Shop Talks on Economics

Front matter

BY

AUTHOR OF RHYMES OF EARLY JUNGLE FOLK

CHICAGO

What You Sell to the Boss

SHOP TALKS ON ECONOMICS

I.

What You Sell to the Boss.

If you are a working man or woman, no matter what you do in the shop or factory, or mine, you know that there are two kinds of power used in the plant—human, or labor power, and steam, or water (or perhaps—gas explosion) power.

The owner of a new barrel plant in Indiana decided it would be cheaper to have some company furnish power to run his mill than to install a power plant himself, so he sent for the three representatives of the three power plants in that city.

The first man came from the company that offered to run the machines in the mill by steam power; the second came from a firm which wanted to sell him a gasoline engine to furnish the power by the explosions of gas, while the third came from a great water-power company. This man offered to supply power to run the mill machinery at a lower price than the others asked. Of course, he secured the contract.

By this time the mill owner was almost ready to have his plant opened. He had logs (or raw mate- rial) ready to start on; he had machinery and power to run that machinery. Only one thing more was needed to start the plant running and to produce staves and hoops for barrels. This was the commodity which you workers supply. It is human power, human labor-power.

One hundred years ago almost everything was produced by human labor-power, but gradually improved machinery has been invented that lessens the human toil needed to make things. Big machines, run by steam, or water-power, now do most of the heavy and difficult work. But the owner of the mine or factory or mill needs one other commodity to guide the machines, to tend the machines and feed them. He needs your labor-power.

The barrel manufacturer in Indiana said he needed "hands." He meant hands to do things. He meant labor-power. So he put an advertisement in the paper reading "Men Wanted." Of course he did not want to buy men outright, as folks used to buy chattel slaves. He hired some of you to work for him. He bought your human power (to work)—your labor-power.

And you sold him your labor-power, just as a stockman sells horses or a baker sells bread. You went to the boss with something to sell. He was in the market to buy human labor-power, and if your price was low you probably got a job.

Some of us work many years before we realize that even we wage-workers have one commodity to sell. As long as we are able to work we try to find a buyer of our labor-power. We hunt for a job and the boss that goes with a job.

Men and women who have no other means of support have to sell their labor-power for wages in order to live.

A commodity is something that satisfies some human want; something produced by labor-power for sale or exchange. A dress made by a woman for herself is not a commodity. A dress made to be sold to somebody else is a commodity. It is not made for use, but for sale.

Sheep are commodities, as are shoes, houses, gloves, bread, steam-power and water-power, when sold by one man to another. And your strength to make things, your human laboring-power (or, as Marx says, your labor-power) is also a commodity when sold to an employer for wages.

Now you know that any man who is selling a commodity asks as high a price for it as he can. The little grocer who runs the small store near your home charges just as much as possible in selling butter to you. The coal dealers raise their prices whenever they can. And when you strike the boss for a job, you ask him as high a price for your labor-power as you think you can get.

High prices for labor-power is what wage-workers want. Low prices for labor-power is what your employer wants.

Are your interests identical?

What happens when there are ten men competing to sell their labor-power? Who gets the job?

What happens when there are several jobs and only one worker? Will he receive higher or lower wages? Will he get a good price for his labor-power?

When workingmen are scarce and manufacturers are forced to pay a high price for labor-power (high wages) in a certain locality, does the scarcity of workers last long? If not, why not?

When men are hunting jobs toward which cities do they go? Why?

Does supply and demand have anything to do with the price at which you are able to sell your labor-power?

Why is the steel trust putting up a fifty million dollar plant in China? Will they be able to make more profits manufacturing steel there than in America? Why?

Why do Chinese workmen come to America to sell their labor-power?

Karl Marx talks much of commodities—their value and their price, and in order to understand his teachings, we must know first of all that we are sellers of a commodity called labor-power.

In the next lesson we shall take up the question of what determines the value of your labor-power and the value of all other commodities.

We suggest that students buy and study Capital, by Marx; 3 vols.; cloth, $2.00 each.

Value, Price and Profit, by Marx, 15 cents.

These lessons are only an attempt to say, in the language of working men and women, the things Marx says in his own books.

The Value of a Commodity

II.

The Value of a Commodity.

In the preceding chapter, we learned that the wageworker's relation to the boss is that of a seller of a commodity. Whether you work in a mine, a mill or a factory, whenever you get a job, you are selling your strength to work—or your labor-power—to the boss.

We know that labor-power is a commodity like shoes or hats or stoves.

Now all commodities are the product of labor, that is, there was never a commodity that was not the result of the strength and brains of working men or women. Workers make shoes; bakers of bread are working men or women; houses, street cars, trains, palaces, bridges, stoves—all are the product of the laboring man. All commodities are the product of labor.

There is one common thing which all commodities contain. This is labor. A commodity only has value (exchange value) because it contains human labor.

Horses are commodities, cows are commodities, gold is a commodity. Human labor has been spent in producing all these. Labor-power is also a commodity, the result of human labor in the past.

Working men and women spent labor producing you and me. Somebody made bread, sewed shoes, built houses and made clothes for us. All the things we ate and drank and wore and used were made by the labor of working men and women. Their labor was necessary labor. Without it we should never have grown old enough or strong enough to have labor-power to sell. Labor-power was spent in raising us to the point where we would be able to work.

The value of a commodity is determined by the social labor-time necessary to produce it. On page 61 of the Kerr edition of Value, Price and Profit, Marx says:

"It might seem that if the value of a commodity is determined by the quantity of labor bestowed upon its production, the lazier a man, or clumsier a man, the more valuable his commodity, because the greater the time of labor required for finishing the commodity. This, however, would be a sad mistake. You will recollect that I used the word social labor, and many points are involved in this qualification.

"In saying that the value of a commodity is determined by the quantity of labor worked up or crystalized in it, we mean the quantity of labor necessary for its production in a given state of society, under certain social average conditions of production, with a given social average intensity, and average skill of labor employed."

If you spend three months cutting up a log with a pen-knife into a kitchen chair, it will be no more valuable in the end than the kitchen chair made in the big factories where many men working at large machines produce hundreds of chairs in a single day.

Of course we know that every new improvement in machinery lessens the labor-time needed in making certain commodities. Oil is less valuable than it was ten years ago because it takes less labor-power to produce it. Steel has fallen in value, because owing to the new and improved machinery used in making steel it requires less human labor power for its production.

Suppose every shoe factory in the country were working full time in order to supply the demand for shoes. The factories using the very old fashioned machinery would require more labor to the shoe than the factories using newer machines, while the great, up-to-date factories using the most modern machines would need comparatively little human labor-power in producing shoes.

The value of shoes would be determined by the average (or social) labor-time necessary to make them, or the socially necessary labor contained in all the shoes.

The value of gold or silver is determined in the same way. The necessary social labor needed to produce gold gives it its value. The value of gold rises or falls just as the value of other commodities rise or fall. Today gold is much lower in value than it was twenty years ago, because new methods of production have reduced the social labor needed in gold mining about one-half. If you have twenty dollars in gold it is only of half the value of twenty dollars twenty years ago. It contains only half the labor.

In the same way we may determine the value of laboring-power. "Like every other commodity its value is determined by the quantity (or time) of labor necessary to produce it.

"The laboring-power of a man exists only in his living individuality. A certain mass of necessaries must be consumed by a man to grow up and maintain his life. But the man, like the machine, will wear out, and must be replaced by another man. Besides the mass of necessaries required for his own maintenance, he wants another amount of necessaries to bring up a certain quota of children that are to replace him on the labor market and to perpetuate the race of laborers… It will be seen that the value of laboring-power is determined by the value of the necessaries required to produce, develop, maintain and perpetuate the laboring-power." (Value, Price and Profit, pp. 75-76.)

The value of a man's labor-power is determined by the social labor necessary to produce it, Marx says. This means food, clothing, shelter (the necessities of life) and it means something additional to rear a boy or girl to take your place in the shop or factory when you grow too old to keep up the fierce pace set by the boss.

Enough to live on and to raise workers to take our places—this is the value of our labor-power, if we are wage-workers.

QUESTIONS.

What is a commodity? What does the wage-worker sell to his employer?

What determines the value of a commodity?

What do you mean by SOCIAL labor-power?

Are matches less valuable now than they were ten years ago? Why?

Have commodities in general decreased in value in the last ten years of improved machine production? Why?

Name commodities that have decreased in value. Has rubber increased in value? Why?

Does it take less labor power to weave cloth, to make cement, to slaughter hogs than it did twenty years ago? Why?

Remember that SCARCITY may cause a commodity to exchange (sell) above or below its value, but it does not make value. Marx says that Value is human labor (in the abstract).

Every class should have at least one set of Marx's Capital for reference in connection with these lessons. The Table of Contents in these three volumes is a splendid guide to students. Price, $2.00 a volume, $6.00 for the set; we prepay expressage.

Prices

III.

Prices.

The value of a commodity is determined by the necessary social labor contained in it. If some one told me that an overcoat was equal in value to the value of (or contained in) a suit of clothes, I would know that the overcoat and suit of clothes were equal in value because they contained equal quantities of the same common thing—labor.

Generally speaking the value of four pairs of trousers is about equal to the value of one coat. Why is the coat more valuable than the trousers? And what determines the measure of value when we come to exchange commodities?

You exchange your labor-power—to the boss—for perhaps $2 in gold a day, and in turn the gold is exchanged for the necessities of life—food, clothing and shelter. Why do these commodities exchange for each other?

As we learned before, labor is the measure of value. The coat, mentioned above, exchanges for four pairs of trousers because the coat contains four times the quantity of social labor that one pair of the trousers contains.

The necessary social labor contained in a commodity (shoes, coats, gold, bread, your labor power, or whatever it may be) determines what it will exchange for. The natural tendency is for commodities of equal value to exchange for each other, or for other commodities of equal value.

For example: the amount of wheat produced by ten hours of necessary social labor time will exchange for the amount of cloth, shoes, chairs, gold or some other commodity that will be produced by ten hours of necessary social labor.

The value or values for which commodities will exchange change constantly as the social labor necessary to their production changes. Last month we read of a new molding machine that enables one boy to produce as many castings in one day as four men had been accustomed to produce. These castings have now greatly decreased in value (in the individual plant where the new process is used) but the total value of castings in general has been only slightly reduced. The average labor necessary to produce castings is only a little less than formerly. When the new process becomes general and the average necessary labor greatly reduced, castings will greatly decrease in value.

"If we consider commodities as values, we consider them exclusively under the single aspect of realized, fixed, or, if you like, crystalized human labor. In this respect they can differ only by representing greater or smaller quantities of labor, as for example, a greater amount of labor may be worked up in a silken handkerchief than in a brick.

"A commodity has value, because it is a crystalization of social labor… The relative values of commodities are, therefore, determined by the respective quantities or amounts of labor worked up (or contained) in them." (Pages 56 and 57, Value, Price and Profit.)

"In calculating the exchangeable value of a commodity we must add to the quantity of labor last employed, the quantity of labor previously worked up in the raw material of a commodity, and the labor bestowed in the implements, tools, machinery, and buildings, with which labor is assisted." (Value, Price and Profit, page 60.)

The value of barrels, for example, is determined by the social (factory) labor spent in producing staves and hoops and the labor time used in producing the portion of machinery worn out in making them, as well as the necessary social labor spent in cutting and hauling (producing) raw logs for use in the mill.

Every time more social labor is needed in making commodities—shoes, hats, gloves, stoves or cigars—whatever these commodities may be—their value is increased. Every time the quantity of socially necessary labor is lessened in the production of commodities, their value is decreased.

Nearly all kinds of furniture have greatly deereased in value the past few years owing to the improved machines used in their production and the relatively small quantity of labor contained in furniture.

Gold has steadily been decreasing in value in the past ten years owing to the improved methods of producing gold and the decreasing quantity of labor contained in it.

Rubber is steadily growing more valuable because the available world supply has been nearly exhausted and it requires more time hunting or planting, and caring for rubber trees—more labor is contained in a pound of rubber than a few years ago.

Gradually we see huge machines replacing the smaller ones in all the great producing industries and, with the constant introduction of more improved machinery, the quantity of human labor contained in commodities produced by modern methods—grows less and less. Such commodities decrease in value with every decrease in the labor embodied in them.

Price.

Price is the money name for which commodities exchange. We are accustomed to figure in gold prices. All our bank notes read "payable in—so much—gold." But gold is a commodity just like bread, or overcoats, or dresses, or automobiles. And commodities tend to exchange for the sum of gold containing a quantity of labor equal to the quantity of labor contained in them.

That is, if ten dollars in gold contains forty hours of necessary labor, that gold will exchange for (or will buy) as many pairs of shoes as forty hours of social labor will produce.

Generally speaking, a commodity containing ten hours of necessary labor will tend to exchange for gold, or any other commodity containing ten hours of necessary labor.

This is true when price and value are equal. But supply and demand cause commodities to exchange (or sell) above or below their value, temporarily.

A temporary shortage in coal—when the supply does not equal the demand—may enable the dealers to exchange coal above its value for a short time. An over supply of automobiles may cause the manufacturers to offer to sell (or exchange) autos below their value, for a time.

Prices are often a little above or below the value of commodities, but they are always inclining toward the value of commodities.

(Please remember that we are not here speaking of monopoly prices. We shall consider them in a later lesson.)

"If supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, that is to say with their values, as determined by the respective quantities of labor required for their production… If, instead of considering only the daily fluctuations, you analyze the movement of market prices for longer periods… you will find that the fluctuations of market prices, their deviations from values, their ups and downs, paralyze and compensate each other; so that, apart from the effect of monopolies and some other modifications I must now pass by, all descriptions of commodities are, on the average, sold at their respective values or natural prices…

"If, speaking broadly, and embracing somewhat longer periods, all descriptions of commodities sell at their respective values, it is nonsense to suppose that profit, not in individual cases, but the constant and usual profits of different trades, spring from the prices of commodities, or selling them at a price over and above their value.

"To explain the general nature of profits, you must start from the theorem that, on an average, commodities are sold at their real values, and that profits are derived from selling them at their values, that is in proportion to the quantity of labor realized (or contained) in them.

"If you cannot explain profit upon this supposition, you cannot explain it at all." (From Value, Price and Profit, pages 68, 69 and 70.)

QUESTIONS.

Why does skilled labor-power sell (or exchange) at a higher price (for more gold) than unskilled labor? Does the fact that it requires more LABOR to produce a skilled laborer, that it takes more years of feeding, clothing and shelter to PREPARD a skilled workman, have anything to do with the VALUE of their labor-power?

Mining experts tell us that it takes much less labor-power to produce the commodity—gold, than it did a few years ago. Have you noticed that your gold (or money) exchanges for fewer commodities nowadays than it did ten years ago?

Wheat is produced for a world market. Do you think wheat has decreased much in value in the past ten years as compared to the decrease in value (or social labor necessary) of steel?

We believe it takes very nearly as much labor-power to produce a bushel of wheat (on the AVERAGE) as it did in 1900; hence its value must have remained nearly the same.

Why then will a hundred bushels of wheat today exchange for MORE gold dollars than it did in 1900?

If the VALUE of both commodities had remained the same and no monopolist controlled the world's wheat or gold supply, they would exchange upon the same basis as formerly. That is, the same amount of gold would exchange for (or buy) the same amount of wheat.

Does the decreased value of GOLD result in the farmer getting a higher price (or more gold) in exchange for his wheat crop?

(Do not forget that, as Marx says, if we cannot explain profits upon the basis that all commodities exchange at their Values, we cannot explain them at all.)

Our next lesson will take up Surplus Value, which explains how capitalists make profits even though all commodities exchange at their values.

Remember that we do not sell our labor. We sell our strength to work our laboring power, our labor power. Labor is the expenditure of labor-power. See Value, Price and Profit, pages 71, 72 and 73. When we apply for a job, we do not offer to sell our WORK, but our strength to WORK. The commodities we make are crystallizations of our work or of our LABOR, but it is our strength to labor, or laboring power—our labor-power which we sell to the boss.

How Profits are Made

IV.

How Profits Are Made.

Many of us have been accustomed to think that profits are made from graft, from special privileges or from monopoly. We have talked so much of thieving among capitalists that we have altogether overlooked the great, main method of profit taking.

As Marx says, if you cannot explain profits on the supposition that commodities exchange at their values, you cannot explain them at all.

And so we shall assume (as in truth they generally do) that commodities, on the average, exchange at their value.

Suppose that it takes two hours of necessary labor to produce the necessaries of life for a workingman—or, in other words, two hours of labor a day to produce laboring-power.

Suppose too (as is very likely the case), that $2.00 in gold represents two hours of labor.

Now the value of labor-power (which the working-man sells) is determined (as the values of all commodities are determined), by the social labor contained in it. It is represented by the necessities of life, produced by two hours of necessary labor a day.

If the workman sells his labor-power at its value, he will receive in return a commodity containing two hours of necessary social labor, In the case we mention above, he would receive $2.00 a day.

In other words, a day's labor-power represents two hours of labor, embodied in the food, clothing and shelter that produce it, just as the two dollars in gold (or an equivalent) represent two hours of necessary labor. The labor-power is equal in value to the value of the $2.00 in gold. The workman has sold his labor-power at its value.

The workman receives enough ($2.00) in wages to eat, drink, to rest and clothe himself—enough to produce more labor-power. He receives the value of his labor-power.

But wage laborers sell their laboring-power to the bosses by the day or by the week, at so many hours a day. The capitalist buys the commodity (labor-power), paying for it at its value. If the wage worker is a miner, in two hours he will dig coal equal in value to his wage of $2.00 a day. The coal he digs will contain two hours of labor just as the two dollars in gold contain two hours of labor and as the necessaries for which he exchanges his two dollars, contain two hours of labor.

In other words, in two hours (of necessary labor) the miner would have produced value in coal equal to the value of his wages (or his laboring-power). But he sells his labor-power by the day or week and the boss prolongs the hours of work as far as possible.

In two hours, however, the miner has produced enough value to pay his own wages, but the boss, having bought the laboring-power by the day, may be able to make the wage-worker work ten hours daily. The miner needs only to work two hours to produce a value of $2.00 to reproduce his labor-power. As Marx would say:

He must daily reproduce a value of $2.00 (which he will do in two hours), to daily reproduce his labor-power.

But when he sells his laboring-power to the boss the boss acquires the right to use his labor-power the entire day—as many hours as the worker's physical endurance will permit.

If he forces the miner to work ten hours daily, the workingman will be laboring eight hours beyond the time necessary to pay his own wages (or value of his labor-power). These eight hours of surplus labor are embodied in a surplus value or a surplus product.

In two hours the miner produces in coal value sufficient to pay for his labor-power, but in the eight succeeding hours of labor he will produce coal valuing $8.00, all of which the capitalist retains for himself.

Since the miner sold his laboring-power to the capitalist, the coal, or value the miner produces, belongs to the capitalist.

Thus the capitalist spends $2.00 a day in wages (or two hours of labor) and acquires coal, or other commodities, equal to $10.00 (or ten hours of labor). Thus come profits.

Year after year the capitalists buy labor-power, paying for it at its value (in the case of the miner at $2.00 a day). The capitalists own the products of the workers—equalling ten hours of labor. They exchange a commodity (gold, or money), containing two hours of labor for labor-power (containing two hours of necessary labor—represented by the necessities of life). But when the miner goes home at night the capitalists find themselves owners of the coal he has dug, which contains ten hours of labor.

Coal (representing ten hours of labor) will exchange for gold (or money) containing ten hours of labor; in this case for $10.00. The miner has produced $10.00 worth of coal. He received $2.00.

The eight hours of value, or $8.00 worth of coal, which the capitalists appropriate, is surplus value, for which they give no equivalent.

"It is this sort of exchange between capital and labor upon which capitalistic production, or the wages system, is founded, and which must constantly result in reproducing the workingman as workingman and the capitalist as a capitalist.

"The rate of surplus value, all other circumstances remaining the same, will depend on the proportion between that part of the working day necessary to reproduce the value of the laboring-power and the surplus time or surplus labor performed for the capitalist. It will, therefore, depend on the ratio in which the working day is prolonged over and above that extent, by working which the working man would only reproduce the value of his laboring-power or replace his wages." (Page 81, Value, Price and Profit, by Karl Marx.)

The capitalist owns the product of his wage-worker. When he sells this product he disposes of commodities a part of which have cost him absolutely nothing, although they have cost his workman labor.

It is easy to see how the miner received the value of his laboring-power; $2.00 gold contain two hours of labor, $2.00 exchange for—or will buy—the necessaries of life (produced by two hours of labor) which will enable the miner to produce more labor-power for the next day's work.

In this case the miner's product, the coal he digs in one day, contains five times the quantity of labor needed to produce the necessaries of life, which produce, in him, more strength or more labor-power.

For the things he gets for his labor-power contain only two hours of labor, while the things he produces, and which are claimed by the capitalist, contain ten hours of labor.

The miner sells his labor-power and, naturally, the capitalist desires to use it as profitably (for himself) as possible. If the wage-worker demanded commodities in exchange for his products, containing an equal quantity of labor, he would no longer be a wage-worker, for capitalists would no longer employ him. There would be nothing—no surplus value—left for the capitalists.

But men and women who have nothing to sell but their labor-power have no choice in the matter. They are compelled to sell their strength or labor-power in order to get wages to live. Capitalists, on the other hand, employ them for the sole purpose of taking profits. Capitalists are forced to give the working class enough to live and work on, but they try by every means at their command to prolong the working day into ten, or even twelve hours, in order that more surplus products, or surplus value, may remain for themselves.

But intelligent workmen and women are not content with selling their laboring-power at its value. They are coming more and more to demand the value of their products. We are growing weary of being mere commodities, compelled to sell ourselves, for wages at the regular "market price." We are weary of receiving a product of two hours of labor for products containing ten hours of our labor. We are tired of living on meagre wages while we pile up millions for the capitalist class.