Sunday, January 06, 2019

Marxian Economic Basics

Workers puzzle over the question:
“When we can produce so much in the shop, how is it that we ourselves get so little? Certainly, we produce hundreds of times more wealth with the factories than our great-grandfathers did without them. But the things we produce do not belong to us. Somehow we can never buy back what we ourselves make. Sometimes we produce things that then rust in warehouses or rot on the ground. Sometimes all we produce goes up in battlesmoke. Sometimes we are idle and the factories remain idle too! Why?”
These questions can be answered in two sentences: The world’s great productive system is owned by a little handful of people who run it for their own profit and not for people’s use. And it can run at full steam and keep running only when society as a whole owns and operates it.
Yes, that is the answer. But how do we know it is the answer? We know the present system is rotten and useless by our own experience with depressions and wars. But we did not arrive at the above socialist answer through hopelessness and despair. The answer is the product of a reasoning process. It is a reasoning that conscious fighters for socialism should follow. It is a rather long chain of reasoning that Marx begins by analyzing the things we make in the factory.
Look around you in the house, and you will see- the products made by us in the factories. Chairs, tables, sewing machine, ice box, oil stove, cook stove, sink, toilet and bathtub – all factory products. Now look out the window. The lamp post, the cars and trucks on the street, the street itself – asphalt, car tracks, concrete or bricks, are factory products too.
Even the food you eat was canned and preserved in the factory. And before that it was planted, cultivated and harvested by factory-made machinery. Workers, just like ourselves, make all these things – food, clothing, shelter and all. They make them in tremendous quantities In great factories.
So if we are to follow Marx’s reasoning let us begin by looking at these factory products. The things we make – and the ways under which we make them – turn us into what we are.
The first thing we learn about these things is that just looking at them does not tell us very much. Many of them look just like they did ages before the factories made them. Factories, as we have seen, are something new under the sun. And the factory worker is too. But many of the things we make in our new way were made by different methods thousands of years ago. Bread, for instance, used to be baked by slaves before the Bible was written or the pyramids were built.
Nevertheless, bread and other things we make today are very different from the same things made before the factory was born. Why? Precisely because we make them so differently. That is where the difference arises. A given thing could have been made by ancient slaves, by a shepherd girl in the medieval hills, by a semi-craftsman in a cotter’s hut, or in a billion dollar factory with a hundred thousand pairs of hands whisking it along to the salesroom or warehouse. This difference in the method of production does actually stamp its difference on the product. But we discover this only if we probe beneath the surface.
Just by looking at it you might not think bread has changed very much in the last ten thousand years. But it has just the same. Capitalist bread contains something that primitive bread was quite innocent of. Capitalist bread has market value. For example, a loaf of bread contains 12 cents “worth” of value.

What the Difference Is

What’s the difference? you might ask. Slaves’ bread filled the slave’s stomach so he could work for his master, capitalists’ bread fills the worker’s stomach so he can work for his boss. Both loaves are things to eat. Why get so technical? The bread must have been worth 12 cents ten thousand years ago – if there had been 12 cents lying around somewhere.
But the 12 cents is something you exchange the bread for. If you could only make one loaf a day, and nobody else could do any better, you’d be a fool to exchange it for 12 cents or even $12 because you wouldn’t have any bread left to eat. You wouldn’t produce it to sell in the first place. The idea of selling it or trading it would never enter your primitive head.
Besides, what would you do with the 12 cents anyway? Suppose you needed a couple of razor blades. Well, if they were made at that time it would have taken longer to make one than to use one up – so who would have one to sell you? Your 12 cents would be no good, even if it were “lying around.”
The bread, too, would be “no good” from the point of view of the 12 cents. Or take it in its wider aspect: exchange could not exist. We thus see value expressed in exchange. And until there are enough goods exchanged – and made to be exchanged – there can’t be any idea of money or exchange value.
Under primitive conditions the loaf of bread is life itself. It’s produced to feed the producer. It’s as much a part of him as his big toe. And he would no more think of selling it.
Under capitalism, the loaf of bread, unlike a big toe, is quite detachable. It can be sold. In fact all the bread is produced for just that purpose: to be sold. Instead of the baker being thought crazy if he sold his bread, he would be thought crazy if he did not. Under capitalism the goods must be sold – or the producers starve.
These goods – all the billions of units of factory products, all produced for a market – are called commodities. Karl Marx begins his famous book on Capital with the analysis of a commodity.

A commodity is something produced to be exchanged. Nearly everything made nowadays comes under that heading. Things are very different today from the pioneer era when people made their own shoes, clothing, and molded the bullets for their long rifles.
There couldn’t be much exchange then, because people had to work from sunrise to sunset just to make the things they needed for themselves. Their log cabin was their factory. But it was the most inefficient factory you can imagine. In spite of Herculean labor, they often couldn’t produce enough goods for one family (that is, for themselves) to exist.
Today great factories employing thousands of people are busy making just one of the items the pioneers made – socks, for instance, or stockings. Hundreds of thousands of pairs of stockings are made – far more than the owners, or even the workers in that particular factory, can use. The stockings have to be exchanged for other things.
The capitalist who owns the factories and employs the workers who produce the socks, is interested in only one thing about socks. How much he can get for them. How useful they are to people is entirely secondary with him. If it so happens that he profits five cents a pair on cotton socks and only four cents a pair on wool, he will turn his whole factory over to the production of cotton socks. Children’s underwear, for several reasons, has yielded a lower profit than coats and dresses in recent years – so children have had to go without underwear. This is because we are living in a commodity system. Goods are produced to be sold – and at a profit. It is the number of purses that counts and not the number of users. If the working people as a whole ran the factories, they would, of course, make underwear for their children and themselves. But then they would no longer be producing commodities, production would then no longer be hamstrung by capitalism.
The capitalist, as we have said, doesn’t care whether the commodity is good or bad, so long as he can sell it. But all the same, the commodity has to be of some use, otherwise the people are not going to buy it. Dishes have to be smooth and cleanable, coal has to be hard and burnable, auto tires have to be soft and rideable, bread has to be fresh and eatable.

Two-fold Nature of Value

A commodity is a useful thing and it is at the same time a saleable thing. It has value in use (use-value) and value in exchange (exchange-value). The loaf of bread we described last week is a commodity precisely for these two reasons. It is useful to man. And it is produced to sell or exchange.
Naturally not every useful thing is necessarily a commodity. The air we breathe is quite useful, we would die without it. But it is not produced or monopolized by man. So it is free. On the other hand, oxygen, the purest air for breathing, is distilled out of the air by the labor of man, and therefore it becomes a commodity. It is sold to hospitals for oxygen tents, etc. It is sold to factories for welding and burning purposes. The acetylene flame breathes the oxygen – but not for free.
If we look up and down the world-wide list of commodities – from toothbrushes to tractors – we find every single thing that is sold on the market (except unimproved land – see Marx’ Capital, Vol. III) is a product of human labor. Now this seems such a commonplace, such a humdrum sort of discovery, you might say “so what?”
You might say everything contains labor and materials – just like a repair job on your car. That’s right. And the “materials” are commodities, too. The wrist pins, the rings, the pistons, etc., are also the product of labor – labor and materials again. But the raw steel they came from originally wasn’t worth a dime a pound. And that steel, too, was the product of the labor of thousands of workers, the sum total of tiny bits of their labor concentrated in that little bit of steel.
If a commodity so far as its exchange value is concerned is nothing but an amount of labor, you might say that the labor that produced it should own it. That would be fair and just. But a commodity is produced to be sold. The capitalist hires you to make caviar or Packards – not so you can use them, but so he can sell them.
We shall see why that alters everything when we continue our analysis of the commodity, and its two fold nature of being of value in usefulness and in exchange.

What does this statement mean: “Use Value Cannot Be Measured?” It means there is no yardstick that can mark off the different degrees of usefulness different things have.

A smart engineer might tell you that usefulness can be measured. He puts steel beams in a certain part of a building he is working on, because they will outlast wooden ones. They will not only outlast wood. They will stand a much greater strain at any given time than wooden beams. Experience and mechanical theory enables him to compute exactly how much longer they will last, and how much more they will stand.

A glass of milk and a cup of coffee have about the same exchange value. But their usefulness to the human body is very different. This difference can be measured pretty closely by a good doctor. He could show you that the number of calories and other health-giving elements in milk are just exactly so many times greater than in coffee.

This can be repeated a thousand times with all kinds of items in all kinds of ways. But if you stop to reflect a moment you can see that it’s only one particular side of usefulness that can be so measured. You can measure calories, pounds, hardness and other qualities. But you cannot measure calories against pounds, color against hardness, or one usefulness against another.

The usefulness of things lies in their filling the needs of mankind, making people happy, contented or comfortable. In that sense they cannot be measured.

Even where certain aspects of usefulness can be measured, as for example, durability, strength, etc., these measurements do not at all enter into the determination of value. Thus tool steel is not merely several times as hard as mild steel. It is infinitely harder in its service to man. If mild steel were used for a cutting tool on a lathe it would just burn up without doing any work at all. But a steel that is just a little harder can cut a turning shaft on a lathe as though it were wood. Without hard steel we couldn’t have lathes or machine shops at all. But tool steel is not infinitely more expensive than mild steel.

If you’ve ever had to change a tire in the middle of nowhere and tried to get the wheel off a car without a lug wrench, you know what a wonderfully useful thing that wrench can be. You know how many hours of fruitless tapping of the lugs with a hammer you save by using a wrench.

Use-Value and Exchange-Value

And yet for all its usefulness the wrench costs very little. It costs perhaps 75 cents or so. It may be a blessing to the user, but it has little actual exchange value.

If you work in a shop you may have had trouble with the old time crescent wrenches, occasionally breaking a handle. But the new crestaloys and other alloy wrenches will stand five to ten times as much pulling. You can put a six-foot pipe over the handle and still they won’t break – yet the crestaloy costs only about a quarter more than an ordinary wrench.

Some people might say the crestaloy was ten times as valuable when they really mean that it is much superior to ordinary metal. Usefulness and value are two entirely different aspects of things (Marx sometimes used the phrase use-value and exchange-value, sometimes use-value and value).

Usefulness – use values – were constantly increased under capitalism. Factory production made things available to everyone that formerly even kings could not get. Automobiles, for example, and electric light bulbs. Since commodities have to be useful, the capitalist was forced to look for more and more useful things to produce – and encourage inventors to invent still more of them.

But that day is past. Now thecapitalist discourages inventions and new use-values and he tries to keep up the exchange value (the price) of the old ones

Exchange value, unlike usefulness, can be measured quite exactly. The fact that things are always exchanged in definite proportions is a proof of this. Prices prove this in a special way. Commodities are exchanged for fifty cents in money – fifty-one cents – fifty-five, etc. If one commodity sells for fifty cents, and another for a dollar, we say that the second is twice the value of the first and will exchange for two of the first.
But some people think that all the grocers and storekeepers get together and cook up their price-lists every so often and foist them on an unwary public. No doubt, the storekeeper tries his best to get a high price out of us. But what is a “high” price? – higher than what? – “Why higher than the real value,” you will say.
There we are again – back to value itself. How can we measure this real value? If we tried to exchange a bicycle across the table for an automobile, we’d find the bicycle not remotely able to balance the automobile in the scales of value. But a little diamond only an ounce or so in weight would exchange very readily for the car.
But what is the measuring meter on this scale of value? It isn’t pounds or ounces. It isn’t yards or inches. Is it dollars and cents? – But a dollar is only a certain amount of gold – today 35 to the ounce. If a diamond and a car are both worth 560 dollars, then they both have the value of a pound of gold.
”Well, gold has value because it is rare,” people will say. “It’s hard to get.” But how rare is it and how hard to get is it? What determines that? Automobiles aren’t so rare. How come they exchange with diamonds, gold, boats, tractors and so on? There must be something in them all that is common to each.

What Gives Commodities Their Value?

Perhaps it would be easier to discover this common thing which determines value if we looked at the simple exchange of commodity for commodity before gold and money were in universal use. Take a couple of farmers of an earlier century who were craftsmen on the side. One made plowshares and the other made axes. When the first one wanted an ax, he would offer the second a plowshare and expect, say, two axes in return. Suppose the second would give him only one ax?
Right then and there number one would balk. And why? Because only a few years before he had been making axes himself, and he knew that two could be made in the same time he made one plowshare. He would go back to making his own axes again. Or if a third farmer made axes he would take his business there.
Even if number one had never made axes before, he could soon find out that it took less labor to make axes than plowshares, and he wouldn’t dream of exchanging the product of two days’ labor for the product of one day’s labor. If he should do this, then the more days he labored and exchanged the poorer he would get.
Without seeing gold, dollars, dimes or cents from one year’s end to the next, he would know quite well when he was getting gypped. He would have an excellent scale on which to weigh the value of the article he traded. He would measure the value by the amount of labor-time took to make it – and the other trader would do the same.
It takes a great deal of labor, on the average throughout the world, to find, mine and refine gold. It takes as much labor for an ounce of gold as for a half ton of cast iron. And whether you call the ounce of gold 20 dollars or 35 dollars, that’s what the half ton of iron will exchange for – one ounce of gold. It’s the amount of labor in a thing that determines its value.
The rarity of a thing is only incidental. Commodities are not rare moths or butterflies that you catch only once in thirty years or so. They are made in mass production. Automobiles are much more plentiful on the streets than rare butterflies. But they are also more expensive. The number of autos could even be doubled under certain conditions, and the value of each car would still be the same.
It isn’t how pretty or ugly, how big or how little, how rare or how plentiful a thing is that determines its value. It’s how much labor under average conditions is necessary to produce it. A commodity, as Marx said, is nothing but crystallised labor so far as its value is concerned.

“The total labor-power of society, which is embodied in the sum total of the values of all commodities produced by that society, counts here as one homogeneous mass of human labor-power, composed though it be of innumerable units.”
Marx’s Capital

* * *

Even though the worker in the shop is far removed from the bowels of the earth where the iron he works upon comes from – the final product that he makes represents nothing but a piece of the earth transformed by the labor of thousands of people.
If we look up and down the whole world-wide list of commodities, we see that every single one of them answers this description. They are all products of labor as far as man is concerned – and nothing but parts of the earth as far as nature is concerned.
Take a piece of metal, shaped into an auto fender, for instance. Trace its history back, and you will see that everything in its making is labor and nothing but labor.
The fenders are stamped out from sheet steel by operators of huge presses. The man and the press made them from the sheet steel. The press itself was made by many machinists, founders, tool-and-die makers, etc. The sheet metal that was stamped out came in turn from the rolling mill or strip mill, where men pressed it out with massive machinery that was also the product of labor – the ingot steel came from the bloomingmill, and the open hearth furnaces – and before that from the cast iron made by the blast furnace workers. (Needless to say, these furnaces are all the products of labor, too). And before the blast furnace, the iron ore, the limestone and the coal that go into it are all dug out of the ground by man. Man – human labor – works upon the earth.
A commodity has a tangible, touchable material – the elements it is made of. And it also has another substance: all the labor that has gone into making it.
The labor that goes into making the commodity has two sides to it, just as the commodity has. There is the particular kind of labor, like shovelling, picking, press-operating. And there is just plain human labor – the energy of human muscles, nerves and mind.
Some kinds of labor may be far more useful than others – just like the products of that labor. One man makes dog biscuits, another makes bread for human beings.
One works at a forge, another extracts iron ore. But two men can’t dig and forge at the same time. Both things have to be done to make a hammer. And although a hammer and iron ore are two very different KINDS of things, they are just two different ways of using human brain and muscle.
When you consider all the thousands of different kinds of useful labor and all the people working together to make the complete product, it’s as though one universal giant with millions of pairs of hands made the hammer and the fender.
It doesn’t make any difference so far as the quantity of labor in a given product in concerned, whether one pair of hands painted, polished or hammered. It makes no difference whether they moved up and down, back and forth, or around in circles. Just so long as the labor was necessary labor. It’s the total AMOUNT of labor – human labor, that creates the product.

The Sum Total

Take the finished auto fender. There it is, gleaming in all its painted glory. The sweat and dirt of the workers has been washed off. The blood from industrial accidents has been mopped from the floor. The umbilical cord is cut between it and the producer. It stands there as though it had dropped from heaven – the sacred property of the capitalist.
But the labor of the workers – the motion, the activity, of which the sweat and dirt are the by-products – has not really disappeared. Just as the mighty motion of Niagara is transformed into charged power lines, so the laboring motion of the working people is transformed into the apparent stillness of their product.
The painter’s activity has been concretized in color, the polisher’s in brightness and smoothness, the steelmaker’s in flexibility and durability, etc. – that is, the useful side of their activity. But they all work in common to produce a single commodity, and the sum total of their different labors equals one massive general labor – value-creating labor.
All the different useful labors flow into the final product just as many rivers flow into the sea. The great Mississippi loses its identity in the ocean just like the little Rappahannock. So the big and little labors lose their individuality in the product. And this product becomes a part of the sum total of generalized human labor; labor-power concealed in material mold.
The capitalists do not grow richer by cheating each other. Nor do they merely gain from the others’ losses. It would be as if there were 10 men in a poker game, each with a million dollar stake. If they played with a one dollar limit, the chances are they would all play for years and still each have their million at the end. Each would gain from the other only to lose to the other.
Yet if each put his money into a business – shares of ownership stock in U.S. Steel, for example, he would have about a million and 50 thousand at the end of one year.
Even suppose the general law of chances didn’t work out in the poker game and one capitalist won millions of small pots constantly, cleaned the others out and made 10 million. The fact remains that there was only 10 million to start with, and there was only 10 million, at the finish – even though differently divided. But if the whole 10 million had been put into U.S. Steel, it would have increased to 10 million, 500 thousand at the end of the year. Even if it were put into savings banks it would have Increased 200 thousand or so.
If you look over the income returns, you will see that the capitalists as a whole get richer and richer every year. Where do all their riches come from? If they don’t cheat other capitalists out of it, maybe they cheat the poor people out of it when they sell to them?
That can’t be true either. Take the steel producer. He sells only to capitalists. He can’t cheat them, as we have proved (yet he makes 5 percent profit). The steel producer would look at the automobile producer who sells directly to the working man. He’d say, “To hell with selling steel to a man I can’t cheat. I’ll get in the auto business, where I can sell to the working man and cheat him to death. Thus I will make more profit.” But he doesn’t do this. For both heavy steel and light cars are sold at their value, and there is a profit in both of them.
Then, too, the rich are 7 billion dollars richer than they were last year. But the poor, though poorer, are not 7 billion dollars poorer. The seven billion didn’t come by the capitalists gypping each other out of it, and it didn’t come by their evercharging the consumers for their products.
The 7 billion is 7 billion dollars worth of new wealth. It is something that did not exist before. It is new factories, new limousines, and warehouses full of products. It is the product of the labor of the working people.
The working people did not give their employers warehouses full of goods and newly built factories by passing them over the counter in a sleepy trade. No. It was not a gesture of trade but a labor – a constant labor of millions and billions of hours on their part, that created this wealth.
The working peoples’ labor made all their own food and prepared it – it built their homes, made their clothes in the factories, and all their other necessaries, as we have seen. In addition it made 7 billion dollars worth of other things they didn’t get.
The capitalists get their wealth directly out of the labor of the people who work for them. When the capitalist owner of the factory takes the products you have made and gives you wages in return, he has already made his profit. The products turn into money as they go out the door of the factory into the trucks of the merchant who pays for them.
Naturally, the capitalists and their stooges do not agree with this. And when you show them that new wealth cannot be created by trading everything back and forth (buying and selling), they pull their ace-in-the-hole. “Why capital makes its own profit! All you do is invest it. Money itself breeds money!”

Suppose I have a million dollars and I want it to “make money” for me, as they say money does. Will it grow bigger if I put it in a hole in the ground and cover it up with dirt? No, I must invest it. If I don’t want the trouble of deciding what to “invest” it in, I can put it in a savings bank – let them invest it tor me, and the law will guarantee me an income on which I can live beautifully without touching the million.
What magic does this million have, to act like that? What does it do to yield up this new fortune every year? It is more than human, apparently. For it creates new life without ever dying itself.
Let us follow this million dollars around in its “investment”: A large building is bought for 50 thousand dollars. Forty machines at an average cost of 15 thousand dollars are bought for 600 thousand – lathes, planers, shapers, boring-mills, etc. Throughout the year 250 thousand dollars’ worth of steel bars, shafts, castings, etc., are bought from other capitalists to serve as the raw material for these machines.
There is 900 thousand of the million accounted for. Will it “make money”? By all the laws of logic, it should make nine-tenths as much as a million. But will it? Suppose I let those things all stand there for a year. At the end of the year how much would I make?
Well, the building would probably still sell for 50 thousand dollars. My 40 machines, if they had been soaked in oil, might still sell for 600 thousand, but most likely I would take a loss on them. The same applies to my 250 thousand worth of raw materials.
So here is 900 thousand of my million that is very stubborn and singularly inept about this business of creating new values out of itself. The machines stand next to the raw materials like so many male and female mules. They have a lot of latent power but they cannot generate anything new. No matter how long these things associate with each other, nothing new is created. And no new value appears.
But if 40 workers are hired to put the raw material in the machines, operate and guide the work, at the end of the year. Instead of rough castings there will be fine machined products, smooth close-tolerance shafts, etc. These will be a new creation. And they will represent a greater value than before. They are new things and new values.

New Value Has Been Added

They have the old value of 250 thousand that was given them by the previous labor worked up in them in the steel plants and foundries. Now they have a new value added to the old – the labor worked up in them by the machinists. Now they are sold for 450 thousand instead of 250 thousand dollars. That is a new value of 200 thousand dollars added by the machinists during the year.
Now if each of these machinists has been paid 50 dollars a week it will cost me just about 100 thousand dollars for the year. This, you will remember, was the tenth part of my million. If there is any magic about my million it is that tenth that is paid for labor. Because the labor added 200 thousand in value to the product, and I only paid the laborers 100 thousand. So my million has at last given birth to a little image of itself. It has apparently presented me with a 100 thousand dollar profit.
Here is the real problem, and also the real clue to the source of profits; the labor of other people that is worked up in the capitalist’s product – and the wages paid for that labor.
Products are bought and sold all the time by the capitalists among themselves. They are sold according to how much labor is incorporated in them. But after a capitalist has bought products that represent a certain amount of labor, he must add some more labor to them in order to sell them for more than he bought them for.
To make a profit he must always be sure to pay the worker less values than the worker produces – or adds to the product. But how does the capitalist get away with this?
“In order to be able to extract value from the consumption of a commodity, our friend Moneybags, must be so lucky as to find in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labor, and consequently a creation of value. The possessor of money does find on the market such a special commodity in ... labor power.”

* * *

As we have shown, commodities exchange in accordance with their value. The capitalist buys and sells everything at its value. How is it then that he pays less for the new values created by the labor he employs?
Just what does the capitalist buy when he pays the worker his wages? He would probably say that he buys “labor.” That he pays the market value for it too, by God! His millions of dollars in profit – that is, his steel products, autos, soap, or frigidaires over and above his investment, he regards not as the product of labor, but as the product of his brain. Or if he hired someone else’s brain, he looks upon the new product as the legitimate offspring of his own capital. At any rate the law says the profit is his, and that is enough for him!
As a matter of fact the capitalist does not buy your labor at all. He buys LABOR POWER. And that is what he pays the market value for. Labor itself has no value at all. It is the measure of all values. But like breathing, it is only an activity of man (rather harder than breathing, to be sure.) Labor doesn’t have value any more than running has size.
Long before exchange or exchange value ever existed there was labor. Labor was “an eternal nature – imposed necessity” on man in order to live. It was his relationship to the earth – a purposeful activity. He couldn’t exchange this activity either then or now. Today he may perform this activity for another. But exchange is the trading of two things both of which are products of this activity, labor.
Walking, for example, is such an activity. Walking itself hasn’t any exchange value. But a number of hours walking behind a plow adds so much value to the potatoes which will be harvested in the fall. Later a faster, riding plow is invented. Walking behind plows becomes less and less socially necessary labor. But both before and after the invention of the riding plow, walking itself has no value.
“But I sell my labor for so much an hour, don’t I? It must be worth something” the worker says. No, you give your labor to the earth, as men have always done. You incorporate your labor in your product. What you sell the capitalist is not walking – but your ability to walk. If he can make you run instead of walk, so much the better for him, and worse for you.

You Sell Yourself

What you sell is your nerves, muscles, flesh, blood, bone and brain for so much an hour. Add up all the hours you sell, it for throughout your life, and you will see that what you sell is yourself. You sell yourself piece-meal to the capitalist, little by little, hour by hour throughout your life. The capitalist does not buy you all at once like a chattel slave. He does not want to feed you and your children during depressions when you don’t work for him.
The self that you sell piece by piece can well be called your labor power. It is this labor power that is bought and sold under capitalism. It is the worker’s strength, his intelligence, the skill of his hand, the sharpness of his eye, that passes under the auction block like tobacco and slaves.
Labor and labor power do not at first sound like such very different things. But you have to remember that “labor power” is the worker himself. Labor is the worker’s action. Or putting it another way: labor power is a commodity whose use is labor.
The capitalist buys so much labor power and pays so many dollars for so many hours of its use. How he uses it is his business. The more usefulness he can extract from it, the richer he gets.
You could buy an apple for a nickle, for instance. The seller would get the exchange value for it. You would get its use value by eating it.
If you are a laborer and sell your apple (your labor power) to the boss, you get your nickel. And the boss eats the apple, which in this case happens to be you – because you and your commodity (labor power) happen to be one and the same. At any rate the method the boss has of realizing your use value is by putting you to work. Your commodity, labor power, has the wonderful aspect for the capitalist, that in using it, he can obtain values beyond what he paid for it. And lo and behold, when the day is finished you are eaten up, the capitalist is fatter, while your wages – the price of your labor power – barely replenishes you and your family.

Labor power is the capacity to work. It is, in the long run, the worker himself. But labor is the living action of the worker. It is value-creating action.
It was the genius of Karl Marx that first discovered and clearly described this difference between labor and labor-power. At first glance, the difference seems slight. It might be some kind of hair-splitting. But the difference is really of great importance. And it is because of this difference that capitalism can exist at all.
It is the second great distinction that the young student of Marxist economics has to master. The first was the distinction between use-value and value. These seemed a little bit alike, but we saw how these two qualities were very different.
It may be difficult to grasp the difference between labor and labor-power at first. But once we do grasp it we can understand what capitalist exploitation is.
It is because the laborer is able to produce more than enough for his own and his family’s upkeep, that profits can exist. If the product of his labor was exactly equal to the products that he and his family consumed in daily life, there would be no capital, and no capitalism.
Labor power can remain almost unchanged from one year to the next. A man’s muscle and brain don’t change much in a year. And his food, clothing and family requirements are about the same. But his labor and what it produces can change drastically in that same year.
In ship building, for example, it used to be a year- round proposition to build an ocean going ship – especially naval craft. But before the war was over, these vessels were turned out in a matter of days. Labor was applied in different ways, under new circumstances – welding huge pre-fabricated sections together with assembly line technique. The labor, however, was still powered with the same spinach and beef as when the iron worker, fitter, burner and welder used to put each ship-plate in place in the ancient days of 1940.

Labor Power Must Be Sustained

A man working piece-work may turn out a thousand articles a day, and a maintenance man may read comic books for hours at a time. The labor they perform is very different. But their labor power is about the same. They eat about the same quantity of groceries – they wear out the same amount of clothing, and they both have a wife and family to provide for.
During the war a man labored six days for the boss to get the money to keep his labor power replenished for seven days. But now he only labors five days. And he still must live for seven. That is why he demanded a higher price for his labor power and struck for the 18½ cent raise.
Finally, a man who is laid off altogether, is doing no labor whatsoever for the boss. But his labor power, like a millstone around his neck, is an unsold commodity that still requires spinach and beef, even in idleness. In an agony of hunger and worry for his family, he is willing to sell it cheaper and cut out the beef. But once having sold it at a cut rate, he is still compelled to produce for his boss at a faster rate of labor than ever.
The capitalists are always trying to push down the price of labor power. They are trying to make the laborer get along on less. They are trying to reduce his standard of living. That is why the working people are organized in unions – in order to resist this pressure – and raise the price of their labor power.
And while the capitalists try to reduce the value of labor power, they move heaven and earth to increase the values that its labor produces – in other words, they whip more labor out of the labor-power they have bought.
Having grasped the difference between labor and labor power, we have accomplished two big things. We have stripped bare the secret of capitalist exploitation. And we have discovered the economic roots of the class struggle.

Your labor power is your SELF. It is your muscle, bone, and mind. Under capitalism it is a commodity. It is the only commodity you own. Your clothing, your car, your groceries, were once some capitalist’s commodities. Now they are your useful possessions. And being second-hand now you could not sell them for very much – even if you wanted to. They are no longer commodities.
Your labor power is the only thing you have to sell. The products of your labor are not your own. They belong to the capitalist who employs you in the factory.
You sell your labor power for so much a week and so much an hour. This selling price is called “wages.” Wages are always paid in money. This helps to conceal the difference between what you produce and what you get. It’s harder to see that you are giving the company so much unpaid labor every day.
How is the selling price of labor power determined? “Why, the union bargains for my wages,” you might say. But in many shops no union exists. Moreover there was a certain wage level before the union was organized. And even today the union’s bargaining centers around a definite amount called a “living wage.”
People’s idea of a good selling price for labor power is their idea of a good “living wage.” That is to say what they can live on. The wages which will buy them and their families enough food, clothing and shelter to get by decently.
And what is this food, clothing and shelter for the laborer? It is the cost of production of his labor power. His labor power cannot be useful and available for work without these necessities of life. And the value of these necessities is the value of his labor power.
How do we determine the value of the food, clothing etc.? By the amount of labor it takes to produce them. And so we find that the VALUE OF LABOR POWER IS DETERMINED BY THE AVERAGE AMOUNT OF LABOR NECESSARY TO PRODUCE THIS LABOR POWER. Like all other commodities, labor power obeys the same law of value.
But the commodity – LABOR POWER (the laborer) – does not drop from heaven with a rivet gun in hand. This commodity must be produced from the cradle to the factory gate as well. So the capitalist pays the laborer enough to bring up a family. Not because the capitalist loves his workers’ children, but because these children must be reasonably strong and healthy when they bring their labor power to market.
As Karl Marx says, “The value of labor-power is determined, as in the case of every other commodity, by the labor time necessary for its production, and consequently also, the reproduction, of this special article.”
If it takes 20 hours labor to produce the food, clothing, shelter, etc., for a working-class family to live then the values that you produce in 20 hours will be the value of your labor power, and approximately the same as your wages.
In other words, if you had the opportunity of exchanging what you produced in the factory with all the other factory workers in the world, you’d find that you’d produced your own wages in 20 hours.
However, you are working for the capitalist and not for yourself. Thanks to the labor of your fathers, he has huge machinery and factories with which he employs you in making values – in 40 hours, or 50 hours, not 20. And he keeps the change.
According to the law of the land you and he are – equals. You sell your labor power. He buys it. You sell it according to how much labor it takes to produce it. You sell it for enough to keep it alive. He buys it, and like all buyers, consumes what he has bought.
“To the purchaser of a commodity belongs its use. From the instant the worker steps into the workshop, the use value of his labor power, and therefore also its use – which is labor – belongs to the capitalists.” – Marx.
Value for value is given in the market. Equals exchange for equals. All is perfectly legal in this exchange. But the market-place is only the most temporary stopover for the laborer and his precious product, which is HIMSELF. His free and equal bargain with the employment manager is quickly sealed, his product sold, and he has to keep delivering for a long time after.
There is a change from equality to inequality. It takes place after the bargain is sealed. Marx describes the change thus:
“He who before was the money owner, now strides in front as capitalist; the possessor of labor power follows as his laborer. The one with an air of importance, smirking – intent on business; the other timid, and holding back, like one who is bringing his own hide to market and has nothing to expect but – a hiding.”
“Well, it’s a dirty deal,” you might say, “and a tough situation when your labor produces so much and your labor power gets paid so little. But after all, why does your labor produce so much? You couldn’t do it without the capitalists’ machinery and factories. You couldn’t do it without the inventions of Edison and other smart men. You’re just a laborer after all – even if a little bit skilled. If you sell your labor power for its full value and get a decent living wage – that’s really all you’re entitled to.”
Without modern factories and techniques we are helpless, all of us. That is true. But who made the factories? Did the capitalist, with his millions? Did even Edison, with his brains?
Ages ago the factories did not exist. And more ages before that there was no difference between labor and labor power that could be separated and exploited like it is today. And strangely enough, there were no millionaires.
At the dawn of humanity, the cave-man, or even eons later, the primitive Indian living in groups or tribes could barely produce enough from the unwilling earth even to keep alive. His labor power could not be bought and sold even if there had been someone around to buy it from him. There would have been no profit in it. For if part of the product of his labor were given to someone else, he would soon die of starvation.
But today human labor can produce thousands of times what the caveman could. For many, many centuries people have been improving their working tools, and thus increasing the productivity of labor.
No one knows who invented the wedge, the lever, the pulley, the wheel or axle. Long before writing existed, these existed. Ages before patent offices were invented, these were invented.
Yet they were tremendous advances for mankind. They made man’s labor more fruitful. Labor could produce more with these elementary tools and mechanical devices. And in the last few hundred years these tools and devices have become transformed into extremely complex machines. Inventors long dead and forgotten made axes, nails and chisels from the wedge, and wagons, waterwheels and mills from the wheel. In the last century they learned to harness steam and electricity to the machines.
The physical and mental labor of our fathers and grandfathers has produced the factories, railroads and other riches that lie around us. But generations upon generations of our remoter ancestors produced the things that made our fathers’ labor more productive too.
The tools and technique we have today, the accumulated capital of the past and the rightful heritage of all humanity, these are the things that make our labor so productive. Our brains, too – finer and more subtle instruments than our ancestors had, enable us to work more efficiently, to produce better things.

Our Heritage Turned Against Us

But still, we as laborers have only ourselves to sell – only our labor power. All that we produce – all that we labor to make – belongs to the buyers of our labor power.
Our ancestors built up such a tremendous storehouse of tools and knowledge, such a magnificent productive system, that it is impossible for each worker to own the tools that make his labor so productive.
We cannot work alone. We must work in common with hundreds of others, in order to make the kind of things and amount of things that are made today. We must work in huge factories.
Our heritage is turned against us. The capitalist, who owns the means of production – the instruments of our labor, finds us disinherited in the market place, with nothing to sell but our labor power. While our labor creates our work places and his pleasure palaces – our labor-power is rewarded with slave’s bread, masquerading under the name of a “Living Wage.”