Why are the workers compelled to accept a wage that allots to them nothing more than subsistence? This, of course, is the real story of capitalism, and Marx devoted a great deal of time and many pages to his answer. Marx was, among other things, the first great economic historian [that is to say, historian of economic matters -- he was also the first great historian of economic theory, which is another thing entirely. See the three volumes of THEORIES OF SURPLUS VALUE.] Looking principally at the evolution of capitalism in England [the data for which were more readily available to him], Marx argues that over a period of several centuries, peasants and artisans were progressively deprived of their ownership of or access to the means of production -- the land, in the first instance, but also the forests, the mines, the tools of their trades, and also, eventually, the inherited knowledge and skill that made them productive craftspersons. Having no access to the means of production, they were left with nothing but their capacity for labor, or as Marx calls it, their Labor Power. They are compelled to work for wages, at terms set for them by the capitalists. At the same time, the traditional bonds between lord and peasant are broken, so that on the one side, the workers are legally free to accept work wherever and at whatever wage they choose, while on the other side, the employer is liberated from any traditional or legal responsibility for the well-being, indeed for the survival, of his workers. It is no concern of his if they starve to death. To be sure, if an employer offers wages well below the market standard, his workers will leave him for an employer offering better wages. But the competition between workers and employers is unequal, because the employers own and control the means of production, and are capable of sitting out a strike, whereas the workers are living from hand to mouth. The key to understanding any historical era, Marx says, is identifying who controls the means of production. It is for this reason that the central demand of socialists is collective control and ownership of the means of production.
A few side notes on this vast subject, which I am merely touching on. First, in the seventeenth century, as capitalism and wage labor were developing, it was common to view working for wages as a kind of slavery [what eventually came to be called by radical critics "wage slavery."] John Locke, in his classic SECOND TREATISE OF CIVIL GOVERNMENT, asserts that I acquire ownership in a portion of the common given to us by God by mixing my labor with it. [Thus, if I clear an uncultivated field and make it ready for cultivation, I acquire ownership of the field by mixing my labor with it.] If my servant [his word], who works for me for wages, clears the land, then, since I own his labor, I and not he acquire property in the land. It is in this way that one individual comes to own vastly more land than he could ever mix his labor with.
Second, Marx considers the appropriation of the means of production perfectly just, by bourgeois [say, Lockean] conceptions of justice. But does he think it is REALLY just? The answer -- rather surprising to readers who expect Marx to be a utopian reformer -- is that there is no such thing as Real JUSTICE. Morality is a by-product of the structure of the social relations of production in an era. Feudal justice simply IS justice in a feudal society, albeit it is an anachronism in a capitalist society. So long as the slave owner in a slave society pays the contracted price for his slaves, he has a legitimate claim to own them IN A SLAVE SOCIETY. Marx never, never says that socialism OUGHT to replace capitalism. he says that socialism WILL replace capitalism, as a consequence of the working out of the "laws of motion" of capitalist society and economy.
One amusing final observation. Capitalism, for purposes of rationalizing the subsistence wage, construes the worker as a petty commodity producer whose commodity is Labor-Power [and for whom the wage is the cost of production of that commodity.] Now, in the American tax code, independent business owners are permitted to deduct their costs of doing business from their gross taxable income before arriving at the net taxable income on which they owe taxes. So, since the worker must eat, wear clothes, and find shelter in order to produce, each day, his or her product -- Labor-Power -- the worker ought to be able to deduct the cost of food, clothing and shelter [and also medical expenses, etc.] from his or her gross taxable income before arriving at the net taxable amount. Good luck! If I am not mistaken, someone [in Connecticut?] actually took such a claim to court. The logic of the claim was, I believe, unassailable, but not surprisingly, the court threw it out. So much for bourgeois justice when it conflicts with the interests of the ruling capitalist class.
Not only did Marx study the history of the development of capitalism, and the history of economic theory, he also studied what actually went on in the factories that were spewing out the vast quantities of commodities that were making capitalists rich. In this as well he was breaking new ground. Marx did not go into factories and watch the production process. Instead he went to that great library, the British Museum. Why so? Because one of the achievements of the Reform Movement that flourished in England in the first third of the nineteenth century was the establishment of a cadre of professional Parliamentary Factory Inspectors charged by the government with traveling around England and gathering data, first hand, on the conditions in the rapidly multiplying factories. The Inspectors not only observed the production process. They also interviewed workers and collected data on their working and living conditions. Their observations were presented to Parliament in [I think] semi-annual Factory Inspectors' Reports, which Marx read, volume after volume. [These reports have been reprinted by the Irish University Press, and should be available in most really good university libraries.] Much of the extraordinary Chapter X of CAPITAL Volume One, "The Working Day," is drawn from the reports, as Marx's footnotes indicate.
Marx describes the endless devices by which employers sought to extract extra labor time from their employees. They would even go so far as to push back the hands of the clock in the factory so as to steal an extra few minutes of unpaid labor. These detailed, matter of fact descriptions give the modern reader an appalling picture of life in the early factories. But it is very important to be clear that Marx is NOT saying that these tricks and thefts on the part of the capitalists explain or account for the existence of profit. One of the beauties of Marx's theory is that it accounts for profits in the ideal, never actualized case in which workers are faithfully paid the wages for which they contracted, the production line is not speeded up above the norm for the industry as a whole, and equal organic composition of capital in all liens of production guarantees that all goods, outputs and inputs, exchange in proportion to their labor value.
It is also important to be clear that despite Marx's itemizing of the cruelties and dishonesties of English capitalists, he insists that we will only have a satisfactory theory of capitalism if we can explain how it works when all the capitalists are good-hearted, upstanding, honest men and all the workers dutiful and obedient employees. His analysis and critique focus on the structure of capitalism, its logic, so to speak, not on the many corruptions of it and deviations from the canons of bourgeois justice.
There is, of course, a great deal more to be said about Marx's account of capitalism, but at this point I want to continue the story I have been telling about Marx's completion and critique of the classical school of Political Economy. We had gotten as far as showing [or at least reporting -- I have not set down the proofs here. They can be found in UNDERSTANDING MARX] that in the special case of equal organic composition of capital, prices are proportional to labor values and surplus labor is extracted annually from the workers in an amount exactly equal to the labor value of the annual physical surplus. The ratio of total profits to total surplus value is then exactly equal to the ratios of prices to labor values, and thus, in that direct sense, profit just IS the surplus labor extracted from the workers.
One terminological point before we move on to Marx's solution to Ricardo's problem of unequal organic composition. In common speech, to exploit something is to make use of it so as to achieve some end. Now, in that very generally sense, we may say that the factory owner exploits coal's natural ability to burn in such a manner as to fuel a power machine, and the corn producer exploits iron's ability to hold its shape and serve as a plowshare. But there is a more precise and limited sense of the word that Marx invokes in his account of the origin of profit. To exploit an input into production in this limited sense is to extract from it, in the process of employing it in production, more value than has been embodied in it in the process by which it was produced. There is, Marx says, only one such commodity [see the mocking passage, quoted above, about Moneybags] -- namely, Labor Power. The capitalist buys a day's Labor Power from its producer, the worker, at its natural price, namely a price proportional to the quantity of labor embodied in it. [By the way, I keep inserting the term "proportional to" because money and labor are measured in two different units -- pounds sterling, let us suppose, for money, and hours of average socially necessary labor time for labor. Hence they can never, in the strict sense, be "equal."] The capitalist then extracts from the labor power, in the production process, MORE VALUE THAN IS CONTAINED IN IT.
It is in this precise sense that, according to Marx, CAPITALISM RESTS ON THE EXPLOITATION OF THE WORKING CLASS.
If I may end today's post on a personal note, it is this proposition, in my considered judgment, that is absolutely true, and remains when all the criticisms I have yet to mount are leveled against Marx's specific solution of Ricardo's problem. The simple truth, as true now as it was when Marx first advanced it, is that capitalism rests upon exploitation. That is why, on this blog and elsewhere, I call myself a Marxist.