Sunday, May 29, 2011

Capitalism is theft, literally. It is Labor that creates all wealth

by Richard Mellor
Afscme Local 444, Retired

We use the term capital frequently, either in reference to human capital or stocks or factory buildings and money itself. But Marx explained that capital is no one thing, it is a process. In fact he describes very clearly in his General Formula for Capital, how money is transformed in to capital through the process of production.

The source of the capitalists' profit is surplus value, that value created during the process of production that is over and above what the capitalist lays out for Labor power or wages. This is the basis of capitalist exploitation or wage slavery as the relationship has been called over the years. The capitalist hires our ability to work over a period of time and we produce more value than they compensate us for.

Once we accept understand this clearly, life becomes easier for us in a sense; coming face to face with reality is a good thing.

Your average enterprise borrows money to pay the wages of its workers. There are special loans and rates and rules for this type of bowing. That’s another thing, the policies and practices of the business world are very hidden, there’s no such thing as economic democracy. Workers rarely consider that the much praised first amendment of the US constitution, the right of free speech, does not apply in the workplace which is the domain of the capitalist.

I raise this issue because despite coming under vicious assault in an intensified class war, we tend to buy in to the argument that the capitalist has the right to the money, the right to their billions; after all, they earned it. And all the propaganda in society leads us to believe that the business exists through their efforts, they started it.

In a sense this is right of course, an individual may be able to borrow money from a bank using the home their parents left them as collateral and use this borrowed money to purchase plant and machinery, (Marx called this constant capital) and hire a worker or two (purchase human Labor power or a human’s capacity to work, “variable capital” ) and start a small business. The hundreds of millions of dollars that capitalists raise for what they call “start ups” are beyond the capacity of any worker to afford, we just don’t have the collateral for it.

But the main point is that this borrowed money to start a business, or the borrowed money to pay wages every two weeks of the workers in a firm, or the money that banks lend to each other from a reserve is accumulated capital that is the product of past Labor power, past surplus value.

The starting point for their billions
So no matter which way we look at it, the money stored in the banks, the money used to pay wages and buy plant, the surplus value from which the capitalists wealth is derived, all has its origin in the Labor Process and specifically in the surplus value created by the capitalists being able to impose an unequal relationship of exchange on the working class; surplus value is the unpaid Labor of the working class. Surplus value was produced under feudalism too, it was the property of the aristocracy and capitalism was a historical step forward from that relationship in that it advanced the ability of society to produce what we need. But it has outlived its historical usefulness.

Constant crisis is the norm for an economic system of this nature. The wars, poverty, disease and many of the so-called natural environmental disasters are all a by-product of this social relationship. The inner workings and details of the relationship are important to understand and figure out. But it is enough to understand the general processes that take place and how wealth is created because it completely discredits the ideology of the capitalist class that rules society that it is their individual efforts and hard work that creates wealth, that wealth is their creation therefore their product.

So once we get this obstacle out of the way in our own minds, we can see that that a major task ahead of us is to take collective ownership of this surplus value which would include the process of production that creates it. The capitalist would call this theft as we would be taking what they tell us is rightfully theirs. But it is no more rightfully theirs than the slave owners' wealth extracted from the slave  or the feudal Lord's from the serf. It is a right imposed by might, by force.

We are mightier and stronger than them. Through their control of the means of production and the state they use all sorts of methods to divide us and weaken the unity of workers that has the power to change this exploitative relationship. They discredit the ideas of great economists and philosophers like Karl Marx who came to understand and help us figure out how society really works. They hide worker’s history and teach us the history of capitalism, the history of ruling classes. Most importantly, they distort the ideas of scientific socialism in order to deter working class people from delving in to them, something made easier by the existence of the Stalinist regimes in the former Soviet Union and China.

The recent economic crisis has discredited capitalism in the eyes of millions of workers. Our history and the history of political ideas has been driven back but are emerging once again with the increased opposition to capitalist austerity throughout the world.

The Arab uprisings have inspired us all and opened up a new era. There is a lot to be optimistic about.

6 comments:

Unknown said...

Hi. I'm currently reading Malcolm X. He speaks of this very truth. It is the workers/modern day slaves that are creating the wealth for the rich person/business/country.

Unknown said...

Read Karl Marx. He explains thing scientifically without any moral interference and without calling profit as theft. (Actually he attacked Proudhon when he said property is theft)

Richard Mellor said...

Unknown. Why don't you share why you think profit is not theft? I understand why Marx might have said it.

Rick Lannoye said...

I found it so refreshing to read Mellor's post because, much of the public discourse about income inequality fails to explain WHY it's right to tax the rich more or, better, not allow them to lay claim to so much of the nation's wealth--It was not properly theirs in the first place!

I've recently published a book on the topic--Capitalism Is Slavery, Why Claiming to Own the Wealth Others Worked to Create Is Wrong and Should Be Made Illegal--because I feel it's so important that workers realize they are being robbed of most the wealth they create, and the rich who took it are lying when they claim they earned their billions.

Greater taxation of the wealthy would be a great start in terms of recovering some of the wealth they stole, but it is an indirect solution. In my view, it should be illegal for anyone to take the wealth workers create in the first place.

I understand this is not an easy proposition. We could, of course, do as Marx advocated, and have the State take possession of all the means of production. But a more practical and politically doable solution, in my view, is to put strict limits on how much any business can structure it's compensation scale. For instance, we could have a federal law that limits the scale of compensation to 5 times, certainly no more than 10 times, between the paycheck of the lowest paid employee to the highest paid. Admittedly, a US Constitutional Amendment banning anyone from taking wealth created by workers (because that's where wealth comes from) might be necessary to make such a fundamental change permanent.

Rick Lannoye
Thedetector.net

Anonymous said...

Capitalism involves a voluntary exchange of goods or services. What you are essentially claiming here is that anybody who realizes they didn't get the best end of a deal should yell "That's theft!" That's not how it works.

Also, if this assertion from the article is true:
"The source of the capitalists' profit is surplus value, that value created during the process of production that is over and above what the capitalist lays out for Labor power or wages. This is the basis of capitalist exploitation or wage slavery as the relationship has been called over the years."

Then good little socialist and proponents of organized labor ought never sell homes for more than they bought them for. After all, the surplus value they are banking in those transactions isn't really any value they generated, right?

Richard Mellor said...

You are right about it not being theft as both sides have equal right in this system. The capitalist has the right to buy labor power and the worker to sell it. As Marx pointed out, when these two equal rights meet in the market place then force decides. That what the class struggle is. On the second part you’re mistaken as to what Marx was discussing and that Is the economy as a whole. Yes an individual can sell something above its value or for more than they paid for it but that’s not how the rich get rich their wealth comes from unpaid labor created in the labor process and that situation is maintained through coercion, violence and by the capitalist having the control of the state.