When asked about my economic politics, I say I’m “socialist, kinda”. I owe a lot of that to listening to The Barefoot Bum over many years talking directly about how economic systems work, and the problems with capitalism. By comparison, I find a lot of other socialist arguments on the internet unsatisfying. It’s all “overthrow capitalism” and “seize the memes of production”, and I wish we could talk about specifics more often.
So, I’d like to lead a discussion about the problems with capitalism, much like what I did with health insurance years ago. Don’t treat me as an authority, tell me how wrong I am, discuss.
My first subject of discussion, is exploitation of labor. This is a Marxist concept, but I’m not interested in exploring what exactly Marx did or did not believe. I’m interested in exploring (and improving upon) the concept as I understand it. So here goes:
Each worker produces resources at a certain rate, and also consumes resources at a certain rate in order to maintain their life as a laborer. The surplus value of labor is equal to the amount of resources produced, minus the maintenance cost.* The exploitation of labor expresses the idea that the people at top will pay workers only the maintenance cost, while keeping most of the surplus value for themselves.
*Technical language note:
in Marxist theory, the amount of resources a worker produces is their “labor power”, and the maintenance cost is called the “reproduction cost”. see comments
For example, suppose a worker produces 150 cans of soup a day, and spends the equivalent of 100 cans a day (40 cans on rent, 15 cans on food, 25 cans on a retirement fund, 15 cans on healthcare, 2 cans on entertainment, and 3 cans on miscellany). 100 cans per day is the maintenance cost, and 50 cans per day is the surplus. The factory owners only pay a salary of 100 cans per day, and keeps the 50 cans surplus for themselves. The laborers earn enough to maintain a certain quality of life, but never enough to move upwards.
Of course, it’s one thing to tell a narrative, and another to show the narrative to be accurate. In practice, I’d expect that workers receive at least some of the surplus. On the other hand, 80% of Americans live paycheck-to-paycheck, so maybe not very much.
As for that 1 to 2 surplus/maintenance ratio? I pulled that out of my ass, and I have no idea what a realistic ratio would be. The true surplus might be quite complicated to calculate. Perhaps the worker operates a single step of an assembly line, and goes through 10,000 cans a day, but you have to account for the workers on every other step of the assembly line, as well as the cost of procuring raw materials, maintaining machinery, managing workers, etc.
Anyway, in Marxist theory, the surplus rightfully belongs to the workers, but instead it gets hogged by the owners of capital–the people who put up the initial investment to buy machinery and a building.
I want to keep this post brief in order to encourage discussion, so I’ll stop here and continue later. Here’s a permalink to the series.
- One issue with the “maintenance cost” and “surplus value”, is that we might disagree on what counts. Does “entertainment” count as a maintenance cost, or is it extra? What about paying off a mortgage, or student debt? How much do these questions matter?
- To what extent do you think workers are receiving the surplus of their own labor? What economic forces allow them to get at least a slice of that pie?
- Does the surplus rightfully belong to workers? What would a fair distribution look like?
- Where would you like me to take this discussion next?