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.

What’s Wrong With Capitalism?

In the previous post I argued from the standpoint of the inter-subjective theory of consciousness that relationships predicated on domination are — if I may be so bold as to use the term — immoral (there are different methods which one may employ to arrive at immorality, but the basic idea is that, where domination is present, I can neither recognize myself as self nor the other as self, and, insofar as recognition of self-as-self and other-as-self is inherent to our nature, this is a problem.)  Assuming this evaluation is correct, the next reasonable question is, what about capitalism?  In the realm of political theories which would seek to eradicate the domination of the state, there are those who would argue that capitalism must also be eradicated (left-libertarians, libertarian socialists, social anarchists,etc.) and those who maintain that capitalism should be preserved (right-libertarians, minarchists, so-called anarcho-capitalists, etc).

Classical anarchism is rooted in socialism, which, by the end of the 19th century had split between anarchists of various stripes and Marxists (i.e., socialists who do not advocate the immediate elimination of the state).  What the two still held in common, however, was the conviction that capitalism must be abolished.  Marx understood capitalism as boiling down to two essential things: the accumulation of profit and private property.  Based upon this definition, an ethical critique of capitalism follows quite naturally.  While I do not consider myself a Marxist, the following is an excerpt from a paper I wrote over Marx’s critique of capitalism which I feel succinctly encapsulates my argument against capitalism.  The underlying assumption, as will become clear, is that individual human persons are inherently valuable, which immediately problematizes the ethical egoist foundation of capitalism, which reduces the value of individual persons to monetary gain and therefore, in principle, renders such concepts as human rights and social justice tertiary at best, and immoral at worst, should they conflict with the only absolute value which is profit maximization.

The goal of the accumulation of profit may be very briefly shown to naturally result in exploitation and alienation.  Quite simply, when the goal of opening a certain factory and hiring workers to work in that factory is to accumulate profit for the owner/employer, it is obvious that the worth of these workers will be valued insofar as they bring in profit.  Should a particular worker bring in (what is perceived as) too little profit, she will be swiftly let go and replaced by another who can ensure greater profit for the corporate elites, no matter what the negative consequences may be upon the worker who has been dismissed.  Had she brought in more profit, her employment would have been maintained and, essentially, she would have deserved the wages which will afford her food, housing, etc.  What this essentially boils down to is this: if the worker is not monetarily valuable to the employer, she does not deserve to eat, have a home, or any other of the basic necessities.  And not only this, but insofar as labor laws require corporations to spend more money to ensure the safety of its workers, in the absence of such laws these safety precautions will likely not be taken and thus the workers will be subjected to unsafe working conditions.  But because their labor is forced (as a result of the nature of the system), they must continue working under these conditions regardless (assuming they want to eat, of course).  [Note: many will argue that labor is not forced because the worker voluntary gives her labor to the capitalist in exchange for pay, and she could just as soon “take her work elsewhere”, as the saying goes.  This line of argument has problems, however.  First of all, because corporations are in competition with one another, they must produce the greatest amount of product, for the least possible cost, to gain the maximum amount of profit.  As a result, we have no reason to assume, should the laborer look elsewhere for employment, that the next employer would be any better than the first.  Secondly, what often happens is that one giant corporation monopolizes the market and destroys the competition.  When this happens, the laborer essentially has two options: work for this corporation, regardless of the conditions or pay, or don’t work at all, which means, in effect, give up the possibility of food, shelter, and livelihood.  It is a lose-lose situation.  Hence, labor is forced because it is performed out of necessity rather than desire.]

Now, to be fair, all of this assumes a rather libertarian-esque, laissez-faire economy, and one may reasonably argue that we now have laws in place which are meant to protect workers from these very dangers which result from the capitalist system.  However, to the mind of the present author, this is an absurd justification.  To say that the system should be maintained because, though the system naturally results in overwhelming amounts of exploitation and dehumanization, laws have been implemented to, in varying degrees, defend against this exploitation and dehumanization is hardly justification.  When the foundation of a home is causing problems we do not simply patch the roof and repaint the siding and call it good.  So too, following Marxian argumentation, capitalism should be abolished and an entirely new system adopted.

But this is not the only aspect of capitalism which results in alienation.  Private property, according to Marx, “is on the one hand the product of alienated labour, and on the other hand the means by which labour is alienated, the realization of this alienation” (308).  Specifically, a possession becomes private property when it brings profit to the owner, who does not himself work, but rather hires workers to work and earn profit for him.  And once this happens, the worker finds herself in the situation described above.

Obviously, what has been offered is only a brief argument against capitalism, but I think it is sufficient in demonstrating why it is, at best, not readily apparent that capitalism is a desirable system and, at worst, that it most certainly is not a desirable system.  There is much more which could still be said for the violence, oppression, coercion, racism, sexism, classism, etc. which is arguably also inherent to the capitalist system.  However, based upon the above argument, it is not difficult to see how such implications would naturally follow from capitalism.

Coupled with the previous post on inter-subjectivity, then, what has been offered is an argument in favor of a social structure predicated on anti-authoritarianism, anti-capitalism, and egalitarianism — that is to say, anarchism.

Anti-Authoritarianism and Inter-Subjectivity

“No mistake or crime is more horrible to God than those committed by power.  Why?  Because what is official is impersonal, and being impersonal is the greatest insult that can be paid a person.” — Kierkegaard (quoted in Jacques Ellul’s Anarchy and Christianity)

In Problems of Dostoevsky’s Poetics, Mikhail Bakhtin writes of Dostoevsky’s novels that “the heroes suffer destruction because they cannot wholeheartedly affirm the other, “thou art.” (5) The tragedy, in other words, occurs when the “I” of the hero fails to recognize the “I” of the other.

The theory of inter-subjectivity has its roots in the German Idealist philosopher Johann Gottlieb Fichte.  However, it was fully developed by G.W.F. Hegel.  The basic idea of an inter-subjective theory of consciousness is that one must first recognize an “other” before it can recognize itself.  There is no I without a thou.  How this happens, according to Hegel, will be explained in the following excerpt from a paper I wrote over the subject.  (Quotations are taken from Hegel’s Phenomenology of Spirit, translated by J.L.H. Thomas, reprinted in part in Philosophic Classics Volume IV: Nineteenth-Century Philosophy, ed. Forrest E. Baird and Walter Kaufmann).

In the Hegel’s master-servant dialectic, the thesis and antithesis which must be synthesized are “self-as-self” and “other-as-other”, respectively.  The synthesis, Hegel declares, is “other-as-self”.  How this comes about is not quite as complicated as Hegel’s jargon would suggest.  Essentially, the single existing self-consciousness initially inhabits a world comprised of self and other, i.e. the world of objects.  Inevitably, this self-consciousness will meet another self-consciousness, whereupon an interesting process of recognition ensues.  When the self-consciousness first comes into contact with another self-consciousness, the first immediately recognizes that the second is not simply an other (i.e. a rock, tree, etc.); not only is it not simply an other, but it is, in fact, a self, and in so being, is so similar to the first self-consciousness that the first, upon recognizing that the second can clearly not be categorized as “other”, can see only one other option: the second self is self, meaning that the first self’s self is projected onto the second, whereby the first self is no longer self, but other.  And while this is taking place in the consciousness of the first, the second is having exactly the same experience.  In the midst of this, each consciousness is essentially having an existential crisis: as Hegel says, “self-consciousness has lost itself, for it finds itself as another being” (36).

What is to be done?  The two must fight to the death: “it must set out to do away with the other independent being in order thereby to become certain of itself as the essential being” (36).  From the standpoint of the first self, the second must be destroyed so that selfhood can be re-appropriated upon the first self.  Almost immediately, then, one self (we’ll say the first) achieves victory over the other (the second), and the second has already accepted that it must be defeated.  However, “[t]his proving through death does away… with the truth that was to result from it” (38), for, while the first has the second in a death-grip, it realizes that, per the inter-subjective theory of self-consciousness, if the second is destroyed, the first can no longer recognize itself as self, and will experience alienation without an other to recognize it as a self.  In lieu of destruction, then, the first simply dominates the second and forces the second to become a servant.  In this way, the first – now, the master – can exist for itself, but also has the second, which only exists for the other, to recognize the first as such.

However, this master-servant relationship does not last forever.  While the master does nothing for itself, but demands absolute servitude of the servant, it grows dependent upon the servant.  And the servant, in the meantime, works and masters the earth, and, “attains as a consequence a view of independent being as itself” (40).  Eventually, this results in an over-turning of the master-servant relationship.  In order for the master to regain mastery, it must also become a worker, living alongside the servant, who has also attained mastery.  And when this happens, the relationship is no longer one of master-servant, but rather, we might say, one of worker-worker.  Domination is no longer possible and the new relationship is predicated upon mutual exchange and equality.

In other words, any relationship predicated on the domination of one self over another will necessarily result in Dostoevskian tragedy for the dominating party.  According to the inter-subjective theory of consciousness, a proper I and Thou relationship is not possible so long as one I dominates the other.  Thou cannot be truly recognized as an I in such a relationship, and, by extension, I cannot be truly recognized in the absence of the recognition of Thou.  The two must be equal in order for this to happen.

Ergo, the inter-subjective theory of consciousness precludes the possibility of human beings existing in any real relationship to one another so long as hierarchical structures predicated on domination exist.   As Kierkegaard says, the relationship of the powerful to those over whom power is exercised is necessarily an impersonal one, and, therefore, in his own view, such relationships are actually sins against God, who created us as social creatures.  Hence, in destroying the possibility for proper social relations, we are sinning against God in that we are destroying the image of the one in whom we are made — namely, an image predicated on communality.

Consequently, Marx took many of Hegel’s ideas and ran with them, throwing out the metaphysical aspects and postulating a strictly atheist-materialist understanding of the historical dialectic.  Nevertheless, it seems that he, as a social holist, would agree with Kierkegaard insofar as he saw the domination and exploitation of capitalist society as unnatural and, quite simply, bad.

Human beings are naturally social creatures, who are meant (whether because of God or historical materialism, or both) to live in community with one another, rather than in dominating relationships which destroy the I and Thou.