Freedom

From the Western Clarion, Dec. 1917

One of the most amazing paradoxes to be found in modern civilization is the workers belief that they are free. Every experience points to the fact that they are quite the reverse. Their whole life, from childhood to the grave, is composed of actions most of which are either unpleasant, irksome, or revolting.

As soon as he leaves school (that institution for turning the growing crop of wage slaves’ children into serviceable material for industry) the actions of the young worker are determined , not by desire, but by stern necessity. The larder of his parents too often needs immediate replenishing - the clothes of his younger brothers and sisters - aye, and of his parents too, require replacing. He must go to work. He has arrived at a stage of development when his energy is of sufficient strength to be of use in industry. He owns a commodity now - labor-power. He must sell it. From that moment the labor-market has his destiny within its grasp.

If industry is brisk perhaps a little latitude will be his, as to what kind of work he is able to get. The wages may be a little better than “last year,” and the boss may not be quite so tyrannical, but work he must. He sets the alarm at 7:00, not because he particularly relishes the biting air of a winters’ morning, but because circumstances over which he has no control have ordered that the hum of industry shall begin at 8:30 am. At first the youthful vendor of human energy may look upon the search for work as a kind of adventure. The factories, or other places of industry he visits in quest of a buyer are so big - do busy - so bewildering. But as the days roll by and he still finds himself jobless, the glamor of his new experience begins to wane. Egged on by his parents, who need what little support his meagre wages will afford, he continues on his daily round, together with other lads like himself on a similar mission. At last the memorable day arrives. He gets a job! ‘Tis true the wages are insignificant and the hours long, compared with the drudgery of school, but he thinks, he will soon “rise.” Alas! for youthful hopes! Once a wage-slave, and industry embraces him, not with the fond embrace of a mother but with the embrace of an angry bear which which crushes life itself from out its victim - he has become the appendage of a machine. His speed must be its speed. Other boys have done it - other boys, capable, willing, and anxious to do it, are outside - he must - and does. But at what cost? His youthful frame is strained to its utmost. His mind, dulled by the daily toil amidst the noise and dust of his surroundings becomes the mind of a wage-slave, capable of thinking only of work or of the crudest recreations. Freedom? Sure. Free to quit his job - and starve. He must keep on - and toil, till the machine, through its owner, casts him off, and this it does at frequent intervals.

The products of the facory in which he works belong to the owner of that factory, as a matter of course. Has that owner not put out his good money in raw materials, machinery and wages? And, as capitalist must he not be recompensed for his investment? To profit by the ownership of his factory he must sell the product of his workers’ toil and he does - provided there are buyers for it. This capitalist, too, considers himself free, but economic forces prove otherwise, for, will what he may there comes a time when the market will not absorb his goods - the orders dwindle - competition with his fellow capitalists brings prices tumbling - he faces actual loss - he closes his works and thereby separates the workers from the means of production - and incidentally from their meal tickets. This dearth of buyers upon which follows stagnation of business, unemployment and misery, spring from causes that lie at the roots of capitalist society itself, and is clearly undesired by both capitalist and worker. The former suffering at least a loss of profit , perhaps ruin; the latter poverty, perhaps starvation.

Under capitalism all products, and labor-power as well, take the form of commodities. They only change hands through the medium of an exchange - through buying and selling. But in order to buy there must first have been a sale of something at least as valuable as the commodity to be bought. The purchasing power of the vast majority of the people is limited strictly to their wages, which are reduced by competition to a level determined by the bare necessities of life, whilst the development of machinery has so increased labor’s productivity that only a small portion of industry’s is necessary to feed, clothe, and shelter the working class. The balance cannot be consumed by the owners of the means of production - capitalists cannot personally consume millions of tons of flour, steel rails and tobacco, neither can they wear millions of pairs of boots nor ride in countless autos. They can consume unlimited values in the form of luxuries, and they do, but in order to buy these, the commoner commodities, the production of which supplies them with their income, must first be sold. The wages of the working class only buys a part, consequently a surplus gluts the market and causes stagnation, relieved only by re-investment in undeveloped countries, a dangerous though necessary expedient, since the development of “new” countries creates competitors hitherto non-existent for a shrinking market.

As the young wage-worker grows it becomes more and more apparent that the commodities he is able to withdraw from the market as a result of spending his wages merely suffice to enable him to re-appear on the morrow as a worker; that the raw material upon which he works functions only as an absorbant of his energy, and that the whole process constantly reproduces him as a worker and his boss a capitalist.

The years roll by. With manhood comes manhood’s necessities. He gets a “home.” His job becomes from that time on, all the more precious. The freedom to wander, in search of work, has lost its old significance and charm. An anchor is upon his life. The spectre of dismissal constantly haunts him and raises thoughts not only of poverty and starvation for himself, but also the maddening site of a hungry wife and children. Toil he must! Work becomes his one obsession - overtime, or rather the few extra nickels it brings in - almost a necessity. Free? Of course he is! Free to work - when his masters need him. There can be no doubt, however, that he is free from many things. No wrinkles sear his brow as a result of the heavy responsibilities which the burden of industrial stewardship entail. No sleepless nights result from his activities “in society.” No legal problems dig his death. Freedom, from comfort, from leisure, from art and, above all, from property, is his inalienable right as a wage slave.

The workers’ belief in their so-called freedom, is however, not so strange after all, if the money factors which go to form his ideas are taken into consideration. Thoroughly imbued at school with a method of thought which seeks to explain human events by attributing them to genius and which endows mankind with a free will upon the nature of which depends the individual’s success or failure, the worker started life ill-equipped to withstand the hollow plattitudes of press and pulpit, patriot and politician. He starts, in fact, a mental slave. In the commercial struggle he sees capitalists crushed and reduced to the ranks of the proletariat, whilst some of the members of his class may be seen to rise. The intervention of the contrast , as between equals, obscures the true relation between himself and his boss. Past history, what little he knows of it seems to repeat “The poor ye have always with ye.” It is pleasant for him to consider himself free and the condition of his brain, made sluggish by long hours, toil, adulterated and ill-cooked food, and lack of proper recreation, make apathy inevitable.

Change, however, is the one certain law of nature. The quickly succeeding events, which characterize this age of machinery as the age of “progress,” are having an effect. “Freedom” has been played up too much. “Democracy” has been stuffed down the workers’ throats til its stink forces them to take notice and think about it. The time has come for a change in thought.

The sooner the better.

-A.T.

How Capitalism Works (part 1)

WHAT IS ECONOMICS?

THE REASON THE natural and industrial resources of the world are not used to provide the abundance they are capable of producing is to be sought, not in the realm of technology, but in that of economics.

Economics is basically the study of what happens when wealth is exchanged — that is when it is either bartered for other wealth or bought and sold for money. It is not the study of the production and allocation of wealth as such, but the study of its exchange and how this affects decisions about production and allocation.Exchange is not to be confused with allocation.

Allocation (sometimes called distribution) is about the use which people make of the wealth they have produced: how much they consume immediately. How much they store for future consumption. How much they use to build up or renew their stock of tools and machines. "Allocation" is used here in preference to "distribution" because the latter has acquired other meanings which can cause confusion; it sometimes means transportation (which is really part of production)— but worse shops, which are exchange institu¬tions, have taken to calling themselves the "distributive trade".

In some past societies the amount and kind of wealth that was produced and allocated were decided according to some prearranged plan, even if this "plan" was just a set of tribal customs or some other unwritten code of social behaviour. Wealth was allocated directly for individual and communal use so that the sole aim of production could be said to have been direct allocation, or use.

In societies where the bulk of the wealth is exchanged after it has been produced (and before it is allocated) the production and allocation of wealth is no longer decided according to human plans or customs. The decisions are of course still made by people but within terms of reference outside of their control. Economics is the study of these terms of reference or, perhaps, of the laws or economic forces which come into operation once production for exchange becomes widespread.

THE ENTERPRISE

An exchange institution is a body set up to take economic decisions; that is, decisions about the production and allocation of wealth in an exchange economy. A shop (where products are sold) or a bank (where money is deposited) are obvious examples. Not so obvious perhaps is the "enterprise" or firm, an institution for making decisions about the use of the large-scale, collectively-operated workplaces where the bulk of the world's wealth is produced. The enterprise is the key modern exchange institution since, apart from the sale of human energy for wages and the purchase of consumer goods by wage-earners, exchange today takes place overwhelmingly between enterprises.

An enterprise is an institution which seeks continually to increase the monetary value of its assets (the instruments of production, the raw materials, the stocks and the cash, including the wage fund, it controls.) The monetary value of these assets is sometimes called "capital"; hence "capitalism" as the name for the modern exchange economy. The aim of inter-enterprise exchange is profit, the difference between production costs and sales receipts.

Enterprises aim to increase their capital through making profits, the ratio of the increase in capital to its original value being the rate of profit.

The internal structure of the enterprise— who makes the decisions? Who gets the profits? —varies from State to State according to their differing historical and political conditions. The two most common types of enterprise are the joint-stock company and the nationalised or state industry.

In the joint-stock company the key decisions are made by a board of directors elected by and responsible to the shareholders who supplied the money to buy the assets of the enterprise. The profits are shared between the share¬holders as dividends and the directors (and sometimes the top managers) as fees and high "salaries".

The assets of a state enterprise are usually controlled by a management board appointed by the government. Its profits can be. and are. shared in a great variety of ways. They can. for instance, simply be handed over to the government to use to pay interest to those who have lent it money. Or they could find their way into the pockets of the state-appointed managers, once again through inflated "salaries". Or they could be used to maintain in comfort and privilege those who control the state.

What is significant about the enterprise from an economic point of view is not its internal structure but its role as the mechanism through which the laws of the market are transmitted tc those who make the decisions about the production of wealth— whoever they may be and however they may be chosen. The internal structure of the enterprise could be, and in a few cases is, quite different from either private or state enterprises. The workers could elect their own management committee or workers' council, but not even this would make any difference to the enterprise's economic role. The workers' council would still have to take decisions in accordance with what the market dictated. Real control by the producers over the production and allocation of wealth is not possible within an exchange economy.

WORLD DIVISION OF LABOUR

The production of wealth is now a process involving millions of men and women in even,' part of the world. What used to be the division of labour between individual skilled workers has become, with the development of modern technology, a division of the work of production between hundreds of thousands of collectively-operated workplaces (farms, plantations, mines, ships, docks, railways, factories, offices, warehouses) spread all over the world. Indeed, it is no exaggeration to say that every article produced today is the product of the world labour force co-operating within this world-wide division of labour.

Wealth production is no longer individual or local or national; it is social and worldwide. A single world society already exists but, because the workplaces of the world are controlled by enterprises, it takes the form of a world exchange economy.

The fact that there is only one, worldwide exchange economy is obscured by the political division of the world into states, each with the power to issue its own currency, impose tariffs, raise taxes and pay subsidies. The different economic policies of these states mean that conditions in the world market vary and give rise to the illusion that rather than there being one world economy there are as many "national economies" as there are states. But although states can. and do, try to change world market conditions in their favour, because of the worldwide character of the pro¬ductive process they do not have the power to isolate exchange within their frontiers from exchange outside. Far from it. World market conditions are in the end the most important factor states have to take into account when formulating their policies. They, like enterprises, have to work within the terms of reference of the exchange economy. Of course, states do have the power to make laws about the production and allocation of wealth, as about any other human activity, but enforcing such law is another matter. So is their economic effect.

The natural and industrial resources of the world are now controlled by profit-seeking private and state enter¬prises. In every state only a small minority can draw on these profits as a source of personal income. Whether or not they have title deeds to prove it, they are in practice the owners of the means of production. This applies equally to profit-taking politicians and managers and to shareholders and bondholders. Collectively these owners form a class with exclusive control — a monopoly — over the means of production. This class monopoly is the basis of modern society.

THE LAW OF WAGES

The personal income of those excluded from the means of production is the wage (or salary) they are paid by the enterprise which employs them. These wage-earners form a class of propertyless people since, collectively, they do not own the means of production. As individuals of course most of them do have some personal possessions and savings, but these cannot be used to produce wealth.

It is because they are members of a propertyless class that they are compelled by economic necessity to work for wages. This is the only way they can get money to buy the things they need to live. The wage relation which arises between the owning and the non-owning class is a basic feature of the present exchange economy. The use of wage-labour to produce the wealth of society signifies that human skill and energy has become an article of exchange due to the exclusion of the producers from the means of production. The existence of wage-labour means the existence of production-for-profit and vice versa: they are two aspects of the same social relationship.

The law of wages says that wage-earners tend to receive from their employer a sum of money sufficient to pay for the goods and services they have to buy in order to maintain their working skill and to raise and keep a family at the same standard. It also says that any sum of money regularly paid to wage-earners from a source other than their employer and any goods and services regularly provided free by employers or anyone else means that employers need pay wage-earners a smaller sum than they would otherwise have to.

In terms of goods and services, what this means is that other things being equal, over a given period of time the wage-earners' standard of living is fixed at the amount of goods and services they need to maintain their skills and their families. Except within very narrow limits they can get no more and no less than this. So any attempt, say by the state, to raise their standard of living by providing free services or money payments is bound to fail. The operation of the law of wages will tend to ensure that the overall standard remains the same by causing a reduction in the sum of money paid by the employer. Similarly any reduction in the amount in a pay packet caused by increasing taxes, either on the goods they buy or directly on their wages, will be self-defeating. The law of wages will tend to bring about a corresponding increase in the sum paid by the employer.

Actually this is an oversimplified picture since the law of wages is not an automatic process; it operates only through human activities, through the struggles between the wage-earners and the profit-seeking enterprises that employ them over the size of the wage packet (or salary cheque). Indeed this struggle is the operation of the law of wages and to the extent that the wage-earners cannot, or do not, struggle then their living standards can be reduced. Other factors, like the levels of output and unemployment and the depreciation of the currency, also complicate the picture, sometimes considerably, but the broad outline remains accurate: the wage-earners' standard of living cannot be improved by state subsidies nor can it be reduced by taxation.

This is not to say that the amount of goods and services the average wage-earner gets can never be altered at all. It can be, by two factors. First, by a change in the average skill of the worker. In the 19th century when the skilled handicraftsman was being replaced by a mass of less skilled machine-minding factory hands, often wo¬men and children, the average degree of skill did fall, and with it the wage-earners' standard of living. In the 20th century, on the other hand, with the spread of universal education the average degree of skill, and with it the standard of living, has tended to rise. Second, the amount of goods and services needed to maintain wage-earners and their families is not something that could be calculated ;n precise terms by a team of doctors and scientists. Social factors enter into it too. People's tastes and habits in regard to food, dress, housing, transport and entertain¬ment vary from place to place and change as advancing technology makes new products available. And when, as in a prolonged period of high employment, wage-earners have come to regard as necessities what were once luxuries then what they need to maintain themselves and their families has not only changed but has also increased.

The law of wages does not rule out such changes m living standards but, by their very nature as long term trends, they are increases that cannot be brought about by the actions either of the state or of the wage earners themselves.

FIXING WAGE LEVELS

But why are wages fixed at a certain level? Wages are a price, the price of the skills and energies wage-earners sell to enterprises, and like all prices are not fixed arbitrarily. Prices, in a roundabout way. reflect the amount of human effort that had to go into producing an article from start to finish. So wages, the price of human energy, are an indirect reflection of the amount of work that has to be done to produce all the goods and services needed to keep a human being alive and fit to work.

Wages are the form taken in an exchange economy of the amount of wealth that must be consumed to create and maintain the supply of human energy for the work of production, while profits are the form taken by the surplus wealth produced over and above this. The restriction on the amount of wealth allocated to the class of wage earners is the inevitable outcome of human energy being an article of exchange.

(ALB. Socialist Standard, January 1979)

to be continued...

What are your wages?

From the SPGB Pamphlet named Marxian Economics: An Introduction.

IF IT weren't for the money, most of us would stop work tomorrow. After all, wages are the common means of getting work out of men and women. You can hear some of them call it "bloody slavery". They are not trying to be accurate-only to express their feelings.

There is very little real slavery in the world today. It is a very old-fashioned and inefficient system of getting work out of people. The big empires of the past were built up on slave labour; and there was a brief flare-up of it again in America when the virgin land of the new continent was being opened up to agriculture. The slave was caught or bought, like a horse or a machine; and he was fed or flogged when necessary in order to get the maximum of work out of him. Slaves were not really regarded as people: they were denied citizenship; and their owners usually had power of life and death over them. But the quality of work they could do was generally very low; and there is a snag to owning slaves: they have to be fed and housed even when there is no work for them to do.

Although there has always been a certain amount of it, getting work out of people for wages is fairly new as a universal system. Almost everywhere in the world the slave empires were overthrown by the much less highly organised system of feudalism. The feudal serf was a "free" man owning his own bit of land; but to protect themselves from attack serfs clustered round the strong-arm men, the lords of the manor; and they paid for their "protection" by working on the land or fighting the battles of their lords. In the time that was left over, they were able to work their own strips of land. A tenth of what they produced was demanded from them by a highly organised church, which operated in league with the lords to prevent serfs from running away. It is debatable, therefore, whether serfs were much better off than slaves.

With the rise of capitalism, however, the serfs were gradually freed entirely-by having even their strips of land taken from them. They were no longer forced to work for anybody-except by the pressure of starvation. As it was, they offered themselves for work eagerly, even desperately at times, for there was no other way of getting food, clothing and shelter, except by wages. At last, in capitalism, the system of buying and selling became universal. Everything was for sale. Anything could be bought. The problem for the great mass of humanity was that they had nothing left to sell except their ability to work.

Most of us feel we have the right to live. The trouble is that hardly any of us have got "private means". We can only get the means to live by "selling ourselves". It is rather like prostitution; but we have no choice. Because of this, a lot of workers talk about the "right to work" almost as though it were the same thing as the right to live. They take part in marches and demonstrations when jobs are scarce, insisting upon their right to work. They feel offended if they are told that they are demanding the right to prostitute themselves. Actually, of course, workers have no legal right to work. Nor will they ever have. All they possess is a commodity-the ability to work. Millions of people throughout the world own nothing else.

This is what distinguishes them as a separate economic class, the working class. They constitute about ninety per cent of the civilized population of the world. Of course, in the more advanced countries they may own their own house and their own car; but economically their class is determined by the fact that they have to prostitute themselves throughout their useful lives in order to keep these things and live from day to day.

Obviously, if workers are sellers of the ability to work, there must also be a class of buyers. Occasionally and briefly, one worker may buy the services of another to do a job; but as he only has his wages with which to pay wages it cannot be general. Only those who possess the wealth which can be worked upon to produce more wealth, can really afford to pay wages. But why should anyone want to hire us - especially if they already have the wealth, and we have none? Why should anyone pay us wages for the use of our mental and physical energy? There can only be one reason: to increase their wealth further by our work. And not only that: to increase it by more than the cost of our wages.

Wealth used in this way to make more wealth is called capital; and those who use it in this way are called capitalists. So the bulk of humanity is divided into two classes: sellers and buyers of labour power; workers and capitalists.

So wages are really the price paid for our ability to work. The very existence of wages proves the division into classes, wherever it is found. Every week or every month our pay packet or cheque reminds us of the fact that we belong to the class which can only secure the right to live by offering themselves for work by prostituting themselves to those who find it convenient to buy their abilities-the world's capitalists.

Such a situation inevitably produces conflict. In buying and selling, the seller always tries to raise the price, while the buyer tries to reduce it. There is no let-up. And the very point of conflict is the wage packet itself. The quickest and surest way for the capitalist to increase his profits is by cutting wages. And yet the worker's wage is his only means of living, so that he has no choice but to struggle-not only to raise his wages, but to prevent them being depressed.