One of the many ideological barriers that undermine efforts to understand the origins of profits, or to understand the nature of the relationship between the capitalist and the worker, is the bourgeois ideal of commodity production and exchange as the universal and natural form of human economic life. The late American economist Paul Sweezy argued this point early on in his discussion of value theory in his classical text The Theory of Capitalist Development. Quoting Smith, he sums it up as the idea that the propensity to exchange is peculiar to humans, and thus is one of the pillars, along with the division of labor, of human civilization. However, the analytical tools of historical materialism shed light to the fact that this not the case. In Sweezy’s words, commodity production “is not the universal and inevitable from of economic life. It is rather one possible form of economic life… a historically conditioned form which can in no sense claim to be a direct manifestation of human nature.” Therefore, continuing with Sweezy’s argument, we must direct our attention to “the character of the social relations which underlie the commodity form.”
For example, the view of commodity production as our universal and natural economic form, would lead many to simply disregard capitalist profits as a result of exchange, and the overpricing of final products above the sum of the prices of its inputs. Marx’s analysis clearly demonstrates that this, once again, is not the case. One of the clearest examples on this issue can be found in his discussion on the contradictions in the circuit of capital, where he explains that if an individual with £40 value worth in wine, exchanges them for £50 value worth in corn, the total amount of value continues being £90. Therefore, “if equivalents are exchanged, no surplus-value results, and if non-equivalents are exchanged, still no surplus value. Circulation, or the exchange of commodities, begets no value.” Another of Marx’s important points on the matter is summarized by Sweezy, arguing that if every capitalist “were to attempt to reap a profit by raising the price, let us say by 10 per cent, what each gained as a seller he would lose as a buyer, and the only result would be higher prices all around from which no one would benefit.” At this point, it is clear to us that labor-power must be the source from which the capitalist is extracting profits, or more precisely, surplus value.
As Marx explains, capitalists “must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose, use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labor, and, consequently, a creation of value.” In order to find this commodity, Marx mentions two prerequisites. The individual who possesses labor-power must be the “untrammeled owner of his capacity of labor,” and also must not be “in the position to sell commodities in which his labor is incorporated,” he should “be obliged to offer for sale as a commodity that very labor-power, which exists only in his living self.” As Michael Lebowitz explains, “Marx proposed, workers first must be free in a double sense. They must be free to sell their labor-power… and they must be “free” of means of production.”
Once these conditions are satisfied, the capitalist can buy labor-power and use it to produce use-values. The value of these use-values would be equal to the socially necessary abstract labor time required to produce them. However, if the capitalist were to sell these commodities at a value equal to the sum of the value of labor-power and the value of the means of production required to produce them, he would make no profits. Nevertheless, if the laborer were to continue working, after having worked the amount of hours equal to the value of his labor-power, he would be adding value that would result in profits for the capitalist. Sweezy summarizes this process explaining, “In a day’s work the laborer produces more than a day’s means of subsistence. Consequently the working day can be divided into two parts, necessary labor and surplus labor…” where “the product of surplus labor is appropriated by the capitalist in the form of surplus value.”
This appropriation, for Marx, meant that the working class is being exploited. This leads us to the question, why would the working class voluntarily participate in a process that results in their exploitation? Is it merely an ideological apparatus that perpetuates a false consciousness, allowing the capitalist to exploit the worker with no need for coercion? Surely ideology has a role, but it is in the particular stage of the development of the forces and relations of production that we find the underlying process that explains this phenomenon. As mentioned above, it is with the tools of historical materialism that we can comprehend how the capitalist can extract surplus value from workers in what appears to be a voluntary agreement. Specifically, it is related to the “double freeing” of the worker.
In the transition from feudalism to capitalism, the two conditions of the free laborer were ensured. First, the decay of the feudal system meant the disintegration of the bonds between the serfs and the lords; setting the conditions for a mass of people that are “untrammeled owners of their capacity of labor.” Meanwhile, the enclosure movement ensured the second condition. As Ernest Mandel summarizes, “The economic changes which, between the sixteenth and eighteenth centuries, created a mass of producers separated from their means of production in the towns, were thus accompanied by changes which in practice deprived part of the peasantry of land as a means of producing their means of life. In this way the modern proletariat appeared… In other words, the separation of the producers from their means of production creates a class of proletarians who cannot live otherwise than by hiring out their strength, that is, by selling their labor-power, to the owners of capital, which enables the latter to secure for themselves the surplus-value produced by these producers.”
This leads to what I consider a fundamental question, is the labor process truly free of coercion toward the worker? Surely, legal processes such as indentured and bonded labor or peonage, which were common practice in late feudalism and early capitalism across different geographical areas, are no longer in place to ensure coercive rights to capitalists. However, the absence of official, state condoned, coercive mechanisms, does not imply there is a total absence of coercion. As Lebowitz argues, the buying and selling of labor-power “looks like a free transaction;” however, the workers are being “compelled to sell their power to produce in order to get the things they need… They can sell it to whomever they choose, but they cannot choose whether or not to sell their power to perform labor (if they are to survive).” I would argue that in addition, most areas in the capitalist world economy in reality offer very limited choices in terms of to whom workers can sell their labor-power, but the main point is this: workers must sell their labor-power or starve to death. This is the fundamental reality of the modern proletariat, and this can hardly be classified as a free and voluntary choice.
Modern capitalism obviously generates exceptions or alterations to this fundamental reality. Most advanced capitalist nations possess welfare systems or safety nets that would prevent the worker from actually starving to death. However, this does not change the main point. In this particular case, workers must sell their labor-power or instead live practically in poverty, in conditions that profoundly hamper the development of the individual’s potential or capabilities. Once again, it is hardly a choice free of coercive elements. Would the average individual willingly desire to live in such conditions? Others would surely argue that the modern proletariat actually has choices. He can choose to become self-employed or to become an employer instead of selling his labor-power. However, these practices are the exception, not the rule. These exceptions no doubt help promote the idea that capitalism is a system of voluntary and free choices. Nonetheless, the fact is that a variety of political, cultural, and economic mechanisms block most of the proletariat from following these alternate paths. As Marx says, “Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.” In practice, the mass of dispossessed workers, or free workers from the bourgeois perspective, are in fact forced to sell their labor-power by the processes we have so far discussed.
In addition, once these social relations of production are set, ideological elements develop that secure their continuous operation. This particular process exemplifies the relevance of value theory along with historical materialism. The pertinence of these perspectives, among other reasons, stems from the fact that they are profoundly useful analytical tools to debunk the myths that surround the origin of capitalist profits or the overall workings of the capitalist economy.
Sweezy’s closing remarks on the transformation problem coincide with this point: “Under capitalist conditions, a part of this social output is appropriated by that group and community which owns the means of production. This is not an ethical judgment, but a method of describing the really basic economic relation between social groups. It finds its most clear theoretical formulation in the theory of surplus value. As long as we retain value calculation, there can be no obscuring of the origin and nature of profits as a deduction from the product of total social labor… In short, value calculation makes it possible to look beneath the surface phenomena of money and commodities to the underlying relations between people and classes.” For this reason, value theory and historical materialism are not only useful analytical or theoretical tools; they are fundamental and key tools for activists seeking to organize and recruit workers for the struggle toward a socialist society.
Lebowitz, M. A. (2006). Build it now: Socialism for the Twenty-first century. New York: Monthly Review Press.
Mandel, E. (1968). Marxist Economic Theory Volume One. London: Merlin Press.
Marx, K. (1967). Capital, Volume I. New York: International Publishers.
Marx, K., Engels, F., & Tucker, R. C. (1978). The Eighteenth Brumaire of Louis Bonaparte. The Marx-Engels Reader (pp. 594-617). New York: Norton. (Original work published 1972)
Sweezy, P. M. (1942). The Theory of Capitalist Development: Principles of Marxian Political Economy. New York: Oxford University Press.