George Walford: Wages, Price, Profits and Prospects

The pamphlet by Karl Marx, known in our anarcho-socialist days as “Value, Price and Profit,” was re-issued in 1947, and reprinted at least up till 1976, by Progress Publishers, Moscow, under the title “Wages, Price and Profit.” It still includes the statements by Marx which amount to an assurance that no revolution is necessary. It still says, in effect, that capitalism can operate without producing poverty in the midst of plenty.

According to Marx’s Labour Theory of Value, set out in this pamphlet, under capitalism the workers sell the capitalists their labour power for a price which enables them to maintain and reproduce it; that is to say, for its full value. In working with the tools and raw materials supplied by the capitalist they produce a value greater than the value of their labour-power, and that is where profits come from. Exploitation of the workers consists in paying them the value of their labour-power but depriving them of the full product of their labour. (In what follows I ignore some of the issues Marx deals with, such as wear and tear on equipment used; these complicate things but do not affect the main theme).

Marx gives figures. If, in a working day of twelve hours, six shillings’ worth of labour is added to the raw materials supplied by the capitalist, and the worker is paid three shillings, then the surplus value, or difference between the value of the labour-power expended and the value of its product, will be three shillings and the rate of profit 100%. If the worker receives two shillings the capitalist will get four and a rate of profit of 200%. If the worker gets four shillings the capitalist will receive two and a profit of 50%.

On these figures, even if we take the example most favourable to the worker, it is easy to understand why Marx should be urging the workers to end such a system. The capitalist may well be employing hundreds of workers, each of them getting four shillings for his day’s labour while the capitalist, who has done nothing but supply the equipment, and raw materials, gets two shillings for each worker employed. This may well be thought to justify revolution.

But the pamphlet sets out to analyse the working of an economic system and in that undertaking feelings of indignation, however generous, are out of place. The argument has to be rigorous, each step justified, and when judged by this standard Marx’s examples are nothing to the point. His figures do not derive from the theory, they are hypothetical or historical, and the fact that the system he describes has produced them in the past is no proof that it must continue to do so in future. The Labour Theory of Value shows the workers will not receive the full value of their labour but says nothing whatever about the size of the discrepancy. It does not even say a capitalist must receive more than a worker.

Marx confirms this. He says there is a fixed amount to be distributed, the more the worker gets the less remains to the capitalist, and there is no limit to the amount the workers may receive. These are his words (emphases in the original):

although we can fix the minimum of wages we cannot fix their maximum.

Or, if you would like some context:

But as to profits, there exists no law which determines their minimum. We cannot say what is the ultimate limit of their decrease. And why cannot we fix that limit? Because, although we can fix the minimum of wages, we cannot fix their maximum. (p.51)

This is no isolated or incidental statement; the argument has led up to it from the beginning of the pamphlet and continues from it. Marx goes on to say that the level of wages is fixed (at any point not below the value of labour-power) by the efforts of the capitalist to reduce them and the efforts of the worker to increase them: “The matter resolves itself into a question of the respective powers of the combatants”. “In its merely economic action capital is the stronger side” but working-class pressure has produced legislative interference imposing limitations on exploitation. (p.52)

Two things follow: First, the insistence of the more aggressive left upon the need for a revolution comes from some source other than any objective demonstration, based on the Labour Theory of Value, that so long as capitalism survives the workers will be seriously exploited. We have the authority of Karl Marx for saying that so far as that theory goes exploitation under capitalism can be indefinitely reduced.

Second, that if the workers do continue to be seriously exploited this is not a necessary consequence of relations between labour-power, labour, surplus value and the other matters dealt with by the Labour Theory of Value. Legislative interference has already placed limits upon exploitation and that theory sets no limits to the distance this can be carried. We have the authority of Karl Marx for saying that so far as this theory is concerned wages can be increased, and profits correspondingly reduced, to a point where exploitation becomes a triviality, important to nobody but theoreticians. Whether this will happen or not depends upon what the general body of the people are willing to accept, and that is a question not of economics but of ideology.

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THE MANY readers who turn eagerly to our back page for the latest instalment in the heart-stopping saga of the (A-)SPGB will find it in Harold Walsby’s article, “EITHER BLACK OR WHITE,” on page six.

THE HEBREW journalist dashed into the newsroom, shouting: “Hold the back page!”

from Ideological Commentary 28, July 1987.