From the February 1962 issue of the Socialist Standard
THE NATIONAL CAKE this expression often crops up in newspapers and in the mouths of politicians. At first sight it seems like a convenient and homely figure of speech, giving a rough idea of the truth. Not so. Like the other myths employed as propaganda for capitalism, it is false at its very roots.
What it is meant to convey is that there is a certain total of earnings—the national income—out of which both wages and profits have to be allocated. Often this idea is put forward by writers and speakers who claim to have working-class interests at heart. In this case they complain that the workers are not getting a large enough share of the mythical cake; and many workers are deceived by this sympathy into thinking in these terms themselves. They see that profits are rising and they demand their 'share'. And so it is easy for the capitalists, or their managers or politicians, when they can manage to show that the 'cake' has decreased in size, to make an attack on wages or to resist demands for rises. The recent 'wage pause' is a case in point.
It also helps them to persuade workers to work harder: 'Our standard of living can only be raised if we increase our earnings overseas' and so on. It is an idea that has gained strength from the fact that standards of living are relatively higher in countries like the U.S.A. where productivity is high. It has become an extremely powerful idea, favoured especially by so-called 'socialist' parties like the British Labour Party; and many people take it for granted. Yet it is a completely anti-socialist myth.
Unfortunately, the truth is not nearly so simple or so homely. But the whole business reminds one of that problem about the three men who were overcharged in a restaurant and the waiter who kept two bob for himself. It is not a problem at all, really: it's a matter of considering the wrong set of figures. The point is that there is no such thing as a national cake; or of there is—if the total annual national profit can be called a cake—then the workers have no part in it at all. Their wages certainly do not come out of it.
Wages have to be paid before the capitalist handles any profit at all—sometimes a long time before. They are paid out of capital, just as are other production costs like raw materials, machinery, fuel and rent. And they are usually 'fair' wages; that is to say that, on average, capital usually buys workers' abilities at a price close to their real value. Profit is not mainly made by underpaying the workers (although much more could be said on this). Profit is made because work done on raw materials adds more value to them than the value of the labour power used up in the work.
It is when these commodities are sold, and not until, that the capitalist really handles his profit. He has converted his capital back into money once more—and a larger amount of money than he started with. This surplus, if anything, can be called cake—and it is cake for capitalists only. The majority of it is re-invested automatically to pay more workers and buy more materials, to bring in more cake—to build up, in fact, a veritable layer-cake.
So that almost everywhere a worker turns his eyes he sees property owned—not by himself or his kind who produced it all—but by a small minority—the ones who can really talk about 'our' country and mean what they say—the ones for whom it really is 'a piece of cake'.