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Jews own everything. If they don't seem to own everything, this is only because Jews haven't yet taken it from the goy non-entities. So Marx must have had difficulty with 'surplus value'; in his deepest beliefs, Marx must have thought that all value temporarily owned by the filthy goyim was surplus to them. The Kahal system tried to put this attitude into practice.
This attitude seems to permeate the Davos group including Schwab, the 'World Economic Forum', when they try to persuade people that, after being reset, they will own nothing and be happy in the way filthy non-entity empty-shell goyim are permitted. My guess is that Schwab thinks he's the Jewish 'Messiah', or 'Moschiach'.
RW 7 March 2023
CHAPTER XIX The Theory of Surplus Value
Marx’s theory of surplus value is simple in its main outline, though complicated in its details. He argues that a wage-earner produces goods equal in value to his wages in a portion of the working day, often assumed to be about half, and in the remainder of his working day produces goods which become the property of the capitalist although he has not had to make any payment for them. Thus the wage-earner produces more than he is paid for; the value of this additional product is what Marx calls “surplus value.” Out of surplus value come profits, rent, tithes, taxes — in a word, everything except wages.
This view is based upon an economic argument which is not altogether easy to follow, the more so as it is partly valid, partly fallacious. It is, however, very necessary to analyse Marx’s argument, since it has had a profound effect upon the development of Socialism and Communism.
Marx starts from the orthodox economic doctrine that the exchange value of a commodity is proportional to the amount of labour required for its production. We have already considered this doctrine in connection with Ricardo, and have seen that it is true only partially and in certain circumstances. It is true in so far as the cost of production is represented by wages, and there is competition among capitalists which keeps the price as low as possible. If the capitalists have formed themselves into a Trust or Cartel, or if the cost of raw material is a large part of the total cost of production, the theory is no longer true. Marx, however, accepted the theory from the economists of his day, although he despised them, apparently without any examination of the grounds in its favour.
The next step in the argument is derived (without adequate acknowledgment) from Malthus. It followed from Malthus’s theory of population that there would always be competition {232} among wage-earners, which would ensure that the value of labour, like that of other commodities, should be measured by its cost of production (and reproduction). That is to say, wages would suffice for the bare necessaries of the labourer and his family, and under a competitive system they could not rise above this level.
Malthus’s theory of population, like Ricardo’s theory of value, is subject to limitations which we have already considered. Marx always rejects it contemptuously, and is bound to do so, since, as Malthus was careful to point out, it would, if valid, make all communistic Utopias impossible. But Marx does not advance any reasoned argument against Malthus, and, what is still more remarkable, he accepts without question the law that wages must always (under a competitive system) be at subsistence level, which depends upon the acceptance of the very theory that he at other times rejects.
From these premisses, the labour theory of value and the iron law of wages, the theory of surplus value seems to follow. The wage-earner, let us say, works twelve hours a day, and in six hours produces the value of his labour. What he produces in the remaining six hours represents the capitalist’s exploitation, his surplus value. Although the capitalist does not have to pay for the last six hours, yet, for some unexplained reason, he is able to make the price of his product proportional to labour-time required for production. Marx forgets that this whole theory depended upon the assumption that all labour had to be paid for, and the further assumption that the capitalists competed with each other. [Footnote: Though this is stated by Engels in his introduction to La Misère de la Philosophie.] In the absence of these assumptions, there is no reason why value should be proportional to the labour-time of production.
If we assume that there are many competing capitalists in the business in question, then, supposing the state of affairs to have been initially as Marx supposes, it will be possible to lower the price and still make a profit, which will therefore be done as a result of competition. The capitalist, it is true, will have to pay {233} rent, and probably interest on borrowed money; but so far as he is concerned, he will be forced down to the lowest profit at which he thinks it worth while to carry on the business. If, on the other hand, there is no competition, the price will be fixed, as with all monopolies, by the principle of “what the traffic will bear,” which has nothing to do with the amount of labour involved.
While, therefore, it is undeniable that men make fortunes by exploiting labour, Marx’s analysis of the economic process by which this is done appears to be faulty. And the main reason why it is not correct is the acceptance of Ricardo’s theory of value.
I have written above as though (apart from currency fluctuations) value could be measured by price. This, indeed, follows from the definition of value, which is the amount of other commodities for which a given commodity will exchange. Price is merely a means of expressing the exchange values of different commodities in commensurable terms: if we wish to compare the values of a number of different commodities, we do so most easily by means of their price, i.e. (under a gold currency) by their exchange value in relation to gold. In so far as value means “exchange value,” the fact that (at any given moment) value is measured by price is a mere logical consequence of the definition.
But Marx has another conception of value which obscurely conflicts with the definition of value as exchange value. This other conception, which never emerges clearly, is ethical or metaphysical; it seems to mean “what a commodity ought to exchange for.” A few quotations will illustrate the difficulty of arriving at Marx’s meaning on this point.
“Price,” he says, “is the money-name of the labour realised in a commodity. Hence the expression of the equivalence of a commodity with the sum of money constituting its price, is a tautology, just as in general the expression of the relative value of a commodity is a statement of the equivalence of two commodities. But although price, being the exponent of the magnitude of a commodity’s value, is the exponent of its exchange-ratio with money, it does not follow that the exponent of this exchange ratio is necessarily the exponent of the magnitude of the commodity’s {234} value. . . . Magnitude of value expresses a relation of social production, it expresses the connection that necessarily exists between a certain article and the portion of the total labour-time of society required to produce it. As soon as the magnitude of value is converted into price, the above necessary relation takes the shape of a more or less accidental exchange-ratio between a single commodity and another, the money-commodity. But this exchange-ratio may express either the real magnitude of that commodity’s value, or the quantity of gold deviating from that value, for which, according to circumstances, it may be parted with. The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself.”
So far it might be supposed that Marx is thinking only of accidental fluctuations, such as might be due to the relative shrewdness or impecuniosity of buyer and seller. He goes on, however, to a more serious distinction between price and value, which, if he had followed it up, would have raised difficulties for him of which he apparently remained unaware. He says:
“The price-form, however, is not only compatible with the possibility of a quantitative incongruity between magnitude of value and price, i.e., between the former and its expression in money, but it may also conceal a qualitative inconsistency, so much so, that, although money is nothing but the value-form of commodities, price ceases altogether to express value. Objects that in themselves are no commodities, such as conscience, honour, &c., are capable of being offered for sale by their holders, and of thus acquiring, through their price, the form of commodities. Hence an object may have a price without having value. The price in that case is imaginary, like certain quantities in mathematics. On the other hand, the imaginary price-form may sometimes conceal either a direct or indirect real value-relation; for instance, the price of uncultivated land, which is without value, because no human labour has been incorporated in it.”
It is of course necessary for Marx, with his labour theory of value, to maintain that virgin land has no value. Since it often has a {235} price, the distinction between price and value is essential to him at this point. Exchange-value, it now appears, is not the actual amount of other goods for which a given commodity can, in fact, be exchanged; it is the amount of goods for which the commodity could be exchanged if people valued commodities in proportion to the amount of labour required for their production. Marx concedes that people do not so value commodities when they are buying and selling, for, if they did, it would be impossible to exchange virgin land, upon which no labour has been expended, for gold, which has had to be mined. Accordingly when Marx says that the value of a commodity is measured by the amount of labour required for its production, he does not mean to say anything about what the commodity is likely to fetch in the market. What, then, does he mean?
He may mean either of two things. He may be giving a mere verbal definition of the word “Value”: when I speak of the “value” of a commodity (he may be saying), I mean the amount of labour required to produce it, or rather, such quantity of other commodities as an equivalent amount of labour would produce. Or, again, he may be using “value” in an ethical sense: he may mean that goods ought to exchange in proportion to the labour involved, and would do so in a world ruled by economic justice. If he adopts the first of these alternatives, most of the propositions in his theory of value become trivial, while those which assert a connection between value and price become arbitrary and remain partly false. If he adopts the second alternative, he is no longer analysing economic facts, but setting up an economic ideal. Moreover, this ideal would be an impossible one, for the reasons emphasized in Ricardo’s theory of rent: a bushel of wheat grown on bad land embodies more labour than one grown on good land, but could not in any imaginable economic system be sold at a higher price. Either the verbal or the ethical alternative as to the meaning of “value,” therefore, reduces Marx’s economic theory to a state of confusion.
The ethical interpretation of “value,” nevertheless, seems to have had some influence, not only on Marx, but on all those who {236} upheld the labour theory of value. In the case of Marx, this is born? out by the fact that, in connection with the price of virgin land, he mentions such things as the price of a man’s honour, where we feel that there is something ethically reprehensible in the existence of a price. In the case of other economists, it is interesting to observe that Hodgskin, from whom Marx learned much, and who first among theorists applied the labour-theory of value in the interests of the proletariat, finds the source of this theory in Locke’s doctrine that the justification of private property is a man’s right to the produce of his own labour. [Footnote: Halévy, Thomas Hodgskin, pp. 208-9, Societé Nouvelle de Librairie et d'éedition, Paris, 1903.]
If he exchanges the produce of his own labour for the produce of an equal amount of some one else’s labour, justice is preserved; the labour-theory is therefore in conformity with ethics. This point of view, perhaps unconsciously seems to have influenced Marx: where price arid value diverged, he felt that price represented the wickedness of capitalism.
Much of the efficacy of Marx’s writing depends upon tacit assumptions in his arithmetical illustrations. Let us take one of these as typical of many.
“One more example. Jacob gives the following calculation for the year 1815. Owing to the previous adjustment of several items it is very imperfect; nevertheless for our purpose it is sufficient. In it he assumes the price of wheat to be 8s. a quarter, and the average yield per acre to be 22 bushels. [Note by RW: a 'bushel' was a measure of grain, I think by volume; a 'quarter' is 1/4 of that. So 22 bushels was worth 22 x 32 shillings, which is 704 shillings, = £35 4s. Something wrong!]
| Seed | £1 9s | Tithes, Rates, and Taxes | £1 1s | |
| Manure | £2 10s | Rent | £1 8s | |
| Wages | £3 10s | Farmer's Profit and Interest | £1 2s | |
| Total | £7 9s | Total | £3 1s |
{237} “Assuming that the price of the product is the same as its value, we here find the surplus-value distributed under the various heads of profit, interest, rent, &c. We have nothing to do with these in detail; we simply add them together, and the sum is a surplus-value of £3 11s. 0d. The sum of £3 19s. 0d., paid for seed and manure, is constant capital, and we put it equal to zero. There is left the sum of £3 10s. 0d., which is the variable capital advanced: and we see that a new value of £3 0s. 0d. + £3 11s. 0d. has been produced in its place. Therefore s/v = £3 11s. 0d. / £3 10s. 0d., giving a rate of surplus-value of more than 100%. The labourer employs more than one-half of his working day in producing the surplus-value, which different persons, under different pretexts, share amongst themselves.”
In this illustration, s means surplus-value, and v means variable capital, i.e. wages. It will be seen that Marx includes in surplus-value the whole of what the farmer makes, and the whole of the rates and taxes. It is therefore implied in the calculation (a) that the farmer does no work, (b) that the rates and taxes are wholly handed over to the idle rich. Marx would not, of course, make either of these assumptions in explicit terms, but they are implicit in his figures, both in this case and in every analogous illustration. In 1815, the year to which the above example applies, the rates were mainly expended in wages, under the old Poor Law. The taxes, it is true, went chiefly to the fund-holders, but of the remainder some part was certainly spent in useful ways—for example, in keeping up the British Museum, without which Marx could not have written his magnum opus.
More important than the question of rates and taxes is the question of the capitalist’s work. In the case of a small capitalist, such as a farmer, it is ridiculous to treat him as one of the idle rich. If a farm were run by the State, it would need an overseer, and a competent overseer could probably obtain a salary about equal to the farmer’s profit, taking one year with another. The cotton manufacturers of the years before 1846, who formed Engels’s conception of the capitalist, and thence Marx’s, were {238} largely men in a rather small way, who worked almost entirely on borrowed capital. Their income depended upon their skill in using the money that had been lent to them. It is true that they were brutal, but it is not true that they were idle. Somebody has to organize a factory, somebody has to buy the machinery and sell the product, somebody has to do the day-to-day supervision. In the early days of capitalism, all this was done by the employer; yet Marx regards the whole of his earnings as entirely due to appropriation of the surplus value created by the employees. I know there are passages where the opposite is admitted, but they are isolated, whereas the assumption that the employer does no work is pervasive.
In the modern large-scale developments of capitalistic enterprise, it is true, the capitalist is often idle. The shareholders of railways do nothing, and the directors do not do much, in the way of managing the business. The work of management, in all large concerns, tends to fall more and more into the hands of salaried experts, leaving the capitalists a: mere recipients of interest. In so far as socialism represents a more scientific organization of industry, less chaotic and less lacking in forethought, salaried experts might be expected to sympathize with it. They seldom do so, however, because, as a result of the bias given by Marx, Socialism has tended to stand, not only for the workers as against the idle rich, but for the manual workers as against both the rich and the brain workers. Marx, by ignoring the functions of the small-scale capitalist in managing his business, produced a theory which could not do justice to the salaried experts who do the work of management in large-scale capitalism. The glorification of manual work as against brain work was a theoretical error, and its political effects have been disastrous.
It may be said that it is of no importance whether Marx was right in the niceties of his economic analysis. He was right in maintaining that the proletariat were brutally exploited, and that their exploitation was due to the power of the rich. To distinguish one class of rich men from another was, from this point of view, unprofitable; the important thing was to end {239} exploitation, and this could only be done by conquering power in a fight against the rich collectively.
To this there are two objections. The first is, that the abolition of exploitation, if unwisely carried out, might leave the proletariat even more destitute than before; the second, that Marx * has not rightly analysed where the power of money resides, and has therefore given himself an unnecessary number of enemies.
The first of these objections applies to the destruction of any system in which power is unequally distributed. The holders of power will always use their position to obtain special advantages for themselves; at the same time, they will in general wish to prevent chaos, and to insure a certain efficiency in the system by which they profit. They will tend to have a monopoly of experience in government and management. It may well happen that, if they are suddenly dispossessed, lack of knowledge and experience on the part of those previously oppressed will cause them to fall into even greater sufferings than those from which they have escaped. If this is not to happen, there must be, on the side of the newly emancipated, a sufficient amount of governmental and technical intelligence to carry on the political and economic life of the community. Successful revolutions, such as the French Revolution, have had more knowledge and intelligence on the side of the rebels than among the defenders of the old system. Where this condition is not fulfilled, the transition is bound to be arduous, and may never succeed in producing any improvement. It is doubtful whether the population of Haiti has been happier since it threw off the power of the French.
As regards the analysis of the power of money, I think that Henry George was more nearly right than Marx. Henry George, following Spence and the French physiocrats, found the source of economic power in land, and held that the only necessary reform was the payment of rent to the State rather than to private landowners. This was also the view of Herbert Spencer until he became old and respected. In its older forms, it is scarcely applicable to the modern world, but it contains an important element {240} of truth, which Marx unfortunately missed. Let us try to restate the matter in modern terms.
All power to exploit others depends upon the possession of some complete or partial, permanent or temporary monopoly, but this monopoly may be of the most diverse kinds. Land is the most obvious. If I own land in London or New York, I can, owing to the law of trespass, invoke the whole of the forces of the State to prevent others from making use of my land without my consent. Those who wish to live or work on my land must therefore pay me rent, and if my land is very advantageous they must pay me much rent. I do not have to do anything at all in return for the rent. The capitalist has to organize a business, the professional man has to exercise his skill, but the landowner can levy toll on their industry without doing anything at all. Similarly if I own coal or iron or any other mineral, I can make my own terms with those who wish to mine it, so long as I leave them an average rate of profit. Every improvement in industry, every increase in the population of cities, automatically augments what the landowner can exact in the form of rent. While others work, he remains idle; but their work enables him to grow richer and richer.
Land, however, is by no means the only form of monopoly. The owners of capital, collectively, are monopolists as against borrowers; that is why they are able to charge interest. The control of credit is a form of monopoly quite as important as land. Those who control credit can encourage or ruin a business as their judgment may direct; they can even, within limits, decide whether industry in general is to be prosperous or depressed. This power they owe to monopoly.
The men who have most economic power in the modern world derive it from land, minerals, and credit, in combination. Great bankers control iron ore, coalfields, and railways; smaller capitalists are at their mercy, almost as completely as proletarians. The conquest of economic power demands as its first step the ousting of the monopolists. It will then remain to be seen, whether, in a world in which there is no private monopoly, much harm is done {241} by men who have achieved success by skill without the aid of ultimate economic power. It is questionable whether, on the balance, the world would now be the better if Mr. Henry Ford had been prevented from making cheap cars; and the harm that is done by great industrialists, is usually dependent upon their access to some source of monopoly power. In labour disputes, the employer is the immediate enemy, but is often no more than a private in the opposing army. The real enemy is the monopolist.