exploitation where do profits come from

Mark Bergfeld 12 July 2013

@mdbergfeld

Exploitation: Where do profits come from?

1. Deepest crisis since the 1930s 5 years into the crisis

a) The living standards are the lowest in a decade according to Financial Times last

month; household debt, longer working hours, stress and people in dead-end jobs;

no surprise that the indignados slogan No future resonates with millions across

the globe

b) At the same time multinational companies like Apple are making record profits. In

the first quarter of 2012, Apple made $11.5bn in profit alone; Starbucks profit

rose by 26% in the first quarter of 2013 to $390million; even troubled banks like

RBS announces first quarter profit of 826 million in 2013.

c) According to those figures one would believe capitalism is healthy and on its way

out of the crisis. But the IMF predicts that growth will stagnate until at least 2018.

Furthermore, for every company that runs a profit there is another company which

loses out: for every Apple, theres a Nokia who couldnt keep up with latest

technology of smartphones; for every Starbucks there is a local coffee shop down

the road driven out of business and for every RBS which saved by the state theres

a Lehman Brothers or Northern Rock driven up against the wall

2. The ugly face of capitalism

a) In his book Why Marx was right Terry Eagleton points out that you know that

capitalism is in crisis when people start speaking about capitalism once again.

They drop the their euphemisms of the free market, liberal democracies. In the

same way, when people speak about exploitation that something isnt going so

smoothly after all: so people accused Apple of exploitation of Foxconn workers

in China; Starbucks accused of exploitation of its staff when it didnt face up to

paying its taxes, or when it signed up to the Workfare scheme and RBS accused

of exploitation when it charges too high interest rates for medium and small

businesses to kick-start the economy

b) While its common sense use always implies injustice and moral outrage, it hides

the fact that exploitation of workers happens every day when we enter our jobs,

and work for a supposedly fair days wage. It is central to the dynamic of the

system whether one works for Foxconn in China, serves coffee at Starbucks or is a

cashier or white collar bank worker at RBS. It doesnt make a difference whether

rhe company is profitable or not for that matter.

c) In all class societies whether slave or feudal society people people have been

exploited. Wherever there is someone who works and another person who

appropriates the surplus. In feudal societies, the landlord would take us much as

he could wine and dine and live a lavish lifestyle off. Drawing on untypical


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political economists such as David Ricardo and Adam Smith, Karl Marx argued

for a scientific approach to exploitation. It helps us to distinguish between poverty

and oppression and exploitation. This scientific approach effectively unlocks the

riddle of how capitalism can also be overcome.

3. The Commodity-form

a) For anyone who has read Marxs Capital you will be well aware of the fact that

Marx starts his magnus opus with the commodity. (It actually took me all of

2007 to get through that first chapter) For all those who havent read it, this might

seem strange, but there is a reason: unlike the bourgeois economists who give a

partial view of the system, Marx wants to disclose the inner workings and

dynamic of the system. In order to do so, he starts out with the most basic unit in

capitalism: the commodity.

b) The commodity has a dual character for Marx: On the one hand, it is characterised

by what he calls use-value, or we could crudely call utility-function. So in the

summer a glass of water has a high use value to quench my thirst, whereas the

wool sweater that my grandma knit has hardly any use-value at this particular time

to help me

c) On the other hand, it has an exchange value. In short, it is a tradeable good

whether in a barter system where you naughty children for a bucket of water, or in

capitalism for that matter. We use money, what Marx calls a generalised

equaliser to buy a bottled water.

d) Now, in capitalism commodities are not produced for their use-value but instead

for their exchange-value. Can a commodity make the capitalist a profit? So

instead of producing water and food for starving children in Africa, the capitalist

says Ill just keep on producing diamonds and pollute the towns water while Im

at it. US Steel "we're not in the business of making tseel, we're in the business of

making money"

4. Value

a) So in 19th Century Political Economy a crucial question was: What gives a

commodity a certain value?

b) What makes a commodity a commodity? It is human labour the interaction of

humans with nature. So a clump of iron ore is without value unless someone

smolds it, a raw diamond. All commodities have human labour embodied in them

and thus can be traded, exchanged etc. This is even acknowledged by John Locke

5th Chapter in his Second Treatise on Government and similar writings of that

period

c) The value of a commodity reflects the amount of labour that went into producing

it and the quantity of labour is measured by its duration in weeks, days and

hours. Now some people work better than others. Not everyones labour is the


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same. Lets say I want to produce this t-shirt, it will probably take me 5 days;

whereas the garment worker who created this t-shirt in Mexico will stand at some

kind of t-shirt making machine and produce this commodity in 5 minutes.

d) In order to account for that problem Marx develops the notion of socially

necessary labour time, That means that my t-shirt that I worked on for five days

does not embody more value than that t-shirt produced semi-automatically in the

sweatshops of Mexico City. This problem is overcome through socially

necessary labour time the labour time needed by a society to produce a

commodity with the average degree of skill and intensity prevalent at the time.

e) Each year a certain amount of value is created in form of ipods, ipads, houses

built, tins of tuna. They all embody labour And workers control some of that value

for which they receive wages. The rest is called surplus value.

5. Surplus Value

a) Now here it becomes a bit tricky. Lets say a

Value (chair) = Value (ipod) = 1/1 = Value1 (same socially necessary labour time

of one hour).

Now lets imagine that the Chair Capitalist, or the chairman of the Capitalist

company producing chairs develops a technique to produce two chairs in one

hour.

In one hour of socially necessary labour Value (ipod) = 1 = Value (Chair) = The

chairs value is half that of an ipod.

Now if you switch that around you have productivity 2/1 = machines increase

productivity . Like the chair and the ipod, these machines also are made by human

labour, they embody value. They transfer that value on to the new commodity

produced rather than creating new value. Marx referred to machinery as dead labour

the product of the labour of workers in the pastwhich must be brought together

with the living labour of workers to create more value.

b) Now lets enter the fundamental class antagonism between capitalist and worker.

To make things more simple, well use employer and employee.

The chairman of chair company says Im going to employ you for eight hours a

day and pay you 8 pounds an hour. Off that money youll be able to feed yourself,

pay your rent, get drunk and high once in a while and bring up those children

unlike that goat herder who sold them on for a bucket of water.

I am free to sell my labour. The capitalist can buy my labour-power, he buys the

fact that I am capable of working eight hours without dropping dead and society

falling apart.


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In his chair factory I produce 64 Pounds worth of chairs in six hours. But I work

for two hours and that surplus (of 16) goes into the coffers of the capitalist.

Now he needs to pay rent, interest rates but some of that is profit.

c) Now the chairmaker hears that a new chair factory has opened up in China

So he will invest into better technology for me to produce the chair in even quicker

time: Productivity rises but the value of the chair is lower. Rather than having the

value of half an ipod it suddenly only embodies a fourth of the ipod.

For the first capitalist it makes sense to do this because it lowers labour costs,

increases productivity but soon everyone catches-up and he is being undercut by the

Chinese chairmaker ---- change in the organic composition of capital the

relationship between living labour and dead labour vis--vis constant and

variable capital

the competition between capitalists means that capitalists take steps which are good

for them in the short term but bad for the system in the long term

a change in the socially necessary labour time is a change in value

if it takes fewer hours to produce sth, the value falls

if it takes more hours, the value increases

6. Profits

How does he increase the surplus value?

He can make the worker work longer and harder

- Increase in absolute surplus value

Investing in to new machinery

- Increase in relative surplus value, as its only as long as other capitalists havent

caught up.; Marx said this was far more important in later stages of capitalism


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He can commodify new areas which previously have not been included in the

generalised system of commodity exchange. Such for example health, education,

drinking water, air

- As capitalism ages more and more money is invested into machines, computers,

technology

7. Every society produces a surplus

- Question whether it is democratically and controlled by workers or whether lands

in the coffers of individual capitalists

Capitalism is fundamentally based on exploitation

- universal condition

- we can unite workers on

- without exploitation there wouldnt be profits

exploitation where do profits come from

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