What is uneconomic under capitalism does not become economic under socialism.

loupaulsen at attbi.com loupaulsen at attbi.com
Fri Dec 13 15:09:01 MST 2002

I think this is an interesting and potentially important thread, and leads to
some points that were never entirely settled by Marx, in my opinion.  I think
that Mark is largely right here, but not entirely.

First, this part is right:

> First of all, profits are not, as you seem to suggest, an addition to the
> price which the consumer woud other wsie pay for a product. This idea, that
> capitalism 'forces' us to pay, thereby becoming 'uneconomic compared to
> socialism' which doesn't 'add on' profits--is wrong. It is not Marxism.
> The whole point of Marx's laborious excavations in Volume I of Capital was
> to show the opposite: capitalism does not derive profits by adding something
> to the price. That's not how it works. What the capitalist boss does is he
> makes workers work part of their time for nothing, and then sell what they
> make in that unpaid time, for the normal price. That's where the profit
> comes from--the unpaid labour of the workers.

This is generally true.  The point is that the goods are not being sold ABOVE
the value of the labor that went into them.  They are being sold AT the value
of the labor that went into them.  The workers, however, did not get paid the
value of the labor that they produced.  The workers got paid only the value of
the labor that went into their food, clothing, housing, etc.

Marxist economics expands on the 'labor theory of value' and adds the insight
that when everything does in fact trade at its value, in the ordinary market,
including the laborer's own labour-power, the person who owns the capital (the
factory and the laborers' time) can end up with a profit at the end of the
day, assuming he can make the laborers' work long enough.

This is pretty non-controversial so far, but there are two little wrinkles

First, the capitalists do not insist on having a perfect market and settling
only for the profits that they get under a perfect market.  They will cheat
whenever possible.  If they can get steal some of the raw materials and not
have to pay for the labor at all, they will do that.  If they can cheat the
workers out of their pay, they can do that.  If they can conduct some kind of
share fraud that gives them a pile of money for nothing, they will do that.
(If the average rate of profit falls low enough, this becomes particularly
attractive and even necessary.)  And if they can somehow package up some of
the costs of production and unload them on someone else - some other country,
some victim, "the taxpayer", or future generations - they will do that.

Mark refers to much the same phenomenon later in his post when he says
that "Capitalism's magic depends on the endless abuse of long suffering Mother
Nature."  However, he is looking at it somewhat differently than I am.  He is
saying, "the market is functioning properly, and capitalism is efficient, but
it is running us into a brick wall."  I am saying that much of this "magic"
and "efficiency" IS, in fact, CHEATING and attempting to evade some of the
costs of production that they really ought to be held accountable for even in
bourgeois terms.

For example, let's assume that a capitalist has some poisonous gunk left over
at the end of the production process.  In case (A), he hauls the gunk over to
Mr. Jones's farm (not you, Mark, it's a common name) and dumps it in his
well.  This is a crime even in bourgeois terms.  It's also a civil wrong
against Mr. Jones.  If this 'cheating' is discovered, Mr. Jones can be
compensated for his damages.  In case (B), he pays to render the gunk
harmless.  If ALL capitalists do this, this is part of the 'socially necessary
labor' of production.

Now the interesting case is case (C), where he just dumps it in Lake
Michigan.  This is what they all always used to do.   It would of course make
people sick, but, lucky for the capitalist, the legal system up until 1970 or
so would not allow a civil action for damages unless the plaintiff could prove
that his individual cancer was the result of consuming capitalist A's gunk and
not other gunk from some other capitalist.  (This legal theory is enshrined in
Ayn Rand's "Capitalism: the Unknown Ideal".)  However, it is in fact
CHEATING.  It is depending on the idea that it will be impossible to allocate
the real damages done by capitalist water-polluters back to the individual
capitalists.  "Yes, I have wrongly injured someone, but I dare you to find out
who!"  But in fact it is dumping actual production costs on innocent parties.
If there are advances in technology or in legal technique, these costs can be
allocated back to the polluting capitalist after all, individually or
collectively, even in bourgeois society.

Now, if you think about it, CO2 emissions into the air are not necessarily
different from dumping gunk in the lake.  They are imposing costs on innocent
people.  So where Mark says 'production under capitalism is economical, but
unfortunately it ruins the air', I would say, 'production under capitalism is
not as economical as they think, and would not be so economical if they had to
fix up the damage they do, but in fact they cheat, by ruining the air and not
paying for the harm that they do.'

Second, the selling price of the commodity is the amount that represents not
necessarily the -actual- value of the labor that went into its production, but
the value of the -socially necessary- labor.  This amount depends on ALL of
the social and technological context in which the production is taking place.
It may involve the costs of moving raw materials from one place to another.
It might involve intermediate steps of production.  There may also be costs
which are 'socially necessary' because they are imposed on the capitalist by
social forces.  For example, if there is a regime under which the capitalist
is required to bear all or some of the cost of on-the-job injuries, rather
than just treating them as no cost at all other than what is necessary to find
another unemployed worker, this increases the cost of production.

Now, there is another category of costs which I would like to focus on, which
is referred to by Marx as "costs of circulation".  This refers to the fact
that it is not enough to actually produce the commodity and leave it sitting
on the factory.  The commodity has to actually be taken to market and sold to
someone in order to complete the M-C-M chain and get the capitalist's money
back.  If you need to hire a cart or pay railway freight to get it to market,
the 'socially necessary' amount of these costs goes into the selling price of
the commodity.

In _Capital_, Marx concentrates heavily on the process of production, mentions
transportation some, and mostly does not go into marketing all that much, but
he does assert that all the costs of retailing come out of the capitalist's
surplus.  Today, however, we live in the 'age of the service economy', so we
are told.  This is supposed to be an advance.  It's NOT an advance.  It's
irrationality.  What it means, plain and simple, is that we have one set of
workers doing things that are seemingly technologically necessary to producing
the commodity - the shirt, for example.  And then you have another, LARGER,
set of workers doing things which do not add to the shirt - they sell the
shirt, resell the shirt, market the shirt, advertise the shirt, compete with
other sellers of shirts, they guard the shirt so that nobody steals it, they
insure the shirt against theft, they account for the money obtained from
selling the shirt, they sell advice on how to advertise the shirt and
wholesale the shirt and retail the shirt and guard the shirt, they perform all
these similar services for all the firms that performed all the aforementioned
services, etc. etc. etc. etc. etc.!!  For every one worker who is doing
something with cotton, there may be another one, or maybe two, or even three
workers who are doing things with money and paper and data.

Now, when I went to my first political education class on Marxist economics, I
was told that the workers who actually make the shirt are the 'productive
labor', and the ones who do the advertising and accounting and so on
are 'unproductive labor', and I was told that the value of the shirt was the
value of the 'productive labor' that had gone into it, and that
the 'unproductive labor' was being paid by the capitalist out of his surplus.
In other words, if the price of the shirt is $10.00, this might be broken down
as $2.00 for raw materials, machinery, etc., and $8.00 the value of the
productive labor, although the productive laborers might only get $2.00 of it,
in which case the capitalist is making a surplus of $6.00, but he may have to
spend $5.50 of that for the UNproductive labor of advertising, marketing,
consulting, stock manipulation, etc.

I am no longer convinced that this is right, however.  The point is that, IN
about whether to hire advertisers and marketers etc. etc.  I would now say
that these are part of the **socially necessary** costs of production AND
circulation within the capitalist economic order.  If the labor of the workers
on the truck or ship, whereby the shirt is transported to market, and without
whom the capitalist cannot recover his/her money, goes into the exchange-value
of the shirt, then by the same principle it seems to me that the labor of all
these other people, without whom the capitalist cannot recover his/her money,
ALSO goes into the exchange-value of the shirt.

Now, IF I am right about this, THEN it is quite possible for socialism to be
more economical than capitalism, because much of what is 'socially necessary
labor' in the irrational and anarchic capitalist order CEASES to be 'socially
necessary' given a planned economy.

(But even if I am wrong there are still substantial efficiency gains to be
made by eliminating all this labor which is clearly "socially unnecessary"
under socialism.  This holds true even if you have to conceptualize it like
this:  socialism can be less efficient than capitalism, but it can still be
better for people because the surplus can be used to subsidize social goals
rather than going into the capitalist's bank account for consumption or
redistribution.  AND, note that IF you are going to say that all this 'service
economy' paper-pushing is currently being paid for out of the surplus value,
THEN this surplus is a very large amount, many times larger than the sum of
all the luxury expenses of all the capitalists in existence.)

Whichever way you think of it, the concrete manifestation of this all is that
a very large number of the workers who are now doing 'service' jobs will be
freed up to share in the 'production' jobs, or do other work for which there
is a need.  This, I think, is going to tip the balance between "browned-out
Xanadu" and "cheery old Slumville" considerably.  [Mark, hadn't you ought to
make Slumville the socialist stronghold, and Xanadu the ephemeral capitalist
pleasure dome, to make your fable consistent?]  Environmental consciousness
has its price, but the price would be easier to bear if you were working 6
hours a day, three days a week, doing something which is actually producing
use-value.  I have one of these "service" jobs myself, and the strain of
spending the whole week here pretending to believe that I am "earning my
living" in human terms prevents me from feeling very cheery in my own corner
of Slumville.

Lou Paulsen
Slumville-on-the-Lake, IL

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