MARX BOOK DAY TWELVE

And now, after 130 pages of mocking and mystification, the truth about capitalist production is revealed. Chapter 6, “the Buying and Selling of Labour-Power,” is only 10 pages long but it is, to my way of thinking, the most important 10 pages in the history of economic theory.  Marx has posed a problem, a problem that none of his predecessors fully appreciated or understood.  Only later, after he has revealed his solution to this problem, will he answer the question that Ricardo struggled with and failed to answer.

  

“The change of value that occurs in the case of money intended to be converted into capital, cannot take place in the money itself, since in its function of means of purchase and of payment, it does no more than realise the price of the commodity it buys or pays for; and, as hard cash, it is value petrified, never varying. Just as little can it originate in the second act of circulation, the re-sale of the commodity, which does no more than transform the article from its bodily form back again into its money-form. The change must, therefore, take place in the commodity bought by the first act, M—C, but not in its value, for equivalents are exchanged, and the commodity is paid for at its full value. We are, therefore, forced to the conclusion that the change originates in the use[1]value, as such, of the commodity, i.e., in its consumption. In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power.”

 

Marx begins in a characteristically mocking way. We are to imagine that for some time now the possessor of money, Moneybags, who wishes to expand his pocketbook, has been making commodities and bringing them to market, selling them in the hope that when he exits the market he will have more in his pocket than when he began the production process. But alas, it is not so. He buys his inputs at a price proportional to the labor value, he combines them in his workplace, he takes the finished products to market and he sells them at a price proportional to the labor embodied in them. Since he is an averagely efficient producer of commodities, he does not lose in the process, but neither does he gain anything thereby. 

 

Puzzled by this, he thinks to himself, perhaps there is some input into production that I have not been using, an input that will enable me to exit the market richer than when I entered this process. He tries copper rather than iron, he tries linen rather than wool, he tries steam rather than waterpower. Nothing seems to work.

 

But then Moneybags gets lucky.  Off in one corner of the market he notices a man standing with a sign that says “will work for wages.” Having tried everything else, the would-be capitalist decides to give this unlikely commodity producer a try. And lo and behold, after he has paid the man a price proportional to the labor value of the food, clothing, and shelter that the man needs to produce his labor power for another day, and has combined this man’s labor power with his other inputs, he finds when he goes back into the market to sell what he has produced, he ends up with more money than he had in his pocket when he began! He has solved the problem.

 

It seems that labor-power is the secret ingredient that expands the value of products made by entrepreneurs. But, Marx notes, there are some conditions that must be met in order for this special commodity to appear in the market and be available for combination with the other inputs into the productive process. Here, in this extended passage, Marx lays out those conditions:

 

“[L]abour-power can appear upon the market as a commodity, only if, and so far as, its possessor, the individual whose labour-power it is, offers it for sale, or sells it, as a commodity. In order that he may be able to do this, he must have it at his disposal, must be the untrammelled owner of his capacity for labour, i.e., of his person. He and the owner of money meet in the market, and deal with each other as on the basis of equal rights, with this difference alone, that one is buyer, the other seller; both, therefore, equal in the eyes of the law. The continuance of this relation demands that the owner of the labour-power should sell it only for a definite period, for if he were to sell it rump and stump, once for all, he would be selling himself, converting himself from a free man into a slave, from an owner of a commodity into a commodity. He must constantly look upon his labour-power as his own property, his own commodity, and this he can only do by placing it at the disposal of the buyer temporarily, for a definite period of time. By this means alone can he avoid renouncing his rights of ownership over it. 

 

“The second essential condition to the owner of money finding labour-power in the market as a commodity is this — that the labourer instead of being in the position to sell commodities in which his labour is incorporated, must be obliged to offer for sale as a commodity that very labour-power, which exists only in his living self.

 

“In order that a man may be able to sell commodities other than labour-power, he must of course have the means of production, as raw material, implements, &c. No boots can be made without leather. He requires also the means of subsistence. Nobody — not even “a musician of the future” — can live upon future products, or upon use-values in an unfinished state; and ever since the first moment of his appearance on the world’s stage, man always has been, and must still be a consumer, both before and while he is producing. In a society where all products assume the form of commodities, these commodities must be sold after they have been produced, it is only after their sale that they can serve in satisfying the requirements of their producer. The time necessary for their sale is superadded to that necessary for their production.

 

“For the conversion of his money into capital, therefore, the owner of money must meet in the market with the free labourer, free in the double sense, that as a free man he can dispose of his labour-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realisation of his labour-power.”

 

We may wonder how it comes about that this extraordinary value creating commodity should be available in the market for purchase by clever entrepreneurs, but that is no concern of theirs, and, Marx says, for the time being it will be no concern of ours either. (In the later chapters of Capital, Marx will have a good deal to say about the conditions under which legally free labor power appears as a commodity, but at this point he has other matters to discuss.)  Nevertheless, he does observe that “Nature does not produce on the one side owners of money or commodities, and on the other men possessing nothing but their own labour-power. This relation has no natural basis, neither is its social basis one that is common to all historical periods. It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older forms of social production.”

 

(Let me simply note that this observation by Marx seems to us today is so obvious as to be a truism, and yet no one before Marx had ever really said anything quite like it. This is one of the many ways in which what Marx has taught us has so completely entered into our understanding of the world that even those who consider themselves immunized against his thought have absorbed his insights.)

 

Before we can incorporate into our theoretical analysis what Moneybags has so fortuitously discovered, we must ascertain how the value, and therefore the market price, of this very special commodity is determined. The answer is simple and straightforward. As with every other commodity in the market, the labor value and therefore the price of labor power is determined by its cost of production. The worker produces this commodity by working, which is to say by exerting his or her own physical and intellectual activity, and since in order to work the worker must eat and wear clothes and have somewhere to live, the price of labor-power is determined by the price of the food clothing and shelter that the worker consumes.  And since this is, we must recall, a Ricardian world in which every commodity exchanges in proportion to the quantity of labor required directly or indirectly for its production, the price of labor-power, the money wage, is proportional to the quantity of labor directly or indirectly required for the production of that food, clothing, and shelter and hence is embodied in it.. 

 

Marx adds a qualification that comes directly from Ricardo’s Principles, without however giving him credit, which is unusual for Marx. He writes:  “The number and extent of his so-called necessary wants, as also the modes of satisfying them, are themselves the product of historical development, and depend therefore to a great extent on the degree of civilisation of a country, more particularly on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free labourers has been formed.” 

 

And, of course, like any prudent commodity producer, the worker must make allowance for depreciation.  “The owner of labour-power is mortal. If then his appearance in the market is to be continuous, and the continuous conversion of money into capital assumes this, the seller of labour-power must perpetuate himself, 'in the way that every living individual perpetuates himself, by procreation.'  The labour-power withdrawn from the market by wear and tear and death, must be continually replaced by, at the very least, an equal amount of fresh labour-power. Hence the sum of the means of subsistence necessary for the production of labour-power must include the means necessary for the labourer’s substitutes, i.e., his children, in order that this race of peculiar commodity-owners may perpetuate its appearance in the market.”