Our Work & Our Wages
By Lorenzo Fiorito
Wherever you go in the world, the one inevitable topic of workplace conversation is how little money is made by the workers, compared to how much the boss makes for the privilege of telling you what to do. Far from being an idle complaint, it is exactly this imbalance which is the key to understanding how our society works. This understanding – plain to every worker – is in fact, the beginning point of Marx’s analysis of capitalist society: what he called the theory of surplus value.
We’ll begin with a true-to-life example. Say you work in a factory that produces jackets, which employs 500 people. You can expect to make $8 an hour, and you work 8 hours a day. Let’s say, now, that the average production quota is 500 jackets a day, and that the factory owner sells each jacket to the retailer for $150.
|$8 an hour x 8 hours
= $64 a day for 1 worker’s wages
|$64 a day x 500 workers
= $32,000 a day paid in wages
|500 jackets a day x $150/jacket
= $75,000 worth of jackets produced in a day by the factory
The disparity is obvious. If there are 500 workers who produced 500 jackets, each worker, on average, has produced $150 worth of product in a day, but has only been paid $64 for that day’s work. The factory owner, simply because he owns the factory, has made $43,000 in the day from the sale of these jackets, even though he has done absolutely nothing to produce the jackets. Of course, of this $43,000, some will be spent on the factory: repairing and upgrading machinery, paying the power company, etc. Still, he is a businessman, so quite a bit of the money will go into his pocket.
Someone might argue that the boss has done something to earn his money – he’s risked his money to build up the business; he manages and directs the activity of the company, and so on. However, this misses the point of where the wealth itself comes from. What is the difference between the value of a raw roll of fabric and that of a finished jacket? Labour has been applied to the fabric, just as the difference in value between unprocessed wool and a roll of fabric comes from the amount of labour necessary to make the roll. The boss has done nothing to create wealth at any stage in this process: all wealth is generated by our labour.
Now to return to the example, your labour brings in $150 a day for the company, making your labour worth $18.75 per hour to the boss. But you get to keep just $64, which is 3.4 hours worth of the wealth that you generate.
|$150 of product / 8 hours = $18.75 per hour that is generated by your labour
Your $64 daily wage / the $18.75 your labour is really worth per hour = ~3.4
In other words, for the purposes of our example, you’ve worked a little less than 3 1/2 hours for yourself, and the other 4 1/2 hours in the day have gone to make the boss richer.1 These 4 ½ hours are called, in Marx’s theory, surplus labour, and the value of your work during this time is surplus value. Obviously, the boss relies on this system of exploiting your labour to make his money.
This is the basic relationship which is common to the world economic system that we call capitalism. First there are the people who make money through owning the means of production (the factories, mines, shops, etc.) which produce wealth for them. Then there are those who actually work to operate this machinery. They own nothing that can generate wealth for them except for their ability to work: the only way they can make money is the sale of their labour power. The first group we call the capitalist class (or the bourgeoisie) and the second we call the working class (or the proletariat).
The capitalist buys the labour power of the worker at a price which is more or less just enough to keep the worker alive and able to raise children that will eventually also join the labour force.
The Crisis of Overproduction
Now, everyone knows that capitalism is the system of competition. So your boss who owns the textile factory has to deal with other textile enterprises which also produce jackets. Put simply, competition means that they each have to find a way to produce the jacket more cheaply than the others, in order to attract customers and keep profits high. Once one capitalist has found a way of reducing production costs, every other capitalist is forced to follow suit or go out of business.
There are only a few ways to reduce costs: making the workers themselves work faster and longer for the same pay, investing in more efficient machinery, or transferring work to a cheaper labour market (in our textile example, to a sweatshop in China). How often have we all been asked to work overtime or push production? We are all being forced to work harder and harder to make a living, and all the while the boss is looking to replace us with people who are willing to work for less because they are unemployed or live in poorer parts of the world.
The increased production is at first good for the capitalist; however, every capitalist in every industry is trying to do the same thing! This means that there are more and more people unemployed or making very little (and thus unable to spend money on things like new clothes). Those who can buy only need so many jackets, yet more and more are being produced. This absurd contradiction means that eventually there is no more market for the goods. The rest of the jackets will remain unsold because of falling demand, and in order to try and sell them, the capitalist will reduce his prices – leading to more layoffs – and the spiral continues. And so we have a crisis of overproduction.
What We Can Do About It
The capitalist system has been around for a few hundred years now, and it is common for a worker to feel powerless within it – after all, what are you supposed to do against a boss who is thousands of times wealthier and more powerful as you are? But the key to a solution lies in our starting point: the central role of labour in producing wealth. The system relies on our labour and cannot function without it.
We can draw the following conclusions:
a) The capitalist uses unemployment, differences in average wages in different parts of the world, and the fear of the employed that they will lose their jobs to play sections of the working class off against each other. The solution to this is unity of the working class, cutting across lines of nationality, race, gender, and whatever else the bosses may use to pit us against each other. While these inequalities must be understood and dealt with, we all have in common the fact that we need to feed ourselves and our families, and that we work for bosses who exploit us. It is, after all, our wealth.
b) Our greatest strength is that without our labour, the capitalist system cannot function. Bosses need workers, but workers know how to organize production just fine without the boss. A strike is proof that unified action of workers can bring a boss to his knees; our unions are our best weapon if they are led properly. Linking up workers between industries unifies and strengthens our class, and allows us to take on the capitalists as a class instead of individually.
c) The interests of the bourgeoisie and the working class are always opposed to each other, because both are competing for a share of the wealth that the workers have produced. There is only so much wealth to go around, and how that wealth is used depends on which of the two classes controls society. (There are other classes, but within capitalism they do not have that central role in creating wealth.) Any attempt to change society will eventually have to be led by workers because of their role in the production of wealth.
A society run by the workers will provide the wealth necessary to build a society where all oppressed people will benefit. Workers will use the wealth they produce for things that benefit themselves and all of society: funding education and health care, providing full employment, and funneling money into the arts and scientific research. Since everyone is employed, introducing more efficient machinery will mean, not layoffs, but rather that the quota is met more quickly and there is more free time in the day to participate in politics, pursue further education, participate in the arts, etc. And since the workers are their own bosses, the quotas are decided by the workers themselves, based on how many products are actually needed in the society, rather than producing as much as possible as quickly as possible.
This is the society we are fighting for and the ideas of Marxism are key. Join us!
Read Karl Marx on Marxist economics:
Wages, Price and Profit (brief summary of Marx’s economic theories)
Capital (in-depth; 3 volumes)