Karl Marx, the master economist who fathered the theories of communism and socialism also developed the economic concept of Wage-Labour and Capital. He claimed that the “rapid growth of productive capital calls forth just as rapid a growth of wealth, of luxury, of social needs and social pleasure. Therefore, although the pleasures of the laborer have increased, the social gratification which they afford has fallen in comparison with the increased pleasures of the capitalist.” (Marx p33) In layman’s terms, the growth of capital in turn results in the rapid growth of wealth, however as the wealth of the laborer increases the capitalist’s wealth increases substantially more. Marx’s claim declares the underlying issue within our capitalistic economy, which he proves through his concept of Wage-Labour and Capital. He also deliberately defines the economic terms that are required in order for the reader to understand this concept. Mind you, Marx is considered as the father of communism and was likely biased in favor of a government controlled command economy; similar to that of The Prince since Machiavelli was actually in favor of a republic but rather argued the pros and cons of a monarchy in the perspective of a politician. In comparison, Marx does commit to dissecting the free market capitalistic economy through Wage-Labour and Capital in the perspective of an economist and neither in favor of the capitalist nor labor worker. Though Marx’s argument is sound, he only declares the underlying issue and not so much the remedy to fix our free market capitalistic economy today.
The relationship between the capitalist and the labor worker is nothing short of a bilateral agreement between two parties who benefit off each other’s existence. In the context of the initial relations, “the worker sells his labor for wages, which he receives from the capitalist; according to the present text, he sells his labour-power.” (Marx p6) This initial relationship predates Marx’s time, as the overarching action of economics originate to the early days of bartering and trade. However, as Marx defines the state of the political economy, the “political economy finds it an established fact that the prices of all commodities, among them the price of the commodity which it calls labour” (Marx p7). This term labour gives the worker its value, and in turn “he could sell his future labour, [and] assume the obligation of executing a certain piece of work in a certain time” (Marx p7), which inevitably allows a capitalist to buy and sell the worker’s labor-power. According to Marx, “labour-power, then, is a commodity, no more, no less so than is the sugar.” (Marx p17) Although, even though labour-power is treated as a commodity the relationship is treated otherwise since the capitalist and labor worker status are unequal. Marx understood that “the capitalist, then, does not pay his wages out of the money which he will obtain from the cloth, but out of money already on hand.” (Marx p18) The capitalist then suffers the threat of elevated debt and its associated risk more so than a labor worker. Whereas, according to Marx, “as long as the wage-labourer remains a wage-labourer, his lot is dependent upon capital. That is what the boasted community of interests between worker and capitalists amount to. If the capital grows, the mass of wage-labour grows, the number of wage-workers increases” (Marx p33). The labor worker then suffers the threat of dependence upon the capitalist. Therefore, as capital grows rapidly not only does the mass of wage-labor and the number of wage-workers grow but the wealth of the community overall grows since the labor workers and capitalists amount to the aggregate microeconomy; in Marx’s words, “Rapid Growth of productive capital calls forth just as rapid a growth of wealth”. (Marx p33)
Initially, the wage of a labor worker is “the amount of money which the capitalist pays for a certain period of work or for a certain amount of work.” (Marx p17) However, the labor worker cannot usually claim their price because they work so that they “may keep alive. He does not count the labour itself as a part of his life; it is rather a sacrifice of his life… What he produces for himself is wages; and the silk, the gold, and the palace are resolved for him into a certain quantity of necessaries of life, perhaps into a cotton jacket, into copper coins, and into a basement dwelling.” (Marx p19) If the capital grows then the wage of the labor worker may also grow but their rate of growth is more so horizontal. Individual labor workers suffer from an economic term called diminishing returns, which means the abundance of work per labor worker is marginal and thus limited to the rate of work they can physically output. Since labor workers suffer from diminishing returns, capitalists must hire more labor workers rather than few labor workers that are excessively skilled. Due to the capitalist’s necessity to hire more labor workers, the capitalist can then buy labor-power at a lower minimum wage. The cost of institutionalizing such minimum wages is detrimental to the individual labor workers who “do not receive enough to be able to exist and to propagate themselves; but the wages of the whole working class adjust themselves, within the limits of their fluctuations, to this minimum.” (Marx p27) Therefore, in order to increase the wage of one labor worker, the capitalist theoretically should increase all labor worker wages resulting in a higher minimum wage which is a horizontal growth rate of the laborer’s wealth. The potential growth of the labor worker’s wealth is also hindered by the fluctuations of wage, in which “wages will now rise, now fall, according to the relation of supply and demand, according as competition shapes itself between the buyers of labour-power, the capitalists, and sellers of labour-power, the workers.” (Marx p26) The abundance of labor workers then must compete with each other in order to monetize their labor since the supply of workers is inherently in surplus. However, “if productive capital grows, the demand for labour grows. It therefore increases the price of labour-power, wages.” (Marx p33) Even though there is and will always be a fluctuation of wage due to supply and demand, the overall wealth of labor workers will grow along the rate of the capitalists which should also increase the labor worker’s allowance for pleasures and higher standards of living overall; in Marx’s words (paraphrased), “the pleasures of the laborer have increased along with the rapid a growth of wealth”. (Marx p33)
The relations between the capitalist and labor worker remain ultimately unchanged throughout time, the labor worker’s increasing wage is dependent upon the capitalist’s increasing capital whose wealth attributes to the aggregate increase of wealth. While both parties in bilateral agreement increase their wealth the labor worker’s wealth increases horizontally whereas the capitalist’s wealth grows vertically. While the labor worker suffers from an abundance workforce, the capitalist benefits off the cheaper labor marginally. In terms of capital, “rapid growth of capital is synonymous with a rapid growth of profits. Profits can grow rapidly only when the price of labour-the relative wages-decrease just as rapidly. (Marx p39) Therefore, an efficient capitalist must reduce the labor worker’s wage to the absolute minimum in order to substantially grow their profits. In a capitalistic society, a capitalist’s goal is to maintain profit growth whereas the labor worker’s goal is to survive and maintain a tolerable standard of living. Even though the overall wealth may grow within a microeconomy, “the share of capital in proportion to the share of labour has risen. The distribution of social wealth between capital and labour has become still more unequal. The capitalist commands a greater amount of labour with the same capital. The power of the capitalist class over the working class has grown, the social position of the worker has become worst, has been forced down still another degree below that of the capitalist.” (Marx p37) As a result, the relationship between capitalist and labor worker heavily favors the capitalist even after their risk of debt for productivity and operations are accounted for. The labor worker may receive instant gratification for their work but they also succumb to risk towards the inherently competing labor force. In context of instant gratification, “the material position of the worker has improved, but at the cost of his social position. The social chasm that separated him from the capitalist has widened.” (Marx p40) Even though this growth of wealth is beneficial for the wealth of the microeconomy, it favors the capitalist so much so that the relationship between the capitalist and labor worker has widened to the issue of the 1% we deal with today; in Marx’s words, “the social gratification which they afford has fallen in comparison with the increased pleasures of the capitalist”. (Marx p33)
Marx’s concept of Wage-Labour and Capital and theory of inequality between the relationship of the capitalists and the labor workers are sound. The “rapid growth of productive capital calls forth just as rapid a growth of wealth, of luxury, of social needs and social pleasure. Therefore, although the pleasures of the laborer have increased, the social gratification which they afford has fallen in comparison with the increased pleasures of the capitalist.” (Marx p33) Although, even though the underlying issue within our capitalist economy was declared by Marx himself, there has yet to be as sound of a resolution neither contemplated nor implemented. Today’s capitalist economic gap between the capitalist and labor worker trumps the widening gap described in Wage-Labour and Capital. For example, higher education was supposed to allow the labor worker to advance their skills in order to become successful but today education is no longer the golden ticket to success. Today’s market of the free market capitalist economy has over saturated to the point where even the advanced degrees don’t attribute too much in terms of advancement in the capitalist’s corporation. The barrier to entry into the realm of successful capitalists is diminishing along with the growth rate of competition. Our surplus of labor workers ultimately simplifies labor, and as “the labour simplified. The special skill of the labourer becomes worthless. He becomes transformed into a simple monotonous force of production, with neither physical nor mental elasticity. His work becomes accessible to all; therefore competitors press upon him from all sides… Therefore in the same measure in which labour becomes more unsatisfactory, more repulsive, does competition increase and wages decrease.” (Marx p45) Ultimately overall, competition is the end all of the bilateral agreement between the capitalist and the labor worker; the agreement now has become a unilateral agreement in which the capitalist benefits off the labor worker like a leech, while the labor worker continues their work in hopes just to survive. Only time will tell what the remedy of our capitalistic free market economy is, or our economy will simply collapse…
Works Cited
Marx, Karl. Wage-Labour and Capital/Value, Price and Profit. Trans. Lohnarbeit Kapital. First paperback (combined) edition ed. N.p.: International Publishers Co., Inc., 1976. Print.
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