Sunday, February 14, 2016

The Long-Run Tendency of Capitalism is to Decrease the Rate of Exploitation

This follows quite clearly from (1) the logic of Marx’s own theory in volume 1 of Capital and (2) the empirical history of capitalism.

Let us run through the steps:
(1) Let us assume that the concept of abstract socially necessary labour time is valid (even though the concept is incoherent, cannot be properly defined and is empirically irrelevant). But, as I note, let’s assume – for the sake of argument – that it is coherent and empirically relevant.

(2) For Marx, the total working day is divided into two parts of the working day as follows:
(1) necessary labour-time, which is “determined by the working time required for the reproduction of the labour-power of the labourer himself” (Marx 1906: 256), and

(2) the surplus labour-time (Marx 1990: 341).
The capitalists only tend to pay for the value of labour-power and steal the value of surplus labour-time (or surplus value s). The necessary part of the working day is determined by the value of variable capital v bought by the capitalist (Marx 1990: 326), which is value of labour-power. The rate of surplus value is s/v (Marx 1990: 324; Brewer 1984: 43), which is also the rate of exploitation.

(3) Exploitation for Marx, in its most important sense, arises from the (alleged) manner in which capitalists tend to pay only a wage equal to the value of labour-power, which is the value of reproduction and maintenance of workers, and so this allows the capitalist to steal the value of surplus labour time.

Capitalists can increase this exploitation by increasing the total working day to extend the surplus labour time of workers (and so gain more absolute surplus value) or decreasing the real wage equal to the value of reproduction and maintenance of workers (which is called by Marx relative surplus value). For Marx, the rate of surplus value is the rate of exploitation.

(4) but the long-run trajectory of capitalism in first world countries is to decrease the working day, so that capitalists have not in the long run been able to increase extraction of surplus value by relentlessly increasing the working day.

(5) furthermore, the crux of Marx’s argument is that workers tend only to be paid a wage equal to the value of reproduction and maintenance of workers (a type of subsistence wage), so that this in turn is equal to that part of the working day necessary only for the reproduction and maintenance of labour-power: the hours of the working day beyond this represent the surplus labour time, whose value is surplus labour value extracted from labour.

(6) but the long-run tendency of capitalism is to increase the real wage, even for workers. The real wage – even for workers – has, generally speaking, soared in the past 160 years and has soared well above subsistence level.

(7) even worse for Marx, the long-run tendency of capitalism is to make work less intense and arduous in many industries through use of machines and automation, so that, for example, the socially necessary labour time needed to build a house is far less today than it was 100 years ago, because of machine tools. So therefore many types of workers have seen a rising real wage and a less arduous working day with respect to the same type of work people did 100 years ago, even while their working day has remained stable or even declined.

(8) it follows directly that capitalists cannot be succeeding in stealing more relative surplus value by holding down the real wage to subsistence levels.

(9) if the working day is stable or falling in the long run, and the real wage has a long-run tendency to rise, then it follows that people are being paid more and more above subsistence level, and that they are being paid more and more for their surplus labour time, sometimes for all their surplus labour, and in some cases perhaps even more than their surplus labour time.
The conclusion is clear: under the logic of Marx’s own theory, capitalism has historically had a tendency to reduce the rate of exploitation. Marx should have been talking about the glorious tendency of capitalism to reduce its exploitation of the working class!

Had Karl Marx only lived another 30 years, the old fraud may even have been forced to recognise that his central claim in volume 1 of Capital – that capitalism only ever increases the extraction of unpaid surplus labour value – was false, given the soaring real wages even of workers.

Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.


  1. Hey LK, I've got some work for you.

    A new book published last summer called "Scandinavian Unexceptionalism" has been making some rounds on the internet because it has argued that welfare, taxation, and intervention into the market were actually detrimental to the Nordic countries. I'd like you to analysis the book and offer a critique in defense of the Nordic model.

    The primary arguments are

    1) Between 1870 and 1970 countries like Sweden experienced huge growth and that equality, high growth, high living standards and social cohesion were present before the devastating welfare state showed up. Before 1870 Scandinavia was very poor.

    2) Starting in the 1960's Sweden began to slow down.

    3) The heyday of social democracy was in the 1970's and lasted until some time in the 90's when Sweden was at its weakest, economically speaking.

    4) Willingness to reform and become more market oriented has allowed Sweden to resume stronger economic growth.

    5) The welfare state has impoverished the lower class in Scandinavia making them welfare dependent, and it has eroded values that promo hard work.

    My own critiques are

    1) The social welfare state and high taxation in Sweden started in the 20's not the 60's or even the 50's. Sweden and the other nordic countries had their most impressive gains between the end of WW2 and the 1960's when social democracy was alive and well.

    2) Starting in the 70's most of the wold stagnated. The USSR and the Eastern block entered the "era of stagnation" some time between 1970 and 1975. Meanwhile the US and the western world all took a notable hit with stagflation, energy costs and social unrest. The 80's were a more market oriented time in the US and UK and they did not see the rapid expansion of the post war boom.

    3) Starting in the 90's Scandinavia has become more market oriented, but they have not reversed the trends of the 70's and 80's to any great extent, if at all. In my opinion this is not because of any particular policy, but over time all economies seem to slow after industrialization and modernization. Growth rates exceeding 5% seem almost impossible to maintain after modernization.

    1. Guy,

      On the primary arguments:

      (1) Sweden only had "huge growth" in the 19th century in comparison with the wretched grinding poverty of previous centuries. In the 1945-1973 period real GDP growth and real per capita GDP was better than at any other period in capitalist history. So that refutes their nonsense.

      (2) as you say, the slowdown in 1970s growth and economic problems had more to do with external factors, though wage-price spirals probably contributed to domestic inflation.

      (3) is that even true?

      (4) I'd look at the real GDP and real per capita GDP to check this claim. It sounds like B.S. to me.

      (5) whatever impoverishment has happened would have more to do with: (1) mass unemployment in the 1990s and unnecessarily high unemployment to this day, and (2) loss of skills and discouraged nature of long term unemployed, (3) failure to raise real wages sufficient.

      Now there is one respect in which I think Swedish policy has been problematic, though (I assume you are leftist like me?) you may not want to hear it: open borders and mass immigration. I think this is another fraud of neoliberalism -- however much it is motivated by good intentions. I wouldn't rule out that this has caused competition for low-skilled jobs and helped to hold down real wages in the labour market (though I do know unions are much stronger in Sweden than elsewhere).

    2. I am a lefty(far more so then you) and I basically agree. The book enters the dubious territory of trying to argue that "homogenous" nations are more successful which while it may be true, opens the door for reactionary xenophobes and jingoists to begin pushing for closed borders, emigration restrictions and massive tariffs.

      In my own opinion I do wish to see a world where people can move about freely but recognize that although its a good idea in theory it is not often workable.

      I generally think countries that CAN have open orders, should. Two nations where the populations speak the same language, are geographically close, share similar living standards and have comparable systems of governments should not have restrictive borders. So, the German seeking countries, in my opinion should seek more open borders. Canada and the US should also seek more open borders. However there are plenty of reasons not to.

      1) Wage pressure. Unless supply and demand is somehow suspended for labor, large groups of people willing to work for lower pay will invariably drive down wages, especially for low income workers.

      2) Crime. Opening the border has a risk of allowing criminals to try and slip back and forth across the borders of nations, the wealthier more stable nations will end up bearing the brunt of the cost both in law enforcement expenditures and the safely of the genes public.

      3) National Security. Its likely terrorists could more easily cross borders. For and corrupt countries might not be as capable of catching them as more developed ones. So even with transnational law enforcement cooperation this should be an issue.

      4) Disease. Restrictive borders helped ensure that the ebola crisis was only one on the medical and not real life. The reality is, we can;t just let everyone from sub Saharan Africa come here with no medical records or inspections. You could be denied entry into the US in the early 19th century if you showed signs of having a transmitable disease.

  2. This is a hoary old argument that has been trucked out by low-level neoclassicals in undergrad classrooms for decades. It is typically presented without primary references and is completely incorrect.

    Marx's was a ceteris paribus argument -- that is, the natural tendency is for capital to increase exploitation unless a countervailing force arises. He would have concluded that a rising union movement would increase real wages and a diminishing union movement would decrease real wages. In doing so his theory would have accurately predicted the fluctuations in real wages across the 20th century; that is, the rise after 1945 and the relative decline after 1973 or so.

    He says this clearly very early on...

    " We can only say that, the limits of the working day being given, the maximum of profit corresponds to the physical minimum of wages; and that wages being given, the maximum of profit corresponds to such a prolongation of the working day as is compatible with the physical forces of the labourer. The maximum of profit is therefore limited by the physical minimum of wages and the physical maximum of the working day. It is evident that between the two limits of the maximum rate of profit an immense scale of variations is possible. The fixation of its actual degree is only settled by the continuous struggle between capital and labour, the capitalist constantly tending to reduce wages to their physical minimum, and to extend the working day to its physical maximum, while the working man constantly presses in the opposite direction.

    The matter resolves itself into a question of the respective powers of the combatants."

    Also note that this is the source for the core of the Post-Keynesian AND Old Institutional theory. So some deference might go a long way.

    1. If your interpretation of what Marx really believed about the trajectory of real wages is correct, he would never have said the precise opposite in Capital volume 1 right at the end (the ONLY volume he wanted published in his lifetime), which gives us his considered opinion and verdict on wages:

      "Along with the constantly diminishing number of the magnates of capital, who usurp and monopolise all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working-class, a class always increasing in numbers, and disciplined, united, organised by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.” (Marx 1906: 836–837).

      If real wages have a tendency to soar in Marx's system, he could never have written that the "mass of misery, oppression, slavery, degradation, exploitation" is ALWAYS increasing. You also ignore the fact that in vol. 1 the huge and constantly growing reserve army of labour holds down wages.

      Marx's view is confirmed by Engels repeating these same views in Herr Eugen Dühring’s Revolution in Science (1878):

      “Thus it comes about that the excessive labour of some becomes the necessary condition for the lack of employment of others, and that large-scale industry, which hunts all over the world for new consumers, restricts the consumption of the masses at home to a famine minimum and thereby undermines its own internal market.” (Engels [1894]: 308).

      This is clearly the OPPOSITE of your interpretation.

    2. Finally, your tactic here is typical of the Marxist mental disease: Marx's writings are actually quite inconsistent and incoherent, e.g. vol. 1 badly contradicts vol. 3. Like tons of Marxists, you just take one passage out of context and ignore the mountains of evidence elsewhere about what Marx believed.

      E.g., from the very same work Value, Price and Profit I can quote you this:

      “These few hints will suffice to show that the very development of modern industry must progressively turn the scale in favour of the capitalist against the working man, and that consequently the general tendency of capitalistic production is not to raise, but to sink the average standard of wages, or to push the value of labor more or less to its minimum limit. Such being the tendency of things in this system, is this saying that the working class ought to renounce their resistance against the encroachments of capital, and abandon their attempts at making the best of the occasional chances for their temporary improvement? If they did, they would be degraded to one level mass of broken wretches past salvation. I think I have shown that their struggles for the standard of wages are incidents inseparable from the whole wages system, that in 99 cases out of 100 their efforts at raising wages are only efforts at maintaining the given value of labor, and that the necessity of debating their price with the capitalist is inherent to their condition of having to sell themselves as commodities. By cowardly giving way in their every-day conflict with capital, they would certainly disqualify themselves for the initiating of any large movement.

      At the same time, and quite apart from the general servitude involved in the wages system, the working class ought not to exaggerate to themselves the ultimate working of these every-day struggles. They ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady.”
      (Marx 1913: 124–126)

      This is very clear: the power of capital will prevail and this will "sink the average standard of wages, or to push the value of labour more or less to its minimum limit [namely, the value of labour-power, a kind of subsistence wage]".

      So finally all your passage proves is that Marx's writings are hopelessly contradictory. At any rate this view does not appear in vol. 1 of Capital.

      Also, if your view were correct on what Marx really thought then the whole theory of increasing exploitation in vol. 1 would totally implode.

    3. LK, it could be argued that Marx was referring to the very long term trends, like centuries or more. Also it could be argued things that are "alien" to capitalism like welfare state have suppressed the trend in 20th century.

    4. "it could be argued that Marx was referring to the very long term trends"

      Yeah, this is the same dodge the early christians used with all the end is near pronouncements from Jesus.
      "With Marx all things are possible."

    5. "With Marx all things are possible."

      oh, hahahaha... Ken B, you crack me
      up.. with a sparkling wit like that, you're wasted at whatever real world job you have!

    6. Ken, i completely agree Marxism is kind of like a religion. And i agree it's funny to point out. Enjoy! :)