Labor, value and capitalist production

by Richard Mellor
Afscme Local 444, retired

If we ask workers, or even capitalists where profit comes from, the answer generally is that it comes from selling the product that the particular industry makes above its cost of production. But this is not so.  Profit is made not by selling a product higher than the cost of making it it but in the labor process itself.  The capitalist sells the commodity the worker makes for more than the capital he or she put out in the labor process, the capital for machinery, plant etc along with wages or the price of labor power. But the added value is present in the commodity itself prior to sale, it is merely realized or set free through the sale which is why we live in a 24 hour marketplace and the imbecile Bush urged us to "go shopping" after 911.

This added value contained within the commodity and realized in the sale has its origin in the labor process because the worker produces a certain amount of money value in the labor process (with the assistance of the means of production that the capitalist owns) but in return receives money (wages) that equals only a portion of the value the worker produces.  If the workers produce the value (let's say shoes) of their wages in 6 hours for example, the capitalist doesn't send them home. What would be in it for them?  So while it appears because we are paid a wage, that we receive 8 hours pay for the value we produce in 8 hours work, we are only paid for part of this working time. The value (again, shoes for example) that we produce beyond this we receive nothing for. It is an unequal exchange, the owner of capital receives value or a finished commodity that contains labor power they paid for and labor power they didn't.  This unpaid labor power is the source of profit and Marx called it surplus value.

I am not an economist but this view of the world makes absolute sense to me and explains concretely how workers are exploited in what we call capitalist society; it corresponds to objective reality as I see it.  But what got me to thinking about this was an ad I just saw on TV.  This ad started off stating something like how can an idea become reality "without the capital to make it happen?". I agree with that statement incidentally and understanding exactly what "capital" is, is another task for workers who want to understand how the world actually works.

Then there was another ad that immediately followed it saying the same thing about a "vision" how a vision can become concrete or a real.  A vision can only become reality with "financing" the ad tells us. The ad is right, capital, money or financing is absolutely necessary to make ideas real. 

But in both these cases there is another vital aspect missing and that is human labor power or labor as most people would say.  It is as if this function doesn't exist.  Someone has an idea, another has money and presto, you have society.  But as I explain above, labor is the source of profit and therefore all value creation or wealth.  The short term payroll loan that the capitalist takes out from the banker is simply a reserve capital, the product of labor power past.  It is a collective product.

Not only was human labor missing in these ads, it reminded me of when I hired a guy to do some work on my old house before I sold it. He gave me the contract to sign and I noticed that at the end he had a percentage under the heading "profit". Nowhere was there a column or a mention of the unpaid labor of the workers he employed although his payment for labor power was there, the hourly rate he paid his painters but naturally, there was no mention that he paid them less in wages than the value they create through their labor power.

So at least, labor was in existence in this example but profit again, or its source is not defined.

Someone, I can't remember who, once said that the system works behind the back of society, even the capitalists if you ask them do not really think it through.  They attribute bubbles and excess simply to "animal spirits" or claim "crony capitalism" the culprit whatever that means. They refuse to recognize that these occurrences are an inherent aspect of this system of production, of capitalism and its many contradictions.

As a wage worker all of my life, even before I became political or was introduced to socialist and/or Marxist ideas I used to get mad when I would read or hear something  like, Donald Trump or Howard Hughes built this or that hotel or resort.  "No they didn't" I would say to myself angrily.  Welders, iron workers, laborers, bricklayers, painters, plasterers, carpenters, they built that resort.  Waiters, servers, cleaners, maids, bartenders accountants and other workers operated it, made it function.

Capitalism is an exploitative system, we know this in our gut, but it's a bit harder to see that in a wage system where we are told we are paid 8 hours pay for 8 hours work which is not possible, than in feudal society for example where the exploitation was much clearer as the surplus was given in kind.  The serf would see the product, food for example,  of two or three days labor be handed over to the feudal lord not to mention tithes and rights the lord had like sleeping with your bride on her wedding night.

For the feudal aristocracy the peasant was there to serve their interests, they were the rightful owners of the land and everything on it bar the commons and their wealth came from the peasant's labor.  The capitalists view wage workers in the same way; it doesn't even exist in the creation of things.  All is needed is an idea and some money.

Without production there is no life and without labor there is no production.