The poor capitalist

[tolbiny]

Discalimer- I am sure someone (or many people) have made these points before, but as i am new to reading in capitalism and have not read them in other works specifically. So I pass them off as my own only in so much as i am not directly copying them.


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Capital is money, capital is commodities. By virtue of it being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs.
Karl Marx


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Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth - the soil and the labourer.
Karl Marx


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Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks.
Karl Marx

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Nothing can have value without being an object of utility
Karl Marx

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In his writings Marx intentional makes a distinction between capital and labour, but without satisfactory explanation. Labour has all of the qualities of capital, it has value and is saleable, what is it that makes labour a non commodity that ought to be seperated from other sources of capital?

Commodity
2. something of use, advantage, or value.
It is clear that laour fits this definition percisely.

The direct implications of valuing labour are simple. The factory worker, the farmer, the working poor are capitalists. Trading the only capital they have to better their postion. "By virtue of it being value, it has acquired the occult ability to add value to itself". Yes! The individual labourer increases his utility, the facotry worker goes from unskilled to skilled at his practice increasing the value of his labour, and fits again perfectly into the perception (this one Marx's own) of a capital good. Capital is not "dead labour" as Marx claims it is the natural growth out of labour, value adding value to itself. "It brings forth living offspring, or, at the least, lays golden eggs. " Again, Yes! The strengths of capitalism lie in the adding of value to your start up capital, gains on top of gains, precisely what makes capitalism so great for the lower classes. Their small initial supply of capital, thier limbs and brains, lungs and muscles, is as unplowed field, adding experience and knowlege to it makes it more productive, makes it more valeuable, and makes the capitalist (the owner of the capital) richer.

Quotes from this link (http://www.brainyquote.com/quotes/authors/k/karl_marx.html)

[vhawk01]

Politics maybe? You'd at least get more responses.

[Propertarian]

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Commodity
2. something of use, advantage, or value.
It is clear that laour fits this definition percisely

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This is an extremely broad definition of commodity. Everything in life becomes a commodity by this definition.

The important point to remember, regardless of whether or not you want to call human labor a commodity, is that the labor market works very, very differently than the commericial goods market for a variety of reasons, e.g. A) Labor cannot be detached from the person who is giving it B) Capitalists are not buying output or even labor when they are hiring workers; they are buying labor time, and they must extract actual labor/output from the workers (hence the massive ammount of time and money used on supervision; also, some employers pay above market clearing wages to try and extract more work; this sounds good, but has a drawback: because of, among other reasons, this fact, excess "supply "is not eliminated by decreased "price" in the labor market, and therefore capitalism creates involuntary unemployment) and C) humans can decide, think, feel, protest, sabotage, quit (unlike a candy bar or a machine). A candy bar cannot decide whether or not it will be bought or sold, or for what price it will be sold at. A human can; they can work for less than market wage, refuse to work at all because of market wage, take a job but than not do any work, etc. If the workers don't do what the employer wants, the employer cannot sue the worker for compensation. Economists, therefore, call labor contracts "incomplete" contracts; they don't specify or gurantee what the buyer is getting.

These are not Marxian distinctions here, however. This insight was first presented formally, I think, by Bowles and Edwards in the first edition of "Understanding Capitalism", or in their previous work.

Now, Karl Marx's comments here are wrong because of an extrapolation on this comment:

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Capital is not "dead labour" as Marx claims it is the natural growth out of labour, value adding value to itself.

[/ QUOTE ] Marx thought that one of the reasons Capitalism would destroy itself was the following: profits come from "exploitation" of labor only; he deduced from this and the fact that capitalists use less and less labor as time goes on that Capitalism will destroy itself because the rate of profit will decline and decline.

However, what he failed to realize is that Capital amplifies the quantity and quality of each individual laborer's output (a man with a tool can do more than a man with his bare hands), and therefore, even given that labor is what produces value (as opposed to, say, consumer demand) the rate of profit will not necessarily fall.

[Bill Haywood]

what is it that makes labour a non commodity that ought to be seperated from other sources of capital?

Keep reading. He argues that capitalism turns labor into a commodity. When you make your own shoes and grow your own food, labor is not a commodity. When you sell your labor, (rather than, say, surplus vegetables or shoes), then it is a commodity. The proletarian is one who has nothing to sell but his own labor. Selling labor, rather than objects, is a fundamentally different relationship with the marketplace. It opens the worker up to new forms of exploitation. You are now directly subject to the control of the employer, as opposed to an artisan or small farmer who sells goods, not labor, and has more control over his life and the productive process. At least according to my dim memory, it's been awhile.

[tolbiny]

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Politics maybe? You'd at least get more responses.

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I'd ratehr discuss the thoery and philisopical sides to this than the political applications.

[Propertarian]

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Selling labor, rather than objects, is a fundamentally different relationship with the marketplace. It opens the worker up to new forms of exploitation. You are now directly subject to the control of the employer, as opposed to an artisan or small farmer who sells goods, not labor, and has more control over his life and the productive process. At least according to my dim memory, it's been awhile

[/ QUOTE ] This is true, and Marx may have said this (he wrote thousands and thousands of pages on capitalism) but, it doesn't really change the fact that his deductions are wrong here.

[tolbiny]

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A) Labor cannot be detached from the person who is giving it

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If you define labbour as you did (a person's time) then it certainly could be viewed as detached. The person goes into the labour contract with his body and comes out with it, what he has lost is time and energy, neither of which are permant fixtures of his physical self.

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B) Capitalists are not buying output or even labor when they are hiring workers; they are buying labor time, and they must extract actual labor/output from the workers (hence the massive ammount of time and money used on supervision; also, some employers pay above market clearing wages to try and extract more work; this sounds good, but has a drawback: because of, among other reasons, this fact, excess "supply "is not eliminated by decreased "price" in the labor market, and therefore capitalism creates involuntary unemployment)

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I don't think i agree with your conclusion here. You are mixing up who is selling the labour and who is buying. The employer purchases the labour, at higher prices he wants to purchase less and and lower prices more. So lower prices will reduce involuntary unemployment, as there will be more jobs availible. Perfectly full use of resources is not a goal in a changing market anyway as that reduces (or eliminates) flexibility and stifles innovation. New ventures are viewed as more risky, and it would cost more to lure someone away from a steady job thanto pay someone who is currently not empoyed, increasing the costs of new businesses and slowing economic growth.

Need to think some about C.

[Propertarian]

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You are mixing up who is selling the labour and who is buying. The employer purchases the labour, at higher prices he wants to purchase less and and lower prices more. So lower prices will reduce involuntary unemployment, as there will be more jobs availible.

[/ QUOTE ] No, i"m not mixing them up. Re-read my comment. The employer does not want to (always) reduce prices for the reasons that I gave: employers sometimes want to pay more for labor because paying more will allow them to extract more work (and loyalty) from their employers and therefore they can actually get higher profits from spending more money on labor (depending on the what the curve looks like here; example C pays L $5/hr then L produces $10/hr at that rate, but if C pays L $7/hr then L produces $13/hr; it is therefore more profitable to pay L $7/hr; to pay L more money ($6/hr in profits instead of $5; contrast this to the true commodity of capital: it is always more profitable to get Capital Product A for a lower cost than it is to get Capital Product A at a higher cost, because capital product A always gives the same output, regardless of its price. The workers output and loyalty varies with "price"/wages, unlike all non-living "commodities") the buyer actually does not want to reduce the cost in this situation.

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If you define labbour as you did (a person's time) then it certainly could be viewed as detached. The person goes into the labour contract with his body and comes out with it, what he has lost is time and energy, neither of which are permant fixtures of his physical self.

[/ QUOTE ] I didn't define labor as a person's time; as I said in the next sentence, what the capitalist is buying is labor time, which is distinct from labor/output/work. A capitalist is not purchasing labor when they hire a worker but only labor time.

[tolbiny]

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contrast this to the true commodity of capital: it is always more profitable to get Capital Product A for a lower cost than it is to get Capital Product A at a higher cost

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This is where I disagree. The capitalist is not buying the "same" labour at a higher cost, he is buying a different quality labour at a higher cost, much as a construction foreman can purchase differing qualities of steel for differing costs. If the employer could purchase the same quality labour at lower costs he would want to buy more of it, same with any commodity.

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I didn't define labor as a person's time; as I said in the next sentence, what the capitalist is buying is labor time, which is distinct from labor/output/work. A capitalist is not purchasing labor when they hire a worker but only labor time.

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Which means it can be detached from the worker, the worker shows up at 8 and leaves at 5, he has left behind him 9 hours of his life that he values in some way. He has been compensated for something he no longer has.

[tolbiny]

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what is it that makes labour a non commodity that ought to be seperated from other sources of capital?

Keep reading. He argues that capitalism turns labor into a commodity. When you make your own shoes and grow your own food, labor is not a commodity. When you sell your labor, (rather than, say, surplus vegetables or shoes), then it is a commodity. The proletarian is one who has nothing to sell but his own labor. Selling labor, rather than objects, is a fundamentally different relationship with the marketplace. It opens the worker up to new forms of exploitation. You are now directly subject to the control of the employer, as opposed to an artisan or small farmer who sells goods, not labor, and has more control over his life and the productive process. At least according to my dim memory, it's been awhile.

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The difference between making shoes and selling them in my own sotre and being paid to make shoes in someone else's store is the time at which i am paid. To say that it opens up the worker to new types of exploitation is to ignore that it also opens up the worker to new types of benefits. The worker doesn't have to spend time speculating on the shoe market, figuring out how many shoes to produce, what materials to make, finding suppliers, paying for his training and worrying about having unsold stock as the artisan does. For the aritsan his labour is a commodity, only he is selling it as a part of a whole shoe, while the factory worker sells it as an input before hand.

[Propertarian]

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This is where I disagree. The capitalist is not buying the "same" labour at a higher cost, he is buying a different quality labour at a higher cost, much as a construction foreman can purchase differing qualities of steel for differing costs. If the employer could purchase the same quality labour at lower costs he would want to buy more of it, same with any commodity.

[/ QUOTE ] You are forgeting here that the capitalist is not really buying labor, he is only buying labor time (the capitalist is not getting a set ammount of output at all; he can't sue the worker for showing up but not creating the quality and quantity of labor he wants, etc). The capitalist is buying the same person's labor time either way. You have to recognize that labor time is really what is being exchanged to understand this; all the contract specifies is that the worker will get X dollars for each hour he is in location Y; the capitalist is not buying any labor at all technically-if he was the capitalist could sue the worker for not doing actual work, or not producing the quantity and quality of labor/work/output he wants (which would generally not even solve this problem, because workers often don't have anything anyway). Hence, the employer most attempt to extract work from his employers, and they use the carrot (higher wages) and the stick (supervision) to do so.

In any case, this comment is irrelevant to my conclusion. Whether or not your explanataion is correct or mine is, it still follows that this phenomena leads to involuntary unemployment. The quality of Capital A does not magically increase when you pay more for Capital A instead of less, but if the quality of labor A does increase when you pay more for Labor A instead of less (and it is trivally true that it does at least some of the time), we still have pay above market clearing wages, and therefore excess supply/unemployment.

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Which means it can be detached from the worker, the worker shows up at 8 and leaves at 5, he has left behind him 9 hours of his life that he values in some way. He has been compensated for something he no longer has.

[/ QUOTE ] Different definition of "detached". He has to actually physically be there at the job; he's attached to his time. If he sells a candy bar, he does not have to follow the person with the candy bar around the whole time until the person eats the candy bar. The worker has to physically be their with his labor time.

[tolbiny]

I'm really enjoying this, but my econ background is 1 year of macro in high school and links read over the past year in these forums, so i am likely to misuse/misunderstand a term or two (at the very least).


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The quality of Capital A does not magically increase when you pay more for Capital A instead of less

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Of course it not magical, but if the quality doesn't increase enough then that company will revert back to its old standards of pay (or be outcompeted by the companies that didn't raise their pay levels).

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we still have pay above market clearing wages, and therefore excess supply/unemployment.

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If the pay increase levels are more profitable then this will increase investment in the sector, increasing emplyment opportunites. Further more we have the blessing of marginal utilty fromt he workers, and as they are paid more their free time becomes more valuable and they will want to work less at some point (either through fewer hours, more vacation or earlier retirement). Besides these points short term unemployment isn't nessecarily a bad thing as it frees up resources to move to other areas. I don't view short term unemployment as a weakness of capitalism, but a strength.

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Different definition of "detached". He has to actually physically be there at the job; he's attached to his time. If he sells a candy bar, he does not have to follow the person with the candy bar around the whole time until the person eats the candy bar. The worker has to physically be their with his labor time.

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This seems like an arbitrary cutoff point, the candy bar is chocolate, nuts and nuget mixed with labour and hairnets. There are very few commodities that don't require labour to make them usable (a clean stream, or an apple tree come to mind) but if i sell you a gold bar it had to be mined and refined before sale, it only leaves my side possession when the trannsaction is finished, much like a worker punching out at the end of the day.

[Propertarian]

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If the pay increase levels are more profitable then this will increase investment in the sector, increasing emplyment opportunites. Further more we have the blessing of marginal utilty fromt he workers, and as they are paid more their free time becomes more valuable and they will want to work less at some point (either through fewer hours, more vacation or earlier retirement). Besides these points short term unemployment isn't nessecarily a bad thing as it frees up resources to move to other areas. I don't view short term unemployment as a weakness of capitalism, but a strength.

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I'm really enjoying this, but my econ background is 1 year of macro in high school and links read over the past year in these forums, so i am likely to misuse/misunderstand a term or two (at the very least).

[/ QUOTE ] Unfortunately, it looks as though I'd have to get into economic graphs here to explain here, which is what I feared. This one is a little too long for me to explain I think; I'll try once more without.

Consumer goods market: Let's say that the supply of candy is higher than the demand for candy at price Q. What happens, (ignoring transaction costs and information problems, for the time being; two things which also cause involuntary unemployment in capitalism, btw) is that the the price of candy will decrease, which will clear the excess supply, because it increases (quantity) demand for the candy; more people will buy it for 50 cents than a buck.

Now, in the case of the labor market, employers don't always have an interest in lowering the wages of the worker, because that will decrease loyalty and work output-which will decrease profits in some cases (they could hire more supervisors, but that leads to the same result as raising wages i.e. more cost for the employer). So, because of the fact that work output/quality changes with the "price" of it, many employers don't lower wages. The end result: the excess supply is not removed by changes in price, supply is greater than demand. Involuntary unemployment=supply exceeding demand in the labor market.


Therefore, longterm involuntary unemployment. This ignores social norms against pay cuts, which clearly also has an effect on this (nobody gets mad if you cut the price of an inanimate object, but people (especially the workers) do if wages are decreased).

[BCPVP]

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. The quality of Capital A does not magically increase when you pay more for Capital A instead of less, but if the quality of labor A does increase when you pay more for Labor A instead of less

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I'd liken it to oiling a machine properly. Sure the machine might still work if it isn't oiled properly, but it will work better if it is. The quality of the machine's output is made better by "paying it more" oil. Nothing magical about it.

edit: Similarly,
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Therefore, longterm involuntary unemployment. This ignores social norms against pay cuts, which clearly also has an effect on this (nobody gets mad if you cut the price of an inanimate object, but people (especially the workers) do if wages are decreased).

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A machine might get "mad" and not work as effectively (or "quit") if not properly maintained.

[Propertarian]

Your reply, if taken seriously, actually just would actually make the consumer goods market and the capital goods market more distinct (which I'm all for; nuance is good); it would not demonstrate that the labor market worked like the consumer goods market. What I'm trying to show is the difference between the labor market and the consumer goods market (although Marx was trying to do something else).

[BCPVP]

Pretend the machine is a car then. Proper maintainence (changing oil and other fluids) leads to better performance. Mistreatment (not changing fluids) leads to worse performance or even lack of performance (like quitting). That sounds pretty close to me.

[Propertarian]

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Pretend the machine is a car then. Proper maintainence (changing oil and other fluids) leads to better performance. Mistreatment (not changing fluids) leads to worse performance or even lack of performance (like quitting). That sounds pretty close to me.

[/ QUOTE ] Even if true, the labor market works differently still, because this fact obviously does not have the same consequences in and for the the consumer goods markets as it would in the labor markets, (hence my comment about "seriously" in my first reply).

But it's not true. Not all products require any kind of maintenance; some are consumed immediately. And that maintenance is not provided by given a higher wage. Also, how can a product have "loyalty" to a person?

Human communication and relations is of course different in (approximately) a billion ways than product maintenance.

Finally, your analogy isn't quite right. The analogy from machine to human you are giving here should be an injury (or death) when transfered to humans; but I wasn't talking about breakdown of body/inability to function being a problem, I was talking about sheer refusal, a lack of willingness to create as much output as possible.

A machine can only have an inability to work; it cannot consciously decide to work more or less.

[tolbiny]

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So, because of the fact that work output/quality changes with the "price" of it, many employers don't lower wages. The end result: the excess supply is not removed by changes in price, supply is greater than demand. Involuntary unemployment=supply exceeding demand in the labor market.



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Again you don't show why this short term unemployment prevents a market correction and the end result is long term unemployment. Anytime the labour market is paying above market clearing wages there will be added incentive for new businesses, new investment and more competition, just as with any commodity. What prevents this in the labour market?