The Economic Doctrines of Karl Marx

Part III.
WAGES AND PROFITS

1. Wages

(1) Changes of Magnitude in the Price of Labour-power and in Surplus-value

In the second part we have dealt chiefly with the production of surplus-value. Now we shall address ourselves immediately to the laws governing wages. The introduction thereto and the transition from the second to the third part, which to some extent touches the spheres of both, form the investigation into the changes of magnitude in the price of labour-power and of surplus-value, brought about by the alterations in three factors, with which we have already become acquainted in the second part namely (1) the length of the working day, (2) the normal intensity of labour, and (3) its productive power.

These three factors are subject to the most manifold variations, sometimes one of them alone, sometimes two, and sometimes all three, and the degrees of change vary infinitely. It would take us too far to investigate all the combinations which arise therefrom; a little reflexion on the reader’s part will suffice to deduce these combinations once the chief factors are given. It is only the latter that are here described. We are investigating the changes which transpire in the relative magnitude of surplus-value and in the price of labour-power when one of the three factors changes while the others remain unaltered.

(a) The extent of the working day and the intensity of labour remain unaltered, while the productivity of labour alters. The productivity of labour exercises an influence on the quantity of the products which are produced in a definite period of time, but not on the magnitude of value of this mass of products. If, owing to an invention, a cotton spinner is enabled to spin 6 lbs. of cotton in an hour, whereas hitherto he has only spun 1 lb. in an hour, he will now produce six times as much yarn in an hour as before, but only the same value. But the value which he imparts to a pound of cotton in transforming it by his labour into yarn is now one-sixth smaller. This fall in value reacts upon the value of the means of life of the worker, for example, his articles of clothing. The value of labour-power falls, and surplus-value rises to the same extent. The contrary, of course, takes place when there is a fall in the productivity of labour. The increase or decrease of surplus-value is always the consequence and never the cause of the corresponding increase or decrease in the value of labour-power. It depends upon a variety of circumstances, especially upon the power of resistance of the working class, if and to what extent the fall in the value of labour-power involves a fall in its price. Let us assume that, owing to an increase in the productivity of labour, the daily value of labour-power falls from 3s. to 2s., while its price only drops to 2s. 6d. If the daily surplus-value in respect of each worker formerly amounted to 3s., it would now rise, not to 4s., but only to 3s. 6d., to the great annoyance of the capitalist. Fortunately for him such a case rarely happens. It presupposes not only great power of resistance on the part of the workers, but also that the two other factors remain unchanged – the length of the working day and the intensity of labour. The influence of alterations in these two factors is overlooked by economists, after the procedure of Ricardo. Let us now consider the influence of each of these latter changes.

(b) The working day and the productivity of labour remain unaltered, while the intensity of labour alters. To work more intensively means to expend more labour in the same time, and therefore to create more value in the same period. If a cotton spinner, without the productivity of labour altering, but in consequence of greater exertions, spins 12 lbs. of cotton in an hour instead of 1 lb. as formerly, he creates about one-half more value in an hour than before. If previously he had created a value of 6s. in 12 hours, he now creates a value of 9s. in the same time. If the price of his labour-power was previously 3s. and now rises to 4s., the surplus-value is increased at the same time from 3s. to 5s. It is therefore not true, as is often contended, that a rise in the price of labour-power is only possible at the cost of surplus-value.

This applies only to the first of the cases considered by us; it does not apply to the case just referred to. In passing it may be observed that the increase in the price of labour-time in this, the second case, would not always signify that it has risen above its value. If the increase in price is inadequate to compensate the more rapid using-up of labour-power, which necessarily follows from the greater intensity of labour, the price of labour-power falls in reality below its value.

The intensity of labour differs among various nations. “The more intense working-day of one nation would be represented by a greater sum of money than would the less intense day of another nation.”

In the English factories the working-day was as a rule shorter than in the German, but precisely for this reason work was more intensive in the former, so that the English worker created greater value in a labour hour than his German colleague. “The most infallible means for reducing this qualitative difference between the English and Continental working hour,” says Marx, “would be a law shortening quantitatively the length of the working-day in Continental factories.”

(c) Productivity and intensity of labour remain unaltered, while the working-day changes. This may be effected in two directions. (1) It can be shortened. The value of labour-power is thereby unaffected; the curtailment takes place at the expense of surplus-value. If the capitalist does not wish surplus-value to be diminished, he must force the price of labour-power below its value. The opponents of the normal working-day were fond of adducing this instance. Their arguments, however, were only valid when the intensity and the productivity of labour remained unaltered. But in reality a shortening of labour-time is either a cause or an effect of an increase in the intensity and productivity of labour. (2) The working-day is prolonged. The consequences of this alteration have never occasioned the capitalist any qualms. It increases the total value of the quantity of products created during the working-day, and also the surplus-value. The price of labour-power may also rise. But here, as in the case of augmenting the intensity of labour, unless it rises to a point which is commensurate with its increased wear and tear, it will actually remain below its value.

The cases considered under the headings of a, b, and c may seldom occur in their entirety. As a rule an alteration in one of the three factors involves alterations in the others. Among others, Marx investigates the case where the intensity and productivity of labour grow at the same time as the working-day is shortened, and he indicates the limit to which the working-day could be shortened. Under the capitalist mode of production the working-day cannot be shortened to coincide with the extent of labour-time necessary for the maintenance of the worker. This would mean abolishing the surplus-value which is the basis of capitalism.

The abolition of the capitalist mode of production would permit the limitation of the working-day to the necessary labour-time. Other circumstances being equal, as soon as the capitalist mode of production was abolished, it would become necessary to prolong the necessary labour-time. In the first place, because the social demands of the workers would grow, and secondly, because the accumulation of funds for the continuance and extension of production would fall within the sphere of necessary labour, whereas to-day they are provided for out of surplus-value.

On the other hand, however, the intensity of labour would grow with the shortening of the working-day. The system of socially-organised labour would lead to economies in the means of production and the abolition of all useless labour.

“The capitalist mode of production, while on the one hand enforcing economy in each individual business, on the other hand, begets by its anarchical system of competition, the most outrageous squandering of labour-power and of the social means of production, not to mention the creation of a vast number of employments, at present indispensable; but in themselves superfluous.”

“The intensity and productiveness of labour being given,” continues Marx, “the time which society is bound to devote to material production is shorter, and, as a consequence, the time at its disposal for the free development, intellectual and social, of the individual is greater in proportion as the work is more and more evenly divided among all the able-bodied members of society, and as a particular class is more and more deprived of the power to shift the natural burden of labour from its own shoulders to those of another layer of society. In this direction, the shortening of the working-day finds at last a limit in the generalization of labour. In capitalist society spare time is acquired for one class by converting the whole life-time of the masses into labour-time.”

(2) The Conversion of the Price of Labour power into Wages

So far we have been dealing with the value and price of labour-power and its relation to surplus-value. But what passes superficially in society as wages does not present itself as the price of labour-power, but as the price of labour.

“If we were to ask the labourers, ‘How much wages do you get?’ one would reply, ‘I get a couple of shillings a day from my employer’; another, ‘I get half-a-crown,’ and so on. According to the different trades to which they belong they would name different sums of money which they receive from their particular employers, either for working for a certain length of time, or for performing a certain piece of work; for example, either for weaving an ell of cloth, or for setting up a certain amount of type. But in spite of this difference in their statements, there is one point in which they would all agree: their wages are the amount of money which their employer pays them, either for working a certain length of time or for a certain amount of work done.” [1]

The price of a commodity is its value expressed in money. If labour has a price, it must also have a value, so the economists calculate. But what is the extent of its value? Like every other commodity, it is determined by the labour-time necessary for its production. How many labour hours are required to produce the labour of 12 hours? Obviously 12 hours.

If, according to this, labour is paid for at its full value, the worker receives as much in wages as he imparts by way of value to the product; at the end of this calculation we are accordingly faced with the alternatives of recognising the doctrine of surplus-value, or the doctrine of value, or both, to be false, and consequently declaring the riddle of capitalist production to be insoluble. The classical bourgeois economists, who reached their highest expression in Ricardo, foundered upon this contradiction. The vulgar economists, who do not attempt to investigate the modern mode of production, but instead justify it and paint it in the rosiest colours, have utilised this contradiction in the interest of their finest fallacies.

Marx demolished all these fallacies by clearly establishing the distinction between labour and labour-power, which had been confused by the economists.

In 1847 Marx had not yet made this fundamental discovery. In his Poverty of Philosophy, as in his articles upon Wage-Labour and Capital, he still speaks of the value of labour, whilst unconsciously meaning the value of labour-power. Our economists have so little grasped the significance of the distinction between labour-power and labour that they still treat these ideas as interchangeable, and are fond of referring to a Marx-Rodbertus theory of value, although Rodbertus uncritically adopted the Ricardian theory of value with its confusion of labour and labour-power, and the contradictions that flow therefrom, whereas Marx, in this and other points of fundamental importance (we recall the limitation of value-forming labour to socially-necessary labour, the distinction between general value-forming and special, use-value-creating labour and so on), divested them of their contradictions and was the first to construct a real, adequate, and firmly established theory of value from the Ricardian doctrine.

Marx first demonstrated that labour is not a commodity, and consequently does not possess any commodity value, although it is the source and the measure of all commodity values. What appears in the market is the labourer who offers his labour-power. Labour originates from the consumption of the commodity labour-power, just as a certain blissful feeling is created by the consumption of the commodity champagne. Just as the capitalist buys the champagne, but not the bliss which it generates, so he buys labour-power, and not labour.

But labour-power is a commodity of a peculiar kind; it is not paid for until after it has been consumed; the worker only receives his wages when he has done his work.

Labour-power is bought, but it seems as if labour were being paid for. Wages do not appear as the price of labour-power. They undergo a transformation before they emerge from the pocket of the capitalist into the light of day as wages; they seem to us to be the price of labour.

How this transformation is brought about and what its consequences are the economists anterior to Marx were, of course, unable scientifically to investigate, as they were not acquainted with the distinction between the price of labour-power and labour. Marx gave us, therefore, the first strictly scientific theory of wages. The two basic forms of wages are time wages and piece wages.

(3) Time Wages

We know that the daily value of labour-power, under specific circumstances, is a definite quantity. Suppose the daily value of labour-power amounts to 3s. and the customary working-day is 12 hours. We assume here as elsewhere in this book, where the contrary is not stated, that the value and the price of labour-power coincide. The price of the labour of 12 hours therefore appears 2s. 4d., and the price of one hour’s labour: 2¹/₃d. The price of the labour hour thus ascertained serves as the unit measurement for the price of labour.

We shall therefore discover the price of labour if we divide the daily value of labour-power by the number of working hours of a customary working-day.

The price of labour and daily or weekly wages may fluctuate in various directions. Let us assume that labour time increases from 12 to 15 hours, and that simultaneously the price of labour falls from 2¹/₃d. to 2d. The daily wage now amounts to 2s. 6d. It has risen although the price of labour has fallen at the same time. The price of labour depends, as stated above, upon the daily value of labour-power, and upon the length of the customary working-day.

If, now, owing to an extraordinary event, a crisis for example, the capitalist curtails the labour-time because his commodities are unsaleable, and puts his works on half time, the price of labour is not raised correspondingly. If this amounts to 2d. the worker will only receive 1s. for six hours working time, although the daily value of his labour-power is far higher, according to our assumption 2s. 4d. [2]

If the prolongation of the working-day is a source of suffering for the workers, its temporary curtailment constitutes a new cause of privations.

Whenever it is a question of a legal shortening of the working-day, the capitalists seize the opportunity to express their sympathy with the poor workers. “We are already obliged to pay the most miserable starvation wages for fifteen hours’ work,” they exclaim, “ now you want to reduce the labour-time to ten hours, and thus take a third of their wages from the starving workers. We must energetically protest against such barbarism.”

The noble friends of humanity forget that the price of labour rises if the length of the customary working-day decreases; the price of labour is all the higher, the higher the daily value of labour-power and the shorter the length of the customary working-day. Wages fall with a temporary shortening of the working-day, but rise with a permanent shortening. Among other things this has been seen to be the case in England. According to the Factory Inspector’s report for April, 1860, between 1839 and 1869 wages rose in the factories subject to the 10 hours normal working-day, while they fell in those factories which worked 14 to 15 hours daily. This rule has been confirmed by all experience within most recent times.

The permanent prolongation of labour time depresses the price of labour. On the other hand, a low price of labour compels the workers to submit to prolongation of the working-day, in order to assure themselves a wage, if only a miserable one. A low price of labour and a long working time, however, also exhibit the tendency to reinforce each other. The capitalists lower wages and prolong the labour-time in order to augment their profits. But their competition with each other eventually compels them to reduce the prices of commodities to a corresponding extent. The extra profit which is realised through the prolongation of the working-day and the reduction of wages now disappears, but the low prices remain and operate as a means of keeping wages at the low level they have reached with excessive labour-time. The capitalists derive no permanent advantage, whilst the workers derive a permanent disadvantage therefrom. The legal fixation of the normal working-day sets a sharp limit to this development.

Further beneficial effects of the normal working-day may also be mentioned.

In certain branches of labour it transpires that the capitalist does not pledge himself to the payment of a fixed weekly or daily wage, but remunerates the worker according to the number of hours worked. The worker must be at the disposal of the capitalist the whole day, but it is at the option of the latter to work him immoderately or to employ him only for a few hours. The price of labour, however, is determined according to the length of the customary working-day.

In paying for the normal price of labour, the capitalist has at his disposal the whole of the labour-power of the worker, without paying him for the entire value of his labour-power; this is obvious enough on the days when he employs him below the normal number of working hours; but it also applies to the time when he employs him above this normal period.

The value of the labour-power expended during each working hour is not in fact equal. The labour-power expended during the first hours of the working-day is easier to replace than that expended during the last hours. The value of the labour-power expended during the first labour hours is less than that expended during the tenth or the twelfth hour – although the use-value of the latter may be much smaller than that of the former. Accordingly, in many businesses the custom has grown up, spontaneously and not as a result of physiological and economic insight, of regarding the working-day up to a certain point as “normal,” and the labour-time beyond this limit as overtime, which is better paid.

The above-mentioned capitalists who employ worker by the hour save the higher rates for overtime.

The distinction between the “normal” working-day of the kind mentioned above and overtime is not to be conceived as if the price of labour during the normal working-day represented the normal wage, while an additional wage which exceeded the daily value of labour-power was paid for overtime. There are factories which work overtime year in and year out. The “normal” wage is there fixed so low that the worker cannot exist upon it alone and is compelled to work overtime. Where overtime is systematically worked, the “normal” working-day is only a portion of the actual working-day and the “normal” wage is only a portion of the wage necessary for the maintenance of the worker. The better payment for overtime is frequently only a means of inducing the worker to acquiesce in a prolongation of the working-day. But this coincides, as we have seen, with a fall in the price of labour.

The normal working-day has the tendency to set sharp limits to all these efforts to depress wages.

(4) Piece Wages

Time wages are the converted form of the price of labour-power; piece wages are a converted form of time wages.

Suppose the customary working-day amounts to 12 hours, the daily value of labour-power is 2s., and a worker fabricates on an average 24 pieces of a certain article each day – experience soon demonstrates in capitalist business what performance a worker of average skill and intensity is capable of each day. I may employ a worker by the day at a wage of 2d. per hour, but I could also pay him for every piece which he supplies at 1d. per piece. In the latter case the wage is a piece wage.

It is obvious that, as in the case of time wages, the basis of piece wages is the daily value of labour-power and the customary length of the working-day. It seems, of course, as if the piece wage were determined by the performance of the producer; this semblance vanishes, however, if one knows that the piece wage is correspondingly reduced as soon as the productivity of labour rises. If the worker no longer requires a half, but only a quarter, of an hour for the production of the piece of an article in our above example – possibly owing to the improvement of a machine – other circumstances remaining equal, the capitalist will no longer pay him a 1d. but only 1d. for the piece.

Instances frequently occur, and they are known to every one who is concerned with labour affairs, where particular workers or groups of workers, who have once been lucky enough to furnish an unusually large quantity of products, are arbitrarily docked of the agreed piece wage for this special case, on the plea that the total wage is too much above the usual level of wages.

Such an example shows distinctly enough that piece wages are only a converted form of time wages, a form which the capitalist only resorts to when he thinks it will be more advantageous for him than the unconverted time wages.

As a rule piece wages offer great advantages to the capitalist. In paying time wages the capitalist pays for labour-power in the form of the quantity of work done; in piece wages he pays for it in the form of the product. He can therefore rely on it that, in his own interest, the worker will supply the greatest possible quantity of products in every working-hour, without any external stimulus. He is able to ensure much more easily that the worker supplies a product of average quality. The slightest defect here becomes a cause, and very often a pretext, for wage reductions, sometimes for the downright cheating of the workers.

The supervision exercised by the capitalist and his representatives over the workers becomes therefore, to a great extent, superfluous with piece wages, the capitalist is saved this work and its cost. Piece wages even render it possible in certain branches of industry for the workers to work at home, whereby the capitalist is saved a number of establishment and running expenses (for heating, lighting, rent, and so on) and has the use of a part of his capital which otherwise he would have been obliged to lock up. In trades where home work is prevalent, such as tailoring and shoemaking, it sometimes happens that masters demand rent from journeymen who work in their workshops instead of at home. The worker must pay extra dearly for the pleasure of being able to “work under the master’s eye.”

Under the piece wages system the personal interest of the worker impels him to work as intensely and as long as possible, in order to increase his daily or weekly wage to the utmost. He overlooks the fact that not only does overwork tend to ruin him physically, but also that the price of his labour tends to fall. And even if he perceives this, he is unable to evade the iron law of competition with his fellow-workers. This competition of workers with each other, and the appearance of freedom and independence which piece-work evokes, and frequently also their isolation from each other (in home work) renders the organisation and united action of these workers very difficult.

The piece wages system involves yet another drawback for the workers. For example, it permits the interposition of parasitic existences between the workers and the capitalists, middlemen who live upon the fraction of the wages paid by the capitalist which they are able to intercept. Moreover, the system of piece wages makes it possible, where work is carried on by groups of workers, for the capitalist to conclude agreements with the foremen of groups for the supply of products at a certain price, and it is left for the foremen to pay their subordinate workers what they like. “The exploitation of labour by capital is here effected through the exploitation of the labourer by the labourer.”

Piece wages are as disadvantageous for the workers as they are advantageous for the capitalists. Moreover, piece wages are the form of wages which correspond to the capitalist mode of production. Although not quite unknown to guild handicraft, it was not until the period of manufactures that the system was extensively applied. In the nascent period of modern industry it served as one of the most important levers for the prolongation of labour time and the reduction of the price of labour.

(5) National Differences in Wages

We have noted a series of factors which underlie the value and the price of labour-power and their relation to surplus-value, determined by alterations in the length of the working-day, in the intensity and productivity of labour. This movement is intersected by a simultaneous movement in the mass of the means of life in which the price of labour-power is realised. All these changes also determine changes in the converted form of the price of labour-power, in wages. Thus wages constantly fluctuate in a country, and differ at various times. To this difference in time there corresponds a difference in space. Every one knows that wages are higher in America than in Germany, and higher in Germany than in Poland.

Nevertheless a comparison between the wages of various nations is not quite a simple matter.

“In the comparison of the wages in different nations,” says Marx, “we must therefore take into account all the factors that determine changes in the amount of the value of labour-power; the price and the extent of the prime necessaries of life as naturally and historically developed, the cost of training the labourers, the part played by the labour of women and children, the productiveness of labour, its extensive and intensive magnitude. Even the most superficial comparison requires the reduction first of the average day wage for the same trades, in different countries, to a uniform working-day. After this reduction to the same terms of the day wages, time wage must again be translated into piece wage, as the latter only can be a measure both of the productivity and the intensity of labour.”

The absolute price of labour may stand comparatively very high in the case of one nation, and yet the relative wages, that is the price of labour compared with the surplus-value or the value of the entire product, and the real wages, that is the quantity of the means of life which the worker can obtain, may be very low.

Among nations where the capitalist mode of production is more developed, the productivity and intensity of labour is greater than among those which lag behind in the development of this mode of production. In the world market, however, the more productive national labour, like more intensive labour, counts as greater value-forming labour.

Let us suppose that in Russia a cotton spinner, badly nourished and developed, excessively worked, operating with bad machines, spins an average of 1 lb. of cotton in an hour; an English spinner, on the other hand, spins 6 lbs.; 1 lb. of Russian yarn would not, on this account, have greater value on the world market than a pound of English. The spinning labour in England therefore creates in the same time more value than that in Russia; the value of its products during an equal period is embodied in England in a greater quantity of gold than in Russia. Consequently, the money expression of wages may be higher in a capitalistically developed country than in an undeveloped country, and yet the price of labour in relation to surplus-value may be much lower, precisely because the value of the total product is higher.

But in a country where the productivity of labour is high it is also found that the value of money is low. The price of labour-power may therefore be a high one without the worker being able to buy more food with his higher wages.

In great undertakings outside England, in the construction of railways in Asia for example, the English contractors were obliged to employ expensive English workers by the side of cheap native workers. Experience in this and similar businesses has shown that what seems the dearest labour is in reality the cheapest in relation to the output and the surplus-value.

Paying the most miserable wages and exploiting labour without restriction, pre-war Russian industry was only able to drag out a wretched existence with the assistance of a prohibitive tariff. It could not compete with English industry, which produced with relatively higher wages and shorter labour time, with numerous restrictions upon female and child labour, health regulations, etc. The absolute price of Russian labour, its expression in money, was low. Its relative price in relation to the value of its product in the world market was high.

Notes

[1] Marx, Wage-Labour and Capital.

[2] The price of labour may even fall at the same time: this would however, not be the consequence of the curtailment of labour time, but of the greater supply of labour-power, and so on, phenomena which we do not have to discuss here. It must always be borne in mind during this investigation that so far we have been dealing with the bases of the phenomena of the capitalist mode of production, and net with its aspect as a whole.