. When currency is deflated, prices fall. Of course, besides this basic factor, there are secondary factors in the rise and fall of prices; for instance, supply and demand.
In general, values are relatively constant, but prices fluctuate. If there is a lot of wheat available and not many buyers, its price falls. Sometimes the price of certain commodities falls below their value but, in general, prices fluctuate around their value, sometimes above value and sometimes below. These fluctuations, sometimes above value and sometimes below, cancel each other so that on the average commodities exchange at their value. We have previously remarked that we would explain how profits are made by exchanging commodities at their value. We are not forgetting that promise, but we wish to discuss money a little further.
Whenever a crisis develops, when commodities are unsaleable and, as a result money is not changing hands and credit has tightened up - the credit crunch - there usually arises much agitation against the existing monetary system. At present the great bankers with great hoards of gold are anxious to lend it out, but they can find few enterprises to which they can lend safely and at a profit. Countless numbers of businessmen are now trying to borrow. It is always so in a crisis, but fewer than ever can make the grade because of their insecurity. Therefore, at a time when the bankers have most to lend, and are very anxious to so, they find very few secure businessmen to whom they can lend. This condition creates the illusion that business is bad because the bankers will not let out their money. It is easy to see that there are plenty of people without money, but they can offer no security, and, in fact, many “securities” vanish in a crisis, leaving many bankers with no choice but to close their doors. However, the large bankers who survive have plenty of money on hand. Those who believe that the holding back of loans on the part of the bankers is responsible for the depression, or at least for its prolongation Or else they promote the belief that it is actually the extension of credit to create debt that is the problem and desire the abolition of fractional reserves. They all create various movements for money reforms, for new banking laws and regulations or agitate for the return to the gold/silver standard as Ron Paul and Libertarian Right demand. They all believe that a change in the monetary system would be enough to bring prosperity or at least, security. But, since money is merely a measure of value, we know full well that a mere change in its form would not add more value too that which it measures, any more than the shortening or lengthening of a yardstick would add length or quality to the cloth it measures.
This is the stumbling block of the money reformers of the Keynesian sort; they believe that a change in the measuring of value, a change in the money system, will bring about an alteration in the wealth it measures and changes in the possession of wealth. It is the latter, of course, that is aimed at and the belief is that: “If there is a vast increase in money, surely we will have more chance of getting hold of some.” This certainly is an illusion that the present conditions should expose, even if the “money reformers” are unable to follow the mechanism of the monetary system. It is just as great an illusion as the notion that there is an abundance of wheat everyone will have plenty to eat. Of course, there is a real reason for the repeated demands for inflation of the currency. Within the ranks of the capitalist class there are several divisions. One such division is that between those who have borrowed money and those who have loaned it, the debtor section of the capitalist class and the creditor section. If currency is inflated it causes prices to rise, as those who have commodities to sell demand a higher price. The small business people, such as the small farmers, most of them debtors, want inflation and higher prices so that they can pay their debts with the inflated currency. The creditor section of the business class, particularly the bankers, usually fight inflation so as not to be repaid in depreciated currency. The substance of the whole question is the conflict between big business and little business. For those who have no business and no job, it is not something to get exited about. However, where inflation takes place, whatever its ultimate outcome, its first effect amounts to a cut in “real wages,” the spending power of the workers. The cost of living goes up, often without an increase in wages and where increased wages are obtained it usually occurs after and not ahead of an increased cost of living.
Some liberal "money reformers" advocate variants of social credit ideas which aims to remedy all social ills by reforming the monetary system. Other such as Ellen Brown insist upon nationalised state banks and controlled currency is one of the main measures aiming at capitalist recovery. These schemes in themselves are fore-doomed to failure because no mere change in the means of measuring or medium of exchanging values will create new values or cause existing values to circulate more freely.
The banker’s income is in the form of interest. He is a capitalist whose “stock in trade” is money. He “rents” the use of it just as the landlord rents the use of a building, and just as the latter expects back his outlay, plus profit, so does the banker expect the return of his loan, plus profit. But the banker’s profit is no more made off the customer than the landlord’s profit is made off the tenant. The banker collects interest for the money he has “rented” out. If it is an industrial capitalist to whom he has loaned money, the latter has to give up, in the form of interest, part of the surplus-value exploited out of his employees, just as he may also have parted with some of the surplus-value in the form of rent to the landlord. Of course if a capitalist has plenty of his own capital and is able to own his factory buildings and does not have to borrow any of the banker’s capital, he neither has to pay interest nor rent and thus retains a larger share of the surplus-value.
At one time, the taking of interest was condemned by the Church, and the money lender, the forerunner of the modern banker, was a sinner in high disfavour. But now the gentleman who collects income through interest on loans is among the most respectable of citizen’s and usually occupies a prominent place in Church and State. Banking capital of late years has been very powerful. Its leading lights are men of vast wealth. But they produce no merchandise, neither in mill, mine nor factory. They grow no grain or other agricultural produce, but their wealth increases just the same.
This realisation that the banker is not engaged in production has caused many people to conclude that he gets his riches by some evil practice, some sort of financial sleight of and, but on close observation he can be found to be no more dishonest than other businessmen. There are “tricks in all trades” and the bankers have their little tricks, too, but their wealth is gained in the same “legitimate” way as the other capitalists acquire theirs, namely, through the exploitation of wage-labour. If the banker was to pay out as much in wages to his employees and in other expenses as his returns amounted to, he would make no profit. His business, like any other, makes profit or loses according to how much he can retain over and above his necessary outlay. If his employees received high enough wages there would be no profit for him, but he usually can hire all the assistants he needs, pay them on the average the regular wages for such labour, and have a balance left over, a profit.
During the last few years, thousands of banks have required bail-outs to avoid bankruptcy, (did other businesses such as GM Motors), and the general cause was the same. Loss of income in relation to expenditure wiped out so much of their capital that they became insolvent. Reckless speculation, casino capitalism, helped to hasten their downfall, just as in the case of other speculators. But not all banks failed. The large bankers, the real financiers, are still in a very powerful position today. At one time banking capital was simply auxiliary to industrial capital, the bankers played a secondary role. While banking capital is still at the beck and call of solvent industry, it has gained in many cases such a hold that it has practically absorbed the function of the industrial capitalist. This came about through the bankers becoming more than money lenders. They became direct investors in industry, purchasing large blocks of industrial stock, quite often sufficient to control the financial policies of large industrial concerns. Finance capital has taken the leading role in the directing of industry and commerce. When banking capital developed to the stage where it had a surplus over and above its requirements for industrial and commercial loans, the big bankers began to look for a way of using this surplus profitably. Permanent investments, not loans, were the answer to this problem, and the bankers were in a position to know where such investments would be the most secure and likely to yield the most profit. The “money power” has forged ahead and extended its holdings and consolidated its grip upon an ever-increasing share of the national production and foreign investments.
Finance capital is in the saddle and will probably be riding hard when the old horse capitalism runs its last lap.
It is not banks with their mythical creation of money/credit out of thin air that creates actual wealth. All profit is made by exchanging commodities at their value. When business is good, when there is a brisk demand for products, commodities are bought and sold. The capitalist runs his business for profit, but would never make any if the products were simply stored up in warehouses which is no use to anyone, so buyers must be found who have use for the produce. The capitalist sells commodities. How does a commodity get its value in the first place? Only when human labour is applied to nature that its “raw materials” are transformed and begin to take on value which can then be exchanged, in proportion to the amount of necessary labour expended.
Let us follow the production of a wooden table from the forest to the factory, and from the factory to the home.
a) The finest trees in the forest may rot and fall without ever taking on exchange value and likewise growing trees hold only potential value until human labour is applied. The labour of the lumberjack transforms what were trees into logs which are to be sawed into timber. These logs, we will assume, are the property of a lumber company. The company has no use for the logs but it is out to make profits and so it looks for someone who has a use for them. It offers them on the market at their real value. We will say in this case that the average log, when then tree is felled and trimmed and ready for transportation to the sawmill, exchanges for £10. We will further assume that it costs the company, on average, £1 per tree for wear and tear on its equipment and for auxiliary services used in its business. And let us further suppose that it costs, on average, £2 per tree for labour-power (wage paid to the workers). Thus, the cost to the lumber company will be £3 per tree, leaving a surplus of £7 in the hands of the company. But there may be other capitalists standing ready to collect a share in the surplus value.
This outlay of £3 by the company (£2 for wages and £1 for wear and tear on equipment, etc) comes back again when the £10 exchange value of the log is realised. The £1 for wear and tear on equipment, etc., replaces itself, no more and no less. It is what Marx called constant capital, but the £2 for wages, which he calls variable capital, not only reproduces itself but produces, in this case, £7 of additional value which he has named surplus value. This is the secret of capitalist profit. Its discovery was Marx’s greatest contribution to the science of political economy. With this discovery it was shown that profits arise during the production of commodities and not during the time they are being exchanged and, further, that the surplus-value arose out of the variable capital, the outlay for labour-power, and that the worker receives the value of his labour-power in wages but produces during his working day a much greater value. Of this value added by the worker, the capitalist gets back his outlay in variable capital, in this case the £2 for wages, plus the additional £7 of surplus value.
When we understand this we can see how it is possible for the capitalists to sell commodities at their value and still make a big profit. As all commodities sell at their value, on the average, this also holds good for the commodity of the worker, labour-power. Wages are the price paid for labour-power, and although the prices may fluctuate, sometimes above and sometimes below value, in the long run these variations cancel each other and thus, on the average, labour-power sells at its real value. But, of course, labour-power is unlike all other elements that enter into production and which simply replace their own value. During the time it is being used up, labour-power produces a value much greater than its own value, a surplus-value, as we have already pointed out. This surplus-value is appropriated by the owners of the means of production, the capitalists. The process Marx terms “the exploitation of labour.”
Let us return again to the example of the lumber company. We find that out of the £7 surplus-value extracted from the labour of the lumberjacks, the lumber company has to part with £1 to another capitalist, the landlord upon whose land the trees were cut down. The direct exploiter of labour does not always succeed in retaining the full amount of the surplus-value. He has often to share with other capitalists, and that, too, on an average, according to the amount of their capital that he is obliged to use in his business.
The lumber company may also have had to borrow money from another capitalist, a banker, whose commodity is money which he “rents” the use of to other capitalists. They may have to give up a further share of the surplus in payment of interest on this “rented” money. Then they may have to give up another portion in taxes, etc. What is left of the surplus-value (usually plenty) is the lumber company’s profit. Their logs are sold at their real value and their share of the surplus-value, the profit, is realised. It is collected at the point of exchange, where the logs are sold, but it is during the process of transforming the growing trees into logs or timber, during production, that the surplus-value has arisen.
The question may now be asked: “But what about the value of labour-power?” Its value springs from the same source as that of other commodities, namely, the amount of socially necessary labour required to produce or reproduce it. But this socially necessary labour is incorporated in the food, shelter, etc., that the worker must consume, plus that consumed by his family. Adult labour-power must raise a fresh crop of young labour-power for the future market. But this miserable allowance (£2 per tree in the case of the lumberjacks) only represents a fraction of the value that the applied labour-power produced.
And, further, we might point out that what the product sells for is not dependent upon what the worker receives in wages. Neither do his wages depend on the value of the products but basically upon the cost of living, upon what the capitalists must part with in order that labour-power can be reproduced for their service. And this despite the fact that the capitalist is always ready to howl that the product will go up in price if the workers get more wages. The capitalist takes all he can get for the product, whether wages go up or down. Often, when higher wages are paid, the capitalist gets less for the total product and at times he gets more for it when he has paid lower wages. If it was such a simple matter of passing on the increased costs to the consumer he would not resist an increase in wages so vigorously. The reason he fights so hard against wage increases is because its immediate effect is a cut in profits. If the worker gets more in wages, the capitalist gets less in surplus-value. The standard of the working class has not risen with the vast increase in wealth but, in fact, has fallen, taking the class as a whole. For large numbers, the standard of living is at times driven below the subsistence level, through an over-supply of labour and competition for jobs.
But let us see what now becomes of the timber logs. Who buys such logs? We started out to observe the production of furniture. So we will now suppose that the logs were purchased by a sawmill company. When the sawmill capitalists bought the logs they had them transported by railroad to their mill where they are again being transformed. The logs become finished or dressed lumber to be sold at so much per square foot to consumers, such as those who produce furniture, etc.
The first outlay after the sawmill company buys the logs was the cost of transportation, which we will assume brings the value of the logs to £12 each, an increase of £2 in their value, for necessary transportation is part of production and adds value, in this case through the exploitation of railroad workers. If these workers received wages equal to £2 for each log transported, there would be no profit for the railroad capitalists. But they don’t. They are exploited in the same way as other workers, by selling their labour-power at its value and creating much greater values for the railroad company.
At the furniture factory, the finished lumber is passed through the machinery by the furniture workers and it is transformed into useful furniture. It is then packed and shipped to the furniture stores where it is sold to the consumers, the buyers who use it in their homes.
As already happened in the case of the lumberjacks, the railroad workers and the sawmill workers, they (the furniture workers) receive wages and produce values much greater than they receive in wages. The sawmill company sells finished lumber at market price to the furniture producing company, holding on to as much as possible of the surplus-value added by the workers of the sawmill. And the owners of the furniture factory do likewise.
If the capitalists engaged in producing furniture could reach the consumers direct they would be able to retain most of the surplus-value themselves, but unless they have their own stores, they have to sell for less than the exchange value of the furniture. In other words, they have to share surplus-value with the capitalist retailer, the owner of the furniture store. If it also passes through the hands of a wholesale dealer the surplus-value is simply divided up differently.
Let us trace this process. If a table is produced to sell for £10, and it contains £2 in wages and £1 in raw materials, wear and tear on machinery, etc., then there is a surplus value of £7 in the production of the table. The factory capitalist may succeed in retaining only £2 of the surplus and the other £5 goes to the retailer, or may be divided in some proportion between the wholesaler and retailer.
Transportation may play a different part this time. It may be that in the competition between capitalists for markets that furniture makers located elsewhere may ship their goods into the district covered by other producers. Transportation of this kind is socially unnecessary and does not add value. In the case of small articles the costs of transportation may be so small in relation to the value of the commodities that, in practice, they are charged to “overhead” along with heating, window washing, etc., and have no appreciable effect on prices.
To sum up this process of furniture production and exchange, from the forest to the factory and from there through the hands of the dealers to the home, it will be observed that all the value put into the “raw materials” and the finished product has been put there by the workers, by those who did the producing (including transporting), and that the different capitalists have each taken their share of the surplus-value exploited from the employees.
Let us repeat ourselves in another way. Many people think that profits are made by buying cheap and selling dear. They think that by charging more than commodities are worth the merchants make their profits. That is only the appearance of things and appearances are often deceptive.
If we were to follow the circulation of a £5 note we would soon realise that no profits are made, since circulation, or exchange, as it is sometimes classed, adds no value whatever.
We will assume that a dealer, whom we will call number one – a hatter – sells a hat for £5. Now he can not eat this £5 but he can eat what the money will buy. He goes to the grocer, whom we will call number two, and he buys supplies to the extent of the purchasing value of £5. All that has happened, in effect, in these two transactions, is that the hat dealer has exchanged his commodity, hat, for the grocer’s commodities, sugar, bread, coffee, etc. £5 worth for £5 – value for value.
The grocer, no more than the hatter, can eat the £5 note, nor can he wear it. He needs shoes, we will say, so he goes to dealer number three – the shoe-shop – who exchanges a pair of shoes for £5. Now supposing number three needs to have some carpenter work done. He goes to number four, who owns a carpenter shop. Number four supplies him with £5's worth of joinery work.
The owner of the carpenter shop has now exchanged his woodwork commodity for the same £5. But we will assume that he, the owner of the carpenter shop, decides to buy an entirely different commodity; one that is not put up in cans, bottles or paper bags, one that is not weighed on the scales or measured by the yard. He buys a commodity that is wrapped up in human skin and dressed in overalls. One that is measured by the clock or, if it is piecework, by the amount of product – the commodity of the worker – labour-power.
After investing the £5 in the commodity of the working carpenter, at the end of a certain time agreed upon and covered by the £5 wages, let us say a day’s work, the carpenter has added to the raw materials so much more value than the product of the day’s work now brings, say, £30.
We will assume that the lumber and all other necessary expenses total £10. That amount is called constant capital and the £5 invested in wages is variable capital. These two investments bring the outlay of the boss carpenter up to a total of £15. But £30 was received for the carpenter work. Thus £15 dollars is surplus-value.
It is only the labour (variable capital) that adds value. The materials and wear and tear on the means of production (constant capital) only transfer to the finished commodity their own value – in this case £10 worth of materials, etc. It is the £5 spent on wages that produces the other £15 – the surplus value.
We have seen above that the first four commodity sellers exchanged their commodity evenly – value for value. Nothing was made in the way of profit and nothing lost on the exchange. “But,” you will say, “the hatter, the shoe dealer, the grocer and the boss carpenter are not in business for their health.” They certainly make a profit, but not upon each other as buyers. We have shown that they simply exchanged value for value. Now where does the profit come from? How is it made?
In the case of the hatter, his commodity, the hat, contained its full value when it reached the store. (On many commodities, transportation is often necessary and in this case this transportation expense adds value in proportion to the necessary labour contained in it. When we speak of production in a general sense we also add transportation.) It was the producers in the hat factory who gave the hat its value. The dealer could add no value to the already finished commodity. The hat manufacturer does not sell to the consumer direct. It is usually more economical to have the wholesale and retail dealers handle small quantities and single sales. He, therefore, sells to the wholesaler quantities of hats quite a bit below their value and still makes a profit, the surplus value being so large. The wholesale dealer receives a higher price than he paid but still sells it to the retailer – the storekeeper – at less than its value. The latter, under normal circumstances, sells it at its actual value.
We will say, for example, that the material in the hat cost the manufacturer altogether fifty pence, including other costs. The wages of the worker we will say amount to fifty pence or more. That makes a total cost of £1. However, it is a £5 hat – thus the surplus-value is £4. Of this £4 the manufacturer, the wholesaler and the retailer each get a share.
The hat which cost a £1 to produce we will say sells for £3 dollars in quantities to the wholesaler, leaving £2 of the surplus-value in the hands of the manufacturer. In smaller quantities the wholesaler sells to the retailer, say for £3.50 three, retaining fifty pence of the surplus-value, and the storekeeper, finally selling the hat for £5, keeps £1.50 as the surplus.
Let us repeat again, surplus-value is the difference between what it costs to produce a commodity and what it sells for. It is out of the social labours of the workers in industry that all surplus-values are obtained. The worker is not exploited when he buys things, as some people think, but as a producer where he sells something – labour-power. It is the collective labour of the workers that produces the vast volumes of wealth. In modern industry all functions, from the floor sweeper to the manager, are carried on by hired employees. Hired “hands” and hired “heads” are together engaged in carrying on production. The capitalist is no longer necessary. The future of civilisation is in the hands of the proletariat.
A worker that has been robbed is like a cow that has been milked. The poor dumb animal is incapable of worrying about what becomes of the milk, but the so-called “intelligent” worker takes sides in the quarrel which goes on over that which has been taken from him. When sections of the capitalists, industrial or banker, who exploit the working-class milch-cow squabble over their share of the surplus value, workers who line up and take sides in this quarrel are in the same position as the worker who has been robbed by thieves who then later fight over the division of the booty. It would be funny if it were not so sad and tragic to see the workers take sides, as they often do, with one gang of robbers that has plundered him as against the bunch of thieves.
Adapted from John Keracher here and here
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