Capitalism or socialism (1986)

From the February 1986 issue of the Socialist Standard

A society is a group of human beings gathered together for the common purpose of survival; in the modem age we can speak of the world as our society because the interdependence of human beings across the globe has made localised survival outdated. Our world society operates in accordance with the capitalist system. A system is a network of relationships to the means of wealth production and distribution. Under the capitalist system most people are either possessors of the means of living (factories, farms, transport, media, offices, mines) or producers of goods and services. These two classes stand in different relationships to the powers of production: the capitalist class owns and controls these powers; the working class does not possess the means of survival. So, society exists for the purpose of humans collectively providing for their needs, but the means of so providing are not owned and controlled by all the people who make up society, but by the capitalist minority. Under capitalism the working class is alienated from the principal social power.

Buying and selling

Under capitalism most of what is produced by people is not for their own personal consumption. but is made to be sold. Goods produced for sale are commodities and under capitalism wealth "presents itself as an immense accumulation of commodities" (Marx, Capital, Vol I. p.l).

A commodity must possess two features. Firstly, it must be of use to someone. There would be no point in producing goods which people do not need, so commodities must possess use value. In order to define the use value of a commodity we appeal to common experience: the use value of a book is that it can be read; the use value of a vest is that it keeps you warm. But commodities are not produced solely for use: if they are to be sold they must possess a second kind of value called exchange value. Obviously, it makes no sense to say that books are of more or less use value than vests; use value is not a measured quantity. When it comes to exchange value we must establish why the book is costlier than the vest or the vest dearer than the book. How is exchange value determined? It is discovered by comparing the one common factor which unites books and vests, and all other commodities: the amount of labour required for their production. The exchange value of a commodity is determined by the amount of human labour expended in its production.

This explanation of how value is determined is known as the labour theory of value. Producing gold, which is hard to find and difficult to extract from the earth, requires more labour than the production of paper. A Ford car embodies less congealed labour than a Rolls Royce. so it has a lower exchange value. Sometimes exchange values change: for example when increased productivity means that the same amount of commodities can be produced by fewer workers (or more commodities by the same number of workers). Most commodities which we use today are not produced in one place, but are the product of a global division of labour. So, in calculating the exchange value of a commodity we must look at the labour input at all stages in the productive process. All workers in the modern world are part of the immense system of commodity production and all labour is socially dominated by the law of value.

We have stated that the labour embodied in its production determines the value of a commodity. This is open to the criticism: "If value is determined by labour, why would it not be more beneficial for producers to be lazy and slow so that the commodities they produce have greater value?" Marx answered this point by stating that we are not talking about labour as a purely individual process, but the labour which is "necessary for . . . production in a given state of society." This is referred to as socially necessary labour time and we can now refine our economic analysis by stating that the value of a commodity is determined by the amount of socially necessary labour required for its production. We must also note that labour time is not simply measured in terms of how long it takes to produce a commodity at the point of production, but also how much time is socially necessary in producing the required quality of labour. For example, it might take more labour to produce a brick wall than it takes to sit in an office and make out people's wills, but the time required to produce the trained labour of the lawyer is greater than that needed to produce a bricklayer's labour.

Stated simply, price is the monetary expression of exchange value. The price of a commodity is the manifestation of its exchange value in the market. Commodities sell at around their value, although the struggle which is constantly going on between buyers and sellers (supply and demand) causes prices to fluctuate around the point of value. Money is the universal symbol of value against which commodities can be compared. In the early days of commodity production one commodity was exchanged for another. As social production has become more complicated commodities have ceased to be measured against the value of other specific commodities. but are measured in terms of money. In itself money is not of any use value: you can't eat a five pound note. Its function is as an accepted measure of value and as an intermediate factor in the process of the exchange of commodities. But commodity exchange is not planned and nor can it be, so capitalism has a tendency to enter a period of crisis whenever it becomes more beneficial for capitalists to store money than to invest it in the production of new commodities.

The legalised robbery of labour

Commodity production existed before capitalism came into being. What is new about capitalism is that human labour power (the mental and physical energies of people) has become a commodity, an item to be sold. Why do workers sell labour power to capitalists? Quite simply, because a worker has no choice: he or she does not own the means of living and the wealth which s/he requires and therefore, in order to buy these commodities, s/he must sell labour power. The working class possesses no property upon which it can survive except its labour power — that is the one commodity which the worker can take to the market and sell. This sale is called employment.

We have already pointed out that the value of a commodity is determined by the socially necessary time required for its production. That also applies to the value of labour power. That is why a doctor is paid more than a butcher. We have also stated that commodity values appear in the market as prices; in the case of labour power the term we use instead of price is wage or salary, but it means the same thing. Workers sell labour power for a price. Like other commodities which generally sell at their value, labour power is sold at a price which fluctuates about its value.

Given that labour power sells at its value, how can we say that workers are exploited? The answer is that labour power is a unique commodity in that, unlike all others, it can be used to create values greater than itself. The capitalist who buys labour power from a worker does so on the assumption that the employee will produce wealth which will provide more value for the capitalist than is represented by the price paid for the labour power. This extra value which workers are employed to create is called surplus value and it is the source of the unearned income of the capitalist. For example, a capitalist who buys a worker s labour power for one week at a price of £200 will not expect the worker to turn up on the Thursday and say "Well. I've reproduced the money which you have invested in me, by producing wealth which you can sell, so now I'm going home". The capitalist does not employ the worker so that the worker can receive a wage, but in order to obtain surplus value. If one capitalist employs hundreds of workers, then once their wages (as low as possible, of course) have been paid and they have reproduced the cost of the resources invested in production, a huge fortune can be accumulated out of the surplus value created by the employees. If there is no expectation of the employees producing an unearned income for the employer because the cost of production will be greater than the fruits of the workers' toil, then the capitalist will dismiss the workers, forcing them into the army of the unemployed. So much for the capitalist lie that employment is a gift from the bosses to the workers! On the contrary, workers are wage slaves and are forced to put their energies on sale to the capitalists to present a gift to the capitalist class in the form of surplus value. The involuntary presentation of surplus value by the producing majority to the parasitical minority is the most extensive charity yet known to society. The capitalists, who have no compulsion to work, live in luxury thanks to the exploitation of the unpaid labour of the workers. For what the capitalist calls a surplus (getting more than is put in) the worker may rightly call stolen time (getting less than he or she puts in).

The wages system necessarily entails the legalised robbery of those who produce by those who possess. The worker receives a wage and the capitalist receives a profit, but the worker has had to work hard and the capitalist has done nothing except take advantage of the fact that the worker is compelled to submit to wage (or salary) slavery. It may appear superficially that the worker is entering into a fair or free contract with the capitalist — that wage labour is not exploited or robbed, but an agent in a mutually beneficial deal — but the reality is that the worker's free choice is between the poverty of making ends meet on a wage or salary or the greater poverty of being a wageless wage slave. As Marx points out.

  The Roman slave was held by fetters; the wage labourer is bound to his owner by invisible threads. The appearance of independence is kept up by means of a constant change of employers, and by the fictio juris of a contract (Capital, Vol 1)

The worker may be free to change employers and be exploited by someone else, but not to reject employment and the compulsion to create surplus value. In this sense we can state that profits are produced as a result of the legalised robbery of the working class.

Production — for profit or use?

Capitalism, as a social system, is defined by the existence of commodity production (the buying and selling of goods and services) and by the fact that labour power takes the form of a commodity. But some countries in the modern world claim to have transcended capitalism and to have established socialism. In the so-called socialist countries is there buying and selling? Of course there is. But why should a socialist society in which everything is owned by everyone require exchange value? Common ownership logically means that nobody in society possesses wealth which non-owners need to buy: there are no commodities, but goods and services produced for use. In the bogus socialist countries the state takes the role of the grand capitalist, attempting to regulate the sale of commodities. In such countries does labour power take the form of a commodity? The most elementary investigation of life in Russia or China or Cuba shows that wage labour is still the lot of the majority of people. We have shown that wages are the price of labour power and that where wages exist the produce of the employee is not his or her own. but is bought by an employer (in this case, the state) whose function is to exploit wage labour. In any society where there is buying and selling, money, wages and profits there is capitalism, however falsely its defenders might wish to label it.

In a socialist society we shall not produce commodities to sell to anyone. What belongs to us all we shall all have free access to, and concepts of price and value will give way to those of need and comfort. In a moneyless society all the wasteful and in efficient factors which make capitalist commerce so difficult for most people to comprehend and impossible for the so-called experts to regulate, will make way for a system of deliberate, democratic organisation of production and distribution of goods and services in which the satisfaction of human needs will be the sole concern of society. In a socialist society we shall no longer be dominated by an imposing and anarchic system; society will become a real community. If we remember that humans organise ourselves into society for the purpose of common survival there can be no doubting the fact that the capitalist system of organising for survival and human comfort is an utter failure from the point of view of the working class. For that reason, the task facing our class is to organise, politically and democratically, for the revolutionary purpose of taking the world away from the robber class — in Marx's words, we must "expropriate the expropriators".

Steve Coleman