Profit, Wages, and the Human Good

In his work What is Property? Pierre-Joseph Proudhon famously declares that “property is theft.”[1] In particular, Proudhon has in mind the products of labor, which, under capitalism, the worker produces but does not own. Nor can she afford to buy them, Proudhon says, “Because the right of increase does not permit these things to be sold at the cost-price, which is all that laborers can afford to pay.”[2]

In a capitalist system, the means of production (i.e., land, factories, tools and machinery, as well as stocks and bonds, etc.) are privately owned in order to maximize profit (and these privately owned means of production are what we refer to as “private property”). Workers are hired to produce with these means of production commodities that can be sold on the market. In order to ensure profit, these products must be sold for more than the cost of producing them. Furthermore, most of this consequent surplus value does not go to the workers but rather to those who own the means of production. A fraction of surplus value is then returned to the workers in the form of wage.

What this means is that, quite literally, the value produced in the workers’ labor is stolen from them and only partially returned (an objection which, as it happens, sounds rather similar to capitalist anti-taxation arguments). And the owners have a vested interest in keeping the workers’ wages as low as possible, so that profit is maximized as much as possible. As Milton Friedman insists, businesses have no social responsibility whatsoever other than the maximization of profit.[3]

Karl Marx writes in the Economic and Philosophic Manuscripts of 1844:

For [political economy], therefore, the worker’s needs are but the one need – to maintain him while he is working insofar as may be necessary to prevent the race of laborers from dying out. The wages of labor have thus exactly the same significance as the maintenance and servicing of any other productive instrument . . . Wages, therefore, belong to capital’s and the capitalist’s necessary costs, and must not exceed the bounds of this necessity.[4]

In other words, wages, according to Marx, are literally a maintenance fee.

Human beings are seen (whether implicitly or explicitly) solely in terms of potential profit. Unemployed persons, then, are not producing profit and therefore needn’t be afforded the maintenance fees of wages. Capitalism, in other words, annihilates the possibility of thinking of persons or things as intrinsically valuable – all value is externalized and measured against capital, which is the sole and absolute measure of value.

This is readily apparent when we consider the fact that we must purchase the things that keep us alive (i.e., food, shelter, healthcare, etc.) – which is to say that our very lives are commodities to be purchased. And the only way that we can afford to do this – speaking in the hypothetical absence of a welfare state, which is continually derided as “socialist” and therefore fundamentally anti-capitalist – is if we have jobs, which is to say if we are producing value. And “value,” of course, means capital. If I am not profitable to the capitalist, then I have no standing in relation to capital, the absolute measure of value. And, therefore, quite literally, I have no value and do not “deserve” food, shelter, healthcare, etc. Marx is once again helpful on this issue: “The worker exists as a worker only when he exists for himself as capital; and he exists as capital only when some capital exists for him. The existence of capital is his existence; his life[.]”[5]

What is often forgotten, it seems, is that it was anarchists, socialists, and other labor activists who were fighting against capitalists in favor of such basic worker protections as an eight-hour day, forty-hour week, minimum wage, and child labor laws. All of these cut into profits, and, furthermore, in the case of unskilled labor, if one worker demands a living wage, the capitalist can fire the worker and have a new one, who is willing to work for low wages, hired and trained by the end of the day. Workers are utterly expendable and, as human beings, have no value in and of themselves. Their value is literally a question of how much profit they bring to the capitalists.

On its own, capitalism ignores externalities, such as damage to the environment or the implications for the well-being of society. Frans de Waal points out another telling quotation from Milton Friedman, who says, “few trends could so very undermine the foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.”[6]

As social creatures, our well-being as individuals directly correlates to the well-being of the whole. We are not atomistic individuals who make totally free, totally isolated market choices, which have no effect on society as a whole (an assumption upon which capitalism, as a product of Enlightenment thought, rests). Individual choices have implications for society at large. It’s no mystery why societies in which everyone has access to the basic necessities of food, healthcare, and education are generally happier, healthier, and safer.

I’m not talking about utopia. I’m not saying all our problems will be solved if we just tax the rich a little more and redistribute wealth more equally. I’m talking about how to make things better. Hell, it doesn’t take a rocket scientist to figure out that healthy, happy, and safe workers are better workers. True, ensuring this might cost more in the short-term, but if capitalism were capable of considering long-term impacts – which, granted, I don’t really think it is or ever will be – then increased worker protection and social welfare would be a no-brainer. To be sure, this is an argument for what I take to be a relatively morally neutral “Enlightened Self-Interest” (i.e., I do what’s good for others because it is also what’s good for me), but it’s a hell of a lot better than the straightforward egoism of free market capitalism.

Ann Jones recently published an article in which she praises the social-democratic system of Norway. Now, again, I’m no social democrat (I’m much more strongly anti-capitalist than that), but I do think that Jones makes some important points regarding the superiority of a system that protects more than just the profitability of corporations. She writes, for example:

In the Nordic countries, on the other hand, democratically elected governments give their populations freedom from the market by using capitalism as a tool to benefit everyone. That liberates their people from the tyranny of the mighty profit motive that warps so many American lives, leaving them freer to follow their own dreams—to become poets or philosophers, bartenders or business owners, as they please.

Putting aside the question of whether and to what extent this truly happens in Norway (I’m not the one to ask), Jones is making a point here that I have often tried to make before: The world needs folks who are doing what they are passionate about. Why? Well, for one thing, there is the Enlightened Self-Interest argument that folks who are passionate about what they are doing will obviously do better than folks who are not, and that excellent work will benefit society as a whole.

Another angle on this is that it helps reaffirm the inherent value of work. Socialism is often misunderstood as the position that it doesn’t matter how much work you do, you should still be paid the same at the end of the day. Putting aside the fact that the presence of any form of monetary remuneration is altogether rejected by many socialists, this is not quite the argument.

Marx, for example, made a point of arguing that human beings need meaningful labor, but that capitalism denies most of us this basic human good – something like 80% of Americans hate their jobs – in the name of greater circulation of cheap commodities (implying that “freedom” is fundamentally “freedom to consume”). Labor has become totally instrumentalized – a mere means to the end of having food to eat. Socialism, then, wants to reclaim the inherent value and goodness of labor.

For some socialists, such as communists, this may indeed mean the total abolition of any and all forms of currency and remuneration. For others, such as collectivists, a labor theory of value (i.e., the value of a product is determined on the basis of the labor required to make it) would guide a labor note system, wherein remuneration would be relative to one’s work, but with the crucial difference from capitalist forms of remuneration that the inherent value of life and labor would be affirmed such that even those who do less skilled or less dangerous forms of work would have their needs met just because they are human beings and as such do not need to “earn” the “right” to live.

The capitalist threat of destitution may ensure that most of us work, but work at what? Convincing people to buy cheap clothes they don’t need made by slave children in Bangladesh? Knowingly selling electronics – also made by slaves – that are intended to break in three years to ensure the next model sells? Selling fast food products that are ridiculously unhealthy? What social goods are being promoted with these kinds of jobs? And yet, these are the kinds of jobs that low-wage workers typically have. Do we really need to make sure this kind of labor endures? Just because consumers have been manipulated by advertisements into providing “demand” for these “services”?

Individual persons do not exist in vacuums and neither, by extension, do their market choices. We need to recognize ourselves as intimately bound up with the social whole. Noam Chomsky enquires after the human good in his most recent publication, and ultimately argues that a form of libertarian socialism is the answer. I am inclined to agree, but I do not claim to know. I’m not interested in drawing up blueprints for the perfect society of the future. I’m interested in how well we look after each other right now, and I have to say, free market capitalism seems to me to be one of the worst ways of doing so.

As I’ve argued before, capitalism is inherently and necessarily plutocratic, and therefore anti-democratic by its very nature. Socialism, on the other hand, is not only the position that we need democracy, but that democracy should go all the way down into the workplace, where the wheels of society truly turn. Accordingly, if we want democracy, we need socialism.


 

Notes

[1] Pierre-Joseph Proudhon, from What is Property?, in Anarchism: A Documentary History of Libertarian Ideas, Volume One: From Anarchy to Anarchism (300CE to 1939), edited by Robert Graham, (Montreal/New York/London: Black Rose Books, 2005), 34.

[2] Ibid., 35.

[3] Milton Friedman, “The Social Responsibility of Business is to Increase Profit,” The New York Times Magazine, 13 September 1970, available from: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html.

[4] Karl Marx, Economic and Philosophic Manuscripts of 1844, trans. Martin Milligan (Amherst: Prometheus Books, 1988), 86.

[5] Ibid.

[6] Frans de Waal, The Age of Empathy: Nature’s Lessons for a Kinder Society, (Three Rivers Press: New York, 2009), 38.

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