What makes the rich richer? Surplus-Value

Marxism is not directly about the powerful v powerless’ or the ‘rich v poor’ (“it was in general a mistake to make a fuss about so-called distribution and put the principal stress on it. Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves". - Marx). Workers are exploited by virtue of the fact that we produce surplus value for the capitalists which is appropriated and used for their own ends. Nothing to do with low wages or being harshly treated. Exploitation is something which is built into the very nature of the employment relation itself which implies the division of society into employers/owners and employees/non-owners.  It is about who produces surplus value and who appropriates it. Capitalists often hide behind arguments about who is poor and who is rich. Who is powerful and who is powerless? These are important but secondary considerations. What they don’t want you to focus on is where they get their money/capital from in the first place. YOU are the source of their wealth! Workers’ labour produces everything under capitalism — including the bosses’ profits. Whether you work in a factory, an office or a shop, if you’re not a boss then you’re part of the working class. The whole system rests on your work. We can see it every time workers strike. A strike, workers collectively withdrawing their labour and shutting their work-place down, proves that without us the bosses are nothing. By exploiting workers, the system creates profit, and therefore grows.



Suppose a worker could produce in 6 hours the value of goodies he needs to live on and Mr Moneybags gives the worker the full value of his labour power. The goodies cost $60 and that is what the capitalist gives the worker, paying him $10 an hour. The worker has also made $60 worth of goodies for Mr Moneybags. An even exchange - no increment for Mr Moneybags. In that case the workers would get back in wages the value they created and there would be no capitalist exploitation. What does he do? Mr Moneybags will hire the worker for $5 an hour for 12 hours. This is what free labour and the labour market are all about. After 12 hours the worker gets his agreed upon wage, buys his $60 of goodies and goes home. Mr Moneybags however has been left with $60 from the first 6 hours and $60 from the last 6 hours of the worker's toil. He sells the first $60 worth of goodies and gets his money back - and sells the surplus $60 of goodies and makes a profit; a profit he did not work for but that he expropriates from the surplus value created by the worker. And this, Engels says, is how the "trick has been performed. Surplus-value has been produced; money has been converted into capital." Marx demonstrated how surplus-plus value is created and has revealed "the core around which the whole existing social order has crystallized."

Eleanor Marx describes the origin of value under capitalism:

    “The sum thus entering the pocket of the capitalist Marx calls surplus-value. It is not all profit, but includes the employer’s profit. He has to share it with others: with the Government in the shape of rates and taxes, with the landlord for rent, with the merchant, etc… Thus, all of the classes of society not composed of actual and immediate producers of wealth… all classes, from kings and queens to music-masters and greengrocers, live upon their respective shares of this surplus value. In other words, they live upon the net producer of the surplus labor which the capitalist extracts from his work people, but for which he does not pay. It matters not whether the share of surplus-labor falling to each member of society not actually a producer is granted as a gift by Act of Parliament from the public revenue, or whether it has to be earned by performing some function not actually productive. There is no fund out of which they can be paid, but the sum total of the surplus value created by the immediate producers, for which they are not paid.”

The value that makes society run has only one source, the “immediate producers of wealth.” - wage or salary workers. Marx argues that the reward which a labourer gets to produce a commodity is far less than the value of commodity produced and sold in the market.

A commodity might be exchanged several times. Let’s say a commodity was produced at point A. It was bought by a middleman company and transported and sold again at point C. After being sold at the department store, the commodity leaves circulation. This chain can be represented thus:

A -> B -> C

At each stage of the commodity’s journey profit may be obtained. Let’s suppose profit is obtained when the commodity is sold from the factory at A to the middleman at B. Profit is obtained when the middleman company B sells it to the retail store C. And profit is also obtained when the retailer C sells the commodity to the consumer. Even though profit is obtained at each point in the circulation chain, surplus value can only be produced by the direct producer. Even though profit is obtained by the middlemen and distributor, this profit is not produced by the workers employed by either the middleman B or the retailer C. 

This allows Marx to make the point that the merchant does not get rich by cheating his clerks:

    “We must make the same distinction between him and the wage-workers directly employed by industrial capital which exists between industrial capital and merchant’s capital, and thus between the industrial capitalist and the merchant. Since the merchant, as mere agent of circulation, produces neither value nor surplus-value...it follows that the mercantile workers employed by him in these same functions cannot directly create surplus-value for him...In other words, that he does not enrich himself by cheating his clerks.”

We can extend Marx’s point about clerks to all of those outside production. Eleanor Marx points out, the value that is obtained by all classes has its origin in the direct producers. For all its worth, the distinction between productive and non-productive capitalists remain a question of who gets what share of the unpaid labour of the working class. This is true, not just of the traditional ruling classes, but also of those who are employed but are not direct producers or part of direct production. These workers may help realise value but they do not produce it as the direct producer does. A bank does not create its profit by squeezing value out of its tellers. A bank obtains its profit by receiving a share of the total social product produced by direct producers. Banks obtain their share through investments and financial manipulations, but the origin of that value lies in direct production. The worker's products pass from one hand to another, changing form and names along the way—"value", "commodity", "capital", "interest , "rent, "wage" — depending chiefly on who has them and how they are used. Eventually, these same products — though no longer seen as such — re-enter the worker's daily life as the landlord's house, the grocer's food, the banker's loan, the boss's factory,

How is the value of labour-power determined? Again Marx:"The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this special article. So far as it has value, it represents no more than a definite quantity of the average labour of society incorporated in it. Labour-power exists only as a capacity, or power of the living individual. Its production consequently pre-supposes his existence. Given the individual, the production of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour-time requisite for the production of labour-power reduces itself to that necessary for the production of those means of subsistence; in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer."  This also includes the cost of raising a family of little baby labourers to take his place in the next generation.

More to come