Individualism, libertarianism, mutiualism
Capitalism’s problems are often isolated as single issues to obscure the flaws of the entire system. Capitalism is identified with private control of markets organized on profit and loss economics.
Right Libertarians, or more accurately, Propertarians, espouse not liberty but wage slavery. Capitalism is capital accumulation. Capitalism breeds inequality
“From what source did profit originate?" Knowing this would certainly give us a better understanding of how our existing capital economy works and maybe how the economy might work under conditions of greater freedom.
Profit at its most basic is the difference between the money a business obtains from the sale of its products and the money it has to spend on producing them. Profit arises from capitalist firms employing wage labour selling goods but only having to pay their employees the value of their labour-power, which is less. The need to accumulate capital out of surplus value is the driving force of capitalism. It stems from the economic competition between enterprises which compels each enterprise to increase their market competitiveness or succumb to superior competition and go bankrupt. So, increasing the amount of capital at their disposal to invest in more productive technologies means increasing the amount of surplus value extracted from their workforce which in turn means, among other things, holding down their costs, including their labour costs i.e. our wages!
One of Marx’s crucial discoveries in the field of political economy was that the working class of wage and salary earners gets paid less than the value of the goods it creates, the difference being a surplus value which accrues to the owning class in the form of ground rent, interest and profit. Capitalism turned human labour power into a commodity – something bought and sold. When capitalists buy a worker’s labour they buy the worker’s capacity to work for a full day. Wages are set, however, like every other commodity, by the value of labour-power needed to reproduce them, which in the case of labour is the value of food, clothing, etc. needed to keep the worker in a fit condition to work. But the value of ‘labour power’ is different from the value created by the worker’s labour and this difference, called surplus value, belongs to the capitalist. The working day under capitalism therefore divides into two parts; ‘necessary labour’ when the workers actually earns what they are paid in wages, and ‘surplus labour’ which is the time spent producing ‘surplus value’ for the capitalist employer. The aim of capitalist production is the production of surplus value. The new value added by labour in the process of production to the previously existing value of the raw and other materials is divided into wages and surplus value, which goes to the capitalist employer and is the source of profit. Profits are made in the sphere of production but only “realised” in the market. What is so vital about profit that makes this necessary? It is the source of the capitalist’s capital. The more capital they can accumulate out of the profits accruing to them the more effectively can they compete–by investing in more productive technologies to undercut their competitors–and thus claim a larger share of the market for themselves. If they did not do this then their competitors would, and could knock them out of business. Economic competition between enterprises fuels the drive towards capital accumulation. This in turn necessitates profit maximisation which expresses itself as a continuous downward pressure on wages (reinforced by competition between workers on the labour market)
We’re the ones who build things, make things, provide services, make things work, provide the ideas. But though we build the world around us, it does not belong to us. Everything that has been built around us is the result of our work and yet we don’t work for ourselves. We produce not for ourselves, but at the behest’s and whims of others. The worker is compelled to labour for the purpose of producing something to satisfy the wants of others who, holding the things necessary for his life, thereby control him. He is, therefore, still a slave.We are the ones who are told what to produce, how to produce it, how much, and how fast.We are the ones who receive a paycheque, be it high or low, not for selling what we produce but for selling our power to work. With that paycheque we try to buy back what we make. The source of someone else’s profits comes from our work. Capitalism is based on wage-labour and if a theoretical non-capitalist market economy was a reality it would have to be based on self-employed farmers and artisans. It would also have to be an economy based on handicraft rather than industrial production.(The reason for this is that where there is industrial production the work involved in turning the raw materials into a finished product is no longer individual, but collective.)
This would bring some inevitable consequences.
Industrial production can produce goods at a lower cost per unit than handicraft production, with complete laissez-faire, competition would eliminate most of the independent, self-employed artisans. In other words, industry would begin to be concentrated into the hands of the firms employing industrial methods of production. With complete laissez-faire, competition would result in those firms which employed the most productive machinery winning out against those employing out of date and so less productive machinery. So, there would be a tendency towards a yet greater concentration of industry into the hands of the big firms. What about the displaced independent artisans and the members of bankrupt workers’ co-operatives, some may ask? How would they get a living? Would they not in fact be obliged to sell their skills to the firms that had won out in the battle of competition? But if wage labour appeared then so would profits and exploitation. If these profits were to be shared but the continuing competitive pressures would oblige them to give priority to investing them in new, more productive machinery so as to be able to stay in business and not go bankrupt themselves. So even if it were possible to go back to the sort of multi “free” market economy, the tendency would be for capitalism to develop again. Examples being the kibbutzim and the Mennonites communities which have begun to employ wage labour and orient their production towards making profits and accumulating these as new capital.
Private ownership originally meant the ownership of industry by private individuals. But, while this may have been the case in the days of Adam Smith, this hasn’t been the predominant form of ownership since the introduction and rapid spread in the second half of the 19th century of what in England was called a “limited company” and in America a “corporation”. A limited company is a separate legal entity in its own right. It is the company, the corporation, that owns the assets, the shareholders owning as a collective group not as individuals. This means that they are only personally liable, if the company goes bankrupt, for the amount of their shareholding, not their total wealth. Hence the name “limited liability company”. In the late 1860s, the 14th Amendment to the US Constitution recognised the slave as having human rights, the nascent corporate elite of the time had their lawyers stake a claim to the same rights with the Supreme Court. They fought and won, and the state henceforth recognised the corporation as a human being, a person in law, with the same right to life, liberty and property.
So, as well as private ownership it would be more accurate to speak of capitalism as nowadays involving company or corporate ownership. And, indeed, some in the anti-capitalist movement take this into account by talking of “corporate capitalism”. Which is OK as far as it goes. Only it doesn’t go far enough. The key features of capitalism is production for profit. The motive for producing things under capitalism is to make a profit. The “Profit System” is another very good name for capitalism But from another angle, capitalism could also be called the “Wages System”. The key market in capitalism is the labour market, where workers are forced to earn their living by selling their labour power to an employer.
Capitalism is an economic system where, under pressure from the market, profits are accumulated as further capital, i.e. as money invested in production with a view to making further profits. This is not a matter of the individual choice of those in control of capitalist production – it’s not due to their personal greed or inhumanity – it’s something forced on them by the operation of the system. And which operates irrespective of whether a particular economic unit is the property of an individual, a limited company, the state or even of a workers’ cooperative. The capitalist system is left unscathed. Nowhere is the market-driven profit system as such challenged. Nowhere is the “can’t pay, can’t have” society we have that consigns the greater portion of the population of the planet to lives of abject misery condemned. Capitalism is taken for granted and all that is being asked in the end is the end of corporations. It is just the demand for wider democracy and fairer trading conditions while allowing capitalism to carry on perpetrating every social ill that plagues us.
Let’s clarify what is meant by markets.
It was with the emergence of the capitalist system that society lost its direct control of its productive resources. In previous societies, it was often the case that production was at near maximum capacity given the technology and resources available and this determined what could be distributed. In times of good harvests the whole community could benefit in some shape or form. But with the development of the capitalist system this was eroded as what is produced depends crucially on what can be sold. This means that distribution through sale in the markets determines production and this is always less than what could be produced.
Capitalism is a market economy, but not a simple market economy. A key difference of course is that under capitalism production is not carried out by self-employed producers but wage and salary workers employed by business enterprises. In other words, by profits we mean income that flows to the owner of a workplace or land who hires others to do the work. In other words, under capitalism, the producers have become separated from the means of production. This makes all the difference.
Marx explained the difference when he said that what happens in a simple market economy is that the producers brought to market a product of a certain value which they sell for money in order to buy another product or products of equal value. The economic circuit is commodity-money-commodity (C-M-C), the aim being to end up with a basket of useful things. Under capitalism the economic circuit is different. A capitalist sets out with a sum of money which they use to buy commodities (factory buildings, raw materials, working skills) that can be used to produce other commodities with the aim of ending up, after these other commodities have been sold, with more money than they started off with. So the circuit is now money-commodities-more money (M-C-M+).
Capitalist exploitation occurs as a result of the normal operation of market forces. Capitalism is an economic system of capital accumulation out of profits. This is its dynamic. Profits are made by competing firms which, in order to remain competitive, have to re-invest most of them in new, more productive machinery and equipment. The result is the accumulation of a greater and greater stock of productive equipment used to make profits, or capital. Capitalism is the system of capital accumulation and is derived from the surplus value produced by the class of wage workers. It is the workers who produce the wealth, and the capitalists who make their profits from our unpaid labour.
Market capacity is inherently unpredictable. If too many goods are produced for a market and they remain unsold, a crisis and recession may occur with reduced production, increased unemployment, bankruptcies, and large scale writing-off of capital values. Despite the many attempts that have been made, no theory of economic management has ever been able to predict or control the anarchic conditions of the market system. This is rule by market forces which serve minority interests and which generate the insecurities, crises and conflicts that shape the way we live. The fact that we have great powers of production that cannot be organised and fully used for the benefit of all people has devastating consequences and is at the root of most social problems. In this way, the capitalist system places the production of goods and services, on which the quality of all our lives depends, outside the direct control of society. Capitalism cannot produce primarily to satisfy human needs as production is always geared to meeting market demand at a profit. This means that production is restricted to what people can pay for. But what people can pay for and what they want are two different things, so the profit system acts as a fetter on production and a barrier to a society of abundance. Wherever wealth is produced for sale on a market—wherever, that is, there is commodity-production—economic forces are unleashed which come to dominate production and orient it away from satisfying people’s needs. The operation of these laws means that production is not subject to human control, with the result that it is not human values that are paramount in society, but market values, commercial values, the cash nexus.
But the picture of capitalism is still not complete.
Capitalist investors want to end up with more money than they started out with, but why? Is it just to live in luxury and consume? It is possible to envisage such an economy on paper. Marx did, and called it “simple reproduction”, but only as a stage in the development of his argument. By “simple reproduction” he meant that the stock of means of production was simply reproduced from year to year at its previously existing level; all of the profits (all of M+ less M) would be used to maintain a privileged, exploiting class in luxury . As a result the M in M-C-M+ would always remain the same and the circuit keep on repeating itself unchanged. This of course is not how capitalism operates. Profits are capitalised, i.e. reinvested in production, so that production, the stock of means of production, and the amount of capital, all tend to increase over time . The economic circuit is thus money-commodities-more money-more commodities, even more money (M-C-M+-C+-M++). In order to make more money, money must be transformed into capital.
This is not the conscious choice of the capitalists. It is something that is imposed on them as a condition for not losing their original investment. Competition with other capitalists forces them to reinvest as much of their profits as they can afford to in keeping their means and methods of production up to date. They cannot act contrary to the inner nature of capitalism which requires the constant accumulation of capital and the opening of new markets throughout the world. And it cannot avoid that increasing productivity of labor which means more production for less expenditure of labour.
Libertarians claim we as workers enter a fee contract and “no one is forced to do anything.” – But what planet are they on. The working class is forced each and every day into wage slavery or does money in capitalism grow on trees and all people need to do it pluck it from the branches to pay for food clothing and shelter. No, we are, collectively, compelled under the threat of poverty to sell our capacity to work – our labour power – in order to get access to those things
In 1855, Frederick Douglas, a former slave, wrote:- “The difference between the white slave, and the black slave, is this: the latter belongs to ONE slave-holder, and the former belongs to ALL the slave-holders, collectively. The white slave has taken from his, by indirection, what the black slave had taken from him, directly, and without ceremony. Both are plundered, and by the same plunderers”.
He understood , why can’t others?
The modern slave-owner has no such interest in his slaves. He neither purchases nor owns them. He merely buys so much labor-power – physical energy – just as he buys electric power for his plant. The worker represents to him merely a machine capable of developing a given quantity of labor-power. When he does not need labor-power he simply refrains from buying any. Wage slavery is the most satisfactory form of slavery that has ever come into existence, from the point of view of the masters. It gives them all the slaves they require, and relieves them of all responsibility in the matter of their housing, feeding and clothing.
Instead of the pressures that force people to sell their working skills to an employer, people in socialism will work as a voluntary expression of their relationship with others. Needs will replace the drive for profits and the dictates of the market in deciding what must be done. Instead of the authoritarian control imposed by boards of directors and their corporate managers, production units will be run democratically by the people working in them. Instead of the state and its government of people, in socialism, people will contribute to the decisions made democratically by the community. Wage slavery will be overthrown and labour power cease to be a commodity. The workers, being the owners of the means of production, will also be the owners of the wealth produced, each individually enjoying what they have collectively produced.
Wage slavery has become the only option for the majority to sustain itself. The capitalist system was created through acts of theft and murder. This reality is continually defended by theories of the ideal capitalist model claiming as you do to be a return to “economic justice”, which actually only seeks to legitimise the capitalist’s source of wealth and power – the exploitation of labour for the extraction of profit. It is hypocrisy.
Many libertarians and mutualists argue that ” wage isn’t slavery when free and just conditions exist.” Ah, if only that were the case. Workers sell their labour power to capitalist enterprises for a wage as stated above in earlier post . As a commodity, labour power has an exchange value and a use value, like all other commodities. Its exchange value is equal to the sum total of the exchange values of all those commodities necessary to produce and reproduce the labour power of the worker and his or her family. The use value of labour power is its value creating capacity which capitalist enterprises buy and put to work as labour. However, labour power is unlike other commodities in that it creates value. During a given period it can produce more than is needed to maintain the worker during the same period. The surplus value produced is the difference between the exchange value of labour power and the use value of the labour extracted by the capitalists. In capitalism, however,the wage-worker is a “free” agent. No master holds him as a chattel, nor feudal lord as serf. This modern worker is free and independent: he has choices. He can dispose of his services to this or that capitalist owner, or he can withhold them. But this freedom is ephemeral. He must sell his working ability to some one or other employer or face starvation. In a capitalist society workers have the option of finding a job or facing abject poverty and/or starvation. Little wonder, then, that people “voluntarily” sell their labour and “consent” to authoritarian structures! They have little option to do otherwise. So, within the labour market workers can and do seek out the best working conditions possible, but that does not mean that the final contract agreed is “freely” accepted and not due to the force of circumstances, that both parties have equal bargaining power when drawing up the contract or that the freedom of both parties is ensured. His slavery is cloaked under the guise of wage-labour.
When the worker has found an employer he receives in return for his labour a price known as wages which represents on the average what is necessary for his sustenance so that he can reproduce the energy to go on working, and also produce progeny to replace him when his working days are over. During the working-day the worker produces wealth equivalent to that for which he is paid wages, but this does not require all the time of the working day. In providing for his own keep he has also produced a surplus and this surplus belongs to the employer. This may eventually be split into profit to the manufacturer, rent to the landlord, and interest on capital invested by a financier. As capitalism develops the time in which the worker produces his own keep decreases while the surplus accruing to the capitalist increases. During this development the productivity of labor increases at an accelerating tempo: The worker continually produces more with less.
So when a man sells his labour power a number of hours for a certain wage, the amount of necessaries to produce his wages is always smaller than the amount of labour which the employer receives from him, the difference between what the worker receives as wages and what his labour power produces during his working time, constitutes the sole source of unearned income, i.e., capitalist profits. So profits exist because the worker sells themselves to the capitalist, who then owns their activity and, therefore, tries to control them like a machine.
Wage levels will vary with “the respective power of the combatants” as Marx puts it and in the long run this will determine the value of labour-power and the necessaries of life. From the point of view of wage-labour , wage levels and the value of labour-power depends on the balance of class forces, on what workers can actually get from their employers. As wages are also regulated by the relation of supply and demand, a surplus of labour power (the unemployed) is necessary to prevent wages swallowing up all profit. Therefore the unemployed army is a vital necessity to capitalist production, and there can be no solution under capitalism.
It would be wrong to confuse exploitation with low wages. It does not matter if real wages do go up or not. The absolute level of those wages is irrelevant to the creation and appropriation of value and surplus-value. Labour is exploited because labour produces the whole of the value created in any process of production but gets only part of it back. On average workers sell their labour-power at a “fair” market price and still exploitation occurs. As sellers of a commodity (labour-power) they do not receive its full worth i.e. what they actually produce. Nor do they have a say in how the surplus value produced by their labour gets used.
The worker goes into the labour market as an article of merchandise, and his wages, that is, his price, is determined like that of any other article of merchandise, by the cost of production (i.e. the social labour necessary), and this in the case of the worker is represented by the cost of subsistence. The price of labour power fluctuates by the operation of supply and demand. There are generally more workers in the market than are actually required by the employers, and this fact serves to keep wages from rising for any length of time above the cost of subsistence. Moreover, machinery and scientific applications are ever tending to render labourers superfluous, with a consequent overstocking of the labour market, decrease of wages, and an increase in the number of the unemployed. Under these conditions reelative poverty is necessarily the lot of the working-class.
We have the worker entirely dispossessed of the means of getting a living except by selling himself as an article of merchandise to the owners of the means of living. This is wage-slavery. While capitalists are as a class against the workers as regards the ownership of the wealth produced by the working-class, they, the capitalists, are also antagonistic to one another in the endeavour to get the larger share of the markets. It wasn’t just Marx but also Fourier who pointed long ago that this competition could only end in monopoly, and we do see concentration an going on in every branch of industry.
Many seek a capitalism with the rough corners smoothed out, the utopian aspiration of a tamed capitalism. What is really required is a fundamental change of the economic basis of society. Many seek an idealised world and call for governments not to interfere in the operation of the market, to let market forces operate unhindered – laissez faire – and that the detrimental effects of the capitalist system can be eliminated by taming global corporations. For as long as capitalism has existed state “interference” or state “intervention”, in the economy has always existed. A corporation-dominated government is really the logical outcome of a class-divided society where the state must serve the owning minority. Individualists attack socialism because they fear the whole of the wealth of society shall be owned by a number of persons incorporated into a State or a bureaucracy, instead of being, as at present, owned by private individuals. They maintain that the right of the individual is supreme, and condemn any action on the part of a State or collection of individuals, that interferes with their desires. But socialists are not statists, that if the working class was compelled to work for a State instead of for individual employers then wage-slavery is not abolished, but is intensified.The worker to-day, while compelled to work for an employer, still has some sort of a choice among those masters, but with the State as the only employer he is compelled to work for that employer and under all of that employer’s conditions, or take the only other alternative – starvation. State-capitalism or as some like to call it State Socialism) would intensify slavery, but state-capitalism is not socialism.
People completely misunderstand Marx if you believe that his solution was to have GOVERNMENT-OWNERSHIP of the means of production and his object was to simply just to REDUCE the power of the capitalist because he wished a mere re-distribution of wealth between capitalists and the working class. He stood for the the ABOLITION OF THE STATE and he stood for the ABOLITION OF CAPITALISM [not its replacement by capitalism in another form]. Critics of Marx should go to the source and forget what the state-capitalist Leninists or Trotskyists say and understand that Marx was in favour of the abolition of the state and its replacement by an “association of associations”, i.e. by a co-ordinated network of neighbourhood councils and producer-controlled production units. Marx made quite clear when he says “The existence of the state is inseparable from the existence of slavery…”
What is called for is a community where each contributes to the whole to the best of his or her ability and takes from the common fund of produce what he or she needs. The Earth can no longer be owned; it must be shared. Its fruits can no longer be expropriated by the few, they must be rendered available to all on the basis of need. Power must be freed from the control of the elites and be redistributed in a form that renders its use participatory. That is “free economics”, that is “economic justice”. Production will be to meet human need, each person or group determining their own reasonable needs in a social context. There will be no buying or selling, but instead, plenty of giving and taking. Capitalism operates irrespective of whether a particular economic unit is the property of an individual, a limited company, the state or even of a workers’ cooperative”
Many have consistently failed to acknowledge or have dismissed as irrelevant the fact that the right of private property leads to control by property owners over those who use, but do not own, property (such as workers ). Free-market capitalist system leads to a very selective and class-based protection of “rights” and “freedoms.” For example, under capitalism, the “freedom” of employers inevitably conflicts with the “freedom” of employees. When stockholders or their managers exercise their “freedom of enterprise” to decide how their company will operate, they violate their employee’s right to decide how their labouring capacities will be utilised and so under capitalism the “property rights” of employers will conflict with and restrict the “human right” of employees to manage themselves. Capitalism allows the right of self-management only to the few, not to all. Bosses have the power, workers are paid to obey. Workers are subject to control from above which restricts the activities they are allowed to do and so they are not free to act, make decisions, participate in the plans of the organisation, to create the future and so forth. Thus we have “free” workers within a relationship lacking freedom. Representing employment relations as voluntary agreement simply mystifies the existence and exercise of power within the organisation so created. Libertarians are ignoring the vast number of authoritarian and co-ercive social relationships that exist in capitalist society.In the labour market it is clear that the “buyers” and “sellers” of labour power are not on an equal footing . Under capitalism competition in labour markets is skewed in favour of employers. Thus the ability to refuse an exchange weighs most heavily on one class than another and so ensures that “free exchange” works to ensure the domination and so exploitation of one by the other. Inequality in the market ensures that the decisions of the majority of people within it are shaped in accordance with that needs of the powerful, not the needs of all.
Kropotkin argued that “The modern Individualism initiated by Herbert Spencer is, like the critical theory of Proudhon, a powerful indictment against the dangers and wrongs of government, but its practical solution of the social problem is miserable — so miserable as to lead us to inquire if the talk of ‘No force’ be merely an excuse for supporting landlord and capitalist domination.”
To defend the “freedom” of property owners is to defend authority and privilege. Free exchange is NOT a revolutionary concept. Free access is revolutionary.
But just to make sure it is clearly understood that for socialists, the means and ends cannot be separated. The establishment of socialism can only be established by the working class when the immense majority have come to want and understand it. The machinery of coercion which is the State has to be taken out of the hands of the capitalist class by political action. Industrial democracy is a possibility only when the capitalist class have ceased to rule the State. The struggle for democracy is the struggle for socialism. It is not a struggle for reforms, for this or that political system, for this or that leader, for some rule change or other—it is the struggle for an idea, for a belief, a belief that we can run our own lives, that we have a right to a say in how society is run, for a belief that the responsibility for democracy lies not upon the politicians or their bureaucrats, but upon ourselves. At the moment a small group of people control all the wealth and property, and it is upon their interests that everything hinges. It is only by removing such people, and not by tinkering with the form that true democracy can be reached .
Until you support and work towards the society that is based upon the principle ”from each according to their ability, to each according to their needs”, then you remain fixated upon the status quo of a society constrained by artificial rationing through the market and money system, a “can’t pay - can’t have” society that is inherently co-ercive, that has police and courts and jails to ensure its continued existence. As oft quoted "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread. ”
If libertarians seek real liberty then it is free access to goods and services which will deny to any group or individuals the political leverage with which to dominate others which has been a feature intrinsic to all private-property or class based systems through control and rationing of the means of life . This will work to ensure that a socialist society is run on the basis of democratic consensus. Free access to the common treasury and no monopoly of ownership , not even by the producers who call for ownership of their own product, (such as promoted by mutualists and syndicalists) can deprive individuals in society of common ownership of the means of production and distribution .
Goods and services would be provided directly for self determined needs and not for sale on a market; they would be made freely available for individuals to take without requiring these individuals to offer something in direct exchange. The sense of obligations and the realisation of universal interdependency arising from this would profoundly colour people’s perceptions and influence their behaviour in such a society.
Building a society that is based upon such a system of generalised reciprocity, that is truly a revolutionary concept .
According to von Mises, rational economic calculation is only possible on the basis of prices fixed by the free play of market forces. In other words, the only form of rational calculation that can be applied to the production of wealth is monetary calculation. Von Mises claimed that a socialist society was impossible because it would be unable to calculate rationally which productive methods to adopt. This argument merely amounts to the tautology that only a market economy is able to perform economic calculations couched in market prices’and that it is‘reading into socialism the functional requirements of capitalism.
In reality it is the wasteful, destructive and exploitative capitalist system that is incapable of rationally allocating resources.
Although, monetary calculation, will disappear in socialism this does not mean that there will no longer be any need to make choices, evaluations and calculations. In socialism it will be the use value of goods not be their selling price (nor even the time needed to produce them) but their usefulness. It is for this that they will be appreciated, evaluated, wanted and produced. So estimates of what is likely to be needed over a given period will be expressed as physical quantities of definite types and sorts of objects. The operational basis for this system would be calculation in kind (e.g. tonnes, kilos, litres) instead of monetary calculation.
Goods will be voluntarily produced, and services voluntarily supplied to meet people’s needs. People will freely take the things they need. Socialism will be concerned solely with the production , distribution and consumption of useful goods and services in response to definite needs . It will integrate social needs with the material means of meeting those needs .
Common ownership means that society as a whole owns the means and instruments for distributing wealth. It also implies the democratic control of the means and instruments for producing and distributing wealth, for if everyone owns, then everyone must have equal right to control the means and instruments for producing and distributing wealth.
Socialism will be a self-adjusting decentralised inter-linked system. A socialist economy would be polycentric , not centrally planned. It is not a command economy but a responsive one to provide for a self -sustaining steady- state society.
Capitalism differs from previous class societies in that under it production is not for direct use, not even of the ruling class, but for sale on a market. Competitive pressures to minimise costs and maximise sales, profit-seeking and blind economic growth, with all the destructive effects on the rest of nature, are built-in to capitalism. These make capitalism inherently environmentally unfriendly. The framework within which humans can regulate their relationship with the rest of nature in an ecologically acceptable way has to be a society based on the common ownership and democratic control of productive resources, freed from the tyranny of the economic laws that operate wherever there is production for sale on a market
We know that humans are capable of integrating themselves into a stable ecosystem. and there is nothing whatsoever that prevents this being possible today on the basis of industrial technology and methods of production, the renewable energies exist (wind, solar, tidal, geothermal and whatever ) but, for the capitalists, these are a “cost” which penalises them in face of international competition. No agreement to limit the activities of the multinationals in their relentless quest for profits is possible. Measures in favour of the environment come up against the interests of enterprises and their shareholders because by increasing costs they decrease profits. No State is going to implement legislation which would penalise the competitiveness of its national enterprises in the face of foreign competition. States only take into account environmental questions if they can find an agreement at international level which will disadvantage none of them. But that’s the problem, isn’t it? Competition for the appropriation of world profits is one of the bases of the present system. So it is the capitalist economic system itself which is responsible for ecological problems and the capitalist class and their representatives, they themselves are subject to the laws of profit and competition. Some future apologists of capitalism are promising us !
In a stable society such as socialism, needs would most likely change relatively slowly. Hence it is reasonable to assume that an efficient system of stock control, registering what individuals actually chose to take under conditions of free access from local distribution centres over a given period, would enable the local distribution committee to estimate what the need for food, drink, clothes and household goods that would be required over a similar future period.
If people want too much? In a socialist society “too much” can only mean “more than is sustainably produced” . If people decide that they (individually and as a society) need to over-consume then i concede socialism cannot possibly work. But, as you say Max , under capitalism, there is a very large industry devoted to creating needs. Capitalism requires consumption, whether it improves our lives or not, and drives us to consume up to, and past, our ability to pay for that consumption. In a system of capitalist competition, there is a built-in tendency to stimulate demand to a maximum extent. Firms, for example, need to persuade customers to buy their products or they go out of business. They would not otherwise spend the vast amounts they do spend on advertising.
Another side of the consumerist argument is that in capitalist society a tendency for individuals to seek to validate their sense of worth through the accumulation of possessions. The prevailing ideas of society are those of its ruling class so we can understand why, when the wealth of that class so preoccupies the minds of its members, such a notion of status should be so deep-rooted within workers . It is this which helps to underpin the myth of infinite demand.
It does not matter how modest one’s real needs may be or how easily they may be met; capitalism’s “consumer culture” leads one to want more than one may materially need since what the individual desires is to enhance his or her status within this hierarchal culture of consumerism and this is dependent upon acquiring more than others have got. But since others desire the same thing, the economic inequality inherent in a system of competitive capitalism must inevitably generate a pervasive sense of relative deprivation. What this amounts to is a kind of institutionalised envy and an alienated capitalism.
Human behaviour reflects society. In a society such as capitalism, people’s needs are not met and people feel insecure. People tend to acquire and hoard goods because possession provides some security. People have a tendency to distrust others because the world is organized in such a dog-eat-dog manner.
In socialism, the notion of status based upon the conspicuous consumption of wealth would be devoid of meaning because individuals would stand in equal relation to the means of production and have free access to the resultant goods and services . Why take more than you need when you can freely take what you need? In socialism the only way in which individuals can command the esteem of others is through their contribution to society.
By the replacement of exchange economy (the market economy) by common ownership basically what would happen is that wealth would cease to take the form of exchange value, so that all the expressions of this social relationship peculiar to an exchange economy, such as money and prices, would automatically disappear. Goods would cease to have an economic value and would become simply physical objects which human beings could use to satisfy some want or other. What is meant by needs should not be understood as mere personal consumption. It should not suggest a rampant consumerist culture. Production for needs would include a wide range of considerations such as the need to protect and conserve the environment. In defining socialism we should emphasise that it will provide for one vital need in a way that is impossible under the capitalist system. This is the need of peoples throughout the world to bring the organisation of their community affairs under their own democratic control and to develop them in the interests of the whole community.
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Money
The case that money IS essential if you value individual freedom couldn’t be further from the truth. It is only in a society where all people enjoy FREE ACCESS to goods and services which denies to any group or individuals the political leverage by which to dominate others. It has been a feature of all private-property or class based systems that through the control of and restrictions to the means of life, that people are controlled.
Böhm-Bawerk in “Marx and the Close of his System”, that the labour theory of value is wrong because Marx failed to take into account scarcity as a factor in fixing value which simply exposes his poor knowledge of what Marx has writtern. What he and Hayek want most to instil into the minds of the working class is that capitalist production and distribution of life’s necessities and wants is a natural and, above all, moral system. It is their “wet dream”.
Hayek may well criticise central planning basing his argument upon the Soviet Union but socialism ( real socialism and not state capitalism) is a decentralised society that is self correcting , from below and not from the top . Socialist determination of needs begins with consumer needs and then flows throughout distribution and on to each required part of the structure of production. Planning in socialism is essentially a question of industrial organisation, of organising productive units into a productive system functioning smoothly to supply the useful things which people had indicated they needed, both for their individual and for their collective consumption. What socialism would establish would be a rationalised network of planned links between users and suppliers; between final users and their immediate suppliers, between these latter and their suppliers, and so on down the line to those who extract the raw materials from nature. The responsibility of these industries would be to ensure the supply of a particular kind of product either, in the case of consumer goods, to distribution centres or, in the case of goods used to produce other goods, to productive units or other industries. Planning is indeed central to the idea of socialism, but socialism is the planned, but not Central Planning. The problem with a centrally-planned model of socialism was its inability to cope with change. It lacks any kind of feedback mechanism which allows for mutual adjustments between the different actors in such an economy. It is completely inflexible. We witnessed in Russia how it was unable to determine prices by central planning. Prices were set , re-set , fixed then re-fixed , plans were made then re-appraised , re-defined , changed and dropped. Free-Access Socialism however is a decentralised or polycentric society that is self regulating , self adjusting and self correcting. Marx saw communist administration as a federation of self-governing groups largely concerned with their internal affairs and collaborating for the comparatively few purposes that concern all the groups. Again, beyond those professors of economics to comprehend in their supposed critiques of Marx. Marx was not writing as a simple economist but was putting forward a “critique of political economy” , his main argument being that, whereas writers like Adam Smith and Ricardo regarded economic categories such as capital, wages, value, price, money, as eternal entities, natural features of human social existence, these were, in fact, categories of capitalism that will disappear when capitalism does.
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Value
Work in socialist society would only be voluntary since there would be no group or organ in a position to force people to work against their will. Nor would there exist barter. Goods and services would be made freely available for individuals to take without requiring these individuals to offer something in direct exchange.
An effective anti-capitalist movement will have to be one that works for ending the impersonal economic mechanism that is capitalism by restoring control of production to society; which can only be done on the basis of the Earth’s natural and industrial resources having become the common property of all the people.
Marx does not by a single word claim for the workers “the full value of their labour.” Why not? Because, as he shows, “value,” in an economic sense, is a quality belonging to commodities only, and which, therefore, can only occur in a society where products are exchanged as commodities, the value of a commodity being measured by the socially necessary labour embodied in it. Labour being, therefore, the measure of value, can have no value of its own. But it is quite different with the labour-power of the workers. This labour-power in our society is a commodity has a value. And this value is determined by the quantity of socially necessary labour required for its production, maintenance, and reproduction, that is to say, required for the production, maintenance, and reproduction of the actually living labourer.
Take a wooden table, says Marx. It is just wood that human labour has turned into a table and taken to market. Wood + Labor = Table. Where is the mystery? When it gets to the market the table finds itself in the company of the stool and the chair. All three have use values, are made of the same wood, and may be in equal supply and equal demand - yet each has its own different price.
Why these different prices? Same wood, same demand, same supply. They are all the products of human labour. What is the difference between them that justifies different prices? The prices are reflections of the underlying values of the products. Could the values be different? What does Marx say determines value? It is the different quantities of socially necessary labour time embodied in the commodities.
The table, the stool, and the chair three "things" that are related to each other as the embodiment of the social relations and necessary labour of human beings that created them. Human social relations have been objectified as the relations between non human things. The chair is more valuable than the table but the reason is now hidden away from the perception of people.
"A commodity is therefore a mysterious thing," Marx writes, "simply because in it the social character of men's labour appears to them as an objective character stamped upon the product of that labour; because the relations of the producers to the sum total of their own labour is presented to them as a social relation, existing not between themselves, but between the products of their labour."
Capitalism’s problems are often isolated as single issues to obscure the flaws of the entire system. Capitalism is identified with private control of markets organized on profit and loss economics.
Right Libertarians, or more accurately, Propertarians, espouse not liberty but wage slavery. Capitalism is capital accumulation. Capitalism breeds inequality
“From what source did profit originate?" Knowing this would certainly give us a better understanding of how our existing capital economy works and maybe how the economy might work under conditions of greater freedom.
Profit at its most basic is the difference between the money a business obtains from the sale of its products and the money it has to spend on producing them. Profit arises from capitalist firms employing wage labour selling goods but only having to pay their employees the value of their labour-power, which is less. The need to accumulate capital out of surplus value is the driving force of capitalism. It stems from the economic competition between enterprises which compels each enterprise to increase their market competitiveness or succumb to superior competition and go bankrupt. So, increasing the amount of capital at their disposal to invest in more productive technologies means increasing the amount of surplus value extracted from their workforce which in turn means, among other things, holding down their costs, including their labour costs i.e. our wages!
One of Marx’s crucial discoveries in the field of political economy was that the working class of wage and salary earners gets paid less than the value of the goods it creates, the difference being a surplus value which accrues to the owning class in the form of ground rent, interest and profit. Capitalism turned human labour power into a commodity – something bought and sold. When capitalists buy a worker’s labour they buy the worker’s capacity to work for a full day. Wages are set, however, like every other commodity, by the value of labour-power needed to reproduce them, which in the case of labour is the value of food, clothing, etc. needed to keep the worker in a fit condition to work. But the value of ‘labour power’ is different from the value created by the worker’s labour and this difference, called surplus value, belongs to the capitalist. The working day under capitalism therefore divides into two parts; ‘necessary labour’ when the workers actually earns what they are paid in wages, and ‘surplus labour’ which is the time spent producing ‘surplus value’ for the capitalist employer. The aim of capitalist production is the production of surplus value. The new value added by labour in the process of production to the previously existing value of the raw and other materials is divided into wages and surplus value, which goes to the capitalist employer and is the source of profit. Profits are made in the sphere of production but only “realised” in the market. What is so vital about profit that makes this necessary? It is the source of the capitalist’s capital. The more capital they can accumulate out of the profits accruing to them the more effectively can they compete–by investing in more productive technologies to undercut their competitors–and thus claim a larger share of the market for themselves. If they did not do this then their competitors would, and could knock them out of business. Economic competition between enterprises fuels the drive towards capital accumulation. This in turn necessitates profit maximisation which expresses itself as a continuous downward pressure on wages (reinforced by competition between workers on the labour market)
We’re the ones who build things, make things, provide services, make things work, provide the ideas. But though we build the world around us, it does not belong to us. Everything that has been built around us is the result of our work and yet we don’t work for ourselves. We produce not for ourselves, but at the behest’s and whims of others. The worker is compelled to labour for the purpose of producing something to satisfy the wants of others who, holding the things necessary for his life, thereby control him. He is, therefore, still a slave.We are the ones who are told what to produce, how to produce it, how much, and how fast.We are the ones who receive a paycheque, be it high or low, not for selling what we produce but for selling our power to work. With that paycheque we try to buy back what we make. The source of someone else’s profits comes from our work. Capitalism is based on wage-labour and if a theoretical non-capitalist market economy was a reality it would have to be based on self-employed farmers and artisans. It would also have to be an economy based on handicraft rather than industrial production.(The reason for this is that where there is industrial production the work involved in turning the raw materials into a finished product is no longer individual, but collective.)
This would bring some inevitable consequences.
Industrial production can produce goods at a lower cost per unit than handicraft production, with complete laissez-faire, competition would eliminate most of the independent, self-employed artisans. In other words, industry would begin to be concentrated into the hands of the firms employing industrial methods of production. With complete laissez-faire, competition would result in those firms which employed the most productive machinery winning out against those employing out of date and so less productive machinery. So, there would be a tendency towards a yet greater concentration of industry into the hands of the big firms. What about the displaced independent artisans and the members of bankrupt workers’ co-operatives, some may ask? How would they get a living? Would they not in fact be obliged to sell their skills to the firms that had won out in the battle of competition? But if wage labour appeared then so would profits and exploitation. If these profits were to be shared but the continuing competitive pressures would oblige them to give priority to investing them in new, more productive machinery so as to be able to stay in business and not go bankrupt themselves. So even if it were possible to go back to the sort of multi “free” market economy, the tendency would be for capitalism to develop again. Examples being the kibbutzim and the Mennonites communities which have begun to employ wage labour and orient their production towards making profits and accumulating these as new capital.
Private ownership originally meant the ownership of industry by private individuals. But, while this may have been the case in the days of Adam Smith, this hasn’t been the predominant form of ownership since the introduction and rapid spread in the second half of the 19th century of what in England was called a “limited company” and in America a “corporation”. A limited company is a separate legal entity in its own right. It is the company, the corporation, that owns the assets, the shareholders owning as a collective group not as individuals. This means that they are only personally liable, if the company goes bankrupt, for the amount of their shareholding, not their total wealth. Hence the name “limited liability company”. In the late 1860s, the 14th Amendment to the US Constitution recognised the slave as having human rights, the nascent corporate elite of the time had their lawyers stake a claim to the same rights with the Supreme Court. They fought and won, and the state henceforth recognised the corporation as a human being, a person in law, with the same right to life, liberty and property.
So, as well as private ownership it would be more accurate to speak of capitalism as nowadays involving company or corporate ownership. And, indeed, some in the anti-capitalist movement take this into account by talking of “corporate capitalism”. Which is OK as far as it goes. Only it doesn’t go far enough. The key features of capitalism is production for profit. The motive for producing things under capitalism is to make a profit. The “Profit System” is another very good name for capitalism But from another angle, capitalism could also be called the “Wages System”. The key market in capitalism is the labour market, where workers are forced to earn their living by selling their labour power to an employer.
Capitalism is an economic system where, under pressure from the market, profits are accumulated as further capital, i.e. as money invested in production with a view to making further profits. This is not a matter of the individual choice of those in control of capitalist production – it’s not due to their personal greed or inhumanity – it’s something forced on them by the operation of the system. And which operates irrespective of whether a particular economic unit is the property of an individual, a limited company, the state or even of a workers’ cooperative. The capitalist system is left unscathed. Nowhere is the market-driven profit system as such challenged. Nowhere is the “can’t pay, can’t have” society we have that consigns the greater portion of the population of the planet to lives of abject misery condemned. Capitalism is taken for granted and all that is being asked in the end is the end of corporations. It is just the demand for wider democracy and fairer trading conditions while allowing capitalism to carry on perpetrating every social ill that plagues us.
Let’s clarify what is meant by markets.
It was with the emergence of the capitalist system that society lost its direct control of its productive resources. In previous societies, it was often the case that production was at near maximum capacity given the technology and resources available and this determined what could be distributed. In times of good harvests the whole community could benefit in some shape or form. But with the development of the capitalist system this was eroded as what is produced depends crucially on what can be sold. This means that distribution through sale in the markets determines production and this is always less than what could be produced.
Capitalism is a market economy, but not a simple market economy. A key difference of course is that under capitalism production is not carried out by self-employed producers but wage and salary workers employed by business enterprises. In other words, by profits we mean income that flows to the owner of a workplace or land who hires others to do the work. In other words, under capitalism, the producers have become separated from the means of production. This makes all the difference.
Marx explained the difference when he said that what happens in a simple market economy is that the producers brought to market a product of a certain value which they sell for money in order to buy another product or products of equal value. The economic circuit is commodity-money-commodity (C-M-C), the aim being to end up with a basket of useful things. Under capitalism the economic circuit is different. A capitalist sets out with a sum of money which they use to buy commodities (factory buildings, raw materials, working skills) that can be used to produce other commodities with the aim of ending up, after these other commodities have been sold, with more money than they started off with. So the circuit is now money-commodities-more money (M-C-M+).
Capitalist exploitation occurs as a result of the normal operation of market forces. Capitalism is an economic system of capital accumulation out of profits. This is its dynamic. Profits are made by competing firms which, in order to remain competitive, have to re-invest most of them in new, more productive machinery and equipment. The result is the accumulation of a greater and greater stock of productive equipment used to make profits, or capital. Capitalism is the system of capital accumulation and is derived from the surplus value produced by the class of wage workers. It is the workers who produce the wealth, and the capitalists who make their profits from our unpaid labour.
Market capacity is inherently unpredictable. If too many goods are produced for a market and they remain unsold, a crisis and recession may occur with reduced production, increased unemployment, bankruptcies, and large scale writing-off of capital values. Despite the many attempts that have been made, no theory of economic management has ever been able to predict or control the anarchic conditions of the market system. This is rule by market forces which serve minority interests and which generate the insecurities, crises and conflicts that shape the way we live. The fact that we have great powers of production that cannot be organised and fully used for the benefit of all people has devastating consequences and is at the root of most social problems. In this way, the capitalist system places the production of goods and services, on which the quality of all our lives depends, outside the direct control of society. Capitalism cannot produce primarily to satisfy human needs as production is always geared to meeting market demand at a profit. This means that production is restricted to what people can pay for. But what people can pay for and what they want are two different things, so the profit system acts as a fetter on production and a barrier to a society of abundance. Wherever wealth is produced for sale on a market—wherever, that is, there is commodity-production—economic forces are unleashed which come to dominate production and orient it away from satisfying people’s needs. The operation of these laws means that production is not subject to human control, with the result that it is not human values that are paramount in society, but market values, commercial values, the cash nexus.
But the picture of capitalism is still not complete.
Capitalist investors want to end up with more money than they started out with, but why? Is it just to live in luxury and consume? It is possible to envisage such an economy on paper. Marx did, and called it “simple reproduction”, but only as a stage in the development of his argument. By “simple reproduction” he meant that the stock of means of production was simply reproduced from year to year at its previously existing level; all of the profits (all of M+ less M) would be used to maintain a privileged, exploiting class in luxury . As a result the M in M-C-M+ would always remain the same and the circuit keep on repeating itself unchanged. This of course is not how capitalism operates. Profits are capitalised, i.e. reinvested in production, so that production, the stock of means of production, and the amount of capital, all tend to increase over time . The economic circuit is thus money-commodities-more money-more commodities, even more money (M-C-M+-C+-M++). In order to make more money, money must be transformed into capital.
This is not the conscious choice of the capitalists. It is something that is imposed on them as a condition for not losing their original investment. Competition with other capitalists forces them to reinvest as much of their profits as they can afford to in keeping their means and methods of production up to date. They cannot act contrary to the inner nature of capitalism which requires the constant accumulation of capital and the opening of new markets throughout the world. And it cannot avoid that increasing productivity of labor which means more production for less expenditure of labour.
Libertarians claim we as workers enter a fee contract and “no one is forced to do anything.” – But what planet are they on. The working class is forced each and every day into wage slavery or does money in capitalism grow on trees and all people need to do it pluck it from the branches to pay for food clothing and shelter. No, we are, collectively, compelled under the threat of poverty to sell our capacity to work – our labour power – in order to get access to those things
In 1855, Frederick Douglas, a former slave, wrote:- “The difference between the white slave, and the black slave, is this: the latter belongs to ONE slave-holder, and the former belongs to ALL the slave-holders, collectively. The white slave has taken from his, by indirection, what the black slave had taken from him, directly, and without ceremony. Both are plundered, and by the same plunderers”.
He understood , why can’t others?
The modern slave-owner has no such interest in his slaves. He neither purchases nor owns them. He merely buys so much labor-power – physical energy – just as he buys electric power for his plant. The worker represents to him merely a machine capable of developing a given quantity of labor-power. When he does not need labor-power he simply refrains from buying any. Wage slavery is the most satisfactory form of slavery that has ever come into existence, from the point of view of the masters. It gives them all the slaves they require, and relieves them of all responsibility in the matter of their housing, feeding and clothing.
Instead of the pressures that force people to sell their working skills to an employer, people in socialism will work as a voluntary expression of their relationship with others. Needs will replace the drive for profits and the dictates of the market in deciding what must be done. Instead of the authoritarian control imposed by boards of directors and their corporate managers, production units will be run democratically by the people working in them. Instead of the state and its government of people, in socialism, people will contribute to the decisions made democratically by the community. Wage slavery will be overthrown and labour power cease to be a commodity. The workers, being the owners of the means of production, will also be the owners of the wealth produced, each individually enjoying what they have collectively produced.
Wage slavery has become the only option for the majority to sustain itself. The capitalist system was created through acts of theft and murder. This reality is continually defended by theories of the ideal capitalist model claiming as you do to be a return to “economic justice”, which actually only seeks to legitimise the capitalist’s source of wealth and power – the exploitation of labour for the extraction of profit. It is hypocrisy.
Many libertarians and mutualists argue that ” wage isn’t slavery when free and just conditions exist.” Ah, if only that were the case. Workers sell their labour power to capitalist enterprises for a wage as stated above in earlier post . As a commodity, labour power has an exchange value and a use value, like all other commodities. Its exchange value is equal to the sum total of the exchange values of all those commodities necessary to produce and reproduce the labour power of the worker and his or her family. The use value of labour power is its value creating capacity which capitalist enterprises buy and put to work as labour. However, labour power is unlike other commodities in that it creates value. During a given period it can produce more than is needed to maintain the worker during the same period. The surplus value produced is the difference between the exchange value of labour power and the use value of the labour extracted by the capitalists. In capitalism, however,the wage-worker is a “free” agent. No master holds him as a chattel, nor feudal lord as serf. This modern worker is free and independent: he has choices. He can dispose of his services to this or that capitalist owner, or he can withhold them. But this freedom is ephemeral. He must sell his working ability to some one or other employer or face starvation. In a capitalist society workers have the option of finding a job or facing abject poverty and/or starvation. Little wonder, then, that people “voluntarily” sell their labour and “consent” to authoritarian structures! They have little option to do otherwise. So, within the labour market workers can and do seek out the best working conditions possible, but that does not mean that the final contract agreed is “freely” accepted and not due to the force of circumstances, that both parties have equal bargaining power when drawing up the contract or that the freedom of both parties is ensured. His slavery is cloaked under the guise of wage-labour.
When the worker has found an employer he receives in return for his labour a price known as wages which represents on the average what is necessary for his sustenance so that he can reproduce the energy to go on working, and also produce progeny to replace him when his working days are over. During the working-day the worker produces wealth equivalent to that for which he is paid wages, but this does not require all the time of the working day. In providing for his own keep he has also produced a surplus and this surplus belongs to the employer. This may eventually be split into profit to the manufacturer, rent to the landlord, and interest on capital invested by a financier. As capitalism develops the time in which the worker produces his own keep decreases while the surplus accruing to the capitalist increases. During this development the productivity of labor increases at an accelerating tempo: The worker continually produces more with less.
So when a man sells his labour power a number of hours for a certain wage, the amount of necessaries to produce his wages is always smaller than the amount of labour which the employer receives from him, the difference between what the worker receives as wages and what his labour power produces during his working time, constitutes the sole source of unearned income, i.e., capitalist profits. So profits exist because the worker sells themselves to the capitalist, who then owns their activity and, therefore, tries to control them like a machine.
Wage levels will vary with “the respective power of the combatants” as Marx puts it and in the long run this will determine the value of labour-power and the necessaries of life. From the point of view of wage-labour , wage levels and the value of labour-power depends on the balance of class forces, on what workers can actually get from their employers. As wages are also regulated by the relation of supply and demand, a surplus of labour power (the unemployed) is necessary to prevent wages swallowing up all profit. Therefore the unemployed army is a vital necessity to capitalist production, and there can be no solution under capitalism.
It would be wrong to confuse exploitation with low wages. It does not matter if real wages do go up or not. The absolute level of those wages is irrelevant to the creation and appropriation of value and surplus-value. Labour is exploited because labour produces the whole of the value created in any process of production but gets only part of it back. On average workers sell their labour-power at a “fair” market price and still exploitation occurs. As sellers of a commodity (labour-power) they do not receive its full worth i.e. what they actually produce. Nor do they have a say in how the surplus value produced by their labour gets used.
The worker goes into the labour market as an article of merchandise, and his wages, that is, his price, is determined like that of any other article of merchandise, by the cost of production (i.e. the social labour necessary), and this in the case of the worker is represented by the cost of subsistence. The price of labour power fluctuates by the operation of supply and demand. There are generally more workers in the market than are actually required by the employers, and this fact serves to keep wages from rising for any length of time above the cost of subsistence. Moreover, machinery and scientific applications are ever tending to render labourers superfluous, with a consequent overstocking of the labour market, decrease of wages, and an increase in the number of the unemployed. Under these conditions reelative poverty is necessarily the lot of the working-class.
We have the worker entirely dispossessed of the means of getting a living except by selling himself as an article of merchandise to the owners of the means of living. This is wage-slavery. While capitalists are as a class against the workers as regards the ownership of the wealth produced by the working-class, they, the capitalists, are also antagonistic to one another in the endeavour to get the larger share of the markets. It wasn’t just Marx but also Fourier who pointed long ago that this competition could only end in monopoly, and we do see concentration an going on in every branch of industry.
Many seek a capitalism with the rough corners smoothed out, the utopian aspiration of a tamed capitalism. What is really required is a fundamental change of the economic basis of society. Many seek an idealised world and call for governments not to interfere in the operation of the market, to let market forces operate unhindered – laissez faire – and that the detrimental effects of the capitalist system can be eliminated by taming global corporations. For as long as capitalism has existed state “interference” or state “intervention”, in the economy has always existed. A corporation-dominated government is really the logical outcome of a class-divided society where the state must serve the owning minority. Individualists attack socialism because they fear the whole of the wealth of society shall be owned by a number of persons incorporated into a State or a bureaucracy, instead of being, as at present, owned by private individuals. They maintain that the right of the individual is supreme, and condemn any action on the part of a State or collection of individuals, that interferes with their desires. But socialists are not statists, that if the working class was compelled to work for a State instead of for individual employers then wage-slavery is not abolished, but is intensified.The worker to-day, while compelled to work for an employer, still has some sort of a choice among those masters, but with the State as the only employer he is compelled to work for that employer and under all of that employer’s conditions, or take the only other alternative – starvation. State-capitalism or as some like to call it State Socialism) would intensify slavery, but state-capitalism is not socialism.
People completely misunderstand Marx if you believe that his solution was to have GOVERNMENT-OWNERSHIP of the means of production and his object was to simply just to REDUCE the power of the capitalist because he wished a mere re-distribution of wealth between capitalists and the working class. He stood for the the ABOLITION OF THE STATE and he stood for the ABOLITION OF CAPITALISM [not its replacement by capitalism in another form]. Critics of Marx should go to the source and forget what the state-capitalist Leninists or Trotskyists say and understand that Marx was in favour of the abolition of the state and its replacement by an “association of associations”, i.e. by a co-ordinated network of neighbourhood councils and producer-controlled production units. Marx made quite clear when he says “The existence of the state is inseparable from the existence of slavery…”
What is called for is a community where each contributes to the whole to the best of his or her ability and takes from the common fund of produce what he or she needs. The Earth can no longer be owned; it must be shared. Its fruits can no longer be expropriated by the few, they must be rendered available to all on the basis of need. Power must be freed from the control of the elites and be redistributed in a form that renders its use participatory. That is “free economics”, that is “economic justice”. Production will be to meet human need, each person or group determining their own reasonable needs in a social context. There will be no buying or selling, but instead, plenty of giving and taking. Capitalism operates irrespective of whether a particular economic unit is the property of an individual, a limited company, the state or even of a workers’ cooperative”
Many have consistently failed to acknowledge or have dismissed as irrelevant the fact that the right of private property leads to control by property owners over those who use, but do not own, property (such as workers ). Free-market capitalist system leads to a very selective and class-based protection of “rights” and “freedoms.” For example, under capitalism, the “freedom” of employers inevitably conflicts with the “freedom” of employees. When stockholders or their managers exercise their “freedom of enterprise” to decide how their company will operate, they violate their employee’s right to decide how their labouring capacities will be utilised and so under capitalism the “property rights” of employers will conflict with and restrict the “human right” of employees to manage themselves. Capitalism allows the right of self-management only to the few, not to all. Bosses have the power, workers are paid to obey. Workers are subject to control from above which restricts the activities they are allowed to do and so they are not free to act, make decisions, participate in the plans of the organisation, to create the future and so forth. Thus we have “free” workers within a relationship lacking freedom. Representing employment relations as voluntary agreement simply mystifies the existence and exercise of power within the organisation so created. Libertarians are ignoring the vast number of authoritarian and co-ercive social relationships that exist in capitalist society.In the labour market it is clear that the “buyers” and “sellers” of labour power are not on an equal footing . Under capitalism competition in labour markets is skewed in favour of employers. Thus the ability to refuse an exchange weighs most heavily on one class than another and so ensures that “free exchange” works to ensure the domination and so exploitation of one by the other. Inequality in the market ensures that the decisions of the majority of people within it are shaped in accordance with that needs of the powerful, not the needs of all.
Kropotkin argued that “The modern Individualism initiated by Herbert Spencer is, like the critical theory of Proudhon, a powerful indictment against the dangers and wrongs of government, but its practical solution of the social problem is miserable — so miserable as to lead us to inquire if the talk of ‘No force’ be merely an excuse for supporting landlord and capitalist domination.”
To defend the “freedom” of property owners is to defend authority and privilege. Free exchange is NOT a revolutionary concept. Free access is revolutionary.
But just to make sure it is clearly understood that for socialists, the means and ends cannot be separated. The establishment of socialism can only be established by the working class when the immense majority have come to want and understand it. The machinery of coercion which is the State has to be taken out of the hands of the capitalist class by political action. Industrial democracy is a possibility only when the capitalist class have ceased to rule the State. The struggle for democracy is the struggle for socialism. It is not a struggle for reforms, for this or that political system, for this or that leader, for some rule change or other—it is the struggle for an idea, for a belief, a belief that we can run our own lives, that we have a right to a say in how society is run, for a belief that the responsibility for democracy lies not upon the politicians or their bureaucrats, but upon ourselves. At the moment a small group of people control all the wealth and property, and it is upon their interests that everything hinges. It is only by removing such people, and not by tinkering with the form that true democracy can be reached .
Until you support and work towards the society that is based upon the principle ”from each according to their ability, to each according to their needs”, then you remain fixated upon the status quo of a society constrained by artificial rationing through the market and money system, a “can’t pay - can’t have” society that is inherently co-ercive, that has police and courts and jails to ensure its continued existence. As oft quoted "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread. ”
If libertarians seek real liberty then it is free access to goods and services which will deny to any group or individuals the political leverage with which to dominate others which has been a feature intrinsic to all private-property or class based systems through control and rationing of the means of life . This will work to ensure that a socialist society is run on the basis of democratic consensus. Free access to the common treasury and no monopoly of ownership , not even by the producers who call for ownership of their own product, (such as promoted by mutualists and syndicalists) can deprive individuals in society of common ownership of the means of production and distribution .
Goods and services would be provided directly for self determined needs and not for sale on a market; they would be made freely available for individuals to take without requiring these individuals to offer something in direct exchange. The sense of obligations and the realisation of universal interdependency arising from this would profoundly colour people’s perceptions and influence their behaviour in such a society.
Building a society that is based upon such a system of generalised reciprocity, that is truly a revolutionary concept .
According to von Mises, rational economic calculation is only possible on the basis of prices fixed by the free play of market forces. In other words, the only form of rational calculation that can be applied to the production of wealth is monetary calculation. Von Mises claimed that a socialist society was impossible because it would be unable to calculate rationally which productive methods to adopt. This argument merely amounts to the tautology that only a market economy is able to perform economic calculations couched in market prices’and that it is‘reading into socialism the functional requirements of capitalism.
In reality it is the wasteful, destructive and exploitative capitalist system that is incapable of rationally allocating resources.
Although, monetary calculation, will disappear in socialism this does not mean that there will no longer be any need to make choices, evaluations and calculations. In socialism it will be the use value of goods not be their selling price (nor even the time needed to produce them) but their usefulness. It is for this that they will be appreciated, evaluated, wanted and produced. So estimates of what is likely to be needed over a given period will be expressed as physical quantities of definite types and sorts of objects. The operational basis for this system would be calculation in kind (e.g. tonnes, kilos, litres) instead of monetary calculation.
Goods will be voluntarily produced, and services voluntarily supplied to meet people’s needs. People will freely take the things they need. Socialism will be concerned solely with the production , distribution and consumption of useful goods and services in response to definite needs . It will integrate social needs with the material means of meeting those needs .
Common ownership means that society as a whole owns the means and instruments for distributing wealth. It also implies the democratic control of the means and instruments for producing and distributing wealth, for if everyone owns, then everyone must have equal right to control the means and instruments for producing and distributing wealth.
Socialism will be a self-adjusting decentralised inter-linked system. A socialist economy would be polycentric , not centrally planned. It is not a command economy but a responsive one to provide for a self -sustaining steady- state society.
Capitalism differs from previous class societies in that under it production is not for direct use, not even of the ruling class, but for sale on a market. Competitive pressures to minimise costs and maximise sales, profit-seeking and blind economic growth, with all the destructive effects on the rest of nature, are built-in to capitalism. These make capitalism inherently environmentally unfriendly. The framework within which humans can regulate their relationship with the rest of nature in an ecologically acceptable way has to be a society based on the common ownership and democratic control of productive resources, freed from the tyranny of the economic laws that operate wherever there is production for sale on a market
We know that humans are capable of integrating themselves into a stable ecosystem. and there is nothing whatsoever that prevents this being possible today on the basis of industrial technology and methods of production, the renewable energies exist (wind, solar, tidal, geothermal and whatever ) but, for the capitalists, these are a “cost” which penalises them in face of international competition. No agreement to limit the activities of the multinationals in their relentless quest for profits is possible. Measures in favour of the environment come up against the interests of enterprises and their shareholders because by increasing costs they decrease profits. No State is going to implement legislation which would penalise the competitiveness of its national enterprises in the face of foreign competition. States only take into account environmental questions if they can find an agreement at international level which will disadvantage none of them. But that’s the problem, isn’t it? Competition for the appropriation of world profits is one of the bases of the present system. So it is the capitalist economic system itself which is responsible for ecological problems and the capitalist class and their representatives, they themselves are subject to the laws of profit and competition. Some future apologists of capitalism are promising us !
In a stable society such as socialism, needs would most likely change relatively slowly. Hence it is reasonable to assume that an efficient system of stock control, registering what individuals actually chose to take under conditions of free access from local distribution centres over a given period, would enable the local distribution committee to estimate what the need for food, drink, clothes and household goods that would be required over a similar future period.
If people want too much? In a socialist society “too much” can only mean “more than is sustainably produced” . If people decide that they (individually and as a society) need to over-consume then i concede socialism cannot possibly work. But, as you say Max , under capitalism, there is a very large industry devoted to creating needs. Capitalism requires consumption, whether it improves our lives or not, and drives us to consume up to, and past, our ability to pay for that consumption. In a system of capitalist competition, there is a built-in tendency to stimulate demand to a maximum extent. Firms, for example, need to persuade customers to buy their products or they go out of business. They would not otherwise spend the vast amounts they do spend on advertising.
Another side of the consumerist argument is that in capitalist society a tendency for individuals to seek to validate their sense of worth through the accumulation of possessions. The prevailing ideas of society are those of its ruling class so we can understand why, when the wealth of that class so preoccupies the minds of its members, such a notion of status should be so deep-rooted within workers . It is this which helps to underpin the myth of infinite demand.
It does not matter how modest one’s real needs may be or how easily they may be met; capitalism’s “consumer culture” leads one to want more than one may materially need since what the individual desires is to enhance his or her status within this hierarchal culture of consumerism and this is dependent upon acquiring more than others have got. But since others desire the same thing, the economic inequality inherent in a system of competitive capitalism must inevitably generate a pervasive sense of relative deprivation. What this amounts to is a kind of institutionalised envy and an alienated capitalism.
Human behaviour reflects society. In a society such as capitalism, people’s needs are not met and people feel insecure. People tend to acquire and hoard goods because possession provides some security. People have a tendency to distrust others because the world is organized in such a dog-eat-dog manner.
In socialism, the notion of status based upon the conspicuous consumption of wealth would be devoid of meaning because individuals would stand in equal relation to the means of production and have free access to the resultant goods and services . Why take more than you need when you can freely take what you need? In socialism the only way in which individuals can command the esteem of others is through their contribution to society.
By the replacement of exchange economy (the market economy) by common ownership basically what would happen is that wealth would cease to take the form of exchange value, so that all the expressions of this social relationship peculiar to an exchange economy, such as money and prices, would automatically disappear. Goods would cease to have an economic value and would become simply physical objects which human beings could use to satisfy some want or other. What is meant by needs should not be understood as mere personal consumption. It should not suggest a rampant consumerist culture. Production for needs would include a wide range of considerations such as the need to protect and conserve the environment. In defining socialism we should emphasise that it will provide for one vital need in a way that is impossible under the capitalist system. This is the need of peoples throughout the world to bring the organisation of their community affairs under their own democratic control and to develop them in the interests of the whole community.
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Money
The case that money IS essential if you value individual freedom couldn’t be further from the truth. It is only in a society where all people enjoy FREE ACCESS to goods and services which denies to any group or individuals the political leverage by which to dominate others. It has been a feature of all private-property or class based systems that through the control of and restrictions to the means of life, that people are controlled.
Böhm-Bawerk in “Marx and the Close of his System”, that the labour theory of value is wrong because Marx failed to take into account scarcity as a factor in fixing value which simply exposes his poor knowledge of what Marx has writtern. What he and Hayek want most to instil into the minds of the working class is that capitalist production and distribution of life’s necessities and wants is a natural and, above all, moral system. It is their “wet dream”.
Hayek may well criticise central planning basing his argument upon the Soviet Union but socialism ( real socialism and not state capitalism) is a decentralised society that is self correcting , from below and not from the top . Socialist determination of needs begins with consumer needs and then flows throughout distribution and on to each required part of the structure of production. Planning in socialism is essentially a question of industrial organisation, of organising productive units into a productive system functioning smoothly to supply the useful things which people had indicated they needed, both for their individual and for their collective consumption. What socialism would establish would be a rationalised network of planned links between users and suppliers; between final users and their immediate suppliers, between these latter and their suppliers, and so on down the line to those who extract the raw materials from nature. The responsibility of these industries would be to ensure the supply of a particular kind of product either, in the case of consumer goods, to distribution centres or, in the case of goods used to produce other goods, to productive units or other industries. Planning is indeed central to the idea of socialism, but socialism is the planned, but not Central Planning. The problem with a centrally-planned model of socialism was its inability to cope with change. It lacks any kind of feedback mechanism which allows for mutual adjustments between the different actors in such an economy. It is completely inflexible. We witnessed in Russia how it was unable to determine prices by central planning. Prices were set , re-set , fixed then re-fixed , plans were made then re-appraised , re-defined , changed and dropped. Free-Access Socialism however is a decentralised or polycentric society that is self regulating , self adjusting and self correcting. Marx saw communist administration as a federation of self-governing groups largely concerned with their internal affairs and collaborating for the comparatively few purposes that concern all the groups. Again, beyond those professors of economics to comprehend in their supposed critiques of Marx. Marx was not writing as a simple economist but was putting forward a “critique of political economy” , his main argument being that, whereas writers like Adam Smith and Ricardo regarded economic categories such as capital, wages, value, price, money, as eternal entities, natural features of human social existence, these were, in fact, categories of capitalism that will disappear when capitalism does.
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Value
Work in socialist society would only be voluntary since there would be no group or organ in a position to force people to work against their will. Nor would there exist barter. Goods and services would be made freely available for individuals to take without requiring these individuals to offer something in direct exchange.
An effective anti-capitalist movement will have to be one that works for ending the impersonal economic mechanism that is capitalism by restoring control of production to society; which can only be done on the basis of the Earth’s natural and industrial resources having become the common property of all the people.
Marx does not by a single word claim for the workers “the full value of their labour.” Why not? Because, as he shows, “value,” in an economic sense, is a quality belonging to commodities only, and which, therefore, can only occur in a society where products are exchanged as commodities, the value of a commodity being measured by the socially necessary labour embodied in it. Labour being, therefore, the measure of value, can have no value of its own. But it is quite different with the labour-power of the workers. This labour-power in our society is a commodity has a value. And this value is determined by the quantity of socially necessary labour required for its production, maintenance, and reproduction, that is to say, required for the production, maintenance, and reproduction of the actually living labourer.
Take a wooden table, says Marx. It is just wood that human labour has turned into a table and taken to market. Wood + Labor = Table. Where is the mystery? When it gets to the market the table finds itself in the company of the stool and the chair. All three have use values, are made of the same wood, and may be in equal supply and equal demand - yet each has its own different price.
Why these different prices? Same wood, same demand, same supply. They are all the products of human labour. What is the difference between them that justifies different prices? The prices are reflections of the underlying values of the products. Could the values be different? What does Marx say determines value? It is the different quantities of socially necessary labour time embodied in the commodities.
The table, the stool, and the chair three "things" that are related to each other as the embodiment of the social relations and necessary labour of human beings that created them. Human social relations have been objectified as the relations between non human things. The chair is more valuable than the table but the reason is now hidden away from the perception of people.
"A commodity is therefore a mysterious thing," Marx writes, "simply because in it the social character of men's labour appears to them as an objective character stamped upon the product of that labour; because the relations of the producers to the sum total of their own labour is presented to them as a social relation, existing not between themselves, but between the products of their labour."
