The Cooking the Books column from the August 2018 issue of the Socialist Standard
A recent anarchist pamphlet Fight for the City revives the theory of secondary exploitation that was popular in anti-capitalist circles before WWI. This is the theory that workers are economically exploited not just at work through producing a ‘surplus value’ over and above what they are paid for the sale of their mental and physical energies to an employer; they are also said to be exploited outside of work by landlords, moneylenders, shopkeepers and others when they spend their wages. Here’s how the London Anarchist Communists put it in their pamphlet:
‘We are already exploited at work. Wages are as low as the bosses can get away with in order to maximise their profits. But we are exploited in other ways. Increasingly, all aspects of our non-working lives involve the spending of our wages on things that make profits for others: landlords, banks, and all the companies providing the goods and services that we buy (. . .); at every stage, whether in the act of producing or consuming, more surplus is creamed off our wages, creating profits and wealth for a few. The fight for the city is therefore a class struggle – a struggle against those who want to squeeze everything they can from us.’
This is economic illiteracy. Marx based his theory of surplus value on the premise that workers are paid the full value of what they sell, i.e., that their wages cover the full cost of creating and recreating their working skills. Surplus value arises from the fact that there is a difference between the value of their labour power (the labour incorporated in it) and the value they add to what they produce (the total new labour they incorporate into it); that, for example, their wages represent 20 hours labour while they add 40 hours labour to what they produce. This difference belongs to their employer and is the source of all non-work incomes.
Suppose that, when it came to spending their wages, workers were not engaged in equal exchange, that they didn’t get goods and services that took 20 hours to produce but, say, only 15 hours’ worth. This would mean that they would not be in a position to recreate the value of their labour power as this requires them to consume goods worth 20 hours. They would not be able to work so intensively or so efficiently for their employer and so not produce as much surplus value.
What workers buy has always helped those they buy from to turn the surplus value produced by their employees into a monetary profit, but that is not the same as creating surplus value for them. This is created by their employees not their consumers.
Individual workers and groups of workers can be, and sometimes are, swindled by landlords and shopkeepers who don’t give them a product of equal value to what they pay, but this is still not extracting surplus value from the workers concerned. If such swindling becomes the norm, then employers would have to increase wages to, in our example, 25 hours to take account of this and ensure that they are getting the full value of what they pay for.
Normally workers do exchange the full value of their wages for goods and services of an equal value. As just explained, that they should do so is in the employers’ interest too and is why there are laws to protect consumers and to limit how much interest moneylenders can charge.
There is no secondary exploitation, only occasional swindling. Of course if they are ripped off workers are going to react but this cannot be described as part of the class struggle between workers and employers as it is essentially a struggle between consumers and sellers that can be settled by ensuring equal exchange.