Wage Labour and Capital & Value, Price and Profit

“But the putting of labour-power into action—i.e., the work—is the active expression of the labourer’s own life. And this life activity he sells to another person in order to secure the necessary means of life. His life-activity, therefore, is but a means of securing his own existence. He works that he may keep alive. He does not count the labour itself as a part of his life; it is rather a sacrifice of his life.”

The phrase “life activity” reveals that, for Marx, labor is a fundamentally human endeavor and central to life. However, under capitalist relations, labor is no longer the fulfilling activity it should be, leading to The Experience of Worker Alienation. Instead, work becomes a sacrifice laborers are forced to make to survive, and their “real life” only begins outside of the workplace.

“Industry leads two great armies into the field against each other, and each of these again is engaged in a battle among its own troops in its own ranks. The army among whose troops there is less fighting, carries off the victory over the opposing host.”

Marx uses a lot of metaphors and analogies to help explicate his arguments. This has the dual benefit of making complex ideas more accessible, while also making his prose less dry and boring—both equally important, given his aim to reach a wide, popular audience.

“[T]he cost of production of simple labour-power must include the cost of propagation, by means of which the race of workers is enabled to multiply itself, and to replace worn-out workers with new ones. The wear and tear of the worker, therefore, is calculated in the same manner as the wear and tear of the machine.”

Marx argues that one of the ways the capitalist mode of production dehumanizes workers is in the way it treats them as parts of a larger machine, rather than people. They are quite literally factored into the cost of production calculation the same way as raw materials and other instruments of labor, leading to The Experience of Worker Alienation.

“The relations of production in their totality constitute what is called the social relations, society, and, moreover, a society at a definite stage of historical development, a society with peculiar, distinctive characteristics. Ancient society, feudal society, bourgeois (or capitalist) society, are such totalities of relations of production, each of which denotes a particular stage of development in the history of mankind.”

Capital is contingent on the specific social relations of a specific historical moment. This idea is important to Marx’s overall project, because his broader argument is that capitalist social relations are a step toward a set of new social relations—communism—that will come about due to the contradictions inherent in the capitalist mode of production.

“A house may be large or small; as long as the neighboring houses are likewise small, it satisfies all social requirements for a residence. But let there arise next to the little house a palace, and the little house shrinks to a hut. The little house now makes it clear that its inmate has no social position at all to maintain, or but a very insignificant one; and however high it may shoot up in the course of civilization, if the neighboring palace rises in equal or even in greater measure, the occupant of the relatively little house will always find himself more uncomfortable, more dissatisfied, more cramped within his four walls.”

Here, Marx suggests that beyond the use and exchange of value of a given commodity, value is also inherently social. When viewed in contrast to what others have, things like a house can either increase or decrease in their perceived value. This point is important to his arguments about relative wages: Namely, that it doesn’t matter if the money value of wages increases if the wealth and power gap between the working class and capitalist class has also increased.

“The distribution of social wealth between capital and labour has become still more unequal. The capitalist commands a greater amount of labour with the same capital. The power of the capitalist class over the working class has grown, the social position of the worker has become worse, has been forced down still another degree below that of the capitalist.”

Marx asserts that the very structure of the social relationship is such that things are always trending in the direction of the capitalist—always becoming more unequal—even in circumstances where wages are increasing for workers. On top of this, it is a positive feedback loop, because more capital gives capitalists the capacity to purchase more labor power and extract even more surplus-value, reflecting The Labor Theory of Value and Surplus Value.

“The bourgeoisie is too much enlightened, it keeps its accounts much too carefully, to share the prejudices of the feudal lord, who makes an ostentatious display of the magnificence of his retinue. The conditions of existence of the bourgeoisie compel it to attend carefully to its bookkeeping.”

One aspect that marks capitalist social relations as distinct from others that came before it—such as feudalism—is that the inherent imbalance in power between classes is hidden from view in a way it wasn’t before. Under feudalism, serfs knew their status and suffered no illusions about their freedom; but under capitalism, the wage system and other ideological tools give the appearance that workers have freedom and are entering into a fair relationship with the capitalist, thanks to The Nature of Bourgeois Ideology.

“But the productive forces of labour is increased above all by a greater division of labour and by a more general introduction and constant improvement of machinery. The larger the army of workers among whom the labour is subdivided, the more gigantic the scale upon which machinery is introduced, the more in proportion does the cost of production decrease, the more fruitful is the labour.”

Marx argues that it is the workers that face the consequences of this constant, unending competition between capitalists. The primary means by which capitalists lower the cost of production is by introducing better machinery that further increases the division of labor. This process intensifies The Experience of Worker Alienation, as their actual work becomes simplified and repetitive, and they becomes further and further removed from the final product they create.

“[The industrial war between capitalists] has the peculiarity that the battles in it are won less by recruiting than by discharging the army of workers. The generals (the capitalists) vie with one another as to who can discharge the greatest number of industrial soldiers.”

Marx goes back to the war analogy he used to open the text, but now uses it to show how ridiculous and illogical the capitalist cycle of competition is. Since they are constantly fighting to lower the cost of production, capitalists seek the means to reduce their workforce (and the wages paid out) while maintaining the same level of production, thereby allowing them to lower the price of their goods and capture a larger share of the market. A real war could not be won by discharging more soldiers than the other side, and the contradiction at the heart of capitalism is that it cannot either, as workers are required to generate surplus value.

“They become more frequent and more violent, if for no other reason, than for this alone, that in the same measure in which the mass of products grows, and therefore the needs for extensive markets, in the same measure does the world market shrink ever more, and ever fewer markets remain to be exploited, since every previous crisis has subjected to the commerce of the world a hitherto unconquered or but superficially exploited market.”

Another contradiction in capitalism is its reliance on perpetual growth. Marx argues that this is a problem because raw materials and new markets to exploit are not infinite, which leads to a cycle that ends in increasingly devastating crises of overproduction.

“But suppose the amount of national production to be constant instead of variable. Even then, what our friend Weston considers a logical conclusion would still remain a gratuitous assertion.”

This demonstrates a common rhetorical strategy employed by Marx: He grants his opposition’s argument the most optimal conditions or proceeds as if some falsehood they’ve stated is true, and then still proves their conclusions incorrect. This makes his opposition appear to be doubly wrong, by strengthening his argument while weakening theirs.

“Citizen Weston illustrated his theory by telling you that a bowl contains a certain quantity of soup, to be eaten by a certain number of persons, an increase in the broadness of the spoons would produce no increase in the amount of soup. He must allow me to find this illustration rather spoony.”

Despite the serious and often dry nature of the topics Marx tackles in his work—or perhaps because of them—Marx loves to play with language whenever he can. The spoon pun he employs here is indicative of his overall prose style, which constantly strives to be readable and engaging.

“If you consider that two-thirds of the national produce are consumed by one-fifth of the population […] you will understand what an immense proportion of the national produce must be produced in the shape of luxuries, or be exchanged for luxuries.”

Marx doesn’t emphasize it here, but this ratio of consumption is illustrative of the kind of wealth inequality that existed at the time of writing. Four-fifths of the population—most of whom are also directly involved in the process of production through their participation in wage labor—only have the means to consume one-third of what is produced. It also reveals the necessity of creating other markets of things, like luxury items, to ensure that capital can continue to grow.

“It was a rise of wages under circumstances singularly unpropitious. Dr. Ure, Professor Senior, and all the other official economical mouthpieces of the middle class […] proved, and I must say upon much stronger grounds than those of our friend Weston, that it would sound the death-knell of English industry.”

It is important to note that, for Marx, the middle class is made up of capitalists, while the upper class is made up by the aristocracy. This is also an important example of The Nature of Bourgeois Ideology at work: Marx even uses the word “mouthpiece,” which suggests how much these economists have a vested interest in the theories and ideas they have about how markets work.

“All of you know that the currency of this country is divided into two great departments. One sort, supplied by bank-notes of different descriptions, is used in the transactions between dealers and dealers, and the larger payments from consumers to dealers, while another sort of currency, metallic coin, circulates in the retail trade.”

The difference in the two types of currency is essentially the reification of class division. On the one hand, metallic coins represent a fixed, concrete amount of money, and are used for smaller transactions, like buying necessities from a store. On the other hand, banknotes quite literally represent a theoretically infinite amount of money, insofar as they can be made out to whatever amount the user has access to, and the capitalist class relies upon an ever-increasing amount of capital. Thus, banknotes are used for large money transactions. The possibility of one form to increasingly grow while the other remains fixed reflects the different material realities of the working class and capitalists.

“Their wages will be limited by the values of the products, but the values of their products will not be limited by the wages.”

This is an example of the way Marx likes to use syntactical reversals in his writing as an expression of the dialectic. The Marxist concept of the dialectic, in short, is a relationship where two things or ideas mutually impact one another—and even rely upon one another for their existence—leading to development and eventually negation.

“You will recollect that I used the word ‘social labour,’ and many points are involved in this qualification of ‘social.’ In saying that the value of a commodity is determined by the quantity of labour worked up or crystallized in it, we mean the quantity of labour necessary for its production in a given state of society, under certain social average conditions of production, with a given social average intensity, and average skill of the labour employed.”

When reading Marx, it is important to remember that he is looking at society as a whole, not individual cases, and at specific moments of time—in other words, he is interested in the social structures that determine the shape or form a given society takes. This is why he is constantly using the phrase “social average” and gives qualifiers like “in a given state of society.”

“Of course, having once found out the true but hidden sense of the expression ‘value of labour,’ we shall be able to interpret this irrational, and seemingly impossible application of value, in the same way that, having once made sure of the real movement of the celestial bodies, we shall be able to explain their apparent or merely phenomenal movements.”

This analogy reveals how Marx sees his role: He is not just an political scientist or philosopher, he is a scientist, and he approaches economics and the capitalist mode of production as a scientist approaches the stars. He wants to uncover its inner-workings and mysteries and get to the bottom of what is actually happening, rather than accepting what appears to be happening on the surface.

“The separation between the Man of Labour and the Instruments of Labour once established, such a state of things will maintain itself and reproduce itself upon a constantly increasing scale, until a new and fundamental revolution in the mode of production should again overturn it, and restore the original union in a new historical form.”

This is succinct distillation of how Marx sees this phase of history. The capitalist mode of production will reproduce itself until its inherent contradictions reach a tipping point, at which an entirely new mode of production—and with it, a new way of structuring society—follows.

“This false appearance distinguishes wage labour from other historical forms of labour. On the basis of the wages system even the unpaid labour seems to be paid labour. With the slave, on the contrary, even that part of his labour which is paid appears to be unpaid […] But since no bargain is struck between him and his master, and no acts of selling and buying are going on between the two parties, all his labour seems to be given away for nothing.”

Marx uses the historical example of enslavement (and serfdom, not included here) where the power dynamic of the working relationship was not obscured. Enslavement was deemed immoral and unfair because the injustice is on the surface for anyone to see, but with capitalism it is not, because the relationship between worker and owner is framed as a choice (i.e., both parties enter into and agree upon a contract), and because the wage system masks the exploitation and The Nature of Bourgeois Ideology.

“The capitalist would consequently realize the profit of three shillings, not by selling his commodity at a price over and above its value, but by selling it at its real value.”

This passage is particularly important because it reveals that the capitalist makes a profit not by some ingenuity or cleverness on their part, but by exploiting workers through the extraction of surplus labor. Marx’s view represents a reframing of economics, wherein the entire production process is examined from the perspective of the worker, rather than the capitalist, to expose The Labor Theory of Value and Surplus Value.

“You see, therefore, the fallacy of the popular notion, which confounds the decomposition of a given value into three parts, with the formation of that value by the addition of three independent values, thus converting the aggregate value, from which rent, profit, and interest are derived, into an arbitrary magnitude.”

The idea that the profit is divided among three groups makes it seem less exploitative, as it shifts the focus from one large amount of surplus value and breaks it down into three smaller ones. It also gives the appearance that the price of the commodity comes from having to pay rent, profit, and interest, rather than the labor embodied in it.

“Since the capitalist and workman have only to divide this limited value, that is, the value measured by the total labour of the working man, the more the one gets the less will the other get, and vice versa.”

Marx argues that this dynamic between capitalists and workers is why capital and labor are inherently opposed to one another, stuck in an unending tug-of-war over profit. It also means that there is no way for the capitalist to make a profit without exploiting unpaid labor.