Marx Review
labor power
"The value of labor power is determined as in the case of every other commodity, by the labor time necessary for the production and consequently also the reproduction of this special article." - Marx what the laborer sold as a commodity wages fall to subsistence level -Subsistence wages not biologically determined but being determined in social historical conditions -deviations from subsistence level has to do with the industrial reserve army or unemployed people -unemployed people get lower than subsistence wages, they compete with working people to get jobs, which keeps wages at the subsistence level -When capital accumulation takes place, there's a boom period, demand for labor increases, reserve army will be depleted -Capitalists have to pay higher wages. -during booms wages increase -capitalist takes wage level as given, Marx attempted to change to labor saving techniques of production -temporarily alleviates the problem of high wages as the reserve army (unemployed workers) grows due to workers being displaced when newer more efficient technology arises
Industrial capital types
-P: production -M: money -C: commodity M -> C -> P -> C' -> M' surplus = C' - C -what is created beyond what is put into production -origin of surplus value comes from capitalists buying one set of commodities and selling another entirely different set -came with M, left with M', where M'>M. -leave with more capital value than they came with, then restart the same process with said expanded capital -capitalism reflects the never ending cycle of this repeated process
Marx's analysis of capitalism/classical economics
-analyzed creation of surplus endowed by capitalism system -surplus is the value that remains after subsistence wages are paid surplus can be created by lengthening the working day -- work the beginning hours to cover subsistence level and continue working past that to create surplus value -surplus can also be created by introducing better technology -surplus is the root of exploitation -- exchange is not beneficial for everyone: workers are exploited Two distortions in regards to capitalism: 1. capitalism is thought to be universal, however he added that a small portion of people own this capital and use it to create a power relationship with workers in which they benefit by obtaining surplus value created by workers 2. all economic phenomena were reduced to acts of buying and selling commodities -forms of property ownership determines production -production and distribution are not independent of each other when workers are viewed as a commodity, equality between individuals abstractly appears exchange economy based on the self-interested actions channeled through an invisible hand into a socially harmonious whole -- but Marx does not see capitalist society as harmonious
exploitation in the production process
-has to do with control of the production process -formal submission: worker signs a contract with their employer, worker agrees to abide by contract and obey employer -when work day is extended, then we know there is surplus value created, and this value created is called absolute surplus value -real submission: labor can be reorganized technically to make workers produce more -the surplus value created from real submission is called relative surplus value -aka some value is created through working more hours, extending the work day, and this creates absolute surplus value -relative surplus value is created through the technical reorganization of labor to achieve better productivity/efficiency
Neoclassical economics
-he focused on production and distribution not on exchange -does not see private property as sacrosanct -hated capitalism, he paid a tribute to it because of the high productivity growth -classes as an analytical category: 1. workers 2. capitalists -sees exchange as something that allows workers to be exploited -Socialism would not be forthcoming until the conditions of workers were totally deteriorated -This deterioration is inevitable under capitalism
when does capitalism exit?
-in a commodity producing society, one small class of people-capitalists has monopolized the means of production -where the greater majority of the direct producers-workers- would not produce independently because they have no means of production
Social Nature of Commodity Production
-products of human labor are commodities when they are exchanged for money in the market -each producer depends on the product of another and this is the social relationship that exists
Marx's intellectual influences
1. Ricardian influence. He felt that Ricardo's labor theory of value had short comings and proceeded to overcome them. 2. The role of socialists. He felt that socialism would not be forthcoming until the conditions of the working class deteriorated to the point of open rebellion. He sought to show why this deterioration was inevitable under capitalism. 3. The Hegelian influence. He was influenced by Hegel's view that historical knowledge and progress occur through a process of conflict and opposing ideas. 4. The Darwinian connection. Upon reading Darwin, Marx thought that in the struggle for existence favorable variations tended to be preserved and unfavorable ones destroyed. 5. Feurbach's materialism. Philosophical materialism refers to an emphasis on matter, real things, or the world of reality, as contrasted to the realm of ideas.
consequences of capital accumulation
1. economic concentration a. competition among capitalists forces weaker firms to leave market b. as technology improves, the minimum amount of capital need increases, but worker productivity increases alongside the technology improvement 2. sectoral imbalances: the economy is split into consumption sector and capital goods sector a. labor saving technology -> workers are fired due to improved efficiency per worker -> demand for consumption goods decreases -> surplus supply of consumption goods -> producers now will not want to produce consumption goods -> demand for capital used in production of consumption goods will decrease b. total wages decline c. excess supply in both sectors leads to depression d. industrial reserve army increases e. sectoral imbalance is what creates crises in capitalism system 3. cycles and the tendency of falling rates of profits: a. two causes for cycles: i. profits increase alongside investment increase ii. wages increase -> profits decrease b. when wages increase investment is discouraged -- leads to a decrease in aggregate demand -> triggers a crisis and prices will fall and profit rates will decline further worsening the crisis i. crisis expels most inefficient firms -> profit rate increases again -> move economy out of business cycle because: increased average profits leads to increased desire to produce more goods -> increase in demand for labor -> wages increase again -> cycle restarts c. total capital, C = constant capital, K + variable capital V -K = capital in machinery, etc. -V = workers -S = surplus value i. rate of profits = S/C = S/(K+V) -> (s/v)/[(K/v)+1] d. K/V: organic composition of capital -over time ceaseless accumulation of capital would increase the value of means of production faster than the increase in value of labor power, increasing organic composition of capital -all else equal an increase in K/V -> decline in profit rate e. K/V will increase over time because constant capital increases faster than variable capital f. counteracting forces: i. intensity of exploitation could increase if you increase the amount of hours in the workday ii. if there is overpopulation -> wages will go below the value of labor power iii. technological change could make constant capital cheaper iv. similar to Mill, influences of trade: capital invested in foreign trade can increase profits 4. alienation and increasing the misery of the proletariat a. the produce of the worker becomes alien to himself b. the alienation of the worker from the producing activity c. alienated labor alienates men from other men d. alienated from another man, the other man being an individual - alienation reaches its peak in capitalist society throughout history
3 historical pre-reqs needed for a society to be a primarily commodity producing society
1. productive specialization. 2. such specialization required the complete separation of use value from exchange value 3. well-developed markets, which required pervasive use of money as a universal value equivalent mediating every exchange
under what conditions will z(c)/z(k) = p(c)/p(k)
1. when r = 0, but this does not happen in capitalism because profit is not zero 2. when l ( c)/ l( k) = k(c )/k(k ) in general prices diverge from labor values because different techniques are used to produce different goods and the profit rate is not zero
existence of labor as commodity depends on two essential conditions
1. worker must own its labor power and sell it for a limited period of time (not slavery) 2. the laborer sells its labor power as a commodity
stages of industrial capital
M -> purchases commodities C -> uses commodities to production P -> creates commodities C' -> gets money M' C' > C & M'>M By how much is C'>C? By how much surplus labor is put into commodity sold
private property
exists in all societies -private property rights are legal framework for capitalist societies -foundation for capitalists themselves as well -size of capital represents amount of power said capitalist has
Labor Power and the Definition of Capitalism
labor power: a person's ability to work and produce commodities -commodities bought and sold in market -its use value is the performance of work -use value: reflects the relations between particular individuals and material items -when work is performed labor power becomes embodied in the commodity -surplus value is the difference between value created from the commodity and the labor value used to create said product -labor value is unique in that it reproduces itself and adds surplus value
living labor vs dead labor
one commodity produced by means of itself and labor z = labor value of unit of product l = living labor k = input of product (e.g. seeds for corn) V = value of labor power -labor used to produce product paid as a wage to one unit of labor value of gross product: z = l + zk variable capital: v = Vl -labor necessary to reproduce labor power -(1-V): labor appropriated by capitalist constant capital: k = zk surplus value: s = l*(1-V) new z: z = l*(1-V) + Vl + zk = s + v + k rate of surplus value or exploit value: q = surplus labor/necessary labor q = s / v = (1/V) - 1
wage differences between occupations
reflect the fact that special training and education is needed for certain specialized or higher skilled jobs -expenses of this education entered into the total value of various types of labor power
rate of surplus labor
surplus labor/necessary labor
Length of the working day
the struggle between the capitalists and workers that determined the working day
dimensions of value
value has quantitative and qualitative dimensions -quantitative dimension: labor time that is needed for creation of value
Necessary labor vs surplus labor
working hours initially to obtain subsistence level, then following that with working 'extra' hours in order to gain surplus value -value of commodity C' is greater than C by the amount equal to hours worked past point of obtaining subsistence level -capitalism always has workers working for some amount of surplus labor/value -i.e. always extends beyond necessary labor time -commodity labor power is the only source of surplus value
relative labor values and relative prices
z(c) / z(k) = [l(c )+ l (k) k(c )/(1-k(k)]/ [l(k)/(1-k(k)] p(k) = w. l(k) + p(k). k(k) (1+ r) p(c) = w. l(c ) + p (k). k( c ) (1+ r) p(c ) /p(k) = [l(c )/ l(k)] [ 1 - k(k) (1+ r)] + k(c ) (1+ r)
