[Even among Marx-friendly economists, the labor theory of value
has fallen out of favor. But its technical validity is less important
than the core message: workers are exploited because the value they
create is undemocratically taken by capitalists.]
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KARL MARX WAS RIGHT: WORKERS ARE SYSTEMATICALLY EXPLOITED UNDER
CAPITALISM  
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Ben Burgis
June 11, 2022
Jacobin
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_ Even among Marx-friendly economists, the labor theory of value has
fallen out of favor. But its technical validity is less important than
the core message: workers are exploited because the value they create
is undemocratically taken by capitalists. _

A young worker at a Nestlé factory. , Nestlé/Flickr

 

In 1865, Karl Marx filled out a questionnaire. We thus know, for
example, his favorite color (red), his favorite food (fish), and his
favorite names (Jenny and Laura, those of his wife and daughter). He
left the line for “figure in history you dislike the most” blank
(my best guess is that he had trouble narrowing down the list) and
listed two for “your hero” — Johannes Kepler and Spartacus.

Those latter choices tell you everything about how Marx understood his
theoretical project. Kepler assimilated the study of the heavens into
mundane physics by discovering laws of planetary motion. Spartacus led
a slave revolt.

Marx’s collaborator, Friedrich Engels, called their project
“scientific socialism.” The idea wasn’t that social science by
itself could tell you that socialism was better than capitalism. The
“science” — Marx’s drive to uncover the “laws of motion”
of capitalist economies — was an _engineering_ science, one meant
to understand how capitalism worked in order to overcome it and thus,
in Marx and Engels’ eyes, remove arbitrary economic obstacles to
human flourishing.

In his magnum opus, _Capital_
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Marx used the most advanced economic theory of his day to decipher the
structure of capitalist exploitation. Like David Ricardo and other
previous nonsocialist economists, Marx thought that the value of a
commodity was a product of the labor time it took to produce — the
“labor theory of value.” Sharpening Ricardo’s analysis with his
own insights, Marx conceived of value as the “congealed” result of
average socially necessary labor time.

If you think of “value” in this way, the traditional socialist
charge that workers are exploited under capitalism is easy to
understand: workers produce value but capitalists control how much of
it is returned to them in wages.

Like every other area of empirical inquiry, though, economics has
changed a lot since _Capital_ was published in 1867. Today, most
economists — including many who are committed Marxists — reject
the labor theory of value (LTV).

But does the apparent obsolescence of the LTV mean capitalism is
innocent on the charge of exploitation? Not quite. As the Marxist
philosopher G. A. Cohen demonstrated, Marx’s core insight about
exploitation can be reformulated in an even simpler way if you drop
his nineteenth-century assumptions about value and prices. The key
point is that workers are the source of the products that have value
and capitalism systematically forces them to surrender some of that
value to the boss.

That’s a complicated proposition. So let’s walk through it,
starting with Marx’s original formulation.

Marx’s Analysis of Labor and Capital

Marx spends the first five chapters of _Capital_ analyzing several
economic concepts, starting with commodities, money, and value. He
then considers them in relation to capital, using his famous
three-letter diagrams.

For instance, even a subsistence farmer might sell some of the goods
he and his family don’t need to buy products they can’t make — a
chain of transactions that Marx renders as C-M-C
(commodities-money-commodities). The capitalist does the opposite:
M-C-M (money-commodities-money). While a miser simply keeps his money,
perhaps filling a swimming pool with gold coins like Scrooge McDuck,
the capitalist turns his cash into commodities and turns those
commodities _into more money _(representing an underlying increase
in value) — whether by selling them (in the case of the merchant
capitalist) or using them to manufacture new goods and selling those
(in the case of the industrial capitalist).

The first volume of Karl Marx’s Das Kapital.

Crucially, the capitalist drive to accumulate money isn’t primarily
about individual capitalists being bad, greedy people but rather the
relentless pressures of the system itself. A capitalist who doesn’t
ruthlessly pursue profits will be outcompeted by those who do — as
Marx says, the capitalist is a kind of “rational miser” (while the
miser is a “capitalist gone mad”).

But, Marx asks, how does the store of value held by the capitalists
increase?

To be sure, some people are better at business than others and can buy
cheap and sell dear, but how does the _supply of value in_ _society
as a whole_ increase over time? Where does the new value come from?
Marx’s answer is that a worker’s capacity to work — her “labor
power” — is a “c” that has the capacity to turn “m” into
more “m.”

Marx’s key analytic point is that mainstream economists who ignore
the class antagonism at the heart of capitalism are obscuring a
central element.

At this point in the discussion, any good defender of capitalism will
counter that the capitalist provides the physical means of production
— the factories, equipment, and so on. Isn’t the capitalist the
source of that value? But Marx points out both that the physical means
of production are a source of value insofar as they are used by
workers and that these are themselves the result of the activity of
previous workers — in Marx’s phrase, “dead labor” used by
“living labor” to produce more value.

And yet, despite being the source of value, labor is dominated. In a
striking passage at the end of chapter six, Marx portrays a stylized
exchange between the “owner of money” and the “owner of this
peculiar commodity, labor-power,” who meet in a marketplace to
exchange their property. They meet as equals to make this exchange,
but then:

When we leave this sphere of . . . the exchange of commodities, which
provides the “free trader _vulgaris_” with his views, his
concepts, and the standard by which he judges the society of capital
and wage-labor, a certain change takes place, or so it appears, in the
physiognomy of our _dramatis personae_. He who was previously a
money-owner strides out in front as a capitalist; the possessor of
labor-power follows as his worker. The one smirks self-importantly and
is intent on business; the other is timid and holds back — like
someone who has brought his own hide to market and now has nothing to
expect but — a tanning.

As the book continues, turning at last to the key concept of class
struggle, Marx writes at length about what the “tanning” looks
like and how it works. He describes “half-starved widows” giving
up their children to toil in the match-making industry — working all
day every day and facing very early death because of the industrial
process. He writes about groups of desperate workers and their
families petitioning local governments to reduce their
worktime _to_ _eighteen hours a day_.

But Marx’s key analytic point is that mainstream economists who
ignore the class antagonism at the heart of capitalism are obscuring a
central element. Under feudalism, the direct producers (peasants) are
clearly forced into giving up some of their “surplus labor” (the
time they spend working but not to meet their own needs) to the ruling
class. The coerced transfer is out in the open. Under capitalism, the
immediate producers (workers) are legally free to make contracts with
anyone or — if they’re willing to simply go hungry — no one. The
coercion is disguised.

Yet the underlying reality, Marx insists, is a crude relationship of
domination and extraction.

G. A. Cohen’s Analysis of Exploitation

_[xxxxxx MODERATOR - FOR MORE ABOUT G.A. COHEN SEE THIS 2009
OBITUARY FROM THE GUARDIAN
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In his 1989 book _History, Labour, and Freedom_
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socialist philosopher G. A. Cohen points out
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while most economists (including many contemporary Marxist economists)
reject the labor theory of value, rank-and-file socialists often talk
as if the LTV is obviously true. What explains the disconnect?

The LTV, as Marx inherited it from Ricardo and sharpened it with his
own analytic contributions, may or may not be true, but it certainly
isn’t obvious. To begin with, the relationship between value and
price that Marx postulated is complicated. A whole series of facts
about competition and supply and demand pressures can carry the actual
market price of a commodity far away from its underlying value.
Nevertheless, Marx thinks, prices are still a kind of distorted
reflection of labor-time value.

This view isn’t as easy to refute as many barstool
libertarians seem to believe
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Marx doesn’t think, for example, that products have more value if
they’re made by particularly slow workers. Marx sees value as
stemming from the social _average_ in necessary labor time at a
particular time and place.

Still, even the non-strawman version doesn’t persuade most
contemporary economists. As economist and _Jacobin_ contributing
editor Mike Beggs notes [[link removed]],
economists today think in terms of supply and
demand _schedules_ rather than supply and demand as forces operating
on commodities — which makes Marx’s argument that something must
account for prices when these forces are in balance much less
compelling.

But Cohen believed that rank-and-file socialists who think the LTV is
obvious are moved by something other than Marx’s technical claims
about value. Instead, what moves them is something like a “labor
theory of things that have value,” which is very obviously true!
Regardless of what value is, no commodity that _has_ value has ever
been the product of anything except some combination of (a) the
nonhuman natural world and (b) human labor.

And once that’s in place, the entire analysis in the previous
section still applies. I faithfully reproduced several of Marx’s key
arguments in _Capital _there, but nothing I’ve said presupposes
the _technical details _of the LTV.

OK, but Are Workers Really Exploited?

Pro-capitalist economists like to talk about “land, labor, and
capital” as independent factors that all contribute to production
and say that therefore the disconnect between the part of a firm’s
revenues that goes into workers’ wages and the part that isn’t
under their control is unobjectionable — after all, workers only
supply one of the three factors. But if capital means the share of
society’s resources (above and beyond what’s present in unaltered
nature) used in production, that’s just the fruit of previous labor.
It hardly rebuts the charge that workers don’t control the products
of their labor.

Of course, capitalists sometimes do managerial labor themselves, but
that doesn’t mean that “manager” and “capitalist” aren’t
distinct roles. In a small enough business, the owner might even sweep
the place up herself at closing time. But that doesn’t make the role
of a capitalist the same as the role of janitor.

Fine, a defender of capitalism could argue, but aren’t capitalists
still making an important contribution by hiring the managers that
oversee the production process?

If anything, not routing Marxist analyses of exploitation through
nineteenth-century assumptions simplifies the issue and sharpens
Marx’s original analogy between feudalism and capitalism.

While some managerial labor wouldn’t be necessary if workers
controlled the means of production and their incentives were
different, some would be. But any managers who are performing useful
tasks could be hired by a workers’ committee as easily as by a
capitalist. As Cohen puts it elsewhere
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what’s socially necessary is “what is delegated” — not the
capitalist who happens to be empowered by existing social structures
to do the delegating.

When it comes to land, the equivocation is even more obvious.
Does _ownership_ of land contribute somehow to production? Only in
the sense that the owner permits it to take place. (If that counts, in
an absolute monarchy where the king has to grant individual approval
to every productive act in his kingdom, he, too, is usefully
contributing!)

The land itself makes a valuable contribution, but how does that
refute the Marxist charge that it’s exploitative for workers not to
control the output of their labor? As radical scholar David
Schweickart argues in his book _After Capitalism_
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unless the idea is that some of the crops produced by the combination
of land and agricultural labor are going to burned as a “sacrifice
to the God of Land,” the land’s contribution seems rather
irrelevant to questions of distribution.

In the same vein, G. A. Cohen argues that it doesn’t matter for the
charge of exploitation whether autoworkers are directly producing
value or simply producing cars which have value (and transporting the
cars, and selling them). If anything, not routing Marxist analyses of
exploitation through nineteenth-century assumptions about equilibrium
prices simplifies the issue and sharpens Marx’s original analogy
between feudalism and capitalism. As with feudal peasants, workers are
deprived of control over the product — and hence whatever price it
fetches if the person who does control it sells it.

Cohen’s Analysis of Working-Class Unfreedom

To be clear, neither Marx nor Cohen thought that workers should
receive the _entire_ product of their labor. Marx argued
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would be both impractical and wrong for a variety of reasons
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one, what about upkeep of old factory equipment? Or about building new
factories? What about “common needs” like schools and hospitals or
the consumption needs of those unable to work?

What makes the surrender of some of the value produced by workers or
the value of the commodities they produce exploitation is that it’s
surrendered not in some democratic process in which the beneficiaries
have to make a convincing case but that it’s _TAKEN _as a result of
the power one class has over another.

The real question, then, is whether the part of the value controlled
by the capitalist is voluntarily surrendered by the worker. In fact,
Cohen argues that the LTV being true would do nothing to strengthen
the charge of exploitation. To see why not, assume a simply
“marginalist” account of value whereby value is produced by the
desire of consumers. Does that somehow give consumers a right to the
things they desire? Of course not. The real issue is who produces the
goods and services themselves, and whether the arrangements by which
those products come under the control of separate capitalists are ones
the workers accept of their own free will.

Libertarian philosopher Robert Nozick argued that someone can only be
“coerced” to do something if their property rights aren’t
respected, but Cohen argues in a brilliant 1983 paper
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backward, and not just because libertarian theories of property rights
are deeply implausible
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We can and should establish that something is coercive before we ask
whether anything could justify that coercion. A serial killer, for
example, is _forced_ to stay removed from society — and that’s a
good thing.

What makes the surrender of some of the value produced by workers
exploitation is that it’s surrendered not in some democratic process
but taken as a result of the power one class has over another.

Nor does it do any good to say that the worker with no realistic
ability to start a business of his own has at least some other choices
besides going to work for a capitalist — that he can “go on the
dole, or beg, or simply make no provision for himself and trust to
fortune.” You might as well say a bank teller forced with a gun to
her head to give up the code to the safe isn’t really forced because
she had the option of wrestling away the gun or giving her life for
the bank. When we say that someone was forced to do something, Cohen
points out, we don’t generally mean they had literally _no_ other
choices — just that they had no _acceptable_ choices.

Cohen thinks the best argument against the claim that workers are
forced to submit to the rule of capitalists, and hence forced to give
up the part of the product of their labor that isn’t under their
control, is the simple fact of upward mobility. Some workers, even
some who start in very desperate positions, are eventually able to
claw their way up to a higher position in the class structure — for
example, by starting small businesses of their own.

But Cohen argues a crucial point: it’s structurally impossible for
everyone in a complex modern economy to own their own little business.
Either the labor force will collectively control the means of
production or they’ll be dominated by capitalists who can then
extract their surplus labor — the labor that goes not toward meeting
their own needs but toward the remainder of a firm’s revenues,
which, whether kept by the capitalists or reinvested, is outside of
the workers’ control.

“Capitalism requires a substantial hired labor force,” Cohen
writes, “which would cease to exist if more than a few workers
rose.” This means that even though there are a few lifeboats, the
working class is collectively trapped aboard the wage-labor ship.

He introduces an analogy:

Ten people are placed in a room, the only exit from which is a huge
and heavy locked door. At various distances from each lies a single
heavy key. Whoever picks up this key — and each is physically able,
with varying degrees of effort, to do so — and takes it to the door
will find, after considerable self-application, a way to open the door
and leave the room. But if he does so he alone will be able to leave
it. Photoelectric devices installed by a jailer ensure that it will
open only just enough to permit one exit. Then it will close, and no
one inside the room will be able to open it again.

There is a sense in which any of those prisoners can escape. But
there’s also a clear sense in which they’re collectively unfree. A
prisoner in Cohen’s hypothetical room, like a worker under
capitalism, might be able to make their individual escape, but they
can’t escape with their fellow prisoners.

The only way for workers to be free to _all escape together_, Cohen
says, is for them to achieve a “deeper kind of freedom” —
freedom from class society.

_BEN BURGIS is a Jacobin columnist, an adjunct philosophy professor
at Morehouse College, and the host of the YouTube show and
podcast Give Them An Argument. He’s the author of several books,
most recently Christopher Hitchens: What He Got Right, How He Went
Wrong, and Why He Still Matters._

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